FEDERAL COURT OF AUSTRALIA

Stuart v Construction, Forestry, Mining and Energy Union [2010] FCAFC 65

THE COURT ORDERS THAT:

1.         The appeal be allowed.

2.         Orders 1 and 2 of the Order of Gray J of 2 October 2009 be set aside.

3.         In lieu of Orders 1 and 2 of the Order of Gray J of 2 October 2009, the Court makes the following declarations and orders:

(1)       Declaration that the First Respondent contravened s 38 of the Building and Construction Industry Improvement Act 2005 (Cth) (the BCII Act) constituted by the Second Respondent organising a stop-work meeting of employees working on the site of the construction of a Police and Law Courts complex at 141 Princes Highway, Morwell in Victoria (the Site) on 3 October 2006;

(2)       Declaration that the First Respondent contravened s 44 of the BCII Act constituted by the Second Respondent:

(i)        refusing to induct to the Site on 19 September 2006 two employees of Celltech Australia Pty Ltd, contrary to the Second Respondent’s obligations to his employer, Hooker Cockram Projects Ltd;

(ii)        stating that the work that the two employees of Celltech Australia Pty Ltd proposed to do at that Site was CFMEU work, not AMWU work, and that those employees needed a building agreement, namely a CFMEU EBA or other form of building agreement (an EBA) and all appropriate paperwork to work at that Site; and

(iii)       organising a stop-work meeting of employees at that Site on 3 October 2006,

with admitted intent to apply undue pressure to Celltech Australia Pty Ltd to agree to make an EBA under Pt 8 of the Workplace Relations Act 1996 (Cth) (the WR Act).

(3)       Declaration that the Second Respondent contravened s 38 of the BCII Act constituted by organising a stop-work meeting of employees working on Site on 3 October 2006.

(4)       Declaration that the Second Respondent contravened s 44 of the BCII Act constituted by:

(i)        refusing to induct to the Site on 19 September 2006 two employees of Celltech Australia Pty Ltd, contrary to the Second Respondent’s obligations to his employer, Hooker Cockram Projects Ltd;

(ii)        stating that the work that the two employees of Celltech Australia Pty Ltd proposed to do at that Site was CFMEU work, not AMWU work, and that those employees needed an EBA and all appropriate paperwork to work at that Site; and

(iii)       organising a stop-work meeting of employees at that Site on 3 October 2006,

with admitted intent to apply undue pressure to Celltech Australia Pty Ltd to agree to make an EBA under Pt 8 of the WR Act.

(5)       Within 30 days of the date of publication of these Orders, the First Respondent shall pay to the District Registrar of the Victorian Registry of the Court a fine in the sum of $25,000 or by such further time and by such instalments as the District Registrar may allow.

(6)       In the event that there is default in the payment of the fine referred to in paragraph (5) above, the District Registrar of the Victorian Registry of the Court shall apply to the Court for directions concerning enforcement.

(7)       The First Respondent pay the Appellant’s costs of the Appeal.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website. 

REASONS FOR JUDGMENT

MOORE J

1                          I have had the considerable benefit of reading the reasons for judgment of Besanko and Gordon JJ in a draft form.  I gratefully adopt and do not repeat their Honours' account of the background and I also gratefully adopt their summary of the general principles to be applied in sentencing appeals. However I wish to add further observations about those general principles.  They concern Crown appeals against sentence for which a number of particular principles have developed.  They have been applied in relation to appeals by regulatory authorities: WorkCover Authority (NSW) v Challita (2006) 153 IR 409.  They have also been applied in relation to appeals against sentence imposed on corporations: Director of Public Prosecutions v Amcor Packaging Australia Pty Ltd (2006) 153 IR 363 at 373.

2                          The first is that Crown appeals should concern cases where the appeal court is being invited to develop or preserve adequate and consistent sentencing standards: Everett v The Queen (1994) 181 CLR 295 at 300.  The second is that if the appeal court reaches a point of re-sentencing then a relevant consideration in determining the appropriate sentence, in the absence of a statutory direction to the contrary, is the fact that the respondent to the appeal has been exposed to a form of double jeopardy: R v JW [2010] NSWCCA 49. More generally an appeal court can in an appeal against sentence exercise a discretion not to intervene notwithstanding demonstrated error: R v Allpass (1993) 72 A Crim R 561 at [5].

3                          I turn now to consider each ground of appeal.  The first concerns general deterrence and the penalty against the CFMEU.  It was expressed in these terms:

1.   The learned trial Judge misdirected himself in dealing with the issue of general deterrence in respect of the First Respondent (CFMEU), including by reason of taking into account the following incorrect and/or irrelevant considerations:

(a)        finding that the Appellant had undermined his argument in respect of the weight to be given to general deterrence because:

(i)         "the [Appellant] was prepared to abandon general deterrence altogether in return for the chance to enhance specific deterrence by means  of a compliance program"  (at [29]), when no such submission was made by the Appellant, the Appellant's position at trial being that if the CFMEU genuinely participated in a compliance program conducted by the Australian Building and Construction Commission, that fact "could be a significant matter on penalty" (T32.10); and

(ii)        the Appellant did not seek a monetary penalty against the second Respondent (Corbett) (at [28]);

(b)        failing to give any or any adequate weight to general deterrence in respect of the CFMEU irrespective of what the Appellant's position may have been in respect of the matters referred to in (a) above.

(c)        incorrectly considering that the application of general deterrence was only applicable to a contravener that was directly liable for a contravention, as distinct from a contravener that was vicariously liable for the conduct of its employees or agents (at [28]); and/or

(d)        (see later)

4                          I deal first with (a)(i).  Having regard to the transcript of the proceedings provided to us in this appeal, it appears the primary judge did not correctly state the position adopted by the appellant during the sentencing hearing. It was not that the appellant was prepared to abandon general deterrence (presumably in the sense that the penalty need not contain any element directed to general deterrence) if the CFMEU agreed to participate in a compliance program conducted by the Commission but rather it was that the appellant submitted that genuine participation in such a program could be a significant matter on penalty.  The clear implication of the position advanced by the appellant was that a lesser penalty could be imposed if participation in a compliance program was agreed to by the CFMEU and, I infer, the agreement was in good faith.  Whether the appellant adopted this approach because there would then be a lesser need for general deterrence or specific deterrence was not made clear at the hearing.

5                          Putting to one side, for the moment, the specifics of the primary judge's misunderstanding, it is desirable to consider what appears to be the rationale for the approach he adopted.  His Honour appears to have been saying that any justification for the imposition of a large penalty (or heavy penalty, as he described it) containing a material element directed to general deterrence was neutralised or substantially neutralised if it was conceded by the regulator there should be no penalty (as his Honour wrongly understood the appellant's position) if there was an agreed compliance program or if it was conceded there should be a reduced penalty (the appellant's apparent actual position).  What his Honour appears to have been saying is that the attitude adopted by the appellant focused only on specific deterrence (to be addressed by a compliance programme) and, by implication, the appellant was not seeking any penalty containing an element directed to general deterrence.  That was because the acceptance of a compliance program would potentially alter the conduct or behaviour of the CFMEU and its officials which is the same goal as a penalty directed to specific deterrence. If that had been the attitude of the appellant and, importantly, had there been an agreement to implement a compliance program, then the approach of the primary judge appears to me to be a not inappropriate one though I am not sure whether anything would be particularly gained by referring to specific deterrence on the one hand and general deterrence on the other.  

6                          However, in the absence of agreement, the fact that the appellant adopted the approach it did (whether the approach his Honour believed it had adopted or the approach actually taken) on the assumption there was to be agreement, appears to me to be irrelevant on what penalty should be fixed.  What would have been relevant was an agreement and the regulator then submitting there should be no penalty or a lesser penalty.  Such a submission probably would have been required.  An agreement to undertake or implement a compliance program has been accepted in cases concerning contravention of penalty provisions of the Trade Practices Act 1974 (Cth) as "a most important matter to take into account on penalty": NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 294 per Burchett and Kiefel JJ. That Act is directed to establishing particular norms of conduct in the commercial world and, in that respect, has a broadly similar objective as the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act) which operates in a different though overlapping area namely the building industry in relation to workplace relations and more generally.

7                          I should, at this point, note that this error by the primary judge would not, in my opinion, warrant appellate intervention in relation to the exercise of the sentencing discretion.  That is because his Honour's approach to general deterrence was guided in the same direction by two factors.  This was the first.  His Honour's approach in relation to the second, which I discuss in the following paragraphs, was not attended by error and, it appears, led his Honour to the same general conclusion as the first factor. 

8                          I now deal with (a)(ii), (b) and (c).  It is desirable to set out what the primary judge said (at [28]):

The applicant’s case with respect to deterrence is undermined in the present case by two substantial factors.  One is that the applicant has chosen to seek no penalty against the second respondent.  This decision might be justified by the absence of any need for specific deterrence, because the second respondent has ceased to work in the construction industry.  He is therefore unlikely to contravene provisions of the BCII Act in the future.  In terms of general deterrence, however, the picture is different.  As I have said, the liability attaching to the first respondent in this case is not said to attach because of any moral turpitude on the part of the first respondent.  Its liability is vicarious as a result of the conduct of the second respondent.  Considerations of general deterrence suggest that a penalty should be imposed on the actual contravener, rather than the vicarious contravener.  There has been no exploration of the extent to which the first respondent might have avoided the contravention, or might avoid similar contraventions in the future, by exhortation, or perhaps improved training, to its workplace representatives.  There is no material before the Court as to the extent of any communications between the first respondent and its workplace representatives on the subject of compliance with the BCII Act.

9                          Before discussing his Honour's reasons, it is convenient to refer to the scheme of the BCII Act in so far as it proscribes conduct (in respect of which a penalty may be imposed) which may be engaged in by an organisation of employees. I confine this discussion to an organisation of employees registered under the Fair Work Act 2009 (Cth). The proscribed conduct is found in Chapters 5 and 6.  Various sections (ss 38, 43, 44, 45 and 46) declare that "a person" not engage in conduct specified in the section.  By operation of s 22(1)(a) of the Acts Interpretation Act 1901 (Cth) the expression "a person" includes a body corporate unless the relevant legislation manifests a contrary intention.  The BCII Act does not manifest such an intention and, indeed, s 43(2) is clearly drafted on the assumption that the expression "a person" includes a body corporate.

10                        Section 69 provides:

(1) For the purposes of this Act, the following conduct in relation to a building association is taken to be conduct of the building association:

(a) conduct of the committee of management of the association;

(b) conduct of an officer or agent of the association acting in that capacity;

(c) conduct of a member, or group of members, of the association where the conduct is authorised by:

(i) the rules of the association; or

(ii) the committee of management of the association; or

(iii) an officer or agent of the association acting in that capacity;

(d) conduct of a member of the association, who performs the function of dealing with an employer on behalf of the member and other members of the association, acting in that capacity.

(2) Paragraphs (1)(c) and (d) do not apply if:

(a) a committee of management of the building association; or

(b)a person authorised by the committee; or

(c)an officer of the industrial association;

has taken reasonable steps to prevent the action.

(3) In this section:

officer, in relation to a building association, includes:

(a) a delegate or other representative of the association; and

(b) an employee of the association.

11                        Whether this section identifies, exhaustively, the way in which an organisation can, as "a person", contravene the provisions I am presently discussing, need not be explored to finality though I am inclined to think that it does.  What is important, however, is that a central part of the scheme of the BCII Act is that the conduct of specified individuals or groups of individuals is to be treated as conduct of the organisation.    I should add that the references in s 69(1) to the nominated individual (an officer or agent) "acting in that capacity" probably raise for consideration whether the conduct of the individual was within the scope of the duties and responsibilities of the officer or the scope of the agency as that may bear upon the validity of the section: a matter I discussed in relation to a similar provision in Kelly v Construction, Forestry, Mining and Energy Union (1994) 125 ALR 109 at 116.  While the constitutional underpinning of federal industrial law is now the corporations power, it remains the case that federal laws concerning industrial organisations must have the requisite connection with the head of power: Work Choices Case (2006) 229 CLR 1 at [319] and following.  For my part I would not describe liability arising from the operation of s 69(1)(a) or (b) as strict liability.

12                        If, as I think it does, s 69 identifies the way in which an organisation can be vicariously liable and exposed to a penalty because of the conduct of individuals or groups or individuals then, necessarily, an organisation can refrain from engaging in the conduct only if the specified individuals or groups of individuals associated with the organisation likewise refrain from engaging in the conduct. If an organisation engages in proscribed conduct by operation of s 69 (because an individual or group of individuals has engaged in that conduct) then to impose a penalty on the organisation directed, in part, to specific and general deterrence is to encourage that organisation (specific deterrence) or other organisations (general deterrence) not to engage in such conduct again.  That can be achieved directly by the organisation if it directs, requires or encourages through compliance programmes, the individuals or groups of individuals on whom s 69 operates not to engage in similar conduct in the future which will be imputed to the organisation.  However that objective (of deterring the contravening organisation or other organisations) is much more likely to be achieved if, in addition to a penalty being imposed on the organisation, penalties are imposed on the individual or individuals who themselves have engaged in the contravening conduct.  The combined effect of imposing a penalty both on the individual and the organisation is more likely to achieve the objective of deterring the contravening organisation or other organisations from contravening or further contravening the BCII Act.

13                        This leads me to the approach of the primary judge.  If, as in this case, the nominee of the regulatory authority (the prosecuting inspector) does not seek a penalty against the individual (even if that person no longer works in the industry) whose conduct is imputed to the organisation then it will not provide a deterrent effect (as general deterrence) on other individuals working in the building industry who might otherwise engage in such conduct.  It appears to me to follow that the Court is, in these circumstances, not being asked to deploy the full range of remedies which will generally deter other organisations from engaging in proscribed conduct which will only come about because of the conduct of individuals.  But is this a reason, as the primary judge apparently thought, to determine a penalty for the CFMEU without giving great or undue weight to the general deterrent effect of the penalty?

14                        I think it is, certainly as a matter of sentencing discretion.  In sentencing theory, other organisations will generally be deterred by the penalty imposed on the CFMEU and those other organisations could take steps to minimise the prospects of individuals (whose conduct will be imputed to them by operation of s 69) engaging in contravening conduct by instructions, directions or compliance programmes.  However in the absence of a penalty being imposed on Mr Corbett, the capacity of other organisations to prevent those individuals engaging in contravening conduct is diminished.  That is because there would not be the reinforcement ofany instructions, directions or compliance programmes - reinforcement otherwise flowing from the penalisation of Mr Corbett. I would have thought that the primary judge was entitled, as a matter of discretion, to take into account the absence of that reinforcement in determining the general deterrent effect of any penalty to be imposed on the CFMEU.

15                        The remainder of the first ground of appeal, dealing with deterrence and the penalty imposed on the CFMEU, was in the following terms:

The learned trial Judge misdirected himself in dealing with the issue of general deterrence in respect of the First Respondent (CFMEU), including by reason of taking into account the following incorrect and/or irrelevant considerations:

                        ...........

(d)        incorrectly considering that the importance of general deterrence was diminished by reason of there being no evidence in respect of the following matters:

(i)  the extent to which the CFMEU might have avoided a contravention of the Building and Construction Industry Improvement Act 2005 (Cth) (the BCII Act) or might have avoided similar contraventions in the future by exhortation or improved training; and/or

(ii)the extent of any communications between the CFMEU and its workplace representative on the subject of compliance with the BCII Act (at [28]).

16                        It is true that the primary judge made observations along the lines summarised in these grounds of appeal and did so in a paragraph concerning deterrence.  However those observations were not, in terms, called in aid by his Honour as factors lessening the need for the penalty to contain an element of deterrence.  They were not factors identified as relevant to the sentence nor was their significance discussed: Markarian v The Queen (2005) 228 CLR 357 at [51] per McHugh J.  Had there been evidence that the CFMEU had a compliance program that evidence would presumably tell in its favour, if it did not then the opposite may be the case.  However his Honour's observations do not, in my opinion, manifest error in the sentencing process.

17                        The next ground of appeal concerns the primary judge's approach to the gravity of the contraventions.  The ground was in the following terms:

2.              The learned trial Judge misdirected himself as to the gravity of the contraventions of ss.38 and 44(1) of the BCII Act (the contravening conduct), including by reason of taking into account the following incorrect and/or irrelevant considerations:

(a)        there were "positive aspects to the end that the Respondents were seeking to achieve [by engaging in the contravening conduct], that the conditions under which Ryan Buntine and Mr Hanegraaf were to perform work on the site should be regulated by an agreement between the first Respondent and Celltech" (at [21]);

(b)        the contravening conduct was "consonant" with the main object of the BCII Act in s.3(1) and s.3(2)(a) (at [26]);

(c)        the contravening conduct involved conduct "that is widely regarded as legitimate"  (at [26]);

(d)        the contravening conduct involved conduct in support of "the right of those other workers [on site]  not to have the terms and conditions of their employment undermined by competition with other workers" (at [26]);

(e)        the contravening conduct of the CFMEU did not involve "any moral turpitude"  (at [28]);

(f)        the contravention of s.38 of the BCII Act as "almost insignificant"  (at [20]); and/or

(g)        "the complete absence of any [adverse] effect of the [contravening conduct]  taken with the admitted intent  (at [30]), such finding not being open on the evidence.

18                        I deal with grounds 2(a) to (d) [(e) to (g) were not pressed].  It is convenient to set out what the primary judge said (at [21] and [26]):

Counsel for the applicant referred to a list of factors that he submitted should be taken into account by the Court in determining the appropriate penalty.  The first is that the conduct of the respondents was wilful and deliberate, as well as being designed to apply undue pressure to Celltech to make an agreement with the first respondent.  I have already dealt with the last of these elements.  The assertion that the conduct was wilful and deliberate needs to be examined in more detail.  The conduct in question in this case is that of the second respondent.  The first respondent is alleged to be liable solely on the basis that it incurs vicarious liability, pursuant to s 69 of the BCII Act.  There is no suggestion in the material that the first respondent ought to be regarded as liable by reason of any act or default of anybody other than the second respondent.  There is no question that the second respondent acted deliberately, in the sense that he intended to take each of the steps he is admitted to have taken.  It is unclear whether he took each of these steps wilfully, in the sense of knowing that they were contrary to specific provisions of the BCII Act, or in a general sense contrary to law, and intending to defy the law.  The statement of Mr Woolf that the second respondent’s position was “illegal”, and his assertion that Ryan Buntine and Mr Hanegraaf did not need an EBA, were made after the second respondent had already committed two of the overt acts, the refusal to induct Ryan Buntine and Mr Hanegraaf and the statement that they needed an EBA.  Whether the second respondent understood from Mr Woolf’s statement that his position was “illegal” that this illegality extended to the third overt act (organising the stop-work meeting) is not the subject of any material before the Court.  It cannot be assumed that the second respondent either did or did not know in general terms, or specifically, about the provisions of the BCII Act and the manner in which they would bear upon what he was about to do.  Nor can it be assumed that the second respondent was acting perversely, in that he was simply intending to inflict mindless damage on Hooker Cockram or Celltech or any other person.  There are positive aspects to the end that the respondents were seeking to achieve, that the conditions under which Ryan Buntine and Mr Hanegraaf were to perform work on the site should be regulated by an agreement between the first respondent and Celltech.  Diversity in terms and conditions of employment among those performing similar work at the same site can be productive of discontent among those persons.  An attempt to achieve uniformity of conditions of employment for those doing similar work was not lacking in merit.  It is therefore necessary to regard the second respondent’s conduct as deliberate, in the sense that he did not act inadvertently.  It is not possible to characterise that conduct as wilful, either in the sense of knowing that the conduct was in breach of the law, or in the sense of gratuitous troublemaking.

(Emphasis added)

........

Counsel for the applicant referred to what was described as the need to ensure compliance with minimum standards, and to conflict between the respondents’ conduct and the objectives of the BCII Act.  As I have already said, the attempt to secure an agreement with Celltech about the terms and conditions on which Ryan Buntine and Mr Hanegraaf would perform work on the site could very well be regarded as consonant with the main object of the BCII Act, expressed in s 3(1), particularly in respect of the means referred to in s 3(2)(a), of encouraging genuine bargaining at the workplace level.  Counsel for the applicant made specific reference to the means referred to in s 3(2)(b) (promoting respect for the rule of law), (c) (ensuring respect for the rights of building industry participants) and (d), (ensuring that building industry participants are accountable for their unlawful conduct).  These are difficult concepts.  It is understood widely that the heavy-handed application of sanctions against conduct that is widely regarded as legitimate can result in lack of respect for the law authorising the imposition of those sanctions.  Various classes of building industry participants have various rights.  Often those rights conflict.  The “right” of Celltech to employ workers on the site on different terms and conditions from those on which other workers on the site doing similar work were employed may conflict with the “right” of those other workers not to have the terms and conditions of their employment undermined by competition from other workers.  Accountability for unlawful conduct is always the object of the penalty process.  It is hard to regard it as some sort of separate object to which the Court must aspire.  The means by which the BCII Act is said to achieve its main object are not to be treated as separate objects in themselves.  The main object itself speaks in terms of, among other things, fairness for the benefit of all building industry participants.  Such an element cannot be ignored entirely, by a focus only on such things as efficiency, productivity and the benefit of the Australian economy as a whole.  Like most statutory objects, this one can be a source of comfort or not, depending on which of its words are chosen for emphasis. 

19                        In order to understand what the primary judge meant, I should mention an aspect of industrial law which would have been well known to his Honour.  For over a century, federal industrial laws were rooted in s 51(xxxv) of the Constitution.  Those laws were enlivened by the existence of industrial disputes extending beyond the limits of one state.  One legal controversy concerning the reach of those laws was whether an industrial dispute could exist between a registered organisation of employees and an employer about the terms and conditions of employment of non-union labour and, all the more so, if the employer then employed no unionised labour.  A related question was whether an award could be made in settlement of such a dispute requiring an employer to pay or provide specified rates and conditions to both union members and non-union members. 

20                        The High Court determined such a dispute could be created and awards could be made in these terms.  The first leading authority on this question was The Metal Trade Employers' Association v The Amalgamated Engineering Union (1935) 54 CLR 387.  While plainly enough the issue addressed by the High Court was a legal one involving Constitutional questions and issues of statutory construction, the legal conclusions of the Justices were nonetheless not divorced from worldly considerations.  One was encapsulated in the following observations of Rich and Evatt JJ at 418:

Nor does the fact that the demand made by the unionists extends to the case of employers who do not employ unionists at all, prevent the creation of an industrial dispute upon the subject matter of the terms and conditions which should be observed by such employers in employing such non-unionists.  In such cases, the union has an equally direct concern in removing the obstacles to the employment of its own members and to the maintenance and protection of the union standard of wages, even although the removal of such obstacle by the granting of the demand will incidentally benefit persons, non-unionists, who are not parties to the dispute, but the terms of whose employment by their employers (parties to the dispute) is the subject matter of the industrial dispute.

21                        The appellant argues that the considerations referred to in the grounds set out earlier are "incorrect or irrelevant".  For my part, I do not accept either is so.  Neither the BCII Act nor the Workplace Relations Act 1996 (Cth) prohibited, at the time these incidents occurred, an organisation of employees making an enterprise bargaining agreement which would have the effect of creating a measure of uniformity in wages and conditions of employment (to the extent that the Act permitted) of the two employees coming onto the site when compared to those employees already employed on the site.  Such an agreement might well serve the purposes discussed by Rich and Evatt JJ in the passage I have just quoted though acknowledging, of course, that such an objective could not have been achieved by pattern bargaining which was effectively proscribed (s 439 of the Workplace Relations Act).

22                        May I respectfully observe that his Honour's reasons on this topic are a little discursive.  However, I think the substance of what his Honour was saying in the passages I have quoted and which are criticised by the appellant is that the main object of the BCII Act identified in s 3(1) that (in part) "...... building work is carried out fairly, efficiently and productively for the benefit of all building industry participants...." can, on one view of what is fair, be achieved by avoiding disparities in wages and working conditions.  While doubtless that would not be a universally held view of what is fair, it is a reasonable view.  His Honour appears to have approached the matter on the basis that the conduct of Mr Corbett was directed to avoiding disparity by securing an agreement with Celltech Australia Pty Ltd through its managing director, Mr Buntine, which would regulate the wages and working conditions of the two employees brought on the site.  His Honour's approach appears to be based on a factual assumption or inference that in the absence of such an agreement, the two employees would have been paid different wages and enjoyed different conditions as other building workers on the site.  No challenge was made in this appeal to that assumption or inference.  At no point does his Honour suggest that the conduct was not unlawful.  I rather think that probably what his Honour was directing attention to was the motive for the conduct.  That can be a relevant consideration in exercising the sentencing discretion:  R v Bright [1916] 2 KB 441 per Darling J at 444 and Neal v The Queen (1982) 149 CLR 305 at 324 per Brennan J. The primary judge's reasons, in my opinion, do not reveal error in the exercise of the sentencing discretion.

23                        Grounds 3 and 4 concern specific deterrence as an element of the penalty for the contravention by the CFMEU.  The grounds are in the following terms:

3.         The learned trial Judge erred in failing to give any or any adequate weight to         specific deterrence in respect of the CFMEU.

4.         Further or in the alternative to Ground 3, the learned trial Judge failed to give        any or any adequate reasons as to how he dealt with the consideration of        specific deterrence in respect of the CFMEU.

24                        The primary judge addressed the question of specific deterrence in the following passage from his reasons (at [27]):

In any process of determining penalty, deterrence, both specific and general, is a major factor.  Counsel for the applicant contended that, having regard to the nature of the contraventions, the absence of regret, contrition or remorse, the lateness of the cooperation with the applicant and the record of previous contraventions, both before and after the acts the subject of this proceeding, the Court could not be confident that the first respondent would not contravene s 38 and s 44 of the BCII Act in the future.  There is therefore a need for specific deterrence.  In addition, counsel for the applicant sought substantial penalties for the purpose of general deterrence, to send a message to potential contraveners that penalties will outweigh any gains to be made by their conduct.  The figures suggested by counsel for the applicant were $15,000 in respect of the contravention of s 38 and $20,000 in respect of the contravention of s 44, a total of $35,000.  (Emphasis added)

25                        Given what is said in the first sentence it is untenable to suggest that his Honour did not pay regard to specific deterrence.  Indeed the highlighted sentence in the preceding passage is conclusory.  What his Honour appears to have done is recite the argument of the appellant and then accept, for the reasons advanced, there was a need for specific deterrence when determining what penalty should be imposed on the CFMEU.  That this was his Honour's approach is fortified by the remainder of that paragraph and the following paragraph (set out earlier in these reasons at [8]) which is a discussion about general deterrence.  This ground of appeal is not made out.

26                        The next ground of appeal concerns the previous contraventions by the CFMEU.  It was in these terms:

5.         The learned trial Judge erred in failing to give any adequate weight to the previous contraventions of the CFMEU, including by reason of:

(a)  reliance on such contraventions for the confined purpose of determining that the CFMEU could not be treated as having first offender status (at [23]); and/or

(b)  diminishing the proper weight to be given to the previous contraventions of the CFMEU by finding that the CFMEU "will have some difficulty adjusting to legislation that applies sanctions in an attempt to bring about a change to an entrenched culture", when such finding was not open on the evidence and was otherwise irrelevant.

27                        The question of prior contraventions was dealt with by his Honour in the following passage (at [23]):

There were conflicting submissions by counsel for the parties about the extent to which I should take into account previous findings of contraventions of the BCII Act by the first respondent.  The conflict concerned such matters as the relevance of contraventions of provisions of the BCII Act other than those directly in issue in the present case, and whether it was legitimate to take into account contraventions brought about by the activities of branches of the first respondent in states other than Victoria, which might be affected by the degree of autonomy under which branches function.  These questions are now largely dealt with in the judgment of Jessup J in Williams v Construction, Forestry, Mining and Energy Union (No 2) [2009] FCA 548, to which the parties referred me in writing by agreement after the close of argument in the present case.  It is unnecessary to repeat what is said in that case.  For present purposes, it is sufficient for me to say that I deal with the first respondent on the basis that it has a record of prior contraventions of the BCII Act and similar provisions, in circumstances having some similarities to those of the present case.  It is not surprising that an organisation in the position of the first respondent will have some difficulty adjusting to legislation that applies sanctions in an attempt to bring about a change to an entrenched culture.  It remains to be seen whether repeated imposition of penalties, and lapse of time, will bring about greater compliance.  The first respondent cannot be treated as having first offender status for the purposes of this case.

(Emphasis added)

28                        Obviously the last sentence, which the appellant criticises, cannot be divorced from what the primary judge said in the highlighted sentence midway through the passage.  It is tolerably clear that his Honour did not overlook (and in fact took into account) the prior contraventions.  The observation about bringing about a change to an entrenched culture appears to me to be unexceptionable.  What I think his Honour was saying was that the prior contraventions by the CFMEU were a manifestation of its failure to change and comply with the norms of conduct created by the BCII Act.  Describing this as a "difficulty [in] adjusting" does not manifest any erroneous approach, either factually or in point of principle.  Saying that this is not surprising likewise does not manifest any erroneous approach. His Honour should not, in my opinion, be taken to be condoning the contraventions.  Rather his Honour was recognising that there had been an entrenched culture (a proposition comprehensively permeating the second reading speech of the Minister for Employment and Workplace Relations when introducing in March 2005 the Bill which became the BCII Act) and change had not been immediately achieved and this was not surprising. These comments do not, in my opinion, manifest any error in the sentencing discretion. 

29                        The last ground of appeal contends that the penalty was manifestly inadequate. The penalty imposed on the CFMEU was $5000.  It is not, to my mind, plainly apparent that this penalty is excessive: Dinsdale v The Queen (2000) 202 CLR 321 at 325.  It is not sufficient that this Full Court would have imposed a more severe sentence: R v Hallocoglu (1992) 29 NSWLR 67 at 78.  The sentence imposed by the primary judge might be described as at the outer extreme of the lower end of what is the appropriate penalty.  But sentencing is an evaluative judgment giving rise to a choice, not between alternatives but by selecting a point inside a "generous ambit within which reasonable disagreement is possible": see the discussion by Basten JA in Einfeld v Regina [2010] NSWCCA 87 at [78] citing Brennan J in Norbis v Norbis (1986) 161 CLR 513 at 540.

30                        Means of assessing what is the appropriate penalty is the seriousness of the offence viewed objectively:  Veen v R (No 2) (1988) 164 CLR 465 per Mascon CJ, Brennan, Dawson and Toohey JJ and R v Dodd (1991) 57 A Crim R 349 which can involve a comparison between the case under consideration and the worst possible case. Relevant to this task is the maximum penalty which can be treated as the penalty appropriate for the worst possible case: Markarian v The Queen (2005) 228 CLR 357 at [31]. 

31                        The conduct of Mr Corbett of 19 September 2006 of refusing to induct the two employees was little more than an inconsequential act of defiance given that the induction was undertaken by someone else.  As coercive conduct, it was a damp squib though plainly unlawful.  The conduct of Mr Corbett in stating to the two employees and a representative of his own employer that Celltech needed an enterprise bargaining agreement was conceded by the respondents to be coercive conduct contravening s 44.  Why this is so is not immediately apparent to me but, accepting it was coercive conduct, it is of a similar character, in my opinion, as the refusal to induct.  Calling the stop work meeting on 3 October 2006 is a slightly different character.  However that occurred against a background where, on the unchallenged facts found by the primary judge, in the last week of September 2006 a representative of the CFMEU had been discussing with Mr Buntine (the managing director of Celltech) an enterprise bargaining agreement with Mr Buntine indicating he would be happy to enter one.  No evidence was led by the appellant or fact agreed (and more importantly no finding made) that in truth Mr Buntine did not then mean what he said.  The stop work meeting should not have taken place.  Calling it was unlawful.  But I do not think the penalty imposed by the primary judge for this conduct, imputed to the CFMEU, and the earlier unlawful conduct is so obviously beyond the appropriate range to be characterised as manifestly inadequate.

32                        I conclude with some general observations.  The discourse in this Court about proceedings of this type under the BCII Act has recourse to concepts and approaches found in the criminal law.  There has been a long-standing debate in relation to the penalty provisions in the Trade Practices Act whether proceedings for a pecuniary penalty should be characterised as criminal proceedings.  Burchett and Kiefel JJ intimated in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 294 they were not.  Plainly there is no bright line between civil and criminal proceedings: see the helpful discussion of the Full Court in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466 at [19]-[28].  Of obvious relevance is the purpose for which they are being characterised.

33                        An aspect of this characterisation of proceedings under the Trade Practices Act concerns whether a penalty is, in part, punishment.  There is a view that given that the provisions are intended to induce compliance with norms of conduct, penalties should not be imposed as punishment. Whether this is of any real significance is another question.  As a Full Court said in Australian Competition and Consumer Commission v Ithaca Ice Works Pty Ltd [2001] FCA 1716 (at [50]):

However, as presently advised, we see little or indeed no difference between taking into account, in computing the penalty, the deliberate nature of the conduct in question (a matter the relevance of which is not in dispute) and taking into account the fact that the penalty should act as a punishment of the offender.

34                        In a later case, Weinberg J noted that a pecuniary penalty is intended to achieve, amongst other things, the goal of punishment: Australian Competition & Consumer Commission v Australian Abalone Pty Ltd [2007] FCA 1834 at [116].  However, for my part, I entertain some doubt whether any element of a penalty should be to punish a contravener of provisions of the BCII Act. Rather, the penalty is imposed as a means of influencing the behaviour of those to whom the BCII Act applies if they do not conform with the norms of conduct the Act is intended to establish and maintain.

35                        I would make the declarations in relation to the second respondent for the reasons given by Besanko and Gordon JJ and which are the subject of agreement between the parties but I would otherwise dismiss the appeal, and order the appellant to pay the respondents' costs.

Associate:

Dated:         8 June 2010

REASONS FOR JUDGMENT

BESANKO AND GORDON JJ

INTRODUCTION

36                        This is a sentencing appeal filed by Karen Stuart, an Australian Building and Construction Inspector appointed under the Building and Construction Industry Improvement Act 2005 (Cth)(the BCII Act) (the Appellant), against a sentence imposed on the Construction, Forestry, Mining and Energy Union (the CFMEU) for conduct of the Second Respondent (Corbett) which contravened ss 38 and 44(1) of the BCII Act and for which the CFMEU admitted it was vicariously liable by reason of s 69 of the BCII Act. 

37                        The contravening conduct occurred on a site where Hooker Cockram Projects Ltd (Hooker)was responsible for the construction of a Police and Law Courts Complex at 141 Princes Highway, Morwell (the Site).  Celltech Australia Pty Ltd (Celltech) was a sub-contractor working at the Site. 

38                        On 25 February 2008, the Appellant commenced proceedings against the respondents seeking declarations and the imposition of the penalties for multiple allegations of contraventions of the BCII Act. 

39                        In May 2009, the parties reached agreement about the future conduct of the proceedings on the basis of a statement of agreed facts and limited affidavit evidence.  It will be necessary to return to consider the affidavit evidence later in these reasons.  For present purposes, it is sufficient to note that the agreed facts disclosed two admitted contraventions of the BCII Act.  The first admitted contravention was of s 38 of the BCII Act constituted by Corbett organising a stop-work meeting at the Site.  The meeting commenced at 11:00am, lasted 20 minutes and involved some 23 workers.  Corbett conducted the meeting to inform the workforce that Celltech did not have any form of enterprise bargaining agreement or other form of building agreement (an EBA) with the CFMEU as to the terms and conditions of employment of employees on the Site.  The second admitted contravention was of s 44(1) of the BCII Act constituted by Corbett:

1.         refusing to induct to the Site two employees of Celltech on 19 September 2006 contrary to Corbett’s obligations to Hooker;

2.         stating on 19 September 2006 that the work that the two employees of Celltech proposed to do at that site was CFMEU work, not Australian Manufacturing Workers Union (AMWU) work, and that those employees needed an EBA and all appropriate paperwork to work at that Site; and

3.         organising the stop-work meeting of employees at the Site on 3 October 2006,

with admitted intent to apply undue pressure to Celltech to agree to make an EBA under Pt 8 of the Workplace Relations Act 1996 (Cth) (the WR Act).

40                        As noted earlier, the CFMEU admitted that, by reason of s 69 of the BCII Act, it was vicariously liable for Corbett’s contravening conduct.  Before turning to the “Agreed Orders” proposed by the parties, it is relevant to note that the conduct giving rise to the contravention of s 38 of the BCII Act is completely subsumed by the conduct giving rise to the contravention of s 44 of the BCII Act.

41                        The statement of agreed facts proposed the following “Agreed Orders”:

36.          The parties seek the following orders:

(1)        A declaration that the first and second respondents have each contravened s 38 of the BCII Act by reason of the matters in paragraphs 20 to 22 and 26 to 31 of the Statement of Agreed Facts … ;

(2)        A declaration that the first and second respondents have each contravened s 44 of the BCII Act by reason of the matters in paragraphs 12 to 22 and 32 to 35 of the [Statement of Agreed Facts];

(3)        There be no order as to costs.

Corbett – no penalty sought

37.          Corbett has now retired from the building and construction industry.  [The Appellant] will seek no penalty against Corbett.

CFMEU – the issue of penalty

38.          The parties will make submissions at trial as to what penalty, if any, should be imposed against the CFMEU for the above contraventions of s 38 and s 44 of the BCII Act.

42                        The trial judge refused to grant the declarations specified in the “Agreed Orders” (see [41] above) and instead made the following Orders:

1.         Within 30 days of this day, the first respondent pay to the Commonwealth of Australia penalties totalling $5,000 in respect of:

(a)          the admitted contravention of s 38 of the Building and Construction Industry Improvement Act 2005 (Cth) constituted by the second respondent organising a stop-work meeting of employees working on the site of the construction of a police and law courts complex at 141 Princes Highway, Morwell in Victoria on 3 October 2006; and

(b)          the admitted contravention of s 44(1) of the Building and Construction Industry Improvement Act 2005 (Cth) constituted by the second respondent:

(i)         refusing to induct to the site of the construction of a police and law courts complex at 141 Princes Highway, Morwell, Victoria, two employees of Celltech Australia Pty Ltd on 19 September 2006, contrary to the second respondent’s obligations to his employer, Hooker Cockram Projects Ltd;

(ii)        stating that the work that the two employees of Celltech Australia Pty Ltd propose to do at that site was CFMEU work, not AMWU work, and that those employees needed an EBA and all appropriate paperwork to work at that site; and

(iii)       organising a stop-work meeting of employees at that site on 3 October 2006

with admitted intent to apply undue pressure to Celltech Australia Pty Ltd to agree to make a building agreement under Pt 8 of the Workplace Relations Act 1996 (Cth).

2.         Otherwise, the application be dismissed.

3.         By consent, there be no order as to the costs of the proceeding.

The Appellant appeals against paragraphs 1 and 2 of these Orders. 

43                        The Appellant contends that, in sentencing the CFMEU, the trial judge erred in the exercise of the sentencing discretion and, further, imposed a sentence which was manifestly inadequate.  The issues on appeal are different in relation to Corbett.  The trial judge refused to grant the declarations specified in the “Agreed Orders” and otherwise dismissed the proceeding against Corbett.  The Appellant now seeks modified declarations of contravention against Corbett.  Corbett consents to the Court granting declarations of contravention in the modified form. 

NATURE OF APPEAL AND COURT’S APPROACHES

44                        Before turning to consider the appeal grounds and the parties’ submissions, it is necessary to say something about the nature of the appeal and the approach to be adopted by an appellate Court.

45                        As noted earlier, this is a sentencing appeal:  see Construction, Forestry, Mining and Energy Union v Williams (2009) 262 ALR 417 at [8].  Counsel for the CFMEU submitted that this Court on appeal should first consider whether the sentence was manifestly inadequate, rather than consider whether the Appellant had identified some error by the trial judge in the exercise of the sentencing discretion.  That submission should not be accepted. 

46                        The principles to be applied in a sentencing appeal are described in House v The King (1936) 55 CLR 499 at 505.  That this is so was most recently restated by the High Court in Carroll v The Queen (2009) 254 ALR 379 at [7] – [8] citing Dinsdale v The Queen (2000) 202 CLR 321.  A number of principles are worth restating:

1.         inadequacy of sentence is not satisfied by a mere disagreement by the appellate Court with the sentence actually imposed:  Whittaker v The King (1928) 41 CLR 230 at 248 – 249; Griffiths v The Queen (1977) 137 CLR 293 at 310; Malvaso v The Queen (1989) 168 CLR 227 at 234; Everett v The Queen (1994) 181 CLR 295 at 299 – 300, 306; Dinsdale v The Queen 202 CLR 321 at [6]; Carroll 254 ALR 379 at [7].  Error must first be identified by the appellate Court:  Carroll254 ALR 379 at [7] citing Dinsdale202 CLR 321 at 325 – 326 [6] – [9], 330 [24], 339 – 340 [57] – [61];

2.         an appeal against sentence is an appeal against an exercise of discretion – the sentencing discretion – and is governed by established principles or categories of cases:  Carroll254 ALR 379 at [7] citing House 55 CLR 499 at 505; see also Dinsdale 202 CLR 321 at 324-325 [3] – [4];

3.         the categories reflect particular kinds of error – that the trial judge had acted upon a wrong principle, allowed extraneous or irrelevant matters to guide or affect them, had mistaken the facts or had not taken into account some material consideration.  If a case of specific error of any of those kinds is made, it is necessary to identify the asserted error in the grounds of appeal;

4.         another category of error is where no case of specific error is alleged except that the sentence was manifestly inadequate or excessive.  That category arises where (House 55 CLR 499 at 505 cited in Carroll254 ALR 379 at [8]):

It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance.  In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.

47                        Contrary to the respondents’ contentions, the present appeal does not concern the last category identified in paragraph [46(4)] above.  Specific error has been alleged by the Appellant and those specific errors are not “particulars” of manifest inadequacy:  cf Dinsdale 202 CLR 321 at 325-326 [5].  They are specific errors of the kinds identified in paragraph [46(3)] above.

APPEAL GROUNDS

48                        We will deal with the appeal grounds concerning the CFMEU and Corbett separately.

CFMEU – APPEAL GROUNDS 1 TO 6

Trial Judge’s Remarks

49                        In his Honour’s remarks, the trial judge mentioned the nature and gravity of the admitted contraventions (paras [15] to [21]), the nature and extent of the loss and damage suffered as a result of the unlawful conduct (para [22]), CFMEU’s previous contraventions (para [23]), the financial capacity of the CFMEU to meet a penalty (para [24]), the extent of involvement of senior management of the CFMEU and its inculpatory actions(para [25]), the need to ensure compliance with the law (para [26]) and finally, general and specific deterrence. 

Appeal

50                        The Appellant contends the trial judge misdirected himself in imposing the penalty that he did by taking into account incorrect or irrelevant considerations as to general deterrence, the gravity of the contraventions, specific deterrence and the CFMEU’s previous contraventions.  We will address each appeal ground in turn.

Appeal Grounds 1(a)(ii), (b) and (c):  General Deterrence – relevance for the vicarious contravenor and where no monetary penalty sought against the actual contravenor

51                        The trial judge found (at [28]) that the need for general deterrence was undermined by “two substantial factors”.  First, that general deterrence was a matter applicable for Corbett, the actual contravenor who directly engaged in the unlawful conduct, not “the vicarious contravenor”, and the Appellant had sought “no penalty” against Corbett.

52                        In our view, the trial judge fell into error in concluding that the need for general deterrence was undermined on these bases.

53                        There is nothing in the facts of this case or the authorities to support the contention that because the CFMEU was vicariously liable for the unlawful conduct, the principles of general deterrence are inapplicable:  see, for example, Alfred v Wakelin (No. 1) [2008] FCA 1455 at [38] and [40] (CFMEU found liable by reason of s 69 of the BCII Act for the conduct of its job delegate); Cruse v Construction, Forestry, Mining and Energy Union (No. 2) [2008] FCA 1637 at [9] (CFMEU found vicariously liable for conduct of shop steward); Cahill v Construction, Forestry, Mining and Energy Union (No. 4) (2009) 189 IR 304 at [76], [86], [93] and [97]; John Holland Pty Ltd v Construction, Forestry, Mining and Energy Union (No. 2) (2009) 187 IR 400 at [96] (CFMEU found vicariously liable for conduct of its organisers).  That approach is not limited to the industrial context.  The same approach has been adopted in the context of other penalty provisions.  For example, it has been adopted in relation to the Trade  Practices Act 1974 (Cth) in the context of accessorial liability:  see Australian Competition and Consumer Commission v ABB Transmission and Distribution (No. 2) (2002) 190 ALR 169 at [16] and [18]; Australian Competition and Consumer Commission v IPM Operation and Maintenance Loy Yang Pty Ltd (No. 2) [2007] FCA 11 at [66]; Australian Competition and Consumer Commission v TEAC Australia Pty Ltd [2007] FCA 1859 at [27] and Australian Competition and Consumer Commission v Skins Compression Garments Pty Ltd [2009] FCA 710 at [70] and [86].

54                        Such an approach is not surprising.  As Gleeson CJ said in Tiger Nominees Pty Ltd v State Pollution Control Commission (1992) 25 NSWLR 715 at 718:

As a rule the common law refused to impose criminal responsibility on a person, as a principal, for the misdeeds of others:  R v Huggins (1730) 2 Ld Raym 1574 at 1580; 92 ER 518 at 522-523;  Halsbury’s Laws of England 4^th ed. Vol 11 par 51 at 40.  The development and extension of principles imposing vicarious liability in the nineteenth and twentieth centuries reflect, to some extent, difficulties encountered in law enforcement.  Principles were abstracted from developments in the law of tort, and this was done most readily when offences could be characterised as regulatory in substance although criminal in form.  Such offences were sometimes characterised as “public welfare offences”.  Laws relating to fair trading, consumer protection, and safeguarding the environment provide examples.

55                        These observations were examined in the 2003 Report of the Law Reform Commission of New South Wales (the LRC) entitled “Sentencing:  Corporate offenders”.  The report considered the various bases of corporate liability.  In dealing with vicarious liability, the LRC rightly acknowledged that “[i]n its application to corporations, vicarious liability may be justified on the basis of deterrence: it is directed at ensuring internal policing” and the prospect of the corporation incurring vicarious liability would “result in greater shareholder and corporate officer attention to the selection of officers and subordinates”.  However, as the LRC also noted, the application of the principle of deterrence in the context of criminal conduct is not without its difficulties.  For example, the principle may be seen to be at odds with the notion of criminal liability being dependent (at least in all but exceptional cases) on proof of fault.  Further, where vicarious liability extends liability to wrongs committed by lower level officials and employees, the reasonableness of imposing liability on a corporation for such acts is often debatable if the corporation has derived no benefit from such acts and if the principle of vicarious liability does not take account of the difficulty in supervising what may be hundreds or even thousands of employees:  J Gobert, “Corporate criminality: four models of fault” (1994) 14 Legal Studies 393 at 398-399.

56                        In the present case, these issues or difficulties are dealt with in at least two ways.  First, the statute imposing vicarious liability must be properly construed.  In the BCII Act, there are two aspects to the imposition of vicarious liability:  (1) circumstances where the contravening conduct is attributed to the corporate offender without a basis for exculpation, a strict liability offence (ss 69(1)(a) and (b) of the BCII Act) and (2) circumstances which do provide a basis for exculpation if the corporate offender had taken reasonable or appropriate steps to prevent the criminal conduct (ss 69(1)(c) and (d) of the BCII Act).  The extent to which fault or exculpation is a determinative factor in the imposition of criminal liability is a question for Parliament, not a question for the Court.  However, the criticisms or factors identified by the LRC (for example, where there is no benefit to the corporation from the contravening conduct and the imposition of liability where the primary contravener is an officer or employee at a low level) are matters that, in appropriate cases, can be taken into account in the exercise of the sentencing discretion. 

57                        Further, if the imposition of vicarious liability (with or without a basis for exculpation) reflects difficulties encountered in enforcement or, as the LRC put it, on the basis of deterrence, it is apparent that deterrence is not only a relevant, but essential, consideration in sentencing a corporate offender.  If it were otherwise, it would encourage participants to organise their affairs in a particular manner for the sole purpose of avoiding the imposition of a more serious penalty.  Deterrence, both general and specific, is the very reason why, at least in the case of the BCII Act, the statute imposes criminal liability on a corporation for the misdeeds of its officers or employees.  It follows that deterrence lies at the heart of the imposition of a penalty on a corporate offender.  In the present case, general deterrence is directed towards dissuading other corporations, unions and individuals in the industry covered by the BCII Act from engaging in similar conduct.

58                        Another aspect of the first “substantial factor” identified by the trial judge to undermine the need for general deterrence was that the Appellant sought “no penalty” against Corbett (see at para [28]).  There may be a real question about the significance that should be attached to the expressed attitude of the Appellant to the question of punishment.  However, that matter need not be pursued in this appeal.  As is apparent from the “Agreed Orders”, the Appellant did not seek a financial penalty against Corbett.  However, the Appellant did seek a remedy – declarations of contraventions of the BCII Act which Corbett had consented to be made.  The trial judge did not make the declarations.  (That matter is the subject of Appeal Ground 7 which is addressed below).

59                        The parity principle of sentencing requires there should not be a marked disparity between sentences imposed on co-offenders which gives rise to a justifiable sense of grievance:  Postiglione v The Queen (1997) 189 CLR 295 at 301, 307 – 308 and 324 – 325.  However, in determining whether there is some justifiable sense of grievance, it is essential to take proper account of the different circumstances of the co-offenders, including any difference in the relevant degrees of criminality:  see Markarian v The Queen (2005) 228 CLR 357 at [19].  

60                        In the present matter, we do not consider that there is any want of parity if the corporate respondent is fined and the individual respondent is not.  The imposition of different penalties upon the two respondents represents the differing consequences of applying considerations of general deterrence.  Further, the need for specific deterrence of the individual respondent is reduced (even eliminated) when it is observed that he is no longer engaged in the industry. 

Appeal Ground 1(a)(i):  General Deterrence – Appellant’s position concerning a compliance program

61                        The second “substantial factor” taken into account by the trial judge in “undermining the case for general deterrence” (see at para [29]) was the finding that the Appellant was prepared to abandon any application for a penalty against the CFMEU if the CFMEU agreed to participate in a compliance program provided at the cost of the Appellant. 

62                        The difficulty is that no such submission was made by the Appellant.  The transcript of the proceedings before the trial judge records that the Appellant submitted that if the CFMEU genuinely participated in a compliance program conducted by the Australian Building and Construction Commission, that fact “could be a significant matter on penalty”.  The CFMEU rejected the suggestion that it should participate in a compliance program and the possible consequences of its participation were not further pursued.

63                        In our view, the trial judge misdirected himself in dealing with the issue of general deterrence by taking into account an incorrect consideration – the Appellant’s alleged position concerning a compliance program – which was incorrect and, in any event, a position not accepted by the CFMEU.  If it had any relevance, it was a factor going to specific deterrence. 

Appeal Ground 1(d):  General Deterrence – other evidentiary matters

64                        The trial judge also found that general deterrence had little or no relevance because there was no evidence about (1) the extent to which the CFMEU might have avoided the contraventions of the BCII Act or might have avoided similar contraventions in the future by exhortation, or improved training, to its workplace representatives or (2) the extent of any communications between the CFMEU and its workplace representatives on the subject of compliance with the BCII Act. 

65                        In our view, the trial judge also misdirected himself in dealing with these matters.  The matters were within the knowledge of the CFMEU.  It could have led evidence of these matters in addressing general deterrence.  It did not.  The absence of evidence on these matters was not a basis for discounting the relevance and importance of general deterrence in respect of the CFMEU. 

Appeal Grounds 2(a), (b) and (d): Gravity of the Contraventions

66                        In addressing the Appellant’s submission about the need to ensure compliance with minimum standards and the conflict between the respondents’ conduct and objects of the BCII Act, the trial judge stated that the respondents’ conduct had “positive aspects” and “could well be regarded as consonant with the main objects of the BCII Act”, including s 3(1) and 3(2)(a) of the BCII Act:  at [20], [21] and [26]; see Appeal grounds 2(a) and (b).  Appeal ground 2(d) was to a similar effect.

67                        The object of the BCII Act is “to provide an improved workplace relations framework for building work to ensure that building work is carried out fairly, efficiently and productively for the benefit of all building industry participants and for the benefit of the Australian economy as a whole”:  s 3(1) of the BCII Act.  The means to achieve that object are set out in s 3(2) and include:

(a)        improving the bargaining framework so as to further encourage genuine bargaining at the workplace level;

(b)        promoting respect for the rule of law;

(c)        ensuring respect for the rights of building industry participants;

(d)        ensuring that building industry participants are accountable for their unlawful conduct;

(e)        providing effective means for investigation and enforcement of relevant laws;

(f)        improving occupational health and safety in building work;

(g)        encouraging the pursuit of high levels of employment in the building industry;

(h)        providing assistance and advice to building industry participants in connection with their rights and obligations under relevant industrial laws.

The trial judge placed considerable emphasis on the means identified in s 3(2)(a). 

68                        In our view, the trial judge failed to adequately address that the conduct he identified as having “positive aspects” and which he considered “could well be regarded as consonant with the main objects of the BCII Act”, was in fact unlawful conduct under that Act:  see ss 38 and 44(1) of the BCII Act.  The conduct was unlawful because the respondents adopted means which were not consistent with the objects of the BCII Act, namely seeking to place undue pressure on Celltech to make an EBA.  As Besanko J said in Bonan v Hadgkiss (2006) 160 FCR 10 at [31], [34] and [37] in relation to the BCII Act, the intention of Parliament is to be discerned from the provisions of the Act.  In the present case, it appears that the trial judge considered some, but not all, of the provisions of the BCII Act or at the very least failed to adequately address those provisions of the Act which prescribed unlawful conduct, even if that conduct sought to achieve some stated object of the Act.  As a result, the sentencing discretion miscarried. 

Appeal Grounds 2(c), (e), (f) and (g)

69                        The Appellants identified other passages in the trial judge’s reasons for decision which it submitted gave rise to specific error.  Having regard to the conclusion already expressed, these other grounds can be dealt with shortly.

70                        Appeal Ground 2(c) should be dismissed.  The specific passage in the trial judge’s reasons for decision relied upon by the Appellant does not support the Appellant’s submissions.  Appeal grounds 2(e), (f) and (g) are also dismissed.  They were not pursued by the Appellant on appeal. 

Appeal Grounds 3 and 4: Specific Deterrence

71                        The trial judge (at [27]) rightly acknowledged that in the process of determining penalty, deterrence, both specific and general, is a major factor. 

72                        The Appellant submits that it is difficult to discern from his Honour’s reasons for decision how specific deterrence was ultimately dealt with and therefore submits that the conclusion to be drawn is that the exercise of the sentencing discretion miscarried:  Carlisle Homes v Barrett Property Group Pty Ltd [2009] FCAFC 31 at [40] – [46]. 

73                        Given the views we have formed about the other appeal grounds (see for example [58] – [61] and [63] above), it is sufficient for present purposes to note that we do not consider that the trial judge adequately addressed the issue of specific deterrence in sentencing the CFMEU.  Specific deterrence is a relevant consideration in the re-exercise of the sentencing discretion.

Appeal Ground 5 – Previous Contraventions by the CFMEU

74                        The Appellant contends that in the exercise of the sentencing discretion, the trial judge fell into specific error when he failed to give any or any sufficient weight to the previous contraventions of the CFMEU.  Two matters are relied upon by the Appellant in support of the contention.

75                        First, that unlike the description adopted in other similar cases in which the CFMEU was a respondent, the trial judge had understated the CFMEU’s position when he said that the CFMEU “cannot be treated as having first offender status for the purposes of this case” (at [23]):  cf Draffin v Construction, Forestry, Mining and Energy Union (2009) 189 IR 145 at [92] and Williams v Construction, Forestry, Mining and Energy Union (No. 2) (2009) 182 IR 327 at [29].  Secondly, the trial judge had inappropriately observed, without any evidentiary foundation, that the CFMEU would “have some difficulty adjusting to legislation that applies sanctions in an attempt to bring about a change to an entrenched culture”:  at [23].

76                        It is not in dispute that the evidence disclosed that the CFMEU had a number of previous contraventions, some involving similar conduct which was unlawful under the BCII Act and its predecessors such as s 170NC of the WR Act.  Again, given the views we have formed about the other appeal grounds, it is sufficient for present purposes to note that we do not accept that the trial judge’s descriptions are an accurate reflection of the CFMEU’s previous contraventions.  Those contraventions (by reference to date, unlawful conduct and relevant statutory framework) will be relevant matters in the re-exercise of the sentencing discretion.

Appeal Ground 6 – Manifestly Inadequate

77                        This Court must re-sentence the CFMEU, exercising the sentencing discretion afresh.  As we explained earlier, specific error being shown, it is not necessary to examine whether the sentence imposed on the CFMEU at first instance should be classified as manifestly inadequate. 

RE-EXERCISE OF SENTENCING DISCRETION

78                        The nature and difficulty of the sentencing task faced by a Court has recently been stated:  see Williams 262 ALR 417 at [28] - [30]. 

79                        In the present case, there were two contraventions:  see [39] above.  Often the first question to be asked, or issue to be determined, is whether those two contraventions were properly to be seen as a single course of conduct:  Williams 262 ALR 417 at [14] – [27].  Here, the conduct occurred on two separate days – 19 September 2006 and 3 October 2006 – not very far apart:  cf Hamberger v Construction, Forestry, Mining and Energy Union [2002] FCA 585 at [11].  The conduct involved the same participants (Mr Ryan Buntine, Mr Paul Hanegraaf and Corbett) and occurred at the one place – the Site.  The conduct had an admitted common purpose, namely to apply undue pressure to Celltech to agree to make an EBA under the WR Act, constituted by Corbett:

1.         refusing to induct to the Site on 19 September 2006 two employees of Celltech, contrary to his obligations to his employer, Hooker;

2.         stating on 19 September 2006 that the work that the two employees of Celltech proposed to do at that Site was CFMEU work, not AMWU work, and that those employees needed an EBA and all appropriate paperwork to work at that Site; and

3.         organising a stop-work meeting of employees at that Site on 3 October 2006. 

80                        However, there was another fact or matter which was of particular significance in the sentencing process – the unlawful conduct constituting the contravention of s 38 (organising a stop-work meeting of employees at the Site on 3 October 2006) was entirely subsumed in the conduct constituting the contravention of s 44 of the BCII Act. 

81                        By their Notice of Contention, the respondents submitted that because the elements of, and the contravening conduct under, s 38 of the BCII Act were wholly contained or subsumed in the elements of, and the contravening conduct under, s 44 of the BCII Act, by the application of the principles of double jeopardy, only one penalty should be imposed. 

82                        Whether the appropriate language is “double jeopardy” (Pearce v The Queen (1998) 194 CLR 610 at [68] and Rohde v Director of Public Prosecutions (1986) 161 CLR 119 at 129), “double punishment” (Pearce 194 CLR 610 at [34]ff and Hadgkiss v Aldin (2007) 164 FCR 394 at [87] – [91]), “multiple punishment” or “duplication of penalty for what is substantially the same act” (Pearce 194 CLR 610 at [68]) and whether it is good sentencing practice or a positive rule of law is unnecessary to resolve because the applicable general considerations are now well established:  see Pearce 194 CLR 610 at [34] – [39].

83                        As the High Court said in Pearce 194 CLR 610 at [40]:

To the extent to which two offences of which an offender stands convicted contain common elements, it would be wrong to punish that offender twice for the commission of the elements that are common.  No doubt that general principle must yield to any contrary legislative intention, but the punishment to be exacted should reflect what an offender has done; it should not be affected by the way in which the boundaries of particular offences are drawn.  Often those boundaries will be drawn in a way that means that offences overlap.  To punish an offender twice if conduct falls in that area of overlap would be to punish offenders according to the accidents of legislative history, rather than according to their just deserts.

84                        As noted earlier, in the present appeal the unlawful conduct constituting the contravention of s 38 (organising a stop-work meeting of employees at the Site on 3 October 2006) was entirely subsumed in the conduct constituting the contravention of s 44 of the BCII Act.  The BCII Act does not suggest any legislative intention contrary to the general proposition that it would be wrong to punish the CFMEU twice for the commission of that element.  Accordingly, we consider that it is appropriate to punish the contravention of s 44 of the BCII Act by the imposition of a monetary fine for that contravention and not to impose a separate fine for the contravention of s 38 of the BCII Act.  The maximum penalty is $110,000. 

85                        The task for the Court is “to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations”:  Williams 262 ALR 417 (at [29]) citing Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [91]. 

86                        Of course, in fixing the amount of the financial penalty that is to be imposed, it is also necessary to take into account the nature of the conduct, the circumstances in which the conduct was committed and the principles of deterrence (both specific and general).  In our view, the conduct was not an especially serious instance of conduct contravening the BCII Act, but was nonetheless sufficiently serious to warrant a higher penalty than that imposed by the trial judge.  In addition to the matters just identified, that conclusion is supported by the previous contraventions of the CFMEU to which the Court was taken, balanced against the affidavit evidence disclosing the lawful activities of a union organiser in seeking to negotiate an EBA with the Managing Director of Celltech.

87                        The essential facts of this matter have been sufficiently set out earlier in these reasons.  So too the applicable principles have been sufficiently discussed.  Having regard to those matters, we consider that an appropriate sentence to be passed in relation to the CFMEU is to order payment of a fine of $25,000 in relation to the contravention of s 44 of the BCII Act.  A period of 30 days from the date of publication of these reasons should be allowed for payment of the fine. 

CORBETT – APPEAL GROUND 7

88                        As noted earlier, the trial judge exercised his discretion not to grant the declarations sought by consent against Corbett.  His Honour stated (at [12]):

The agreed statement of facts includes agreement as to the making of declaratory orders.  The parties invite the Court to make a declaration that the first and second respondents have each contravened s 38 of the BCII Act “by reason of the matters in paragraphs 20 to 22 and 26 to 31 of the Statement of Agreed Facts”.  They also invite the Court to make a declaration that the first and second respondents have each contravened s 44 of the BCII Act “by reason of the matters in paragraphs 12 to 22 and 32 to 35” of the statement of agreed facts.  Orders in this form would be totally pointless.  If declarations that are not true declarations of right are ever to be made, their only justification can be to provide some kind of record of what has been found to have occurred in a particular case. For that purpose, it is necessary that any such declaration contains sufficient detail to provide such a record.  To require any person who might be interested in reading such a record to go from the order to a document found only on the relevant Court file would not fulfil any function at all.  The function of recording the Court’s findings, principally fulfilled by the Court’s reasons for judgment, can also be fulfilled by specifying in an order relating to a penalty the conduct in respect of which the penalty has been imposed. See, for example, the orders made by Jessup J in Williams v Construction, Forestry, Mining and Energy Union (No 2) [2009] FCA 548.  For these reasons, I decline to make the declarations sought by both parties.

(Emphasis added).

89                        Although the making of a declaration and the terms in which it should be framed are in the Court’s discretion (see Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437–9 per Gibbs J; and Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581–2 and 596–7; AWB Ltd v Cole (No 6) (2006) 235 ALR 307 at [5]), any declaration made by the Court should reflect the final outcome of the case with certainty and precision:  see also Minister for Immigration and Ethnic Affairs v Guo Wei Rong (1997) 191 CLR 559 (at 579) citing University of New South Wales v Moorhouse (1975) 133 CLR 1; Bass v Permanent Trustee Company Limited (1999) 198 CLR 334 at [49]; Australian Competition and Consumer Commission v Danoz Direct Pty Ltd (2003) 60 IPR 296 at [260] and K Dharmananda and A Papamatheos (eds), Perspectives on Declaratory Relief (2009) at 101.

90                        In the present case, the trial judge refused to grant the declarations sought by the parties by consent because of their form.  That was not surprising.  The proposed forms of declaration lacked certainty and precision. 

91                        On appeal, the Appellant sought declarations which were more precise and certain than those sought at trial.  The respondents consent to the making of declarations in the form now proposed by the Appellant.  We would grant the declarations now sought by consent by the parties.  In our view, a declaration of contravention in respect of Corbett was necessary.  We do not consider that an order dismissing the proceeding against Corbett (see para [42], order 2 above) accurately or appropriately reflected the outcome of the proceeding as against him:  cf Cruse v Multiplex Ltd (2008) 172 FCR 279 at [59].  Corbett admitted his conduct contravened ss 38 and 44 of the BCII Act.  No monetary penalty was sought against Corbett.  Adapting what Goldberg and Jessup JJ said in Cruse 172 FCR 279 at [59]:

[T]here is some utility in using the declaration to define and publicise the type of conduct that constitutes a contravention of the [BCII] Act.  In our view, that utility is more obvious in a situation in which contraventions are admitted or have been found, in which no other relevant orders are to be made, and in which, therefore, the only formal record of the disposition of the proceeding, absent the making of a declaration, would be a dismissal thereof.

92                        Further, the penalty imposed on the CFMEU in some respects concerned contravening conduct by Corbett for which it was vicariously liable.  Declarations of contravention by Corbett are necessary to set out clearly the foundation on which the consequential orders by way of pecuniary penalty, including those based on vicariously liability, are grounded:  Australian Competition and Consumer Commission v Midland Brick Company Pty Ltd (2004)207 ALR 329 at [21]. 

93                        For those reasons, we would make declarations against Corbett as follows:

1.         Declaration that the second respondent contravened s 38 of the BCII Act constituted by organising a stop-work meeting of employees working on the Site on 3 October 2006.

2.         Declaration that the second respondent contravened s 44 of the BCII Act constituted by:

(i)        refusing to induct to the Site on 19 September 2006 two employees of Celltech Australia Pty Ltd, contrary to the second respondent’s obligations to his employer, Hooker Cockram Projects Ltd;

(ii)       stating that the work that the two employees of Celltech Australia Pty Ltd proposed to do at that Site was CFMEU work, not AMWU work, and that those employees needed an EBA and all appropriate paperwork to work at that Site; and

(iii)       organising a stop-work meeting of employees at that Site on 3 October 2006

with admitted intent to apply undue pressure to Celltech Australia Pty Ltd to agree to make an EBA under Pt 8 of the Workplace Relations Act 1996 (Cth).

DECLARATIONS OF CONTRAVENTION AGAINST THE CFMEU

94                        In the present case, we would also make a declaration of contravention of s 38 and a declaration of contravention of s 44 of the BCII Act against the CFMEU.  This is a case where there is utility in using the declaration to define the conduct that constituted a contravention of the BCII Act.  In relation to both declarations of contravention, it would in our view be odd, having regard to the fact that the penalty imposed on the CFMEU in some respects concerned contravening conduct by Corbett for which it was vicariously liable, for there to be declarations of contravention of ss 38 and 44 of the BCII Act against Corbett but not against the CFMEU.

COSTS

95                        The CFMEU should pay the Appellant’s costs of the appeal.  We would make no order as to costs in relation to Corbett. 

Associate:

Dated:         8 June 2010