FEDERAL COURT OF AUSTRALIA

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (Werribee Shopping Centre Case) [2017] FCA 1235

ORDERS

In these Orders:

(1)    “ACCE” means Action Commercial Catering Equipment Pty Ltd.

(2)    “FW Act” means the Fair Work Act 2009 (Cth).

(3)    “Project” means the Pacific Werribee Shopping Centre Expansion Project located on the corner of Derrimut and Heaths Road, Werribee.

THE COURT DECLARES THAT:

1.    The second respondent, an officer of the first respondent acting in that capacity for the purposes of s 363(1)(b) of the FW Act, contravened:

(a)    section 346 of that Act when, during the course of an induction session held in the site office of the Project on 4 August 2015, he took adverse action against Dylan Schembri, an employee of ACCE, by preventing him from performing any work on the project that day, for reasons including that he was not a member of the CFMEU.

(b)    section 348 of the Act when, during the course of an induction session held in the site office of the Project on 4 August 2015, he prevented Ryan Hart-McGuinness, an employee of ACCE, from performing any work on the Project, with intent to coerce him to engage in industrial activity by paying membership subscriptions, levies and/or dues to the first respondent; and

(c)    section 348 of the Act when, during the course of an induction session held in the site office at the Project on 4 August 2015, he prevented Dylan Schembri, an employee of ACCE, from performing any work on the Project, with intent to coerce him to engage in industrial activity by becoming a member of the first respondent.

2.    By the conduct of the second respondent in the previous declaration and by operation of ss 363(1)(b) and 363(3) of the FW Act, the first respondent contravened:

(a)    section 346 of that Act when, during the course of an induction session held in the site office at the Project on 4 August 2015, it took adverse action against Dylan Schembri, an employee of ACCE, by preventing him from performing any work on the Project that day, for reasons including that he was not a member of the CFMEU.

(b)    section 348 of the Act when, during the course of an induction session held in the site office of the Project on 4 August 2015, it prevented Ryan Hart-McGuinness, an employee of ACCE, from performing any work on the Project, with intent to coerce him to engage in industrial activity by paying membership subscriptions, levies and/or dues to the first respondent; and

(c)    section 348 of that Act when, during the course of an induction session held in the site office at the Project on 4 August 2015, it prevented Dylan Schembri, an employee of ACCE, from performing any work on the Project, with the intent to coerce him to engage in industrial activity by becoming a member of the first respondent.

THE COURT ORDERS THAT:

1.    For his contraventions of:

(a)    section 348 of the FW Act the subject of declaration 1(b) above, the second respondent pay a pecuniary penalty of $4,000; and

(b)    section 348 of the FW Act the subject of declaration 1(c) above, the second respondent pay a pecuniary penalty of $4,000.

2.    For its contravention of:

(a)    section 348 of the FW Act the subject of declaration 2(b) above, the first respondent pay a pecuniary penalty of $45,000; and

(b)    section 348 of the FW Act the subject of declaration 2(c) above, the first respondent pay a pecuniary penalty of $45,000.

3.    The said penalties be paid to the Commonwealth of Australia within 28 days.

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

REASONS FOR JUDGMENT

TRACEY J:

1    This proceeding was commenced by the Director of the Fair Work Building Industry Inspectorate in July 2016. The Director alleged that the respondents had contravened a number of provisions of the Fair Work Act 2009 (Cth) (“the Act”). The allegations arose as a result of conduct by the second respondent, Mr Andrew Harisiou, on a building site in Werribee. Mr Harisiou was a member and delegate of the first respondent, the Construction, Forestry, Mining and Energy Union (“the CFMEU”).

2    Since December 2016 the proceeding has been maintained by the applicant Australian Building and Construction Commissioner (“the Commissioner”): see item 19 of schedule 2 to the Building and Construction Industry (Consequential and Transitional Provisions) Act 2016 (Cth).

3    The Commissioner has not pressed all of the original allegations. He alleges, and the respondents concede, that each of the respondents contravened s 346 of the Act once and contravened s 348 on two occasions.

4    These sections relevantly provide that:

346     Protection

A person must not take adverse action against another person because the other person:

(a)    is or is not, or was or was not, an officer or member of an industrial association; or

(b)    …

(c)    …

Note: This section is a civil remedy provision (see Part 4-1).

…

348    Coercion

A person must not organise or take, or threaten to organise or take, any action against another person with intent to coerce the other person, or a third person, to engage in industrial activity.

Note: This section is a civil remedy provision (see Part 4-1).

The term “adverse action” is relevantly defined in item 7(b) of s 342 to include action by a union, officer or member, “that has the effect, directly or indirectly, of prejudicing [a] person in the person’s employment or prospective employment”. The phrase “engages in industrial activity” is relevantly defined in s 347(b)(vi) to include a person paying or not paying a fee to a union and, in s 347(a), as including becoming or not becoming a union member.

5    On the eve of the trial the parties reached an agreement, under which the Commissioner withdrew certain allegations and the respondents accepted that they had contravened both ss 346 and 348 of the Act on the same day. Leave was subsequently granted to the Commissioner to file an amended statement of claim. The parties also filed an agreed statement of facts and admissions to explain the circumstances in which the contraventions occurred. The following account of relevant events is based on this agreed statement.

6    In 2015 the Werribee Shopping Centre was being expanded. Probuild Constructions (Aust) Pty Ltd (“Probuild”) was the principal contractor on the project.

7    A new shop called the “Coffee Club” was part of the development. In July 2015 Action Commercial Catering Equipment Pty Ltd (“ACCE”) was contracted to manufacture and then install various stainless steel items in the Coffee Club shop. Mr Nick Paterakis was a Director of ACCE. Mr Ryan Hart-McGuinness and Mr Dylan Schembri were employees of ACCE.

8    At about 7:00 am on 4 August 2015 Messrs Paterakis, Hart-McGuinness and Schembri arrived at the project site, ready to install the contracted equipment in the Coffee Club. They attended a site induction which was conducted by an employee of Probuild.

9    On 4 August 2015 Mr Paterakis was a financial member of the CFMEU. Mr Hart-McGuinness was a member but behind in paying his subscriptions. Mr Schembri was not a member of the CFMEU.

10    After the induction had concluded, Mr Harisiou attended at the site office and spoke to the three men, and others, about the CFMEU, the benefits of union membership and related industrial matters.

11    The statement of agreed facts records that, in the course of the conversation, Mr Harisiou said and did the following:

(a)    said to Paterakis, Hart-McGuinness and Schembri, words to the effect “whoever’s financial, you’re good to go and whoever’s not, just hang back”;

(b)    said to Hart-McGuinness and Schembri, words to the effect “You can’t get on site … if you’re not financial, you’re not getting on the site” and “if you’re not part of the union, you’re not allowed on this site”;

(c)    said to Hart-McGuinness after being told that he was a member but had not paid his dues, words to the effect “you need to pay”, “you need to pay your fees if you want to go on site as well” and “since you’re a member, you can pay from now to 30 September”;

(d)    said to Schembri, words to the effect “so you don’t want to join the union” and after Schembri said no, said words to the effect “What, so fuck the union?” and “all right. That’s good to know. Well, you’re not getting on site. You can sit in the car”;

(e)    said to Paterakis after he requested Harisiou to allow Schembri onto the site to help them out that day, words to the effect “Nuh. Chuck him on a train, send him home, do whatever you want to do, but he’s not getting on site”;

(f)    asked Paterakis, Hart-McGuinness and Schembri whether they were in the union, checked Paterakis’ membership card and upon confirming that he was financial, said (in relation to performing work on the Project) “you can go”;

(g)    rang the CFMEU offices, provided Hart-McGuinness’ details, ascertained how much he had to pay to become financial and then required Hart-McGuinness to immediately pay that amount (being $156.70) to the CFMEU over the telephone before performing any work that day (Paterakis paid the membership fee of $156.70 on behalf of Hart-McGuinness to the CFMEU using his credit card that day);

(h)    allowed Paterakis to perform work on the Project after confirming that he was up-to-date with his membership subscriptions, levies and/or dues;

(i)    allowed Hart-McGuinness to perform work on the Project after his membership subscriptions, levies and/or dues had been paid that day (by Paterakis) and brought up-to-date; and

(j)    refused to let Schembri perform any work on the Project that day after Schembri had refused to become a member of the CFMEU and pay the necessary membership subscriptions, levies and/or dues.

12    As a result of Mr Harisiou’s refusal, Mr Schembri was prevented from performing any work on the project on 4 August 2015. He waited around for the remainder of the working day until Mr Paterakis and Mr Hart-McGuiness had completed their work.

13    The CFMEU accepted that, by reason of the provisions of s 363(1)(b) of the Act, Mr Harisiou’s actions were to be taken as its actions and that, pursuant to s 363(3), Mr Harisiou’s states of mind, when taking the impugned actions, were attributable to it.

14    The CFMEU and Mr Harisiou admitted that s 346 had been contravened by adverse action which had been taken against Mr Schembri for reasons including that he was not a CFMEU member and which had the effect, directly or indirectly, of prejudicing him in his employment with ACCE.

15    The respondents also admitted that s 348 had been contravened by action taken against Mr Schembri with the intent to coerce him to engage in industrial activity by becoming a CFMEU member. It was admitted that the same provision was contravened by action taken against Mr Hart-McGuiness with the intent to coerce him to engage in industrial activity by paying membership subscriptions, levies and/or dues to the CFMEU.

16    The Commissioner sought declarations that the respondents had contravened ss 346 and 348 of the Act and the imposition of pecuniary penalties on the respondents for those contraventions. It was common ground that, because the contraventions of each of those sections arose from the same conduct, penalties should only be imposed for the contraventions of s 348. Each respondent had contravened that section on two occasions: once in dealing with Mr Hart-McGuiness and once in dealing with Mr Schembri.

17    Notwithstanding the admissions and concessions made by the respondents it remains a matter for the Court to determine whether the agreed facts provide a proper basis for the granting of the relief sought by the Commissioner.

18    I am satisfied, on the basis of the agreed facts, that each of the respondents has contravened ss 346 and 348 of the Act on 4 August 2015 as a result of Mr Harisiou’s conduct towards Messrs Hart-McGuinness and Schembri.

19    The respondents did not oppose the making of declarations in the terms proposed by the Commissioner.

20    The educative value of declarations in civil remedy proceedings under the Act has been remarked on by the Court on many occasions: see, eg, Cruse v Multiplex Ltd (2008) 172 FCR 279 at 298-299; [2008] FCAFC 179 at [53]-[59] (Goldberg and Jessup JJ); Fair Work Ombudsman v Al Hilfi [2015] FCA 313 at [22] (Besanko J). See also, in analogous legislative contexts: Stuart v Construction, Forestry, Mining and Energy Union (2010) 185 FCR 308 at 333; [2010] FCAFC 65 at [89]-[92] (Besanko and Gordon JJ); Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [90]-[94] (Dowsett, Greenwood and Wigney JJ). The Commissioner submitted, and I agree, that the proposed declarations are appropriate in cases such as the present where admissions are made and agreed facts filed and where pecuniary penalties are not sought in relation to all admitted contraventions.

21    The proposed declarations will be made.

22    The starting point for determining the appropriate pecuniary penalties for the various contraventions is the identification of the maximum penalties prescribed for contraventions of s 348. At the relevant time those maxima were $54,000 for each contravention by the CFMEU and $10,800 for Mr Harisiou: see s 546(2) and column 4 of item 11 of s 539(2) of the Act. A penalty unit was, at the time of the contraventions, valued at $180: see Crimes Act 1914 (Cth) s 4AA(1); s 12 of the Act. The applicable rate has been held to be that in force at the time of the contravention: see Murrihy v Betezy.com.au Pty Ltd (No 2) (2013) 221 FCR 118 at 127; [2013] FCA 1146 at [28] (Jessup J); Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 at [394]–[395] (Katzmann J).

23    Mr Harisiou’s conduct was deliberate and wilful. He arrogated to himself the right to determine who would and would not be permitted to work on the site: Mr Paterakis could do so because he was a financial member of the CFMEU; Mr Hart-McGuinness could only do so once he had made good his arrears; and Mr Schembri could not because he was not a member and was not prepared to become a member of the CFMEU. It may readily be inferred (as I do) that Mr Harisiou was acting to enforce a union policy that only financial members of the union be permitted to work on the site. In doing so he undermined provisions of the Act which were designed to ensure that workers enjoyed freedom of association in the workplace.

24    The predominant purpose of civil penalty provisions is deterrence, both specific and general: see Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at 506; [2015] HCA 46 at [55] (French CJ, Kiefel, Bell, Nettle and Gordon JJ); Australian Competition and Consumer Commission v High Adventure Pty Ltd (2006) ATPR ¶42-091 at 44 564; [2005] FCAFC 247 at [11] (Heerey, Finkelstein and Allsop JJ).

25    The CFMEU is a large, asset rich, and well-resourced industrial organisation. It has regularly been involved in litigation in which it has been found to have contravened provisions of the Act, including ss 346 and 348, which attract pecuniary penalties. See the non-exhaustive summary of coercion-related decisions involving the CFMEU between 2010 and 2015 in Jessup J’s judgment in Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union (the Webb Dock Case) [2017] FCA 62 at [67]. It may, therefore, be taken to be well aware of the constraints imposed upon it and its members by such provisions.

26    Despite this, it has persisted in its contravening conduct. The Commissioner has provided the Court with an analysis of such cases which demonstrates that, since about 2000, the CFMEU has been found to have breached pecuniary penalty provisions on more than 120 occasions.

27    The industry of the Commissioner has identified 15 cases, since 2000, in which the CFMEU and its officials have been found to have contravened the Act and its predecessors by engaging in misconduct with a view to maintaining “no ticket no start” regimes on building sites around the country. Penalties have been imposed by this Court, the Federal Magistrates Court and the Federal Circuit Court.

28    The present case falls into this pattern of repeated disregard for the law. To adopt the language of Mortimer J in Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2016] FCA 436 at [142]: the misconduct forms “part of a deliberate and calculated strategy by the CFMEU to engage in whatever action, and make whatever threats, it wishes, without regard to the law, and then, once a prosecution is brought, to seek to negotiate its way into a position in which the penalties for its actions can be tolerated as the price of doing its industrial business.” See also Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (Perth Childrens’ Hospital Contraventions Case) [2017] FCA 491 at [83]-[90] (Barker J) and the authorities there cited.

29    In developing principles to guide the exercise of its power to impose civil penalties, the Court has, on many occasions, drawn on analogies with criminal sentencing practices. Whilst sometimes helpful the assistance provided by criminal sentencing principles is limited: see, eg, Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2016] FCA 436 at [67]-[85]. In Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 1213 at [63] I ventured the opinion that:

Neither the CFMEU nor any individual respondent is to be punished again for earlier misconduct. They are, however, to be punished more severely than they would have been had they had no adverse record or been responsible for only a few isolated incidents over a period of many years. Their continued willingness to engage in contravening conduct supports the view that earlier penalties, some of them severe, had not had a deterrent effect: cf Veen v R (No 2) (1988) 164 CLR 465 at 477-8. The longer such recidivism continues the more likely it is that this consideration will carry greater weight than the principle that the maximum available penalty must be reserved for the worst possible offending.

These observations were made before the decision of the High Court in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; [2015] HCA 46. The Court there emphasised the pre-eminence of deterrence as a guiding principle where the fixing of civil penalties is concerned. In their joint judgment, French CJ, Kiefel, Bell, Nettle and Gordon JJ said (at [55]) that:

No less importantly, whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil remedy, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:

“Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. … The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.”

(Citations omitted.)

30    The comments of Keane J in the same case (at [110]) also bear mention:

It is because the Commissioner may, on occasion, be too pragmatic in taking such a stance that the court must exercise its function to ensure that the penalty imposed is just, bearing in mind competing considerations of principle, including that of equality before the law and the need to maintain effective deterrence to other potential contraveners. In this latter regard, in Australian Competition and Consumer Commission v TPG Internet Pty Ltd, French CJ, Crennan, Bell and Keane JJ approved the statement by the Full Court of the Federal Court in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission that a civil penalty for a contravention of the law:

“must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business.”

(Citations omitted.)

31    More recently, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 53, Dowsett and Rares JJ emphasised (at [97]) that “coercion is a particularly serious form of industrial (mis)conduct.” In determining appropriate penalties in that case their Honours said that:

100.    In a liberal democracy, it is assumed that citizens, corporations and other organisations will comply with the law. Such compliance is not a matter of choice. The community does not accept that a citizen, corporation or other organisation may choose to break the law and simply pay the penalty. The courts certainly do not accept that proposition. Such acceptance would pose a serious threat to the rule of law upon which our society is based. It would undermine the authority of Parliament and could lead to the public perception that the judiciary is involved in a process which is pointless, if not ridiculous.

101.    The Parliament’s purpose in legislating to provide that particular proscribed conduct will attract a civil penalty was to deter persons, including but not limited to trade unions or corporations, from engaging or continuing to engage in such conduct. A civil penalty would lose its utility if the person on whom it was imposed simply treated it as a cost of continuing to carry on with the very conduct that had just been penalised.

See also Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [98] (Dowsett, Greenwood and Wigney JJ).

32    Having regard to the history of offending by the CFMEU to which I have referred, it may be doubted that any penalty falling within the available range for contraventions of the kind presently under consideration would be “sufficiently high to deter repetition”. Any penalty will be paid and treated as a necessary cost of enforcing the CFMEU’s demand that all workers on certain classes of construction sites be union members.

33    Counsel for the respondents submitted that certain factors suggested that the present contraventions were less serious than might otherwise be the case. In particular, it was submitted that the conduct:

(1)    occurred during a single induction session during which the benefits of union membership and related industrial matters were being discussed;

(2)    was constituted by statements to two persons to the effect that “if you are not a financial member of the union you can’t get onto the site”;

(3)    was limited in time;

(4)    was not accompanied by verbal abuse or threats of future action;

(5)    did not involve any physical, intimidation, violence of property damage;

(6)    was that of a single shop steward; and

(7)    resulted in Mr Schembri not working for one day.

34    Whilst the events at the site on 4 August 2015 were confined to a single induction process and involved a single shop steward, they form part of the broader pattern to which reference has already been made. Mr Harisou’s principal loyalty was to the CFMEU. He arrogated to himself the right to determine who would and would not work on the site in order to advance the “no ticket no start” regime on which the union insisted notwithstanding the provisions of the Act which proscribe such conduct.

35    Mr Harisiou has not been found to have contravened ss 346 or 348 of the Act on any previous occasion. Whilst deterrence remains an essential consideration in determining penalties for his misconduct, the absence of prior contraventions is a mitigatory factor in his case.

36    Neither respondent has exhibited any contrition for the contravening conduct. No assurance has been proffered by the CFMEU that it will direct its shop stewards not to seek to enforce “no ticket, no start” regimes and to respect the freedom of association provisions of the Act.

37    As a result of Mr Harisiou’s conduct, Mr Schembri was unable to perform any duties on the site that day. There was no evidence as to whether or not he lost wages as a result. It was not suggested that ACCE suffered any economic consequences as a result of Mr Schembri’s inability to work on 4 August 2015. There was evidence that ACCE incurred the amount of $156.70 when paying Mr Hart-McGuinness’s subscription arrears.

38    Having regard to all of the circumstances I consider that it is appropriate to impose a penalty of $50,000 in respect of each of the CFMEU’s contraventions. I bear in mind, however, that the contraventions occurred at the same time and as part of the same induction process. For this reason, a total penalty of $100,000 is more than is appropriate to mark the overall culpability of the CFMEU. Some moderation is required. For that reason the penalty to be imposed in each case will be $45,000.

39    For similar reasons penalties of $5,000, which would otherwise be appropriate in respect of each contravention by Mr Harisiou, should be reduced to $4,000.

Associate:

Dated:    23 October 2017