2023 WAIRC 00867
WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT


CITATION : 2023 WAIRC 00867

CORAM : INDUSTRIAL MAGISTRATE T. KUCERA

HEARD : TUESDAY, 29 AUGUST 2023

DELIVERED : MONDAY, 6 NOVEMBER 2023

FILE NO. : M 22 OF 2022

BETWEEN : WESTERN AUSTRALIAN PRISON OFFICERS' UNION OF WORKERS
CLAIMANT

AND

MINISTER FOR CORRECTIVE SERVICES
RESPONDENT

CatchWords : INDUSTRIAL LAW – Claim for Personal (sick) leave – Enforcement of State industrial instrument – Whether caution or pecuniary penalty should issue – Discretion to impose a caution – Role of a caution – Consideration of appropriateness of caution – Effect of caution in the context of increased pecuniary penalties – Caution issued
Legislation : Industrial Relations Act 1979 (WA)
Industrial Relations Legislation Amendment Act 2012 (WA)
Fair Work Act 2009 (Cth)
Instrument : Department of Justice Prison Officers Industrial Agreement 2020

Case(s) referred
to in reasons: : Janine Marie Callan v Garth Douglas Smith [2021] WAIRC 00216
Trade Practices Commission v CSR Limited [1990] FCA 762
Commissioner of Police v Brian John McCormack [2018] WAIRC 00809
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
BKH Contractors Case (No. 2) [2018] FCA 1563
ABCC v Pattison [2022] HCA 13
United Voice WA v Director General – Department of Education [2012] WAIRC 00778
Result : Caution issued
REPRESENTATION:

Claimant : Mr D. Stojanoski (of counsel) as instructed by Slater & Gordon
Respondent/s : Mr R. Andretich (of counsel) as instructed by the State Solicitor’s Office

REASONS FOR DECISION
1 On 17 July 2023, I ruled the employing entity, the Minister for Corrective Services (respondent) breached cl 71.1 of the Department of Justice Prison Officers Industrial Agreement 2020 (Agreement) when it refused to approve an application that one of its employees, Neal Paterson (Paterson), made for three (3) days personal (sick) leave.
2 After issuing my reasons for decision (decision), I directed the parties to each file an outline of submissions on penalty. On 29 August 2023, I also convened a further hearing to give the parties an opportunity to make any additional oral submissions on this question.
3 One of the matters I asked the parties to give particular attention to was whether this was an appropriate case in which a caution should issue.
4 For the following reasons, I have determined that a caution, having regard to, the particular circumstances of this case, is an appropriate disposition.
Claimant’s Submissions
5 The claimant in both its Submissions on Penalty and the oral argument its counsel made during the further hearing, submitted the Court should impose a pecuniary penalty under s 83 of the Industrial Relations Act 1979 (WA) (IR Act). The crux of the claimant’s argument was that the Court should impose a fine because without it, the Department will not consider the gravity of its conduct. Claimant’s Submissions on Penalty (Claimant’s Outline) paragraph 3, also see Hearing Transcript 29 August 2023. (Transcript) page 3.

6 Counsel for the claimant argued a caution or any lesser penalty would simply not go far enough and would lack the desired and required deterrence effect. It was submitted that the Court would not be able to frame a caution strong enough to change the respondent’s contravening behaviour. Transcript page 3.

7 On the claimant’s submission, a caution would be appropriate in circumstances where a contravention involves an inadvertent error or ignorance of the law. The claimant argued this was not such a case as the act of refusing Paterson’s personal (sick) leave was both deliberate and unreasonable. Transcript page 5.

8 The claimant submitted, that because the contravention was intentional and senior officers were involved, the respondent’s conduct fell under the category of a serious breach for which a fine would be the only penalty strong enough to act as a deterrent. Claimant’s Outline paragraph 23.

Department’s Submissions
9 The respondent in both its Submissions on Penalty and by the oral submissions its counsel made, argued against the imposition of a pecuniary penalty. Counsel for the respondent submitted there was no finding that it had, through its employees, acted with either an intention to deny Paterson his personal (sick) leave or acted in the knowledge, that its conduct would be in breach of the provisions of cl 71.1 of the Agreement. Respondent’s Submissions on Penalty (Respondent’s Outline) paragraph 8.

10 Rather, the findings against the respondent were that the discretionary process under which the decision to refuse Paterson’s application for personal (sick) leave was made, miscarried. The respondent argued its discretion miscarried because its officers did not take relevant considerations into account, some of which were peculiar to Paterson. Respondent’s Outline paragraph 8.

11 The respondent submitted that it had acted upon an incorrect interpretation of the relevant provisions of the Agreement and that the construction of cl 71 (Accessing Personal Leave) had not been previously considered by either the Court or the Western Australian Industrial Relations Commission (Commission). Counsel for the respondent contended the words used in cl 71 were arguably open to more than one interpretation. Respondent’s Outline paragraphs 8 and 9.

12 Having now had this matter determined by the Court, counsel for the respondent argued the decision will inform the respondent’s future management of personal leave applications, including by revising internal documents to reflect the decision. Respondent’s Outline paragraphs 10 and 13.

13 The respondent submitted that a history of similar, or other contraventions, that would support the imposition of the maximum financial penalty under the IR Act or anything greater than a caution, was not before the Court. Transcript page 17.

14 The respondent submitted that no finding beyond a caution is required by way of deterrence, because the breach was:
a. an isolated incident concerning one employee;
b. confined to one application for personal (sick) leave of three days duration;
c. the result of a misinterpretation of the relevant provisions of the Agreement and the decision making process miscarrying, rather than the result of an intention to flout a known obligation arising from the Agreement; and
d. the respondent has acknowledged the breach and will implement measures to inform the decision making process for staff charged with administering the leave management system, so the breach is not repeated. Respondent’s Outline paragraph 14.

Orders for Breach of Industrial Agreements
15 The orders the Court could make for a breach of an industrial agreement under s 83(4) of the IR Act, at the time the respondent committed the contravention, were as follows:
(4) On the hearing of an application under subsection (1) the industrial magistrate’s court may, by order –
(a) if the contravention or failure to comply is proved –
(i) issue a caution; or
(ii) impose such penalty as the industrial magistrate’s court thinks just but not exceeding $2 000 in the case of an employer, organisation or association and $500 in any other case;
or
(b) dismiss the application.
16 On 1 July 2022, s 83 was amended, increasing the maximum pecuniary penalty for a breach of an industrial agreement in the case of a body corporate (which would include a government department), to a fine of $65,000. For cases involving a serious contravention by a body corporate, a maximum pecuniary penalty of $650,000 was introduced. Industrial Relations Legislation Amendment Act 2021 proclaimed on 20 June 2022.

17 In addition to the increased pecuniary penalties under the IR Act, a Full Bench of the Commission in Janine Marie Callan v Garth Douglas Smith [2021] WAIRC 00216 (Callan v Smith) found that when imposing penalties, the Court may impose a separate penalty for each breach, where multiple contraventions are committed, as part of a single course of conduct.
18 As result of the interaction of the decision in Callan v Smith and the increased penalties under s 83 of the IR Act, the capacity of the Court to impose large fines on employers where they are found to have contravened the terms of industrial agreements has been significantly bolstered.
19 Notwithstanding the increase in penalties, the Court has retained its discretion under s 83 of the IR Act, to issue a caution, in appropriate cases.
Role of a Caution
20 The primary purpose of pecuniary penalties under a statute such as the IR Act, is to secure compliance with the provisions of the statutory regime. French J in Trade Practices Commission v CSR Limited [1990] FCA 762, which was cited with approval in Callan v Smith at [30].

21 A “caution” in the Macquarie Concise Dictionary is defined as a “warning”. Although it is included as a potential outcome where enforcement proceedings under s 83 of the IR Act for a contravention of an industrial instrument are proven, a caution is not a penalty. Commissioner of Police v Brian John McCormack [2018] WAIRC 00809: Matthews C at [95].

22 It appears a caution has been included in s 83(4) of the IR Act as an alternative to a pecuniary penalty.
23 If the Western Australian Parliament (Parliament) had concluded there was no role for cautions in securing compliance and that this could only be achieved by issuing fines, it is reasonable to conclude the power to impose a caution in appropriate cases would have been removed during the recent amendments to s 83.
24 The retention of this power under s 83, suggests the Parliament accepted that compliance with the IR Act and industrial instruments, in appropriate cases, could be secured with the issuance of a caution.
Determining the orders to be made
25 Having noted the primary purpose of pecuniary penalties is to secure compliance with the provisions of a statutory regime, the issue the Court is required to turn its mind to when deciding what orders to make under s 83, is whether an appropriately crafted warning, would, instead of a pecuniary penalty, have the effect of deterring a contravener from engaging in the same or similar conduct.
26 In Callan v Smith, the Full Bench observed that when determining a penalty, the Court is required to have regard to a non-exhaustive range of considerations to decide whether particular conduct calls for the imposition of a penalty, and if it does, the amount of a penalty. Callan v Smith at [90].

27 In Callan v Smith at [90] the following considerations were set out, which include but are not limited to:
(a) the nature and extent of the conduct which led to the breaches;
(b) the circumstances in which that conduct took place;
(c) the nature and extent of any loss or damage sustained, as a result of the breaches;
(d) whether there had been similar previous conduct by the respondent;
(e) whether the breaches are properly distinct or arose out of the one course of conduct;
(f) the size of the business enterprise involved;
(g) whether or not the breaches were deliberate;
(h) whether senior management was involved in the breaches;
(i) whether the party committing the breach had exhibited contrition;
(j) whether the party committing the breach had taken corrective action;
(k) whether the party committing the breach had cooperated with the enforcement authorities;
(l) the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
(m) the need for specific and general deterrence.
28 Citing the decision in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 the Full Bench in Callan v Smith at [91] observed that the task of the court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations.
29 A further consideration is the maximum penalty identified in the statute for the contravention. As Flick J stated in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563 at [19]:
In undertaking the task of assessing and quantifying the penalties to be imposed, the maximum penalty prescribed by the Commonwealth legislature for a specific contravention serves as a “yardstick” against which the assessment of penalties is generally to proceed.
30 The factors which inform an assessment of a civil penalty with an appropriate deterrent value were similarly described by the High Court in ABCC v Pattison [2022] HCA 13 (Pattison) at [18]. The considerations described were consistent with and much the same those set out in Callan v Smith.
31 The High Court in Pattison noted the list of considerations when determining penalty is not a rigid catalogue of matters for attention. Relevantly at [19] the majority concluded:
It is important, however, not to regard the list of possible relevant considerations as a “rigid catalogue of matters for attention” as if it were a legal checklist. The court’s task remains to determine what is an “appropriate” penalty in the circumstances of the particular case.
32 These considerations outlined are also relevant to whether a caution should be ordered instead of a pecuniary penalty. United Voice WA v Director General – Department of Education 2012 WAIRC 00778 at [5].

Callan v Smith and Pattison are Different Cases
33 Before addressing the considerations relevant to whether a caution would be a more appropriate disposition instead of a pecuniary penalty, it is worthwhile noting the cases in Callan v Smith and Pattison involve very different factual scenarios to the present case.
34 Pattison dealt with the imposition of pecuniary penalties against the Construction, Forestry, Mining, Maritime and Energy Union (CFMMEU) and one of its delegates for contraventions of the Fair Work Act 2009 (FW Act). The CFMMEU had previously engaged in conduct in defiance of the FW Act and was regarded by the Court as a repeat offender. As a result, the potential for a non-pecuniary outcome when applying the various factors was not considered by the Court.
35 Callan v Smith involved a matter where although the employer respondent had not previously been involved in contravening behaviour, it had engaged in multiple contraventions (282) over a long period of time. The level of the underpayment and the nature of the contraventions were also serious and intentional.
36 Also different is that Callan v Smith and Pattison, both involved enforcement proceedings that were pursued by statutory regulators. The present case is different in that the participants in the proceedings are also parties to the industrial instrument the claimant is seeking to enforce.
37 In this matter I have concluded there was utility in the Court interpreting the agreement, particularly where the terms of the industrial instrument have not been previously considered by either the Court or the Commission.
Consideration
Nature and Extent of Conduct and the Circumstances in which it Occurred
38 The present case involved one contravention, which counsel for the respondent said, has since been rectified. To this end, counsel for the respondent submitted that Paterson’s personal and annual leave balances have been adjusted to show he took paid personal (sick) leave on 13 October 2021 and that he has been recredited the three days annual leave he used on these dates.
39 Counsel for the respondent submitted the respondent did not have a record of any prior relevant contraventions. The claimant did not take issue with this submission and on this basis, I accept the breach should be regarded as the first of its type by the respondent.
40 Although I accept both the claimant and Paterson were until this matter was decided, inconvenienced by the respondent’s decision to refuse Paterson’s personal (sick) leave application, having regard to the particular circumstances of this case, the contravention involved a single breach that falls at the lower end of the range of contravening behaviour.
Nature and Extent of any Loss or Damage Sustained
41 Initially, Mr Paterson suffered no immediate financial loss as he was able to use accrued annual leave to cover for his days off. The determination of this matter in his favour has meant that he has been put back into the position he would have been in if his sick leave had been approved. In other words, I have formed the view the impact of the breach on Paterson in this case was limited.
42 I acknowledge the claimant, who has brought these enforcement proceedings on Paterson’s behalf would have incurred significant legal costs in pursuing these proceedings, however these costs are not recoverable under s 83 of the IR Act.
43 In the circumstances of this case, the costs the claimant has outlaid are however more appropriately dealt with when weighing up the respondent’s corrective action, contrition and cooperation.
Scale and Size of the Business
44 The respondent properly described, is a large government department. When deciding what orders to make under s 83(4) of the IR Act, this consideration is weighed up for two reasons.
45 Firstly, and as counsel for the claimant in effect submitted, where a respondent is a large and well-resourced government department, it is reasonable to expect it could have done more to prevent a contravention and so, a pecuniary penalty rather than a caution would be a more appropriate disposition.
46 Secondly, the scale and size of the business is relevant for the purposes of setting a fine to a level to deter future contravening conduct. According to this logic, the bigger the size and scale of the business the greater the fine needs to be to deter future contravening conduct.
47 In this case, the maximum penalty that would apply is a $2000 fine. It is so low, that even if it was to be imposed, the potential deterrent effect is questionable, a point to which I will return.
48 Whilst there is no doubt from the documents that were submitted in evidence, there were more people involved this matter than just Superintendent Sinclair who made the initial decision to refuse Paterson’s application for personal (sick) leave, including Deputy Commissioner Brampton, this matter very much needs to be viewed in the context of the specific circumstances that applied when the contravention occurred.
49 These circumstances included facts that were particular to Paterson as well as limits on the availability of and access to medical practitioners, during the COVID-19 Pandemic. Decision, at [146] – [149] and [169].

Financial Position of the Respondent
50 The financial position of the respondent in this case, as in most cases does not carry any great weight in the assessment of an appropriate disposition.
51 However, as a well-resourced employer, the respondent will at the very least, have the means to ensure the findings in this matter that are relevant to how decisions on applications for personal (sick) leave are to be considered into the future are adopted and applied.
52 In this regard I accept almost as an undertaking the submission from the respondent’s counsel, that the decision will inform the respondent’s future management of personal leave applications, including by revising the respondent’s internal documents regarding applications for personal (sick) leave.
Deliberateness of the Contravention
53 Counsel for the claimant argued the conduct in this matter should be viewed as deliberate and intentional, citing the involvement of senior officers and the issuance of information and guidance notes regarding evidence required for personal (sick) leave applications.
54 Counsel went as far as to suggest the respondent was “gaming the system” and that it had made up its own reading of cl 71 of the Agreement. Transcript at page 5.
In other words, counsel for the claimant tried to place the respondent’s conduct into the category of conduct to which the maximum penalty should apply.
55 He also argued the respondent had acted unreasonably because it had continued to refuse Paterson’s personal (sick) leave application, even though on the evidence, the respondent did not dispute he was sick. Transcript at page 6.

56 The difficulty with these submissions is that ultimately the respondent’s refusal to approve Paterson’s application for personal leave is because a discretion was not exercised correctly. The resolution of the matter also required me to interpret the Agreement in respect of which there were competing arguments as to the construction of cl 71 that needed to be resolved.
57 Whilst I accept the respondent demonstrated a level of inflexibility when it was challenged by the claimant on its interpretation of cl 71 and its decision to refuse Paterson’s application for personal (sick) leave, in this instance, the conduct was not enough to tip this matter into the category of an “egregious” or a serious breach of the type for which a pecuniary penalties have been imposed. Contrast with Callan v Smith or United Voice WA v Director General – Department of Education 2012 WAIRC 00778.

Corrective Action, Contrition and Co-operation
58 In relation to co-operation, this is not a case where the contravention was admitted at an early stage, thereby saving the parties and the Court the costs of a contested hearing. The case did however proceed efficiently to the extent that much of the material evidence upon which the matter had to be decided was agreed or not disputed.
59 In relation to contrition and corrective action, counsel for the respondent has advised the Court of the measures it has adopted to ensure a contravention of this type is not repeated and the steps it has taken to correct Paterson’s leave balances. This is a factor, in mitigation, that I have viewed in the respondent’s favour.
60 As indicated previously, I accept this was a costly exercise for the claimant, which could have been avoided if the respondent had been more circumspect in its review of Paterson’s personal (sick) leave application. However, on this occasion, this must be balanced against the benefit to the parties in having access to a forum to resolve disputes over the correct construction of the industrial agreement.
61 The result in this matter is also very much confined to its own facts and to the circumstances in this particular case. This is not to say that I have viewed this contravention lightly. Rather the breach, on this occasion, falls just short of the threshold to warrant the imposition of a fine.
62 In future, the danger to the respondent in adopting an approach to the construction of the agreement that fails to take heed of the decision in this case, particularly in the face of increased penalties under s 83 of the IR Act, is the Court may be more inclined to impose a pecuniary penalty where a contravention is proved.
Specific and General Deterrence
63 Counsel for the claimant argued an order for a caution should not issue because it would have little deterrent effect. He submitted there were two reasons for this.
64 Firstly, the claimant’s counsel submitted a caution would be viewed as a “slap on the wrist”. Transcript page 3.
Secondly, counsel for the claimant submitted there needs to be a “sting” which only a pecuniary penalty can provide. Transcript at page 9.

65 Whilst I agree this analysis will be applicable in many cases involving breaches of industrial instruments, in this matter, I have reached a different conclusion.
66 Dealing firstly with specific deterrence, it is my view there will be a “sting” if a caution is issued in this matter because the respondent is accountable to Parliament. The potential public embarrassment that attaches to parliamentary scrutiny, where a warning is issued against engaging in contravening conduct, is a consequence that should not be understated.
67 In relation to general deterrence and as I have already indicated, the maximum penalty of $2000 that would apply is so low, that even if it was to be imposed, it is unlikely the potential deterrent effect, particularly given the respondent’s size and the resources at its disposal, would be felt.
68 While a comparatively small pecuniary penalty for a breach does not provide a reason against the imposition of a fine, if in the circumstances of a particular case, the conduct is such (as in this case) that issuing a caution is justified and compliance can be secured instead of imposing a penalty, it is reasonable and proportionate for one to issue.
69 The risk to the respondent, upon the issuance of a caution, is that any future contraventions of this type, are likely to attract the increased pecuniary penalties that now apply under the IR Act.
70 When imposing a penalty in any future matters involving the same respondent, the Court will be able to have regard to previous proven contraventions and any failure to take heed of a caution.
71 In those circumstances, the Court will be hard pressed not to order a significant fine, where, despite the issuance of a warning by way of a formal caution, the same respondent engages in further contravening conduct.
Conclusion
72 For all of the reasons outlined in the preceding paragraphs, I have determined that a caution is the most appropriate disposition in this case. Accordingly, an order imposing a caution will now issue.



T. KUCERA
INDUSTRIAL MAGISTRATE