Industrial Relations Commission of New South Wales in Court Session CITATION : Ian Robertson v Marrickville Council [2003] NSWIRComm 394 PROSECUTOR Ian Robertson PARTIES : DEFENDANT Marrickville Council FILE NUMBER: IRC1164-1170; 1172-1174 of 2003 CORAM: Peterson J CATCHWORDS : Civil penalty - Alleged breach of hours clause - Plea of guilty - Nature of proceedings - Breaches established - Assessment of penalty - Penalties imposed. LEGISLATION CITED : Industrial Relations Act 1996 Fines Act 1996 CASES CITED : BHP Steel v Australian Workers' Union, New South Wales Branch [2003] NSWIRComm 151, 15 May 2003, unreported HEARING DATES: 06/26/2003 DATE OF JUDGMENT: 11/14/2003 PROSECUTOR Mr I C Latham of counsel UNION Development and Environmental Professionals' Association. FIVE DOCK. LEGAL REPRESENTATIVES: DEFENDANT Mr A Britt of counsel EMPLOYER ORGANISATION Local Government Association of NSW SYDNEY. JUDGMENT: - 13 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: PETERSON J DATE: 14 NOVEMBER 2003 Matter Nos IRC1164, 1165, 1166, 1167 of 2003 IAN ROBERTSON v MARRICKVILLE COUNCIL Prosecutions and recovery of civil penalty under clause 12A(vii) of the Local Government (State) Award 1997 Matter Nos IRC1168, 1169, 1170 and 1174 of 2003 IAN ROBERTSON v MARRICKVILLE COUNCIL Prosecutions and recovery of civil penalty under clause 13A(vi) of the Local Government (State) Award 2000 Matter Nos IRC1172 and 1173 of 2003 IAN ROBERTSON v MARRICKVILLE COUNCIL Prosecutions and recovery of civil penalty under clause 15A(vi) of the Local Government Award 2001 JUDGMENT 1 By summons issued by the Industrial Registrar on the application of Ian Robertson, Marrickville Council ('the Council') was called upon to answer charges in these matters that it breached either cl.12(A)(vii) of the Local Government (State) Award 1997 in certain of the matters, or in others the identical provision in cl.13(A)(vi) of the replacement award made in 2000 and cl.15(A)(vi) of that made in 2001. 2 The proceedings were instituted under s 357, Part 1, Breach of Industrial Instruments of Chapter 7, Enforcement of the Industrial Relations Act 1996 ('the Act'). Section 357 is in the following terms: 357 Civil Penalty for Breach of Industrial Instruments 357(1) If an industrial court is satisfied that a person has contravened a provision of an industrial instrument, it may order the person to pay a pecuniary penalty not exceeding $10,000. (2) Proceedings for a civil penalty may be instituted: (a) by an inspector or any other person authorised by this Act to institute proceedings for offences, or (b) by an employer bound by the industrial instrument concerned, or (c) by an industrial organisation concerned in the industry to which the proceedings relate. (3) Proceedings for a civil penalty may be instituted within 6 years after the contravention. (4) To avoid doubt, the rules of evidence apply to proceedings for a civil penalty. (5) Evidence given in proceedings for the recovery of money under Part 2 is not admissible in proceedings for a civil penalty. (6) In any proceedings for a civil penalty, the industrial court may award costs to either party and assess the amount of those costs. Costs cannot be awarded against the prosecutor except in the circumstances in which costs can be awarded against the prosecutor in criminal proceedings. (7) The following provisions apply to contraventions of industrial instruments and to proceedings for a civil penalty for such a contravention in the same way as they apply to criminal proceedings for an offence against this Act: (a) Sections 400-403 (b) The provisions of any Act relating to the recovery of penalties imposed for an offence. (c) Any provision of this or any other Act relating to criminal proceedings that is applied to this section by the regulations (whether with or without modification). 3 The prosecutor seeks the imposition of a penalty in respect of the alleged breach of an award. In that respect, the parties agreed that the procedure to be adopted in the conduct of the matter was to treat it as a criminal case, with the prosecutor putting his case and the Council making its case in response. 4 At the outset of the proceedings there was an agreed statement of facts tendered in the following terms: The prosecutor is the secretary of an industrial organisation of employees registered under the Industrial Relations Act. The defendant is a local government council. On or about 8 December 1999, 10 November 1999, 15 June, 24 July 2000, 23 April 2001, 21 May 2001, 4 July 2000, October 2001, 15 June 2002 and 1 July 2002, the Defendant did breach the provisions of Clause 15(vi) of the Local Government State Award 2001 and its predecessors in that it did alter the spread of hours available to employees without the agreement of the consultative council at Marrickville Council. The prosecutor is unaware of any previous applications for penalty against the defendant. 5 It will be seen from those agreed facts that the defendant accepted its breach of the relevant clause. In those circumstances, for reasons which I shall in due course explain, it was indicated by the court that it would need to be satisfied that the alleged breach, depending as it does upon the construction of the award, was made out. 6 The clause the subject of the charge occurs in the context of the hours of work clause and, in the 1997 version, it provided: 12. Hours of Work A Spread of Hours (vii) Where the council seeks to alter the spread of hours and/or payment for the spread of hours for a new or vacant position, the matter shall be referred to the consultative committee for recommendation to council prior to advertising the new or vacant position. 7 Another clause of relevance is cl.12(A)(iii): (iii) Commencing and or finishing times within the spread of ordinary hours provided for in subclause (i) of Part A of this clause and/or payment for the spread of hours may be altered by agreement between management and employee(s) concerned and the terms of the agreement referred to the consultative committee for recommendation to the council. 8 The prosecutor's case consisted of affidavits from three employees of the Council, upon which they were not cross-examined and an affidavit of Ian Alexander Robertson, the Secretary of the Development and Environmental Professionals' Association ('DEPA'). 9 While the agreed facts refer to the absence of agreement with "the consultative council", that may be taken to be a reference to the consultative committee referred to in the award provisions. 10 The affidavits of the three Council employees, Tanya Antony, Natasha Jean Harras and Mark Andrew Sage, indicate that upon their assuming their current positions they were required to work a 19-day month. In the case of Ms Antony and Ms Harras, the previous occupants of their positions had worked a 9-day fortnight. In Mr Sage's case the evidence is that he had been working a 9-day fortnight in his previous position but was required to convert to a 19-day month in his new appointment as Assistant Health and Building Surveyor. Each of the three employees expressed, through their affidavits, a desire to maintain a 9-day fortnight, their evidence adverting to the advantages for them of that system and the absence of disadvantage, in their view, for the Council. 11 Mr Robertson's affidavit commenced by reference to the structural efficiency in award restructuring process adopted from 1991 which led to the consolidation of the industry awards into one, which began from May 1992 and was finalised in October 1995. A consultative committee was established at each Council with the intention of improving consultation within the industry. The establishment and role of the committees was the subject of award prescription. 12 On 17 June 2002 Mr Robertson wrote to the Council to express concern that it had been changing starting and finishing times for new or vacant positions and thereby removing the 9-day fortnight but that this had not been done according to the requirements of cl.12(A)(vii). Further correspondence ensued and a meeting occurred between Mr Robertson and representatives of the Council on 5 August 2002 when the breach was denied and a written response was promised. Subsequently, a representative of the Local Government Association acting on behalf of the Council informed Mr Robertson orally that the Council disagreed with his view about the requirements of the award. Eventually, on 16 September 2002, the General Manager of the Council wrote to Mr Robertson informing him, in part, as follows: Council has also considered your view that individual jobs that have been changed to a nineteen day month should be submitted to the Consultative Committee. To eliminate any uncertainty about this issue, Council submitted information to the Consultative Committee on 20 August 2002 regarding the status of the 19 day month arrangement. A copy of the minutes from the Consultative Committee Meeting is attached for your information. 13 The minutes of that meeting included the following: (B) Nineteen Day Month Candy Nay advised the Committee that Peter Black had intended to speak to the Committee about the nineteen day month issue but unfortunately had been delayed interstate. Stuart McLean spoke to submission that had been previously distributed to Committee members. There was a general discussion about the nineteen day month and the following issues were raised:- Operational Issues Gabriel Mafi indicated that staff in the development and Environmental Services Division were concerned about the differential working hours between staff on a nineteen day month and staff on a nine day fortnight. The differential caused operational problems particularly with the provision of counter service. Ken Hawke gave an undertaking to Gabriel that he would look at any operational issues that were causing concern. Review Prior to Implementation Employee representatives raised concerns that nine day fortnight positions were being changed over to a nineteen day month with little consideration to the operational implications. Candy Nay explained that the General Manager had been open to arguments as why positions should not be converted to a nineteen day month arrangement and there were examples of where nine day fortnight arrangements had been retained. The Citizen Service Centre was an example of where consideration had been given to operational issues and to working conditions and as a result the nine day fortnight had been retained. Schedule 1 and 2 Several employee representatives raised issues regarding the detail on the Schedules. Stuart McLean explained that the details had been gathered from the Consultative Committee minutes back to 1995, submissions to the Consultative Committee, Job and Person Specifications and staff personnel files. Stuart agreed to check the specific details raised by the representatives and the Committee agreed that the Schedules should be distributed to Managers for confirmation of individual working arrangements. Conditions of Employment The fairness of the implementing the nineteen day moth was raised by some employee representatives. Candy Nay reminded the Committee that the nineteen day month arrangement had only been applied to vacant positions and the incumbents had accepted the nineteen day month as a condition of their employment. The Consultative Committee recommended that:- 1 that the positions listed in Schedules 1 and 2 be accepted as nineteen day month positions, subject to the Schedules being distributed to Managers for checking and any amendments being reported to the next meeting; and 2 that in future consideration be given to operational issues before vacant positions were converted to a 19 day month. 14 Mr Robertson adverted to the fact that until December 2002 employees working a 19-day month were required to work an extra 23 minutes each day, thereby working the same daily hours as other employees on a 9-day fortnight cycle. This was done without the payment of overtime or the grant of time in lieu. 15 In cross-examination, Mr Robertson agreed that each of the employees concerned in the 19-day month change which led to this issue accepted a new and vacant position and that they were aware the positions were a 19-day month, "albeit invalidly entered into". 16 Mr Robertson made clear that on his understanding employees were working an additional 23 minutes up to December 2002 without additional payment; this was evidence of information and belief. 17 The evidence adduced on behalf of the Council came through Ms Candy Nay, the Director, Corporate Services of the Council. Ms Nay's affidavit illustrates that from 1994 the Council began a progressive alteration for its indoor employees from a 9-day fortnight to a 19-day four week cycle, the latter being offered to employees accepting new employment only, unless an existing employee applied for and was appointed to a new or vacant position within the Council. Approximately 72% (106) of the indoor employees in administrative areas work a 19-day four week cycle, the remaining 28% (42) on a 9-day fortnight. In the Community Services Division, 125 employees all work a 19-day four week cycle. The 19-day four week cycle has facilitated what Ms Nay described as the improvement of service delivery through better availability of employees for customer allocation and staff rostering. This enables shorter turnaround in responding to customer requirements. 18 Ms Nay deposed to her reliance upon advice that the Council was not required to refer vacant positions to the consultative committee if it intended to change from a 9-day fortnight to a 19-day month. Had she been aware that the interpretation she relied upon was incorrect, she would have referred those matters to the consultative committee. This is now done. She also deposed that the affected employees suffered no financial loss and the Council did not obtain financial benefit from the introduction of a 19-day four week cycle. 19 Ms Nay indicated in chief that she had investigated the suggestion that the 19-day month employees were working an additional 23 minutes per day and it was found that flexible arrangements operated so that if rostered up to 5pm, employees would either have a flexible lunch hour or leave early, but that it was not true that they had been working an extra 23 minutes without being paid for it. 20 In cross-examination, in response to a question about any economic benefit to the Council in a 19-day month, Ms Nay indicated that it had given the Council a better level of citizen service. She said: We are quite a small organisation, very flat structure, which means a lot of our jobs are one off specialist positions and having someone not there one day every fortnight excluding annual leave, sick leave, study leave, it means inquiries cannot be dealt with or other areas that need to liaise with people, it makes it very difficult for them to deal with the issues and there is just not the people there to answer the phones and so on and I think that Local Governments evolve over time and with our new General Manager we have Marrickville values and one of them is citizen focus and it is an attempt to improve the level of citizen service. Q. There is no economic benefit to Marrickville Council, is there? A. No. 21 In relation to the development of an awareness of misapplication of the award, Ms Nay referred to the position as she understood it in August 2002, this way: We still frankly doubted whether it was or it wasn't and it was ultimately talking to the barrister and the general manager was also involved in those discussions, that we accepted that we were wrong and part of that is because being on the consultative committee myself since 1994, no one had ever raised this to be an issue where we were clearly advising and offering jobs as a nineteen day month. It was first - basically it had not been raised as a concern by anybody. 22 Ms Nay also agreed with a series of propositions summarising the way in which the 19-day month deprived the relevant employees of benefits and opportunities relating to leisure activities. Ms Nay agreed in cross-examination that she became aware through a DEPA newsletter dated November 2001 that a dispute had arisen at Eurobadalla Shire Council over a similar issue. That matter was resolved by a rectification of the breach. 23 In addresses, Mr Latham of counsel for the prosecutor and Mr Britt of counsel for the Council submitted that the matter was to be dealt with in accordance with the principles applicable to ordinary criminal matters in sentencing. Mr Latham submitted that while the early breaches by the Council may be due to inadvertence, it is clear that from 2001 onwards there was an issue about award compliance. The Council either closed its eyes or was reckless in relation to the breach and this goes to its culpability. These features support consideration of specific deterrence. Mr Latham's submissions raised the apparent conundrum of a decision made, in his submission invalidly, but which was being maintained in operation at the Council. Section 357 does not seem, on his submission, to allow the Commission to be able to reverse those decisions that were made in breach of the award. Declaratory relief might be necessary to avoid the continuation of breach ad infinitum. The Nature of the Proceedings 24 As I have already mentioned, counsel agreed that the proceedings should be dealt with on the basis that they involved satisfaction on the criminal onus. No authority was referred to as having determined that matter. The issue was not taken further in the course of the proceedings. It appears to me to be not quite so clear. As I mentioned at the outset, the proceedings are raised under s 357 which appears in Part 1, Breach of Industrial Instruments of Chapter 7, Enforcement. Part 6 of Chapter 7 is entitled Criminal and other legal proceedings and deals in part with offences under this Act or the Regulations. On the face of s 357, there would seem to be contrary indications. Section 357(1) permits the court to order a person to pay "a pecuniary penalty" described as a civil penalty. On the other hand, the provisions of s 357(4), (5), (6) and (7) raise matters which are suggestive that the proceedings might be intended to be analogous to criminal proceedings. Under those provisions, the rules of evidence apply; evidence given in recovery proceedings under Part 2 is not admissible in s 357 proceedings; costs may be awarded, but against the prosecutor only in circumstances where they can be awarded against the prosecutor in criminal proceedings; and, by s 357(7), ss 400-403 in Part 6, Criminal and Other Legal Proceedings, are made applicable as are "the provisions of any Act relating to the recovery of penalties imposed for an offence". That provision would incorporate, as applicable to the civil proceedings, the provisions of the Fines Act 1996. 25 The Commission's Rules provide, in Part 28, Proceedings to Recover a Civil Penalty, but particularly in r 219(2), that the application for summons must state certain matters, two of which are the name of the applicant and the person against whom the proceedings are brought, who are referred to in parenthesis as "the prosecutor" and "the defendant". Thereafter, the parties are referred to in Part 28 by those descriptions. 26 There is no other indication in the Act or Rules that such matters should be heard as criminal cases according to criminal case principles. The nomenclature adopted in r 219 seems to me to be insufficient to identify and characterise the proceedings as criminal in nature, by overcoming the very description of penalty in s 357 as a civil penalty. 27 The judgment of Haylen J in BHP Steel v Australian Workers' Union, New South Wales Branch [2003] NSWIRComm 151, 15 May 2003, unreported, is of assistance in this respect. In that matter, his Honour was concerned with proceedings brought under s 139 of the Act in relation to alleged breach of a dispute order of the Commission. The question of onus and procedure in such proceedings was considered in the context of competing submissions, by the prosecutor on the basis that the civil onus of proof applied and by the respondent, Australian Workers Union, on the basis that the criminal onus applied. Haylen J, after an extensive examination of the authorities relating to the determination of such questions in this Commission and generally, concluded that the proceedings are not criminal proceedings and that the civil onus applies. Section 139 permits the Commission to take a number of courses to the proceedings, including the imposition of a penalty on an industrial organisation or an employer, the maximum penalty not to exceed in total $10,000 for the first day the contravention occurs and an additional $5,000 for each subsequent day on which the contravention continues or, if involving a second or subsequent offence of that kind, a penalty not exceeding $20,000 for the first day and $10,000 for each subsequent day. Section 139(5) provides: Any such penalty may be recovered in the same way as a penalty imposed by the Commission for an offence against this Act. 28 It would seem that the provisions of s 139(5) are analogous to, and have the same effect as, the provisions of s 357(7)(b) which I have cited above. Both provisions would cause the application of the procedure laid down by the Fines Act and dealt with extensively by Haylen J in his Honour's judgment. There, his Honour came to the view that: "94 . . . s 139(5) is effectively a deeming provision for the purposes of recovering a penalty imposed under s 139. In focusing on the recovery process, it treats proceedings under s 139 as if they were the same as an offence, thereby immediately recognising that s 139 is not an offence and is not to be treated as a criminal proceeding." In the circumstances of this case, the matter not having been debated before me, it is preferable that I not take any positive view about the matter of onus, particularly where the Council has accepted it breached the award. If I am satisfied that the breach occurred, the issue becomes one of assessment of penalty. 29 Turning to the principal issue, I am satisfied that the Council has breached the hours clause by failing to comply with the requirement to refer a proposal to alter the spread of hours for a new or vacant position to the consultative committee prior to advertising that position. The clause expresses that obligation in mandatory terms. However, the purpose of the obligation is to ensure that the consultative committee has the opportunity to consider the matter and to formulate any recommendation it might make to Council. Council is not obliged to accept that recommendation and, according to the evidence, the General Manager of the Council, by way of delegated authority, is empowered to, in effect, accept or reject that recommendation. Thus, there may not be any basis for viewing the failure to refer the particular examples of breach as having introduced any resultant invalidity, although that was not an issue here. 30 When it is considered that the provisions of this kind were adopted with the intention of improving consultation with the local government industry and were adopted by consent, it is no small thing to treat it with disregard. The question arises whether any purpose is served by imposing a penalty on the Council. Mr Latham's submission in respect of deterrence, although put in the context of criminal proceedings, nevertheless seems to me to remain good. There is merit in the proposition that a penalty in this context would further the compliance with award obligations by both the Council and by employers more generally. I take into account also the fact that there had been prior difficulty with this award provision at Eurobodalla, which was publicised throughout the industry. 31 On the other hand, the approach to the clause by the Council was one which was not motivated by any positive intention to breach or by way of recklessness. The relevant Council officers relied upon advice which, in the end, turned out to be erroneous. The matter was then sought to be rectified by Council in compliance with its legal advice. 32 I take into account also the good industrial record of the Council; the fact that the General Manager had the capacity to overcome any adverse view of the consultative committee and that the Council made no monetary gain. I also recognise the fact that the breaches arose out of a single course of conduct. 33 Section 357 does not provide that multiple breaches may be treated as a single breach, where they arise out of a course of conduct. However, if one were to apply the totality principle applicable in criminal proceedings, a course submitted by the parties to be applicable here, then a result not too far removed from a single breach approach would be achieved. I will apply totality. 34 The maximum penalty for an offence is $10,000.00; there are ten individual charges in respect of which the Council has pleaded guilty. In all of the circumstances, I would assess a pecuniary penalty, taking into account all matters I have identified in the sum of $5,000.00. I impose a penalty in each matter of $500.00. I order a moiety of those penalties to DEPA. I also order that the Council pay the prosecutor's costs of the proceedings in an amount as may be agreed or, in the absence of agreement, assessed. 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