FEDERAL COURT OF AUSTRALIA
Woodside Burrup Pty Ltd v Construction, Forestry, Mining & Energy Union [2011] FCA 949
| IN THE FEDERAL COURT OF AUSTRALIA | |
| Applicant | |
| AND: | CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION First Respondent JOSEPH MCDONALD Second Respondent Australian Building & construction Commissioner Intervener |
| DATE OF ORDER: | |
| WHERE MADE: |
BY CONSENT OF THE APPLICANT AND RESPONDENTS THE COURT ORDERS THAT:
1. The first respondent, whether by itself, its employees or its agents or otherwise howsoever, and the second respondent, whether by himself or his agents or otherwise howsoever, be permanently restrained from:
(a) engaging in any industrial action; or
(b) threatening, organising, counselling, encouraging, procuring, or otherwise being involved in any industrial action by any person;
on or in connection with any of:
(c) the Pluto LNG Project;
(d) the North West Shelf Project; and
(e) the Browse LNG Project;
including construction and operations, and any future expansions of those projects.
Definitions
“the Browse LNG Project” means the project known by that name for the development, production and processing of petroleum and includes the off-shore and on-shore components of that project. The off-shore components of that project relate to the production of petroleum from the Brecknock, Calliance and Torosa fields located approximately 425 kilometres north of Broome, Western Australia and the on-shore components of that project relate to the on-shore processing of petroleum, currently anticipated to be located at James Price Point, near Broome, Western Australia.
“industrial action” has the meaning given in s 19 of the Fair Work Act 2009 as amended from time to time and any successor legislation but does not include protected industrial action.
“the North West Shelf Project” means the project known by that name for the development, production and processing of petroleum and includes the off-shore and on-shore components of that project. The offshore components of that project relate to the production of petroleum from various fields located in the region approximately 130 kilometres north west of Karratha, Western Australia and the on-shore components of that project relate to the on-shore processing of petroleum at the Karratha Gas Plant in Karratha, Western Australia.
“the Pluto LNG Project” means the project known by that name or by the name Pluto LNG Development Project for the development, production and processing of petroleum and includes the off-shore and on-shore components of that project. The onshore part of that project includes the construction of a single gas processing train and ancillary facilities between Onslow and the Burrup Peninsula in Western Australia.
“protected industrial action” has the meaning given in s 408 of the Fair Work Act 2009 as amended from time to time and any successor legislation.
“related body corporate” has the meaning given in s 50 of the Corporations Act 2001.
2. The first respondent indemnify the applicant for 25% of all liabilities, costs (including on an indemnity basis) and expenses which the applicant may incur as a result of or in relation to any and all claims by contractors against the applicant arising out of the industrial action at the Pluto LNG Project on 1 and 2 December 2009 to a maximum of $500,000.
3. The first respondent pay the applicant within 14 days of this order $1,500,000 as compensation for damages suffered by the applicant as a result of the above contraventions and a contribution towards its costs of and incidental to these proceedings.
AND THE COURT FURTHER ORDERS THAT:
4. The first respondent pay the applicant within 14 days of this order a pecuniary penalty of $71,500 for (a) engaging in; and (b) being involved in unlawful industrial action in contravention of s 38 of the BCII Act.
5. The second respondent pay the applicant within 14 days of this order a pecuniary penalty of $14,300 for (a) engaging in; and (b) being involved in unlawful industrial action in contravention of s 38 of the BCII Act.
6. There be liberty to the parties to apply in relation to the costs of the issue as to whom the penalties ought be paid.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
| WESTERN AUSTRALIA DISTRICT REGISTRY | |
| GENERAL DIVISION | WAD 16 of 2010 |
| BETWEEN: | WOODSIDE BURRUP PTY LTD Applicant |
| AND: | CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION First Respondent JOSEPH MCDONALD Second Respondent
Australian Building & construction Commissioner Intervener |
| JUDGE: | GILMOUR J |
| DATE: | 22 August 2011 |
| PLACE: | PERTH |
REASONS FOR JUDGMENT
INTRODUCTION
1 The applicant, Woodside Burrup Pty Ltd, seeks orders imposing pecuniary penalties on the first respondent, the Construction, Forestry, Mining and Energy Union (CFMEU) and the second respondent, Joseph McDonald, an employee and senior office holder of the first respondent, for two contraventions each of s 38 of the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act).
2 The Australian Building and Construction Commissioner (ABCC) has intervened in the proceedings as he is entitled to do under s 71 of the BCII Act. Apart from some general submissions made in relation to a number of the issues before the Court the ABCC primarily intervened to contend that any penalties ordered against the respondents be paid to the Commonwealth and not, as the other parties contend, to Woodside.
3 The parties accept the correctness of most of the written submissions of Woodside. Accordingly it has been convenient, where appropriate, to adopt those submissions in these reasons without attribution at every point.
4 The matter arises from strike action on 1 and 2 December 2009 by employees engaged to perform building work on the Pluto LNG Development Project (Project).
5 Woodside is the majority owner and operator of the Project. The employees were employed by building contractors whom Woodside had contracted to carry out the building work on the Project.
6 By its amended statement of claim filed on 17 February 2010, Woodside alleged, and by a statement of agreed facts (SOAF) filed in the court on 3 May 2011, the respondents have admitted, that the respondents each contravened section 38 of the BCII Act by:
(a) engaging in unlawful industrial action in the form of a ban on the performance of building work by employees employed on the Pluto LNG Development Project on 1 and 2 December 2009; and
(b) aiding, abetting, counselling and procuring, and so being involved in, unlawful industrial action in the form of a failure to attend for building work by those employees on 1 and 2 December 2009.
7 Woodside alleged, and the respondents have in the SOAF admitted, that as a result of the contraventions no building work was performed by the employees on 1 and 2 December 2009 and the applicant suffered loss and damage.
8 The parties have agreed that:
(a) the contraventions arose out of the one course of conduct; and
(b) the penalty for the two contraventions should be $71,500 in the case of the CFMEU and $14,300 in the case of the McDonald.
The parties also contend that these penalties are within the permissible range for the contraventions.
9 Woodside and the respondents have also agreed that the penalties should be paid to Woodside.
10 In addition to orders for pecuniary penalties, Woodside seeks orders, to which the respondents have consented:
(a) permanently restraining the CFMEU and McDonald from:
(i) engaging in any industrial action; or
(ii) threatening, organising, counselling, encouraging, procuring, or otherwise being involved in any industrial action by any person;
on or in connection with any of the Pluto LNG Project, the North West Shelf Project or the Browse LNG Project, including construction and operations, and any future expansions of those projects. The last two projects are resources projects in which the applicant and its related bodies corporate have interests: SOAF at [5];
(b) for judgment in the sum of $1,500,000, being compensation for damages claimed by Woodside as a result of the above contraventions and as a contribution towards its costs of and incidental to these proceedings; and
(c) requiring the CFMEU to indemnify Woodside for 25% of all liabilities, costs and expenses which Woodside may incur as a result of or in relation to claims by contractors against Woodside arising out of the industrial action on 1 and 2 December 2009 to a maximum of $500,000.
QUANTUM OF PENALTIES
11 Notwithstanding the agreement of the parties as to the amount of the penalties that should be paid, it is accepted by the parties that ultimately it is for the Court to determine what, if any, penalties should be imposed on the respondents: Alfred v Construction, Forestry, Mining and Energy Union [2011] FCA 556 at [67]-[68].
12 The general approach for the Court to adopt in respect of an agreed position as to the quantum of the penalty was set out by Kenny J in White v Construction, Forestry, Mining and Energy Union [2011] FCA 192 at [5] as follows:
(a) it is the responsibility of the Court to determine the appropriate penalty;
(b) determining the amount of penalty is not an exact science;
(c) within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another;
(d) there is public interest in promoting settlement of litigation, particularly where it is likely to be lengthy;
(e) the view of the regulator, as a specialist body, is a relevant, but not determinative, consideration;
(f) in determining whether the proposed penalty is appropriate, the Court examines all of the circumstances of the case; and
(g) where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure, in the Court's view, is appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if it is within the permissible range.
13 In Wotherspoon v Construction, Forestry, Mining and Energy Union [2010] FCA 111 Jessup J described the approach to be taken as follows:
[8] The authorities make it clear that, notwithstanding the agreement of the parties to a particular proceeding, the determination of the correct penalty is a matter for the court. The court is not obliged to accept the parties' agreement; nor is it entitled to take the easy course of doing so without deliberation. However, the authorities also show that, where the parties have agreed on a penalty, the court should give weight to that agreement, and should generally give effect to it so long as the agreed penalty falls within the appropriate range, that is, so long as it may be described as neither manifestly inadequate nor manifestly excessive …
…
[27] The touchstone by reference to which to approach the question whether the penalties agreed in the present case are either manifestly inadequate or manifestly excessive is that the penalties should pay "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.": Australian Ophthalmic Supplies Pty Ltd v McAlary Smith (2008) 165 FCR 560 at 580 [91]: Construction, Forestry, Mining and Energy Union v Williams (2009) 262 ALR 417 at 428. Although it is not the function of the court to substitute its own preferred penalties for those agreed by the parties, it is necessary for the court to come at least to a general view about the seriousness of the conduct involved in the admitted contraventions of s 38 of the BCII Act.
14 Gordon J in Hardwick v Australian Manufacturing Workers’ Union (2010) 198 IR 312 at [13] said:
. . . additional regard should be had in this matter to the presence of the ABCC as the industry regulator, and the support he has given to the agreement in determining whether the agreed penalties are appropriate.
15 In Australian Building & Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) (2010) 199 IR 373 (at [7]), Barker J summarized the proper approach to the assessment of penalties generally as follows:
The task which a sentencing judge is faced with is one of "instinctive synthesis": Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560 (Australian Ophthalmic Supplies), Gray J at [27] and Graham J [55]. Such a process requires that a court take into account all relevant factors and to arrive at a single result which takes due account of them all: see Wong v The Queen [2001] HCA 64; (2001) 207 CLR 584 at [74]-[76]; Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 (Markarian), Gleeson CJ, Gummow, Hayne and Callinan JJ at [37]-[39]. The penalty must not be so great as to crush the person upon whom the penalty is imposed or reveal the person as a scapegoat: Ponzio at [93] (Lander J); McDonald v R (1994) 48 FCR 555 at 563. The maximum penalty is reserved for only the most serious of contraventions: Markarian at [31]. Proportionality and consistency commonly operate as a final check on the penalty assessed: Australian Ophthalmic Supplies at [53].
16 In this case, the agreed penalties, when it is recognised that one course of conduct was involved and that mitigating factors have been taken into account are, I accept, at the upper end of the range in light of the statutory maxima , and are accordingly, within the permissible range. A penalty will be within the permissible range if it is neither manifestly inadequate nor manifestly excessive: Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [129]; Alfred v CFMEU at [68]. This case does not, in my view, fall within the category of “worst imaginable cases”: QR Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2010] FCAFC 150 at [55] per Keane CJ and Marshall J.
17 The Court in exercising industrial jurisdiction has identified a non-exhaustive range of factors that may be relevant in assessing the appropriate penalty in the circumstances of the particular case: see for example, Construction, Forestry, Mining & Energy Union v Coal & Allied Operations Pty Ltd (No 2) (1999) 94 IR 231 at [8]; Kelly v Fitzpatrick (2007) 166 IR 14 at [14]; Stuart-Mahoney v Construction, Forestry, Mining and Energy Union (2008) 177 IR 61 at [39]-[40]; Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357 at [57]-[58]; White v Construction Forestry Mining and Energy Union at [7]. They include:
(a) the nature and extent of the contravening conduct;
(b) the circumstances in which the conduct took place;
(c) the period of the conduct;
(d) the nature and extent of any loss or damage sustained as a result of the conduct;
(e) whether the contraventions were distinct or arose out of the one course of conduct;
(f) whether or not the breaches were deliberate;
(g) whether senior management was involved in the conduct;
(h) whether there had been any contrition exhibited;
(i) whether the party committing the breach had taken any corrective action;
(j) whether the party committing the breach had cooperated with the prosecutor;
(k) whether there has been similar previous conduct by the respondent;
(l) the size of the business enterprise involved; and
(m) the need for general and specific deterrence.
18 This range of factors which are relevant to penalty should not restrict other matters which the Court may take into account: Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 3) [2011] FCA 579 at [21]. The Court has warned against the use of checklists because they risk transforming the process of "instinctive synthesis" into the application of a rigid catalogue of matters for attention: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [89]-[91]; Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union at [58]-[59].
19 Warnings have also been expressed against comparing the case the subject of the assessment with any other particular case so as to derive from it the amount of penalty to be fixed: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith at [12]-[14], [56]-[57] and [87]; Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union at [60]; Draffin v Construction, Forestry, Mining and Energy Union (2009) 189 IR 145 at [73]-[74]; McDonald v Australian Building and Construction Commissioner [2011] FCAFC 29 at [23]-[25].
20 In the assessment of penalty, having regard to the dual purposes of punishment and deterrence, the punishment must be proportionate to the offence and consistent with the prevailing range of penalties: Cruse v Construction, Forestry, Mining and Energy Union (2009) 182 IR 60 at [10].
21 The objects of the legislation will also be relevant.
22 Section 3(1) of the BCII Act provides that the main object of the BCII Act is to provide an improved workplace relations framework for building work to ensure that building work is carried out fairly, efficiently and productively for the benefit of all building industry participants and for the benefit of the Australian economy as a whole.
23 The BCII Act was introduced to reform the building and construction industry, following upon the findings of the Royal Commission into the Building and Construction Industry that the commercial construction industry was characterised by illegal and improper payments, chronic failure to honour legally binding agreements, regular flouting of court and industrial tribunal orders and a culture of coercion and intimidation: Building and Construction Industry Improvement Bill 2005, Second Reading Speech; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) at [16]-[17]; see also Stuart-Mahoney v Construction, Forestry, Mining and Energy Union at [56]-[57]; Cahill v Construction, Forestry, Mining and Energy Union (No 4) (2009) 189 IR 304 at [97].
24 A contravention of industrial laws is now regarded more seriously than has generally been the case in the past. As Merkel J said in Finance Sector Union of Australia v Commonwealth Bank of Australia (2005) 224 ALR 467 at [72].
… It may be that breaches by unions and employers of industrial legislation from time to time have been accepted as part of the give and take of industrial disputation. However, in recent years industrial legislation has increasingly codified and prescribed what is acceptable, and what is unacceptable, industrial conduct. The legislature has, over time, also moved to increase the penalties that may be imposed in respect of unlawful industrial conduct. In my view, any light-handed approach that might have been taken in the past to serious, wilful and ongoing breaches of the industrial laws should no longer be applicable. As is apparent from the penalties that I have imposed, I have not accepted that such an approach, which was urged by CBA (which contended that either no penalty or only a nominal penalty was appropriate), is applicable in the present case.
25 Although the penalty imposed by Merkel J was reduced to $300,000 on appeal, no criticism was made by the Full Court of the above observations of his Honour: Commonwealth Bank of Australia v Finance Sector Union of Australia (2007) 157 FCR 329 at [191]-[192] per Branson J; at [17] and [19] per Spender J; cf. at [239] per Marshall J who would not have reduced the penalty.
26 Merkel J’s observations were also endorsed by Branson and Lander JJ in Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union at [62].
The nature of the contravening conduct; the circumstances in which the conduct took place; the period of the conduct
27 The central element of the penalty assessment process requires the Court to ensure that the penalty is appropriate to the objective seriousness of the contravention. As such, the nature and extent of the contravening conduct and the circumstances in which the conduct took place are important considerations. These appear from the statement of agreed facts. The following account of events is drawn from that statement.
28 As stated, Woodside is the majority owner and operator of the Pluto LNG Development Project. The onshore part of the Project includes the construction of a single gas processing train and ancillary facilities between Onslow and the Burrup Peninsula in Western Australia.
29 Woodside engaged various building contractors (Contractors) to undertake building work in relation to the construction of a LNG processing train at the Project. The Contractors employed workers to undertake the building work (Construction Employees).
30 Woodside is also the majority owner of Gap Ridge Village, an accommodation camp situated in or near Karratha which can accommodate approximately 2130 employees in single occupancy accommodation units.
31 Woodside made the Gap Ridge Village accommodation available to the Contractors for use by their Construction Employees.
32 The vast majority of employees residing at Gap Ridge Village were Construction Employees.
33 At pre-start meetings on 27 November 2009, the Contractors informed their Construction Employees that, with effect from 4 January 2010, Woodside intended to introduce new accommodation arrangements for employees residing at Gap Ridge Village whereby employees would no longer have use of the same accommodation unit for the duration of their employment on the Project (Motelling).
34 On 27 November 2009, the respondents engaged in the following conduct:
(a) the CFMEU arranged to hold a meeting outside the front gate to the Gap Ridge Village on the afternoon of 27 November 2009;
(b) at about 4.00pm, McDonald attended outside the front gate to the Gap Ridge Village where there was a large flag bearing the letters "CFMEU" and a large blue "Eureka flag" on the median strip outside the front gate to the Gap Ridge Village;
(c) the CFMEU, together with officials from other unions, at or about 5.45pm, conducted a meeting which then took place and was attended by a large number of employees, including Construction Employees, by addressing those present using a megaphone or PA system;
(d) McDonald addressed the meeting from time to time and informed the meeting that those attending should meet on the following Monday morning and then commence strike action if Woodside did not reverse the decision to introduce Motelling;
(e) McDonald called for a motion from those attending to reconvene a meeting at 8.00am on the following Monday 30 November 2009, and to "sit on the grass" if the decision by Woodside to introduce Motelling was not reversed; and
(f) in the absence of a motion forthcoming from those attending, McDonald informed the meeting that it would be reconvened at 5.00pm pm the following Monday to assess what Woodside had to say about Motelling in the interim.
35 Foster Wheeler (WA) Pty Limited in joint venture with WorleyParsons Services Pty Ltd (FWW) was responsible for assisting with and managing the implementation of Motelling on behalf of Woodside.
36 On Monday, 30 November 2009, Graham Pallot, an official of the CFMEU, met in Perth with Colin Gibson, an industrial relations consultant for FWW on the Project, to discuss the Motelling issue.
37 At that meeting:
(a) Pallot asked that Woodside defer the implementation of Motelling to allow discussions to occur after Christmas; and
(b) Gibson, speaking on behalf of FWW and Woodside, informed Pallot that Woodside would not agree to defer the implementation of Motelling, and the reasons why that could not occur.
38 On the afternoon of 30 November 2009 and after the meeting set out above, McDonald engaged in the following conduct:
(a) attended the vacant land outside the Gap Ridge Village where several large flags were displayed including a large flag with the words "CFMEU" and several blue "Eureka flags";
(b) together with officials from other unions, conducted a meeting of at least several hundred employees including Construction Employees who attended on the vacant land outside the Gap Ridge Village where the flags were displayed;
(c) from time to time addressed the meeting and encouraged those present to take industrial action in support of their demands;
(d) informed the meeting that he could not make decisions for the employees present;
(e) informed the meeting that the employees present needed to decide whether they would prefer to go on a one, two, three or seven day strike;
(f) towards the end of the meeting:
(i) repeated a motion from the floor to take industrial action for 48 hours; and
(ii) called for a vote on that motion, saying the words: "The motion is…", immediately following which another speaker said "we're out the gate for 48." McDonald then said "Those in favour raise your hands"; and
(iii) immediately following a show of hands from those present said the words "So we go back to work on Thursday", thereby informing those present that they would go back to work on "Thursday", by which was meant Thursday, 3 December 2009.
39 Employees of the Contractors were rostered and required to perform building work on Tuesday, 1 and Wednesday, 2 December 2009.
40 The work which the employees were rostered and required to perform on 1 and 2 December 2009 was required to be performed in accordance with terms and conditions prescribed by, and was regulated by, "Commonwealth industrial instruments" within the meaning of s 4(1) of the BCII Act.
41 On 1 December 2009 approximately 1200 employees employed by the Contractors who were rostered and required to attend for building work on the Project failed to do so without lawful excuse.
42 On 2 December 2009 approximately 1340 Construction Employees employed by the Contractors who were rostered and required to attend for building work on the Project failed to do so without lawful excuse.
43 In these circumstances each of the respondents has admitted the contraventions of s 38 of the BCII Act set out in paragraph 4 above.
44 The CFMEU admits that it bears responsibility for the conduct of McDonald.
45 The respondents have also admitted that the employees' conduct in failing to attend for building work on 1 and 2 December resulted from the conduct of McDonald (and through him the CFMEU) at the meetings on 27 and 30 November described in paras 28 and 32 above.
46 Because s 69(1) of the BCII Act provides that the conduct of McDonald "is taken to be the conduct of" the CFMEU, the Court is required to treat the objective circumstances of the contraventions as being the same for each respondent. While the starting point for both respondents is therefore the same, in an appropriate case, other circumstances may provide a basis for imposing a proportionately different penalty: McDonald v Australian Building and Construction Commissioner at [36]-[38].
47 The CFMEU submits that the subject matter of the dispute and the circumstances in which Motelling was introduced are at least relevant considerations. It says that Woodside introduced a fundamental change to long established living arrangements immediately prior to the taking of the relevant industrial action. This occurred in a remote location where living away from home arrangements would understandably be of great significance to employees and an emotive issue. This, it contends, is to be contrasted with a dispute over, say, union coverage.
Relevant prior conduct
48 The applicable principles in relation to this factor were set out by Barker J in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) at [47] as follows:
(1) Similar prior relevant conduct may be taken into account in assessing penalty, but it cannot be given such weight as to lead to the imposition of a penalty that is disproportionate to the gravity of the instant contravention: Veen v R (No 2) (1988) 164 CLR 465 (Veen), Mason CJ, Brennan, Dawson and Toohey JJ at 477.
(2) Similar previous conduct may demonstrate that a respondent has a history of engaging in the particular conduct in question, that the penalties previously imposed were insufficient to deter the respondent from re-engaging in that conduct and that the respondent has failed to take adequate steps to prevent further contraventions Veen at 477; Mahoney at [44]; Temple v Powell (2008) 169 FCR 169 (Temple) at [64].
(3) A respondent is not to be punished again for the prior conduct. Prior conduct may diminish leniency by reason of good character, having an upward affect on penalty, albeit within the proper limits indicated by the circumstances of the immediately contravening conduct: R v McInerney (1986) 42 SASR 111 (McInerney), King CJ at 113.
(4) The effect of prior contravening conduct is more cogent if it has been the subject of conviction. If not, the prior conduct is still relevant but perhaps of less weight: McInerney, King CJ at 113 and Cox J at 124; Williams v Construction, Forestry, Mining and Energy Union (No 2) (2009) 182 IR 327 (Williams (No 2)), Jessup J at [26]-[28].
(5) Whether previous misconduct is relevant to fixing a penalty is a question of logic: Temple at [63].
(6) Conduct of a different character does not assist: Leighton Contractors Pty Ltd v Construction, Forestry, Mining and Energy Union (2006) 164 IR 375 (Leighton Contractors) at [67]; Mahoney at [44].
(7) The quality of the conduct and its relevance to the industrial behaviour which the instant legislation seeks to address is determinative, not whether the prior conduct arose under different legislation or different provisions of the instant legislation: Mahoney at [46]; Williams (No 2) at [16]-[17].
(8) Prior relevant conduct includes prior relevant conduct of officials from other branches of the union: Williams (No 2) at [19]-[25].
49 Past conduct cannot operate so as to increase the penalty beyond that which would be appropriate to the conduct in question: Temple v Powell at [63].
50 Conduct need not be identical to be relevant. Different conduct may demonstrate a similar modus operandi, such as the unlawful use of coercion to achieve an outcome. Cahill v Construction, Forestry, Mining and Energy Union (No 4) at [50]-[51] is a example of this where contraventions of s 170NC Workplace Relations Act 1996 (Cth) (WR Act) were held to be relevant in the assessment of penalty for contraventions of s 187AB as both provisions involved the use of coercion.
51 Annexure A to these reasons is a table that sets out prior relevant conduct of the CFMEU and McDonald which Woodside contends the Court may take into account. This includes:
(a) conduct that occurred, and which led to contraventions being recorded, prior to the conduct the subject of this proceeding; and
(b) conduct that occurred prior to the conduct the subject of this proceeding, and which led to contraventions being recorded, but those contraventions were not recorded until after the conduct which is the subject of this proceeding.
52 The conduct set out in Annexure A includes:
(a) conduct that contravenes the BCII Act and conduct that contravenes the provisions of the Workplace Relations Act 1996 (Cth); and
(b) conduct that took place in Western Australia and conduct that took place in other states.
53 However, senior counsel for the ABCC emphasised that only conduct disclosing contraventions of s 38 of the BCII Act need be taken into account.
54 The Court has previously accepted lists of prior relevant conduct and held that it is an error of principle not to take such conduct into account: Draffin v Construction, Forestry, Mining and Energy Union at [68]-[72].
55 There has been some dispute in this case as to exactly what is the totality of the relevant prior conduct.
56 It is unnecessary, as I put to counsel for all the parties without dissension from any of them, for me to resolve those disputes in this case because I have taken the view that such prior conduct as has not been put in issue, taken together with other relevant factors, constitutes a sufficient basis for the imposition of the agreed penalties.
57 The first three cases in Annexure A are of particular relevance. In each case McDonald, and through him the CFMEU, were involved in unlawful industrial action (which included strike action) contrary to section 38 of the BCII Act. In two of the cases, Leighton Contractors Pty Ltd v Construction, Forestry, Mining and Energy Union (2006) 164 IR 375 (Leighton Contractors) and Temple v Powell (2008) 169 FCR 169, contraventions were recorded against each of the respondents prior to the conduct the subject of this proceeding.
58 As the conduct of the respondents in this case occurred in the context of a number of prior breaches, specific deterrence is an important consideration for the Court.
59 Further, a persuasive form of deterrence against similar future misconduct is necessary due to the extent of the prior relevant conduct: Temple v Powell at [64] (Dowsett J); Stuart-Mahoney v Construction, Forestry, Mining and Energy Union at [44]; Draffin v Construction, Forestry, Mining and Energy Union at [90]; Williams (No 2) at [29].
60 The parties in this case have agreed that the proposed penalties are proportionate to the contraventions.
61 The respondents submit that contraventions within a different branch of the Union are relevant, but are to be given less weight than contraventions within the branch in question: Australian Building and Constructgion Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977; Cahill v Construction, Forestry, Mining and Energy Union (No 4) at 320 [69]; Draffin v Construction, Forestry, Mining and Energy Union at [72]; Leighton Contractors Pty Ltd v CFMEU at 389-390 [67]; cf Alfred v CFMEU at [84].
62 They also submit the approach of Le Miere J in Leighton Contractors Pty Ltd (adopted from the approach of Branson J in Construction, Forestry, Mining and Energy Union v Coal & Allied Operations Pty Ltd (No 2) (1999) 94 IR 231 at 232) is appropriate when considering the use to be made of schedules of so-called “relevant prior records”. Le Miere J stated (at [67]):
It is not appropriate to consider all contraventions of any industrial legislation by any branch of the first respondent anywhere in Australia. The first defendant is a very large organization that operates throughout Australia. Branches, Divisions, officers and representatives of the first defendant are involved with employers in relation to industrial matters every day. It is inappropriate to take account of conduct of the first defendant through various branches, divisions & officers or representatives that is of a different character than the contravening conduct in question and are contraventions of different legislation.
63 I do not accept these submissions by the respondents and would decline to follow the decision relied upon. The prevailing view within this Court rejects the proposition that contraventions within different branches of the CFMEU should be given less weight than contraventions within the branch in question: John Holland Pty Ltd v Construction, Forestry, Mining and Energy Union (No 2) (2009) 187 IR 400 at [142]-[143]; Alfred (No 1) at [84]; Williams (No 2) at [18]-[25]; A & L Silvestri Pty Ltd v Construction, Forestry, Mining and Energy Union [2008] FCA 466 at [13]; Cozadinos v Construction, Forestry, Mining and Energy Union [2011] FMCA 284 at [13].
64 In my opinion, these authorities are correct and I would follow them. As Jessup J observed in Williams (No 2) at [20]:
The deterrent effect of a penalty would be significantly compromised if the court were obliged to turn a blind eye to a prior contravention merely because it occurred in a different division or branch of an organisation.
One course of conduct
65 Woodside and the respondents agree, and I accept, that the contraventions arose out of the same course of conduct: Construction, Forestry, Mining and Energy Union v Williams (2009) 262 ALR 417 at [15], [26], [31]; Stuart v Construction, Forestry, Mining and Energy Union (2010) 185 FCR 308 at [80]-[84]; see also CFMEU v Cahill (2010) 194 IR 461
Deliberate conduct
66 The nature of the respondents' contravening conduct is disclosed in the statement of agreed facts.
67 Woodside contends that the conduct was calculated and deliberate and "was motivated by purposes which included the purpose of disrupting the performance of work on the … Project". The ABCC submits that it was part of a “concerted and deliberate strategy” and demonstrated “a studied disregard of the norms laid down in the BCII Act.”. The CFMU and McDonald submit that the SOAF does not support these descriptions. Ultimately senior counsel for the CFMEU conceded that the conduct was deliberate in the sense that it was intentional and not the result of a mistake. However, he emphasised that it occurred over only a few days in late November and early December 2009. That characterisation of the conduct, in my view, accurately reflects the relevant content of the SOAF. Apart from adding colour the word “calculated” really adds nothing, in the present context, to the word “deliberate” in any event.
Size of the contravener
68 The respondents have agreed the amounts of the proposed penalties and have not sought any mitigation by virtue of their size or financial position.
69 The ABCC correctly contends that the fact that the CFMEU is a large and financially secure national organisation is relevant to the assessment of penalty: Stuart-Mahoney v Construction, Forestry, Mining & Energy Union.
70 According to the accounts of the WA Divisional Branch of the CFMEU filed with Fair Work Australia for the year ended 31 December 2009:
(a) current assets were $9,255,266;
(b) net assets were $7,706,249; and
(c) there was a surplus of income ($10,114,934) over expenditure ($9,879,071) of $235,863.
Involvement of senior management
71 It is relevant to note that McDonald, in addition to being an employee of the CFMEU is and was at all material times a senior official of the CFMEU, holding the positions of :
(a) Joint Divisional Senior Vice President of the CFMEU’s Construction and General Division; and
(b) Assistant Secretary of the CFMEU’s Construction and General Division, Western Australia Divisional Branch.
Contrition
72 Woodside draws attention on this point to the following:
(a) the matter was referred, by consent, to mediation at an early stage of the proceedings;
(b) at the commencement of the mediation proceeding, the respondents indicated a clear willingness to try and resolve all issues without the need for the filing of witness statements and so as to avoid a trial; and
(c) the admission of liability and consent to all the orders now sought by Woodside is capable of being viewed as an acceptance of wrongdoing and a suitable and credible expression of regret.
73 The CFMEU submits that in Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at [76]-[78] it was said that an admission of liability: (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice. Similarly, frank admissions of wrongdoing may operate in mitigation. This is to misstate what was said by the Full Court. Rather the Full Court observed that:
… a discount should not be available simply because a respondent has spared the community the cost of a contested trial. Rather the benefit of such a discount should be reserved for cases where it can fairly be said that an admission of liability: (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice.
74 The CFMEU further submits that in addition to admitting liability and accepting wrongdoing, it has agreed to:
(a) pay a large sum by way of compensation;
(b) a significant curtailment of its future industrial activity with a view to achieving industrial peace; and
(c) provide an indemnity in respect of its future conduct,
which will ensure many years of industrial peace on a major project of significant national interest.
75 In Alfred v Construction, Forestry, Mining and Energy Union (No 2) [2011] FCA 557 (2 June 2011) Tracey J dealt with the issue of “Apology” as follows (from [37]):
[37] The CFMEU acknowledged that it had not apologised for its contempt of the Court’s orders. It did, however, contend that the absence of an apology was not an aggravating circumstance that might justify higher penalty than might otherwise be justified.
[38] The CFMEU’s submission in this regard is supported by authority: see BHP Steel (AIS) Pty Ltd v Construction, Forestry, Mining and Energy Union [2001] FCA 336 (per Kiefel J at [10]). I accept it.
76 The ABCC submits that it is relevant to note that resolution of the proceeding, together with the corresponding proceeding in WAD 27 of 2010, was only reached following the serving of three affidavits and three witness statements by the ABCC in WAD 27 of 2010.
77 However, the CFMEU submits that the resolution of these proceedings after the serving of the three affidavits and witness statements by the ABCC does not demonstrate a lack of contrition.
78 The CFMEU submits that the admission of liability occurred early in the proceeding. This, it contends, indicates a willingness to facilitate the course of justice: Mornington Inn Pty Ltd v Jordan at [76]; Australian Communications and Media Authority v Radio 2UE Sydney Pty Ltd (No 2) 178 FCR 199 at [150].
79 The CFMEU then submits that the admission of liability was made before Woodside or the respondents in WAD 16 of 2010 had to perform any comprehensive procedural steps and relieved them of the bulk of the cost of preparing for a trial. The proceeding in WAD 27 of 2010 was brought by the ABCC in respect to the same industrial action as in the present proceeding. It was resolved by orders made on 21 June 2011 by consent by which the matter was discontinued and the CFMEU was ordered to pay the ABCC’s costs fixed at $30,000.
80 Furthermore, the CFMEU contends, as per the SOAF at para 37, the CFMEU has made a frank admission of wrongdoing, which should operate as a mitigating factor in considering penalty: Mornington Inn at [76].
81 McDonald relies on the factors concerning contrition referred to by Woodside.
82 I accept that the respondents have, in the main, by their general conduct since the institution of these proceedings, demonstrated a willingness to facilitate the course of justice. They are entitled to an appropriate discount to reflect that fact. This is appropriately considered below under the rubric of ‘cooperation’. However, this conduct does not give rise to a conclusion that any of the respondents have demonstrated remorse or contrition for their unlawful actions. The respondents, whilst pragmatic, are not contrite.
Cooperation
83 The respondents have agreed facts, penalties and other remedial orders resulting in a considerable saving in resources and court time.
84 The respondents' cooperation is a mitigating factor in the assessment of penalty.
85 However, Woodside points out that both respondents initially filed defences not admitting any contravention of the Act.
86 The CFMEU accepts that the whole of its conduct is relevant and that in determining the level of its co-operation the Court is entitled to note that defences were initially filed. However, it further submits as does McDonald that the mere filing of defences should not be taken as an aggravating factor in circumstances where:
(a) the Rules allow for a short time in which to file a Defence (O11 rule 20) and where, in this case, the settlement involved complex multi-party negotiations which ultimately took many months to resolve; and
(b) the ABCC commenced against the CFMEUW (a union registered under state industrial legislation) in WAD 27 of 2010, and where no contraventions or penalties formed part of the ultimate settlement involving that organisation.
87 I consider that the respondents’ submissions in this regard have merit and find that there was, at a relatively early stage of the proceedings, overall, a significant degree of cooperation manifested by the respondents.
Deterrence
88 The need for general as well as specific deterrence is a major factor which requires consideration in every case. In Stuart v Construction, Forestry, Mining and Energy Union (2010) 185 FCR 308 Besanko and Gordon JJ said at [57]:
. . . Deterrence, both general and specific, is the very reason why, at least in the case of the BCII Act, the statute imposes criminal liability on a corporation for the misdeeds of its officers of employees. It follows that deterrence lies at the heart of the imposition of a penalty on a corporate offender. In the present case, general deterrence is directed towards dissuading other corporations, unions and individuals in the industry covered by the BCII Act from engaging in similar conduct.
89 The objects of the BCII Act also underscore the need for both general and specific deterrence.
90 In this case the respondents' extensive history of similar conduct emphasises the need for specific deterrence to form part of the assessment of the appropriateness of the quantum agreed upon by the parties.
91 In Cahill v Construction, Forestry, Mining and Energy Union (No 4) Kenny J observed at [93]:
The need for specific deterrence is underscored by the Union's history of similar conduct . . . and its continuing involvement in the building and construction industry.
92 Woodside also submits that McDonald occupies a senior position within the CFMEU and is likely to be influential in setting the standards of behaviour and conduct of others within that organisation. As such, it contends that it is appropriate that a penalty be imposed to deter similar contraventions in the future.
93 The CFMEU submits that the “history of similar conduct” and McDonald’s senior position with the CFMEU are relevant and have been adequately taken into account by the Parties in the quantum of agreed penalty and the other relief to which the Respondents have consented. McDonald submits that the “history of similar conduct” and McDonald’s senior position are not relevant to deterrence.
94 There is certainly a degree of overlap and I am satisfied that these matters, under whatever category they might be placed have been appropriately taken into account in the arriving at appropriate penalties.
The nature and extent of any loss and damage sustained as a result of the conduct
95 The conduct resulted in approximately:
(a) 1200 employees not attending for building work on the Project on 1 December 2009; and
(b) 1340 employees not attending for building work on the Project on 2 December 2009.
96 The conduct resulted in scheduled building work not being able to be performed on the Project on 1 and 2 December 2009 with consequent disruption to the construction schedule where other works were planned in reliance of work being completed on those days.
97 This in turn caused Woodside:
(a) significant loss and damage; and
(b) to be exposed to claims by some contractors for losses allegedly suffered by those contractors.
98 The CFMEU has accepted and acknowledged liability for damage and loss caused to Woodside and agreed to the entering of judgment against it for the payment to Woodside of the sum of $1,500,000 as compensation and as a contribution towards Woodside’s costs of and incidental to these proceedings.
99 The CFMEU has also agreed to indemnify Woodside for 25% of all liabilities, costs (including on an indemnity basis) and expenses which Woodside may incur as a result of or in relation to claims by contractors against Woodside arising out of the industrial on 1 and 2 December 2009 to a maximum of $500,000.
Conclusion on quantum of penalties
100 In all the circumstances of the case, having regard to the matters set out above, including the deliberate and calculated nature of the conduct, the involvement of a senior official of the CFMEU, the large number of employees involved in the unlawful industrial action, the extent of the losses suffered by Woodside, the respondents' extensive history of prior relevant conduct, the objects of the legislation and the need for specific and general deterrence, significant penalties are warranted.
101 Woodside and the respondents have agreed that each respondent should pay a single penalty for its contraventions of s 38 the BCII Act, by reason of the contraventions having arisen out of the same conduct.
102 In accordance with s 49(2) of the BCII Act, the maximum penalty for each contravention of s 38 of the BCII Act is $110,000 for the CFMEU and $22,000 for McDonald.
103 Having regard to the above matters, Woodside submits that the agreed penalties of:
(a) $71,500 against the CFMEU; and
(b) $14,300 against McDonald;
are proportionate to the conduct and in each case in the upper range for the breaches. It submits that the quantum is thus within the permissible range for such breaches and reflects appropriately the gravity of the breaches and the other sentencing principles referred to above.
104 The ABCC submits that the agreed penalties for each respondent is an appropriate penalty, within the permissible range of penalties for the contravention, and should be made payable to the Commonwealth.
105 I accept these several submissions.
Payment of penalties
106 Section 49(5) of the BCII Act states
A pecuniary penalty is payable to the Commonwealth or some other person if the Court so directs.
107 Pursuant to s 49(5) of the BCII Act, Woodside seeks an order from the Court that the respondents pay the penalty sums to it. The respondents consent to such an order. They jointly submit that an order that the penalties be paid to Woodside, in this case, would be the "usual order".
108 The ABCC, by contrast, submits that pursuant to s 49(5), the penalties should be paid to the Commonwealth.
109 I accept that the fact of consent of the respondents as to whom the penalties ought be paid is irrelevant. Section 49(5) of the BCII Act makes it clear that this is a matter for the Court.
110 The ABCC submits that the "usual order" is not for the penalties to be paid to Woodside, but rather for them to be paid to the Commonwealth, as the embodiment of the public interest in vindicating the norms laid down in the BCII Act, and upholding and enforcing the law: Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 at 223. The ABCC cites, in support, the observations of Gray J that “Where a public official vindicates the law by suing for and obtaining a penalty, it is appropriate that the penalty be paid to the Consolidated Revenue Fund”: Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union (2008) 171 FCR 357 at [44]. I will revisit these decisions later.
111 This approach, the ABCC contends, is reflected in the structure of s 49(5) of the BCII Act because it explicitly indentifies the Commonwealth as the primary recipient of any penalties imposed by the Court and that any other order requires the party seeking it to persuade the Court that it should depart from this position, by demonstrating some cogent reason why the Court should do so. The ABCC contends that Woodside has not done so in this case.
112 In my opinion, the language of s 49(5) simply means that, unless the Court directs otherwise, a penalty is payable to the Commonwealth. The question is whether there is a basis for the Court to direct that the penalties in this case should be paid to Woodside. If there is not, then they are payable to the Commonwealth.
113 It is common ground that none of the authorities deal with the circumstances of the present case. All of them relate to a circumstance in which a private litigant sues to the exclusion of a public official. However, here the ABCC in WAD 27 of 2010, commenced proceedings in relation to the same conduct that is the subject of the present case and did so just 15 days after Woodside filed its proceeding. An order was made by the Court on 17 February 2010 that both proceedings be heard together, and that the evidence in one proceeding be evidence in the other. The ABCC submits that it prosecuted WAD 27 of 2010 vigorously, actively participated in the mediation process that resulted in a resolution of the joint proceedings, and went to the trouble and expense of preparing and filing affidavits – something Woodside never did. However, I find that its “active participation” was well below that of the other parties. Senior counsel acknowledged that the conduct of the mediation as described by senior counsel for Woodside was correct. I refer to this below. The ABCC argues that it has actively ensured that the public interest in penalising the respondents for their unlawful conduct has been protected and advanced in these proceedings.
114 Provisions similar to s 49(5) of the BCII Act in the WR Act and its predecessors have been construed as intended to encourage persons, historically referred to as common informers, to sue for breach of statutes.
115 In Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Ltd (No 2) [2010] FCA 652 Logan J ordered that penalties totalling $660,000 be divided amongst the five union applicants. His Honour said:
[82] … The term that is used for this type of proceeding, brought by someone other than an officer of the executive government, is a proceeding brought by a common informer. There may, perhaps, unless the detail of what lies behind that description is understood, be thought to be a pejorative quality in that terminology. There truly is not. Rather, what it is, is the bringing to the attention of the courts of a transgression of a public obligation.
[83] In industrial law, there is a very particular benefit in that occurring for the community, so that the need for adherence to obligations can be brought home more widely. In bringing the present proceedings, the applicant trade unions have done a singular service not just to their members and other workers in QR Ltd and its subsidiaries, but also to the wider community.
[84] … A trade union (or, for that matter, an employer organisation or employer which might inform), may render a particular service in circumstances where, even though a government officer such as an inspector might be permitted to bring a proceeding, for one reason or another, the executive government chooses not to do that.
116 In Gibbs v The Mayor, Councillors and Citizens of the City of Altona, a case concerning the imposition of penalties under the then Industrial Relations Act 1988 (Cth) Gray J at 223 said:
[t]he usual order, when [a] proceeding is not brought by an inspector appointed under the Act, is for payment to the person or organisation applying for the penalty.
117 In Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (No 2) (2001) 110 IR 372 at [8], Merkel J followed Gibbs saying:
… where the conduct in question targets a particular organisation or person and that person is authorised to commence and commences a proceeding for the imposition of a penalty, in the usual course it is appropriate to order that the penalty be paid to the organisation or person.
118 In Plancor Gray J, said at [44].
The correct view is that the initiating party is normally the proper recipient of the penalty as part of a system of recognising particular interests in certain classes of persons (now specified in s 718 of the WR Act) in upholding the integrity of awards and agreements the subject of penal proceedings. Where a public official vindicates the law by suing for and obtaining a penalty, it is appropriate that the penalty be paid to the Consolidated Revenue Fund. Otherwise, the general rule remains appropriate, that the penalty is to be paid to the party initiating the proceeding, with the Gibbs 37 FCR 216 exception that the penalty may be ordered to be paid to the organisation on whose behalf the initiating party has acted.
119 It may be seen then that the reliance by the ABCC on the passages earlier cited from Gibbs and Plancor need to be considered in the context of the wider observations in those cases.
120 The other members of the Court in Plancor, Brandon and Lander JJ, noted at [65] that the approach adopted in Gibbs had been followed in a number of other cases. The only question for them was whether the "usual order" should be made if it would result in a windfall.
121 Orders of this nature were made in favour of a corporation seeking to enforce the relevant industrial laws in Seven Network, in Leighton Contractors and in John Holland.
122 In Seven Network, Merkel J ordered penalties totalling $9,500 be paid to Seven Network saying he saw no reason to depart from the usual order.
123 In John Holland, Greenwood J ordered penalties totalling $94,200 be paid to John Holland, observing that it was not entitled to costs having regard to s 824 of the WR Act and stating at [97]:
Since John Holland is the party affected by the conduct and there is no compensation order, the appropriate course is to order that the pecuniary penalty be paid to the applicant.
124 In Leighton Contractors, a case under the BCII Act, Le Miere J ordered penalties totalling $150,000 be paid to Leighton. These orders were made in addition to orders for costs.
125 Applications under the BCII Act differ from those under the WR Act in that a successful applicant is entitled to obtain an order for costs. The ABCC contends that this is a relevantly distinguishing feature as between the two statutes and the approach to be taken on the issue as to the appropriate beneficiary of any penalty. Woodside contends that as in Leighton Contractors, this factor should not affect whether the Court orders the penalty to be paid to Woodside in this case since the power to direct that penalties be paid to someone other than the Commonwealth is not intended to provide compensation for costs incurred in prosecuting an application: Plancor at [41]-[42]. However, the observations of the majority in that case at [69] rather suggest that, at least in determining whether or not payment of a penalty would result in a windfall, costs are a relevant consideration.
126 Such was the approach taken in Finance Sector Union of Australia v Commonwealth Bank of Australia by Merkel J who said at [63] that, while the power to order payment of a penalty to a party should not be exercised for the purpose of reimbursing to a party the costs incurred by that party, the costs incurred were not irrelevant and evidence could be adduced to demonstrate the nature and extent of the work that had to be carried out to prosecute the proceeding or to demonstrate whether an order in a party's favour would not result in some unwarranted windfall being enjoyed by the party.
127 However, in the same vein as Gray J in Plancor, Moore J said in Rojas v Esselte Australia Pty Ltd (No 2) (2008) 177 IR 306 at [69]:
It is a distinct power and, in my view, it is strongly arguable that it should be viewed as a power which should not be treated as impliedly constrained by the limitations imposed on a power to award costs . . . If a person or organisation successfully brings penalty proceedings, then I see no reason why an order cannot be made that the penalty be paid to that person or organisation without regard to whether the penalty might be used to defray legal costs. The use to which the penalty is put would be a matter for that person or organisation.
128 Accordingly, it is an open question as to whether an applicant should be allowed to profit from a penalty.
129 In Community and Public Sector Union (CPSU) v Telstra Corporation Ltd (2001) 108 IR 228 Finklestein J said at [27] there would be no reason to make "the usual order" if that would result in a "windfall" to an organisation and that "[p]enalty proceedings are not to be used for profit".
130 However, in Finance Sector Union of Australia v Australia & New Zealand Banking Group Ltd [2002] FCA 1035, Wilcox J said at [16]:
In CPSU Finkelstein J suggested that such an order should not be made if it is likely to result in a "windfall to the organisation". I am not sure I agree with that; the rationale of the practice is that it tends to encourage a "common informer" to police the relevant legislation: see Vehicle Builders' Employees' Federation of Australia v General Motors-Holden Pty Ltd (1977) 32 FLR 100 at 113. That rationale is likely to be defeated if the common informer is not to be allowed to make a profit.
131 In McIlwain v Ramsey Food Packaging Pty Ltd (No 4) (2006) 158 IR 181, Greenwood J said at [103]:
The qualification upon the exercise of the power is that such an order ought not to be made if it will result in a windfall gain. Such a windfall might arise in circumstances where the party receiving the benefit of the order has already received compensation pursuant to s 298U both as to any economic loss in respect of the contravention and any non-economic loss in the nature of general damages.
132 However, in that case the inspector was seeking an order that the penalty be paid to the employees who had already been awarded compensation and who had not brought the application: McIlwain at [108], approved by Branson and Lander JJ in Plancor at [70].
133 The power to award payment of a penalty to an applicant, in my opinion, is not intended to compensate a person for losses suffered by the contravention: Plancor at [40]. It is "not regarded as compensatory in any way": Plancor at [45].
134 It is a distinct power of a kind historically construed as intended to encourage common informers. Save then, perhaps, for the question of a windfall, there is no reason why such an order should not be made even where an applicant is awarded both costs and compensation. As to the “windfall” question my own view accords with what Gray J said in Plancor at [45]:
The notion that the order to pay a penalty to the initiating party could produce a windfall is a false notion. If the true purpose of such an order is taken into account, and the order is not regarded as compensatory in any way, any notion of a windfall disappears.
135 In National Tertiary Education Industry Union v Central Queensland University [2008] FCA 481 Logan J at [50] emphasised the public interest served by a civil penalty proceeding and the purpose of the power in encouraging common informers and said he agreed with the observations of Wilcox J in FSUA v ANZ. I too respectfully agree with those observations. The following observations of Le Miere J in Leighton Contractors are also, in my opinion, apt:
[77] Subsection 49(5) of the Act provides that a pecuniary penalty is payable to the Commonwealth, or to some other person if the Court so directs. The parties have agreed that the penalties payable by the defendants should be paid to the plaintiffs. I consider that to be appropriate. The penalties are imposed for conduct which is all directed to, and has caused damage to, the plaintiffs. The plaintiffs, not the Commissioner have prosecuted these proceedings. The plaintiffs have been put to the expense and inconvenience of doing so. The plaintiffs have risked both their own legal costs and paying the defendants' legal costs by bringing the proceedings.
[78] The objects of the Act will be advanced by parties affected by unlawful industrial action bringing proceedings against the offenders. Affected parties will be encouraged to do so if there is a likelihood that the costs, inconvenience and risks associated with doing so will be offset by the receipt of the penalties paid by the offenders.
136 While the question whether the order such as is sought here should not be made if it would be likely to result in a windfall to an applicant remains open, no question of a windfall arises in this case in any event. It is unnecessary then for me to resolve the question in this case. The penalties which have been agreed in this case are not sufficient to give rise to concerns about a "windfall" having regard to the consequences for Woodside resulting from the contravening conduct. Woodside suffered significant loss and damage which it was prepared to compromise, in part, in order to arrive at an agreed outcome. The amount of the judgment sought in this case, which includes an amount for its costs, is substantially less than the amount claimed.
137 The ABCC submits that an order for payment of penalties to the Commonwealth would be the usual order because it commenced proceedings. It did not however commence these present proceedings. The proceedings which it did commence were compromised upon a settlement involving the respondents paying substantial costs to the ABCC.
138 The application and statement of claim filed by Woodside on 28 January 2010 sought penalties as well as injunctive and other relief against the CFMEU. By reason of a drafting error the original application and statement of claim sought injunctive relief but did not seek penalties against McDonald.
139 Woodside’s statement of claim pleaded that the respondents each contravened s 38 of the BCII Act, firstly, by themselves engaging in unlawful industrial action in the form of a ban on the performance of building work by employees on 1 and 2 December 2009 and, secondly, by being involved in, unlawful industrial action in the form of a failure to attend for building work by those employees.
140 The ABCC application and statement of claim in WAD 27 of 2010 sought penalties and injunctive relief against each of the respondents and the state registered Construction, Forestry, Mining and Energy Union of Workers (CFMEUW). The ABCC pleaded only the second of the above causes of action.
141 Save that the ABCC statement of claim sought penalties against McDonald, added the CFMEUW and deleted one cause of action, the document was for the most part a copy of the statement of claim filed by Woodside. Any differences other than those identified above were minor. The ABCC concedes as much.
142 Although the ABCC played some role in the mediation process, it was a minor role and concerned, more particularly, the appropriate level of penalty in the circumstances. As the CFMEU written submissions note, the vast bulk of the negotiations leading to settlement, including mediation, were undertaken between Woodside and the CFMEU. As I mentioned, senior counsel for the ABCC conceded this to be correct.
143 The ABCC says that it “went to the trouble and expense of preparing and filing affidavits – something Woodside never did”. Woodside in fact went to considerable trouble and expense in prosecuting these proceedings including by:
(a) expending significant resources before and after the commencement of proceedings to gather evidence to support its case;
(b) preparing a statement of claim (which the ABCC substantially adopted);
(c) carrying the vast bulk of the settlement negotiations; and
(d) preparing comprehensive submissions in relation to penalty (which the ABCC has again adopted) and the other relief sought (in respect of which the ABCC has made no submissions).
144 I accept that Woodside did not file affidavits because it was not required to and because to do so would have incurred additional costs and distracted Woodside and the respondents from the settlement negotiations. From the outset, February 2010, the respondents indicated their willingness to engage in mediation. When negotiations commenced at the August mediation, it became immediately apparent that the respondents were genuinely committed to a wide ranging settlement. However, given the range and complexity of the issues being negotiated, it was inevitable that negotiations would take time. Whilst there is no affidavit evidence in support of these contentions of fact they are broadly affirmed by the content of the chronology attached to the applicant’s written closing submissions in reply. No objection was taken to the content of the chronology by any party including the ABCC.
145 There is no evidence to suggest or reason to believe that the ABCC affidavits had any material bearing on the negotiations between Woodside and the respondents. Given the level of detail contained in Woodside’s statement of claim, as to what was said and done by McDonald at the mass meetings on 27 and 29 November 2009, much of which has been admitted in the SOAF, the respondents would have been under no illusion as to the evidence available to be called by Woodside.
146 The ABCC relies on the public interest. It submits, as I mentioned earlier, that an order for payment of penalties to the Commonwealth would be “the embodiment of the public interest in vindicating the norms laid down in the BCII Act, and upholding and enforcing the law”.
147 However, I do not consider that any public interest was served by the ABCC commencing parallel proceedings against the respondents. By the time the ABCC commenced its proceedings there were already proceedings on foot directed at upholding and enforcing the law. The proceedings had been brought by a large and well-resourced corporation claiming, among other things, substantial damages. The statement of claim was detailed. There was no reason to suppose that the proceedings would not be prosecuted to finality. If the ABCC had that concern, it could have exercised its right under s 71 of the BCII Act to intervene in WAD 16 of 2010 and then, if at any stage it appeared Woodside did not wish to continue or was not actively prosecuting the proceedings, could have applied to be joined to the proceeding as a second applicant pursuant to Order 6 rule 2 of the Rules. That was the course taken by the ABCC in CBI Constructors Pty Ltd v Abbott, WAD 230 of 2008.
148 As I have observed, the rationale for the “usual order” when a proceeding is brought by a person other than an inspector is to encourage those persons authorised by the legislation to commence proceedings for a penalty to do so: FSU v ANZ Group Ltd [2002] FCA 1035 at [16]. The encouragement of affected parties to enforce legislation advances the objects of the legislation and benefits the wider community: Leighton Contractors at [78]; CEPU v QR Ltd (No 2) [2010] FCA 652 at [83].
149 An order that penalties in a case such as the present be paid to the Commonwealth has the real potential to discourage affected persons authorised to enforce the legislation by bringing proceedings for a penalty from doing so. That, it seems to me, would be contrary to the public interest.
150 There is, in my view, a proper basis for ordering that the penalties be paid to Woodside. As I have explained, it instituted proceedings first and prosecuted them diligently and at considerable cost with associated risks. There was no purpose served by the ABCC instituting its own proceedings. Had it not done so the end result would have been no different.
OTHER ORDERS
151 Woodside seeks other remedial orders, to which the respondents have also consented. The ABCC makes no submissions as to these matters and neither objects nor consents to the making of the orders sought.
152 The facts agreed to, and the admissions made, are admissions upon which the court may rely to pronounce judgment and make orders: Federal Court Rules O 18 r 4(1). Further, in deciding whether consent orders sought are in conformity with legal principle the Court is entitled to treat the respondents' consent as involving an admission of all facts necessary or appropriate to the granting of the relief sought: Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 164.
Injunction
153 In addition to being the majority owner and operator of the Pluto LNG Development Project, Woodside and other related bodies corporate also have interests in the North West Shelf Project and the Browse LNG Project.
154 Pursuant to sections 49(1)(c), (3) and (4) of the BCII Act, Woodside seeks an order permanently restraining each of the respondents from:
(i) engaging in any industrial action; or
(ii) threatening, organising, counselling, encouraging, procuring, or otherwise being involved in any industrial action by any person;
on or in connection with any of the Pluto LNG Project, the North West Shelf Project or the Browse LNG Project, including construction and operations, and any future expansions of those projects.
155 The orders sought are within the Court's jurisdiction. The Court has a wide discretion to make any orders that the Court considers appropriate (ss 49(1)(c) and (3) of the BCII Act and s 23 of the Federal Court of Australia Act 1976 (Cth)). The power of the Court extends to the grant of an injunction restraining a defendant from engaging in conduct whether or not it appears to the court that the defendant intends to engage again in conduct of that kind: ss 49(4)(a) and (c) of the BCII Act.
156 The purpose of the injunction is to restrain a repetition of the contravening conduct or any similar conduct and takes into account the substantial prior contravening conduct of each of the respondents.
157 The orders will also deter the respondents from repeating the contravention by attaching to the repetition of the contravention the range of sanctions available for breaches of court orders.
158 The orders restrain only unlawful conduct and are consistent with the objects of the BCII Act referred to above.
159 The orders are further in the public interest including by reason of the importance of the resources projects to the Australian economy and the need to protect Australia's reputation as a reliable oil and gas supplier.
160 The orders form an essential part of the settlement between the parties.
161 For all these reasons I am satisfied that these injunctive orders should be made.
Compensation
162 Pursuant to s 49(1)(b) of the BCII Act, Woodside seeks an order requiring the CFMEU to pay Woodside $1,500,000 compensation for damages suffered by Woodside as a result of the above contraventions and as a contribution towards its costs of and incidental to these proceedings. The respondents consent to such an order.
Indemnity
163 Pursuant to s 49(1)(c) of the BCII Act, Woodside seeks an order requiring the CFMEU to indemnify Woodside for 25% of all liabilities, costs and expenses which Woodside may incur as a result of or in relation to claims by contractors against Woodside arising out of the industrial action on 1 and 2 December 2009 to a maximum of $500,000. The respondents consent to such an order.
DEED OF SETTLEMENT
164 Finally, Woodside and the respondents have entered into a deed of settlement relating to these proceedings. A copy has been filed with the Court which notes its terms. In particular, the Court notes:
(a) clause 5 of the deed, whereby Woodside agrees to forebear to recover part of the compensation payment, subject to the conditions set out in the clause; and
(b) clause 3.4 of the deed, which deals with the position where the Court declines to make some or all of the orders sought.
Conclusion
165 For these reasons there will be orders as sought by Woodside and the respondents. I will, if necessary, hear the parties on the question of costs relating to the issue as to whom the penalties should be paid.
| I certify that the preceding one hundred and sixty-five (165) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. |
Associate:
ANNEXURE A
Date revised: 14 June 2011
