IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) No. V14 of 1986 ) INDUSTRIAL DIVISION ) BETWEEN: THE CLOTHING AND ALLIED TRADES UNION OF AUSTRALIA TODECIC75 ' ' AND: FEDERAL COURT OF "AUSTRALIA ; PAING'PAL ZL PEDITA AUSTRALIA PTY. ; - eee LTD. SLT 8 DECEMBER, 1986 KEELY J. REASONS FOR JUDGMENT RE PENALTY On 18 November 1986 the court decided, under s. 119 ot the Conciliation and Arbitration Act 1904 'the Act), that the respondent had breached the Clothing Trades 'Bradmill Industries Limited Group) Job Protection Award 1983 (the award) in relation to its termination, on 5S March 1985, of the employment of Mrs. Joyce Legg,who was a member ot the applicant at all material times. These reasons for judgment should be read in the light of the reasons delivered on 18 November 1986. At the hearing the parties had jointly requested that the turther hearing ot the application be adjourned until a date to be tixed atter the court had decided whether the award had been breached by the respondent. That request was in order to enable them to consider the court's reasons for decision and 1f the court there found that there had been a breach of the award, to have discussions as to what was the amount to which Mrs. Legg was entitled under the award ('see s. 119(3) of the Act); turther, to address submissions to the court on the question of penalty. The adjourned hearing took place on 3 December 1986. On that date the parties were in agreement that, on the basis of the court's finding that the award had been breached, the amount to which Mrs. Legg was entitled under the award was the sum of $2,666.85 and that the appropriate deduction by the respondent for taxation on that amount wag $133.42; they were also agreed that, deducting the latter figure from the former, it was appropriate that $2,533.43 be the amount to be ordered by the court under s. 11913) of the Act. The court 183 satistied that Mrs. Legg has not been paid an amount to which she 13 entitled under the award, namely $2,666.85 but the order is tor the respondent to pay to Mrs. Joyce Legg the sum ot $2,533.43; that is the amount agreed upon by the parties as being appropriate, based upon the proposed deduction ot $133.42 for taxation. The respondent has breached two clauses of the award: namely, (1) a breach of clause S, consisting of a tailure to give Mrs. Legg the appropriate notice of termination and a failure to pay her "tor the period equal to the difference between tour weeks' notice and the period of notice actually given" and (2) a breach of clause 9 1n tailing to pay to her the appropriate "severance pay". Although there have been breaches of two different clauses ot the award, Mr. Hainkley, of counsel, on behalf of the applicant, accepted that they arose out of a course of conduct by the respondent and should be treated as constituting a single breach of the award for the purpose ot determining the question of penalty (cp. 3s. 119(1A) ot the Act). Mr. Ginnane, of counsel, on behalf of the respondent, submitted that the applicant should not be heard on the question of penalty. After hearing short argument from both parties on that question I decided to (1) hear the respondent as to all matters which it desired to advance in mitigation ot penalty; (2) hear any submissions by the applicant directing the court's attention to any findings of the court, or any evidence before the court, which in its submission were relevant to any of the respondent's submissions; '3) hear the respondent's counsel in reply to any such submissions. The applicant's counsel wags informed that he could seek to put any other submissions relevant to penalty but, 1n order to do s0, would have to put submissions 1n answer to Mr. Ginnane's submission that an applicant under 3s. 119 does mot have the right to advance such submissions. As that question has not been fully debated I have not formed any opinion on it. Matters which might be relevant to that question, which were reterred to by me during counsel''s submission on this question, included the question of whether an applicant under s. i119 would have aright of appeal against the amount of the penalty imposed by the court. It might also be relevant to have regard to legislative changes in recent years as to the right of a prosecutor to appeal against the leniency of a sentence. It ig also possible that some assistance may be gained by reference to Trade Practices Commission v Madad Pty. Ltd. (1979) 40 FLR 453 at 456-7. That decision was, of course, dealing with a somewhat different question namely the placing of evidence before the court as to facts relevant to penalty - as to which see now Order 49 Rule 5 of the Federal Court Rules. Mr. Ginnane advanced tour matters in mitigation. I accept his submission that the court, 1n considering the amount of the penalty 1n the present case, should not attach any weight to the amount of the underpayment; he referred to the fact that the amount to which Mrs. Legg was entitled had been very significantly increased, atter the date of the dismissal, as a result of a variation of the award made by the Conciliation and Arbitration Commission wath retrospective effect to a date before the dismissal. In any event the amount payable tor severance pay would not necessarily be a relevant factor in considering the question of the penalty to be imposed. It would not seem appropriate to treat a breach in respect of an employee with a shorter period of service (to whom a smaller amount of severance pay was due) as being less serious than a breach in respect of a longer serving employee. On the other hand it may be a relevant tactor if the amount is large and the employee has had to wait for the payment of it for a long period of time - particularly if the court found that the employer was wholly or partly to blame for the delay. I have not formed any concluded view on those aspects, which do not require a decision in the present case. I also accept Mr. Ginnane's submission that it is proper to take into account, 1n mitigation of penalty, the fact that there is no evidence that the respondent, which has operated a business since 1972 and employs a substantial number of employees, has at any time previously breached any award. Mr. Ginnane also sought to rely upon the fact that the award provision, which was made in 1983, had not been in operation tor a lengthy period ot time at the date of the dismissals. Allied to this submission. and of greater significance, was the tact (which [ accept) that at the time of the dismissal the respondent was unaware ot the existence of the award and accordingly the breaches were not deliberate breaches of the award. It should be understood, however, that it would be quite wrong to think that an employer, which had failed to take the necessary steps to ascertain what its obligations were under all relevant awards, would, as a result of that failure, be in a more favourable position than an employer which had taken those steps and had been informed as to what its obligations were. The absence of knowledge does not in any way excuse the action of the respondent in the present proceedings but it is relevant as showing the absence of any deliberate defiance of the award; had such defiance occurred, it would have supported the imposition of a substantially greater penalty than that which would otherwise be appropriate. I have also taken into account the fact, relied upon by Mr. Ginnane, that the respondent co-operated in ensuring that these proceedings were not prolonged by evidence and argument as to the question of the transmission of the business to the respondent in 1984. It should be added that I indicated during the hearing that I did not accept two submissions advanced by the applicant. The first was that, after the dismissal, there had been an attempted "cover-up" by the respondent, or by one of its otficers, as to the reason ror the dismissal. The second submission was that. by reason of the terms of the respondent's letter dated 26 October 1984, offering Mrs. Legg employment "under the same terms and conditions as you were employed by Exacto Knitwear Pty. Ltd. ...", the respondent had represented to Mrs. Legg, that it was aware of all of the terms of her previous employment, including the terms of the 1983 award. Both of those submissions are rejected. An alternative submission put by Mr. Hinkley was that the respondent should have known ot the existence of the award and of its obligations under it. That matter has been dealt with earlier in considering Mr. Ginnane's submissions. The maximum penalty is $1,000. I agree, with respect, with the principle stated by Smithers and Evatt JJ., in the Australian Industrial Court, in North Vv Television Corporation Ltd. (1976) 11 ALR 599 at 612:- "The provisions of 3s 119 empowering the court to impose a penalty for breach or non-observance of an award are directed to ensure, or at least promote, obedience of awards. The procedure is not designed merely aS a means by which an employee may sue tor money due to him under an award. No doubt the court has a discretion to retrain from imposing a penalty in respect of the breach of an award and in this connection the circumstances are to be considered. It should be remembered, however, that it is undesirable that an employer should be encouraged to act on the basis that if he faiis to obey an award the employee may not take action against hin, and that if he does, he, the employer, will probably suffer no more than if he had obeyed the award." In all the circumstances ot the present case, including the findings I have made on the evidence, in my opinion a penalty of $250 is appropriate. The applicant also applied, under s. 120 of the Act, for an order that the amount of the penalty be paid to the applicant. That application was not consented to by the respondent but in my opinion it 1s proper to grant it and accordingly an order will be made that the whole of the penalty of $250 be paid by the respondent to the Clothing and Allied Trades Union of Australia. A stay of 21 days of any orders made was sought and not opposed and accordingly the execution of the orders made is stayed until 29 December 1986. ec 2atoce ny on" her@.t 2 dts Date: % December MBG, tr ee Dates of Hearing Counsel for the Applicant Solicitors for the Applicant Counsel for the Respondent Solicitors for the Respondent 3 December, 1986 Mr. R. W. Hinkley Slater & Gordon Mr. T. Ginnane Freehills