Workplace Relations: Mifsud v Veolia Transport Sydney Pty Ltd [2012] FMCA 167

Mifsud v Veolia Transport Sydney Pty Ltd [2012] FMCA 167

This case concerns two main issues, the first being whether the imposition of a penalty was appropriate as a result of Veolia’s failure to made redundancy payments owed to Mr Misfud under a collective agreement. The second was regarding Mr Misfud’s petition for indemnity costs; specifically whether Veolia’s failure to respond to a settlement offer entitled him to these costs.


Mr Misfud argued that the established breach of clause 41 of the Veolia Transport (Metro Light Rail) Union Collective Agreement 2008 required the Respondents to receive a penalty under s546(2) of the Fair Work Act 2009. However, the Federal Magistrate considered a penalty unsuitable in these circumstances through a consideration of several factors as laid out in Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 at [26]-[59]. These included that:

  1. Veolia did not intentionally breach the Agreement; rather it held a genuine but erroneous belief as to the proper interpretation of the Agreement. They held the belief that if a redeployment opportunity was available to an employee, that employee was not entitled to a redundancy payment.
  2. There was an element of ‘management discretion’ within clause 41, subject to the proviso that the discretion must be carried out lawfully.
  3. In terms of prior conduct, Veolia was considered a ‘good corporate citizen’ with no record of prior contraventions.
  4. The Federal Magistrate felt secure that the risk of re-offending was low or non-existent and as such did not turn his mind to the need for specific deterrence. Also as there was no deliberate breach, the need for general deterrence was reduced, which would normally act to prevent similar contraventions by like-minded persons or organisations.
  5. Veolia’s absence of contrition was not considered an aggravating factor.

Thus, this decision was consistent with the Federal Court’s discretion to not impose a penalty in circumstances of genuine misunderstanding about the operation of a binding award (see Australian Liquor Hospitality & Miscellaneous Workers Union v Broadlex Cleaning Australia Pty Ltd (1997) 78 IR 464 at 467) and where the breaches arose from an arguable but mistaken construction of terms of a certified agreement (AMIEU v Australian Meat Holdings (1998) 82 IR 76 per Keifel J at 78).


The court may order costs pursuant to s 570(2) of the Fair Work Act 2009, relating to the follow circumstances:

  1. The court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
  2. The court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs; or
  3. The court is satisfied of both of the following:
    1. i.            The party unreasonably refused to participate in a matter before FWA;
    2. ii.            The matter arose from the same facts as the proceedings.

The Federal Magistrate found in this case that Mr Misfud was entitled to indemnity payments under s 570(b) above. The court was satisfied that Veolia engaged in an unreasonable act or omission, specifically their unreasonable omission to respond to a Letter of Offer dated 31 August 2011, which proposed a settlement of $27 000. The Court further found that this unreasonable omission caused Mr Misfud to incur costs in connection with the proceeding (See Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574). Veolia contended that the offer did not satisfy the requirements of a Calderbank offer, however this argument was not accepted by the court. It held that, having regard to the intention of the offeror as revealed by the terms of the offer (Elite Protective Personnel v Salmon [2007] NSWCA 322 at [137] per Basten JA), Mr Misfud’s offer was clearly an attempt to resolve the entire proceedings, and Veolia’s lack of response to this letter constituted an unreasonable omission, which caused Mr Misfud to incur legal costs up to the date of judgment.

This case illustrates that where there is a genuine but erroneous belief about the interpretation of a collective agreement, in regards to an established breach, an organisation will not be penalised. However, where an organisation unreasonably furthers the legal costs of another party, they will be liable to pay indemnity costs.

* PCC Lawyers are a team of employment practitioners based in Sydney, with many years of combined knowledge and experience in workplace law, industrial relations, workplace investigations and training.  They provide a high standard of excellence and an exceptional level of personal service to a variety of clients in the Sydney metropolitan area, Central Coast, regional NSW and interstate.