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Williams v Macmahon Mining Services Pty Ltd (No.3) [2010] FMCA 49 (29 January 2010)

Last Updated: 11 May 2010

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WILLIAMS v MACMAHON MINING SERVICES PTY LTD (No.3)

INDUSTRIAL LAW – Civil penalty proceedings – penalty – factors for consideration – to whom penalty to be paid.

ACCC v IPM Operation and Maintenance Loy Yang Pty Ltd (No. 2) [2007] FCA 11
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; [2008] FCAFC 8
Balding v Ten Talents Pty Ltd & Anor (2007) 162 IR 17; [2007] FMCA 145
Carr v CEPU & Anor [2007] FMCA 1526
Cotis v Pow Juice Pty Ltd [2007] FMCA 140
Fair Work Ombusdman v Bundy Market Meats Pty Ltd & Anor [2009] FMCA 994
Fair Work Ombudsman v Primrose Development Pty Ltd & Anor (2009) 183 IR 447; [2009] FMCA 632
Fair Work Ombudsman v The Palcon Group Pty Ltd [2009] FMCA 974
Gibbs v City of Altona [1992] FCA 374; (1992) 37 FCR 216
Hanssen Pty Ltd v Jones (2009) 179 IR 57; [2009] FCA 192
Jones v Hanssen [2008] FMCA 291
Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080
Klousia v TKM Investments Pty Ltd & Anor [2009] FMCA 208
Leighton Contractors v CFMEU (2006) 164 IR 375; [2006] WASC 317
Olsen v Sterling Crown Pty Ltd (2008) 177 IR 337; [2008] FMCA 1392
Ponzio v B&P Caelli Constructions Pty Ltd (2007) 158 FCR 543; [2007] FCAFC 65
Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412
Secretary, Department of Health & Ageing v Pagasa Australia Pty Ltd [2008] FCA 1545
Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union (No. 2) (2001) 110 IR 372; [2001] FCA 672
Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550
Williams v Macmahon Mining Services Pty Ltd (2009) 231 FLR 59; (2009) 182 IR 104; [2009] FMCA 511
Williams v Macmahon Mining Services Pty Ltd (No. 2) [2009] FMCA 763
Workplace Ombudsman v Golden Maple Pty Ltd (2009) 186 IR 211; [2009] FMCA 664
Workplace Ombudsman v KSN Engineering Pty Ltd (2009) 185 IR 316; [2009] FMCA 538

Applicant:
ADRIAN CLIFFORD WILLIAMS

Respondent:
MACMAHON MINING SERVICES PTY LTD

File Number:
PEG 83 of 2008

Judgment of:
Lucev FM

Hearing date:
30 November 2009

Date of Last Submission:
30 November 2009

Delivered at:
Perth

Delivered on:
29 January 2010

REPRESENTATION

Counsel for the Applicant:
Mr D H Schapper

Solicitors for the Applicant:
Derek Schapper

Counsel for the Respondent:
Mr T H F Casperz and Ms R Harding

Solicitors for the Respondent:
Jackson McDonald

ORDERS

(1) The respondent pay a pecuniary penalty of $14,850.00 for contravention of sections 232 and 235(2) of the Workplace Relations Act 1996 (Cth).
(2) The penalty imposed by Order (1) above to be paid by the respondent to the applicant on or before 26 February 2010.
(3) The respondent pay to the applicant interest pursuant to sections 722 and 723 of the WR Act on the sum of $8,067.69 ordered to be paid to the applicant by the respondent by this Court on 14 August 2009 in the amount of $1,187.56 on or before 26 February 2010.
FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PERTH

PEG 83 of 2008

ADRIAN CLIFFORD WILLIAMS

Applicant


And


MACMAHON MINING SERVICES PTY LTD

Respondent


REASONS FOR JUDGMENT

Introduction

  1. The respondent, Macmahon Mining Services Pty Ltd[1] employed the applicant, Mr Williams to work at the Argyle Diamond mine site[2] from 9 November 2006 to 16 December 2007.
  2. Macmahon Mining terminated Mr Williams’ employment on 16 December 2007.
  3. Macmahon Mining did not pay Mr Williams annual leave that he was entitled to on termination of his employment, as it considered that he had been paid wages on a “casual basis” under a contract of employment which included annual leave payments within the casual rate.
  4. On 28 May 2009 this Court delivered reasons for judgment[3] and made declarations to the following effect:
    1. Mr Williams was not a casual employee for the purposes of s.227 of the Workplace Relations Act 1996 (Cth),[4] and that (subject to the declaration below) he was entitled to annual leave payment for accrued annual leave on termination of employment in accordance with ss.232 and 235(2) of the WR Act; and
    2. Macmahon Mining was entitled to set-off any sum of money appropriated from the casual loading paid to Mr Williams in lieu of annual leave against any entitlement Mr Williams has to annual leave payment for accrued annual leave on termination of employment in accordance with ss.232 and 235(2) of the WR Act.
  5. The failure to pay accrued annual leave is a contravention of a term of the Australian Fair Pay and Conditions Standard,[5] and therefore a breach of a civil remedy provision,[6] for which Macmahon Mining may be liable to pay a penalty.[7]
  6. On 14 August 2009 this Court delivered further reasons for judgment[8] and ordered that Macmahon Mining pay Mr Williams the sum of $8067.69 for untaken accrued annual leave.
  7. Macmahon Mining is one of a group of companies, the parent of which is a public company. The Court understands that from June 2009 the work undertaken by Macmahon Mining at Argyle was transferred from Macmahon Mining to another company within the Macmahon Group.
  8. These are the reasons for judgment following the hearing on 30 November 2009 as to the penalty, if any, to be paid by Macmahon Mining for contravention of ss.232 and 235(2) of the WR Act.

Issues

  1. The issue now before the Court is what, if any, penalty ought to be imposed upon Macmahon Mining, and whether any penalty ought to be paid to Mr Williams.
  2. There is also a minor issue which arises concerning the payment of interest on the sum of $8067.69 previously ordered to be paid to Mr Williams.

Further evidence for Macmahon Mining on penalty

  1. Macmahon Mining led further evidence at the penalty hearing. In an affidavit of Angie Catherine Young affirmed on 2 November 2009[9] filed on behalf of the Macmahon Mining, Ms Young states:

Penalty considerations

General considerations

  1. The considerations to be taken into account in assessment of penalty are well established, as follows:
    1. the nature and extent of the conduct which led to the contraventions;
    2. the circumstances of the conduct (including deliberate defiance or disregard of the WR Act);
    1. relevant record of civil penalty contraventions;
    1. whether the contraventions are distinct or arise from a single course of conduct;
    2. the consequences of the contravening conduct;
    3. deterrence, both general and specific;
    4. the objects of the WR Act;
    5. the size and financial resources of the contravener;
    6. co-operation with regulatory authorities;
    7. the contravener’s contrition;
    8. the size of the prescribed penalty, and any recent increases to that prescription; and
    1. the totality principle.[10]
  2. This is not an exhaustive list of considerations that the Court may take into account.[11]

Nature, extent and circumstances of the conduct which led to the contraventions (including deliberate defiance or disregard of the WR Act)

  1. Mr Williams submitted that:
    1. the terms and conditions of his employment were written solely by Macmahon Mining;
    2. the nature and circumstances of the employment were so obviously not of a casual nature that Macmahon Mining could not reasonably have believed that Mr Williams was a casual who was not entitled to annual leave. For example:
      1. the terms of the contract contain detailed prescription as to the roster and hours of work;
      2. the evidence of Mr Dwyer to the effect that an employee could not decide whether to work or not;
      3. the unchanged working of a regular roster for over 12 months in accordance with the contract;
      4. the fly-in/fly-out arrangement with on-site accommodation supplied by Argyle,

each of the above being wholly inconsistent with casual employment;

  1. Macmahon Mining has not sought to demonstrate that its failure to pay annual leave was the result of an oversight or some other innocent exculpating explanation, and no explanation has been given;
  1. that Macmahon Mining knew or ought to have known that Mr Williams was not a casual and was entitled to paid annual leave on termination;
  2. it is likely that many other employees have been engaged on the same basis as Mr Williams and similarly not paid their entitlement;
  3. there were further disingenuities in Macmahon Mining’s position at trial. The explanation by Mr Ihlein that very short notice of termination employment of one hour was required because Macmahon Mining’s contract with Argyle could be terminated at short notice is incorrect. In fact, Argyle was required to give 30 days notice.[12] Yet an employee would require a minimum of 5 years’ service to be entitled to 28 days notice;[13]
  4. other consequences, commercially favourable to Macmahon Mining, such as no redundancy pay, no long service leave, no sick or other paid or unpaid leave entitlement and no requirement to give notice of termination accrue to Macmahon Mining as a result of Mr Williams’ “casual” status;
  5. all the above factors compel the inference that Macmahon Mining intentionally created these arrangement for purely commercial reasons.
  1. Macmahon Mining submitted that:
    1. the breach occurred when it failed to pay Mr Williams for accrued untaken annual leave on termination of his employment, when the reason for not doing so was plainly a belief that Mr Williams was not entitled to any such payment;
    2. up until the termination of Mr Williams’ employment, no-one had contended that he was entitled to payment for annual leave. It is not insignificant that no complaint was made by Mr Williams about not receiving paid annual leave until the termination of his employment;[14]
    1. that no complaint had been made was consistent with the evidence that, at the time of entering into the contract, Mr Williams clearly knew and understood the intended effect of the arrangement,[15] in that he:
      1. expected that the terms and conditions set out in the contract would be the basis of the relationship between him and Macmahon Mining;[16]
      2. was aware that his employment could be terminated on 1 hour’s notice;[17]
      3. understood that the flat hourly rate of $40/hour would be paid for all rostered shifts worked by him;[18]
      4. understood that the rate of pay was all inclusive;[19]
      5. appreciated that the rate of pay included the loading in lieu of paid leave entitlements;[20]
      6. had no expectation of any other payments under the contract;[21]
      7. had no expectation of any paid annual leave;[22]
      8. did not ask for paid leave;[23]
      9. was aware that paid leave was not a condition of the contract;[24]
      10. understood that when he signed the contract that was acceptance by him of the terms and conditions of the contract;[25] and
      11. accepted that he was terminated in accordance with the contract;[26]
    1. it can be inferred from the evidence above, in favour of Macmahon Mining, that Mr Williams entered into the contract freely;[27]
    2. the payment now to Mr Williams in lieu of annual leave is a windfall that was unexpected by him at the time that he entered into the contract or at any time throughout his employment;
    3. Macmahon Mining did not intentionally seek to avoid its obligations under the AFPCS.;
    4. there was no finding by the Court that the contract was a sham. In the circumstances, there is no basis for ascribing any ulterior motive to Macmahon Mining in making the contract with Mr Williams in the form that it did;
    5. on the basis of the Court’s interpretation of s.173 of the WR Act, as applied to the contractual provision for the loading, and the Court’s finding that the evidence did not establish how much of the loading could be appropriated to the obligation to pay annual leave, the payment of the loading failed to have the effect intended by Macmahon Mining, as agreed to by Mr Williams;
    6. there is no basis on which to find that Macmahon Mining’s contravention makes it likely that other employees of Macmahon Mining, or of any other company that Macmahon Mining has a connection with, were engaged on the same basis as Mr Williams and similarly not paid their entitlement. To the contrary, the fact that Macmahon Mining has not previously contravened any of the AFPCS or other legislated minimum conditions of employment[28] supports an inference that should be drawn in favour of Macmahon Mining that Macmahon Mining does not, and is not inclined, to engage in conduct that denies to employees the benefit of such matters;
    7. in the circumstances, the conduct of Macmahon Mining in making the contract with Mr Williams, and Macmahon Mining’s observance of its terms thereafter, including when Mr Williams’ employment was terminated, was not behaviour on its part calculated to avoid its statutory obligations in deliberate defiance or deliberate disregard of the WR Act. The decisions of the Court[29] are the first ones in relation to the effect of s.173 of the WR Act and in relation to the defence of set-off in relation to a claim for payment in accordance with s.235(2) of the WR Act. Macmahon Mining did not have the benefit of the Court’s decisions when it offered the contract to Mr Williams;[30]
    8. Macmahon Mining’s conduct in making the contract with Mr Williams in the form that it did, and Macmahon Mining’s belief that Mr Williams was not entitled to paid annual leave, was wholly explicable: it was not a dishonest or unreasonable belief;
    1. the findings of the Court in Macmahon Mining (No. 1) and Macmahon Mining (No. 2) contradict any suggestion that Macmahon Mining had any appreciation that it was acting in breach of s 235(2) of the WR Act when it failed to pay Mr Williams on termination of his employment;[31]
    1. Mr Williams was not a vulnerable employee;
    2. the Court’s finding that Mr Williams was not employed as a casual employee is a finding based on the evidence in this matter;
    3. there is no evidence of any other failures by Macmahon Mining to pay in accordance with s 235(2) of the WR Act;
    4. at the commencement of the proceedings, Mr Williams discontinued against Macmahon Contractors Pty Ltd.[32] An inference can be drawn from this that Mr Williams no longer relied on any alleged contraventions by that company, in addition to that then alleged against Macmahon Mining. Mr Williams did not allege that any other person was involved in what has now been held to have been a contravention by Macmahon Mining;
    5. in light of the above, there is no basis for either finding that the conduct constituting the contravention extends further than the facts of this matter and/or that the position of any other company or person is relevant when considering what penalty should be imposed on Macmahon Mining for its contravention.
  2. The circumstances of the conduct which led to the breach can be described as an agreement between Mr Williams and Macmahon Mining on the terms of employment, as shown by the following evidence:
    1. there were no findings that the contract was a sham, nor that Macmahon Mining had an ulterior motive in making the contract;
    2. both parties were fully aware of the terms of the contract at the time of entry into the contract, and they had the same understanding of those terms;
    1. Mr Williams was not a vulnerable employee;
    1. Macmahon Mining did not act in deliberate disregard of the WR Act on termination of Mr Williams, as it believed that it was terminating Mr Williams in accordance with the terms of the contract; and
    2. up until the time of termination, both parties believed that they were giving and receiving the correct entitlements, as provided for in the contract.
  3. The nature and extent of the conduct which led to the breach can be described as an unknowing breach of the WR Act for the commercial advantage of employing casual staff, as shown by the following evidence:
    1. the course of conduct was not deliberate;
    2. the systems in place prior to Mr Williams’ entry into the contract were inadequate for a large company with a dedicated human resources team that should have provided the correct advice on their legal obligations to their employees, did not do so, but seemingly did not do so deliberately, as opposed to carelessly or unknowingly; and
    1. Macmahon Mining was unaware of its liability to pay unpaid accrued annual leave as at the date of termination of Mr Williams’ employment.

Whilst Macmahon Mining was ignorant of its obligation to pay Mr Williams his unpaid, accrued annual leave on termination of his employment, and although ignorance of the law is no excuse, the Court accepts that there was no deliberate intention to deprive Mr Williams of his legal entitlements.

  1. In light of the above discussion, the Court considers that the nature and circumstances of the conduct which led to the contravention will have a neutral impact on the size of the penalty that is imposed on Macmahon Mining.

Relevant record of civil penalty contraventions

  1. There is no dispute, and the Court is satisfied, that Macmahon Mining is to be treated as a first time contravener in relation to this contravention.

Whether the contraventions are distinct or arise from a single course of conduct

  1. There is no dispute, and the Court is satisfied, that the contravention arises out of a single course of conduct.[33]

The consequences of the contravening conduct

  1. The immediate consequence of the contravening conduct is that Macmahon Mining failed to pay Mr Williams the annual leave that he was entitled to on termination of his employment, in the sum of $8,067.69. This is a significant amount of money for an individual, even one who is not a low income earner, and equates, in the current circumstances, to over 201 hours’ payment.
  2. The non-payment is conduct undermining the utility and effectiveness of fundamental objects and purposes of the WR Act,[34] and in particular, the ensuring of compliance with minimum standards in relation to employee entitlements and the provision of an economically sustainable safety net of minimum wages and conditions for an employee whose employment was regulated under the WR Act.[35]
  3. Viewed in a broad sense, the consequences of the contravening conduct are therefore serious because the conduct undermines the utility and effectiveness of the fundamental objects and purposes of the WR Act.[36] However, viewed in a narrow sense, a proper appreciation of the consequences of this case requires recognition that:
    1. although not paid his statutory entitlement to annual leave on termination of employment, there was some element of his overall payment which was intended to be in lieu of that payment, but which:
      1. on the evidence, was not specifically identifiable or calculable;[37] and
      2. by reason of s.173 of the WR Act, was of no effect, notwithstanding the original intention of the parties;[38]
    2. Mr Williams is not an employee in the “vulnerable” low income earner or youth categories,[39] but nevertheless the Court recognises that:
      1. it appears that all employees of Macmahon Mining were apparently engaged as casuals;[40] and
      2. there may be a power disparity or inequality of bargaining power between an employer offering employment and an employee considering employment which favours the employer and makes it more likely that an employee will accept employment on the terms offered,[41] but in this case the evidence falls short of suggesting that any power disparity was influential in Mr Williams’ acceptance of employment with Macmahon Mining as a “casual”;
    1. Mr Williams appears to be the only employee who has complained about the “casual” terms of employment at Macmahon Mining.
  4. The consequences of the conduct are therefore primarily conduct undermining the utility and effectiveness of a principal object of the WR Act, and the non-payment of an entitlement of a not insignificant sum of money to an individual, in circumstances where the seriousness of that conduct is lessened, to some degree, by the parties’ contractual agreement.

Deterrence, both general and specific

  1. General and specific deterrence are primary objectives of imposing penalties.[42] Therefore, in imposing civil penalties, deterrence is a significant consideration.[43] It is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend.[44] Therefore it must be of a kind that demonstrates an appropriate assessment of the seriousness of the offending conduct.[45]
  2. General deterrence is an important and relevant consideration in assessing penalty, in order to mark disapproval of the conduct in question and act as a warning to others not to engage in similar conduct.[46]
  3. In relation to specific deterrence, the Court must assess the risk of Macmahon Mining re-offending.[47]
  4. Mr Williams submitted that:
    1. from Ms Young’s Affidavit it appears that Macmahon Mining will argue that, due to changed circumstances, there will be no transgression in future, however, there cannot be any confidence that this is in fact the case;
    2. no explanation is given as to why the work at Argyle has been transferred from Macmahon Mining to another company within the Macmahon Group;
    1. under the terms of the Macmahon Argyle Underground Mining Employee Agreement 2009[48] a casual employee is one who is “engaged and paid as such”.[49] Therefore, at least at first glance, under that agreement an employee employed on the same basis as Mr Williams would have no entitlement to annual leave;
    1. under ss.86-94 of the Fair Work Act 2009 (Cth), such an employee not being a casual employee at common law may well retain the entitlement to paid annual leave;
    2. it follows that Macmahon Mining’s attempt to show that there will be no transgression in the future in fact shows a likelihood of continuing transgression by another company in the Macmahon Group. This is particularly so as no evidence is given as to whether the construction crews currently employed by that other company are employed as “casuals”, like Mr Williams was, or not;
  5. The above submissions are speculative, without sufficient evidence to support the conclusions reached. It is unimportant in determining penalty as to why employment at Argyle has been transferred from Macmahon Mining to another company within the Macmahon Group. Further, the conclusion reached that employees employed under the Employee Agreement 2009, on the same basis as Mr Williams, would have no entitlement to annual leave, is not proven by any evidence, and the Court notes that this Agreement was provided in Ms Young’s Affidavit, on which Ms Young was not cross-examined. The Court fails to see how, prima facie, payment under an approved agreement can show a likelihood of continuing transgression.
  6. Macmahon Mining submits that as to general deterrence, it has been said that:

Macmahon Mining says that this is not such a case.

  1. As concerns specific deterrence, Macmahon Mining says it is evident from Ms Young’s Affidavit that, in order to avoid the possibility of a repetition of the contravention:
    1. Macmahon Mining has taken steps to inform its key managers of the Court’s decisions in this matter;[51] and
    2. Macmahon Mining’s key managers have received training in relevant matters.[52]
  2. Macmahon Mining submits that it is further evident from Ms Young’s Affidavit that:
    1. Macmahon Mining no longer employs anyone at Argyle, the site at which Mr Williams was employed;[53]
    2. this is the only complaint concerning section 235(2) of the WR Act that Macmahon Mining has received from any person who was employed at Argyle;[54] and
    1. employees who work at the Argyle site are now employed by another company within the Macmahon Group, which is a party to a workplace agreement that has passed the no-disadvantage test and expressly permits the engagement and payment of employees as casuals.[55] It is evident from the workplace agreement that the rates of pay of full-time employees are substantially different, and much less, than the flat $40/hour rate paid to Mr Williams. It can be inferred from this, in favour of Macmahon Mining, that the rate of $40/hour that was paid to Mr Williams was in excess of what he would have received if he had been employed under the workplace agreement.
  3. There is no risk of Macmahon Mining re-offending in similar circumstances as it is no longer the employer of staff at Argyle, and there is no evidence to suggest that it will be again. Whether or not Macmahon Mining still employs anyone was not raised in argument by either party.
  4. Macmahon Mining provided evidence that they have put steps in place to ensure that the breach in question is not repeated in future. The fact that employees now working at Argyle are employed under a workplace agreement that has passed the no-disadvantage test and specifically allows for the employment of casual staff, provides the Court with solid evidence and sufficient assurance that the Macmahon Group have taken significant steps to ensure that similar breaches will not occur in future.
  5. In this case there is no need for specific deterrence because:
    1. Macmahon Mining no longer employs staff at Argyle, and there is therefore no discernible risk of it re-offending in the future;
    2. the Macmahon Group company that now employs staff at Argyle has taken some steps to ensure that the breach in question is not repeated by:
      1. providing training to key managers on definitions and types of employees that are to be considered as fixed term, permanent and casual employees; and
      2. entering into an agreement with employees at Argyle that has passed the relevant statutory no-disadvantage test and permits the employment of staff as casuals.
  6. There is, however, a significant need for general deterrence because:
    1. it is important that other mining companies that employ staff to work on their mine sites are warned not to engage in the conduct engaged in by Macmahon Mining, and that employment obligations and employee entitlements must be adhered to; and
    2. the conduct is considered a serious breach of a fundamental employee right to annual leave entitlements, and the Court must signal disapproval of Macmahon Mining’s conduct in order to endeavour to prevent similar conduct being engaged in by other mining companies.

The objects of the WR Act and WR Regulations

  1. In assessing the seriousness of Macmahon Mining’s conduct, and the appropriate level of penalty, the Court must have regard to the statutory purposes of the WR Act.[56]
  2. The objects of the WR Act are set out in s.3, and relevantly include the following:
  3. Since the introduction of major reforms to the WR Act in 2005,[58] the courts have placed greater emphasis on the importance of employers complying with their obligations, including minimum standards of employment, and being responsible for their conduct, in the context of a more devolved and deregulated workplace relations environment under the provisions of the WR Act.[59] The maximum amount of penalties has increased significantly in recent years.[60]
  4. In the context of the objects of the WR Act requiring compliance with minimum standards and facilitating enforcement of the WR Act and industrial instruments,[61] a period of deliberate (but not defiant) contravention is serious, because it involves an undermining of the statutory objects and purposes of the WR Act, and particularly s.3(c) and (f)(i).
  5. This case does not involve a deliberate contravention but does ultimately undermine the utility and effectiveness of the WR Act. Whilst the Court recognises the need to take the objects of the WR Act into account when assessing penalty, it must be counted in Macmahon Mining’s favour that this case involves a single contravention, involving one employee, with no discernible risk of Macmahon Mining re-offending.

The size and financial resources of the contravener

  1. The size of a business should not affect its obligation to comply with the WR Act.[62] It is however appropriate to take into account the contravener’s size and financial resources, including capacity to pay, in determining the quantum of any penalty.[63]
  2. The evidence establishes that:
    1. Macmahon Mining is one of a group of companies the parent of which is a public company; and
    2. Macmahon Mining has specialist human resource management personnel and ready access to expert legal advice as to its legal obligations to employees.
  3. There is no evidence that Macmahon Mining will have difficulty paying any penalty handed down by the Court.
  4. The size and financial resources of Macmahon Mining (as opposed to the Macmahon Group), and particularly its access to specialist advice and expertise, is therefore a relevant factor in the assessment of penalty. That is because the designation of the employment arrangements under which Mr Williams was employed as a “casual”, if they had been reviewed (there is no actual evidence of review), was so obviously open to doubt that any specialist human resources advisers ought to have advised that it was an arrangement which, at the very least, was open to doubt, and upon which further advice, particularly legal advice, ought to have been obtained. This was a task which was within the remit of Macmahon Mining’s human resources management group,[64] that is “to ask appropriate questions, either internally or externally”,[65] but which was not apparently done.[66] In the circumstances, the size and financial resources of Macmahon Mining, and particularly its access to specialist advice and expertise, is an aggravating factor in the assessment of penalty.

Co-operation with regulatory authorities

  1. This factor is not relevant where the applicant is an individual rather than a statutory regulator or authority, or an organisation registered under the WR Act.

The contravener’s contrition

  1. Mr Williams submitted that no remorse has been demonstrated.[67] Rather, Mr Williams says Macmahon Mining has resisted the claim and refused to acknowledge wrongdoing.
  2. Macmahon Mining submitted that, in order to avoid the possibility of a repetition of the contravention:
    1. Macmahon Mining has taken steps to inform its key managers of the Court’s decisions in this matter;[68] and
    2. Macmahon Mining’s managers have received training in relevant matters.[69]
  3. In oral submissions at the penalty hearing, Counsel for Macmahon Mining said that:
    1. Macmahon Mining were “sorry” in that it was “wrong” in thinking that it was paying for annual leave, and there was no intention to contravene the law;[70]
    2. no overt expression of contrition had been made by Macmahon Mining because at the time the contravention occurred Macmahon Mining did not consider that it was doing the wrong thing;[71] and
    1. there was no evidence of any subsequent checking of records by Macmahon Mining to see if other employees were similarly entitled to annual leave payment upon termination and had not been paid.[72]
  4. Macmahon Mining has evidenced their contrition by paying the amount held by the Court to be owed to Mr Williams. They have similarly evidenced their contrition by informing their key managers of the Court’s previous decisions in this matter, and providing them with relevant training to prevent a similar breach from occurring in the future.
  5. In the circumstances, the evidence of contrition is minimal, limited to the information and training factors outlined above.

The size of the prescribed penalty, and any recent increases to that prescription

  1. The maximum allowable penalty that may be imposed on a body corporate for a single contravention of ss.232 and 235(2) of the WR Act is $33,000.00.[73]
  2. Civil penalties imposed in industrial law proceedings must be meaningful and consistent in light of other considerations to be taken into account when determining appropriate penalty,[74] and are no longer to be approached by the Courts with a light hand. In regard to the latter this Court has observed that:
  3. This approach has to be considered in imposing a penalty on Macmahon Mining.

The totality principle

  1. The totality principle does not apply to a single contravention by a single respondent.[76]

Assessment of penalty

  1. Mr Williams submits that the penalty imposed should be at the high end of the range, there being a powerful public interest particularly in deterring large public companies from writing employment contracts which attempt to avoid their legal responsibilities.
  2. Macmahon Mining submits that the penalty to be imposed must be one that is appropriate, taking into account all of the matters it has put in relation to the various factors above. Macmahon Mining submits that a penalty at the lower end of the range is appropriate.
  3. As Macmahon Mining is a first time offender, it is appropriate to reduce the maximum penalty by an amount of 20% to 30%.
  4. A small discount of up to 10% will be given for contrition, reflecting the minimalist nature of the contrition in this case.
  5. The contraventions were contrary to the objects of the WR Act.
  6. In determining the final amount of penalty the Court takes account of the particular need for general deterrence in this case. In terms of the particular need for general deterrence the Court considers that a penalty in the mid-range of penalty (that is 40-60% of the maximum) is appropriate.
  7. In circumstances where:
    1. the Court considers that specific penalty reductions of up to 40% are within contemplation;
    2. general deterrence will be served by a penalty of 40-60% of the maximum; and
    1. the overall circumstances are such as to not put the matter in the category of the most serious of deliberate, but not defiant, conduct,

and having regard generally to the factors discussed above, the Court considers that a reduction of 55% of the maximum penalty is appropriate. The penalty for Macmahon Mining will therefore be 45% of the maximum penalty, that is, $14,850.00.

To whom to pay the penalty?

  1. Mr Williams seeks an order that any penalty imposed be payable to him,[77] by reason of his having incurred considerable expense in prosecuting the proceedings.
  2. Macmahon Mining submitted that:
    1. Parliament can be taken as having been aware that an applicant, such as the present one, would incur considerable expense in prosecuting claims, when it prescribed that, generally speaking, no costs be ordered to be paid in proceedings such as these;[78]
    2. Mr Williams was not a vulnerable employee. The money that has been held by the Court must now be paid to Mr Williams is a windfall gain to him. This amount of money, calculated at his full hourly rate of $40 an hour, plus interest, wholly compensates him for the loss suffered by him as a result of Macmahon Mining’s breach. It would be inconsistent with Parliament’s firm intention that costs should not generally be awarded to order, in addition to this, that any penalty imposed on Macmahon Mining be paid to Mr Williams in consideration of expenses allegedly incurred by Mr Williams in prosecuting his claim.
  3. The Court has the power to order that any penalty, or part of any penalty, imposed be paid to a particular person.[79]
  4. The usual order, when the proceeding is not brought by an inspector appointed under the WR Act, is for payment to the person or organisation applying for the penalty because the proceeding is based on the concept of an action brought by a common informer.[80] The Federal Court has held that:
  5. There is no reason to depart from the usual course in this case.
  6. In the circumstances it is appropriate to order that the penalty be paid to Mr Williams.

Payment of interest

  1. In his original application, Mr Williams sought an order for interest on any sums found to be due to him by Macmahon Mining.
  2. On 14 August 2009, the Court held that Macmahon Mining owed Mr Williams the sum of $8,067.69 for untaken accrued annual leave. An order was made that payment of that sum be deferred, pending hearing of the matter as to penalty and costs.
  3. Macmahon Mining paid the sum of $8,067.69 to Mr Williams on 16 October 2009.
  4. Section 722 of the WR Act requires that, in exercising its powers under s.719(6), upon application, the Court must order interest on the sum awarded from the date the cause of action arose, to the date on which judgment is entered.
  5. The cause of action arose when Mr Williams was terminated from his employment on 16 December 2007, and judgment was entered on 14 August 2009.
  6. Section 723 of the WR Act provides that interest is payable from the date on which judgment is entered until the judgment sum is paid.
  7. The Court is prepared to apply an 8% rate of interest, pursuant to s.77(3) of the Federal Magistrates Act 1999 (Cth).
  8. The relevant period in which interest has accrued on the judgment sum of $8,067.69 is from 16 December 2007, to payment of the sum on 16 October 2009.
  9. At the penalty hearing, Mr Williams sought interest in the amount of $1,188.00, calculated as interest on $8,067.69 from 16 December 2007 to 16 October 2009, which equals 672 days at 8% per annum.
  10. The Court finds that interest should be paid by Macmahon Mining in the amount of $1,187.56.

Declarations and orders

  1. For the reasons set out above the Court has concluded that Macmahon Mining must pay a penalty of 45% of the maximum penalty of $33,000.00 to Mr Williams. There will therefore be an order that Macmahon Mining pay a penalty of $14,850.00 to Mr Williams on or before 26 February 2010.
  2. The Court also finds that interest is payable on the judgment sum of $8,067.69, pursuant to ss.722 and 723 of the WR Act, in the amount of $1,187.56. There will be an order that Macmahom Mining pay interest on the judgment sum in the amount of $1,187.56 on or before 26 February 2010.
  3. The Court will hear the parties as to costs, if any.

I certify that the preceding eighty-one (81) paragraphs are a true copy of the reasons for judgment of Lucev FM


Associate: S. Gough


Date: 29 January 2010

[1] “Macmahon Mining”.
[2] “Argyle”.
[3] Williams v Macmahon Mining Services Pty Ltd (2009) 231 FLR 59; (2009) 182 IR 104; [2009] FMCA 511 (“Macmahon Mining (No. 1)”).
[4] “WR Act”.
[5] “AFPCS”.
[6] WR Act, s.318(1) and (2).
[7] WR Act, ss.718(1) and (2) and 719(1) and (4)
[8] Williams v Macmahon Mining Services Pty Ltd (No. 2) [2009] FMCA 763 (“Macmahon Mining (No. 2)”).
[9] “Ms Young’s Affidavit”.
[10] Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 (“Kelly”); Olsen v Sterling Crown Pty Ltd [2008] FMCA 1392; (2008) 177 IR 337 at 346-347 per Lucev FM; [2008] FMCA 1392 at para.34 per Lucev FM (“Sterling Crown”); Jones v Hanssen [2008] FMCA 291 (“Hanssen”); Workplace Ombudsman v Golden Maple Pty Ltd (2009) 186 IR 211; [2009] FMCA 664 (“Golden Maple”). An appeal against Hanssen was successful, and the penalty imposed by the Court was reduced, but the Federal Court’s appeal judgment did not vitiate these factors: Hanssen Pty Ltd v Jones (2009) 179 IR 57; [2009] FCA 192.
[11] Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 at para.11 per Gyles J (“Dogma”); Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560 at 580 per Buchanan J; [2008] FCAFC 8 at para.91 per Buchanan J (“Australian Ophthalmic Supplies”); Golden Maple IR at 224 per Lucev FM; FMCA at para.11 per Lucev FM.
[12] Exhibit A2, clause 35.
[13] WR Act, s.661.
[14] Transcript, 5 November 2008, at 8. See Fair Work Ombudsman v The Palcon Group Pty Ltd [2009] FMCA 974 at para.46 per Cameron FM (“Palcon”) where account was taken of this particular factor.
[15] Palcon at para.46 per Cameron FM.
[16] Transcript, 5 November 2008, at 7.
[17] Transcript, 5 November 2008, at 7.
[18] Transcript, 5 November 2008, at 7.
[19] Transcript, 5 November 2008, at 7.
[20] Transcript, 5 November 2008, at 7.
[21] Transcript, 5 November 2008, at 7.
[22] Transcript, 5 November 2008, at 7.
[23] Transcript, 5 November 2008, at 8.
[24] Transcript, 5 November 2008, at 8.
[25] Transcript, 5 November 2008, at 8.
[26] Transcript, 5 November 2008, at 8.
[27] Macmahon Mining (No. 1) FLR at 75 per Lucev FM; IR at 121 per Lucev FM; FMCA at para.75 per Lucev FM.
[28] Ms Young’s Affidavit, para.4.
[29] Macmahon Mining (No. 1) and Macmahon Mining (No. 2).
[30] Citing Palcon at para.52 per Cameron FM: that despite a “not too sophisticated reading”, which would have indicated that, on a proper construction, particular AWAs had a certain meaning, there was no basis for finding that the employer had any reason to believe that the AWAs provided something different to what it had instructed its representative to document and implement.
[31] Citing Palcon at para.52 per Cameron FM.
[32] Transcript, 5 November 2008, at 2.
[33] WR Act, ss.318(1) and (2) and 719(2); WR Regulations, Ch.2, reg.14.5(1).
[34] Hanssen at para.29 per Lucev FM: “conduct...unchecked...might undermine some of the statutory objects and purposes of the WR Act.” See also Secretary, Department of Health and Ageing v Pagasa Australia Pty Ltd [2008] FCA 1545 at para.56 per Flick J (“Pagasa”).
[35] WR Act, s 3(c) and (f).
[36] Golden Maple IR at 233 per Lucev FM; FMCA at para.54 per Lucev FM.
[37] Macmahon Mining (No. 2) at para.89 per Lucev FM.
[38] Macmahon Mining (No. 2) at paras.69 and 88 per Lucev FM.
[39] Golden Maple IR at 233 and 234 per Lucev FM; FMCA at paras.53 and 58-59 per Lucev FM; Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 at para.31 per Driver FM (“Rajagopalan”).
[40] Transcript, 5 November 2008, at 32.
[41] Balding v Ten Talents Pty Ltd & Anor (2009) 162 IR 17 at 30 per Lucev FM; [2007] FMCA 145 at para.56 per Lucev FM.
[42] Leighton Contractors v CFMEU [2006] WASC 317; (2006) 164 IR 375 at 391 per Le Miere J; [2006] WASC 317 at para.74 per Le Miere J; Carr v CEPU & Anor [2007] FMCA 1526 at para.29 per Lucev FM; Kelly IR at 21 per Tracey J; FCA at para.28 per Tracey J; Sterling Crown IR at 351 per Lucev FM; FMCA at para.53 per Lucev FM.
[43] Ponzio v B&P Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543 at 577 per Jessup J; [2007] FCAFC 65 at para.164 per Jessup J (“Ponzio”).
[44] Ponzio FCR at 559 per Lander J; FCAFC at para.93 per Lander J, citing Yardley v Betts (1979) 22 SASR 108; Kelly IR at 21 per Tracey J; FCA at para.28 per Tracey J.
[45] Ponzio FCR at 559-560 per Lander J; FCAFC at para.93 per Lander J.
[46] Klousia v TKM Investments Pty Ltd & Anor [2009] FMCA 208 at para.55 per FM O’Sullivan.
[47] Ponzio FCR at 559-560 per Lander J; FCAFC at para.93 per Lander J.
[48] “Employee Agreement 2009”.
[49] Employee Agreement 2009, Clause 8.
[50] Rajagopalan at para.31 per Driver FM; cited with approval in Fair Work Ombudsman v Bundy Market Meats Pty Ltd & Anor [2009] FMCA 994 per Jarrett FM at para.73.
[51] Ms Young’s Affidavit, para.9.
[52] Ms Young’s Affidavit, para.10.
[53] Ms Young’s Affidavit, para.6.
[54] Palcon at paras.46 and 52 per Cameron FM.
[55] Ms Young’s Affidavit, paras.7 and 8.
[56] Hanssen at para.29 per Lucev FM. See also Pagasa at para.56 per Flick J.
[57] WR Act, s.3(c) and (f)(i) and (ii).
[58] Workplace Relations Amendment (Work Choices) Act 2005.
[59] Cotis v Pow Juice Pty Ltd [2007] FMCA 140 at para.63 per Lloyd-Jones FM; Hanssen at para.28 per Lucev FM.
[60] See paras.52-53 below, and the authorities there cited.
[61] See the relevant WR Act provisions at para.38 above.
[62] Kelly IR at 21 per Tracey J; FCA at para.28 per Tracey J.
[63] Sterling Crown IR at 356 per Lucev FM; FMCA at para.76 per Lucev FM, applied in Fair Work Ombudsman v Primrose Development Pty Ltd & Anor [2009] FMCA 632; (2009) 183 IR 447 at 463 and 464 per O’Sullivan FM; [2009] FMCA 632 at paras.73 and 79 per O’Sullivan FM; Workplace Ombudsman v KSN Engineering Pty Ltd [2009] FMCA 538; (2009) 185 IR 316 at 323 per Lucev FM; [2009] FMCA 538 at para.13 per Lucev FM; Dogma Enterprises at para.15 per Gyles J.
[64] Transcript, 5 November 2008, at 16-18.
[65] Transcript, 5 November 2008, at 17.
[66] Transcript, 5 November 2008, at 18.
[67] Applicant’s Submissions, para.4.7.
[68] Ms Young’s Affidavit, para.9.
[69] Ms Young’s Affidavit, para.10.
[70] Transcript, 30 November 2009, at 19-20.
[71] Transcript, 30 November 2009, at 19-20.
[72] Transcript, 30 November 2009, at 14.
[73] Being 300 penalty units at $110.00 per penalty unit: WR Act, s.719(4)(b), Crimes Act 1914 (Cth), s.4AA.
[74] ACCC v IPM Operation and Maintenance Loy Yang Pty Ltd (No. 2) [2007] FCA 11 at para.66 per Young J; Sterling Crown IR at 351 per Lucev FM; FMCA at para.54 per Lucev FM.
[75] Sterling Crown IR at 346 per Lucev FM; FMCA at para.32 per Lucev FM, citing Finance Sector Union v Commonwealth Bank of Australia [2005] FCA 1847; (2005) 147 IR 462 at 483 per Merkel J; [2005] FCA 1847 at para.72 per Merkel J; Commonwealth Bank of Australia & Anor v Finance Sector Union [2007] FCAFC 18; (2007) 157 FCR 329 at 364 per Branson J; [2007] FCAFC 18 at para.192 per Branson J.
[76] Golden Maple at para.96 per Lucev FM citing Workplace Ombudsman v Securit-E Holdings Pty Ltd [2009] FMCA 700 at para.24 per Raphael FM.
[77] WR Act, s.841(b).
[78] WR Act, s.824.
[79] WR Act, s.841(b).
[80] Gibbs v City of Altona [1992] FCA 374; (1992) 37 FCR 216 at 223 per Gray J.
[81] Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union (No.2) [2001] FCA 672; (2001) 110 IR 372 at 375 per Merkel J; [2001] FCA 672 at para.8 per Merkel J.

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