FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union [2018] FCA 934

ORDERS

THE COURT ORDERS THAT:

1.    The respondent pay a pecuniary penalty of $38,000 in respect of its contravention of s 417(1) of the Fair Work Act.

2.    The penalty be paid to the Commonwealth, within 28 days of the date of these orders.

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

REASONS FOR JUDGMENT

JAGOT J:

Introduction

1    Two issues, pecuniary penalties and compensation, remain for decision in this matter, following from declarations I made on 8 December 2017 for reasons given in Fair Work Ombudsman v Maritime Union of Australia [2017] FCA 1363 (the principal reasons).

2    The declarations were in these terms:

1. In the period from 7 August 2015 to 14 August 2015, the Respondent contravened section 417(1) of the Fair Work Act 2009 (Cth) (FW Act), by organising industrial action by:

a. employees of Sydney International Container Terminals Pty Ltd (ACN 134 826 798) (SICT) at the international container terminal at Port Botany, NSW operated by SICT (Sydney Terminal); and

b. employees of Brisbane Container Terminals Pty Ltd (ACN 126 650 020) (BCT) at the international container terminal at Port Brisbane, QLD operated by BCT (Brisbane Terminal).

2. In the period from 7 August 2015 to 14 August 2015, the Respondent was involved, within the meaning of subsection 550(2) of the FW Act, in contraventions of section 417(1) of the FW Act by:

a. employees of SICT engaging in industrial action at the Sydney Terminal; and

b. employees of BCT engaging in industrial action at the Brisbane Terminal.

3    These reasons for judgment are to be read with the principal reasons in which terms were defined and the factual findings leading to the making of the declarations were made.

4    I have concluded that a pecuniary penalty of $38,000 should be imposed on the respondent for what must be taken to be a single contravention of s 417(1) of the Fair Work Act, but that no order for compensation should be made in the circumstances of this case.

Amalgamation of MUA with the CFMEU

5    After the principal reasons were published the MUA amalgamated with the Construction, Forestry, Mining and Energy Union (CFMEU) and the Textile, Clothing and Footwear Union of Australia, the amalgamated body becoming the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU).

6    Section 79 of the Fair Work (Registered Organisations) Act 2009 (Cth) deals with the amalgamation of organisations whilst proceedings are pending. It provides:

Where, immediately before the amalgamation day, a proceeding to which this Part applies was pending in a court or before the FWC:

(a)    the amalgamated organisation is, on that day, substituted for each de-registered organisation as a party; and

(b)    the proceeding is to continue as if the amalgamated organisation were, and had always been, the de-registered organisation.

7    During the further hearing on 25 May 2018 I made orders substituting the CFMMEU for the MUA as the respondent in this proceeding in accordance with s 79(a).

8    The FWO also submitted, however, that amalgamation meant that the prior conduct of the CFMEU became relevant to the determination of penalty. As I understood it, the FWO contended that because the MUA was now amalgamated with the CFMEU, when giving weight to the concept of specific deterrence, the CFMEU’s antecedents had to be taken into account to achieve the object of specific deterrence of the amalgamated organisation, the CFMMEU. During the hearing I queried whether the FWO meant general deterrence rather than specific deterrence of the amalgamated organisation was relevant having regard to s 79 but the FWO pressed its submission as one concerning the need for specific deterrence of the amalgamated organisation, the CFMMEU.

9    I do not accept the FWO’s submission. Section 79(b) requires that the CFMMEU (that is, the amalgamated organisation) be treated “as if it were, and always had been” the MUA (that is, the de-registered organisation) for the purpose of all pending proceedings. Given this statutory construct, I do not consider the conduct of the CFMEU or the fact that it is part of the CFMMEU can be relevant to specific deterrence in this case. To take into account the CFMEU’s conduct or the fact that it is part of the CFMMEU as relevant to specific deterrence, in my view, would involve an error of law because s 79(b) creates a statutory fiction under which the proceeding is to continue, the fiction being that the amalgamated organisation, the CFMMEU, is and always has been the deregistered organisation, the MUA. It follows that it is the MUA alone, under this statutory fiction, which is to be the subject of any specific deterrence consideration. General deterrence, however, involves different considerations because its purpose is not to deter the contravener but all those who may contravene the statute, which necessarily includes organisations of the same kind as the CFMMEU. As such, I have given weight in the determination of penalty to specific deterrence of the respondent “as if it were, and had always been” the MUA and general deterrence of all participants in the industrial relations system, including organisations of the same kind as the CFMMEU. For convenience given the terms of s 79 I also continue to refer to the respondent as the MUA, although it is in fact now the CFMMEU.

Number of contraventions and maximum penalty

10    The maximum penalty for a contravention of s 417(1) by a body corporate was five times 60 penalty units ($180) or $54,000: ss 539(2) and 546(2)(b) of the Fair Work Act.

11    Section 557 of the Fair Work Act is in these terms:

(1)    For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if:

(a)    the contraventions are committed by the same person; and

(b)    the contraventions arose out of a course of conduct by the person.

(2)    The civil remedy provisions are the following: …

…

(j)    subsection 417(1) (which deals with industrial action before the nominal expiry date of an enterprise agreement etc.); …

(3)    Subsection (1) does not apply to a contravention of a civil remedy provision that is committed by a person after a court has imposed a pecuniary penalty on the person for an earlier contravention of the provision.

12    The FWO made alternative submissions about the maximum penalties in the present case. The FWO’s principal case was that the total maximum was $30,024,000 calculated as follows:

(1)    there were 240 shifts the subject of industrial action at the Sydney Terminal and 38 shifts the subject of industrial action at the Brisbane Terminal, giving a total of 278 shifts the subject of industrial action;

(2)    each of the 278 shifts during which each employee took industrial action was a discrete contravention of s 417(1);

(3)    as the MUA both organised those industrial actions and was involved in them (as provided for in s 550(1)), the MUA contravened s 417(1) twice for each of the 278 shifts, giving a total of 556 contraventions;

(4)    556 contraventions multiplied by the maximum penalty of $54,000 equals $30,024,000;

(5)    s 557(1) does not apply to the MUA because it has previously had a civil penalty imposed on it for contravention of s 417(1), as provided for in s 557(3). Accordingly, the 556 contraventions cannot be taken to constitute a single contravention as provided for in s 557(1) even if they did arise out of a single course of conduct by the MUA (which, submitted the FWO in its alternative case, they did not, there being four separate courses of conduct); and

(6)    as s 557(1) does not apply by reason of the operation of s 557(3), the common law course of conduct principle relating to the determination of penalty is also excluded by necessary implication.

13    I consider that the FWO’s principal case fails to confront multiple difficulties.

14    First, I do not accept the FWO’s construction of s 557(3). I do not accept that s 557(3) constitutes a form of “one strike” rule so that if a person has had a pecuniary penalty imposed on them for contravention of a provision, s 557(3) means that s 557(1) does not apply to any future contravention of the same provision by that person. In my view, this involves impermissibly construing s 557(3) literally, rather than purposively, and in isolation from its context. When read purposively and in context, it is reasonably clear that s 557(3) is concerned with pecuniary penalties that have previously been imposed on the same person in respect of the same course of conduct. In the present case, the pecuniary penalties previously imposed on the MUA had nothing to do with the industrial action the subject of the declarations in this case. They concerned entirely unrelated conduct.

15    I am aware that there are passing comments in decisions of this Court which the FWO has taken as supporting its construction of s 557(3) and one case in which a single judge has applied the provision as if it operated in the manner for which the FWO contends. It appears, however, that the proper construction of s 557(3) (in contrast to ss 557(1) and (2)) was not the focus of consideration in any of these cases.

16    In Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Ltd (No 2) [2010] FCA 652 at [16]-[19] Logan J dealt with the concept of a course of conduct as referred to in s 557(1). In that context, Logan J said at [19]:

Especially that is so in light of s 557(3). That renders the otherwise beneficial effects of s 557 inapplicable if a penalty has already been imposed for a breach of a civil remedy provision. On the construction for which the QR respondents contend, if a person had contravened item 2(2) in respect of a term quite unrelated to consultation and in but one of the applicable transitional instruments, that person would be denied the beneficial effects of s 557(1). That seems to me to be a result contrary to the intendment of the provision concerned.

17    In Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62; (2014) 221 FCR 153 at [20], again in the context of s 557(1) and the meaning of a course of conduct, the Full Court agreed with Logan J’s reasoning in QR Ltd at [16]-[19].

18    In Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 53; (2017) 249 FCR 458 at [88] Dowsett and Rares JJ said:

In our opinion, s 557 did not cover the field and did not exclude the common law principle of taking into account, when imposing a penalty, whether the conduct complained of constituted a single course of conduct. However, s 557 provided a legislative indication that certain forms of concerted industrial action, such as multiple contraventions of ss 417(1) and 434, would be deemed, only in the case of a first contravention by the person, to be a single contravention. That contrasted with the legislative purpose of treating one contravention of s 348 differently from ones to which s 557 applied. The Parliament appears to have intended that multiple contraventions of s 348, in what, in other circumstances (such as those covered by s 557), might be treated as a course of conduct, would not necessarily attract any sentencing leniency.

19    In Australian Building and Construction Commissioner v Pauls [2017] FCA 843 Rangiah J said this:

[20] Under s 557(1) and (3) of the FWA, two or more contraventions of s 417(1) are taken to constitute a single contravention if the contraventions arose out of a course of conduct by the person, provided that a Court has not previously imposed a pecuniary penalty on the person for an earlier contravention of that provision.

[21] The Commissioner does not allege that Pauls or Steele have previously contravened s 417 of the FWA, so s 557(1) is capable of applying to their conduct. The Commissioner’s written submissions assert that Bland has had “previous involvement in similar proceedings”, but do not allege that any pecuniary penalty has previously been imposed upon him for contravention of s 417. I therefore accept that s 557(1) is capable of applying to Bland’s contravention of s 417. Pecuniary penalties have been imposed upon the CFMEU for contravention of s 417 on a number of previous occasions, so s 557(1) does not apply to its conduct.

20    It appears from [56] of Rangiah J’s reasons in Pauls that he proceeded on the basis that s 557(1) could not apply to the CFMEU given the terms of s 557(3), but determined penalty on the basis that the common law course of conduct principle did apply (a principle that, as the FWO would have it, is excluded by necessary implication in the present case). Importantly, the CFMEU does not appear to have made any contrary submission about s 557(3) in Pauls.

21    None of these cases determine the proper construction of s 557(3) of the Fair Work Act.

22    The key to the proper construction of the provision is that s 557(3) is an exception to s 557(1). It follows that it must be read as creating an exception for matters which would otherwise be subject to s 557(1); that is, matters which comprise a single and continuing course of conduct. The FWO’s construction ignores this context and reads s 557(3) as if it extends to cases to which s 557(1) would not otherwise apply; that is, cases in which the respondent has been penalised under the same provision but for an unrelated course of conduct in the past. To read an exception or exclusion provision in such a manner is to decontextualize it, which is an impermissible approach to statutory construction.

23    In summary, by s 557(1) two or more contraventions of a civil remedy provision are taken to be a single contravention of that provision so long as the circumstances identified in s 557(1)(a) and (b) apply and the contraventions were in respect of the provisions identified in s 557(2). If the contravention is of a nominated provision, the requisite circumstances are that the contraventions are committed by the same person and arose out of a course of conduct by that person. Section 557(3), being an exception to s 557(1), does no more than exclude from s 557(1) cases which would otherwise be within the scope of that provision. Once this is recognised, it is apparent that the only cases which would otherwise be within s 557(1) are cases to which s 557(1) applies, being cases involving two or more contraventions as part of a course of conduct by the same person. Section 557(3) may apply to such cases if its terms are engaged. To read s 557(3) as the FWO proposes is to give the provision a freestanding operation, disconnected from ss 557(1). Nothing in the language or context supports such a reading.

24    The previous pecuniary penalties imposed on the MUA for contravention of s 417(1), as the FWO acknowledged, have nothing to do with the present case: see Fair Work Ombudsman v Maritime Union of Australia [2012] FCA 1232; DP World Sydney Limited v Maritime Union of Australia (No 2) [2014] FCA 596 and Chevron Australia Pty Ltd v Maritime Union of Australia (No 2) [2016] FCA 768. Accordingly, ss 557(1) and (2) could not apply to the present contraventions and those past contraventions the subject of previously imposed pecuniary penalties. Section 557(3) thus has no work to do in the present case because it is concerned with cases in which a penalty has already been imposed for a contravention forming part of the same course of conduct by the same person. As there has been no pecuniary penalty imposed on the MUA for any contravention forming part of the same course of conduct as that in the present case, s 557(3) is not engaged.

25    The FWO submitted that this leaves s 557(3) with no work to do. Again, I disagree. Section 557(2) identifies a range of civil penalty provisions which are within the potential scope of s 557(1). It is not difficult to imagine cases in which there is a single course of conduct by the same person contravening a civil penalty provision which may continue after the imposition of a pecuniary penalty. In such a case, s 557(1) would otherwise apply but s 557(3) operates so that s 557(1) does not apply. This means that another contravention could be acknowledged and a further penalty imposed for the same course of conduct notwithstanding subsection (1). This prevents the contravener from continuing in an unlawful course of conduct with impunity following the initial imposition of a penalty.

26    Second, nothing supports the FWO’s related proposition that, if s 557(3) does apply (which, in the present case, it does not), the section is also to be read as implicitly excluding the common law course of conduct principle. The FWO would have it that observations of Bromwich J in Fair Work Ombudsman v Lohr [2018] FCA 5 at [33]-[34] support this proposition. The point Bromwich J was making, however, is that if s 557(1) applies, then it is not apparent that there is any scope remaining for the operation of the common law principle. The FWO’s proposition in the present case is that if s 557(1) does not apply because of s 557(3), the common law course of conduct principle is excluded, presumably by necessary implication. There is no foundation in the language of s 557 to support this proposition. I reject it.

27    As a result, even if s 557(1) did not apply in the present case, the common law course of conduct principle would apply to the determination of penalty.

28    Third, the FWO’s principal case does not engage with other statutory provisions. Industrial action is defined in s 19 of the Fair Work Act, relevantly to the present case, as “a failure or refusal by employees to attend for work”: s 19(1)(c). Section 417(1) proscribes organising or employees engaging in industrial action until the expiry of an enterprise agreement. The MUA did not organise employees not to attend work on 278 separate occasions. Even if the FWO’s case that the MUA’s conduct involved organising the industrial action of employees at Sydney separately from Brisbane is accepted, I am unable to characterise the MUA as having engaged in 278 separate acts of organisation.

29    My conclusion is also consistent with s 793(1) of the Fair Work Act which is in these terms:

Any conduct engaged in on behalf of a body corporate:

(a)    by an officer, employee or agent (an official ) of the body within the scope of his or her actual or apparent authority; or

(b)    by any other person at the direction or with the consent or agreement (whether express or implied) of an official of the body, if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the official;

is taken, for the purposes of this Act and the procedural rules, to have been engaged in also by the body.

30    As Jessup J explained in Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2016] FCA 772 at [19] when considering s 69 of the Building and Construction Industry Improvement Act 2005 (Cth), which is in terms equivalent to s 793 of the Fair Work Act:

All of the organisers were employees of the CFMEU, and thus officers by the operation of s 69(3). Their conduct was attributed to the CFMEU. It does not follow, however, that the CFMEU contravened s 38 as many times as the organisers in total did. This provision had an effect which differed in an important way from s 48(2): it was the conduct, not each contravention, which was attributed to the building association (see Director of the Fair Work Building Industry Inspectorate v Robinson [2016] FCA 525 at [50]). Having attributed the conduct, the question remains: did that conduct amount to engagement in unlawful industrial action within the meaning of s 38, and if so, to how many separate instances thereof? On the facts of the present case, it would, in my opinion, be artificial to regard the conduct of the CFMEU as having amounted to a separate engagement in industrial action in respect of the conduct of each of the five organisers concerned … I would hold, therefore, that the CFMEU contravened s 38 of the BCII Act once.

31    Jessup J’s observations in Australian Building and Construction Commissioner v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (No 2) [2017] FCA 367 at [3] are also relevant. His Honour said:

Commencing with s 417(1), the statutory prohibition is upon engaging in industrial action, that is to say (in the context of the present case), upon engaging in a failure or refusal to perform work. Each of the relevant employees of BMC and JBA did so engage from the normal time of recommencing work after the meal break on 27 March 2014 until the resolution of the dispute on 31 March 2014. It was submitted on behalf of the applicant that each day should be regarded as a separate contravention, but I cannot appreciate why this should be so. My reasons of 1 March 2017 do not contain, and would not sustain, a finding that there was a discrete episode of industrial action, separate from any other, on any of 27, 28 and 31 March 2017. From 1.30 pm on 27 March 2017 until the resolution of the dispute on 31 March 2017, there was no period during which normal work was performed such as might mark off, as it were, separate periods of industrial action. In this regard, although the statutory context is not in complete alignment, my thinking has not changed from that which I expressed in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543, 566-567 [136].

32    On the same basis, the notion that the employees were engaged in separate contraventions on a per shift basis in the present case is an artificial construct of the FWO’s making, irreconcilable with the findings I made in the principal reasons and the factual underpinning of the declarations made.

33    On the facts as found in the principal reasons it is apparent that the MUA was engaged in one overall concerted action to bring industrial pressure to bear on HPA not to implement the proposed redundancies at the Sydney and Brisbane terminals in a manner which the MUA considered would be in breach of the enterprise agreement, would result in the unlawful termination of around 100 employees, and destroy its own capacity to continue to function as an effective industrial organisation. On this basis the MUA organised industrial action by employees once, with that industrial action organised to occur in two locations, Sydney and Brisbane.

34    Fourth, and as noted, the FWO’s total of 556 contraventions depends on the FWO’s proposition that the MUA separately contravened s 417(1) twice for each employee per shift because, by ss 550(1), it was involved in each employee for each shift who did not work as required engaging in industrial action. The problem with this proposition is that it pre-supposes the existence of separate contraventions by each employee for each shift. I consider that conception to be removed from the reality of the situation in which the employees who were rostered for shifts between 7 and 14 August 2015 did not show up for work as required (other than with some limited exceptions). Those employees were not engaged in separate industrial actions for each shift they were rostered to work. Each employee was engaged in a single industrial action that continued between 7 and 14 August 2015. This would be so irrespective of s 557(1), but there is also no suggestion by the FWO that individual employees would not have had the benefit of that provision. In other words, the individual employees would be taken to have contravened s 417(1) once. Given the terms of s 550(1) (which turn on a contravention of a civil remedy provision) the MUA cannot have contravened s 417(1), by s 550(1), on a per shift basis when the employees themselves would not be found to have done so. As a result, I reject the FWO’s approach to the number of the contraventions.

35    Fifth, the FWO accepted that the declarations I made did not identify the number of employees who had engaged in industrial action but proposed that I should now make a finding as to that number based on tabs 83 and 84 of the Court book (and the number of shifts for such employees, which I have rejected above). I dealt with those tabs in the principal reasons at [8]-[10] and [43]-[45]. I accept that it would be possible for me to identify the number of employees who were engaged in industrial action by adding up the names highlighted red and orange in tabs 83 and 84 on an employee rather than a shift-by-shift basis as appears in those tabs, but the exercise would be pointless because I have concluded that s 557(1) applies. I am also concerned that such an exercise would be unfair to the MUA in circumstances where I rejected the MUA’s proposition that the FWO’s case required it to prove each and every employee was engaged in industrial action. The FWO obtained the benefit of my approach in the principal reasons and I then made declarations consistent with the principal reasons as sought by the FWO. The FWO should not now be permitted to go behind the declarations given the approach taken in the principal reasons.

36    This brings me to the FWO’s alternative case that, if s 557(1) applies, there are four contraventions because there are four separate courses of conduct, one for organising industrial action at the Sydney terminal, one for being involved in employees engaging in industrial action at the Sydney terminal, one for organising industrial action at the Brisbane terminal, and one for being involved in employees engaging in industrial action at the Brisbane terminal.

37    I do not accept this alternative case. The FWO’s alternative case does not recognise that there is only one civil penalty provision that the MUA has contravened, s 417(1). As the declarations disclose, the MUA contravened s 417(1) in two ways at two places, first by organising industrial action and second by being involved in employees engaging in industrial action. The second way in which the MUA contravened s 417(1) resulting from the operation of s 550(1) means that the MUA is taken to have contravened the same provision as the employees, which is s 417(1). It follows that there are two or more contraventions of s 417(1), the civil penalty provision for the purpose of s 557(1). Under s 557(1)(a), it is also the same person, the MUA, which committed those contraventions. The only question is s 557(1)(b) which requires that the “contraventions arose out of a course of conduct by the person”.

38    I do not accept that, merely because “organising” industrial action within the meaning of s 417(1) is different from being “involved in” employees engaging in industrial action as provided for in s 550(1), the MUA’s conduct in the present case involved two different courses of conduct. As the principal reasons disclose, the same facts founded my conclusions the MUA both organised industrial action and was involved in employees engaging in industrial action. In short, the acts which led me to find the MUA organised the industrial action also led me to find that the MUA was involved in employees engaging in the industrial action. It is difficult to conceive of a case in which a finding of “organising” industrial action would not also necessarily prove being “involved in” employees engaging in industrial action but for present purposes it is sufficient that the same acts resulted in two sources of liability. There was thus a single course of conduct by which the MUA organised industrial action and was involved in employees engaging in industrial action.

39    As to the Sydney and Brisbane terminals, again, I accept that different MUA personnel were involved at some lower levels of action but it is also apparent from the principal reasons that the MUA was engaged, from its highest level down, in one concerted industrial campaign against HPA’s proposed redundancies. While the corporate entities in Sydney and Brisbane were different, they were related HPA companies and, on the facts found in the principal judgment, the MUA was implementing a single plan directed at HPA as the ultimate corporate owner of both ports.

40    For these reasons also I am satisfied that what occurred in Sydney and Brisbane were contraventions arising from a single course of conduct by the MUA.

41    It follows that s 557(1) operates according to its terms. The multiple contraventions of s 417(1) by the MUA are taken to constitute a single contravention. The maximum penalty for this single contravention is $54,000.

Determination of penalty

42    I accept that the following matters are relevant to the imposition of a penalty:

(1)    the industrial action was part of a larger overall campaign by the MUA to pressure HPA not to proceed with proposed large-scale redundancies at the two terminals;

(2)    the industrial action continued despite the Fair Work Commission having ordered to the contrary on 7 August 2015 in respect of employees, amended on 10 August 2015 to apply also to the MUA;

(3)    the industrial action, together with protests in which the MUA was also involved outside the terminals (which do not involve any contravention of the Fair Work Act the subject of these proceedings), meant that the two terminals could not operate between 7 and 14 August 2015;

(4)    HPA would have been likely to suffer loss as a result of the two terminals not operating between 7 and 14 August 2015, which Ms Mihalopoulos assessed to total $620,217.34;

(5)    the MUA’s unlawful conduct, as the FWO submitted, was deliberate, strategic and co-ordinated comprising part of a “comprehensive strategy” against HPA;

(6)    the MUA was motivated to act as it did both to protect employees from what it considered to be unlawful action by HPA (in not complying with consultation obligations in the enterprise agreement about the redundancies) and to protect itself from what it perceived to be an existential threat given the scale of the redundancies;

(7)    senior officials of the MUA, from the National Secretary down, were directly involved in the formulation and implementation of the overall strategy against HPA, including the industrial action;

(8)    the record does not disclose any particular co-operation by the MUA which should have a material effect on the determination of penalty. Complying with statutory notices to produce documents does not amount to the requisite level of materiality for present purposes;

(9)    the record does not disclose any expression of contrition or remorse by the MUA;

(10)    the MUA had available other lawful means to achieve its objectives, in particular the MUA sought and obtained an interlocutory injunction on 13 August 2015 rescinding HPA’s terminations of employees and preventing any further terminations pending a final hearing. As noted, in the principal reasons at [78] it is unclear why the proceedings in this Court, which forced HPA back to the negotiating table by lawful means, was insufficient to achieve the MUA’s objectives; and

(11)    the MUA has been found to have contravened s 417(1) in three previous cases and has otherwise been the respondent in numerous cases in which contraventions of the Fair Work Act have been established. It is not suggested that any of these cases involve facts specifically comparable to the present case but the cases do disclose a history of the MUA engaging in unlawful conduct to achieve its aims.

43    Given these matters, it is apparent that substantial weight must be given to the need for specific deterrence. General deterrence of others is also a relevant consideration entitled to material weight. Those others include organisations of the same kind as the CFMMEU, into which the MUA has now been absorbed, along with other industrial organisations including the CFMEU which has its own extensive record of prior contraventions of the Fair Work Act.

44    Otherwise, I do not accept the FWO’s submission that the conduct of HPA is irrelevant to the assessment of penalty. HPA’s conduct is an essential part of the context within which the MUA’s contravening conduct took place. It is relevant that the MUA considered that HPA was in breach of the enterprise agreement by making employees redundant without complying with its obligations to consult both employees specifically and the MUA. I accept that I should not attempt to determine whether HPA, in fact, was acting unlawfully when it made employees redundant via text messages sent at around 11.30pm on 6 August 2015. But it is relevant that the MUA’s apparent view, that HPA was acting unlawfully (and also in a seemingly high-handed manner, objectively likely to cause employees to be both distressed and angry), was not idiosyncratic. It was a view which was reasonably open given the circumstances. To the extent that the MUA’s view concerned the illegality of HPA’s conduct, it is a view which, at least to the extent of there being an arguable case, this Court must have shared given the grant of the interlocutory orders on 13 August 2015. This is not to condone or excuse the MUA’s unlawful conduct. Nor does it involve any moral judgment of HPA. It is to place the MUA’s conduct in the context in which the conduct occurred, which is always necessary for the determination of penalty.

45    The MUA would have it that HPA intended its late night terminations of employment to provoke industrial action in order to benefit from cl 13.7 of the enterprise agreement (which enabled a dispute to be referred to the Fair Work Commission provided there was no stoppage of work), but a finding to this effect is not reasonably open on the evidence. In any event, in my view it is not useful to ask whether HPA provoked the MUA, deliberately or not, as a result of the circumstances above. The evidence shows that the MUA was always prepared to organise industrial action unlawfully as part of its overall campaign if it perceived it was necessary to do so. It did not perceive it as necessary to do so until HPA sent the notices of redundancy to the 100 or so employees at around 11.30pm on 6 August 2015. I do not accept the evidence of Ms Mihalopoulos that these notices did not terminate employment. They were notices of termination which was to take effect at a later date. The deferral of the date of effect does not mean that HPA was doing other than sacking a large number of its employees. Considered objectively, the circumstances and manner in which HPA made these employees redundant was likely to cause significant anger and distress across HPA’s workforce at the terminals, and did so.

46    For these reasons, it is necessary is to recognise that the MUA’s conduct occurred in a particular context and had a particular purpose. It was not an exercise of industrial power for some arbitrary or capricious end. While I accept that the MUA perceived what was happening as a threat to its own existence, I do not infer that protecting its own existence was itself any kind of arbitrary, capricious or base motive. To the contrary, the MUA had a legitimate interest in its own continued efficacy as an industrial organisation. While all of this must be accepted, organising the industrial action was and remains unlawful conduct. It was also objectively unnecessary for at least two reasons. One, the MUA waited until 11 August 2015 to file proceedings in this Court and by 13 August 2015 had the benefit of interlocutory orders which, from the sequence of events, appears to have broken the deadlock (because HPA was prevented from doing as it wished pending a final hearing). Two, as the MUA must have appreciated, the industrial action obstructed any remedy through cl 13.7 of the enterprise agreement which provided for referral of a dispute to the Fair Work Commission provided there was no stoppage of work.

47    Placing the MUA’s conduct in context does not involve accepting that the MUA’s perceptions justified the unlawful conduct or that the “ends justify the means”. There can be no such justification, particularly not in circumstances where the MUA could and, somewhat belatedly in the circumstances, did avail itself of the protection of the courts from HPA’s perceived illegality. But this does not make the circumstances in which the MUA’s perceptions arose, including HPA’s conduct, irrelevant to penalty.

48    It is also relevant that after the Court granted the interlocutory orders the MUA and HPA found a means to resolve the dispute facilitated by conciliation before the Fair Work Commission. There is no suggestion in the evidence that HPA is dissatisfied with this resolution. The FWO pointed to an order recently made by the Fair Work Commission relating to the Sydney terminal, but the circumstances in which this order was made and its current status would all need to be established before it could be given weight and the FWO has not undertaken this task.

49    Having regard to all of these circumstances I consider that a penalty at the higher end of the range should be imposed in the amount of $38,000 for what must be taken as the MUA’s single contravention of s 417(1) of the Fair Work Act. This is about 70% of the maximum penalty which may be imposed.

Compensation order

50    The FWO seeks an order that the MUA pay $620,217.34 in compensation to the HPA companies which operate the Sydney and Brisbane terminals under s 545 of the Fair Work Act. As noted, the amount is based on the evidence of Ms Mihalopoulos.

51    Section 545 of the FW Act provides:

(1)    The Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.

(2)    Without limiting subsection (1), orders the Federal Court or Federal Circuit Court may make include the following:

(a)    an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;

(b)    an order awarding compensation for loss that a person has suffered because of the contravention;

(c)    an order for reinstatement of a person.

…

(4)    A court may make an order under this section:

(a)    on its own initiative, during proceedings before the court; or

(b)    on application.

52    I accept that s 545 confers on the Court a broad and flexible power which is to be exercised having regard to its remedial purposes. I accept also, as the terms of s 545(2) disclose, that a necessary condition for the making of an order for compensation is that loss be suffered because of the contravention. It necessarily follows that any order for compensation is an order directed to compensating a person for such loss. If it were necessary to say so, I would also conclude that the contravention need not be the sole cause of loss for the power to be available.

53    What I do not accept is the FWO’s submission identifying considerations said to be irrelevant to the exercise of the power to make an order under s 545. In particular, the FWO’s submission that “[o]nce the contravention of a civil remedy provision has been proven, then the court may only decline to exercise its discretion to order an appropriate remedy if the relief would not be directed to the remedial purpose” must be rejected. If this were so, it would be tantamount to saying that if loss has been suffered as a result of a contravention there is no discretion to exercise, as an order for compensation must be made. This is not what s 545 provides.

54    Consistent with principle, the only limits on the matters that may legitimately be considered in the exercise of discretion under s 545 are those arising by necessary implication from the scope, purpose and objects of the legislation. I see nothing in the scope, purpose and objects of the legislation which would preclude the Court from considering a wide range of matters including the conduct of the person who suffered the loss and whether that person’s position with respect to compensation is known, and what that position is. The FWO’s contrary submission should be rejected. In particular, I do not accept the FWO’s argument by analogy that it seeks and obtains compensation orders on behalf of employees against employers when the position of individual employees as to whether they wish to receive compensation or not is unknown. In the example provided by the FWO it may well be appropriate to infer without evidence that employees not paid wages or other amounts to which they were legally entitled would wish to be compensated. The point for present purposes is that if a consideration is irrelevant it is prohibited from being taken into account in all cases. The FWO would have it that, in every case, the Court is prohibited from having regard to the conduct and position of the person in whose favour a compensation order is sought. It is this proposition which I consider must be rejected. Such a consideration may well be relevant and have weight depending on the circumstances of the case.

55    I do not accept that anything Moore J said in Qantas Airways Ltd v Transport Workers' Union of Australia (No 2) [2011] FCA 816; (2011) 211 IR 119 supports the FWO’s contention about s 545. Indeed, his Honour’s observations in [9]-[12] are consistent with my conclusions and inconsistent with the FWO’s case. Moore J said about an equivalent provision:

[9] However, I should observe at this stage that the nature of the discretion to order the payment of a sum to remedy the effects of industrial action is not, in my opinion, exercisable by reference to general considerations of fairness. It is a power conferred for a specific purpose as part of a statutory scheme which made certain conduct unlawful. Whether this proscription of conduct is, in some broad sense, fair, desirable or appropriate is not a matter for me to assess. Also whether engaging in proscribed conduct might, in any given situation, be reasonable or justifiable on broad grounds concerning fairness or “industrial justice” is again not a matter for me to assess. Once it is accepted that the purpose of the conferral of the power to make an order to remedy the effects of industrial action is to address the consequences of unlawful industrial action then the exercise of the discretion both to make an order and to determine the terms on which it is made, is limited.

[10] It would be undesirable for me to endeavour to catalogue in a comprehensive way, considerations which might inform the exercise of the discretion. However, I can deal with those that appear to me as possibly arising in the present case. First, an application needs to be made for an order, at least in the ordinary course. Qantas need not have, but has, made such an application. Another employer in similar circumstances might conclude that, on balance, it was preferable not to risk alienating or antagonizing its workforce, and the union and its officers representing them, by seeking an order for payment of money from union funds. However, Qantas has a legal right to seek an order and it has exercised that right. It is entitled to do so.

[11] Another consideration would be whether the application for the order was bona fide. By that I mean the order was not being sought for an ulterior purpose. There has been no suggestion in the evidence or in the submissions that Qantas has sought the order, not simply to secure payment to compensate it for losses suffered, but rather to secure some advantage in future workplace negotiations with the TWU and its members which Qantas employs. Such negotiations are, I assume, imminent as EBA 7 nominally expired on 1 July 2011. Had there been such an ulterior purpose, I would not make the order I propose to make.

[12] Another consideration would be whether the effect of the industrial action was occasioned, in whole or in part, by the unreasonable conduct of the party seeking the order and, in particular, unreasonable conduct in response to the industrial action. In the present case the respondents submitted it was. They pointed to Qantas acting at SIT, Brisbane, Adelaide and Perth on the basis that it was obliged not to pay the TWU members who had engaged in some form of industrial action four hours pay. This, the respondents pointed out, was not the approach Qantas adopted at SDT where some industrial action was effectively sanctioned by local management, the employees told their pay would not be docked and they returned to work. I must acknowledge the difference in approach. However, the response at SIT, Brisbane, Adelaide and Perth was not the unreasonable one, in the circumstances. On one view of s 507 (but not, in my opinion, the correct view) the employer has no capacity to agree or approve of industrial action after it has taken place. On that view Qantas was obliged to take the approach it did. Also it was not unreasonable to inform the TWU membership of the consequences for them of what they had done. I would not infer that Qantas’ response (even though one of the principal architects of the response, Brad Moore, was not called) was anything other than a genuine response to events as they unfolded, based on the legal effect of s 507 as understood by Moore and others.

56    It is apparent from these observations that Moore J referred to the very kinds of matters which the FWO would have it are irrelevant considerations. Moore J was also not saying, as the FWO seems to suggest, that it is only the conduct of the person seeking the order, in this case the FWO, which may be relevant. His Honour’s essential point (as relevant to this case) was that where compensatory orders would tend to remedy a pecuniary loss that was brought about in part by a person’s own unreasonable conduct, or would tend to endanger present relations to the detriment and disturbance of the relevant parties or industry, compensation orders may not be appropriate or even “remedial”. Considerations of this kind may be relevant irrespective of who is seeking compensation orders.

57    It is also unclear how the FWO’s submission can be reconciled with another case on which the FWO relied to support (properly) the remedial character of s 545, Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; (2018) 351 ALR 190. In that case at [103] Keane, Nettle and Gordon JJ (Gageler J expressing approval at [51]) said:

…the first and most immediate point of significance is the breadth of the terms in which s 545(1) empowers the court to make any order the court considers appropriate. What is “appropriate” for the purpose of s 545(1) falls to be determined in light of the purpose of the section and is not to be artificially limited. As the ABCC submitted, such broad terms of empowerment are constrained only by limitations that are strictly required by the language and purpose of the section.

58    Nothing in the FWO’s submissions provides any basis for concluding that the language and purpose of s 545 limit the Court’s discretion by excluding as irrelevant the conduct of the person said to have suffered loss and that person’s position about compensation.

59    Nothing I have said above should be understood as meaning that, had there been evidence that HPA wished to be paid compensation, I necessarily would have refused to make an order because of HPA’s conduct. The concern in the present case is different. It is that the relevant companies are part of the broader corporate group known as HPA. There is evidence that HPA is a multinational corporation with interests in port operations extending beyond Australia. As a result, it must be inferred that, in contrast to the potential position of individual employees underpaid wages or entitlements, HPA is more than capable of taking all steps it considers appropriate to look after its own interests. HPA has never sought compensation from the MUA for loss caused by the events of 7 to 14 August 2015. It resolved the dispute with the MUA on terms which it must be inferred were acceptable to it. Further, despite Ms Mihalopoulos providing an affidavit quantifying the alleged loss suffered by HPA, her affidavit is silent about whether HPA wishes to be the beneficiary of a compensation order under s 545. It may go too far to say that Ms Mihalopoulos’s affidavit seems to involve a studied silence about that question but the omission is obvious. Ms Mihalopoulos says that she “makes this affidavit to set out some of the costs incurred by [the companies] as a result of the Industrial Action”. She does not say that she is authorised by HPA to support the making of an order for compensation in favour of the relevant companies or even that the companies seek compensation.

60    I raised my concern about the lack of evidence concerning HPA’s position before Ms Mihalopoulos was excused from giving oral evidence, but the FWO made the forensic decision to leave the evidence as it was and relied only on its (rejected) submission that HPA’s conduct and position were irrelevant.

61    In circumstances where:

(1)    HPA is a multinational company well able to look after its own interests;

(2)    there is evidence that the MUA and HPA managed to resolve their dispute following a process of conciliation undertaken by the Fair Work Commission;

(3)    HPA has not at any time claimed compensation from the MUA in connection with the industrial action; and

(4)    I do not know what HPA’s position is in respect of the payment of compensation,

I am not willing to make any order for compensation against the MUA and in favour of the companies within HPA.

62    As a result of these conclusions it is unnecessary to consider whether the causal connection between the industrial action and the loss is sufficient to satisfy the requirements of s 545(2)(b) in relation to causation. Assuming that the industrial action did cause the loss as required, the considerations set out above, to my mind, weigh so heavily against the making of any order for compensation in the circumstances of this case that no such order should be made.

Conclusion

63    An order for the payment by the MUA of a pecuniary penalty in the sum of $38,000 should be made.

Associate:

Dated:    20 June 2018