[2008] NSWIRComm 124
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68
[2017] FCAFC 113
Australian Building and Construction Commissioner v Pattinson (2022) 399 ALR 599
Source
Original judgment source is linked above.
Catchwords
Ch 6, ss 306, 309, 310, 322, 323, 325, 326, 332, 356[2004] FCA 693
ACCC v MSY Technology Pty Ltd (2012) 201 FCR 378[2008] NSWIRComm 124
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68[2017] FCAFC 113
Australian Building and Construction Commissioner v Pattinson (2022) 399 ALR 599[2022] HCA 13
Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
[2008] FCAFC 179
Kelly v Fitzpatrick (2007) 166 IR 14
[2007] FCA 1080
NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 291
[1996] FCA 1134
Ramsay v Menso [2019] FCA 1273
Re Idylic Solutions Pty Ltd
Australian Securities and Investments Commission v Hobbs [2013] NSWSC 106
Re Transport Industry - General Carriers Contract Determination (2016) 257 IR 294
[2016] NSWIRComm 3
Rojas v Esselte Australia Pty Ltd (No 2) (2008) 177 IR 306
[2008] FCA 1585
Sayed v Construction, Forestry, Mining and Energy Union (2016) 239 FCR 336
The plaintiff, the Transport Workers' Union of New South Wales ("TWU"), applied to the Court for a series of declarations pursuant to s 75 of the Supreme Court Act 1970 (NSW) in relation to certain conduct of the defendant, Toll Transport Pty Ltd ("Toll"), along with an order that Toll pay a pecuniary penalty pursuant to s 357(1) of the Industrial Relations Act 1996 (NSW) ("IR Act"). Toll does not oppose the relief sought, and the parties have submitted an agreed pecuniary penalty for the Court's consideration.
TWU brought the proceedings alleging that Toll was in breach of four agreements that it had entered into with contract carriers who were engaged to work in its Express Parcels business unit, which Toll has since sold off. The contract carriers were based variously at depots in Banksmeadow, Newcastle, Wollongong and Bungarribee. The following agreements were entered into pursuant to s 322 of the IR Act, and were approved by the Industrial Relations Commission of New South Wales ("Commission") pursuant to s 325 of the IR Act (together, the "Contract Agreements"):
1. Toll Express Parcels (Banksmeadow and Managed Solutions, Bankstown) Contract Agreement 2019 ("Banksmeadow Agreement");
2. Toll Priority - Newcastle Contract Agreement 2005 ("Newcastle Agreement");
3. Toll Priority - Wollongong Contract Agreement 2004 ("Wollongong Agreement"); and
4. Toll Express Parcels (Bungarribee) Contract Agreement 2019 ("Bungarribee Agreement").
Following a mediation before a Registrar of the Court, the parties filed amended pleadings. By its Amended Statement of Claim, TWU sought declaratory relief in the following terms:
"(i) Toll Transport Pty Ltd breached clause 16 of Part B and clause 22 of Part C of the [Banksmeadow Agreement] on one occasion on each of 14 October 2020, 21 October 2020, 28 October 2020 and 4 November 2020, being a total of four breaches, by failing to pay invoices for 79 contract carriers engaged by it and to whom the contract agreement applied within 7-days of the end of the working week and by no later than the Wednesday following issue of the invoice.
(ii) Toll Transport Pty Ltd breached clause 14 of the [Newcastle Agreement] on one occasion on each of 14 October 2020, 21 October 2020, 28 October 2020 and 4 November 2020, being a total of four breaches, by failing to pay invoices for 14 contract carriers engaged by it and to whom the contract agreement applied within 7-days of the end of the working week and by no later than the Wednesday following issue of the invoice.
(iii) Toll Transport Pty Ltd breached clause 14 of the [Wollongong Agreement] on one occasion on each of 14 October 2020, 21 October 2020, 28 October 2020 and 4 November 2020, being a total of four breaches, by failing to pay invoices for 11 contract carriers engaged by it and to whom the contract agreement applied within 7-days of the end of the working week and by no later than the Wednesday following issue of the invoice.
(iv) Toll Transport Pty Ltd breached clause 35 of the [Bungarribee Agreement] on one occasion on each of 14 October 2020, 21 October 2020, 28 October 2020 and 4 November 2020, being a total of four breaches, by failing to pay invoices for 54 contract carriers engaged by it and to whom the contract agreement applied within 7-days of the end of the working week and by no later than the Wednesday following issue of the invoice."
In addition, TWU sought orders pursuant to s 357(1) of the IR Act that Toll pay pecuniary penalties of $2,500 per breach in relation to its four breaches of each of the Contract Agreements.
Pursuant to its Defence to the Amended Statement of Claim, Toll admitted that it had engaged in the conduct that TWU alleged constituted the four breaches of each of the Contract Agreements (16 breaches in total). Toll also accepted that TWU was entitled to the relief it sought in the Amended Statement of Claim.
The parties are agreed both as to the applicable principles regarding civil penalties, and that an appropriate pecuniary penalty is $40,000. To the extent that there were issues between the parties as to the application of the principles, those issues had narrowed to a significant degree by the conclusion of oral submissions.
For the reasons outlined below, I consider that the declaratory orders sought should be granted. I also consider that it is appropriate to make an order under s 357(1) of the IR Act that Toll pay a pecuniary penalty. The central issue for determination is whether I am satisfied that the amount that the parties have proposed can be accepted as fixing an appropriate amount by way of penalty: Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; [2015] HCA 46 at [48] ("Agreed Penalties Case"), citing NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 291; [1996] FCA 1134 ("NW Frozen Foods"). For the reasons that follow, I consider that the amount proposed is appropriate.
[2]
Background to the proceedings
The background to the conduct in respect of which declarations are sought is set out in the following:
1. The allegations in the Amended Statement of Claim, which Toll has admitted.
2. A document titled "Agreed Facts Pursuant to Section 191 of the Evidence Act 1995 (NSW)" ("Agreed Facts"), signed by the solicitors for Toll and TWU and tendered as Exhibit A in these proceedings.
3. For TWU, an affidavit of Paul Newton affirmed on 20 May 2022, and an affidavit of Isabella Wisniewska affirmed on 20 May 2022. Ms Wisniewska, who is a legal officer employed by TWU, details the chronology of proceedings in the Commission to which I will refer below. Mr Newton worked as a contract carrier for Toll at the Banksmeadow depot until August 2021 (when Toll sold the business). Mr Newton is also a member of TWU, and the Head Delegate for contract carriers at Banksmeadow.
4. For Toll, an affidavit of Michael Rugendyke sworn on 21 June 2022. Mr Rugendyke was an employee of Toll between 2017 and September 2021 (when he became an employee of the company to whom the Contract Agreements were assigned, as part of Toll's sale of this part of its business). Between July and October 2020, Mr Rugendyke was the General Manager for the Central Region of Toll, covering New South Wales, the Australian Capital Territory and National Operations.
In broad summary, each of the Contract Agreements contained a term that was either express or expressly incorporated (by reference to previous custom or practice), stipulating that payment of invoices was to occur within 7 days of the end of the working week to which the invoices related. Mr Newton's evidence was that he organised his affairs, including his money float (by which he ensured he could continue paying vehicle repayments, tolls, fuel charges and any general maintenance charges, as well as support his family), on the basis that Toll paid his invoices in accordance with the 7-day payment term of (relevantly) the Banksmeadow Agreement.
According to the evidence of Mr Rugendyke, on each of 31 January 2020 and 4 May 2020, Toll experienced cyber-attacks which had a significant adverse impact on its business, including its ability to render invoices to customers. This contributed to Toll experiencing what he described as "a serious cash flow issue". The uncertainty of disruptions associated with the pandemic was also having a major impact on Toll's level of activity and cash flow. In order to mitigate the adverse impacts, and to protect and save the business, Toll had to consider and implement a range of measures across its operations. The measures included reducing management remuneration; terminating significant amounts of outside hire and temporary labour hire; adjusting trading terms of customers and external suppliers; reducing its "white-collar" workforce; and changing multiple operational practices to reduce costs.
[3]
Admitted breaches of the Contract Agreements
The 16 contraventions which TWU alleged in the Amended Statement of Claim, and which Toll admitted in the Amended Defence, related to Toll failing to pay invoices that were issued by contract carriers within the 7-day period for which the Contract Agreements made provision, after 1 October 2020. As the pleaded allegations follow a similar format for each of the Contract Agreements it is sufficient to note the allegations regarding the Banksmeadow Agreement as an example. As to that Agreement, the Amended Statement of Claim alleged:
"36A On 9 October 2020, 79 Contract Carriers to whom the Banksmeadow Agreement applied issued Toll invoices relating to their performance of work in the preceding work week.
36B Toll was required to pay the invoices referred to in paragraph 36A above by no later than Wednesday 14 October 2020.
36C Toll paid the invoices referred to in paragraph 36A above on 21 October 2020.
36D In the circumstances set out in paragraphs 36A-36C above, Toll breached clause 16 of Part B to the Banksmeadow Agreement and clause 22 of Part C to the Banksmeadow Agreement by failing to pay the 79 Contract Carriers to whom the Banksmeadow Agreement applied the invoices referred to in paragraph 36A above within 7-days of the end of the working week and by no later than the Wednesday following the issue of those invoices and is liable under s 357(1) of the IR Act to pay a pecuniary penalty in relation to this breach."
Toll admitted the allegations in each of these paragraphs and the three further alleged breaches of clause 16 of the Banksmeadow Agreement, relating to invoices issued by contract carriers on 16 October 2020, 25 October 2020, and 30 October 2020. Toll has also admitted breaches of the equivalent clause of the other three Agreements in respect of invoices issued by contract carriers on 11 October 2020, 18 October 2020, 25 October 2020, and 1 November 2020.
It is important to note that while TWU submitted that Toll's breaches gave rise to practical difficulties for contract carriers, it does not allege that any contract carrier suffered financial loss as a result of the breaches. Toll paid the invoices in question, but it paid them late.
As to the nature of the practical difficulties, Mr Newton gave evidence that the volume of business was low, and the foregoing of an invoice (because of the changed payment terms) meant there was little money available for emergency situations such as services or maintenance works required for his vehicle. He also gave evidence of having to approach his financial institution because funds were running low. Mr Newton's evidence was that other contract carriers approached him in his capacity as Head Delegate raising similar issues. The evidence as to what other contract carriers told Mr Newton was admitted on the limited basis of what he was told.
[4]
The civil penalty provision: section 357 of the IR Act
Section 357 of the IR Act is headed "Civil penalty for breach of industrial instruments". It provides as follows:
(1) If an industrial court is satisfied that a person has contravened a provision of an industrial instrument, it may order the person to pay a pecuniary penalty not exceeding $10,000 (a civil penalty).
Note -
Section 21 of the Interpretation Act 1987 provides that the expression "contravene" in an Act includes a failure to comply.
(2) Proceedings for a civil penalty may be instituted -
(a) by an inspector or any other person authorised by this Act to institute proceedings for offences, or
(b) by an employer bound by the industrial instrument concerned, or
(c) by an industrial organisation concerned in the industry to which the proceedings relate.
(3) Proceedings for a civil penalty may be instituted within 6 years after the contravention.
(4) To avoid doubt, the rules of evidence apply to proceedings for a civil penalty.
(5) Evidence given in proceedings for the recovery of money under Part 2 is not admissible in proceedings for a civil penalty.
(6) In any proceedings for a civil penalty, the industrial court may award costs to either party and assess the amount of those costs. Costs cannot be awarded against the prosecutor except in the circumstances in which costs can be awarded against the prosecutor in criminal proceedings.
(7) The following provisions apply to contraventions of industrial instruments and to proceedings for a civil penalty for such a contravention in the same way as they apply to criminal proceedings for an offence against this Act -
(a) Sections 400-403.
(b) The provisions of any Act relating to the recovery of penalties imposed for an offence.
(c) Any provision of this or any other Act relating to criminal proceedings that is applied to this section by the regulations (whether with or without modification).
The term "industrial court" in s 357(1) of the IR Act is defined in s 356 to include the Supreme Court. TWU is entitled to institute proceedings such as the present proceedings as it is an "industrial organisation of employees" within the meaning of s 357(2)(c) and the Dictionary to the IR Act.
An "industrial instrument", to which s 357(1) refers, is defined in s 8 of the IR Act to include, relevantly, a "contract agreement". That term is, in turn, defined in the Dictionary to the IR Act to mean "an agreement approved, or taken to be approved, by the Commission under Part 3 of Chapter 6".
[5]
The declaratory relief sought
The parties were agreed on the terms of the declarations sought. TWU submitted that it was appropriate to make the declarations, having regard to their educative value in identifying Toll's contraventions of the Contract Agreements and the IR Act.
I am satisfied that the considerations that are relevant to the exercise of the power to make declarations support the grant of declaratory relief in this case. The declarations relate to a real and not a hypothetical question in relation to the breaches alleged by TWU and ultimately admitted by Toll. As to the requirement that there be a proper contradictor to the grant of declaratory relief, in the sense of someone presently existing who has a true interest to oppose the declaration sought, it is not necessary that the contradictor actually oppose the declaratory relief sought: Re Idylic Solutions Pty Ltd; Australian Securities and Investments Commission v Hobbs [2013] NSWSC 106 at [31] per Ward J, citing ACCC v MSY Technology Pty Ltd (2012) 201 FCR 378; [2012] FCAFC 56 and ACCC v Willesee Healthcare Pty Ltd (No 2) [2011] FCA 752 at [44].
Further, the declarations record the relevant contravening conduct and, in doing so, make clear the precise liability in respect of which a penalty has been awarded. In proceedings involving contraventions under the repealed Workplace Relations Act 1996 (Cth), in Cruse v Multiplex Limited (2008) 172 FCR 279; [2008] FCAFC 179 at [53] Goldberg and Jessup JJ referred with approval to what Lee J said by way of summary in ACCC v Midland Brick Co Pty Ltd (2004) 207 ALR 329; [2004] FCA 693 at [21]. In my view, what his Honour there said is apposite to the utility of the declarations sought in this case:
"However, on the other hand it may be said that there is some utility in declaring contraventions of the Act to have occurred in order to define and publicise the type of conduct that constitutes a contravention of the Act and to set out clearly the foundation on which the consequential orders by way of injunction and pecuniary penalty, including those based on accessorial liability, are grounded: see Rural Press Ltd v ACCC [2003] HCA 75; (2003) 203 ALR 217 per Gummow, Hayne, Heydon JJ at [95]; RAIA Insurance Brokers Ltd v FAI Insurance Co Ltd [1993] FCA 92; (1993) 41 FCR 164 at 167; 112 ALR 511 at 514 per Davies J, Beaumont, Spender JJ at FCR 175-8; ALR 522-5."
[6]
The proposed civil penalty
As TWU noted in its submissions, there do not appear to be any previous occasions on which an agreed penalty has been put before this Court in respect of contraventions of s 357(1) of the IR Act for breaches of s 322 agreements. However, I accept that the general principles regarding the imposition of civil penalties, including where there is agreement between the parties, apply in the present circumstances. The principles developed in the former Industrial Court regarding penalties for breach of industrial instruments are also instructive.
In Australian Building and Construction Commissioner v Pattinson (2022) 399 ALR 599; [2022] HCA 13 at [42] ("Pattinson"), the plurality confirmed that civil penalties "are not retributive, but rather are protective of the public interest in that they aim to secure compliance by deterring repeat contraventions". However, "insistence upon the deterrent quality of a penalty should be balanced by insistence that it 'not be so high as to be oppressive'": at [40], citing NW Frozen Foods.
In the context of civil penalties under the IR Act, both parties referred to the decision of the Industrial Court in Auscare Corp Pty Ltd v New South Wales Department of Commerce (No 2) (2008) 183 IR 148; [2008] NSWIRComm 124 ("Auscare No 2"), in which Walton J emphasised the need to take into account their protective purpose: at [8]. His Honour observed of civil penalties that they serve a role in enhancing social welfare by minimising the net social cost of wrongdoing and putting a price on contraventions sufficient to deter repetition by the contravener.
In their written submissions, the parties agreed that in assessing an appropriate penalty, the Court should consider the factors identified in cases such as Trade Practices Commission v CSR Limited (1991) ATPR 41-076; [1990] FCA 762 at 52,152; Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [14], and Rojas v Esselte Australia Pty Ltd (No 2) (2008) 177 IR 306; [2008] FCA 1585 at [64] ("Rojas"). The factors identified in those cases overlap with those which the Industrial Court identified in Auscare No 2 at [12]-[13]. They include the circumstances of the contravention and its consequences, including whether the contraventions were deliberate and whether they constituted a course of conduct; previous contravening conduct (if any); cooperation and corrective action; and specific and general deterrence.
[7]
Payment of the penalty to TWU
The parties agreed that the Court could, in the present case, exercise its discretion under s 403(1) of the IR Act to award the proposed penalty to TWU, rather than into the Consolidated Revenue Fund. Section 403 provides:
(1) If any penalty for an offence has been imposed under this Act in proceedings instituted by an officer of an industrial organisation, the court concerned may order that the penalty, or part of the penalty, be paid to the Industrial Registrar for payment to the industrial organisation.
(2) In any other case, any penalty recovered is to be paid into the Consolidated Fund or as otherwise provided by law.
TWU submitted that payment of the agreed pecuniary penalties to it would encourage common informants such as unions to make applications to bring to the Court's attention, and seek appropriate relief in respect of contraventions of industrial instruments. It cited two decisions of the Federal Court in support of this submission: Sayed v Construction, Forestry, Mining and Energy Union (2016) 239 FCR 336; [2016] FCAFC 4 and Ramsay v Menso [2019] FCA 1273. Having regard to the role TWU has taken in the circumstances of the present case, I consider that it is appropriate to make the order sought.
[8]
Conclusion
It is appropriate to make the orders sought by TWU in the Amended Statement of Claim. No order is sought as to costs.
I make the following orders:
1. Declare pursuant to s 75 of the Supreme Court Act 1970 (NSW) that:
1. Toll Transport Pty Ltd breached clause 16 of Part B and clause 22 of Part C of the Toll Express Parcels (Banksmeadow and Managed Solutions, Bankstown) Contract Agreement 2019 on one occasion on each of 14 October 2020, 21 October 2020, 28 October 2020 and 4 November 2020, being a total of four breaches, by failing to pay invoices for 79 contract carriers engaged by it and to whom the contract agreement applied within 7-days of the end of the working week and by no later than the Wednesday following issue of the invoice.
2. Toll Transport Pty Ltd breached clause 14 of the Toll Priority - Newcastle Contract Agreement 2005 on one occasion on each of 14 October 2020, 21 October 2020, 28 October 2020 and 4 November 2020, being a total of four breaches, by failing to pay invoices for 14 contract carriers engaged by it and to whom the contract agreement applied within 7-days of the end of the working week and by no later than the Wednesday following issue of the invoice.
3. Toll Transport Pty Ltd breached clause 14 of the Toll Priority - Wollongong Contract Agreement 2004 on one occasion on each of 14 October 2020, 21 October 2020, 28 October 2020 and 4 November 2020, being a total of four breaches, by failing to pay invoices for 11 contract carriers engaged by it and to whom the contract agreement applied within 7-days of the end of the working week and by no later than the Wednesday following issue of the invoice.
4. Toll Transport Pty Ltd breached clause 35 of the Toll Express Parcels (Bungarribee) Contract Agreement 2019 on one occasion on each of 14 October 2020, 21 October 2020, 28 October 2020 and 4 November 2020, being a total of four breaches, by failing to pay invoices for 54 contract carriers engaged by it and to whom the contract agreement applied within 7-days of the end of the working week and by no later than the Wednesday following issue of the invoice.
1. Order pursuant to s 357(1) of the Industrial Relations Act 1996 (NSW) that Toll Transport Pty Ltd pay pecuniary penalties of $2,500 per breach in relation to its:
1. 4 breaches of the Toll Express Parcels (Banksmeadow and Managed Solutions, Bankstown) Contract Agreement 2019;
2. 4 breaches of the Toll Priority - Newcastle Contract Agreement 2005;
3. 4 breaches of the Toll Priority - Wollongong Contract Agreement 2004;
4. 4 breaches of the Toll Express Parcels (Bungarribee) Contract Agreement 2019,
being a total of 16 breaches.
1. Order pursuant to s 357(7) and s 403(1) of the Industrial Relations Act 1996 (NSW) that the pecuniary penalties in Order 2 be paid to the Industrial Registrar for payment to the plaintiff.
[9]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 31 January 2023
In the context of those measures, following a preliminary conference between Mr Rugendyke, Richard Olsen (TWU State Secretary), and representatives from Toll and TWU on 3 April 2020, there was a larger meeting by telephone on 6 April 2020. Mr Rugendyke's evidence of this meeting was to the effect that he explained the business impacts that Toll had experienced and how dire the situation was, before discussing the proposal to move to a 14-day payment cycle for contract carriers, rather than the 7-day payment cycle for which the Contract Agreements made provision. Mr Rugendyke recalled that TWU was receptive and cooperative; and he made them aware that $1.5 million would be injected into Toll's cash flow, allowing it to continue to fund its operations and keep the business viable.
The effect of the arrangement was that the contract carriers were to be paid their full entitlements on a fortnightly basis, rather than a weekly basis. However, the arrangement was to be temporary. In a letter to Mr Olsen, dated 6 April 2020, Mr Rugendyke described the new payment terms as being implemented "on a six-month trial basis". In that letter, Mr Rugendyke also stated that if the pandemic continued to have a significant impact on Toll's business, or if there was "any merit in implementing the new payment terms on a permanent basis", he would arrange to meet with Mr Olsen around 3 September 2020, which was one month before the "trial completion date".
From the week commencing 27 April 2020, Toll commenced paying invoices for work performed by contract carriers to whom the Contract Agreements applied within 14 days of the end of the working week to which the invoices related.
On 23 September 2020, a meeting was held in relation to the payment of invoices by Toll to contract carriers to whom the Contract Agreements applied. According to the Agreed Facts, the TWU representatives informed the Toll representatives at the meeting that the contract carriers and TWU did not agree to any extension of the 6-month trial period. It followed that Toll was required, on and from 1 October 2020, to pay contract carrier invoices in accordance with the terms of the applicable Contract Agreements.
Toll failed to revert to paying invoices in accordance with the terms of the applicable Contract Agreements on and from 1 October 2020. On 8 October 2020, TWU filed an application in the Commission under s 332 of the IR Act, listing Toll as a respondent and identifying that TWU and its contract carrier members and Toll were in dispute. The dispute was identified, relevantly, by reference to the agreement on 6 April 2020, the meeting on 23 September 2020, and Toll not reverting to the 7-day payment arrangements on and from 1 October 2020.
According to Ms Wisniewska's evidence, on 20 October 2020, the Commission listed the matter for conciliation, which was unsuccessful. The dispute was then listed for hearing on 20 April 2021. TWU filed its evidence on 28 January 2021 and its submissions on 2 February 2021. According to the Agreed Facts, on or about 3 March 2021, Toll reverted to paying the invoices of contract carriers at the relevant depots in accordance with the applicable Contract Agreements. On 5 March 2021, TWU discontinued the proceedings in the Commission.
In the oral submissions made by Counsel for TWU, TWU clarified that although it submitted that Toll's breaches were deliberate, it did not submit that Toll's motivation was to do harm to the contract carriers. Toll accepted, as it must, that its breaches were deliberate, and relied on the surrounding circumstances, including the dispute in the Commission, to explain (rather than excuse) its conduct. I will return to these matters below.
Chapter 6 of the IR Act applies to contracts of bailment and contracts of carriage: s 306. As TWU submitted, the provisions of the Chapter had their genesis in an inquiry conducted by the Industrial Commission in Court Session into taxi-cabs, private hire cars, motor omnibuses, public motor vehicles and lorry owner drivers, the findings of which were published in a report to the then Treasurer ("Willis Report"). In Re Transport Industry - General Carriers Contract Determination (2016) 257 IR 294; [2016] NSWIRComm 3 at [52], Kite AJ adopted a summary of the conclusions in the Willis Report regarding the appropriateness of regulating contract carriers. Among other things, the Willis Report observed that owner drivers with one vehicle came under direction and control which was, in a practical sense, little different to employees. Their weak bargaining position made them vulnerable to exploitation, requiring the intervention of industrial regulation.
Section 309(1) of the IR Act provides that for the purposes of Chapter 6, a contract of carriage "is a contract…for the transportation of goods by means of a motor vehicle or bicycle in the course of a business of transporting goods of that kind by motor vehicle or bicycle", subject to satisfying the requirements of one of sub-paragraphs (a), (b) or (c). By way of example, s 309(1)(c) provides that where the carrier is a body corporate, in order for a contract to fall within the scope of Chapter 6 no person may be employed in driving the relevant motor vehicle in the course of the business of the body corporate unless the person is a director (or a family member of a director); or a person (or family member) who, together with members of his or her family, has a controlling interest. There was no dispute that the carriers with whom Toll contracted in the present case satisfied s 309(1)(c).
Section 322(2) of the IR Act relevantly provides that "an association of contract carriers may enter into an agreement with a principal contractor…with respect to the conditions of contracts of a specified class made with carriers by that principal contractor…". Toll was a "principal contractor" within the meaning of s 310 of the IR Act, while TWU was an "association of contract carriers". An agreement made under s 322 is called a contract agreement (s 322(5)), but has no effect unless it is approved by the Commission under Part 3 of Chapter 6: s 323(1). Pursuant to s 325(1), the Commission is to approve each contract agreement lodged for approval, "but only if the Commission is satisfied that":
(a) the agreement complies with all relevant statutory requirements…, and
(b) the agreement does not, on balance, provide a net detriment to the drivers or carriers who are to be covered by the agreement when compared with the aggregate package of conditions of engagement under relevant contract determinations that would otherwise apply to the drivers or carriers, and
(c) the parties understand the effect of the agreement, and
(d) the parties did not enter the agreement under duress.
The Commission approved each of the Contract Agreements pursuant to s 325 of the IR Act. Section 326(1)(a) provides that a contract agreement is binding on the parties to the agreement. In the case of a party that is an association of contract carriers, a contract agreement is binding on all carriers who are members of the association, or who are eligible to be members of the association and who enter into contracts of the class to which the agreement relates (s 326(1)(c)). It was common ground that both Toll and the contract carriers were bound by the Contract Agreements.
In oral submissions, TWU submitted that s 357(1) of the IR Act does not permit the imposition of a single aggregate penalty in respect of multiple contraventions of a pecuniary penalty provision, relying on analogous reasoning by the Full Court of the Federal Court (Dowsett, Greenwood and Wigney JJ) in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68; [2017] FCAFC 113 at [122]-[149] ("ABCC v CFMEU"). In the course of the lengthy passage on which TWU relied, the Full Court observed, by reference to earlier single-judge decisions of that Court, that "it may be permissible and appropriate for the Court to impose a single pecuniary penalty for multiple contraventions of a civil penalty provision or provisions having regard to the approach jointly taken by the parties in the pleadings, statement of agreed facts, and submissions". The Court also emphasised that where the parties jointly proposed that it would be appropriate to group the contraventions in terms of separate courses of conduct and impose single penalties in respect of those groups, "the Court may accept that proposal and order a single penalty, or single penalties in respect of groups of contraventions": at [145]. The Court continued at [146]:
"That approach is, in many respects, not dissimilar to the approach that the High Court has said should be taken to agreed penalty submissions in civil penalty cases: Commonwealth v Director, FWBII. Just as the Court may approve a compromise of pecuniary penalty proceedings on terms proposed by the parties, provided that the Court is persuaded that what is proposed is appropriate, the Court may also accept a proposal to impose a single penalty for multiple contraventions where it is persuaded that such a course is appropriate in the circumstances of the case."
Toll submitted that in the present case, the proposed penalty of $40,000 was structured by reference to four identified pay periods for each of the four depots the subject of the Contract Agreements. The proposed penalty could be broken up into 16 amounts of $2,500, for each breach per invoice per contract, or into 4 amounts of $10,000 representing a course of conduct for each contract. In its oral reply, TWU agreed that this was an appropriate course. The manner in which the parties have sought to structure the penalty, by reference to the individual breaches as admitted, means that it is unnecessary to reach a final view on the question of construction that TWU raised in its written submissions.
As Goldberg and Jessup JJ stated in Cruse v Multiplex Limited at [53]:
"With respect to those who take a different view, we cannot agree that the acceptability of declarations which record the outcome of a proceeding is confined to matters arising under the Trade Practices Act. The decision whether to make a declaration will, of course, always be a matter for the discretion of the court, but, if the circumstances are otherwise appropriate, we cannot see why a declaration of this kind might not at least be an available remedy in any proceeding."
Although these factors provide useful guidance, the task of assessing the appropriate penalty is not an exact science: Agreed Penalties Case at [47]. The Court must ultimately fix a penalty that pays appropriate regard to the contraventions that have occurred: Pattinson at [19]. Having regard to the circumstances of the present case, the following factors are of particular significance.
I have set out above the circumstances of Toll's contraventions of the Contract Agreements. The first matter is that the proceedings involve four breaches of the four Contract Agreements, each of which involves the same type of conduct, being a failure to pay invoices as and when they fell due. Considered together, the breaches reveal that over the period to which the allegations relate, Toll engaged in a systematic course of contravening conduct, noting that the common elements in the contraventions require caution to be exercised in considering the appropriate penalty amount.
Second, Toll deliberately breached the Contract Agreements. It had obtained an indulgence from the contract carriers, in the interests of keeping the business viable, but that indulgence was temporary and, to Toll's knowledge, the contract carriers did not agree to an extension. As Counsel for TWU submitted orally, Toll was aware that its proposed course of action, in not reverting to the 7-day payment arrangements, would amount to a contravention of the Contract Agreements. If there were any doubt about that position, TWU commenced the proceedings in the Commission the day before Toll embarked upon the contravening conduct.
Third, Toll's actions were to the practical detriment of contract carriers across the four depots. Mr Newton was one such carrier; he had to continue to rearrange his affairs in light of Toll's failure to make payments in accordance with the terms of the applicable Contract Agreement. I have referred above to the particular characteristics of contract carriers which render them potentially vulnerable to exploitation, which was the mischief that the provisions of Chapter 6 of the IR Act were intended to remedy.
Fourth, notwithstanding the deliberate nature of the conduct and the difficulties to which it gave rise, no contract carrier was unpaid, or underpaid. TWU makes no claim that any contract carrier suffered financial loss.
Fifth, I have referred above to the circumstances in which the initial proposal was advanced and accepted, and the attempts made by Toll to maintain the arrangement. As Toll emphasised, it had proposed the arrangement as a means of remaining financially viable and capable of employing workers, which was of mutual benefit to it and the contract carriers.
In oral submissions, Senior Counsel for Toll referred to the dispute resolution clauses in the Contract Agreements, which provided that in the event of a dispute, the status quo prior to the dispute would be maintained until its resolution. Senior Counsel frankly acknowledged that maintaining the status quo did not entitle Toll to continue to make payments in accordance with the arrangement temporarily agreed to by the contract carriers, when it was on notice that agreement to that arrangement was at an end. Rather, he relied upon the existence of the dispute resolution clauses in submitting that Toll's failures were not motivated by ill will towards the contract carriers. I do not consider that the dispute resolution clauses of the Contract Agreements are of any material assistance to Toll. The contraventions enabled Toll to continue to retain sums owing to the contract carriers for longer than contractually permitted. However, as I have noted above, TWU did not submit that Toll engaged in the contravening conduct with the intention to cause harm. Ultimately, I assess the pleaded contraventions as being at the lower end of the scale of seriousness, although the contraventions do not sit right at the bottom.
Sixth, the penalty sought would not have an oppressive effect on Toll, as a substantial player in the road transport industry. Its position in the industry is also of some relevance in terms of general deterrence.
Seventh, Toll ceased the conduct (albeit not before proceedings were commenced in the Commission) and subsequently cooperated with TWU in resolving these proceedings, including by admitting the contraventions. I consider that its cooperation with TWU in relation to the proceedings is some evidence of Toll's remorse, although both parties ultimately submitted that this was not a case where the issues of cooperation and the absence of remorse were significant considerations.
Eighth, Toll has an exemplary record. In particular, it has not been found to have contravened any industrial agreements in the past. This is relevant to TWU's reliance on the absence of any compliance training in response to what occurred, an argument from which it stepped back in the course of the hearing. There is force in Toll's submission that its record reduces the need for specific deterrence, as does the fact that it has sold off this part of the business. However, the reduction should not be overstated; and general deterrence remains a relevant consideration.
The task of the court is to fix a penalty that pays appropriate regard to the contraventions that have occurred: Rojas at [65]. Having regard to the maximum penalty for which s 357 of the IR Act makes provision, being $10,000, and the pleaded contravening conduct in the context of the matters to which I have referred above, I am satisfied that the proposed penalty of $2,500 per breach, with a total penalty of $40,000, is appropriate.