Industrial Relations Commission of New South Wales in Court Session CITATION: Transport Workers' Union v Carey's Warehousing & Distribution Pty Ltd, TWU v Chemso Pty Ltd, TWU v Carey's Freight Lines (Tamworth) Pty Ltd, TWU v Antarca Pty Ltd [2006] NSWIRComm 192 PROSECUTOR: Transport Workers' Union of New South Wales PARTIES: DEFENDANTS: Carey's Warehousing & Distribution Pty Ltd Chemso Pty Ltd Carey's Freight Lines (Tamworth) Pty Ltd Antarca Pty Ltd FILE NUMBER(S): IRC 2001- 03 of 2006; IRC 2022- 27 of 2006 CORAM: Marks J CATCHWORDS: Prosecution & Recovery of Civil Penalty – breach of several provisions of Industrial Instrument – guilty plea – assessment of appropriate penalty - whether offences to be considered separate and distinct. Held: failure to comply with an industrial instrument serious matter – systematic refusal to pay overtime – general deterrent effect on transport industry as a whole – inappropriate to view the entire matter as separate and distinct offences – offences arose out of same course of conduct - one family group of companies with same controlling mind – penalty imposed. LEGISLATION CITED: Industrial Relations Act 1996 Transport Industry (State) Award HEARING DATES: 14/6/06 DATE OF JUDGMENT: 06/23/2006 PROSECUTOR: Mr A Hatcher of Counsel INDUSTRIAL ORGANISATION Transport Workers' Union of New South Wales LEGAL REPRESENTATIVES: Case Officer: David Tritton DEFENDANTS: SOLICITOR: Mr M Dunne Leitch Hasson Dent: JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: Marks J Friday, 23 June 2006 Matter No IRC 2001, 2003 & 2022 of 2006 Transport Workers' Union New South Wales v Carey's Warehousing & Distribution Pty Ltd Matter No IRC 2002 & 2027 of 2006 Transport Workers' Union New South Wales v Chemso Pty Ltd Matter No IRC 2023 & 2024 of 2006 Transport Workers' Union New South Wales v Carey's Freight Lines (Tamworth) Pty Ltd Matter No IRC 2025 & 2026 of 2006 Transport Workers' Union New South Wales v Antarca Pty Ltd Prosecution and Recovery of Civil Penalty under s 357 of the Industrial Relations Act 1996 JUDGMENT [2006] NSWIRComm 192 1 This judgment is concerned with the imposition of a civil penalty on three companies operating within a group of companies engaged in the transport industry in the Tamworth area. The proceedings were instituted by the prosecutor Transport Workers' Union of New South Wales under s 357 of the Industrial Relations Act 1996 ("the Act"). Relevantly, s 357(1) makes provision for the imposition of a pecuniary penalty not exceeding $10,000 by way of a civil penalty for the contravention of a provision of an industrial instrument. 2 The defendants have pleaded guilty to each of the contraventions alleged against them in each of the nine summonses and this judgment is concerned only with the question of penalty and costs. 3 For completeness, I note that in each of the summonses the prosecutor sought orders for the payment of monies representing the amount of alleged underpayment of the relevant industrial instrument and sought also orders in the nature of an injunction under s 359 of the Act. As will be seen, all outstanding monies have been paid by the defendants and the prosecutor did not pursue any application for orders for the recovery of unpaid monies. Furthermore, the prosecutor did not pursue any orders for the grant of an injunction to restrain the commission of further contraventions. 4 The summonses allege in the aggregate a breach of three provisions of the Transport Industry (State) Award. The first is a failure to pay overtime in accordance with Clause 5.1 of the Award which in summary form provides for the payment of overtime monies at the rate of time and one half for the first two hours and double time thereafter. The second breach is of Clause 6.1.1 of the Award which requires payment of work on a Saturday at a rate of time and a half for the first two hours and double time thereafter. The third relates to Clause 17.2 of the Award which provides for payment of a leave loading whilst an employee is on annual leave based on a calculation of three and one third hours ordinary pay for each month of leave. 5 The defendant Carey's Warehousing and Distribution Pty Ltd pleaded guilty to having breached each of the provisions of the Award with respect to its employee Allan Pollock with a consequent underpayment of $1,383.84 between the period 1 July 2005 until 31 January 2006. 6 The defendant Chemso Pty Ltd pleaded guilty to a failure to pay its employee Patrick Whale overtime under Clause 6.1 of the Award and the annual leave loading under Clause 17.2 over the same period. The amounts involved were $635.67 and $68.83 respectively. 7 The defendant Carey's Freight Lines (Tamworth) Pty Ltd pleaded guilty to a failure to pay its employee David Hall in accordance with Clause 6.1.1 and the annual leave loading under Clause 17 over the same period. The amounts involved totalled $811.92. 8 The defendant Antarca Pty Ltd pleaded guilty to a failure to pay its employee Barry Finlay overtime under Clause 6.1.1 of the Award and overtime under Clause 5.1 of the Award, the amount involved totalling $410.95. 9 The evidence given in the proceedings indicates that there were negotiations between representatives of the prosecutor and representatives of the defendant group of companies in August and September 2005. The union was pursuing an enterprise agreement that included, inter alia, payment for double time on Saturdays. It is clear from a series of emails between representatives of the defendant group of companies that double time was not then being paid for overtime and Saturday work. 10 Furthermore, an affidavit of Todd Anthony Dunne an employed organiser of the prosecutor, which was admitted into evidence without objection, is indicative that in the discussions between representatives of the prosecutor and the defendant group of companies in August 2005, Mr John Carey, the managing director of each of the defendants, was informed that there was a breach of the Award in the defendants having failed to pay double time to their employees for Saturday work and overtime. Mr Carey is alleged to have said "....I've just never paid double time to my employees." 11 It was accepted by both the prosecutor and the defendants that the Carey group of companies were owned by the Carey family and had operated in the Tamworth area for about 60 years. The group of companies employs about 110 employees and is one of the largest employers in the Tamworth area. A major client is the Woolworths Limited organisation. It was said that the group was a good corporate citizen in that it sponsored a number of sporting teams in the area, provided free transportation for charitable events in the area including the transportation of persons in connection with the activities of the local hospital. I shall take into account these activities in assessing penalty. 12 All of the defendant companies have common directors and shareholders being John Thomas Carey and Michael John Carey. 13 The summonses, which have given rise to these prosecutions, were filed on 24 March 2006. The court was informed that they were served on 12 April 2006 and that all outstanding payments, which were the subject of each of the summonses, were made on 15 April 2006. 14 It was also common ground between the parties that the defendants had not previously been convicted of any offence with respect to underpayment of entitlements under any industrial instrument and the defendants had indicated that they would plead guilty to each of the offences at the earliest opportunity. Furthermore, the defendants had examined all of their pay records and all employees (presumably within the total group of companies) had received payment of any amounts not then paid to them under any relevant industrial instrument. It was submitted on behalf of the defendants that this conduct should be accepted as a mark of their contrition and an indication of their remorse as well as evidence of an intention to comply in the future with the provisions of any applicable industrial instrument. I propose to proceed on this basis. 15 The starting point for the assessment of an appropriate penalty is a consideration of the objective seriousness of the offences with which the defendants are charged. The prosecutor submitted, and I accept, that the failure to comply with the provisions of an industrial instrument is a serious matter. Industrial instruments are designed to provide for minimum rates of pay and working conditions for employees. They are established through mechanisms created by government and are intended to have, and do have, the force of law in terms of their application and the enforcement of duties and obligations imposed by them. I accept also that the obligations set out in the Transport Industry (State) Award are expressed in language that is clear and that there can by no confusion about the manner in which they are to be applied. Indeed, there is no evidence that the defendants were unsure as to any obligations imposed upon them by the Award. 16 The defendants submitted that, in effect, these were not serious breaches because the total amount of all underpayments was of the order of $3,300 and the maximum amount claimed in any individual summons was $869. It was said that these are not large amounts and therefore the breaches were not serious. I am not persuaded by this submission. The underpayment of any wages will always be a serious matter, particularly from the perspective of an employee. The situation might have been different had the breaches arisen as a result of some inadvertent mathematical calculation. Here, however, there is evidence of a systematic refusal to pay overtime, for time worked on Saturdays at the rate provided for in the Award, being double time and annual leave loadings. These are breaches that cannot be condoned and which, in my opinion, supports a conclusion that viewed objectively each of the breaches is a serious one by reference to the circumstances in which it occurred. 17 In assessing penalty it is also necessary to take into account the general deterrent effect. This is a specialist court and I take into account the widespread nature of the transport industry throughout New South Wales. In my opinion it is important that all employers understand the significance of their obligations to comply with the provisions of any applicable industrial instrument. In assessing penalty I intend taking the general deterrent effect of the penalty into account. 18 It is also necessary to have regard to the specific deterrent that any penalty will have on these defendants. I accept the submission made by the defendants that it is their intention henceforth to observe the provisions of all applicable industrial instruments strictly and, to this extent, I intend imposing penalties that will reflect a lesser consideration of this matter. However, it is clear from the evidence to which I have referred that the defendants were aware as early as August 2005 that there had been a failure to comply with the provisions of the Award and had not taken any steps to comply with the Award obligations until after the summonses had been issued and served upon them. The defendants sought to explain this failure to make timely payments in the context of the enterprise agreement negotiations which were then proceeding and submitted that I should infer that they were hopeful that the award breaches would be dealt with within the enterprise agreement negotiations. I am unable to make any such inference on the basis of the evidence that is submitted to the Court in these proceedings. On the contrary, I infer that it was not until the summonses were issued that the defendants determined to remedy the breaches of the Award, about which they were clearly aware. 19 During the course of submissions, there was discussion about the appropriate approach to be taken to the imposition of a penalty on each of the defendants having regard firstly to the question of totality and having regard also to the fact that each of the defendants was part of the one family group of companies with the same controlling minds. 20 In terms of totality, I accept that all of the offences arose out of the same course of conduct and that they are all reflective of the same failure on the part of the same individuals to apply the same provisions of the Award for the same, albeit unjustified, reason. It would be inappropriate, therefore, in my opinion to deal with each of the summonses as if they represented separate and distinct offences. They were, as I have observed, part of the one course of conduct and I intend to proceed accordingly. 21 With respect to each of the defendants I shall also take into account the fact that they are all part of the one family group of companies owned by the same family and controlled and directed by the same individuals. It would be inappropriate, therefore, to treat each of the defendants as being separate and distinct legal entities without reference to the interrelationship that I have described. Ultimately, the same shareholders will be affected by the imposition of a penalty on each company. I intend proceeding accordingly. 22 I note for completeness that the defendants indicated that they would plead guilty at the earliest opportunity. I shall apply a discount to reflect the utilitarian value of an early plea of guilty. 23 The maximum penalty that may be imposed on each of the defendants for each offence charged in each summons is the sum of $10,000. The defendant Carey's Warehousing and Distribution Pty Ltd is charge with three offences. Each of the other three defendants is charged with two offences. Having regard to all of the circumstances to which I have referred and having regard also to the matters of principle involving a consideration of the objective seriousness of each offence, the matters of deterrence and the mitigating factors which apply, I have come to the conclusion that an appropriate penalty for each of the 9 offences is the sum of $1,100. 24 The prosecutor sought an order under s 403 of the Act for the payment of the penalties to be made to the prosecutor. S 403 applies to the proceedings by reason of s 357(7) of the Act. The prosecutions arose out of conduct undertaken solely by the prosecutor without reference to any other entity or instrumentality. In these circumstances, it is appropriate, in my opinion, that the penalties be paid to the Industrial Registrar for ultimate payment to the prosecutor being an industrial organisation of the kind referred to in s 403(1). 25 The prosecutor also sought an order for the payment of costs. The defendants, although submitting that no order for costs should be made, advanced no reasons therefor. I propose to order costs accordingly. 26 I make the following orders: (1) Each of the defendants is found guilty of each of the offences charged in each of the summonses. (2) I impose a monetary penalty of $1,100 for each offence. (3) Such penalty shall be paid to the Industrial Registrar for payment to the prosecutor. (4) The defendants are to pay the costs of the prosecutor in an amount assessed by the Court in the absence of agreement. (5) I grant liberty to apply with respect to costs. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.