FEDERAL COURT OF AUSTRALIA

Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) [2018] FCAFC 97

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to r 8.21(1)(d) of the Federal Court Rules 2011 (Cth), the name of the first appellant be amended to “Construction, Forestry, Maritime, Mining and Energy Union”.

2.    On or before 2 July 2018, the respondent file and serve a draft minute of order setting out the terms of the orders he propounds conformably with the reasons of the Court.

3.    On or before 9 July 2018, the appellants file and serve any submissions (of no more than two pages) as to the form of the propounded orders.

4.    The matter be stood over to a date to be fixed for the making of orders.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1    On 14 February 2018, the High Court made orders setting aside the orders of the primary judge (Mortimer J) imposing penalties on the appellants (the Union and Mr Myles) that had not been disturbed by the Full Court on appeal and remitted the re-imposition of penalties to the Full Court. The previous Full Court was constituted by the Chief Justice and Justices North and Jessup. Justice Jessup has retired. Justice North was indisposed for this hearing on penalty.

2    The proceeding concerns events that occurred on 16 and 17 May 2013 at Josephs Road, Footscray, in Melbourne, where part of the Victorian Government’s Regional Rail Link Project was under construction. Construction was being undertaken by John Holland Pty Ltd and Abigroup Contractors Pty Ltd. The Union wanted a delegate on the site. The companies had refused, apparently on the basis that there was already a delegate on the site (though from another union). On the morning of 16 May 2013, approximately 20 people in nine vehicles led by Mr Myles blockaded the site, interrupting a concrete pour. The site was blocked until the concrete in the trucks waiting to enter the site was no longer fit to be used. The concrete that had been poured before the blockade later had to be removed. During the afternoon, prior to leaving, Mr Myles issued a threat to those managing the site that they would be back the next day to repeat the exercise. On the next day, Mr Myles returned, though not in company, and spoke to a senior manager of the work site and issued another threat to the effect that there would be a CFMEU delegate on the site or there would be “war”.

3    The proceeding came before the primary judge in December 2015: Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2016] FCA 436. By the time of the hearing, facts had been agreed and liability admitted. The primary judge imposed one penalty on the Union of $45,000 in respect of two admitted contraventions on 16 May 2013 (the blockade in the morning and Mr Myles’ threat in the afternoon), and a penalty of $25,000 in respect of the third admitted contravention (Mr Myles’ threat) on 17 May 2013. The primary judge imposed one penalty on Mr Myles of $8,000 for the two admitted contraventions on 16 May and $10,000 for the admitted contravention on 17 May. Her Honour also ordered the Union not to indemnify Mr Myles against the penalties imposed on Mr Myles. It should be noted that before the primary judge the Commissioner also sought an order against Mr Myles that he pay the penalty personally and that he not seek or receive reimbursement from any other person, including the Union. The two forms of order sought at first instance were set out at [164] of the primary judge’s reasons, and were as follows:

The second respondent must pay the penalties the subject of orders 10-12 above (Penalties) from his own personal funds, and must not, directly or indirectly, whether before or after the payment of the Penalties:

(a)    procure, cause, encourage, seek, induce or incite any other person (individual or corporate, including in particular the first respondent) to pay to him or for his benefit any monies referable to the payment of the Penalties (whether in whole or in part), whether by way of reimbursement or otherwise; and

(b)    accept or receive any monies referable to the payment of the Penalties (whether in whole or in part), whether by way of reimbursement or otherwise, from any other person (individual or corporate, including in particular the first respondent).

The first respondent must not, directly or indirectly, whether before or after the payment of the penalties by the second respondent the subject of orders 10-12 above:

(a)     procure, cause, encourage, seek, induce or incite any other person (individual or corporate) to pay to the second respondent or for his benefit any monies referable to the payment of the Penalties (whether in whole or in part), whether by way of reimbursement or otherwise; and

(b)     pay to the second respondent any monies referable to the payment of the Penalties (whether in whole or in part), whether by way of reimbursement or otherwise.

4    An order of the kind sought against Mr Myles had been made by Flick J in Director of Fair Work Building Inspectorate v Bragdon (No 2) [2015] FCA 998. The primary judge refused to make the personal payment order against Mr Myles, but did make the non-indemnification order against the Union. The order against the Union was founded on s 545 of the Fair Work Act 2009 (Cth) (the Act).

5    On appeal (Construction, Forestry, Mining and Energy Union v Australian Building and Construction Commissioner [2016] FCAFC 184; 247 FCR 339) the Full Court set aside the non-indemnification order against the Union, but otherwise dismissed the Union’s and Mr Myles’ appeal against the imposition of the penalties. The Full Court was of the view that s 545 could not support the order against the Union.

6    The Commissioner appealed to the High Court, and sought to argue that another source of power for the orders against Mr Myles and the Union was s 546 of the Act. The High Court (Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; 92 ALJR 219) unanimously agreed with the Full Court that s 545 could not support the order made by the primary judge against the Union and unanimously concluded that s 546 could also not support the order against the Union, but, by majority, expressed the view that an order against Mr Myles that he pay the penalty and not seek or receive indemnification from the Union would be supported by an implication within s 546 of the Act. The majority of the Court was also of the view that the Full Court should not just have set aside the non-indemnification order against the Union, but also the penalties against both the Union and Mr Myles, because of their inter-relationship with the non-indemnification order (that had been set aside). The Court remitted the matter to the Full Court “for the re-imposition of penalties according to law”. Thus, before the Court is the re-fixing of penalties against both the Union and Mr Myles and the question whether, and if so in what form, a so-called personal payment order should be made against Mr Myles.

Some preliminary matters

7    Before dealing with the substance of the re-imposition of penalties, two features of the matter should be noted. First, the first appellant, the Union, is now known as the Construction, Forestry, Maritime, Mining and Energy Union. Secondly, after specific request by the Court before the hearing, the Court was informed that the penalties had been paid in June 2016, prior to the hearing of the appeal to this Court. The Court heard the parties as to how, if at all, this should affect the orders of the Court. Both sides expressed the view that it should not affect the orders of the Court, and that the parties (and the Commonwealth) would resolve for themselves the question of repayment and restitutionary interest. (As to the entitlement to interest on moneys paid pursuant to an order that has been set aside, see: Commonwealth v McCormack [1984] HCA 57; 155 CLR 273 at 276; Cox v Hakes (1890) 15 App Cas 506 at 547; Rodger v The Comptoir d’Escompte de Paris (1871) LR 3 PC 465 at 475; Merchant Banking Co v Maud (1874) LR 18 Eq 659; and Heavener v Loomes [1924] HCA 10; 34 CLR 306 at 323-324.)

Re-imposition of penalties

8    The parties agreed on a statement of agreed facts in November 2015. These contained admissions by the Union and Mr Myles of three contraventions of s 348 of the Act: the blockade in the morning of 16 May, the threat to return the following day made in the afternoon of 16 May, and the threat on the morning of 17 May. The primary judge made findings that included findings based on the agreed facts.

9    In the light of the primary judge’s careful and detailed judgment, the observations and reasons of Jessup J in his reasons on the appeal and the observations and reasons of the plurality of the High Court, it might be thought to be a work of supererogation to revisit the facts in detail. The parties, however, were not in agreement as to what this Court could take from those judgments. Therefore, it is necessary to be precise as to the factual basis of the imposition of penalties.

10    There was no dispute that the Court could and should adopt the primary findings of the primary judge at [24]-[66] of her Honour’s reasons. These paragraphs were as follows:

FACTUAL BASIS FOR THE ORDERS TO BE MADE

24    The following findings are made on the basis of the statement of agreed facts and admissions filed by the parties.

25    This prosecution concerns conduct occurring at one of the sites for what is known in Victoria as the Regional Rail Link project, which involves the construction of regional rail lines separate from metropolitan rail lines as well as the modification of existing rail infrastructure including metropolitan, V/Line and Australian Rail Track Corporation Ltd lines. The City to Maribyrnong River Project Package B part of the project includes an area between the north end of Southern Cross Station and the up side of Hopkins Street, Footscray, as well as a section of the Werribee rail line from the down side of Maribyrnong River to the down side of Hopkins Street Footscray.

26    This part of the Regional Rail Link project is to be carried out as a joint venture between John Holland Pty Ltd, Abigroup Contractors Pty Ltd and Coleman Rail Pty Ltd. There is a broader group involved in what is known as the “Package B Project Alliance”, which includes the Secretary of the Victorian Department of Transport (I use this general description recognising the Department changes its name from time to time), the relevant train operators (V/Line and Metro Trains) and a number of other corporations. However it is the three joint venturers who were responsible for the construction work on the project.

27    The workforce of John Holland and Abigroup involved in the project was covered by a single enterprise agreement made under the Fair Work Act. The enterprise agreement was titled the Abigroup, John Holland and the Australian Workers’ Union Regional Rail Link Southern Cross Station to Footscray Junction Project 2012-2015. The Australian Workers’ Union was a party to the enterprise agreement, and there was, accordingly, an AWU delegate on the construction site.

28    The main site offices for the Package B Project were located in Josephs Road, Footscray. The workforce for the project was drawn from labour provided by the three joint venturers as well as a variety of other subcontractors. John Holland had the most employees on site at the time of the offending conduct (71 employees), with Abigroup and Coleman Rail each having a comparatively smaller number (15 and 12 employees respectively).

29    There was a gated entrance to the site offices on Josephs Road, and this was the only way vehicles could enter the construction site.

30    Mr Myles was, in May 2013, a Vice President of the Construction and General Division of the CFMEU. From the evidence, it appears this position sits in the CFMEU organisation hierarchy below the positions of Senior Vice President and President of the Construction and General Division. At the time, there were four Senior Vice Presidents and six Divisional Vice Presidents of the Construction and General Division.

31    The CFMEU wanted a CFMEU delegate on the site. Mr Myles had visited the site frequently since the start of the project and had spoken with Mr Dennis Summerfield, an employee of John Holland. Mr Summerfield was responsible for coordinating and planning the civil works for the Package B Project, including the earth works, structures and services. On repeated occasions Mr Myles had exchanges with Mr Summerfield about getting a CFMEU delegate on the site. He had said to Mr Summerfield that John Holland should “put a CFMEU delegate on the Site”, and had told Mr Summerfield “I need a CFMEU delegate on the Site” and “when am I going to get a delegate?”, or words to that effect.

32    Mr Summerfield’s response had been that since the AWU was the party to the Enterprise Agreement and had a delegate on site, there was no need for a CFMEU delegate. Having said that, there was no dispute before me that the CFMEU was lawfully entitled to make a request of the joint venturers to have one of its delegates on site as well.

33    The parties were also agreed that the making of that request by the CFMEU was within the meaning of “engages in industrial activity” in s 347(b)(iv) of the Fair Work Act, and I accept that to be the case.

34    Prior to the events which are the subject of this prosecution, and consistently with the view Mr Summerfield had conveyed to Mr Myles, the joint venturers had not agreed to have a CFMEU delegate on the site.

35    That brings me to the events of 16 May 2013. On that day John Holland and Abigroup had scheduled the construction of what was called in the evidence a “deflection wall” along a section of railway track. Counsel for the applicant explained in oral submissions that the purpose of the deflection wall was to support a bridge that was to be constructed over the railway line. The wall was to be made of concrete.

36    Boral had been engaged to supply the concrete to build the wall. A large amount of concrete was required: 130 cubic metres of wet concrete. On 16 May 2013, the concrete was to be delivered by concrete trucks arriving in approximately 10 minute intervals over a three to four hour period, with between five and seven cubic metres of concrete to be delivered per load. A number of subcontractors had been engaged to build the wall on that date – some to do the formwork for the wall, some to pump the concrete. The concrete pour would involve 13 employees of the subcontractors, who were scheduled to, and did, arrive between 7 am and 9 am that morning.

37    The first Boral concrete truck arrived at 11.20 am, and the concrete pour began. By approximately 11.50 am, four Boral concrete trucks had delivered approximately 24.4 cubic metres of the 130 cubic metres of concrete to be poured that day. Due to the events which followed, no more concrete would be poured and the construction of the wall had to be abandoned and redone at a later date.

38    Mr Myles and approximately 20 other people arrived at the Josephs Road entrance to the site at approximately 12 noon. By this time, the concrete pour was well underway. They arrived in approximately nine separate vehicles, some of which had “CFMEU” stickers on their rear windows. Neither the people nor the vehicles had any association with the construction work occurring on the site. Many of the people who came with Mr Myles were wearing jumpers with “CFMEU” written on the front and back, or fluorescent vests with the names of various contractors on them.

39    The nine or so vehicles were parked next to each other across the width of the road outside the entrance gate. This blocked vehicle access to the site entrance. Mr Myles and the other people got out of the vehicles and stood around them. The respondents accepted it was appropriate to describe the situation as a blockade.

40    After Mr Summerfield telephoned them, Robert Currie, Abigroup Human Resources/Industrial Relations Manager and Robert Maroney, Abigroup Human Resources Advisor came to the site, arriving shortly after 12 noon.

41    When Mr Summerfield approached Mr Myles and asked him what he was doing, Mr Myles responded with words to the effect of “we’ve lost our keys and are waiting for the RACV”.

42    Mr Summerfield had some traffic management issues to deal with, both in terms of vehicles trying to enter the site and some trying to leave. The drivers of all those vehicles were told to park on the side of the road until he could sort things out.

43    Mr Maroney took some photographs of the scene, which were tendered in evidence. They show a confined area crowded with parked cars and various individuals, and there is clearly no way that any vehicle could get through to enter or leave the site.

44    Mr Currie called the Footscray Police and spoke to Sergeant Mark Anderson, explaining what was happening at the Site. He made this call about 12.20 pm and soon, several police constables had arrived, along with Sergeant Anderson. Sergeant Anderson spoke to Mr Myles, who told him that he and the other individuals with him would “be there for about an hour”.

45    By this time (that is, around 12.30 pm), four more Boral concrete trucks had arrived at the site to continue the concrete pour, and were forced to park along the side of Josephs Road. Mr Summerfield went over to speak to Mr Myles again, and they had a conversation, the substance of which was agreed between the parties to be as follows:

Myles:    I haven’t got a delegate on site to protect my members so I’m blocking the road.

Summerfield:    The Alliance has an AWU delegate, we don’t need a CFMEU delegate. We are under an AWU Agreement.

Myles:    I will only remove the blockade if you stop the pour and pack the concrete pumps up.

46    More police officers arrived. One was Senior Sergeant Damian Jones from the Footscray Police. He spoke to Mr Myles who told him that Mr Myles and his companions would not leave the site until they had disrupted the concrete pour for the day. He also said that the cars would remain blocking the road until the concrete trucks and the concrete pumper had left the area for the day.

47    Approximately an hour later, the respondents’ actions began to have an effect on the condition of the concrete in the four trucks, which began to spoil. All the concrete was rendered unusable. The four trucks left Josephs Road and went to Delta Concrete Recycling to dump the spoiled concrete. The 24.4 cubic metres of concrete which had already been poured to start the wall was also wasted. That concrete had to be destroyed. The entire wall was subsequently repoured at a later date.

48    In turn, this led to John Holland, through Mr Summerfield, cancelling the rest of the concrete deliveries scheduled for 16 May 2013 and instructing the pumping crews to pack up and leave the site because there was no work for them to do. The rest of the work scheduled for 16 May 2013 also had to be abandoned, and recommenced on another occasion.

49    After the concrete trucks and the subcontractors had left, and as Mr Summerfield was passing near to Mr Myles, Mr Myles said:

I’ll be back tomorrow to stop the concrete pour … You won’t pour again until you put a delegate on and Ralph Edwards is happy.

50    Mr Ralph Edwards was the President of the Victoria/Tasmania Branch of the Construction and General Division of the CFMEU.

51    Shortly after this comment, a discussion occurred between the individuals who were blocking the site entrance. They were observed to shake hands and pose for a photograph with a red “CFMEU” flag that one of them was carrying. After the photo was taken, they all left Josephs Road in their vehicles and the road was clear again. This was not long after 2.30 pm. The road had therefore been blocked for just over two and a half hours.

52    The respondents do not dispute that their actions caused delay and disruption to the construction works at the site, and caused the joint venturers to incur wasted construction costs. Those costs included the cost of delivery of the concrete which was both wasted and spoiled, and labour costs associated with the concrete pour that day. Additional costs were incurred in demolishing that part of the wall which had been erected, and also in disposing of the spoiled concrete assigned to it. Those losses were not quantified on the evidence before me, however I am prepared to infer from the evidence about the amount of concrete involved, the number of trucks and the number of workers, that those costs were significant. The respondents’ action caused a short delay to the project itself, but on the evidence that delay does not appear to have been more than one day.

53    The respondents were not done with their disruption upon leaving the site on 16 May 2013.

54    Instead, Mr Myles returned to the site the next morning, on 17 May 2013, to see if the CFMEU action had had the desired effect. He met Mr Summerfield at approximately 9.55 am, at the pedestrian entrance to the site. The following conversation occurred:

Myles:    Has the project reconsidered having a delegate on site, because if there was a delegate on site, there would be no more issues, guaranteed?

Summerfield:    No, we haven’t considered a delegate and won’t be having one.

Myles:    Do you want a war or a delegate?

Summerfield:    Nobody wants a war.

Myles:    Well if you don’t want to put a delegate on then we will have one. I’ll be back tomorrow to stop the concrete pour.

55    Having delivered his message, Mr Myles left the site. There is no evidence before me whether he did in fact return on 18 May 2013 to stop, or attempt to stop, the concrete pour. Indeed, there is no evidence at all before me as to events after 17 May 2013 at the Josephs Road site, nor in relation to whether a CFMEU delegate was put on the site.

FINDINGS

56    On the basis of those facts, I make the following findings.

57    Mr Myles was an “officer” of the CFMEU within the meaning of that word set out in s 12 of the Fair Work Act, because he was an “official” of the CFMEU, holding the office of Vice President of the Construction and General Division.

58    Mr Myles organised and participated in the blockade of the Josephs Road entrance to the Package B Project construction site on 16 May 2013, between approximately 12 noon and shortly after 2.30 pm. He led a group of more than 20 other individuals associated with the CFMEU. Their actions caused a significant and costly amount of wastage of a very large amount of concrete which had been ordered and partly delivered to the site. It also caused the joint venturers to incur additional, unforeseen and unnecessary costs of disposing of the spoiled concrete and dismantling that part of the wall that had been poured and was wasted because of the blockade. Their conduct also caused a short delay in completion of the construction of the wall.

59    As well as organising, leading and engaging in the blockade itself, Mr Myles made two distinct threats to the joint venturers, by his statements to Mr Summerfield. The first threat was that which I have set out at [49] above, which was made after the concrete pour had been successfully disrupted. That threat was to repeat the blockade on 17 May 2013, and to cause a similar level of disruption and waste to the construction work at the Josephs Road site. I infer that Mr Myles was aware that a second day of disruption and potential wastage of that large an amount of concrete would cause additional damage to the joint venturers and to the progress of the project.

60    The second threat was the one I have set out at [54] above, and was made by Mr Myles to Mr Summerfield the following day, 17 May 2013. I find Mr Myles returned to the site with the express intention of finding out whether the threat made on the previous day, after the successful disruption of the concrete pour, had had the desired effect of causing John Holland and the other joint venturers to allow a CFMEU delegate onto the site.

61    I find that the blockade itself was undertaken with the clear intention of coercing John Holland, and the other joint venturers, to change their position and comply with the CFMEU request for a CFMEU delegate to be present on the Josephs Road site.

62    I further find that each of the threats was made with the clear intention of coercing John Holland, and the other joint venturers, to change their position and comply with the CFMEU request for a CFMEU delegate to be present on the Josephs Road site.

63    In the case of the blockade itself, and the two threats he made on 16 and 17 May 2013 respectively, the conduct in which Mr Myles engaged was intended to coerce John Holland and the other joint venturers to engage in industrial activity within the meaning of s 347(b)(iv) of the Fair Work Act: namely, to comply with the CFMEU request for one of its delegates to be present at the Josephs Road site.

64    The blockade, and the two threats made by Mr Myles, amount to contraventions of s 348 of the Fair Work Act.

65    Mr Myles engaged in the conduct I have set out above in his capacity as an officer of the CFMEU. By reason of s 363(1)(b) of the Fair Work Act, read with s 363(3), his actions and state of mind, as I have described them above, are taken to the be the actions and state of mind of the CFMEU. Accordingly, I find the CFMEU has also contravened s 348.

66    There is no doubt that penalties must be imposed on each of Mr Myles and the CFMEU for this conduct.

11    In addition to the above, the primary judge found at [111] and the first sentence of [112] the following:

111    The CFMEU is an organization with a large asset and income base. It occupies a position with particular legal privileges and responsibilities as a registered organisation under the Fair Work (Registered Organisations) Act 2009 (Cth). It is exempt from income tax, and in that sense whatever funds it determines to use to pay pecuniary penalties are not “after tax” funds. The applicant submitted, and I accept, that the Victoria/Tasmania Branch of the Construction and General Division of the CFMEU alone recorded a net surplus of $2,982,143 for the financial year ending 31 December 2014; and as at 31 December 2014, had net assets of $58,862,813 (including $14,353,117 of cash and cash equivalents such as cash at bank and short term deposits).

112    The accounts of the Victoria/Tasmania Branch of the Construction and General Division of the CFMEU alone for the year ending 31 December 2014 show receipts of in excess of $19 million from its members. …

Findings as to seriousness of the conduct

12    The Commissioner sought to rely upon further inferential findings and conclusions drawn by her Honour. The primary judge set out her views on the seriousness of the conduct at [103]-[106] of her reasons, as follows:

103    In my opinion it is inescapable that the respondents’ conduct should be characterised as serious, and as intended to have only one purpose, which was an unlawful purpose. That conclusion stems from a number of factors. A clearly available inference from the evidence, which I am prepared to draw, is that the respondents’ contraventions occasioned significant extra cost to the joint venturers, material delay, and significant disruption to work on the project site. I also find that the respondents intended to cause each of those outcomes. The outcomes were not collateral effects of the respondents’ conduct, but part and parcel of the coercive pressure the respondents intended their conduct to produce.

104    Given the history of contraventions of s 348 by both the CFMEU and Mr Myles, I am prepared to infer that both respondents (and the CFMEU’s other responsible officers) well knew the conduct was unlawful, and did not care. I accept the applicant’s submission that the respondents’ behaviour in relation to these contraventions is a continuation, or repetition, of the behaviour exhibited in relation to the Mitcham Rail project (Mitcham Rail Case [2015] FCA 1173, Jessup J, in which findings were made against both the CFMEU and Mr Myles) and the Bald Hills Wind Farm project (Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2015] FCA 407, Tracey J (the Bald Hills Wind Farm Case), in which Mr Myles was not a respondent). The seriousness of the respondents’ behaviour is exacerbated by the fact that it can be characterised as a repeated tactic. The use by Mr Myles of Mr Edwards’ name, and his obvious intention to convey the message to Mr Summerfield that Mr Edwards endorsed what was happening, was calculated to give the impression of the level of authority Mr Myles had to make the threats and the level of the CFMEU’s determination to procure the result it wanted.

105    It is correct that the time period over which the contraventions occurred was reasonably short, but I am not persuaded that is a factor which tells one way or the other in terms of fixing an appropriate penalty. The period of time is more obviously related, in my opinion, to the nature of the threat and the blockade. Having successfully blockaded the site, and having followed it up with a threat, the point was made.

106    I accept the respondents’ submissions that there was, on the evidence before the Court, no violence involved in the contraventions. Contrary to the respondents’ submissions, I do not consider the absence of violence to affect the level of seriousness with which the contraventions should be viewed. If Mr Myles or other CFMEU members had engaged in violence during the blockade on 16 May, or there had been violence on the return to the Josephs Road site on 17 May, then no doubt consideration would have been given to whether criminal charges should be laid. The criminal law is apt to deal with violent conduct occurring in a situation such as this. I see nothing in the text, context or purpose of s 348 which suggests that action which does not involve violence should necessarily, or even usually, be seen as “less serious”. An assessment of the seriousness of the conduct is made by reference to the intention of s 348 in preventing the coercion of people to engage in industrial activity.

13    We agree with, and see no reason not to adopt, the views there expressed by the primary judge. No challenge was made to them at the appeal in 2016, nor before the Court on this exercise.

Findings as to deliberateness and knowing contravention

14    The Commissioner sought to rely on [107] as to the knowledge of the unlawfulness of the conduct. The primary judge’s findings included the following:

I have already made findings to this effect. The respondents are longstanding, experienced, and regular participants in industrial activity. They are legally represented and have clear capacity to take advice about the lawfulness of their proposed conduct before they engage in it. For the year ending 31 December 2014, the accounts of the Victoria/Tasmania Branch of the Construction and General Division of the CFMEU alone showed an expenditure on legal fees of over $2.2 million.

15    The conduct was deliberate and known by the Union and Mr Myles to contravene the Act.

Findings as to admissions and the avoidance of a contested hearing

16    The Commissioner sought to rely on [114]-[116] of the primary judge’s reasons, which were as follows:

114    I give some, but minimal, weight to the fact that, ultimately, the respondents made admissions and a contested trial on the facts was avoided. That is because the respondents’ change in position occurred very close to trial and, I find, for reasons related to the settlement of other litigation. It was not a change of position borne of any real contrition.

115    The amended defences filed on behalf of the respondents in mid November 2015 contained no admissions, and consisted almost entirely of pleadings that the respondent did not know or could not admit certain allegations, or denied the applicant’s allegations. As I have noted earlier in these reasons, the parties advised the Court of a settlement of the applicant’s claims only 10 days before the trial was due to commence. This followed upon the settlement of related proceedings in the Supreme Court of Victoria. Senior counsel for the respondents said in argument:

MR MORRISSEY:     Anyway, I think it’s – so just to be clear not to distract that the submission is simply this that by virtue of being – that the charge in the proceedings in this matter were not brought for 12 months and that hasn’t occasioned us any embarrassment, so we’re not making a complaint of it, but it’s – that is the fact. In the meantime a criminal charge was laid. That took priority for the union and ultimately when that matter resolved and was withdrawn this matter has speedily raced to a conclusion. If your Honour were not minded to make a finding in the union’s favour concerning delay there then it still is a relevant matter in considering the cooperation of the union with the process in ultimately accepting responsibility for the breaches I mentioned and that’s the way in which it can be used.

HER HONOUR:     You don’t seek to characterise that as remorse or contrition, you seek to - - -

MR MORRISSEY:     No.

HER HONOUR:     - - - characterise it as cooperation?

MR MORRISSEY:     Correct.

116    I consider the respondents’ conduct demonstrates the barest of cooperation, mostly due to the realisation that once the issues they had sought to raise about the stay of these proceedings had been unsuccessful, or served no further purpose, they were likely to be found to have engaged in the contraventions alleged. Their change in position was due, I find, to self interest, rather than to any considerations which should operate significantly in mitigation of penalty.

17    We see no reason not to adopt these findings and this approach, but we also recognise, as the primary judge did at [117], that some allowance should be made for encouraging parties in the position of the Union and Mr Myles to make admissions and co-operate in agreeing facts. We will take that into account.

Balance of the findings and views of the primary judge

18    In the light of the argument on re-imposition, it is perhaps convenient to deal with the balance of the considerations going to penalty otherwise than by reference to the views of the primary judge. That is not by reason of any particular disagreement with her Honour.

Applicable principles

19    It is unnecessary to engage in any extended discussion of principle. Of particular significance is the recognition that deterrence (general and specific) is the principal and indeed only object of the imposition of a penalty – to put a price on contravention that is sufficiently high to deter repetition by the contravener and others who might be tempted to contravene the Act: French J in Trade Practices Commission v CSR Ltd [1990] FCA 762; (1991) ATPR 41-076 at 52,152, cited by the plurality in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (Civil Penalties Case) [2015] HCA 46; 258 CLR 482 at 506 [55]. Retribution, denunciation and rehabilitation have no part to play.

20    Relevant factors in the overall assessment of penalty were helpfully listed by French J in CSR. They have been adopted in many cases. For present purposes, they can be restated as follows: the nature, character and seriousness of the conduct; the loss and damage caused; the circumstances in which the conduct took place; the size of the contravener and its degree of power; the deliberateness of the conduct and the time over which it occurred; the degree of involvement of senior officials or management; the culture of the organisation as to compliance or contravention; and, any co-operation with the regulator and contrition.

21    The seriousness of the contravention and other features of the conduct which may be seen as relevant to it (here, the seriousness of interruption of a concrete pour, the seriousness of the threats of repetition, the deliberateness of the contravening of the Act, and the exhibited apparent sense of impunity in undertaking contravening conduct) find their place in understanding the degree of deterrence that is necessary to be reflected in the size of the penalty: Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53 at [71].

22    The overwhelming importance of deterrence as the protective purpose of the penalty does not exclude the need to determine a penalty which is proportionate to the contravening conduct. The history of contravention is to be taken into account in fixing the proper level of penalty for the proportionate response to the contravention in question. Proportionality has within it the need to characterise the seriousness of the contravention. Proportionality of penal response to a contravention assessed by reference to its seriousness and gravity is an essential characteristic of the application of the statute. The penal response is for that contravention, not earlier contraventions: Veen v The Queen [No 2] [1988] HCA 14; 164 CLR 465 at 477-478. Prior contraventions may reveal an apparent disregard for the Act and the need for deterrence by a penalty at a level appropriate to achieve that objective. It is to be borne in mind, however, that it is for the conduct in question that the penalty is imposed, not for prior conduct.

23    The Commissioner relied on two schedules of prior penalties and declarations under industrial laws involving the Union and Mr Myles. The schedule that concerned the Union comprised 84 pages. It dealt both with the Union as the CFMEU and with the Maritime Union of Australia. (We would not have regard to contraventions of the latter union as a separate and distinct organisation prior to the amalgamation of the two organisations.) It would lengthen these reasons inordinately to traverse the schedule in detail. It is sufficient to describe the history in terms drawing from the comments of the primary judge (at [139] and [140] of her reasons). The prior contraventions are notable for their number and frequency. The conduct is varied but contains contraventions similar to these, including intended coercion, blockades and obstruction of access to sites. The conduct has a theme of deliberateness in contravention of the Act. It is difficult, if not impossible, not to come to the conclusion that the Union is prepared, when it suits it, to contravene the Act and, as here, seek to coerce employers to comply with its demands. Without evidence to the contrary, it is a natural inference that those officials of the Union, such as Mr Myles here, tolerate and facilitate this attitude and approach of contraventions of the Act at the choice and will of the Union.

24    Mr Myles has been involved in far fewer contraventions than the Union: in 2010 (contraventions connected with the exercise of a right of entry); in 2012 (contraventions involving obstruction of access to a site and intimidation and abuse of employees and sub-contractors of a builder); in August 2013 (coercion at the Mitcham Train Station upgrade); in February 2014 (contraventions concerned with exercise of rights of entry); in April and May 2014 (involvement in strike action contrary to s 417 of the Act); and in March 2015 (involvement in a blockade at Port Melbourne). It was submitted on Mr Myles’ behalf that he has not been found to have contravened the Act since June 2015 when the last penalty was imposed on him. That is a matter to be taken into account, but it is not a matter that negatives the need for deterrence, especially in the absence of evidence of contrition from Mr Myles.

The proper level of penalties

25    The maximum penalty under the Act for each contravention is $51,000 for the Union and $10,200 for Mr Myles: see item 11 of the table in s 539(2) and s 348 of the Act, and s 4AA of the Crimes Act 1914 (Cth), by reference to the date of the contravening conduct.

26    It is necessary to have regard to the maximum penalty. In Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; 340 ALR 25 at 63 [154]-[156], the Full Court said:

154    In considering the sufficiency of a proposed civil penalty, regard must ordinarily be had to the maximum penalty. In Markarian, a criminal sentencing context, it was observed at [31] that:

careful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick.

155    The reasoning in Markarian about the need to have regard to the maximum penalty when considering the quantum of a penalty has been accepted to apply to civil penalties in numerous decisions of this Court both at first instance and on appeal (Director of Consumer Affairs, Victoria v Alpha Flight Services Pty Ltd [2015] FCAFC 118 at [43]; Australian Competition and Consumer Commission v BAJV Pty Ltd [2014] FCAFC 52; (2014) ATPR 42-470 at [50]-[52]; Setka v Gregor (No 2) [2011] FCAFC 90; (2011) 195 FCR 203 at [46]; McDonald v Australian Building and Construction Commissioner [2011] FCAFC 29; (2011) 202 IR 467 at [28]-[29]). As Markarian makes clear, the maximum penalty, while important, is but one yardstick that ordinarily must be applied.

156    Care must be taken to ensure that the maximum penalty is not applied mechanically, instead of it being treated as one of a number of relevant factors, albeit an important one. Put another way, a contravention that is objectively in the mid-range of objective seriousness may not, for that reason alone, transpose into a penalty range somewhere in the middle between zero and the maximum penalty. Similarly, just because a contravention is towards either end of the spectrum of contraventions of its kind does not mean that the penalty must be towards the bottom or top of the range respectively. However, ordinarily there must be some reasonable relationship between the theoretical maximum and the final penalty imposed.

27    These considerations, especially those in [156], will be affected by the level of deterrence recognised as necessary, in part from any history of contravening conduct.

28    Looking at the contraventions here, the events of 16 May can be seen to be part of one continuum; but, there were two contraventions. The facts of the whole day were, in one sense, one continuous episode. But there were two contraventions that did not overlap factually, even if they both occurred for a common end – the coercion of the contractors John Holland and Abigroup. It is unnecessary to consider whether the events of 16 May could be characterised as one “course of conduct” for the purposes of s 557 of the Act.

29    The first contravention, the blockade in the morning, was extremely serious. It involved the loss of a large quantity of concrete; it caused loss and damage of a significant amount to those conducting the works; it was a form of coercion on a building site of the utmost weight and force; it was deliberate and continued over a period of time; it was known to be a serious contravention of the Act; and, it was done with an apparent sense of impunity by Mr Myles as a Union official directing it. We take into account the utilitarian value of the (late) admissions and agreement on facts. The Union is a large organisation with significant financial resources. Given the prior history of the Union, its apparent willingness to contravene the Act in a serious way to impose its will, and the need for deterrence of an organisation of its size, we would impose a penalty of $46,000 on the Union for the first contravention.

30    Similar (though not all of the above) considerations attend the assessment of the penalty for Mr Myles. He is an individual. There was no evidence led of his personal assets. His record of contraventions is not as inordinately long as that of the Union. Nevertheless, his contraventions have included serious matters of a blockade and obstruction of a site. We would take into account that the conduct for which he has last been penalised was in March 2015. There is before the Court a proceeding in respect of admitted contraventions of Mr Myles concerning, principally, the exercise of rights of entry over the period of June 2013 through to April 2014. His conduct in directing the blockade and the attitude displayed to the management of the site reflected a disregard for the Act, for the interests of those on the site, for the public and private interests in the work being done, and a disregard for anyone’s interests other than the Union’s demand for a site representative. We would impose a penalty of $8,500 on Mr Myles for the first contravention.

31    The second contravention was serious, but not as serious as the first. It was a coercive threat to come back the next day and repeat the exercise. It was effected with the same apparent disregard of the Act, in the same spirit of practical entitlement to act unlawfully. Whilst it was one part of the day’s events, it is a separate contravention that attracts a penalty. Unless the statute provides otherwise, as it does in s 557 (not applicable here), each contravention attracts a penalty. The phrase “course of conduct” outside its use in s 557 can be problematic in its use. Its proper function in circumstances such as this is to ensure that, having regard to the circumstances (factual and legal), a party is not penalised twice for the same conduct: Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; 194 IR 461 at [41] (Middleton and Gordon JJ); and see Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd trading as Bet365 (No 2) [2016] FCA 698 at [24]-[25] (Beach J) approved by the Full Court in Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd 340 ALR at 60 [141] (Jagot, Yates and Bromwich JJ) and Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2017] FCAFC 159 at [425]-[426] (Middleton, Beach and Moshinsky JJ); Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73 at [231]-[222] (Allsop CJ, Middleton and Robertson JJ). The blockade was serious. A penalty is imposed for that contravention. The second contravention was a threat to repeat the next day that which had just happened. The threat of Mr Myles can be seen to be the tail end of the day’s exercise. But it was a separate and important threat made with an apparent sense of impunity and entitlement. It should not be seen as other than serious. Mr Myles was threatening to stop concrete pours on the site until the Union got its way as to a delegate on site. That said, the threat had a relationship with what had passed during the day. Bearing in mind all the considerations to which we have referred, we would impose a penalty of $25,000 on the Union.

32    As to Mr Myles, the second contravention should be seen as serious, though related to the day’s events. Taking into account the same factors as were relevant to the first contravention by him, we would impose a penalty of $4,000 on Mr Myles.

33    Thus for the two contraventions on 16 May we would impose two penalties totalling $71,000 on the Union and $12,500 on Mr Myles.

34    The third contravention was the return of Mr Myles to the site the following day and his threat of “war” and to repeat the interruption to the concrete pour, unless the Union’s demands were met. The primary judge saw this as more serious for Mr Myles than for the Union, saying at [157] of the reasons:

I consider it appropriate to impose penalties of $45,000 and $8,000 respectively on the CFMEU and Mr Myles for the events of 16 May 2013, during which the most disruption was caused, and penalties of $15,000 and $10,000 respectively in relation to the threat the next day. While I am confident those to whom Mr Myles reported within the CFMEU were content with what he did on 17 May 2013, there was, on the evidence, less organisational presence that day, and no blockade. The vice in Mr Myles’ actions that day was in the threat he personally decided to issue to Mr Summerfield. He should bear, proportionately, a greater penalty for that conduct.

35    With respect to the primary judge, we do not consider that the facts warranted a view that Mr Myles was more culpable on 17 May than the Union. There was certainly no organisational presence, nor a blockade. But, Mr Myles’ delivery of the calculated threat was not done in a personal capacity or for private ends. It was another very serious threat, and, once again, made with a sense of apparent impunity and entitlement to act in that way. It was a separate contravention from the previous day, its relationship with the day before was only that the willingness and ability of the Union to cause significant damage had been demonstrated. The conversation, though short, was a serious act of intended coercion. Taking into account the considerations to which we have made reference, we would impose penalties of $40,000 on the Union and $7,000 on Mr Myles.

36    Thus, the penalties that we would impose on the Union and Mr Myles, for the three contraventions, total $111,000 and $19,500, respectively. In setting the penalties against Mr Myles, we have taken into account that a personal payment order is appropriate.

37    In coming to these penalties, we have had regard to the totality of the penalties, the overall seriousness of the three contraventions and the need for the proportionality of the penalties to the seriousness of the contraventions and to the conduct as a whole.

The personal payment order

38    The plurality of the High Court held that s 546 is sufficient to sustain what their Honours referred to as a “personal payment order”. The focus of the plurality’s reasoning was upon preventing the Union as co-contravener paying the penalty: see especially Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union 92 ALJR at 241 [115], 242 [119] and 243 [122]-[123]. The appeal had come to the Court from this Court concerned with a non-indemnification order against the Union based on s 545 of the Act. During argument, the debate was directed also to the question of a personal payment order against Mr Myles. In that legal context, it is not surprising that the discussion by the plurality was directed to an order that prevented Mr Myles seeking or receiving indemnity from the Union. We do not see anything in the reasons of the High Court to prevent a wider order of the kind made in Bragdon and of the kind sought before, and rejected by, the primary judge (see [3] above). Importantly, however, different considerations may attend an order wider than that to which the plurality made reference, in particular questions of enforcement, supervision and the interference with the rights of third parties.

39    It was submitted on behalf of the Union and Mr Myles that the exercise of the power can only be animated in circumstances where there is a proven (by compelling evidence) necessity for the order, by a proven failure of deterrence from the imposition of penalties unaccompanied by a personal payment order. This is so, it was submitted, because the implication of the implied power comes from the express power carrying with it everything necessary for its exercise; that is, everything necessary for deterrence. Thus, here, it was submitted, there was no proven failure of (specific) deterrence of Mr Myles by penalties alone. We reject this submission. The source of the implication of the power does not limit or constrain the circumstances of its exercise by some “wait and see” principle. The imposition of the order must be appropriate, not to increase the “sting” of the proper penalty (as senior counsel for the Commissioner accepted) but to ensure, as far as possible, that the burden of the proper penalty be recognised. Here the reasons why, in our view, a personal payment order can be justified are straightforward. The primary judge said the following at [199]-[200] in support of the non-indemnification order:

199    As I have noted at [143] above, a registered organisation such as the CFMEU can only behave in the way it does because individuals within the union decide that action should be taken. The CFMEU is legally represented and has access to legal advice. Both the organisation and its officials who lead the contravening conduct seem, on the evidence before me, to be uninterested in whether the conduct is lawful or not, provided they consider the industrial outcome to be sufficiently important. The CFMEU, and its individual officers such as Mr Myles, operate very much on an ‘end justifies the means’ basis.

200    The need for an individual to take responsibility for conduct found to be unlawful, and for that responsibility not to be transferred, lies behind provisions such as s 77A of the Competition and Consumer Act. Where corporate entities are principal actors, it is one of the few mechanisms by which individual behaviour may be changed or affected and the compliance objectives of regulatory schemes advanced.

40    The Union acts through its officials, of whom Mr Myles was, and is, one. The penalty against the individual must be a burden or have a sting to be a deterrent. The history of contravening by the Union, all undertaken through its officials, reflects a willingness to contravene the Act and to pay the penalties as a cost of its approach to industrial relations. Mr Myles has a history of significant contravention. A personal payment order of the kind to which we will come will bring home to him, and others in his position, that he, and they, cannot act in contravention of the Act knowing that Union funds will always bale him, or them, out.

41    There is ample foundation to consider the order presently warranted. This is especially so in the complete absence of any evidence of contrition or change of approach from either the Union or Mr Myles.

42    The Commissioner sought an order wider than one directed to Mr Myles being indemnified by funds of the Union. He sought an order (leaving the precise text of the language to one side for the moment) preventing Mr Myles seeking or receiving any moneys referrable to the payment of the penalties from the Union or any officer, employee or agent of the Union. This was not just aimed at preventing Union funds being the source of the payment, but the moneys of colleagues or workmates who had a relationship with the Union.

43    The Commissioner did not seek an order as wide as the order in Bragdon nor as wide as the order sought before the primary judge.

44    We would not be prepared, at the present time and on the current state of the evidence, to go beyond an order that Mr Myles pay the penalties personally in that (1) he must not, whether before or after the payment of the penalties, seek or encourage the Union in any way whatsoever, directly or indirectly, to pay to him or for his benefit in any way whatsoever any money or benefit referable to payments of the penalties whether in whole or in part and (2) he must not accept or receive from the Union in any way whatsoever any money or benefit referrable to payment of the penalties whether in whole or in part.

45    The Commissioner also sought an order requiring Mr Myles attend at the office of the Commission with a personal cheque or bank cheque to pay the penalties. We would not make that order. Without justification on the evidence it smacks of an overly officious attitude. It is sufficient that the element of personal payment be reflected in the above substantive order.

46    Nor would we make a wider order that may affect others besides the Union. We are of the view that deterrence (specific and general) justifies the order that we are prepared to make. It is directed at preventing Union funds undercutting the sting or burden of the personal penalty. Its enforceability is made less problematic by the ability to focus on the conduct of Mr Myles and the Union and, if necessary, to understand how Union funds have been deployed (or not, as the case may be). The matters referred to by the plurality at 92 ALJR 245-246 [131] were directed to an order in the form we have indicated. Once an order is directed more widely at individuals who may have a relationship, or who may have no relationship, with the Union, different considerations as to supervision and enforcement, and as to the rights of third parties, arise. That is not to say that if an order in the form that we are prepared to make comes to be seen to lack the intended supportive effect on deterrence, a wider order would not be made.

47    The order that we would make is as set out at [44] above, subject to giving the parties an opportunity to address briefly in writing on its form. The order would be accompanied by a penal notice to be served on Mr Myles and the Union under rr 41.06 and 41.07 of the Federal Court Rules 2011 (Cth). The respondent should, within seven days, file and serve a draft minute of order setting out the terms of the orders he propounds conformably with these reasons. Within seven days thereafter, the appellants are to file and serve any submissions (of no more than two pages) as to the form of the propounded orders. The Court will thereafter list the matter for the making of orders.

Associate:

Dated:    25 June 2018