Electrical Trades Union of Employees, Queensland v State of Queensland (Queensland Health) [2022] QIRC 256

QUEENSLAND INDUSTRIAL RELATIONS COMMISSION CITATION: Electrical Trades Union of Employees, Queensland v State of Queensland (Queensland Health) [2022] QIRC 256 PARTIES: The Electrical Trades Union of Employees, Queensland Applicant v State of Queensland (Queensland Health) CASE NO: B/2021/78 PROCEEDING: Application seeking civil penalty pursuant to s 572 of the Industrial Relations Act 2016 (Qld) DELIVERED ON: 1 July 2022 HEARING DATE: 2 March 2022 MEMBER: HEARD AT: O'Connor VP Brisbane ORDERS: 1. The Commission makes the following declarations: (a) that the Respondent contravened clause 7.8.1 of the BEMS Agreement and therefore section 218 of the Industrial Relations Act 2016 (Qld) by not commencing the bid process required by clause 7.8.1 in relation to the Med Air Contract between 19 August 2020 and 31 August 2020; -- 1 of 15 -- 2 (b) that the Respondent contravened clause 7.8.1 of the BEMS Agreement and therefore section 218 of the IR Act by not commencing the bid process required by clause 7.8.1 in relation to the Hospital Beds Contract between 19 August 2020 and 31 August 2020; and (c) that the Respondent contravened clause 7.8.1 of the BEMS Agreement and therefore section 218 of the IR Act by not commencing the bid process required by clause 7.8.1 in relation to the UPS Servicing Contract between 19 August 2020 and 31 August 2020. 2. The Commission further orders that: (a) Pursuant to s 574 of the Industrial Relations Act 2016 (Qld) the Respondent pay a penalty of $3,469.00 (26 penalty units) in respect of each contravention of s 218 of the Industrial Relations Act 2016; and (b) Pursuant to s 576 of the Industrial Relations Act 2016 (Qld) the Respondent pay the penalty to the Applicant within 28 days. I will hear the parties in respect of costs. CATCHWORDS: INDUSTRIAL LAW – QUEENSLAND – AGREEMENTS – BREACH OF AGREEMENT – ADMISSION OF LIABILITY – CIVIL PENALTY – where -- 2 of 15 -- 3 Respondent admitted to three contraventions of certified agreement – where wide discretion exists to impose penalty – whether Commission should impose a penalty – whether penalty should be at higher or lower end of scale LEGISLATION: CASES: Industrial Relations Act 2016 (Qld) s 218, s 572, s 574, s 575 Fair Work Act 2009 (Cth) Australian Building and Construction Commissioner v Construction Forestry, Mining and Energy Union (2018) 262 CLR 157 Australian Building and Construction Commissioner v Pattinson [2022] HAC 13 Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 Australian Securities and Investments Commission v Adler (2002) 42 ASCR 80 Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corporation Ltd (2007) 168 IR 368 Kelly v Fitzpatrick (2007) 166 IR 14 NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 Trade Practices Commission v CSR Ltd (1991) 13 ATPR 41-076 -- 3 of 15 -- 4 APPEARANCES: Mr J Kennedy of Hall Payne Lawyers for the Applicant Ms AC Freeman of Counsel instructed by Crown Law for the Respondent Reasons for Decision [1] The Electrical Trades Union brings this application seeking civil penalties against the State of Queensland ('the Respondent'). The application relates to three breaches of the Queensland Health Building, Engineers & Maintenance Services Certified Agreement (No 7) 2019 ('the BEMS Agreement'). [2] The Applicant applies for declarations that the Respondent has contravened section 218 of the Industrial Relations Act 2016 (Qld) ('the IR Act') and seeks orders that civil penalties be imposed for such contraventions. [3] The Applicant is a party covered and bound by the BEMS Agreement and is entitled to represent the industrial interests of employees who are, or will be, covered by the BEMS Agreement. [4] The Cairns and Hinterland Hospital and Health Service ('CHHHS'), pursuant to the Hospital and Health Boards Act 2011 (Qld) ('the HHB Act'), is vested with the relevant statutory functions and powers to engage contractors, to undertake minor capital works and major capital works approved by the chief executive in the health service area, and to maintain land, buildings and other assets owned by the Service. Accordingly, the Respondent can only comply with the requirement under 7.8.1 of the BEMS Agreement to contract work via the CHHHS. [5] The Applicant alleges that the Respondent contravened clause 7.8.1 of the BEMS Agreement and therefore section 218 of the IR Act by not commencing the bid process required by clause 7.8.1 no later than 3 months from the expiry of the Outsourced Contracts. [6] The Applicant pleaded the following contracts to be the subject of the contraventions: 1. Maintenance of medical air and vacuum equipment contract ending on 31 July 2020 with a review date on 1 August 2021 2. Preventative maintenance of hospital beds contract ending on 31 August 2020 with a review day of 31 August 2021 -- 4 of 15 -- 5 3. UPS servicing contract ending on 30 August 2021 with a review date on 1 July 2021.1 [7] It was alleged against the Respondent that at no time did it commence the bid process required by cl 7.8.1 of the BEMS Agreement for the contracts, whether outside of the three months from the relevant expiry dates or otherwise. [8] Clause 7.8.1 of the BEMS Agreement relevantly reads: The employer shall bid for work currently outsourced to contractors, unless otherwise agreed between the parties and subject to any legislative requirement. This will not prevent the use of contract extension clauses while this process continues. The bid process should start no less than three (3) months from the expiry of the contract. [9] There is no dispute that the Respondent failed to comply with the provisions of cl 7.8.1. and engaged in the three contraventions of s 218 of the Industrial Relations Act 2016 (Qld) as alleged by the Applicant.2 [10] The facts providing a basis for issuing the declarations proposed by the Respondent were set out in the Respondents submission as follows: 18. The evidence before the Commission3 is that: (a) in relation to the Med Air Contract: (i) it was entered into between CHHHS and Atlas Copco Australia Pty Ltd; (ii) it had a commencement date of 1 September 2017 and a completion date of 31 August 2019. (iii) it was extended to 31 August 2020 on 3 September 2019. (b) in relation to the Hospital Beds Contract: (i) it was entered into between CHHHS and Jeal Property Holdings Pty Ltd ATF Jeal Property Trust, trading as ACTIVTEC SOLUTIONS; (ii) it had a commencement date of 1 September 2017 and a completion date of 31 August 2019; (iii) it was extended to 31 August 2020 on 30 August 2019. (c) in relation to the UPS Servicing Contract: (i) it was entered into between CHHHS and Power and Data Support Services Pty Ltd; (ii) it had a commencement date of 1 September 2016 and a completion date of 30 August 2017; (iii) it was extended to 31 August 2020 on 30 August 2019. 19. The BEMS Agreement came into operation on 19 August 2020. All three Outsourced Contracts were due to expire on 31 August 2020. Thus, it is accepted by the Respondent that between 19 August 2020 and 31 August 2020, it did not bid for work outsourced to contractors as required pursuant to clause 7.8.1, that is, three months before the expiry of the relevant contracts. 1 Application filed in the Industrial Registry 21 September 2021. 2 TR 1-4, LL 19-20; Respondent's outline of submissions filed 7 February 2022 [2]. 3 Exhibit 1, Affidavit of Scott Reichman, exhibit SR-2; Exhibit 2, Affidavit of Steven Thacker. -- 5 of 15 -- 6 [11] It is not in dispute that on the basis of the above factual outline the Commission can conclude that three breaches of the BEMS Agreement have been substantiated. Accordingly, it is open to the Commission to make the following declarations: (a) that the Respondent contravened clause 7.8.1 of the BEMS Agreement and therefore section 218 of the IR Act by not commencing the bid process required by clause 7.8.1 in relation to the Med Air Contract between 19 August 2020 and 31 August 2020; (b) that the Respondent contravened clause 7.8.1 of the BEMS Agreement and therefore section 218 of the IR Act by not commencing the bid process required by clause 7.8.1 in relation to the Hospital Beds Contract between 19 August 2020 and 31 August 2020; and (c) that the Respondent contravened clause 7.8.1 of the BEMS Agreement and therefore section 218 of the IR Act by not commencing the bid process required by clause 7.8.1 in relation to the UPS Servicing Contract between 19 August 2020 and 31 August 2020. [12] The only question before the Commission is whether to exercise the discretion to impose a civil penalty pursuant to s 574 of the Industrial Relations Act 2016 (Qld) ('the IR Act'). Civil penalties pursuant to the IR Act [13] Section 218 of the IR Act provides that a person must not contravene a bargaining instrument. Section 218 is a civil penalty provision. [14] Section 218 of the IR Act provides: 218 Contravening bargaining instruments A person must not contravene a bargaining instrument. Notes— 1 This section is a civil penalty provision. 2 A person does not contravene a bargaining instrument unless the instrument applies to the person—see section 219. [15] The term 'bargaining instrument' means a certified agreement.4 A bargaining instrument does not impose obligations or confer entitlements on a person unless the instrument applies to the person and further a person does not contravene a bargaining instrument unless it applies to the person.5 A bargaining instrument applies to an employee, employer or organization if the instrument is in operation, and it covers the employee, employer or organization.6 4 Industrial Relations Act 2016 (Qld) s 168 ('IR Act'). 5 Ibid s 219. 6 Ibid s 220. -- 6 of 15 -- 7 [16] Pursuant to s 572, the Applicant may apply to the Commission6 for an order in relation to the contravention of s 218 of the IR Act. The section reads as follows: 572 Applications for orders in relation to contraventions of civil penalty provisions A person mentioned in column 2 of schedule 3 for a civil penalty provision may apply to the relevant industrial tribunal for an order in relation to a contravention, or alleged contravention, of the provision. [17] Section 574(1) of the IR Act empowers the Commission to order a person to pay a pecuniary penalty that the Commission considers 'appropriate'. Section 574 relevantly provides: 574 Power of relevant industrial tribunal to make civil penalty orders (1) The relevant industrial tribunal for a civil penalty provision may, on an application under section 572, order a person to pay a penalty the tribunal considers is appropriate if satisfied the person has contravened the provision. (2) An order made under subsection (1) is a civil penalty order. (3) To remove any doubt, it is declared that the relevant industrial tribunal may make a civil penalty order in addition to 1 or more orders under another provision of this Act unless otherwise provided. (4) This section applies subject to section 575. 575 Amount of penalty A penalty payable under a civil penalty order must not be more than— (a) if the person is an individual—the maximum number of penalty units mentioned in column 4 of schedule 3 for the civil penalty provision; or (b) if the person is a corporation—5 times the maximum number of penalty units mentioned in column 4 of schedule 3 for the civil penalty provision. [18] By reason of s 575, a pecuniary penalty must not exceed the relevant 'maximum penalty'. The maximum penalties for a contravention of s 218 of the IR Act are 27 penalty units for an individual and 135 penalty units for a body corporate. At the time of the contraventions, a penalty unit was valued at $133.45. Statutory purpose [19] The civil penalty provisions under Part 8 of the IR Act are based upon similar provisions in the Commonwealth Fair Work Act 2009 (Cth). In that jurisdiction, a body of jurisprudence has built up which identifies the statutory purpose, the factors to be considered, and the process to be followed in determining the 'appropriate' civil 'penalty'. -- 7 of 15 -- 8 [20] In Commonwealth v Director, Fair Work Building Industry Inspectorate,7 French CJ, Kiefel, Bell, Nettle and Gordon JJ wrote: In essence, civil penalty provisions are included as part of a statutory regime involving a specialist industry or activity regulator or a department or Minister of State of the Commonwealth (the regulator) with the statutory function of securing compliance with provisions of the regime that have the statutory purpose of protecting or advancing particular aspects of the public interest. [21] In that case, the Court explained the essential differences between civil penalty regimes and criminal offence provisions, observing that a civil penalty proceeding is 'precisely calculated to avoid the notion of criminality as such'. The plurality stated that 'whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty... is primarily, if not wholly protective in promoting the public interest in compliance'.8 [22] It followed that 'civil penalties are not retributive, but like most other civil remedies, essentially deterrent or compensatory and therefore protective'.9 The plurality in Commonwealth v Director, Fair Work Building Industry Inspectorate also endorsed the analysis of French J in Trade Practices Commission v CSR Ltd ('CSR'),10 who had said that “[t]he principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act.” [23] In Australian Building and Construction Commissioner v Construction Forestry, Mining and Energy Union,11 the High Court again emphasised that in the context of s 546 of the FW Act that the purpose of the imposition of penalties was to put an appropriate 'price on contravention'. [24] The plurality went on to observe that a penalty must have the necessary 'sting or burden' to secure 'the specific and general deterrent effects that are the raison d’être of its imposition'.12 However, in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission,13 Burchett and Kiefel JJ (as her Honour then was) emphasised that 'the penalty should not be greater than is necessary to achieve this object'.14 Consideration [25] Section 218 of the IR Act prohibits the contravention of a bargaining instrument.15 Subsection (1) establishes s 218 to be a civil penalty provision. Having satisfied myself that a contravention of s 218 of the IR Act has occurred, I turn now to the question of 7 (2015) 258 CLR 482, 505 [54]. 8 Ibid 506 [55]. 9 Ibid 507-8 [59]. 10 (1991) 13 ATPR 41-076, 52,152. 11 (2018) 262 CLR 157, 173 [42] (Kiefel CJ), 176 [55] (Gageler J), 185 [87] (Keane, Nettle and Gordon JJ). 12 Ibid 195 [116] (Keane, Nettle and Gordon JJ). 13 (1996) 71 FCR 285. 14 Ibid 293. 15 IR Act (n 4) s 218. -- 8 of 15 -- 9 penalty. Section 575(b) relevantly limits the amount payable for a contravention to five times the maximum number of penalty units mentioned in column 4 of schedule 3 for a civil penalty provision.16 [26] Under s 574 of the IR Act, the Commission may order a person to pay a penalty that the Commission considers 'appropriate'. [27] In the recent decision of the High Court in Australian Building and Construction Commissioner v Pattinson,17 it was said that 'The Court's task remains to determine what is an 'appropriate' penalty in the circumstances of the particular case.'18 [28] The plurality went on to observe: 46. .... It is important to recall that an "appropriate" penalty is one that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case. A contravention may be a "one-off" result of inadvertence by the contravenor rather than the latest instance of the contravenor's pursuit of a strategy of deliberate recalcitrance in order to have its way. There may also be cases, for example, where a contravention has occurred through ignorance of the law on the part of a union official, or where the official responsible for a deliberate breach has been disciplined by the union. In such cases, a modest penalty, if any, may reasonably be thought to be sufficient to provide effective deterrence against further contraventions. 47 The penalty that is appropriate to protect the public interest by deterring future contraventions of the Act may also be moderated by taking into account other factors of the kind adverted to by French J in CSR. For example, where those responsible for a contravention of the Act express genuine remorse for the contravention, it might be considered appropriate to impose only a moderate penalty because no more would be necessary to incentivise the contravenors to remain mindful of their remorse and their public expressions of that remorse to the court. Similarly, where the occasion in which a contravention occurred is unlikely to arise in the future because of changes in the membership of an industrial organisation, a modest penalty may be appropriate having regard to the reduced risk of future contraventions. 48 It is not necessary to multiply examples further. It is sufficient to say that a court empowered by s 546 to impose an "appropriate" penalty must act fairly and reasonably for the purpose of protecting the public interest by deterring future contraventions of the Act.19 [29] In the Respondents outline of submissions, Ms Freeman of counsel for the Respondent argues for a penalty not exceeding $2,000 per contravention totalling an amount not more than $6,000.20 [30] Conversely, Mr Kennedy who appeared for the Applicant submitted that the penalty ought to be in the range of $16,750 - $22,350 in total (being $5,583 - $7,450 per contravention).21 16 Ibid sch 3. 17 [2022] HCA 13. 18 Ibid [19]. 19 Ibid [47]. 20 Respondent's outline of submissions filed 7 February 2022, [45]. 21 Applicant's outline of submissions in reply filed 22 February 2022, [20]. -- 9 of 15 -- 10 [31] In CSR,22 French J listed several factors which informed the assessment under the Trade Practices Act 1974 (Cth) of a penalty of appropriate deterrent value: The assessment of a penalty of appropriate deterrent value will have regard to a number of factors which have been canvassed in the cases. These include the following: 1. The nature and extent of the contravening conduct. 2. The amount of loss or damage caused. 3. The circumstances in which the conduct took place. 4. The size of the contravening company. 5. The degree of power it has, as evidenced by its market share and ease of entry into the market. 6. The deliberateness of the contravention and the period over which it extended. 7. Whether the contravention arose out of the conduct of senior management or at a lower level. 8. Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention. 9. Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention. [32] The list of factors includes matters pertaining both to the character of the contravening conduct and to the character of the contravenor. [33] It is important, however, not to regard the list of possible relevant considerations,23 as a 'rigid catalogue of matters for attention' 24 as if it were a legal checklist. The Commission's task remains to determine what is an 'appropriate' penalty in the circumstances of the particular case. [34] As the Applicant submits, whilst such principles or criteria are useful, the overriding principle is that identified by Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith, where his Honour observed: 22 (1991) 13 ATPR ¶41-076 at 52,152-52,153. 23 See also Re HIH Insurance Ltd (in prov liq) and HIH Casualty and General Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler (2002) 42 ACSR 80, 114-6 [126]; Kelly v Fitzpatrick (2007) 166 IR 14, 18-9 [14]. 24 Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560, 580 [91]. -- 10 of 15 -- 11 [91] Checklists of this kind can be useful providing they do not become transformed into a rigid catalogue of matters for attention. At the end of the day the task of the Court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations. 25 [35] The Respondent submits that it is not appropriate to impose a penalty pursuant to section 574 of the IR Act given the circumstances of the case, or alternately, that any penalty- imposed ought to be at the very lower end of the applicable range given the circumstances of the case. [36] The Respondent identifies the following factors to support its submission that it is not appropriate to make any orders against it: (a) the contraventions were committed over a very short period of time and arose out of the same or similar circumstances; (b) the contraventions did not involve deliberate conduct by the Respondent designed to avoid its obligations under the BEMS Agreement, but rather inadvertent non- compliance which was required within a very short period of time after the BEMS Agreement came into effect; (c) the contraventions were born out of confusion as to the correct process to be adopted, which has not been easily resolved and is still a work in progress; (d) processes have been put into place to try and rectify non-compliance; (e) the contraventions had the capacity to affect only a small group of employees (8 electricians out of a total of 7500 employees) and following compliance with the relevant clause, it was determined that such contracts ought to still be contracted out due to the specialized nature of the work and the operational requirements of the CHHHS. [37] The Respondent further submits that over and above the factors identified above, the Commission should have regard to the following: (a) the Respondent has no previous history of contraventions of this kind; (b) the Respondent has admitted liability and attempted to resolve the matter prior to this application being brought; (c) the nature of the contraventions is towards the very lower end of the scale of seriousness given the short timeframe within which the Respondent had to put into place the appropriate processes to comply with the relevant clause of the BEMS Agreement, such non-compliance was not deliberate, steps have been taken to rectify the issue and only a small proportion of the workforce were affected by the non-compliance. 25 Ibid. -- 11 of 15 -- 12 [38] The Applicant argues that a penalty ought to be imposed. [39] The Applicant contends that the imposition of a penalty is appropriate having regard to the nature of the noncompliance. They reject the Respondent's argument that the delay in responding to the breach was born out of uncertainty about how the process should be implemented. [40] In the Affidavit of Scott Reichman,26 an organiser with the Applicant, he deposes that between November 2020 and July 2021, five meetings of the LCF were cancelled. No reason was given for the cancellation. [41] Clause 8.2.1 of the BEMS Agreement deals with Local Consultative Forum (LCF). Pursuant to that clause, contracting is a standing agenda item. [42] In the Affidavit of Steve Thacker,27 a variety of reasons are advanced for not holding the LCF meetings referred to by Mr Reichman. These included the unavailability of union or employer parties; a lack of a quorum; cancellations due to competing commitments; and emerging issues surrounding the 19 Pandemic. [43] In December 2020 the Applicant received a Contracting Report from the Respondent. Subsequent to receipt of the report, the Applicant attempted to raise the issue of the bid process for contracts with the Respondent. [44] On 11 March 2021 a meeting was held where Mr Robert Hill, an ETU Organiser based in Cairns attempted to again raise the issue of the bid process for Contracts with the Respondent. [45] On 9 July 2021, Mr Hill sent three emails to Ms Tina Chinery, Chief Executive of the CHHHS giving notice of a dispute. [46] A Dispute filed in the Commission was conferenced before Industrial Commissioner Dwyer. It was during this conference that the Respondent conceded that it had not complied with cl 7.8.1 of the BEMS Agreement. [47] The evidence of Mr Thacker is that following the dispute notification, a 'bidding in' assessment was undertaken in respect of the Med Air Contract and UPS Servicing Contract pursuant to cl 7.8.1 and communicated to the Applicant on 8 December 2021. Mr Thacker's evidence is that the assessment in respect of both contracts resulted in an outcome which supported the 'Outsourced Contracts' being appropriate at the time because it could not be demonstrated that insourcing the work was competitive.28 [48] The evidence before the Commission is that some 7305 employees across all professions and trades work at the CHHHS sites. 82 employees are employed in BEMS services and covered by the BEMS Agreement. Of the cohort covered by the BEMS Agreement, only eight electricians are directly affected.29 26 Exhibit 1, Affidavit of Scott Reichman affirmed on 20 September 2021. 27 Exhibit 2. Affidavit of Steve Thacker affirmed on 4 February 2022 28 Ibid [30]. 29 Ibid [6]. -- 12 of 15 -- 13 [49] The eight electricians employed by the CHHHS are primarily engaged to provide routine and ad-hoc electrical maintenance of electrical systems, generators and generation systems, switchboards, general electrical equipment (generally not including ICT equipment or clinical equipment under a service contract to other parts of Queensland Health.30 [50] The Applicant argues that the failure to undertake the bidding process under cl 7.8.1 has resulted in the Applicant losing the right to dispute the outcome of the bid process; and losing the opportunity for the work under the contracts to be insourced thereby having implications for job security of the Applicant's members.31 Moreover, it is contended that the breaches have denied the Applicant's members the ability to undertake the work, thereby denying them the opportunity to develop their skills and gain experience in performing work of the kind being undertaken on contract. The Penalty [51] In this case, I consider that a moderate penalty is, in the circumstances, appropriate. In coming to that conclusion, I consider that the imposition of a moderate penalty in respect of each of the three breaches under s 218 of the IR Act is sufficient to incentivise the Respondent to remain mindful of their obligations in respect of cl 7.8.1 of the BEMS Agreement. [52] The penalty that is appropriate to protect the public interest by deterring future contraventions of the Act is moderated by having regard to the factors of the kind referred to by French J in CSR. [53] The nature and extent of the contravening conduct was, in my view, at the lower end of the potential offending conduct and impacted a limited number of employers. The evidence suggests that eight electricians were impacted by the breaches. Those breaches did not cause any serious consequences for those affected. I accept that the conduct of the Respondent had a potential impact on workers as they were denied an opportunity to undertake the work which was contracted out and thereby lost the chance to enhance their skills. The Applicant lost the right to dispute the outcome of the bid process. [54] I accept that the contraventions are limited to cl 7.8.1 and occurred either through ignorance or misunderstanding on the part of the CHHHS, and, in turn the Respondent as to the operation and effect of cl. 7.8.1 of the BEMS Agreement. That misunderstanding may have arisen as a consequence of the close proximity between the certification of the BEMS Agreement and the contract process. Irrespective, the Applicant and Respondent entered into the BEMS Agreement fully aware of their respective obligations arising out of it. The Respondent failed to meet their obligations in accordance with the agreement. [55] It goes without saying that a certified agreement creates mutual rights and obligations which must be taken seriously by the parties to it. Those rights and obligations arise out of a process of negotiation and are given force by the parties reaching an agreement and having it certified by the Commission. Those rights and obligations are legally binding. 30 Ibid [7]. 31 Exhibit 1. Affidavit of Scott Reichman affirmed on 20 September 2021, [30]. -- 13 of 15 -- 14 [56] I am of the opinion that the contraventions of s 218 of the IR Act are unlikely to arise in the future. Based on the material before me, I am of the view that the Respondent has demonstrated a willingness to ensure compliance with cl 7.8.1 of the BEMS Agreement. [57] I also accept the submission of the Respondent that there was no deliberate conduct by it to avoid its obligations arising out of the BEMS Agreement. [58] In Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corporation Ltd,32 Gordon J observed: [18] As the Primary Reasons demonstrate, the breaches arose out of a disputed and disputable construction of the 2005 Enterprise Agreement and the TRA. Neither breach was flagrant, wilful or deliberate. Amendments to the WR Act increasing the penalty for breaches of industrial instruments arising out of unlawful industrial conduct indicate a legislative desire to deter and discourage such conduct. These changes in industrial law have led to general deterrence being referred to as the “most significant factor” in determining the applicable penalty: see Finance Sector Union v Commonwealth Bank of Australia [2005] FCA 1847; (2005) 224 ALR 467 at [60], [72]. Where the unlawful conduct arises out of an arguable but erroneous construction of a relevant term, and the subsequent breach cannot be characterised as demonstrating a flagrant or wilful disregard for the agreement, this legislative purpose is not furthered by imposition of a penalty. In these circumstances, neither general nor specific deterrence is a significant factor weighing in favour of imposing a penalty. Moreover, Mr McDonald has been fully compensated for the loss suffered as a result of the breach. I do not consider that the circumstances in which the conduct took place warrant the Court exercising its discretion to impose a penalty on Telstra. [59] The deliberateness of a contravention and the period over which it extended are factors which are relevant to a determination of the question of penalty. However, in my view, those factors go to moderating the penalty that might otherwise be applied, but do not go to relieving the Respondent totally from the imposition of a penalty. [60] I note that the Respondent made admissions that it was in breach of the clause during the dispute proceedings before the Commission. I also have regard to the fact that in these proceedings the Respondent has made full admissions in respect of each of the three breaches of s 218 of the IR Act. [61] In the circumstances, I impose a penalty of $3,469.00 in respect of each contravention. The penalty in my view is appropriate to deter and discourage such conduct in the future and is not greater than is necessary to achieve this object. 1. The Commission makes the following declarations: (a) that the Respondent contravened clause 7.8.1 of the BEMS Agreement and therefore section 218 of the Industrial Relations Act 2016 (Qld) by not commencing the bid process required by clause 7.8.1 in relation to the Med Air Contract between 19 August 2020 and 31 August 2020; (b) that the Respondent contravened clause 7.8.1 of the BEMS Agreement and therefore section 218 of the IR Act by not commencing the bid process required by clause 7.8.1 in relation to the Hospital Beds Contract between 19 August 2020 and 31 August 2020; and 32 (2007) 168 IR 368. -- 14 of 15 -- 15 (c) that the Respondent contravened clause 7.8.1 of the BEMS Agreement and therefore section 218 of the IR Act by not commencing the bid process required by clause 7.8.1 in relation to the UPS Servicing Contract between 19 August 2020 and 31 August 2020. 2. The Commission further orders that: (a) Pursuant to s 574 of the Industrial Relations Act 2016 (Qld) the Respondent pay a penalty of $3,469.00 (26 penalty units) in respect of each contravention of s 218 of the Industrial Relations Act 2016; and (b) Pursuant to s 576 of the Industrial Relations Act 2016 (Qld) the Respondent pay the penalty to the Applicant within 28 days. I will hear the parties in respect of costs. -- 15 of 15 --