FEDERAL COURT OF AUSTRALIA Ponzio v Firebase Sprinkler Systems Pty Ltd [2005] FCA 733 Workplace Relations Act 1996 (Cth) ss 4, 187AA(1) and 187AD(1) Pine v Seelite Windows & Doors Pty Ltd [2005] FCA 500 - applied GARY PONZIO v FIREBASE SPRINKLER SYSTEMS PTY LTD (ACN 062 076 046) VID 1503/2004 MERKEL J 27 MAY 2005 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 1503 OF 2004 BETWEEN: GARY PONZIO APPLICANT AND: FIREBASE SPRINKLER SYSTEMS PTY LTD (ACN 062 076 046) RESPONDENT JUDGE: MERKEL J DATE OF ORDER: 27 MAY 2005 WHERE MADE: MELBOURNE THE COURT DECLARES THAT: 1. The respondent contravened s 187AA(1) of the Workplace Relations Act 1996 (Cth) by making a payment to each of Mark Fenby, Wayne Harold Foster, Cameron Way, Carey Gray, Gary Francovic, Robert Puckering, Steve Puckering, and Steven Rourke for a period on 5 August 2003 in which they each engaged in industrial action. 2. The respondent contravened s 187AA(1) of the Workplace Relations Act 1996 (Cth) by making a payment to each of Mark Fenby and Wayne Harold Foster for a period on 6 August 2003 in which they engaged in industrial action. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 1503 OF 2004 BETWEEN: GARY PONZIO APPLICANT AND: FIREBASE SPRINKLER SYSTEMS PTY LTD (ACN 062 076 046) RESPONDENT JUDGE: MERKEL J DATE: 27 MAY 2005 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 In the present case, the applicant is applying for the imposition of a penalty under s 187AD(1) of the Workplace Relations Act 1996 ("the Act"). The applicant claims that the respondent contravened s 187AA of the Act by paying wages to its employees during a period in which the employees were engaged in industrial action. 2 Section 187AA provides: "(1) An employer must not make a payment to an employee in relation to a period during which the employee engaged, or engages, in industrial action if: (a) the employer or employee was or is a member of an organisation during that period; or (b) the employer was or is a constitutional corporation bound by an award, a certified agreement or an AWA during that period; or (c) the industrial action was taken, or is being taken, in connection with work regulated by an award, a certified agreement or an AWA; or (d) the industrial action was taken, or is being taken, in relation to an industrial dispute; or (e) the industrial action was or is of a kind referred to in paragraph (a), (b) or (c) of the definition of industrial actionin subsection 4(1); or (f) the industrial action was taken, or is being taken, in a Territory. (2) An employee must not accept a payment from an employer if the employer would contravene subsection (1) by making the payment. (3) A contravention of subsection (1) or (2) is not an offence." 3 In the present matter, as a result of a death in the industry that was unrelated to the respondent, the CFMEU took industrial action on certain sites, which included two sites at which the respondent was working on 5 and 6 August as a sub-contractor. The evidence of the respondent is that the cessation of work that had occurred on 5 and 6 August 2003 involved an occupational health and safety issue. The payments in issue are payments for the cessation of work. 4 It also transpires that on 6 August 2003 the respondent became aware that there was an issue with the CFMEU about payment for the time in which the workers ceased work on 5 and 6 August 2003 and further industrial action was engaged in by the workers in relation to that issue. The respondent was aware of its obligation not to pay the workers when they were engaging in industrial action and refused to make any payment for that further industrial action. 5 The parties have agreed on the relevant facts giving rise to the contraventions. It is common ground that the action taken by the respondent's employees on the relevant occasions was industrial action as defined in s 4 of the Act. 6 Reliance is placed by the respondent on the decision of Finkelstein J in Pine v Seelite Windows & Doors Pty Ltd [2005] FCA 500 ("Seelite") where his Honour declined to impose a penalty in analogous circumstances. The reasoning for that outcome was summarised by his Honour at [10], where his Honour said: "… No harm has been done to anyone. The contravention was inadvertent. It is unlikely to occur again. The amount of wages involved is insignificant. In these circumstances it would be quite wrong to punish the respondents. Nothing would be achieved by the imposition of a pecuniary penalty. There is no need for a specific deterrent: it is simply not necessary. And if any penalty were imposed it would be so low that it could not act as a general deterrent." 7 The present case, however, differs from Seelite in one respect, and that is that in Seelite senior management of the employer was unaware at the relevant time that the payment was being made in respect of industrial action, because that information had not been passed on by the foreman. In the present case, the respondent's management was aware of the payments being made for the cessation of work. However, the respondent put forward a number of matters in mitigation. They are: (a) the only cost involved as a result of the stoppages and payment being made was the payment of the wages to the employees, which totalled $1,143; (b) work on the sites was completed on time and within budget, therefore there was no harm caused as a result of the stoppages; (c) at all material times the respondent's policy and procedure, which it implemented at the time, was not to pay employees pay for industrial action; (d) in pursuit of that policy, the respondent has, since the bringing of this proceeding, established a procedure to ensure it does not contravene s 187AA in the future. It has also taken steps to review and update its policy to ensure compliance with the Act and has informed its employees of that policy. Also, the respondent has not previously contravened s 187AA of the Act and, since the beginning of the proceeding, the respondent has resisted paying strike pay when that has been sought; (e) while the evidence is not altogether clear that the respondent made the payments in question because it formed the view that the pay was not in respect of industrial action, it is likely that the payments were made because of the respondent's view that the action related to occupational health and safety issues; and (f) the respondent has incurred legal costs in defending the proceeding and has acted reasonably and appropriately in agreeing upon the facts and not contesting its liability for the contraventions. 8 It is clear that there was a lack of care or diligence on the part of the respondent that led it to making the payments that constituted the contraventions. However, I am not prepared to go so far as to say it made the payments recklessly, or not caring whether the payments were a breach of the Act. It seems to me that having regard to all of the circumstances, and even accepting the distinguishing feature between the present case and Seelite, the factors that led Finkelstein J in Seelite not to impose a penalty are applicable here. 9 Having regard to all the circumstances, including that it is most unlikely that the respondent will reoffend, I have decided it is not appropriate or necessary in the interests of justice to impose a penalty. 10 I do however wish to emphasise that I regard the circumstances of the present case as exceptional. Also, I have approached the issue of penalty on the basis that the contravening conduct and the subsequent refusal to pay employees when they engaged in further industrial action comprise a single course of conduct relating to essentially the same events. Part of that conduct includes conduct that complied with s 187AA and conduct which did not comply with the section. In those circumstances, I am prepared to regard the breach as one that came about because of inadvertent conduct. 11 Accordingly, save for the grant of declaratory relief, the grant of further relief is neither necessary or appropriate. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Merkel J. Associate: Dated: 7 June 2005 Counsel appearing for the Applicant: Mr C Rawson Solicitor for the Applicant: Australian Government Solicitor Solicitor appearing for the Respondent: Mr M Diserio Solicitor for the Respondent: Lander and Rogers Date of Hearing: 27 May 2005 Date of Judgment: 27 May 2005