Yarramul Pty Limited t-as La Porchetta Mulwala and Mulwala Golden Inn Restaurant Pty Limited v Office of Industrial Relations

Applications for leave to appeal and appeal: Appellants contend penalties imposed at first instance were manifestly harsh and excessive and did not reflect mitigating factors accepted at first instance - leave granted to amend appeal against conviction re s 387(2) offence - appeals pressed as to penalty only - respondent conceded appellable error - orders made - to the extent necessary, leave to appeal granted - appeals upheld - Court to vary sentences pursuant to s 55(2)(b) of Crimes (Appeal and Review) Act - costs orders made at first instance to remain unaltered - each party to pay its own costs of the appeals and re- sentencing process. CATCHWORDS: Re-sentencing of appellants: Objective seriousness of the offences considered - general and specific deterrence - principle of totality relevant to s 357 breaches - subjective features taken into consideration - no prior convictions - held penalties imposed at first instance were too severe - penalties varied.

LEGISLATION CITED: Crimes (Appeal and Review) Act 2001 Industrial Relations Act 1996

Pearce v The Queen (1998) 194 CLR 610 CASES CITED: Transport Workers' Union v Carey's Warehousing & Distribution Pty Limited and others [2006] NSWIRComm 192 Transport Workers' Union of New South Wales v Contract Courier Services Pty Ltd [2007] NSWIRComm 152

APPELLANTS: Mr N Healy of counsel SOLICITORS: WMB Lawyers LEGAL REPRESENTATIVES: RESPONDENT: Mr P Ginters of counsel SOLICITORS: IV Knight, Crown Solicitor

CORAM: WALTON J, Vice-President STAUNTON J STAFF J DATE: Friday 21 September 2007

Yarramul Pty Limited t/as La Porchetta Mulwala v Office of Industrial Relations Matter No IRC 913 of 2007 Application by Yarramul Pty Limited t/as La Porchetta Mulwala for leave to appeal and appeal against a decision of Magistrate O'Shane given on 14 May 2007 in Matter No 20349349/06/2

Mulwala Golden Inn Restaurant Pty Limited v Office of Industrial Relations Matter No IRC 914 of 2007 Application by Mulwala Golden Inn Restaurant Pty Limited for leave to appeal and appeal against a decision of Magistrate O'Shane given on 14 May 2007 in Matter No 20349349/06/2

JUDGMENT OF THE COURT [2007] NSWIRComm 230 1 These are applications for leave to appeal and appeal against a decision of Magistrate O'Shane given on 14 May 2007. 2 The substance of the appeal goes to the penalties imposed by her Honour. The appellants contend they were harsh and excessive and not reflective of relevant matters that should have been taken into account in the determination of penalty. Further, it was said, her Honour had failed to properly consider the principle of totality in her sentencing considerations.

3 Both defendants operate a restaurant within the grounds of the Mulwala Ski Club (the Club). 4 The defendant Yarramul Pty Limited t/as La Porchetta Mulwala (Yarramul) commenced operating an Italian restaurant within the Club in December 2004. In doing so, it entered into an agreement with the Club to provide meals to Club members and patrons. 5 The defendant Mulwala Golden Inn Restaurant Pty Limited (Mulwala) commenced operating a Chinese restaurant at the Club some fifteen years ago. Like Yarramul, it has an agreement with the Club to provide meals to Club members and patrons. 6 Neither appellant holds a liquor licence. Nor do they share in any profits arising from the sale of liquor in their respective restaurants. That is supplied by the Club. Likewise, neither appellant is in any way associated with the Club's gaming facilities. Their income is derived via the sale of food and soft drinks. 7 On 8 March 2005, pursuant to an educational campaign being undertaken by the respondent, Inspector Kirby visited the Club premises. He spoke to the respective proprietors of the defendants. As a result of those discussions, the breaches giving rise to the offences dealt with at first instance came to light. 8 It is appropriate at this point to detail the offences dealt with by her Honour in relation to both defendants. They are: (1) Yarramul (i) One breach of s 387(2) of the Industrial Relations Act 1996 (the Act). Section 387(2) is concerned with offences of failing to comply with the requirements of an Inspector under the Act. (ii) Twenty seven breaches of s 357 of the Act. Section 357 is concerned with persons who contravene an industrial instrument. (2) Mulwala (i) One breach of s 123(1) of the Act. Section 123(1) is concerned with the requirement of an employer to provide written payment details to an employee. (ii) One breach of s 129(1)(a) of the Act. Section 129(1)(a) is concerned with the requirement of an employer to keep records of hours worked and paid to an employee.

(iii) Twelve breaches of s 357 of the Act. 9 The maximum penalty for the breaches identified above are:

(i) breach of s 387(2) of the Act: $11,000. (ii) contravention of an industrial instrument under s 357 of the Act: $10,000.

(iv) breach of s 129(1)(a) of the Act: $2,200. 10 There are, as always, relevant facts and circumstances relating to the above offences. We will elaborate upon those later in this judgment. 11 Both defendants entered a plea of guilty to all of the above offences. In dealing with them, her Honour imposed the following penalties: (1) Yarramul: (i) In relation to the breach arising under s 387(2) of the Act: a penalty of $7,500; (ii) In relation to the twenty seven breaches arising under s 357 of the Act: a 'global civil penalty' of $50,000. (2) Mulwala: (i) In relation to the breach arising under s 123(1) of the Act: the maximum penalty of $2,200; (ii) In relation to the breach arising under s 129(1)(a) of the Act: the maximum penalty of $2,200; (iii) In relation to the twelve breaches arising under s 357 of the Act: a 'global civil penalty' of $30,000. 12 As earlier indicated, the appellants' applications for leave to appeal and, if granted, appeal, went directly to the penalties imposed. They were, it was said, manifestly harsh and excessive and did not reflect the mitigating facts and circumstances that had been put before her Honour which were, in large part, not disputed by the respondent. 13 At the commencement of the appeal proceedings proper, counsel for the defendant Yarramul sought leave to amend its appeal in that it no longer pressed its appeal against the defendant's conviction imposed by her Honour in relation to the offence arising under s 387(2) of the Act. In short, Yarramul's appeal in relation to the s 387(2) breach was pressed only with respect to the quantum of the penalty imposed. 14 Leave was granted to amend Yarramul's appeal with respect to that matter. Further, at the outset the respondent conceded, to the extent necessary, having regard to the Crimes (Appeal and Review) Act 2001, leave should be granted and conceded that her Honour's reasons for decision demonstrated appealable error and that the appeals should be upheld. Following our consideration of those submissions, the following orders were made with respect to both matters: (1) To the extent that leave to appeal is required, it is granted.

(3) The Full Bench will re-sentence the appellants after hearing further from the parties on that question, but noting their written submissions previously filed in that respect.

(4) The costs orders made by Magistrate O'Shane on 14 May 2007 remain unaltered.

(5) Each party shall pay its own costs of the appeals, which order shall extend to any costs associated with the re-sentencing procedures. 15 Having made the above orders, the Court proceeded to hear submissions as to re-sentencing. Award contraventions arising under s 357 of the Act 16 In relation to both appellants and the award breaches arising under s 357 of the Act, it is not disputed by the respondent that the basis for those breaches was that both appellants were paying their employees pursuant to the provisions of the Restaurants, &c., Employees (State) Award (the Restaurants Award) rather than the Club Employees (State) Award (the Club Award). Both appellants held the belief that the Restaurants Award was the correct award given that their respective restaurants were separate corporate entities from the Club in which they operated and they (the appellants) did not participate in any of the gaming or liquor activities of the Club. In short, both restaurants, whilst under the overall umbrella of the Club premises, were separate and distinct entities from the Club's general operations. 17 It was accepted at first instance by the respondent that the belief of both appellants as to the correct award was genuinely held and there was no intention on the part of either appellant to deliberately avoid the Club Award. It was only when the Inspector visited the Club and raised this issue with them that the question of the appropriate award came to light and hence the breaches arising under s 357. In other words, the breaches of the Award arising under s 357 relate, in the case of Yarramul, to six employees and, in relation to Mulwala, to three employees with respect to various award provision contraventions that apply in the Club Award rather than in the Restaurants Award. 18 When the appellants were first charged in relation to the s 357 breaches, they entered pleas of not guilty based on their respective belief that the correct award was the Restaurants Award. When subsequent legal advice confirmed the Club Award as the correct award, both appellants entered pleas of guilty. 19 We agree that breaches of industrial instruments are serious matters and, in that respect, we concur with the view expressed by Marks J in Transport Workers' Union v Carey's Warehousing & Distribution Pty Limited and others [2006] NSWIRComm 192 at [15] as follows: [15] The starting point for the assessment of an appropriate penalty is a consideration of the objective seriousness of the offences with which the defendants are charged. The prosecutor submitted, and I accept, that the failure to comply with the provisions of an industrial instrument is a serious matter. Industrial instruments are designed to provide for minimum rates of pay and working conditions for employees. They are established through mechanisms created by government and are intended to have, and do have, the force of law in terms of their application and the enforcement of duties and obligations imposed by them. [16] ...The underpayment of any wages will always be a serious matter, particularly from the perspective of an employee. 20 We would add, however, that the seriousness attaching to breaches of industrial instruments also relates to the important public purpose such instruments serve by the creation of an orderly system of employment regulation, including the establishment, by force of law, of minimum entitlements for employees (as assessed by the Industrial Relations Commission of New South Wales). We also observe in relation to the above matters, his Honour found that not only were the obligations in the relevant award clear and unambiguous, but there was 'evidence of a systematic refusal to pay overtime, for time worked on Saturdays at the rate provided for in the Award, being double time and annual leave loadings.' 21 There is no evidence in the matters before us that there was any systematic refusal to pay the employees concerned in any relevant respect. Without more than passing consideration to the distinction between the Club Award and the Restaurants Award, for the purposes of these proceedings we accept that the reliance on the Restaurants Award was done in good faith (although we note that this observation does not detract from the requirement for strict adherence to the terms of such instruments). 22 Marks J also considered breaches of industrial instruments in Transport Workers' Union of New South Wales v Contract Courier Services Pty Ltd [2007] NSWIRComm 152 and in particular at [20] when he said, in words that we would endorse: [20] I commence by observing that industrial instruments serve an important and integral part in the orderly regulation of relationships between employers and employees and principals and independent contractors. They have the force of law and sanctions are imposed for breach. ... 23 In endorsing his Honour's observations as to the importance of, and integral part, industrial instruments play in the relationship between employers and employees, we would also observe, in relation to the matters before us, there is no evidence, as was the case before his Honour, that 'the conduct of the defendant cannot be characterised as something that was unintended'. As earlier indicated, the breaches of the industrial instruments arising under s 357 of the Act arose as a result of an honest belief as to the relevant award applying. 24 Overall, in relation to the breaches arising under s 357 of the Act, we are of the view that, given the facts and circumstances, they are at the lower end of the scale of objective seriousness. 25 We also accept that in determining penalty with respect to the s 357 breaches, the principle of totality should be applied. All of the award breaches with respect to both appellants arise from the common element of the appellants' belief as to the award that applied to their respective businesses: See Pearce v The Queen (1998) 194 CLR 610 at [40] where it was stated: To the extent to which two offences of which an offender stands convicted contain common elements, it would be wrong to punish that offender twice for the commission of the elements that are common. Breach of s 387(2) of the Act 26 Turning now to the breach under s 387(2) of the Act with respect to the appellant Yarramul. 27 The provisions of s 387(2) of the Act provide as follows: A person must not, without lawful excuse, fail to comply with a requirement of an inspector under this Part. 28 It is relevant, in our view, that before her Honour, the prosecution accepted there was evidence there had been bona fide attempts made by the appellant Yarramul to comply with the Inspector's notice that they produce records and timesheets. 29 The factual background to this offence is that on 5 September 2005, a Notice was issued to Yarramul to produce records and timesheets by 27 September 2005. On 5 October 2005, an Infringement Notice was issued to Yarramul alleging a failure to produce the required documentation by the 27 September deadline. In fact, on 22 September 2005, the appellant sent the records that it had to the respondent's address at 1 Oxford Street, Darlinghurst which was the address printed on the letterhead attached to the Infringement Notice. This was acknowledged at first instance. 30 As events transpired, this address was the respondent's previous address. They currently have their premises in Bankstown. Against that background, Yarramul did make efforts to comply with the Notice issued by the deadline set. In saying that, counsel on behalf of Yarramul conceded that not all information requested was supplied in that Yarramul simply did not physically have all the records requested. Notwithstanding that, it was emphasised, the appellant did make genuine efforts to comply and did not blatantly disregard its obligations. 31 The respondent does not dispute there were bona fide attempts to comply and that the breach of s 387(2) was not a wilful and deliberate act by the appellant. Further, given the circumstances surrounding this breach, it was conceded it was at the lower end of the scale in terms of objective seriousness. We would agree.

Breaches of ss 123(1) and 129(1)(a) of the Act 32 Turning now to the offences in relation to Mulwala arising under ss 123(1) and 129(1)(a) of the Act. 33 In the first instance, s 123(1) of the Act provides: An employer must, when paying remuneration to an employee, supply the employee with such written particulars regarding the payment as are prescribed by the regulations. 34 Secondly, the provisions of s 129(1)(a) of the Act provides: An employer must ensure that the following daily records are kept in relation to employees of the employer: (a) records of remuneration paid and hours worked by the employees, and ... 35 Having regard to the above breaches, the respondent acknowledged that the background facts and circumstances concerning these breaches arose more from a degree of ignorance or inadvertence on the part of the appellant as to its obligations under the Award rather than a deliberate attempt to disregard its obligations as an employer. By and large, Mulwala has been run as a family business and, it was stated on behalf of the appellant, the breach of the above provisions were a result of a careless approach to record keeping and strict adherence to detail. The respondent does not allege anything to the contrary. 36 In so determining, we accept that the nature of the two offences, when taken together, are at the lower end of the scale of objective seriousness. In that respect, we accept the force of the submission made on behalf of the appellant Mulwala that it does make the imposition of the maximum penalty imposed by her Honour for each of the two breaches difficult to comprehend.

37 We further accept that the two breaches, when taken together, flowing as they do from the same course of conduct, should be dealt with in accordance with the principle of totality. Additional general considerations 38 We consider general deterrence is a relevant consideration in our re-sentencing. No submission was put to the contrary. 39 As to specific deterrence, it was accepted by the respondent that both appellants have now rectified the breaches in relation to the proper award applying and have put in place proper award compliance measures. Nonetheless, they continue to operate the restaurants in question. Accordingly, whilst specific deterrence may be a relevant consideration, we accept it is of overall moderate weight in the determination of our penalty. 40 There are additional subjective considerations to which no issue is taken and, in part, have already been alluded to. 41 Neither appellant has any prior convictions in relation to the operations of their respective restaurant businesses. Both are, relatively speaking, small businesses. While both operate their businesses year round, the bulk of their profits are generated in the summer months when the Club's water skiing activities are at their peak. As well, the breaches that have been identified were over a closed period of some three months. 42 Having regard to all of the above, we are of the view that the penalties imposed by her Honour were, in all the circumstances, too severe and ought to be varied. Accordingly, in addition to the orders earlier made, we make the following additional orders as to penalty: 43 In Matter No IRC 913 of 2007: Yarramul Pty Limited t/as La Porchetta Mulwala v Office of Industrial Relations: (i) In relation to the breach arising under s 387(2) of the Act we vary the penalty imposed by her Honour at first instance to a penalty of $750. (ii) In relation to the breaches arising under s 357 of the Act, and applying the principle of totality, we vary the penalty imposed by her Honour at first instance to $6,000. 44 In Matter No IRC 914 of 2007: Mulwala Golden Inn Restaurant Pty Limited v Office of Industrial Relations: (i) In relation to the breaches arising under ss 123(1) and 129(1)(a) of the Act, and applying the principle of totality, we vary the penalty imposed by her Honour at first instance to $1,200. (ii) In relation to the twelve breaches arising under s 357 of the Act, and applying the principle of totality, we vary the penalty imposed by her Honour at first instance to $3,500. 45 The above orders as to penalty are to be read in conjunction with the orders earlier identified in this judgment in para [14] above.

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