Kelly v Fitzpatrick

• Jurisdiction: Australia Federal only
• Judgment Date: 27 July 2007
• Neutral Citation: [2007] FCA 1080
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Kelly v Fitzpatrick [2007] FCA 1080

WORKPLACE RELATIONS – Penalty hearing – Admitted contraventions of Transport Workers Award 1998 – Underpayment of wages to employee – Where multiple breaches of award arose out of single course of conduct – Relevant considerations in determining level of penalty – Penalty determined

Crimes Act 1914 (Cth) s 4AB

Transport Workers Award 1998

Workplace Relations Act 1996 (Cth) ss 719, 841

Workplace Relations Regulations 2006 ch 7 reg 2.14

Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (2001) ATPR 41-815 referred to

Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 145 ALR 36 referred to

CPSU v Telstra Corporation Limited (2001) 108 IR 228 considered

Gibbs v The Mayor, Councillors and the Citizens of the City of Altona (1992) 37 FCR 216 referred to

Johnson v R (2004) 205 ALR 346 referred to

Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 followed

Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65 referred to

LAUREN MAREE KELLY v WILLIAM MICHAEL FITZPATRICK AND MARGARET MARIE FITZPATRICK

VID 95 OF 2007

TRACEY J

27 JULY 2007

MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 95 OF 2007

BETWEEN:	LAUREN MAREE KELLY Applicant
AND:	WILLIAM MICHAEL FITZPATRICK First Respondent MARGARET MARIE FITZPATRICK Second Respondent

JUDGE:	TRACEY J
DATE OF ORDER:	27 JULY 2007
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The first respondent pay the Commonwealth the following penalties for breaches of the Transport Workers Award 1998:

(a) $400 for breach of clause 15.1.

(b) $1600 for breach of clause 12.5.

(c) $1400 for breach of clause 37.2.

(d) $40 for breach of clause 33.2.1

(e) $200 for breach of clause 35.

(f) $20 for breach of clause 42.

2. Payment of the penalties imposed by Order 1 be made within 60 days.

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 95 OF 2007

BETWEEN:	LAUREN MAREE KELLY Applicant
AND:	WILLIAM MICHAEL FITZPATRICK First Respondent MARGARET MARIE FITZPATRICK Second Respondent

JUDGE:	TRACEY J
DATE:	27 JULY 2007
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1 The applicant, who is a workplace inspector appointed under the Workplace Relations Act 1996 (Cth) (“the Act”), has made application to the Court to have penalties imposed on the respondents for admitted contraventions of the Transport Workers Award 1998 (“the Award”). Each of the contraventions related to the underpayment of wages to a particular employee over a period of about five years. The underpayments, in total, amounted to $96,664.76.

2 The respondents are husband and wife. They conduct a trucking business which trades as “Fitzpatrick’s Transport Service”. The business is not incorporated. The business operates a small fleet of trucks from a base in Charlton in north-west Victoria. The first respondent is one of six drivers who work in the business. The second respondent performs clerical duties relating to the payment of wages and accounts. She attends the office on one day each week for these purposes. The day to day administration of the business is in the hands of an employee manager.

3 In 1991 the first respondent offered employment as a casual driver to Mr Roy Paynting. Mr Paynting accepted the offer and worked in the business on a casual basis from May 1991 until 23 June 2004. Thereafter, until 29 March 2006, Mr Paynting was employed on a full time or part time basis.

4 The main reason that the underpayments occurred was that the first respondent offered, and Mr Paynting accepted, a contractual term that Mr Paynting’s remuneration should be calculated at a fixed hourly rate. During the six year period, commencing on 8 February 2001, to which this proceeding relates, that hourly rate was originally $12 and was later increased to $13 and $14. At all relevant times these rates were lower than the wages payable for ordinary hours under the Award, and no account was taken of additional amounts prescribed by the Award for overtime, weekend, and public holiday work.

5 The respondents assert that they were unaware, until June 2006, of either the existence of the Award or the fact that their business had been “roped in” as a respondent to it. The respondents became aware of their obligations under the Award after Mr Paynting complained about underpayment of his wages to the Office of Workplace Services and that Office wrote to the respondents about the complaint. Between June 2006 and April 2007 discussions took place between the respondents and their representatives on the one hand and the Office of Workplace Services on the other. Those discussions related to the question of liability and the calculation of underpaid wages. This led to the acceptance by the respondents that they had underpaid Mr Paynting by $96,664.76. That amount was paid to Mr Paynting on 11 April 2007.

6 Between 8 February 2001 and 26 March 2006 s 178 of the Act relevantly provided:

“178(1) Where an organisation or person bound by an award…breaches a term of the award…a penalty may be imposed by the Court…

(2) Subject to subsection (3), where:

(a) 2 or more breaches of a term of an award…are committed by the…person; and

(b) the breaches arose out of a course of conduct by the…person;

the breaches shall, for the purposes of this section, be taken to constitute a single breach of the term.”

Subsection (3) is of no present relevance. Subsection (4) provided for maximum penalties for breaches. It will be necessary to return to the question of the applicable maximum penalties which were increased by legislation in 2004.

7 Regulation 2.14 of Chapter 7 of the Workplace Relations Regulations 2006 provided that, after the commencement of the Workplace Relations Amendment (Work Choices) Act 2005 on 27 March 2006, an application could be made to the Court for the imposition of a penalty under s 178 in respect of breaches which occurred prior to 27 March 2006.

8 The former s 178 was amended and renumbered as s 719 with effect from 27 March 2006. Section 719(1) differs significantly in its terms from s 178(1) but it effects no substantial alteration which is of relevance for present purposes. Section 719(2) is in substantially the same terms as s 178(2). No changes were made to the level of penalties applicable to an individual for breaches of an Award. Section 719 only applied to three of the days covered by the application: Mr Paynting’s employment by the respondents ceased on 29 March 2006.

9 As already noted the maximum penalties prescribed by the Act were varied in 2004. Insofar as the penalties applied to natural persons they were:

· Prior to 10 August 2004: 20 penalty units ($2200): see s 178(4) of the Act: s 4AB of the Crimes Act 1914.

· From 10 August 2004 until 26 March 2006: 60 penalty units ($6600): see s 178(4) of the Act.

· On or after 27 March 2006: 60 penalty units ($6600): see s 719(4) of the Act.

10 The parties were agreed that six terms of the Award had been breached leading to the underpayment of wages to Mr Paynting. They were:

· Clause 15.1 which imposed the obligation to pay prescribed minimum rates of pay.

· Clause 12.5 which, between 8 February 2001 and 23 June 2004, imposed an obligation to pay prescribed casual loadings.

· Clause 37.2 which imposed an obligation to pay prescribed penalty rates for overtime.

· Clause 33.2.1 which imposed an obligation to pay prescribed penalty rates for work on Saturdays.

· Clause 35 which imposed an obligation to pay prescribed penalty rates for work on Sundays and

· Clause 42 which imposed an obligation to pay prescribed penalty rates for work on public holidays.

11 The parties’ agreement about the identification of the terms which had been breached was founded on the construction of s 178(2) which was adopted by Gray J in Gibbs v The Mayor, Councillors and the Citizens of the City of Altona (1992)37 FCR 216 at 223. His Honour there held that “each separate obligation found in an award is to be regarded as a ‘term’, for the purposes of s 178…” His Honour further held that, in ascertaining what constitutes a ‘term’, regard should be had “not [to] matters of form, such as how the award maker has chosen to designate by numbers or letters the various provisions of an award, but on matters of substance, namely the different obligations which can be spelt out.” In the present case the parties have fixed on the particular provisions of the Award to which it was necessary to have resort for the purpose of calculating Mr Paynting’s minimum legal entitlements to wages. In my view the parties were correct to approach the matter in this manner. The six “terms” which have been identified applied throughout the relevant period and, depending on the days of which Mr Paynting worked, imposed obligations on the respondents as to the level of remuneration payable to him. Whilst the Award was varied from time to time to increase the amounts prescribed by the various terms, the substantial obligation did not vary: it was that the prescribed amount should be paid to Mr Paynting.

12 When calculating Mr Paynting’s entitlements under the Award for any given day, it was necessary, in many instances, to have regard to more than one of the aforementioned terms. For example, in the period between 8 February 2001 and 23 June 2004, when he was working on a casual basis, his ordinary hourly rate was supplemented by the casual loading and, if the work...