INDUSTRIAL MAGISTRATES COURT OF WESTERN AUSTRALIA

CITATION : 2023 WAIRC 00976

CORAM : INDUSTRIAL MAGISTRATE R. COSENTINO     

HEARD : WEDNESDAY, 6 DECEMBER 2023     

DELIVERED : WEDNESDAY, 6 DECEMBER 2023     

FILE NO. : M 101 OF 2022     

BETWEEN : CONSTRUCTION, FORESTRY AND MARITIME EMPLOYEES UNION

CLAIMANT

AND

Qube Ports Pty Ltd (ABN: 46 123 021 492)

RESPONDENT

CatchWords : INDUSTRIAL LAW – Fair Work Act – Admitted contraventions – Unexplained underpayment – Penalty – Specific Deterrence

Legislation : Fair Work Act 2009 (Cth)

Instrument : Qube Ports Pty Ltd Port of Dampier Enterprise Agreement 2020 [2021] FWCA 5128

Case(s) referred

to in reasons: : Australian Manufacturing Workers' Union v United Lift Services Pty Ltd (No 2) [2023] FedCFamC2G 614

Australian Building and Construction Commissioner v Pattinson [2022] HCA 13

Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301

Mason v Harrington Corporation Pty Ltd [2007] FMCA 7

Rocky Holdings Pty Limited v Fair Work Ombudsman [2014] FCAFC 62

Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832

Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557

Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39

Milardovic v Vemco Service Pty Ltd (No 2) [2016] FCA 244

Result : Penalty determined

Representation:

Claimant : Mr L Edmonds (of counsel) and Ms S Sayed (of counsel) on behalf of the Construction, Forestry and Maritime Employees Union

Respondent : Ms H Millar (of counsel) instructed by KHQ Lawyers

REASONS FOR DECISION

(This decision was delivered extemporaneously on 6 December 2023 and has been edited from the transcript to correct matters of grammar, add headings and include complete citations.)

1         The claimant has brought these proceedings in respect of alleged contraventions of section 50 and section 323 of the Fair Work Act 2009 (Cth) by the respondent's failure to make a payment to its member in accordance with an enterprise agreement that applied to the respondent and that member.

2         The respondent has admitted it contravened section 50 and section 323 of the Act by failing to make the payment to the employee. It has rectified the admitted underpayment.

3         The claimant is seeking:

• a declaration under section 545 of the Act that the respondent has breached section 50 and section 323; and
• penalties imposed in respect of each contravention.

Jurisdiction

4         An employee organisation may apply to an eligible State or Territory Court for orders regarding a contravention of the civil penalty provisions identified in section 539(2) of the Act. The claimant is an employee organisation, and the Industrial Magistrates Court (IMC), being a Court constituted by an industrial magistrate, is ‘an eligible State or Territory court’: s 12; Industrial Relations Act 1979 (WA) ss81, 81B.

5         The application to the IMC must be made within six years after the day on which the contravention of the civil penalty provision occurred: s544.

6         The civil penalty provisions identified in section 539 of the Act include:

• section 50: contravening an enterprise agreement; and
• section 323: failing to make payments in full.

7       The IMC is therefore invested with jurisdiction to determine the relief sought by the claimant.

Approach to penalties under the Fair Work Act

8         The approach that the Court must follow in exercising its discretion in relation to penalty was usefully summarised by Judge Humphreys in Australian Manufacturing Workers' Union v United Lift Services Pty Ltd (No 2) [2023] FedCFamC2G 614 at [51]-[56] citing Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301 and Mason v Harrington Corporation Pty Ltd [2007] FMCA 7. I incorporate his Honour's summary in these reasons.

9         The determination of the appropriate penalty is a matter of instinctive synthesis rather than the application of a rigid catalogue of factors. The ultimate purpose is to promote the public interest in compliance with the Act’s civil penalty provisions by way of general and specific deterrence. An appropriate penalty strikes a reasonable balance between deterrence and oppressive severity.

10      The maximum penalty with respect to a contravention of each of section 50 and section 323 is 300 penalty units, given the respondent is a body corporate. The rate of penalty unit applicable at the date of the contravening conduct, which was 2 June 2022, was $222, making a maximum penalty of $66,600 for each contravention.

11      The fixing of a pecuniary penalty for multiple contraventions is subject to section 557 of the Act. The effect of subsection 557(1) is that two or more contraventions of a civil remedy provision listed in section 557 are taken to constitute a single contravention if they are committed by the same person and arose out of a course of conduct by that person.

12      Subject to proof of a ‘course of conduct,’ the section applies to contravening conduct that results in multiple contraventions of a single penalty provision, whether by reason of the same conduct done on multiple occasions or conduct done once with respect to multiple employees: Rocky Holdings Pty Limited v Fair Work Ombudsman [2014] FCAFC 62; and Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832 at [22].

13      The section does not apply to cases where the contravening conduct results in the contravention of multiple civil penalty provisions, as is the present case: Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 per Katzmann J at [411] and following.

14      In addition to the statutory course of conduct provision, the common law allows the grouping of contraventions that contain common elements or are overlapping to avoid the possibility of a respondent being penalised twice for the same conduct.

Facts relevant to determining penalty

15      The relevant facts about what conduct constitutes the contraventions and the events following the contraventions are uncontroversial. The evidence in this regard is contained in an Agreed Statement of Facts and Exhibit 1, Witness Statement of Joel O'Brien and organiser on behalf of the claimant; and Exhibit 2, Witness Statement of Phil Chandler on behalf of the respondent. Both of these witness' evidence-in-chief was tendered without cross-examination. The witness statements included relevant documents, including emails between Mr O'Brien and Mr Chandler, Mr Chandler and Dan Ortiz, General Manager, Industrial Relations, and Mr Chandler and Penny Robertson, the member in question.

16      The Qube Ports Proprietary Limited Port of Dampier Enterprise Agreement 2020 is an enterprise agreement made and approved under part 2-4 of the Act.

17      Clause 9.7.4 of the Enterprise Agreement provides

Minimum Guarantee

1. GWEs will have a fortnightly guarantee payment equal to 28 ordinary hours payment at the weekly rate for a Grade 2 Employee specified in clause 11 of this Agreement.

18      Separately, in part B clause 16 of the Enterprise Agreement, there is a provision for a North West allowance. The clause itself explains that it is ‘intended to address reasonable remote living expenses incurred in Karratha, Dampier, Port Hedland or South Hedland.’

19      It says that it is not an adjunct to salary and shall not be regarded as income.

20      Between 16 May 2022 and 2 June 2022 Ms Robertson was:

• a member of the claimant in accordance with its Rules;
• employed by the respondent to perform work that was covered by the Enterprise Agreement; and
• a Guaranteed Wage Employee (GWE), which the Enterprise Agreement defines as an employee irregularly engaged to work, and who is guaranteed a minimum payment in accordance with clause 9.7 of the Enterprise Agreement.

21      On 2 June 2022 the respondent made a payment to Ms Robertson in respect of work performed in the fortnightly pay period between 16 May 2022 and 29 May 2022. The amount of that payment was $779.76 plus the North West allowance of $271.56. The amount paid for work performed, that is the $779 component, was $159.25 less than the minimum fortnightly payment of $939.01 provided for in clause 9.7.4.

22      On 19 August 2022 the claimant notified the respondent in writing of two alleged breaches of the Enterprise Agreement, including, relevantly that Ms Robertson was not paid the GWE guarantee in full for the period 16 May 2022 to 29 May 2022. The email was said to constitute step 1 of the dispute procedure.

23      On 26 August, Mr Chandler wrote to Ms Robertson, copying in Mr O'Brien. He represented to Ms Robertson that he had ‘investigated’ - and committed to having the difference rectified in the next pay cycle. The email contained an apology.

24      This claim was lodged on 30 August 2022, which happened to be the same day the respondent made a payment to Ms Robertson of the $159.25 underpayment amount.

25      Initially, when the respondent filed its response to the claim on 28 September 2022, it wholly denied the claim and expressly denied that it had breached the Enterprise Agreement or the Act. However, liability was admitted by the Amended Response filed several months later on 4 April 2023.

Two Separate Contraventions?

26      Section 557(1) of the Act does not apply. The two contraventions alleged in this case are of different provisions of the Act which involve different elements.

27      Neither party addressed the question of how the two contraventions should be treated for the purpose of determining penalty in their written submissions filed prior to today. Nevertheless, it is undoubtedly true that the two separate contraventions arise out of substantially the same facts and where there is an interrelationship between the legal and factual elements of both contraventions.

28      It is therefore appropriate to treat the two contraventions as a single course of conduct or one transaction under common law principles to ensure the respondent is not punished twice for what is essentially the same culpability.

29      That the two contraventions qualify as a single course of conduct simply means that the one transaction principle can be used to guide the Court's discretion as an aspect of proportionality: Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39 per Middleton and Gordon JJ at [41].

30      I accept in this case the penalties ought to be calibrated as though there is one single breach.

The nature and extent of the conduct which led to the breaches

25      The contraventions involve a one off, isolated instance of an underpayment. Having said that, the underpayment to Ms Robertson was not in an insignificant amount: $159.25 is about 17 per cent of the guaranteed wage that Ms Robertson ought to have been paid for the fortnight in question. It wasn’t dollars and cents.

26      The respondent submits that the evidence shows the conduct was not deliberate and that the underpayment arose accidentally. I do not accept that this is what the evidence shows. No proper explanation is given at all in the evidence as to how the underpayment arose. All the evidence shows is that the respondent sought to characterise the underpayment as accidental, and that once the breach was raised as a dispute, it knew it had no legitimate basis to have done what it did. The description of the conduct as accidental is convenient, but it is not established as a true description.

27      The respondent also submits that the evidence shows the underpayment arose out of mistaken understanding of Ms Robertson’s GWE income guarantee. Again, I believe this summary of the evidence is inaccurate. Mr Chandler did not determine for himself the cause of the underpayment. Instead, he appears to rely on what he was told by Qube's industrial relations team. He said that he contacted them by telephone to notify them of the dispute and seek ‘advice as to the next steps.’

28      The advice as to next steps came in the form of an email from Mr Ortiz, which is attached to Exhibit 2 as annexure PC 2. Mr Chandler's statement suggests that the matter was investigated by Mr Ortiz, but this is not what Mr Ortiz's email says. There is no evidence of any investigation occurring. Indeed no one appears to ask about or discuss how the contravention occurred. Rather, Mr Ortiz's email says:

Hi Phil

As discussed with MK yesterday.

Let’s not let this one get to dispute, let’s fix it.

We know moving forward, a Suppo won’t get allocated over a GWE – because we have none.

MK and I were both in agreeance that NWA cannot be classified towards the guarantee because the

EA has the clause reading adjunct

definition of adjunct - something joined or added to another thing but not essentially a part of it.

Advising Joel it was purely accidental and mitigations we have in place and that it has been rectified

will hopefully make it go away.

Thanks

Dan (original emphasis)

29      The respondent submits it can be inferred from this email that the errors had occurred in rostering, leading to the underpayment. I'm unwilling to accept that inference when others are available and more probable. In particular, as the email addresses the dispute raised by Mr O'Brien, which had two components, it is more probable Mr Ortiz is addressing the first component, not the underpayment.

30      All that can be said based on the evidence before the Court is that neither Mr Ortiz nor ‘MK’ believed that Ms Robertson has been paid her entitlements under the Enterprise Agreement. The advice Mr Ortiz gave Mr Chandler was to tell the claimant that it was purely accidental, that mitigations are in place, and that it has been rectified in the hope that ‘it’ will go away.

31      Given the terms of clause 9.7.4 and the nature of the underpayment, it is difficult to understand how the underpayment could be purely accidental in the sense of there being no deliberate act, omission or conduct bringing it about. I'm not willing to treat the conduct as being accidental or not deliberate for the purpose of determining penalty or for characterising the contravention.

Whether there has been similar previous conduct by the respondent

32      The claimant's witness refers to other instances where he has raised alleged contraventions with Qube. In particular, he refers to two matters, which are the subject of separate claims currently before the IMC. The respondent fairly takes issue with any weight being placed on this evidence on the grounds of relevance. I note that nothing is said in the claimant's written submissions in reliance upon the evidence, and the claimant today said the reliance on this conduct was not pressed ‘that heavily’.

33      I was told the other IMC matters have not resulted in any findings of contraventions. They should not factor in the determination of penalty. Ultimately, the union has not made good a basis for reliance on the evidence by reference to establishing there were, in fact, breaches, or that breaches had been admitted, or that those breaches were similar in nature to the ones the Court is dealing with today.

Size of the business enterprise involved

34      The respondent's business is a significant stevedoring business with a centralised payroll department and over 8,000 employees.

Whether the party committing the breach has exhibited contrition

35      An apology was given by Mr Chandler to Ms Robertson in his email to her, and copied to Mr O'Brien, on 26 August 2022. The respondent relies on this apology as a demonstration of the respondent's contrition.

36      Giving an apology is not always the same as showing contrition.

37      In this case, the apology was accompanied by a fair bit of spin. For instance, Mr Chandler says he has ‘investigated.’ This suggests he made some attempt to look into the facts and uncover what went wrong, but he did not do that at all. Rather, he sought advice and acted on advice.

38      The other spin is that the underpayment was purely an accidental oversight. This is just what he was told to say, not what he knew was true.

39      Finally, the suggestion that moving forward, supplementary employees being rostered ahead of GWEs should not occur again and:

I will be more vigilant of this in future -

- was only part of the truth.

40      The full truth was that there was no supplementary employees, so the respondent did not expect the issue to arise again by virtue of that fact, not because it was planning to change anything or act in a more vigilant manner.

41      In this light, I do not treat the apology as a show of contrition. It was plain to Mr Chandler that the underpayment had to be rectified, and it was in the respondent's interest to do that with little effort by it.

42      The respondent says that it admitted the contravention in this matter at the earliest possible opportunity. However, as I have noted, it originally denied the claims in their entirety and only admitted the contraventions on an Amended Response filed after steps had been taken in the proceedings.

Whether the party committing the breach has taken corrective action

43      The respondent has taken some corrective action. Specifically, it made the payment of the amount of $159.25 to Ms Robertson. It did so promptly after the claimant raised the matter with it. This was not difficult for it to do. It is a large, well-resourced corporation, and the sum it had to pay is an insignificant amount to it. Given it was obvious to it that Ms Robertson had an entitlement to this amount, it had little choice but to make the payment.

44      The respondent also relies on Mr Chandler's assurance that he would be more vigilant in future, and that Mr Ortiz states in an email that going forward Qube will know how to avoid the error which led to the underpayment. It says this shows it took the underpayment seriously and is committed to ensuring it does not occur again.

45      I do wonder how this can be the case when the evidence does not demonstrate that Mr Chandler knows why the error occurred. He does suggest that it was as a result of counting the North West allowance towards the guaranteed amount, but that's not what Mr Ortiz's email says to him, and there is no other source of this belief so that he could genuinely have held it.

46      Mr Ortiz's email says, rather, that the North West allowance cannot be classified towards the guarantee. He does not expressly offer this as an explanation for how the underpayment occurred. It is equally possible he is simply discounting the possibility of there being a defence to the underpayment claim or a legitimate reason to resist making a payment to Ms Robertson. Again, the respondent's submissions elevate the value of the evidence before the Court to a level beyond what is warranted.

47      The way I would characterise the evidence is that it shows a lack of any effort by the respondent to get to the bottom of what went wrong, and rather a focus by the respondent on getting rid of the problem quickly or making it go away with as little effort as possible. This is apparent from the lack of an explanation of how the underpayment came about as well as the lack of any evidence of real steps that had been taken to ensure it does not occur as opposed to mere rhetoric.

48      In short, I'm not persuaded Qube has taken the matter of its contraventions seriously.

The need for specific and general deterrence

49      It is probably obvious from what I have said immediately preceding that I consider there is a need for specific deterrence in this matter.

50      In taking into account the factors to which I have referred, and my conclusion that specific deterrence should be the primary purpose of the penalty, I have concluded that in all the circumstances, a moderate penalty of $11,300 is proportionate to the contravening conduct, and sufficiently serves as a specific deterrent without being oppressive.

51      I arrive at this amount as follows:

a)        a penalty of 20 per cent of the maximum, or $13,320 is appropriate in respect of the admitted contravention of section 50.

b)        a penalty of 20 per cent of the maximum, or $13,320 is appropriate in respect of the admitted contravention of a section 323.

c)        a discount of 15 per cent should be applied to each penalty for the admissions of liability and agreement to an agreed statement of facts.

d)        The penalties should be concurrent, or the second penalty reduced to nil on account of the one transaction principle.

e)        The total of $11,322 is rounded down to $11,300.

52      In light of the fact that the contraventions were admitted, I do not consider it necessary to make any declarations.

53      I would order that the penalties be made to the claimant in accordance with the approach set out in Milardovic v Vemco Service Pty Ltd (No 2) [2016] FCA 244 at [40]-[44].