FEDERAL COURT OF AUSTRALIA

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The Quest Apartments Case) [2017] FCA 1398

ORDERS

THE COURT ORDERS THAT:

1.    The further hearing of the application be listed at 10:15 am on 5 February 2018.

2.    On or before 11 December 2017 the applicant file and serve any affidavits and an outline of his written submissions relating to penalties and any other relief sought.

3.    On or before 22 December 2017 the respondents file and serve any affidavits and an outline of their written submissions in response to those of the applicant.

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

REASONS FOR JUDGMENT

TRACEY J:

1    The present proceeding arises out of events which occurred on a building site in Victoria on two days in 2014. The applicant Australian Building and Construction Commissioner (“the Commissioner”) alleges that, at the site, a representative of the first respondent, the Construction, Forestry, Mining and Energy Union (“the CFMEU”), sought to prevent two painters from working there because they were not financial members of the CFMEU.

2    The Commissioner alleges that the CFMEU’s representative, the second respondent, has contravened three sections of the Fair Work Act 2009 (Cth) (“the Act”) and that the CFMEU is also liable for these contraventions.

THE BACKGROUND FACTS

3    For the most part there is no dispute about the circumstances in which the alleged contraventions occurred.

4    Merkon Constructions Pty Ltd (“Merkon”) was the head contractor engaged to perform building works in Tullamarine. Under construction were a number of Quest Apartments.

5    Merkon engaged Arteam Pty Ltd (“Arteam”) to provide painting and related services at the site. Mr Michael Hanna was the director of Arteam. Through Mr Hanna, Artream engaged a number of workers to paint the apartments. Two of these workers were Mr Zivislav Matic and Mr Iraj Hani.

6    Allegations made against Arteam and Mr Hanna, in relation to conduct concerning Mr Matic, were the subject of admissions and declarations recorded in an earlier judgment in this proceeding: see Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (Quest Apartments and Greek Community Centre) [2016] FCA 1262. Arteam and Mr Hanna were removed as the third and fourth respondents to the proceeding by a subsequent order made on 18 April 2017.

7    The second respondent, Mr Godwin Farrugia, was employed by Merkon as a health and safety officer. One of his responsibilities was to conduct inductions of workers coming onto the site. Mr Farrugia was also the CFMEU’s representative or “shop steward” on site.

8    In anticipation of work commencing Mr Hanna sent a series of text messages to Mr Matic and others.

9    On 11 March 2014 Mr Hanna wrote to Mr Matic and others:

Good morning guys,

Finally we’ll start working tomorrow.

There is a few thing that it [sic] has to be done before start on site

Everyone has to do Arteam induction in my office.

Everyone has to have all PPE.

Everyone has to have a valid union ticket.

Everyone has to have own mask for spray.

Please confirm time to meet in the office today.

Thanks

Michael

10    On 15 March 2014 Mr Hanna sent a text message to Mr Matic and Mr Hani in which he provided the address of the site and said: “Please bring your PPE and all your tickets for induction.” “PPE” refers to “personal protective equipment”. The reference to “tickets” is a shorthand reference to cards of the kind identified below at [20].

11    On 17 March 2014 Mr Matic and Mr Hani came to the site. They attended an induction which was conducted Mr Farrugia. In the course of the induction they were each provided with a site induction form which they completed and signed. Each of their forms was countersigned by Mr Farrugia.

12    In the course of the induction both Mr Matic and Mr Hani provided various cards to Mr Farrugia. Mr Farrugia took the cards to his office and photocopied them. Mr Matic had provided a CFMEU membership card which disclosed that he was financial to 31 March 2013. This meant that he was “unfinancial” on 17 March 2014 and had been for some time. So much was confirmed by correspondence which he had been sent to him by the CFMEU in the intervening period advising him that he owed membership fees to the union. Mr Hani said that, on 17 March 2014, he told Mr Farrugia that he did not have a current card because it had expired. His CFMEU card, which he gave to Mr Farrugia on that day, stated that he was financial until 30 September 2013. Certain discussions then occurred which were the subject of conflicting evidence. I will return to these discussions in due course.

13    After the exchanges had concluded Mr Matic performed work on the site until about 1.00 pm. By that time the scheduled work had been completed and he left the site. Mr Matic was next scheduled to work at the site on 31 March 2014.

14    On 27 March 2014 Mr Hanna sent a text message to Mr Matic and others. It read:

Hi all. Just letting you know that as of Monday we’ll be working full time on a couple of new jobs. Please ensure that u [sic] have all cards/tickets before coming to the site. Anyone without these will not be able to work. Thanks all for your support and patience in the last period as it hasn’t been easy for any of us. Looking forward to working with u [sic] all in a more prosperous year. Michael

15    On 31 March 2014 Mr Matic arrived at the site shortly before 7.00 am. He went to Mr Farrugia’s office. Mr Farrugia was there. Mr Matic asked if he could speak to him. Mr Farrugia agreed and they went into the office. Mr Matic was carrying with him a document which he had downloaded from the Fair Work Ombudsman’s website and which dealt with freedom of association and a worker’s right not to join a union.

16    The door to Mr Farrugia’s office was closed. What occurred next in the office is in dispute. I will deal with these events later in these reasons.

17    Following their discussion both Mr Matic and Mr Farrugia’s left Mr Farrugia’s office. Mr Matic approached Mr Hanna who was nearby and advised him that he was leaving the site. He left the site and did not return.

THE 17 MARCH 2014 INDUCTION

18    In the course of the induction on 17 March 2014, and after Mr Farrugia had examined Mr Matic’s CFMEU membership card, he spoke to Mr Matic. Mr Matic said that Mr Farrugia had said words to the effect that:

What about your union membership? All of your tickets have expired. You haven’t paid. You need to fix it. I can’t let you work if you’re not paid up.

Mr Matic explained that he had not worked for three months and had accumulated household bills. He told Mr Farrugia that he expected to be able to make good the arrears of fees in about a month. Mr Matic said that Mr Farrugia had responded: “I can’t give you that long. I give you two days.”

19    Mr Farrugia also examined Mr Hani’s CFMEU membership card. Mr Hani said that Mr Farrugia told him he had two weeks to pay his arrears: “Two weeks, you have to pay it. If you can’t pay it, you can’t working [sic] here, because this one is the Union site.” Mr Hani also said that Mr Farrugia had told him that “[i]f you don’t pay the union cards, you can’t work in here because this job is for the union. This job is a union site” and that “[i]f you want to be working you have to have a union card.”

20    Mr Farrugia gave evidence that he had conducted hundreds of inductions at the site and that he had no independent recollection of the induction of Messrs Matic and Hani on 17 March 2014. He said that it was his normal practice to ask inductees to provide him with their cards. He would not specifically ask for a CFMEU membership card. Amongst the cards usually produced were Cbus, Incolink and CoINVEST cards. These funds provided workers with, respectively, superannuation, redundancy, and long service leave payments. He said he did this as part of his job as health and safety representative and as a CFMEU delegate.

21    If a CFMEU membership card was produced that was out of date he would contact the union office and find out the extent of any arrears and advise the member. He said that he was “obligated” to provide such advice. If the person indicated that they did not want to pay he said that he might advise the union of that but that would be all. If the arrears were not made up he said he would take no further action. He was aware that a worker did not have to be a member of the CFMEU.

22    Mr Farrugia said that his inductions followed a standard pattern and covered a range of topics. As the occupational health and safety officer he would provide advice about safety practices on the site and the reporting of injuries and safety risks. As the CFMEU representative he would explain that workers could come to him for assistance in relation to issues arising under the enterprise bargaining agreement. He would encourage workers being inducted to join the union if they had not already done so and to become financial if they had fallen behind. He maintained an “open door” policy so that workers could come and see him whenever they wished. He said that he did not do anything if a worker indicated that they did not wish to join the union.

23    Mr Farrugia specifically denied having made the statements attributed to him by Mr Matic and Mr Hani in the course of the induction.

EVENTS OF 31 MARCH 2014

24    I resume the narrative of events on 31 March 2017 at the point at which the door to Mr Farrugia’s office was closed and Mr Farrugia and Mr Matic were inside. Mr Matic said that he had told Mr Farrugia that he didn’t have to pay the outstanding fees in order to work on the site and that this was confirmed by a document he had obtained. Mr Matic said that he had held out the document about freedom of association and tried to give it to Mr Farrugia. Mr Farrugia had refused to accept it and said that he did not have to read it. He had then said:

You can’t work here. You can’t work on – to the site. Go into lunch room and wait for your boss.

Mr Farrugia then left the office and Mr Matic followed.

25    Mr Farrugia said that, once the office door was closed, Mr Matic became agitated and thrust a document in his direction. In order to de-escalate a tense situation he decided to leave. He agreed that he did not accept the document but denied saying that Mr Matic could not work on the site.

THE DISPUTED EVIDENCE

26    In making findings of fact in cases in which contraventions of civil remedy provisions in the Act are alleged, the Court is required, by s 140(2)(c) of the Evidence Act 1995 (Cth), to give due regard to the gravity of the matters alleged. Adverse findings are not lightly to be made: see Australian Building and Construction Commissioner v Hall [2017] FCA 274 at [19] and [20] (Flick J).

27    I accept the evidence given by Mr Matic and Mr Hani to the extent that it is inconsistent with that of Mr Farrugia. My reasons for doing so follow.

28    Both Messrs Matic and Hani had provided written statements about what had occurred on each of the two days a relatively short time thereafter, on 1 May 2014 and 24 September 2014, respectively. Their oral evidence at trial was substantially consistent with the written statements they had earlier made. Their evidence was unshaken in cross-examination. Mr Farrugia, on the other hand, had no independent recollection of the relevant conversations on 17 March 2014. As a result he was unable to deny that he had made the statements attributed to him apart from asserting that it was not his practice to insist on the production of evidence of union membership during the induction process. In relation to the events on 31 March 2017, Mr Farrugia said that he recalled some of the events but not the actual date.

29    Mr Farrugia sought to portray himself as a benign facilitator who saw it as his role to do whatever he could to assist workers coming onto the site. His counsel stressed that he had no authority to control the performance of work and to determine who could perform it.

30    The evidence paints a different picture. Nineteen site induction forms, which had been completed by workers who had been inducted on the site between 17 and 27 March 2014 were tendered by the Commissioner. To each was attached a photocopy of the worker’s tickets. Where a worker had presented a current CFMEU membership ticket Mr Farrugia had hand-written on the front of the form: “CFMEU”, the expiry date of the current membership, and added a tick. Where a worker was a member of the CFMEU but had not paid all fees owing, Mr Farrugia’s annotation included the date to which the worker had been a financial member of the union and the monetary sum outstanding. Mr Farrugia said that he had made these annotations “for my references later on, if I have to refer back to them”.

31    Mr Farrugia was questioned about his annotations on these forms during his examination-in-chief and under cross-examination. He was asked about how he dealt with unfinancial members of the CFMEU. He agreed that he considered requests, by unfinancial members, for extra time within which to pay. Under cross-examination he was asked:

[Y]ou can sometimes facilitate arrangements for a couple of weeks for people - - - ? — Generally - - -

- - - to pay fees? — Generally that has to be something I run by the union office and organise a payment plan or something that they come – both come to an agreement. It’s not something I can make the agreement up on.

But you felt comfortable to be involved in an arrangement which might take a week or two? — Yes. If someone says to me, “I need a week”, I – I – I will give them that – that week. Yes.

But if someone says to you, “I need a month,” --- ? — I would refer that to the union office.

(Emphasis added.)

Why, it might be asked rhetorically, was it of any concern to Mr Farrugia whether or not a particular worker was a financial member of the CFMEU? More important, for present purposes, is that he considered that it was necessary for them to be granted a dispensation. He did not explain why and for what purpose he assumed the power to grant such dispensations.

32    Mr Farrugia’s attention was drawn to Mr Hani’s induction form on which he had inscribed: “CFMEU 30-9-14”. He was directed to Mr Hani’s evidence that he had told him (Mr Farrugia) that he did not have a union card because it had expired. The cross-examination continued:

I’m suggesting that you said to him, “When do you want to get it” and he said, “After two weeks. If you will let me work, I will pay in two weeks”? — I don’t recall it, but maybe. I sometimes make arrangements - if someone ask me for a bit of time to work and they work, yes. I let them work.

And that has happened before, where you’ve been able to facilitate a period of time like a two week period of time - something like that? — Yes. It’s not general practice because - - -

But it has happened? — Yes, I would say it has, yes.

I suggest to you that you said to Hani, “That’s okay. You can start work”? — Yes.

(Emphasis added.)

33    Mr Farrugia’s assertion that he could decide whether or not unfinancial members of the CFMEU could work at the site was confirmed by an unguarded answer which he gave in examination-in-chief. Mr Matic’s allegation that Mr Farrugia had told him, on 31 March 2014, that he (Mr Matic) could not work there and could not go onto the site was put to Mr Farrugia. His response was:

I previously let – he worked on the site. I don’t understand. If he has already worked on the site there was no reason for him not to come there that morning and just work again.

(Emphasis added.)

This was clearly a reference to Mr Matic having worked on the site on 17 March 2014. On Mr Matic’s account Mr Farrugia had told him on that day that he had to pay his arrears within two days. That dispensation allowed him to work on 17 March 2014. It did not extend to 31 March 2014 and Mr Farrugia’s feigned bemusement as to why there could have been any impediment to Mr Matic working on 31 March 2014 was no more than an attempt to retrieve the slip which he had made.

34    On 31 March 2014 Mr Matic remained unfinancial. On that day Mr Farrugia wrote on Mr Matic’s site induction form: “sent off site”. When questioned about this in cross-examination, Mr Farrugia said that he shouldn’t have made this annotation and stated: “I should have wrote [sic] he left site.”

35    The annotation on the site induction form is entirely consistent with Mr Matic’s version of the conversation with Mr Farrugia that morning in which Mr Farrugia told him that he couldn’t work on the site or go onto it.

PROCEDURAL MATTERS

36    The proceeding was commenced by the Director of the Fair Work Building Industry Inspectorate. Whilst the trial was pending the Building Construction Industry (Consequential and Transitional Provisions) Act 2016 (Cth) commenced operation. By force of that Act the Australian Building and Construction Commissioner was deemed to have replaced the Director as the moving party in the proceeding: see clause 19 of Schedule 2.

37    Mr Farrugia’s initial response to the allegations made against him was to invoke the privilege against self-exposure to a penalty. His defence did not, therefore, traverse the allegations levelled against him.

38    After the Commissioner’s case had closed, and at the beginning of the second day of the hearing, Mr Farrugia elected to waive the privilege and to give evidence.

39    Once that election had been made, the CFMEU and Mr Farrugia sought and were given leave to file and serve an amended defence and they did so.

THE ALLEGED CONTRAVENTIONS

40    The Commissioner contended that Mr Farrugia had contravened s 349 of the Act on 17 March 2014 and that he had contravened both ss 346 and 348 on 17 and 31 March 2014.

41    The Commissioner further contended that the CFMEU was rendered liable for Mr Farrugia’s alleged contraventions by operation of s 363 and further, or in the alternative, s 793 of the Act.

42    Mr Farrugia denied all of the alleged contraventions and the CFMEU contended that, because its alleged liability was wholly derivative, the Commissioner’s case against it fell with his case against Mr Farrugia.

THE ALLEGED CONTRAVENTIONs OF S 349

43    Section 349 of the provides that:

349 Misrepresentations

(1)    A person must not knowingly or recklessly make a false or misleading representation about either of the following:

(a)    another person’s obligation to engage in industrial activity;

(b)    another person’s obligation to disclose whether he or she, or a third person:

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

(ii)    is or is not engaging, or has or has not engaged, in industrial activity.

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

(2)    Subsection (1) does not apply if the person to whom the representation is made would not be expected to rely on it.

44    The phrase “engages in industrial activity” is relevantly defined to include becoming or remaining a member of a union (s 347(a)) and paying a fee to a union (s 347(b)(vi)). The Commissioner submitted that the word “member” in s 347(a) could be read as “financial member”.

45    The word “obligation” is not defined in the Act. Its ordinary and natural meaning extends to “the binding power or force of a promise, law, duty, agreement, etc.”: S Butler (ed), Macquarie Dictionary (Macquarie Dictionary Publishers Pty Ltd, 7th ed, 2017). There are no contextual or purposive considerations which would support the respondents’ contention that only legal obligations are comprehended by s 349. No authority was cited to support this proposition. In an industrial relations environment where organisations historically have taken collective action in support of claims for wages and conditions, social pressures to join organisations and engage in collective action can be and are presented as moral or other obligations even though they are not founded on any legal duty. Section 349 falls within the general protections provisions of Part 3-1 of Chapter 3 of the Act. One of the objects of that Part, provided for in s 336(1)(b)(i), is to protect freedom of association by ensuring that persons are free to become, or not become, members of industrial associations such as unions. The protection of such freedom would be radically undermined were the word “obligation” to be narrowly construed to refer only to legal obligations.

46    The elements of a contravention of s 349(1) of the Act, which are pertinent in the present case, are:

    the relevant representation must be made;

    the representation must be false or misleading; and

    the representation must be made knowingly or recklessly.

47    The representations, attributed to Mr Farrugia, which were said to be false or misleading were pleaded by the Commissioner as being one or more of the following:

    a representation that Mr Matic, and the other Arteam employees to whom Mr Farrugia spoke, had an obligation to engage in industrial activity, namely to become or remain members (specifically, financial members) of the CFMEU and further or alternatively to pay membership subscriptions to the union;

    a representation that Mr Matic and the others had an obligation to disclose to Mr Farrugia whether they were or were not members (specifically, financial members) of the CFMEU; and

    a representation that Mr Matic and the others had an obligation to disclose whether or not “he was or was not engaging, or had or had not engaged, in industrial activity”, namely becoming or remaining a member (specifically, a financial member) of the CFMEU and further, or alternatively, paying a fee to the CFMEU.

48    Each representation was said to have been made by Mr Farrugia to Mr Matic and the others on 17 March 2014 in the course of the induction process.

49    The representations were said to have been made by Mr Farrugia knowing that they were false or misleading or, alternatively, made recklessly as to whether they were false or misleading. They were said to have been made in circumstances in which Mr Matic and others would be expected to rely on them.

50    Mr Farrugia denied having made any of the alleged representations. He also contended that, had they been made, Mr Matic and the others would not have been expected to rely on them.

51    The evidence of the exchanges between Mr Farrugia and Mr Matic and Mr Hani on 17 March 2014 (which I accept) is set out above at [18] and [19]. In substance Mr Farrugia told them that they were obliged to pay such amounts as were necessary to bring their membership subscriptions up to date as a precondition to working on the site. Mr Farrugia told Mr Matic that the arrears had to be paid within two days. Mr Farrugia also told Mr Hani that being a financial member of the CFMEU was necessary in order to work on the site and that he had two weeks in which to pay the outstanding amount owed.

52    Mr Farrugia was well aware that workers were not obliged to join or remain financial members of the CFMEU (or any other union) in order to be able to perform the work for which they had been engaged.

53    I am satisfied that Mr Farrugia knowingly made a false representation to Mr Matic that Mr Matic was obliged to pay fees to the CFMEU within two days in order to work on the site. I am also satisfied that Mr Farrugia knowingly made a false representation to Mr Hani that payment of his outstanding CFMEU fees within two weeks was a precondition for working on the site. The representations were false and Mr Farrugia knew this.

54    The respondents disputed that Mr Farrugia had made representations “about” another person’s obligation to engage in industrial activity for the purposes of s 349(1)(a). The respondents relied upon Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2015) 230 FCR 298 at 328; [2015] FCAFC 25 at [156] where Logan, Bromberg and Katzmann JJ said that “the fact that a representation may be inconsistent with a workplace right does not make it a representation about a workplace right”. The respondents contended that the representations, attributed to Mr Farrugia, did not concern a person’s obligation to engage in “industrial activity” within the meaning of s 347(b) but rather a person’s contractual obligation to pay fees to the CFMEU pursuant to the rules of that union. Mr Farrugia had done no more than make representations that members were behind in the payment of these fees and that the outstanding dues were required to be paid. Both of those matters were true as a matter of fact and law. The respondents also relied upon this argument to claim that the alleged breaches of s 349(1)(b) could not be sustained.

55    In answer to this contention, the Commissioner submitted that BHP Coal was distinguishable on the basis that, in that case, the relevant statements were found to be about union policy and not about the subject matter to which s 349 was directed. In contrast, the Commissioner said, statements in this proceeding are “unambiguously” representations “about the subject matter to which s 349 is directed, being an obligation that Matic be a financial member of, and pay fees to, the union, in order to work on the Site” (emphasis in original).

56    I accept the Commissioner’s submissions in relation to the representation made by Mr Farrugia to Mr Matic. They also aptly describe the representation made to Mr Hani. The representations were about an obligation, to which Messrs Matic and Hani were said to be subject, to engage in industrial activity within the meaning of s 347(b)(vi) by paying a fee to the CFMEU in order to undertake the work that they had been engaged to perform at the site. The representations were clearly about the purported obligation to pay the arrears. In particular, Mr Farrugia represented that payment of the fees would enliven their work rights on the site.

57    Mr Farrugia does not have a defence under s 349(2), which provides that s 349(1) does not apply if the person to whom the representation is made would not be expected to rely on it. Mr Farrugia conducted the induction as both a representative of the company and the CFMEU. He was in a position of authority. He made it plain to Mr Matic and Mr Hani, on 17 March 2017, that payment of the arrears of union subscriptions was required. It cannot be said that Mr Matic or Mr Hani would not be expected to rely on what Mr Farrugia had told them. On the contrary, Mr Matic and Mr Hani were made to understand that they were under an obligation to pay and it was this that led them each to make a plea for a period of grace.

58    For these reasons I find that Mr Farrugia contravened s 349(1)(a) of the Act on 17 March 2014 by knowingly making a false representation about another person’s obligation to engage in industrial activity within the meaning of s 347(b)(vi). Having made that finding, I do not consider that it is necessary to engage with the Commissioner’s argument with respect to the scope of the word “member” in s 347(a).

59    Mr Farrugia did not, in terms, require Mr Matic or Mr Hani to disclose to him whether or not they were members (or financial members) of the CFMEU. Mr Farrugia was aware that they were members but were not presently financial because they had given Mr Farrugia their CFMEU membership cards. They had brought the cards to the site because Mr Hanna had told them that they should do so. The cards were given to Mr Farrugia together with other cards which Mr Hanna had also told them they should bring.

60    In these circumstances I am not satisfied that Mr Farrugia represented to Mr Matic or others that they had an obligation to disclose to Mr Farrugia whether or not they were members of the CFMEU. For this reason, the Commissioner has not established a contravention of s 349(1)(b)(i) of the Act.

61    Nor am I satisfied that Mr Farrugia represented to Mr Matic or others that they had an obligation to disclose whether or not they were engaging, or had engaged, in industrial activity. Mr Farrugia did not, in terms, represent to Mr Matic or others that they had an obligation to disclose to him their intentions with respect to their ongoing CFMEU membership or whether or not they had paid a fee to the CFMEU. The Commissioner has not made out his case with respect to the alleged contravention of s 349(1)(b)(ii).

THE ALLEGED CONTRAVENTIONs Of S 348

62    Section 348 of the Act relevantly provides that a person must not take or threaten to take any action against another person with intent to coerce that other person to engage in “industrial activity”.

63    Again, the relevant parts of the definition of “engages in industrial activity” in s 347 are paragraph (a) and sub-paragraph (b)(vi) of that section.

64    The elements of a contravention of s 348 which arise in the present case and which the Commissioner must satisfy are that Mr Farrugia:

    threatened to take action or took action against Mr Matic;

    with intent to coerce Mr Matic to engage in relevant “industrial activity” (that is, to become or remain a member of the CFMEU and further, or alternatively, to pay a fee to the CFMEU).

65    The Commissioner’s case was founded on various things Mr Farrugia was alleged to have said and done on 17 and 31 March 2014. In particular, the Commissioner relied on the statements made by Mr Farrugia to Mr Matic on 17 March 2014 which are recorded above at [18]. These statements, it was said, were “a threat to take action” within the meaning of s 348.

66    The Commissioner also contended that Mr Farrugia contravened s 348 on 31 March 2014 when he made the statement recorded above at [24] and subsequently sent Mr Matic “off-site”.

67    All the relevant statements were said to have been made with an intent to coerce Mr Matic to become a member of the CFMEU or remain a member of that organisation, or to pay a fee to that organisation. The Commissioner again submitted that “member” in s 347(a) encompassed “financial member”. In making the statements, it was submitted, Mr Farrugia had acted unlawfully to the extent that he had contravened ss 346 and 349 of the Act. In the alternative, the Commissioner contended that Mr Farrugia’s action, in making those statements, was unconscionable or illegitimate.

68    Mr Farrugia denied any contravention of s 348 and emphasised that, to the extent that the Commissioner alleged that he intended to coerce Mr Matic to join the CFMEU, that claim must fail given that Mr Matic was, at relevant times, a member of the union albeit an unfinancial member.

69    The meaning of the phrase “intent to coerce” in s 348 is now well settled. The authorities have recently and helpfully been summarised by White J in Australian Building and Construction Commissioner v Huddy [2017] FCA 739 at [164]-[172]:

164    It was common ground that the phrase “intent to coerce” is used in ss 343 and 348 of the FW Act with the same meaning: see Fair Work Ombudsman v Maritime Union of Australia [2014] FCA 440; (2014) 243 IR 312 at [301]-[304] (Siopis J).

165    Coercion involves two elements: first, the exertion of pressure which, in a practical sense, will negate choice and, secondly, conduct which is unlawful, illegitimate or unconscionable: Seven Network (Operations) Ltd v CEPU [2001] FCA 456, (2001) 109 FCR 378 at [41]; State of Victoria v CFMEU [2013] FCAFC 160, (2013) 218 FCR 172 at [70]-[71] (Buchanan and Griffiths JJ); Esso Australia Pty Ltd v AWU [2016] FCAFC 72, (2016) 245 FCR 39 at [174] (Buchanan J, with whom Siopis J agreed). Accordingly, proof of an “intent to coerce” involves proof of two elements: first, that the actor intended to exert pressure which, in a practical sense, would negate choice; and, secondly, that the pressure involved conduct which was unlawful, illegitimate or unconscionable: Seven Network at [41]; Victoria v CFMEU at [71].

166    The element of intent concerns the first element of coercion. It is not necessary for the Commissioner to prove that the respondents had an intention to use unlawful, illegitimate or unconscionable means to bring about the negation of choice of LOR: Esso Australia v AWU at [175]-[177].

167    The Represented Respondents conceded the unlawfulness of their industrial action. Accordingly, the issue for determination in relation to the element of “intent to coerce” is that of whether the individual respondents intended to negate LOR’s choice about its exercise, or the manner of exercise, of the Dispute Resolution Right and the Working Time Right.

168    In National Tertiary Education Industry Union v Commonwealth of Australia [2002] FCA 441; (2002) 117 FCR 114 at [103] (NTEU), Weinberg J elaborated the concept of an intention to negate choice:

The approach to the expression “intent to coerce” taken in each of the authorities set out above makes it clear that what is required is an intent to negate choice, and not merely an intent to influence or to persuade or induce. Coercion implies a high degree of compulsion, at least in a practical sense, and not some lesser form of pressure by which a person is left with a realistic choice as to whether or not to comply.

(Emphasis in the original)

169    The Commissioner has the onus of proving that each individual respondent had an intention to coerce in the requisite way. The determination of whether a respondent had that intention requires an examination of the respondent’s purpose in taking the action: CFMEU v BHP Coal Pty Ltd [2014] HCA 41; (2014) 253 CLR 243 at [19] (French CJ and Kiefel J); Board of Bendigo Regional Institute of Technical and Further Education v Barclay (No 1) [2012] HCA 32; (2012) 248 CLR 500 at [44]-[45] (French CJ and Crennan J). In this case, the assessment must be made in relation to each individual respondent. See, in addition to what was said in BHP Coal and Barclay, Geelong Wool Combing Ltd v Textile, Clothing and Footwear Union of Australia [2003] FCA 773, (2003) 130 FCR 447 at [17]-[18]; and Victoria v CFMEU [2013] FCAFC 160, (2013) 218 FCR 172 at [84]. That is because the intentions of the individual respondents may have been diverse. That does not mean that the intention of the group, to the extent to which it may be discerned, may not inform the determination of the intentions of the individuals. In some circumstances it is possible to infer that persons who go along with decisions made by others have adopted their purpose for engaging in the conduct.

170    In discharging the onus of proving that the individual respondents had an intention to coerce in the requisite sense, the Commissioner has the benefit of the presumption contained in s 361 of the FW Act. Section 361 provides (as it then was):

361 Reason for action to be presumed unless proved otherwise

(1)    If:

(a)    in an application in relation to a contravention of this Part, it is alleged that a person took, or is taking, action for a particular reason or with a particular intent; and

(b)    taking that action for that reason or with that intent would constitute a contravention of this Part;

it is presumed, in the proceedings arising from the application, that the action was, or is being, taken for that reason or with that intent, unless the person proves otherwise.

(2)    Subsection (1) does not apply in relation to orders for an interim injunction.

173    Section 360 of the FW Act is also pertinent because it provides that, for the purposes of provisions which include ss 343 and 348, a person takes action for a particular reason if the reasons for action include that reason.

70    It has been held that s 361 does not apply where the proscribed conduct extends no further than the making of a threat to take the relevant action: see Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (The Red & Blue Case) (2015) 254 IR 200 at 231; [2015] FCA 1125 at [111] (Jessup J); Australian Building and Construction Commissioner v Parker (2017) 266 IR 340 at 375; [2017] FCA 564 at [105] (Flick J); Australian Building and Construction Commissioner v Upton (The Gorgon Project Case) [2017] FCA 847 at [119] (Barker J); Construction, Forestry, Mining and Energy Union v De Martin & Gasparini Pty Limited (No 2) [2017] FCA 1046 at [364] (Wigney J).

71    In the course of the induction, conducted on 17 March 2014, Mr Farrugia told Mr Matic (in substance) that, unless he brought his union membership subscriptions up to date, he would not be allowed to work at the site. This demand was later modified by the grant of a two day dispensation. Mr Farrugia did not prevent Mr Matic from working on the site on that day. His utterances constituted a threat to take action in the future if Mr Matic did not promptly rectify his arrears.

72    In so advising Mr Matic, Mr Farrugia plainly intended to exert practical pressure on Mr Matic to make good his subscription arrears. This is a finding which I would have made on the evidence without reference to either ss 360 or 361 of the Act. I would, however, record that Mr Farrugia did not satisfy me that he lacked the proscribed intention. Mr Matic had no choice in the matter if he wished to work at the site. This was a threat by Mr Farrugia which was intended to induce Mr Matic to make the required payment. The threat was unlawful, illegitimate and unconscionable because Mr Farrugia well knew that Mr Matic’s right to perform duties on the site could not be conditioned upon him making payments of subscriptions to the CFMEU. As I have held at [58], the threat was unlawful because it constituted a false or misleading representation about another person’s obligation to engage in industrial activity contrary to s 349(1)(a) of the Act. It was also unlawful because it constituted adverse action contrary to s 346(b): see below at [90].

73    The threat did not extend to a demand that Mr Matic become a member of the CFMEU. He was a member at relevant times, albeit one who owed arrears of subscriptions. Because of my finding at [72], I do not consider it necessary to determine whether “member” could be read as “financial member” for the purposes of s 347(a).

74    On 31 March 2014 Mr Matic returned to the site. Before work was due to start he approached and spoke to Mr Farrugia. Mr Matic had not, by this time, brought his CFMEU subscriptions up to date. He sought to persuade Mr Farrugia that he was under no obligation to do so in order to work at the site. Mr Farrugia had no interest in what Mr Matic was seeking to convey. Mr Farrugia’s reaction was to tell Mr Matic that could not work on the site and could not go onto the site. He told Mr Matic to go to the lunch room and wait for Mr Hanna. He inscribed “sent off site” on Mr Matic’s induction form. Mr Matic did not work at all on 31 March 2014. I readily infer that this notation recorded a direction by Mr Farrugia that Mr Matic should leave the site.

75    This conduct, on the part of Mr Farrugia, contravened s 348 of the Act for the same reasons that his conduct on 17 March 2014 had done so.

THE ALLEGED CONTRAVENTIONS OF S 346

76    Section 346 of the Act proscribes the taking of “adverse action” against another person, relevantly, because that other person is not a member of an industrial association (s 346(a)) or because the other person “engages, or has at any time engaged or proposed to engage, in industrial activity within the meaning of paragraph 347(a) or (b)” of the Act (s 346(b)). The Commissioner contended that ss 346(a) and 347(a) covered the taking of adverse action against another person because that other person is not a financial member of a union.

77    “Adverse action” will occur if a union or a union official “takes action that has the effect, directly or indirectly, of prejudicing the person in the person’s employment or prospective employment” or “if the person is an independent contractor — takes action that has the effect, directly or indirectly of prejudicing the independent contractor in relation to a contract for services”: see s 342, item 7, column 2(b) and (c).

78    Section 342(2)(a) provides that adverse action includes threatening to take such action.

79    In order to make good his case under s 346 it is necessary for the Commissioner to establish that:

    Mr Matic engaged or proposed to engage in relevant industrial activity;

    Mr Farrugia took “adverse action” against Mr Matic; and

    Mr Farrugia took such action because Mr Matic was not a member of the CFMEU or because Mr Matic had engaged or proposed to engage in industrial activity.

80    The Commissioner contended that Mr Farrugia had contravened paragraphs (a) and (b) of s 346 on both 17 and 31 March 2014. The contraventions of paragraph (b) were pleaded as further or alternative contraventions to the breaches of paragraph (a).

81    His case was that Mr Farrugia took adverse action against Mr Matic on 17 March 2014 by threatening to take action that would have the effect of prejudicing him either as a party to a contract for services with Artream or as an employee of that company by prejudicing his capacity to work on the site. The threat was that Mr Matic would not be allowed to work on the site unless he paid his outstanding union dues within a very short period.

82    The relevant adverse action on 31 March 2014 was alleged to be Mr Farrugia’s verbal refusal to allow Mr Matic to work on the site and his direction to Mr Matic to leave the site. This had occurred because Mr Matic was unable or unwilling to pay his outstanding union dues.

83    Mr Farrugia denied that he had taken any adverse action against Mr Matic. He contended that, to the extent that he engaged in the impugned conduct attributed to him, it did not constitute “adverse action” within the meaning of the Act.

84    Relevantly, s 347(a) provides that a person “engages in industrial activity” if that person does not become or ceases to be a member of a union and s 347(b)(vi) provides that a person engages in such activity if that person does not pay a fee to a union.

85    I do not consider that the Commissioner has made out a case insofar as he seeks to rely on s 346(a). I am not satisfied that Mr Farrugia threatened or took adverse action against Mr Matic because of one or more of the reasons identified in that paragraph. Nor am I satisfied that adverse action was taken because of industrial activity engaged in by Mr Matic within the meaning of s 347(a). Because of my finding at [87] below, I do not think it necessary to determine whether the word “member” in ss 346(a) and 347(a) also encompasses a person’s status as a “financial” or “unfinancial” member.

86    At all relevant times Mr Matic was a member of the CFMEU. He was not, however, a financial member. The threats made, and action taken, by Mr Farrugia were directed to securing payment of Mr Matic’s arrears. Mr Matic did not seek to resign from the union. Whether or not he remained a member once his subscriptions had fallen into arrears was a matter which fell to be dealt with under the union rules. No action relating to his financial status, under the rules, was proposed.

87    I do, however, find that Mr Matic engaged in industrial activity, as defined in s 347(b)(iv), by not paying the membership subscriptions which he owed under the rules. The threats made, and the action taken, by Mr Farrugia against Mr Matic were made and taken because he had not paid the fees.

88    On 17 March 2014 Mr Matic had said that he was prepared to make good the arrears if he were given time to do so. By 31 March 2014, his position had changed. By then he had made certain enquiries and formed the view that, in order to work at the site, he was under no obligation to make the payments and that he did not propose to do so.

89    Mr Farrugia’s conduct on these two days constituted adverse action within the meaning of the Act for the purposes of s 346(b). It is not necessary that I determine whether Mr Matic was engaged as an employee or as an independent contractor. In either capacity he was subject to adverse action by Mr Farrugia. Mr Matic was prejudiced in his employment or in relation to his performance of a contract for services by the threats and action of Mr Farrugia. The effect of the threats, made on 17 March 2014, was that, unless Mr Matic paid the subscription arrears, he would not, in future, be permitted to work on the site. Mr Farrugia’s actions on 31 March 2014 had the effect of preventing Mr Matic from performing any work on the site on that day. He was thereby prevented from performing remunerative work.

90    For these reasons I find that Mr Farrugia contravened s 346(b) of the Act on both 17 and 31 March 2014.

LIABILITY OF THE CFMEU

91    The respondents accepted that Mr Farrugia was, at relevant times, an officer of the CFMEU and was acting in that capacity. The CFMEU accepted that, to the extent that the Commissioner made good his allegations against Mr Farrugia under ss 349, 348 and 346 of the Act, the CFMEU was also liable for the contraventions.

92    The derivative liability arose pursuant to ss 363 and 793 of the Act.

93    The CFMEU’s liability is co-extensive with that of Mr Farrugia.

DISPOSITION

94    I will give directions for the parties to make submissions relating to the relief sought by the Commissioner for the various contraventions of the Act which I have found to have occurred.

Associate:

Dated:    30 November 2017