FEDERAL COURT OF AUSTRALIA
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113
ORDERS
DATE OF ORDER: |
THE COURT DECLARES THAT:
1. The First Respondent, by the conduct of its officers on 24, 25 and 26 May 2011, was directly knowingly concerned in and party to the following contraventions of s 38 of the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act):
(a) contraventions by approximately 165 persons who engaged in unlawful industrial action by failing or refusing to attend for building work at the construction site of the Queensland Children’s Hospital on 24, 25 and 26 May 2011, in circumstances where that action was industrially motivated, constitutionally-connected and not excluded action as defined in the BCII Act;
(b) contraventions by approximately 260 persons who engaged in unlawful industrial action by failing or refusing to attend for building work at the construction site of the Brisbane Convention and Exhibition Centre and on 24, 25 and 26 May 2011, in circumstances where that action was industrially motivated, constitutionally-connected and not excluded action as defined in the BCII Act;
(c) contraventions by approximately 180 persons who engaged in unlawful industrial action by failing or refusing to attend for building work at the construction site of the Queensland Institute of Medical Research on 24, 25 and 26 May 2011 in circumstances where that action was industrially motivated, constitutionally-connected and not excluded action as defined in the BCII Act.
2. The Second Respondent, by the conduct of its officers on 24, 25 and 26 May 2011, was directly knowingly concerned in and party to the following contraventions of s 38 of the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act):
(a) contraventions by approximately 165 persons who engaged in unlawful industrial action by failing or refusing to attend for building work at the construction site of the Queensland Children’s Hospital on 24, 25 and 26 May 2011, in circumstances where that action was industrially motivated, constitutionally-connected and not excluded action as defined in the BCII Act;
(b) contraventions by approximately 180 persons who engaged in unlawful industrial action by failing or refusing to attend for building work at the construction site of the Queensland Institute of Medical Research on 24, 25 and 26 May 2011 in circumstances where that action was industrially motivated, constitutionally-connected and not excluded action as defined in the BCII Act.
THE COURT ORDERS THAT:
1. The First Respondent pay the Commonwealth a pecuniary penalty in the sum of $300,000 in respect of the contraventions the subject of declaration 1.
2. The Second Respondent pay the Commonwealth a pecuniary penalty in the sum of $130,000 in respect of the contraventions the subject of declaration 2.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
THE COURT:
1 During 2011, the Queensland Government was engaged in a number of major public infrastructure projects in Brisbane. They included the construction of the Queensland Children’s Hospital, a significant extension to the Brisbane Convention and Exhibition Centre and the construction of the Queensland Institute of Medical Research at the Royal Brisbane Hospital. The construction work in respect of each of those projects was carried out by lead contractors and many sub-contractors, each of whom employed a large number of building workers. Most if not all of those building workers were members of one or other of two trade unions: the Construction, Forestry, Mining and Energy Union (the CFMEU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the CEPU).
2 In May 2011, work in respect of each of the three projects was disrupted by industrial action by the building workers who were engaged on the construction sites. In short terms, the building workers failed or refused to attend for work on a number of days. They were encouraged not to attend work by officials of the CFMEU, in the case of all three sites, and the CEPU, in the case of the Children’s Hospital and Institute sites. At the time, the unions were engaged in a broad campaign against so-called “sham contracting” arrangements in the construction industry, being arrangements whereby employers sought to avoid responsibility for employee entitlements by disguising an employment relationship as an independent contracting arrangement. The union officials who encouraged the building workers on the three sites to not attend work did so in pursuit of that campaign.
3 For reasons that will be explained in due course, the industrial action by the building workers was unlawful industrial action under the Building and Construction Industry Improvement Act 2005 (Cth) (the BCII Act) in contravention of s 38 of that Act. The CFMEU and CEPU, through the actions of their officials, were involved in those contraventions and, by reason of s 48 of the BCII Act, are to be treated as if they too were contraveners. The BCII Act has since been repealed.
4 The applicant, the Director, Fair Work Building Inspectorate (now the Australian Building and Construction Commissioner) sought declarations and pecuniary penalties against the CFMEU and the CEPU in respect of the contraventions. The unions admitted the contraventions and did not dispute that declarations should be made and pecuniary penalties imposed. The facts were agreed and the parties’ submissions in respect of the appropriate range of pecuniary penalties that should be imposed were in broad agreement. As far as the parties were concerned, the only issue for the Court was the fixing of the amount of the penalties within the submitted range, though they accepted that the Court was not bound to impose penalties within that range.
5 There were, however, some complications. In broad terms, the complications concerned the precise identification of the number of contraventions of s 38 of the BCII Act by the unions and whether it was permissible and appropriate to impose a single penalty on each of the unions in respect of multiple contraventions of that provision. The resolution of those questions was not made easier by the unnecessarily complicated and convoluted terms of the legislation and the fact that the parties tended to ignore, or at least gloss over, those issues in the pleadings, the agreed facts and, perhaps to a lesser extent, the written submissions. When these issues were raised by the Court during the hearing, the unions appeared to change their position in an important respect. The matter also has a somewhat unfortunate procedural history.
6 For the reasons that follow, orders imposing pecuniary penalties on the CFMEU and CEPU for $300,000 and $130,000 respectively should be made. Those pecuniary penalty orders reflect the sum of the appropriate penalties for multiple contraventions of s 38 of the BCII Act. It is also appropriate to make declarations recording the contraventions by the two unions.
Procedural background
7 These proceedings were commenced by the Commissioner in May 2013 by the filing of an originating application and statement of claim. The originating application sought declarations that the CFMEU and CEPU were “directly knowingly concerned in and party to contraventions of s 38 of the BCII Act” by their officials arising from their actions on the building sites in question on 24, 25 and 26 May 2011. The originating application did not specify the number of contraventions. A single pecuniary penalty of $105,000 was sought in respect of the “breach” by the CFMEU and a single penalty of $45,000 was sought from the CEPU.
8 The statement of claim did not assist in terms of defining the number of contraventions of s 38 of the BCII Act that the Commissioner alleged against the CFMEU and the CEPU. More will be said about that later. Suffice it to say at this stage that the statement of claim did not provide any particulars of the number of employees who failed or refused to attend work on the sites on the relevant days and thereby engaged in unlawful industrial action. Despite the absence of appropriate particulars in the statement of claim, the CFMEU and CEPU filed a defence in which, relevantly, they admitted the pleaded contraventions of s 38 of the BCII Act.
9 The parties subsequently filed an agreed statement of facts and submissions as to the amounts of civil penalty which they agreed should be imposed. The unions agreed that each had contravened s 38 of the BCII Act by virtue of their involvement in contraventions by certain of their officers. The agreed facts recorded that the Commissioner and the unions “consent to and agree to seek from the Court” declarations as to the contraventions and pecuniary penalties of $105,000 against the CFMEU and $45,000 against the CEPU. The agreed facts also stated that, “subject to the discretion of the Court to fix an appropriate penalty”, those penalty amounts are “satisfactory, appropriate and within the permissible range in all the circumstances”. The agreed facts did not shed any light on the number of workers who refused or failed to attend work at the relevant sites on the relevant days and were therefore involved in the unlawful industrial action. Nor did the agreed facts otherwise specify how many contraventions of s 38 the unions were knowingly concerned in and party to. Needless to say, the agreed facts did not shed any light on how the agreed penalties had been arrived at, save for the assertions concerning their appropriateness.
10 On 10 April 2014, the Chief Justice directed, pursuant to s 20(1A) of the Federal Court of Australia Act 1976 (Cth), that the original jurisdiction of the Court should be exercised by the Full Court in respect of the Commissioner’s application. That was because, at the time, an issue had arisen concerning whether the High Court’s decision in Barbaro v R (2014) 253 CLR 58 applied to civil penalty proceedings. If it did, it would have precluded the Court receiving the facts and submissions concerning the agreed penalties of $110,000 and $45,000. The Commonwealth was subsequently given leave to intervene. Because the Commissioner, the unions and the Commonwealth each supported the making of the agreed penalty, leave was given for separate counsel to appear as contradictor.
11 On 1 May 2015, the Full Court as presently constituted held that the reasoning in Barbaro applied to civil penalty proceedings and, consequently, that the parties’ agreed penalty submissions could not be received: Director, Fair Work Building Industry Inspectorate v Construction, Forestry Mining and Energy Union [2015] FCAFC 59; (2015) 229 FCR 331. On that basis the Court adjourned the further hearing of the matter to enable the parties to consider their positions. It should also be noted that the Court was critical of the lack of detail of certain relevant matters in the agreed facts: see in particular [248]-[250].
12 The Commonwealth was granted special leave to appeal to the High Court. On 9 December 2015, the High Court held that principles considered in Barbaro had no application in civil proceedings and that submissions as to agreed penalties could be received by the Court in civil pecuniary penalty proceedings: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 326 ALR 476 (Commonwealth v Director, FWBII). The High Court rejected the unions’ submission that it should make the agreed penalty order and remitted the matter to the Court for determination according to law.
13 Upon remittal, the respective positions of the parties changed somewhat. First, the Commissioner withdrew from the agreement with the unions to seek a penalty of $105,000 against the CFMEU and $45,000 from the CEPU. The Commissioner filed, by consent, an amended originating application which amended the declarations sought to provide further particulars of the contravening conduct by each of the unions and abandoned the claim for a single specified penalty against each union. Instead, the Commissioner sought penalties in such amounts as the Court considered appropriate. As will be seen, the Commissioner submitted that the appropriate penalty for the both the CFMEU and the CEPU was substantially higher than the prior agreed penalties. He submitted that the appropriate penalty for the CFMEU was within the range $180,000 to $205,000 and that the appropriate penalty for the CEPU was within the range $70,000 to $90,000.
14 One wonders how it was that the Commissioner was originally prepared to agree to and actively advocate penalties that were clearly well below the very bottom of the ranges that, following remittal, were said to be appropriate. That puzzle remains unanswered.
15 Despite the Commissioner’s withdrawal from the previous agreement concerning the penalty amounts, neither the CFMEU nor the CEPU sought to withdraw their admissions concerning the contraventions. The unions in due course filed their own submissions concerning the appropriate penalty. In short, they agreed with and supported the penalty ranges proposed by the Commissioner. They contended that penalties within those ranges would be appropriate, though they submitted that the Court should impose penalties at the lower end of those ranges.
16 The parties also prepared and filed a revised statement of agreed facts. The revised statement of agreed facts sought to address some of the concerns previously expressed by the Court about the lack of detail about certain matters in the agreed facts. The parties subsequently filed a supplementary statement of agreed facts. As explained in more detail later, however, neither the revised statement of agreed facts, nor the supplementary statements of agreed facts, squarely addressed the question of how many contraventions of s 38 of the BCII Act the respective unions were said to be knowingly concerned in and a party to. That question was also not addressed in the amended originating application. As will be seen, the Commissioner eventually submitted that the unions were involved in, and were therefore parties to, each contravention by each individual worker who participated in the unlawful industrial action organised by the unions at the relevant building sites on the three days in question.
Facts
17 Following is a brief summary of the relevant facts.
18 In about March 2011, the CFMEU launched a campaign against sham contracting in the building industry. Sham contracting was said to occur where an employer sought to avoid responsibility for employee entitlements by disguising an employment relationship as an independent contracting arrangement. Both the CFMEU and the CEPU made public statements and circulated newsletters concerning the campaign prior to the conduct the subject of these proceedings. The unions were concerned that this practice was occurring at the three government construction sites, though those concerns were not substantiated by any legal proceedings.
19 On the morning of 24 May 2011, two CFMEU officers, Joseph Myles and Shane Treadway, and two CEPU officers, Christopher Lynch and Gary O’Halloran, attended the construction site for the new Queensland Children’s Hospital (QCH), now known as the Lady Cilento Children’s Hospital, in South Brisbane. The QCH project involved construction of a multi-story building worth approximately $800 million. As the construction workers arrived for work at the QCH construction site, the union officers told them that there would be no work on the site that day. A representative of Abigroup Contractors Pty Ltd, the principal contractor for the QCH project, was informed by a union officer that the unions intended to convene a meeting of workers at 6.30am that morning.
20 At that meeting of QCH construction workers, the union officers alleged that sham contracting was occurring on the QCH project site. The union officers circulated a pro forma letter to the (then) Queensland Workplace Rights Ombudsman alleging that sham contracting was occurring on the site. They then encouraged the workers to vote to cease work at the site for 72 hours. The majority of the workers voted to do just that.
21 Following the meeting, the majority of the workers employed on the QCH project did not return to work on 24 May 2011. Indeed, they did not carry out any further work on 24, 25 and 26 May 2011. The supplementary statement of agreed facts stated that the industrial action at the QCH project site involved approximately 165 workers. While that figure was said to be an approximate figure, it was not in issue that the Court should proceed on the basis that 165 building workers engaged in the relevant industrial action at the QCH site over the three days in question.
22 The Commissioner accepted that the union officials who encouraged the workers to engage in the industrial action on the QCH project were not on a “frolic” of their own, but were rather acting in furtherance of the unions’ campaign against sham contracting. The Commissioner also accepted that the unions’ concerns relating to sham contracting were genuinely held, but not necessarily genuinely held in relation to the QCH project.
23 The unions also waged their campaign concerning sham contracting at the construction project which involved an extension to the Brisbane Convention and Exhibition Centre (BCEC) at Southbank. The BCEC project was worth approximately $120 million and was funded by the Queensland Government. The principal contractor for the BCEC project was Laing O’Rourke.
24 On the morning of 24 May 2011, an officer of the CFMEU, Mr Peter Close, attended the BCEC project site. He informed a representative of Laing O’Rourke that the CFMEU intended to “take the site out” to hold a meeting with the construction workers on the BCEC project in relation to sham contracting on State Government projects. Mr Close went on to state that the CFMEU intended to “take the job out until Friday”. He then proceeded to speak to the construction workers as they arrived for work that day. Approximately 260 workers left the project site and went to the Southbank Parklands, where Mr Close convened a meeting at about 6.30am.
25 At the meeting, Mr Close encouraged the workers to vote to take industrial action for 24 hours, with a further meeting to be convened the following morning. The action was said to be in response to concerns relating to sham contracting. The workers voted accordingly and the majority did not return to work on the BCEC project on 24 May 2011.
26 The following morning, four CFMEU officers attended the BCEC project site. Those officers, Mr Close, Mr Jamie McQueen, Mr Edward Bland and Mr Kevin Griffin, convened a further meeting of the BCEC project construction workers. They encouraged the workers to vote to continue the industrial action until another meeting was convened on 27 May 2011. The majority of BCEC workers voted in accordance with the stated wishes of the CFMEU officers. No work occurred on the BCEC project on 25 and 26 May 2011.
27 Following the meeting on 25 May 2011, Messrs Close, McQueen and Bland informed a representative of Laing O’Rourke of the outcome of the meeting. They also told the Laing O’Rourke representative that they were aware that some workers had worked on 24 May 2011. They said that that was to cease.
28 On 26 May 2011, Mr Bland, Mr Griffin and another CFMEU officer, Mr Gerard Neiland, attended the BCEC project site and informed the workers who arrived at the site that there was no access to the site due to the strike which had been agreed to at the meeting on 25 May 2011.
29 As was the case with the action at the QCH site, the Commissioner accepted that the action at the BCEC site was part of the unions’ campaign against sham contracting and that the unions’ broad concerns in relation sham contracting were genuinely held.
30 It was agreed that approximately 260 workers engaged in the relevant industrial action at the BCEC project site over the three day period commencing 24 May 2011. While that was said to be an approximate figure, there was again no issue that the Court should proceed on the basis of that figure.
31 The CEPU had no involvement in the industrial action which occurred on the BCEC project site.
32 Finally, the unions took aim at another Queensland Government construction project, being the construction of a 15 storey medical research centre at the Royal Brisbane Hospital. The Queensland Institute of Medical Research (QIMR) project, which was worth some $167 million, was funded by a philanthropic foundation, together with contributions by the Queensland and federal governments. The principal contractor was Watpac Construction (Qld) Pty Ltd.
33 As was the case on the other two sites, on the morning of 24 May 2011, two officers from the CFMEU, Mr Andrew Clark and Mr Tony Kong, and one officer from CEPU, Mr Mark Bateman, attended the QIMR project site and convened a meeting of the construction workers. At the meeting the union officers distributed the same pro forma letter regarding sham contracting that had been distributed at the QCH site, and encouraged the workers to vote not to return to work until 27 May 2011. A majority of the QIMR workers voted accordingly, with the result that about 180 workers left the site that day. Only a small number of workers remained and continued to work on the project.
34 Mr Kong returned to the QIMR site on 25 May and reminded the QIMR employees about the industrial action. Mr Clark did the same on 26 May. As a result, only about 6 employees carried out the scheduled work on the QIMR site on 25 and 26 May 2011.
35 There was no issue that the Court should proceed on the basis that 180 construction workers engaged in the industrial activity at the QIMR site on 24, 25 and 26 May 2011.
36 The Commissioner again accepted that the unions encouraged the industrial action on the QIMR site as part of their broader campaign against sham contracting.
37 The failure by the workers on each of the sites to perform building for a period of three days would have had a financial impact and risked delaying each construction project. The likely financial impact was not quantified or even estimated in the revised statement of agreed facts or anywhere else.
38 The revised statement of agreed facts included other facts that together supported the conclusion that, by the actions of their officials, the unions contravened s 38 of the BCII Act. The relevant provisions of the BCII Act are outlined below. Suffice it to say at this stage that the action taken by the workers at each of the three construction sites on 24, 25 and 26 May constituted “unlawful industrial action” within the meaning of s 37 of the BCII Act and therefore contravened s 38 of the BCII Act. The unions accepted that the actions of their officers at the various sites in encouraging that unlawful industrial action resulted in them being involved in the contraventions of s 38 by each of the workers for the purposes of s 48(2) of the BCII Act. Finally, the unions accepted that the conduct of their officers was, by reason of s 69(1)(b), taken to be their conduct. Accordingly, the unions were involved in each of the contraventions of s 38 of the BCII Act by each of the workers who engaged in the unlawful industrial action on each of the three construction sites on each of the three days in May 2011.
Statutory FRAMEWORK
39 The key statutory provision in this matter, s 38 of the BCII Act, is in beguilingly simple terms. It simply provides that “[a] person must not engage in unlawful industrial action”. Unfortunately, however, as is the case with much modern legislation, to understand the precise elements of a contravention of s 38 it is necessary to proceed through a labyrinthine series of complex definitional provisions.
40 Section 4 of the BCII Act provides that “unlawful industrial action” has the meaning given by s 37. Section 37 provides as follows:
Building industrial action is unlawful industrial action if:
(a) the action is industrially‑motivated; and
(b) the action is constitutionally‑connected action; and
(c) the action is not excluded action.
41 It can be seen that unlawful industrial action involves four elements: first, it is implicit in the definition that the relevant action must be “building industrial action”; second, the action must be “industrially motivated”; third, the action must be a “constitutionally-connected action”; and fourth, the action must not be an “excluded action”. Each of those concepts is defined or explained by other provisions in the BCII Act and, in the case of “excluded action”, the Fair Work Act 2009 (Cth).
42 In relation to the first of the elements, s 36(1) provides a list of actions that, unless the contrary intention appears, constitute “building industrial action”. Relevantly, paragraph (d) of the definition is in the following terms:
(1) In this Chapter, unless the contrary intention appears:
building industrial action means:
…
(d) a failure or refusal by persons to attend for building work or a failure or refusal to perform any work at all by persons who attend for building work;
43 Section 36(3)(b) provides that “a reference to building industrial action includes a reference to a course of conduct consisting of a series of building industrial actions”. The significance of that provision will become apparent later.
44 In relation to the second element, the expression “industrially motivated” is defined in the following terms in s 36(1) of the BCII Act:
industrially motivated means motivated by one or more of the following purposes, or by purposes that include one or more of the following purposes:
(a) supporting or advancing claims against an employer in respect of the employment of employees of that employer;
(b) supporting or advancing claims by an employer in respect of the employment of employees of that employer;
(c) advancing industrial objectives of an industrial association;
(d) disrupting the performance of work.
The employer referred to in paragraphs (a) and (b) need not be the employer whose employees do the work to which the action relates.
45 It should be noted, at this stage, that the Commissioner alleged, and the unions accepted, that the actions of the relevant employees fell within paragraphs (c) and (d) of this definition: it was motivated by purposes that included advancing industrial objectives of the unions, namely a campaign against sham contracting, and disrupting the performance of work on the relevant construction sites. There was no dispute that the unions were “industrial associations” as defined in s 4 of the BCII Act.
46 As for the third element of unlawful industrial action, the expression “constitutionally connected action” is defined in the following terms in s 36(1):
constitutionally connected action means building industrial action that satisfies at least one of the following conditions:
(a) the action is taken by an organisation;
(b) the action is taken by a constitutional corporation, or adversely affects a constitutional corporation in its capacity as a building industry participant;
(c) the action is taken in connection with an industrial dispute;
(d) the action relates to work that is regulated by a Commonwealth industrial instrument;
(e) the action relates to the bargaining or proposed bargaining for, or the making or proposed making of, an enterprise agreement;
(f) the action occurs in a Territory or Commonwealth place.
47 The Commissioner alleged, and the unions accepted, that the actions of the relevant employees fell within paragraphs (b) and (d) of this definition.
48 In relation to paragraph (b), it was agreed that the relevant actions of the employees “adversely affected” the lead contractors because scheduled work could not be completed on the sites. Each of the lead contractors was a “constitutional corporation” as defined in s 4 of the BCII Act because they were corporations to which paragraph 51(xx) of the Constitution applied and they were adversely affected in their capacity as a “building industry participant” as defined in s 4 of the BCII Act. That definition includes a “building contractor”, which expression is in turn defined in s 4 as including a person who has entered into a contract for services under which the person carries out building work or arranges for building work to be carried out.
49 As for paragraph (d), it was agreed that the action related to work regulated by a “Commonwealth industrial instrument” as defined in s 4, which includes a “fair work instrument”. A “fair work instrument” is defined in s 12 of the Fair Work Act as including a modern award, an enterprise agreement, a workplace determination or a Fair Work Australia order.
50 As for the fourth element of unlawful industrial action, “excluded action” is defined in s 36 as meaning “building industrial action that is protected industrial action (as affected by Part 3 of this Chapter)”. The expression “protected industrial action” is in turn defined in s 4 as having the same meaning as in the Fair Work Act. Division 2 of Part 3-3 of the Fair Work Act contains detailed provisions concerning protected industrial action. Section 40 of the BCII Act (which comprises Part 3 of Chapter 5 of the Act) provides that certain building industrial action is not protected industrial action. It is unnecessary to deal with either the provisions in the Fair Work Act or s 40 of the BCII Act. The unions do not dispute that the relevant industrial action by the building workers was not protected industrial action and therefore was not excluded action.
51 It is common ground that it was the building workers on the three building sites who engaged in the relevant unlawful industrial action and therefore contravened s 38 of the BCII Act. As has already been noted, there is an issue concerning exactly how many contraventions of s 38 there were. That issue will be addressed later. It is sufficient to note at this stage that the Commissioner did not seek any relief against any of the building workers. Nor, indeed, did the Commissioner seek any relief against the union officers who encouraged the workers to take the industrial action. The Commissioner only sought relief against the two unions on the basis that the unions, through the actions of their officers, were “involved in” the contraventions by the building workers. The Commissioner relied, in that regard, on s 48(2) and s 69(1)(b) of the BCII Act.
52 Section 69(1)(b) of the BCII Act provides that the conduct of an officer or agent of a building association acting in that capacity is taken to be the conduct of the building association. The Commissioner contended, and the unions admitted and accepted, that the conduct of the union officers in encouraging the building workers was, by reason of s 69(1)(b), taken to be the conduct of their respective unions.
53 Subsection 48(2) of the BCII Act provides as follows:
(2) For the purposes of this Part, a person who is involved in a contravention of a civil penalty provision is treated as having contravened that provision. For this purpose, a person is involved in a contravention of a civil penalty provision if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
(b) has induced the contravention, whether by threats or promises or otherwise; or
(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
54 The Commissioner contended, and the unions admitted and accepted, that the unions, by the actions of their officers, were directly knowingly concerned in and party to the contraventions of s 38 of the BCII Act by the building workers. They were therefore to be “treated as having contravened” s 38.
55 Section 49(1)(a) of the BCII Act provides that an “appropriate court”, on application by an “eligible person”, may make an order imposing a pecuniary penalty on a person (the “defendant”) who has contravened a civil penalty provision. The Court is an “appropriate court” in respect of contraventions of s 38: see s 48(1)(a) of the BCII Act. The Commissioner is an “eligible person” for the purposes of s 49: see s 49(6).
56 Section 38 is a “Grade A civil penalty provision” as defined in s 4 of the BCII Act. The maximum pecuniary penalty for a Grade A civil penalty provision is 1,000 penalty units if the defendant is a corporation. A penalty unit at the relevant time was $110.00: see s 4AA of the Crimes Act 1914 (Cth). Accordingly, the maximum penalty for each contravention of s 38 that the CFMEU and the CEPU was involved in was $110,000.
The Contraventions
57 As has already been noted, there was no dispute between the Commissioner and the unions that it was the building workers on the three sites who contravened s 38 and that the unions, though the actions of their officials, were involved in those contraventions. The unions were therefore to be treated as having contravened s 38. There was, however, an issue as to exactly how many contraventions the unions were involved in. It is important to determine the number of contraventions in order to work out the aggregate maximum penalty that could be imposed on the unions. That is because the maximum penalty serves as a “yardstick” in determining the appropriate penalty.
58 As adverted to earlier, that issue was not squarely addressed in the pleadings, the statements of agreed facts, or the written submissions of the parties.
59 The Commissioner’s statement of claim alleged that the employees on the three sites engaged in unlawful industrial action on certain specified days and that the employees who engaged in that action contravened s 38 of the BCII Act (see paragraphs 39, 75 and 102). Those allegations were admitted by the unions in their defence (see paragraphs 26, 60 and 85). The statement of claim does not, however, state how many employees engaged in the unlawful industrial action on the relevant days on the relevant sites and thereby contravened s 38.
60 The pleading goes on to allege that the unlawful industrial action by the employees was aided, abetted, counselled or procured by the union officials, that the conduct of the officials was taken to have been engaged in by their respective unions, and that the unions thereby contravened s 38. The pleading does not, however, specify how many contraventions the unions were to be treated as having been involved in. The Commissioner’s amended originating application does not assist in identifying how many contraventions the unions were alleged to have been involved in.
61 The revised statement of agreed facts is equally opaque in terms of identifying the number of contraventions that the Commissioner alleged, and the unions agreed or admitted, were committed. Like the pleading, the agreed facts adopt the drafting technique of describing the contraventions by reference to defined terms. That technique obscured, or at least gave rise to a degree of ambiguity concerning the number of employees who contravened s 38 and therefore the number of contraventions that the respective unions were involved in.
62 That may be illustrated by the facts concerning the action at the Children’s Hospital site. The agreed facts were that the lead contractor, Abigroup, and its subcontractors employed construction workers to perform work on the “QCH Project”. Those workers were defined as the “QCH Employees”. After describing the actions of the QCH Employees and the union officials on the QCH Project site on 24, 25 and 26 May 2011, the revised statement of agreed facts described the admitted contraventions in the following terms:
41. The respondents accept that:
41.1. the action by the QCH Employees on 24, 25 and 26 May 2011 constituted “unlawful industrial action” within the meaning of s 37 of the BCII Act, and contravened s 38of the BCII Act;
41.2. each of Mr Myles, Mr Treadaway, Mr Lynch and Mr O’Halloran organised and was directly knowingly concerned in and party to the QCH Employees engaging in the unlawful industrial action.
42. The CFMEU accepts that:
42.1. the conduct Mr Myles and Mr Treadaway was engaged in by each in his capacity as officer and agent of the CFMEU;
42.2. by that conduct, the CFMEU organised and was directly knowingly concerned in and party to the QCH Employees engaging in the unlawful industrial action which contravened s 38 of the BCII Act, by operation of s 69(1)(b) of that Act;
42.3. for the purpose of the penalty provisions of the BCII Act, by operation of s 48(2), the CFMEU is to be treated as having contravened s 38 of the BCII Act.
43. The CEPU accepts that:
43.1. the conduct of Mr Lynch and Mr O’Halloran was engaged in by each in his capacity as officer and agent of the CEPU;
43.2. by that conduct the CEPU organised and was directly knowingly concerned in and party to the QCH Employees engaging in the unlawful industrial action which contravened s 38 of the BCII Act, by operation of s 69(1)(b) of that Act;
43.3. for the purposes of the penalty provisions of the BCII Act, by the operation of s 48(2), the CEPU is to be treated as having contravened s 38 of the BCII Act.
63 The supplementary statement of agreed facts provided some clarity in relation to the number of employees that engaged in the relevant unlawful industrial action on the Children’s Hospital site. As noted earlier, the agreed fact was that “the unlawful industrial action at the QCH Project site involved approximately 165 workers”.
64 The agreed facts in relation to the contraventions arising from the action on the QCH project site were consistent with the pleadings: see paragraphs 39, 40 and 41 of the statement of claim and paragraphs 26, 27 and 28 of the defence.
65 The somewhat ambiguous terms of the pleadings and agreed facts raised an issue concerning the number of contraventions arising from the industrial action on the QCH project site. Was the Commissioner alleging, and were the unions accepting, that they were involved in approximately 165 contraventions of s 38 of the BCII Act on each of the three days that the employees failed or refused to turn up for work on the QCH site? Or was it alleged and agreed that they were involved in a single contravention by “the QCH Employees” on each of the three days, or indeed a single contravention over those three days? If it was the latter, can the relevant provisions of the BCII Act be construed so as to permit a contravention of s 38 by a collective group of persons?
66 The same questions arise in relation to the contraventions that flow from the action taken on the other sites. The agreed facts and pleadings in relation to the contraventions flowing from the industrial action taken on the BCEC project site and the QIMR project site were in relevantly identical terms to the facts and pleadings relating to the QCH project.
67 While there was some ambiguity in the pleadings and agreed facts, the Commissioner’s written submissions at least made it tolerably clear that the Commissioner was alleging that the unions were involved in contraventions by each of the individual workers who failed or refused to turn up for work and therefore engaged in unlawful industrial action. Paragraph 15 of the Commissioner’s written submissions stated that “each worker who took the action outlined in the [statement of facts] engaged in ‘unlawful industrial action’ within the meaning of s 37” and there was therefore “a separate contravention of s 38 by each separate person”. The submissions pointed out (in paragraphs 16 and 17) that the unions’ liability for these “myriad individual contraventions” arose because the unions, through the actions of their officials, were involved in “each contravention of s 38 by each individual worker who participated in the unlawful strike action organised by that Union”.
68 The unions’ written submissions did not take issue with the Commissioner’s submission that they were involved in contraventions of s 38 by each individual worker who failed or refused to turn up for work and thereby engaged in unlawful industrial action on the three sites (two sites insofar as the CEPU was concerned) on the three days in question. Indeed, the unions appeared to agree with that submission. They submitted (at paragraph 3) that while “formally the contraventions arise from the conduct of the employees, the involvement [of the unions, through their officials] was that of organising the unlawful industrial action”. The point being made appeared to be that, while the unions may have been involved in contraventions by each of the individual employees, their culpability arose from their actions in organising the collective action. The unions’ written submissions did not, however, suggest that the matter could or should be approached on the basis that the unions were only to be taken to have committed a single contravention of s 38 at each site where their officials organised the unlawful industrial action by the workers.
69 At the penalty hearing, the Commissioner maintained his position that the unions’ liability for pecuniary penalties arose as a result of their involvement in the contraventions of s 38 by each of the individual workers who failed or refused to attend for work and thereby engaged in unlawful industrial action at the relevant sites on the days in question. When pressed to indicate how many contraventions had been committed, the Commissioner’s response was “a large number”.
70 That was perhaps an understatement. On the Commissioner’s construction of the relevant provisions, the unions were liable, at the very least, for contraventions of s 38 by 165 workers in respect of the QCH project, 260 workers in respect of the BCEC project (though only the CFMEU was involved in those contraventions) and 180 workers in respect of the QIMR project. That would be the case if the failure of each worker to attend for building work over the three day period (24, 25 and 26 May 2011) was treated as a single episode of engaging in unlawful industrial action and therefore a single contravention by each worker of s 38. If each of the three days was treated as separate case of engaging in unlawful industrial action, and therefore a separate contravention of s 38, then the unions could be taken to have been involved in three contraventions by each of the workers – a total of 1815 separate contraventions across the three sites.
71 The necessary implication of the Commissioner’s submissions in relation to the potential number of contraventions that the unions were involved in was that the aggregate maximum penalty for both the unions was enormous. For the CFMEU, if each worker engaged in a single course of unlawful industrial action over the three days, the aggregate maximum penalty for which it was potentially liable was about $66.5 million. If each worker engaged in unlawful industrial action on each of the three days that he or she failed or refused to attend for building work, the aggregate maximum penalty was almost $200 million. For the CEPU, which was not alleged to have been involved in any of the contraventions at the BCEC project, the aggregate maximum penalty was either approximately $40 million, or almost $114 million.
72 The Commissioner’s submissions concerning the “grouping” of contraventions that involved a single course of conduct, and the imposition of a single penalty in respect of each such group, are considered in detail below. Suffice it to say at this stage that the Commissioner submitted that, even if multiple contraventions were grouped together, that did not alter the fact that the maximum penalty for each individual contravention still applied.
73 It would appear that the significance of the Commissioner’s stance in relation to the aggregate maximum penalty did not become apparent to the unions until the hearing, when it was the subject of a lengthy exchange between the Court and the Commissioner’s counsel. When the penny did finally drop, the unions appeared to take a different tack to that which they had taken in their written submissions. They submitted, in effect, that s 38 of the BCII Act could be read as providing that “persons [plural] must not engage in unlawful industrial action”. They relied, in that regard, on s 23 of the Acts Interpretation Act 1901 (Cth), which provides, inter alia, that words in the singular number include the plural. They also contended that the BCII Act was primarily directed to collective action that was engaged in by groups of people. The effect of this, so it appeared to be submitted, was that a union, for example, could be taken to contravene s 38 of the BCII Act if it was knowingly concerned in and party to a contravention of s 38 (for example a strike) by a group of persons. That could, in the unions’ submission, amount to a single contravention of s 38 by the union.
74 The unions submitted that if s 38 was not construed so as to permit a single contravention by a group of employees, absurd results would necessarily follow. This was, in the unions’ submission, a case in point. If there was a single contravention of s 38 by each worker who failed or refused to attend work at the three sites in question, the potential aggregate penalty would be many millions of dollars.
75 The upshot of the unions’ submissions in relation to the number of contraventions was that pecuniary penalties should be fixed on the basis that the CFMEU was involved in three contraventions, one contravention in respect of each group of workers at each of the three construction sites. In the same way, the CEPU could be said to have been involved in two contraventions. If that submission was to be accepted, the aggregate maximum penalty for the CFMEU would accordingly be $330,000 and the aggregate maximum penalty for the CEPU would be $220,000.
76 The unions’ submissions concerning the construction of s 38 of the BCII Act must be rejected.
77 It may readily be accepted that a number of elements of the somewhat complex statutory meaning of “unlawful industrial action” are directed to collective action. For example, the definition of “building industrial action” in s 36 includes a failure or refusal of “persons” to attend for building work. Similarly, the definition of “constitutionally-connected action” includes action that adversely affects a constitutional corporation in its capacity as a building industry participant. It could hardly be said to be likely that the actions of an individual, as opposed to collective action, could adversely affect a corporation. If only one employee refused or failed to turn up for work, it would have little effect on the employer corporation. Likewise, the definition of “industrially motivated” includes advancing industrial objectives of an industrial association. The actions of one employee refusing to work would be unlikely to advance the industrial objectives of an industrial association like a union.
78 It does not follow, however, that it would be open to the Commissioner to commence proceedings against a group of persons seeking a pecuniary penalty for a single contravention of s 38 of the BCII Act. A person, for the purposes of s 38 of the BCII Act, may be an individual, a body politic or a corporation: see s 2C of the Acts Interpretation Act. It cannot, however, be a group of individuals, even if that group was acting in a collective way. If it could, how would the Commissioner go about describing the group if it was to be named as a defendant or respondent in proceedings commenced under s 49 of the BCII Act?
79 It may be that action taken by an individual worker would not constitute unlawful industrial action if it was not part of the collective action of a group of workers. In those circumstances the individual worker would not contravene s 38. If, however, the action by the individual worker was part of the collective action of a group of workers, such that it constituted unlawful industrial action, the actions of that worker, and all of the other workers engaged in the collective action, would constitute contraventions of s 38. The mere fact that the action engaged in by the individual workers was part of the collective action of a broader group would not justify a finding that there was only a single contravention of s 38 by the group. Rather, each individual would be taken to have engaged in conduct that amounted to a contravention of s 38.
80 A similar conclusion was reached, albeit in the context of different statutory provisions, by the Full Court in Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543. That case concerned contraventions of s 187AA(1)(a) of the Workplace Relations Act 1966 (Cth), which relevantly provided that an “employer must not make a payment to an employee in relation to a period during which the employee engaged, or engages, in industrial action if …. the employer or employee was or is a member of an organisation during that period…” An employer admitted that it made payments to a number of employees in a period during which the employees were engaged in industrial action in contravention of that provision. Both Lander and Jessup JJ held that there was a separate contravention of s 187AA(1)(a) for each payment made to each employee, as opposed to a single contravention for the payments made to the employees. Lander J held (at [75]-[78]) that the word “employee” in the section should not be construed to include the plural “employees” by reference to the Acts Interpretation Act.
81 Once it is accepted that there is a separate contravention of s 38 of the BCII Act by each employee who engages in unlawful industrial action, as opposed to a single contravention by the collective group of workers (unless the group constitutes a body politic or corporation, as was plainly not the case here), it must follow that, by their actions (through the conduct of their officers) in encouraging the unlawful industrial action, the unions were knowingly concerned in or party to the contraventions of s 38 by each individual worker. If there can be no collective contravention of s 38 by the group of workers, the unions cannot be treated as having been involved in a single collective contravention. They were therefore, by operation of s 48(2), involved in and to be treated as having contravened s 38 in respect of each individual contravention by each worker.
82 Contrary to the unions’ submissions, this construction of s 38 does not produce absurd results. It is true that, in some cases at least, the result may be that the aggregate maximum penalty faced by an organisation who was knowingly concerned in a large number of contraventions by individual workers may be very large. However, as will be discussed in more detail later, the aggregate maximum penalty in such cases is to be treated as no more than a yardstick. A court imposing penalties for the contraventions must have regard to a number of relevant principles in fixing the appropriate penalties, including principles relating to courses of conduct and totality. It would be wrong to suggest that the Court would be constrained, by reason of the maximum penalty, to impose an inappropriately severe penalty: cf. Elias v The Queen [2013] HCA 31; (2013) 248 CLR 483 at [27]. The proper application of those principles will ensure that the penalties imposed are appropriate and not absurd, even if the aggregate maximum penalties are high.
83 It should also be emphasised that, even if there was some merit in the unions’ construction of s 38 of the BCII Act, their conduct of the proceedings effectively precluded them from arguing that the fixing of appropriate pecuniary penalties should be approached on the basis that they were not involved in individual contraventions by each of the relevant workers, but were only involved in single contraventions by the groups of workers who engaged in the collective action at the relevant construction sites. The unions did not at any stage seek to withdraw the admissions in the pleadings, or any parts of the statements of agreed facts, which tended to indicate that the Commissioner’s case was that the unions were involved in each contravention of s 38 by each worker who engaged in the unlawful industrial action at the three construction sites. That was so even after there had been debate at the hearing concerning that issue, and even after the Commissioner made it abundantly clear that its case was that the unions should be treated as having contravened s 38 in respect of each contravention by each worker.
84 It clearly would have been preferable for the number of contraventions to be made explicit in the pleadings and the agreed facts. Had the unions taken issue with this aspect of the pleadings, consideration would then have had to be given to requiring the Commissioner to properly plead the case put against the unions in relation to the number of contraventions. That plainly would have been the case if the unions had defended the case. Likewise, given the potential ambiguity in the pleadings and facts, the Court may have had to consider whether the unions should be permitted to withdraw any relevant admissions or agreed facts once the issue was fully ventilated, and the Commissioner’s case was fully exposed, during the hearing. As has already been indicated, however, the unions chose not to take that course.
85 The final point to note is that each worker who failed or refused to work at the three construction sites on 24, 25 and 26 May 2011 should be treated as having contravened s 38 only once in respect of that three day period. That follows from the terms of s 36(3)(b) of the BCII Act, which provides that “a reference to building industrial action includes a reference to a course of conduct consisting of a series of building industrial actions”. The failure or refusal of the workers to attend work on each of the three days could clearly be considered to be a course of conduct consisting of a series of building industrial actions. Workers who engaged in that course of conduct could properly be considered to have contravened s 38 once, not three times. This was effectively conceded by the Commissioner at the hearing.
86 It follows that the pecuniary penalties should be imposed on the unions on the basis that the CFMEU is to be treated as having contravened s 38 on 605 occasions. The CEPU is to be treated as having contravened s 38 on 345 occasions. The question whether separate pecuniary penalties must be imposed in respect of each contravention is addressed later. So too is the application of principles relating to courses of conduct and totality.
Declaratory relief
87 The CFMEU and CEPU admitted that, by operation of ss 48(2) and 69(1)(b), they were involved in, and should be treated as having contravened, s 38 of the BCII Act.
88 The CFMEU admitted that its officials attended the QCH, BCEC and QIMR project sites and organised for the workers at those sites to engage in unlawful industrial action by failing or refusing to attend for building work on those sites on 24, 25 and 26 May 2011. They thereby were directly knowingly concerned in and party to the unlawful industrial action engaged in by the workers at those sites on those three days. The conduct of the CFMEU officials was taken to be the CFMEU’s conduct.
89 Likewise, the CEPU admitted that its officials attended the QCH and QIMR project sites and organised for the workers at those sites to engage in unlawful industrial action by failing or refusing to attend for building work on those sites on 24, 25 and 26 May 2011. They thereby were directly knowingly concerned in and party to the unlawful industrial action engaged in by the workers at those sites on those three days. The conduct of the CEPU officials was taken to be the CEPU’s conduct.
90 The fact that the parties have agreed that a declaration of contravention should be made does not relieve the Court of the obligation to satisfy itself that the making of the declaration is appropriate: Commonwealth v Director, FWBII at 489 [59]; Australian Competition and Consumer Commission v MSY Technology Pty Ltd No 2 [2011] FCA 382 at [7] (overturned by the Full Court in Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56; (2012) 201 FCR 378 on a separate issue). It is not the role of the Court to merely rubber stamp orders that are agreed as between a regulator and a person who has admitted contravening a public statute: Australian Securities and Investments Commission, in the matter of Chemeq Limited (ACN 009 135 264) v Chemeq Limited (ACN 009 135 264) [2006] FCA 936; (2006) 234 ALR 511 at 534-535 [100]; Commonwealth v Director, FWBII at 484 [31], 489 [48], 491 [58].
91 The facts necessary to support the declaration may be established by agreed facts (under s 191 of the Evidence Act 1995 (Cth)) and admissions: Minister for Environment, Heritage and the Arts v PGP Developments Pty Ltd (2010) 183 FCR 10.
92 The Court has a wide discretionary power to make declarations under s 21 of the Federal Court of Australia Act 1976 (Cth): Forster v Jododex Australia Pty Limited (1972) 127 CLR 421 at 437-438 (per Gibbs J, citing Russian Commercial and Industrial Bank v British Bank for Foreign Trade Limited [1921] 2 AC 438 at 448); Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 at 99 (per Sheppard J). Before making a declaration, the Court should be satisfied that the question is real, not hypothetical or theoretical, that the applicant has a real interest in raising the issue, and that there is a proper contradictor: Forster at 437-438.
93 Declarations relating to contraventions of legislative provisions are likely to be appropriate where they serve to record the Court's disapproval of the contravening conduct, vindicate the regulator's claim that the respondent contravened the provisions, assist the regulator to carry out its duties, and deter other persons from contravening the provisions: Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2006] FCA 1730; (2007) ATPR 42-140 at [6], and the cases there cited; Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [95].
94 The agreed facts provide a proper factual basis for the declarations sought by the Commissioner and agreed to by the unions. The issue concerning the contraventions of s 38 of the BCII by the CFMEU and the CEPU is a real, not a hypothetical or theoretical issue. The making of declarations in relation to the contraventions is appropriate because it will serve to record the Court’s disapproval of the contravening conduct, will vindicate the Commissioner’s claim that the unions contravened s 38, and will assist the Commissioner to carry out its duties and deter other persons from engaging in similar contravening conduct. The declarations sought by the Commissioner are of utility and are an appropriate exercise of the Court’s jurisdiction.
95 It follows that it is appropriate to make the declarations sought by the Commissioner, though with some changes in the form of the declarations so as to ensure that they contain sufficiently clear particulars of the contraventions.
FIXING APPROPRIATE PENALTIES – relevant principles
96 The BCII Act provides no express guidance in relation to determination of an appropriate pecuniary penalty in respect of a contravention of a provision such as s 38. Section 49(1) simply says that an appropriate court may make an order imposing a pecuniary penalty. Section 49(2) simply specifies the maximum pecuniary penalty based on whether the contravened provision was a Grade A or a Grade B pecuniary penalty. As noted earlier, s 38 is a Grade A pecuniary penalty which attracts a maximum penalty of $110,000 where the defendant is a body corporate.
97 There are, however, a number of general principles that are applicable to the determination of appropriate pecuniary penalties in different statutory contexts. For the most part, those principles are applicable to the fixing of pecuniary penalties under the BCII Act. There was effectively no dispute between the parties concerning the applicable general principles. The following brief discussion of the general principles is drawn primarily from the summary of the principles in Australian Competition and Consumer Commission v Australia and New Zealand Banking Group Limited [2016] FCA 1516 at [78] – [83] (ACCC v ANZ).
General principles
98 Whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty is primarily, if not wholly, protective in promoting the public interest in compliance: Trade Practices Commission v CSR Ltd [1990] FCA 521; (1991) ATPR 41-076 at 52,152 [42]; Commonwealth v Director, FWBII at [55] (per French CJ, Kiefel, Bell, Nettle and Gordon JJ). The principal object of a pecuniary penalty is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene; both specific and general deterrence are important: Chemeq at [90]; Ponzio at [93]. A pecuniary penalty for a contravention of the law must be fixed with a view to ensuring that the penalty is not to be regarded by the offender or others as an acceptable cost of doing business: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at 659 [66]; Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 at 265 [62]-[63]. In relation to general deterrence, it is important to send a message that contraventions of the sort under consideration are serious and not acceptable: Australian Securities and Investments Commission v Southcorp Ltd (No 2) (2003) 130 FCR 406 at 418 [32].
99 The question whether a pecuniary penalty involves an element of punishment remains somewhat controversial: see the discussion in Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2016] FCA 453; 242 FCR 389 at [76]; ACCC v ANZ at [78]–[83]; Construction, Forestry, Mining and Energy Union v Australian Building and Construction Commissioner [2016] FCAFC 184; 341 ALR 383 at [8], referring to NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 296-7; Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 75 FCR 238 at 241; Trade Practices Commission v Stihl Chainsaws (Aust) Pty Ltd (1978) ATPR 40-091 at 17,896; Australian Competition and Consumer Commission v Ithaca Ice Works Pty Ltd [2001] FCA 1716; (2002) ATPR 41-851 at 44,543 [50]. To a certain extent, that debate appears to be more semantic or philosophical than real. It is sufficient to say that, accepting that the primary purpose of imposing a pecuniary penalty is to protect and deter, that purpose is achieved by imposing a punishment in the form of a pecuniary penalty: ACCC v ANZ at [83].
100 The fixing of a pecuniary penalty involves the identification and balancing of all the factors relevant to the contravention and the circumstances of the defendant, and making a value judgment as to what is the appropriate penalty in light of the protective and deterrent purpose of a pecuniary penalty. While there may be differences between the criminal sentencing process and the process of fixing a pecuniary penalty (cf. Commonwealth v Director, FWBII at 491 [56]-[57]), the fixing of a pecuniary penalty may to an extent be likened to the “instinctive synthesis” involved in criminal sentencing: TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 294. Instinctive synthesis is the “method of sentencing by which the judge identifies all the factors that are relevant to the sentence, discusses their significance and then makes a value judgment as to what is the appropriate sentence given all the factors of the case”: Markarian v The Queen (2005) 228 CLR 357 at 378 [51] (per McHugh J). Or, as the plurality put it in Markarian (at 374 [37], per Gleeson CJ, Gummow, Hayne and Callinan JJ) “the sentencer is called on to reach a single sentence which … balances many different and conflicting features”. Like the exercise of imposing a sentence for an offence, the process of fixing an appropriate pecuniary penalty should not be approached as a mathematical exercise involving increments to or decrements from a predetermined range of sentences: Wong v The Queen (2001) 207 CLR 584 at 611-612 [74]-[76].
101 In fixing the amount of a civil penalty, reference is frequently made to the lists of factors or considerations identified by Santow J in Australian Securities and Investments Commission v Adler (No 5) [2002] NSWSC 483; (2002) 42 ACSR 80 at 114-115 [126] and French J in Chemeq at 534 [99]. Those lists of relevant considerations, which have been approved and elaborated on by many subsequent decisions of this Court, were not, and plainly were not intended to be, exhaustive. Nor was it suggested that each of the factors referred to in the respective lists was necessarily relevant or important in every case. These lists of factors should not be treated as a rigid catalogue or checklist of matters to be applied in each case; the overriding principle is that the Court should weigh all relevant circumstances: Australian Securities and Investments Commission v GE Capital Finance Australia [2014] FCA 701 at [72].
102 In general terms, the factors that may be relevant when fixing a pecuniary penalty may conveniently be categorised according to whether they relate to the objective nature and seriousness of the offending conduct, or concern the particular circumstances of the defendant in question.
103 The factors relating to the objective seriousness of the contravention include: the extent to which the contravention was the result of deliberate, covert or reckless conduct, as opposed to negligence or carelessness; whether the contravention comprised isolated conduct, or was systematic or occurred over a period of time; if the defendant is a corporation, the seniority of the officers responsible for the contravention; the existence, within the corporation, of compliance systems and whether there was a culture of compliance at the corporation; the impact or consequences of the contravention on the market or innocent third parties; and the extent of any profit or benefit derived as a result of the contravention.
104 The factors that concern the particular circumstances of the defendant, particularly where the defendant is a corporation, generally include: the size and financial position of the contravening company; whether the company has been found to have engaged in similar conduct in the past; whether the company has improved or modified its compliance systems since the contravention; whether the company (through its senior officers) has demonstrated contrition and remorse; whether the company had disgorged any profit or benefit received as a result of the contravention, or made reparation; whether the company has cooperated with and assisted the relevant regulatory authority in the investigation and prosecution of the contravention; and whether the company has suffered any extra-curial punishment or detriment arising from the finding that it had contravened the law.
105 Where the defendant is a body corporate, the size of the body does not of itself justify a higher penalty than might otherwise be imposed: Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2015] FCA 330; (2015) 327 ALR 540 at 559-561 [89]-[92]. The size of the corporation may, however, be particularly relevant in determining the size of the pecuniary penalty that would operate as an effective deterrent. The sum required to achieve that object will generally be larger where the company has vast resources: Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) [2005] FCA 265; (2005) 215 ALR 301 at 309 [39]; Australian Competition and Consumer Commission v Apple Pty Limited [2012] FCA 646 at [38].
106 Careful attention must also be given to the maximum penalty for the contravention. That is so for at least three reasons: first, because the legislature has legislated for the maximum penalty and it is therefore an expression of the legislature’s policy concerning the seriousness of the prescribed conduct; second, because it permits comparison between the worst possible case and the case that the Court is being asked to address; and third, because the maximum penalty provides a “yardstick” which should be taken and balanced with all the other relevant factors: Markarian at 372 [31] (per Gleeson CJ, Gummow, Hayne and Callinan JJ).
107 Even where the maximum penalty for the contravention is high, and the amount necessary to provide effective deterrence is large, the amount of the penalty should be proportionate to the contravention and should not be so high as to be oppressive: Stihl Chainsaws at 17,896; NW Frozen Foods at 293.
Course of conduct, totality and the fixing of penalties for multiple contraventions
108 While there was no dispute concerning the general principles applicable to the fixing of pecuniary penalties, as already noted there was some controversy concerning the relevant principles relating to the fixing of pecuniary penalties for multiple contraventions. The nub of the issue concerned whether, in cases involving multiple contraventions of a civil penalty provisions or provisions, it was permissible and appropriate for the Court to impose a single pecuniary penalty, or to group similar contraventions together and impose single penalties in respect of those groups, particularly where the contraventions were part of a course or courses of conduct.
109 As discussed in detail earlier, each of the unions were involved in multiple contraventions of s 38: one contravention for each worker who failed or refused to attend work at the relevant construction sites (each of the three sites in the CFMEU’s case, and the QCH and QIMR sites in the CEPU’s case) during the three day period in May 2011. The Commissioner contended, however, that a single penalty should be imposed on each of the unions. The single penalties were, in the Commissioner’s submission, appropriately calculated on the basis that there was a single course of conduct in respect of each of the QCH and QIMR sites, and two courses of conduct in respect of the BCEC site. The unions did not dispute that it was permissible and appropriate to impose single penalties, or that they should be calculated in the way proposed by the Commissioner.
110 Despite the common position that was taken by the parties in relation to the imposition of a single penalty, close attention must be given to whether the BCII Act, and ss 38 and 49 in particular, permit the imposition of a single pecuniary penalty for multiple contraventions and, if so, in what circumstances might it be appropriate to fix a single penalty. Consideration must also be given to two principles that are frequently referred to in the context of fixing appropriate pecuniary penalties when multiple contraventions are involved. Those principles are commonly referred to as the “course of conduct” and “totality” principles. It is perhaps most useful to consider those two principles first.
Course of conduct
111 Like many of the principles that apply to the fixing of pecuniary penalties, the so-called course of conduct, or one-transaction, principle is derived from criminal law sentencing principles. While the High Court in Commonwealth v Director, FWBII emphasised certain important differences between imposing civil penalties and sentencing for criminal offences, many principles that have been derived from the criminal law, like the course of conduct principle, have and continue to be routinely applied by the Court in fixing civil penalties.
112 The principle, as applied in sentencing for criminal offences, was explained in the following terms by Owen JA in Royer v Western Australia [2009] WASCA 139 at [22]:
… At its heart, the one transaction principle recognises that, where there is an interrelationship between the legal and factual elements of two or more offences with which an offender has been charged, care needs to be taken so that the offender is not punished twice (or more often) for what is essentially the same criminality. The interrelationship may be legal, in the sense that it arises from the elements of the crimes. It may also be factual, because of a temporal or geographical link or the presence of other circumstances compelling the conclusion that the crimes arise out of substantially the same act, omission or occurrences.
113 In the criminal sentencing context, the course of conduct is a tool of analysis that generally assists a sentencing judge in determining whether sentences of imprisonment for separate offences should be ordered to be served concurrently or consecutively. Owen JA referred to the following statement by Wells J in Attorney-General v Tichy (1982) 30 SASR 84 at 92-93 as being “an admirable distillation of the principle”:
It is both impracticable and undesirable to attempt to lay down comprehensive principles according to which a sentencing judge may determine, in every case, whether sentences should be ordered to be served concurrently or consecutively. According to an inflexible Draconian logic, all sentences should be consecutive, because every offence, as a separate case of criminal liability, would justify the exaction of a separate penalty. But such a logic could never hold. When an accused is on trial it is part of the procedural privilege to which he is entitled that he should be made aware of precisely what charges he is to meet. But the practice and principles of sentencing owe little to such procedure; what is fitting is that a convicted prisoner should be sentenced, not simply and indiscriminately for every act that can be singled out and brought within the compass of a technically identifiable conviction, but for what, viewing the circumstances broadly and reasonably, can be characterised as his criminal conduct. Sometimes, a single act of criminal conduct will comprise two or more technically identified crimes. Sometimes, two or more technically identified crimes will comprise two or more courses of criminal conduct that, reasonably characterized, are really separate invasions of the community’s right to peace and order, notwithstanding that they are historically interdependent; the courses of criminal conduct may coincide with the technical offences or they may not. Sometimes, the process of characterization rests upon an analysis of fact and degree leading to two possible answers, each of which, in the hands of the trial judge, could be made to work justice. The practice of imposing either concurrent or consecutive sentences cannot avoid creating anomalies, or apparent anomalies, from time to time. What must be done is to use the various tools of analysis to mould a just sentence for the conduct of which the prisoner has been guilty. Where there are truly two or more incursions into criminal conduct, consecutive sentences will generally be appropriate. Where, whatever the number of technically identifiable offences committed, the prisoner was truly engaged upon one multi-faceted course of criminal conduct, the judge is likely to find concurrent sentences just and convenient.
114 The important point to emphasise is that the course of conduct principle, in the criminal context at least, does not operate to permit a sentencing judge to impose a single sentence in respect of multiple offences on the basis that the offences formed part of a course of conduct. Absent a statutory provision that provides otherwise, a sentencing judge is to impose a separate sentence, albeit with the option of concurrency, for each offence.
115 The course of conduct principle has been applied in the civil pecuniary penalty context: see for example Construction, Forestry, Mining and Energy Union v Williams [2009] FCAFC 171; (2009) 191 IR 445; Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; (2010) 194 IR 461. That is despite the fact that only a pecuniary penalty can be imposed and that the issue of concurrent or cumulative prison sentences cannot arise. The principle has also been consistently applied despite the fact that it is largely based on the need to avoid double punishment, whereas, as discussed earlier, the primary, if not sole, purpose of imposing a pecuniary penalty is said to be to deter, not to punish. There would also appear to be cases where the Court has, purportedly pursuant to the course of conduct principle, grouped together separate contraventions which were considered to be part of a single course of conduct and imposed a single penalty for that course of conduct. That is effectively the approach that the Commissioner urged upon the Court in this matter. The question whether such a course is available and appropriate in this matter is considered later.
Totality
116 The totality principle, like the course of conduct principle, has its origins in criminal sentencing. The totality principle was described in the following terms in the frequently cited passage from the judgment of the High Court in Mill v The Queen (1988) 166 CLR 59 at 62-63:
The totality principle is a recognized principle of sentencing formulated to assist a court when sentencing an offender for a number of offences. It is described succinctly in Thomas, Principles of Sentencing, 2nd ed. (1979), pp. 56-57, as follows (omitting references):
“The effect of the totality principle is to require a sentencer who has passed a series of sentences, each properly calculated in relation to the offence for which it is imposed and each properly made consecutive in accordance with the principles governing consecutive sentences, to review the aggregate sentence and consider whether the aggregate is ‘just and appropriate’. The principle has been stated many times in various forms: ‘when a number of offences are being dealt with and specific punishments in respect of them are being totted up to make a total, it is always necessary for the court to take a last look at the total just to see whether it looks wrong[’]; ‘when … cases of multiplicity of offences come before the court, the court must not content itself by doing the arithmetic and passing the sentence which the arithmetic produces. It must look at the totality of the criminal behaviour and ask itself what is the appropriate sentence for all the offences’.”
See also Ruby, Sentencing, 3rd ed. (1987), pp. 38-41. Where the principle falls to be applied in relation to sentences of imprisonment imposed by a single sentencing court, an appropriate result may be achieved either by making sentences wholly or partially concurrent or by lowering the individual sentences below what would otherwise be appropriate in order to reflect the fact that a number of sentences are being imposed. Where practicable, the former is to be preferred.
117 The totality principle is sometimes confused or conflated with the course of conduct principle. That is perhaps not surprising because application of the totality principle may again result in a court adjusting what would otherwise have been consecutive or cumulative sentences to sentences that are wholly or partially concurrent. The proper approach, however, is to first consider the course of conduct principle and determine whether the sentences should be consecutive, or wholly or partly concurrent. Once that is done, the Court should then review the aggregate sentence to ensure that it is just and appropriate. That may require a further adjustment of the sentences: either by ordering further concurrency or, if appropriate, lowering the individual sentences below what would otherwise be appropriate.
118 While, in the criminal sentencing context, the totality principle is generally applied in cases involving sentences of imprisonment, it has been held to apply to the fixing of fines: Camilleri’s Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 704; Environmental Protection Authority v Barnes [2006] NSWCCA 246 at [43]-[50]. In the case of fines, the Court must fix a fine for each offence and then review the aggregate to ensure that it is just and appropriate. If the result of the aggregation of multiple fines is that the penalty is excessive, that may lead to the moderation of the fine imposed in respect of each offence: Barnes at [49].
119 Once again, the important point to emphasise is that, in the criminal sentencing context, application of the totality principle does not authorise or permit the sentencing court to impose a single sentence for multiple offences. That has been made clear in a number of cases: see R v Bibaoui [1997] 2 VR 600 at 603-604; R v Finnie [2002] NSWCCA 533 at [54]-[57]; Thorn v The Queen [2009] NSWCCA 294; (2009) 198 A Crim R 135 at [39]-[47].
120 Like the course of conduct principle, the totality principle has been picked up and applied in the context of civil pecuniary penalty proceedings: see for example Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70; (2008) 168 FCR 383 at [5]-[7] (Gyles J) and [41]-[43] (Stone and Buchanan JJ).
121 It would also appear that in the civil penalty context the totality principle, often in conjunction with the course of conduct principle, has been relied on to support the imposition of a single pecuniary penalty for multiple contraventions. Consideration must now be given to whether that is permissible and appropriate, either pursuant to the course of conduct principle, the totality principle, or on some other basis.
Can a single penalty be imposed for multiple contraventions?
122 In some statutes, specific provision is made for treating multiple contraventions of a civil penalty provision as a single contravention. For example, s 557 of the Fair Work Act 2009 (Cth) provides that 2 or more contraventions of certain civil remedy provisions are to be taken to constitute a single contravention if the contraventions are committed by the same person and the contraventions arose out of a course of conduct by the person. Other statutes provide that if conduct constitutes a contravention of two or more pecuniary penalty provisions, a proceeding may be instituted against a person in relation to the contravention of any one or more of the provisions, but a person is not liable for more than one pecuniary penalty: see s 76(3) of the Competition and Consumer Act 2010 (Cth).
123 There is no such provision in the BCII Act. And, for the reasons given earlier, the word “person” in s 38 of the BCII Act must relevantly be read in the singular, meaning that when a group of persons engages in industrial action, even if it is collective industrial action, each of those persons commits a separate offence under s 38. If an industrial association, such as a trade union, through the actions of its officers, encourages or procures the individuals to engage in the industrial action, by operation of s 69(1)(b) and s 48(2) of the BCII Act the association is taken to have been involved in, and taken to have committed, each of the contraventions by each of the individuals.
124 The question arises, however, whether the Court can impose a single pecuniary penalty on the union in such circumstances, particularly in circumstances where the encouragement of the group of workers arose out of a course of conduct.
125 The Commissioner submitted that the Court could impose a single penalty for multiple contraventions of s 38 of the BCII Act where the contraventions arose from a single course of conduct by an industrial association. In the Commissioner’s submission, such a course was permitted by s 49 and was supported by numerous cases where the Court had imposed single penalties for multiple contraventions of the BCII Act and other civil penalty provisions.
126 The Commissioner’s submissions in relation to the construction of s 49 were either unpersuasive or wrong and must be rejected. The Commissioner’s submissions concerning earlier cases where single penalties have been imposed for multiple contraventions require some further analysis.
127 In relation to the proper construction of s 49 of the BCII Act, the Commissioner submitted that s 49 simply permits a court to make “an order imposing a pecuniary penalty” upon a person “who has contravened a civil penalty provision”. In the Commissioner’s submission, a person who has contravened a civil penalty provision on 2 or more occasions is the subject of an order imposing a pecuniary penalty even if a single penalty is imposed in respect of the 2 or more contraventions. That may be so, but that does not answer or assist in the relevant question of construction. Section 49, in terms, empowers the Court to impose a pecuniary penalty on a defendant who has contravened a civil penalty provision. It does not provide that the Court can impose a single penalty on a defendant who has contravened a civil penalty provision on 2 or more occasions.
128 The Commissioner also drew attention to the fact that s 49 uses “permissive language”, including the word “may”, and cited a number of well-known cases that were said to support the proposition that it is appropriate to construe provisions which confer powers upon a court broadly and flexibly. Even accepting that such an approach to the construction of s 49 should be adopted, the language used in s 49 does not support the imposition of a single pecuniary penalty in respect of multiple contraventions. In Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2016] FCA 413 at [50], White J said the following in relation to the construction of s 546(1) and (2) of the Fair Work Act, which is in relevantly similar terms to s 49 of the BCII Act:
The terminology of subs (1) suggests that, when the Court is satisfied that a person has contravened a civil remedy provision, it is to exercise a discretionary judgment as to whether to order the payment of a pecuniary penalty. It indicates, however, that when the Court decides to impose a pecuniary penalty it does so in respect of the particular contravention which the Court has found established. That is to say, each contravention is to have its own penalty. This impression is confirmed by the terms of subs (2) which fixes the maximum penalty which may be imposed by reference to that applicable to an individual contravention.
129 The same reasoning applies in relation to s 49 of the BCII Act. White J concluded that s 546 did not allow the Court to impose a single penalty in respect of multiple contraventions of the Fair Work Act, other than in the circumstances specifically provided for in s 557 of that Act. The same conclusion would follow in the case of s 49 of the BCII Act.
130 Finally, the Commissioner submitted that to require the Court to impose separate penalties against a union in respect of the “underlying primary contraventions of each individual worker” would create significant investigative and evidentiary burdens upon the regulator. That broad assertion is difficult to accept. The Commissioner has brought these proceedings against the CFMEU and CEPU in respect of multiple contraventions of s 38 without proceeding against the individual workers who were encouraged by the unions to engage in the unlawful industrial action. The Commissioner’s “investigative or evidentiary burden” in bringing these proceedings would have been the same whether the Court ultimately imposes a single penalty or multiple penalties. In any event, given the clear language of s 49, arguments based on assertions about investigative or evidentiary burdens are far from persuasive.
131 That leaves the Commissioner’s arguments based on earlier cases where single penalties have been imposed.
132 In relation to cases concerning contraventions of the BCII Act, the Commissioner relied on the Full Court decisions in Construction, Forestry, Mining and Energy Union v Williams [2009] FCAFC 171; (2009) 191 IR 445; Draffin v Construction, Forestry, Mining and Energy Union [2009] FCAFC 120; (2009) 189 IR 145; and Stuart v Construction, Forestry, Mining and Energy Union [2010] FCAFC 65; (2010) 185 FCR 308. Upon close analysis, however, none of those cases support the broad proposition advanced by the Commissioner.
133 In Williams, while the Court ultimately ordered the respondents to pay single aggregate “fines”, it is clear that those aggregate fines were the product of the Court imposing separate individual penalties in respect of each contravention: see in particular [31] and [35]. In fixing the separate penalties for each of the contraventions (having found that the primary judge had erred in fixing the penalties), the Court had regard to both the course of conduct and totality principles. It should also perhaps be noted that, contrary to the position taken by the Commissioner in this case, the Court in Williams considered that if a person is to be punished for two contraventions that formed part of the one course of conduct, the Court should begin from the premise that the maximum penalty is the maximum penalty for one contravention: see [31].
134 In Draffin, proceedings were commenced against the union and a number of individuals in respect of contraventions of ss 43 and 45 of the BCII Act and s 298P(2) of the Fair Work Act. It would appear that it was alleged, and the Court found, that the unions and the individuals were involved in single contraventions of each of those provisions, even though each of them “engaged in a course of conduct which was constituted by a series of separate acts which had the objective of preventing employees” from performing duties at the relevant site: see [61]. The Full Court set aside the penalties imposed by the primary judge and imposed separate penalties for each of the contraventions: see [96] and [98]-[100]. In the union’s case, the Court increased the penalty imposed in respect of the contravention of s 43, but “[h]aving regard to the totality principle” did not disturb the fairly low penalties imposed by the primary judge in respect of the other contraventions: see [96].
135 In Stuart, it was relevantly alleged that the union contravened s 38 and 44(1) of the BCII Act. The Full Court found that the primary judge erred in fixing the penalties for those contraventions. In considering what penalties should be imposed, the Court found (at [84]) that the unlawful conduct constituting the contravention of s 38 was “entirely subsumed in the conduct constituting the contravention of s 44 of the BCII Act”. Applying the course of conduct principle, the Court imposed a significant penalty for the s 44 contravention and did not impose a separate penalty for the s 38 contravention. That unremarkable application of the course of conduct principle is quite different to what the Commissioner proposes in this matter. In a sense, the Court did impose a penalty for each contravention, but having regard to the course of conduct principle, it determined that the penalty for the s 38 contravention should be zero because the union had already effectively been punished for the conduct constituting that contravention by the penalty imposed in respect of the s 44 contravention. There is a clear distinction between that methodology and the imposition of a single penalty in respect of both contraventions.
136 In relation to pecuniary penalties imposed under other statutes, the Commissioner relied on decisions of the Full Court in NW Frozen Foods, Ponzio, and Australian Securities and Investments Commission v Beekink [2007] FCAFC 7; (2007) 238 ALR 595. Some reliance was also placed on the decision of the High Court in TPG Internet. As with the BCII Act cases just considered, on close analysis none of those cases provide principled support for the broad proposition advanced by the Commissioner.
137 NW Frozen Foods concerned multiple contraventions of s 45 of the Trade Practices Act 1974 (Cth). The appellant admitted those contraventions and agreed with the regulator, the Australian Competition and Consumer Commission, that the appropriate penalty was a global penalty of $900,000. That agreed figure was put to the Court but rejected by the primary judge. The Full Court held that the primary judge erred in rejecting the agreed penalty. The Full Court’s reasoning primarily concerned the approach that the Court should take to agreed penalties in pecuniary penalty proceedings. The Full Court found that, having regard to the principles properly applied in relation to agreed penalties, the agreed penalty of $900,000 was appropriate. Given that the penalty was agreed, no consideration was given to whether, in the absence of agreement between the parties, a single penalty could be ordered in respect of multiple contraventions.
138 Ponzio also involved an agreed penalty which had been effectively rejected by the primary judge. The agreed penalty was $6,000 in respect of multiple contraventions of the Workplace Relations Act. A majority of the Full Court found that the primary judge erred in rejecting the agreed penalty and found that the agreed penalty was within the range. It is readily apparent from the reasoning of the majority (Lander and Jessup JJ), however, that their Honours considered that, absent any agreement in relation to penalty, the proper approach would have been to commence with an assessment of an appropriate penalty for each contravention. Jessup J said (at [146]-[147]):
In a setting which did not involve an agreement on penalty, it would, therefore, be necessary to commence with an assessment of an appropriate penalty for each contravention, paying due regard to such mitigating factors as there were. In the judgments to which the trial Judge referred, it seems to have been accepted that, absent strong mitigating circumstances such as sheer inadvertence, a penalty of about $200 for each contravention of s 187AA on the facts existing on 5 and 6 August 2003 could not be regarded as excessive. On the facts of the present case, and having regard to what I have described as the conventional mitigating circumstances referred to by his Honour, I do not think that a penalty of $200 for a single contravention would have been excessive. It may not have been the penalty that I would have imposed, but on no view might it have been regarded as outside the permissible range. If that penalty had been imposed for each of the contraventions which came before his Honour, a total of $20,200 would be the aggregate result. Manifestly the application of the totality principle was then required.
The question then becomes: if a Judge were determining the appropriate aggregate penalty in the circumstances posited, could it be said that the utilisation of a discount factor of some 70% by way of application of the totality principle would still produce a final penalty figure that should be regarded as manifestly excessive? In my respectful view, the question needs only to be asked in this form for a negative answer to be obvious. It would follow that $6,000 should not have been regarded as outside the range of penalties that could have permissibly been imposed on the first respondent in the circumstances of the present case.
139 Thus, while the agreed penalty that was upheld on appeal in Ponzio was, in a sense, a single penalty for multiple contraventions, the appropriateness of that agreed penalty was approached on the basis of fixing individual penalties for each contravention, aggregating those individual penalties and then applying the totality principle to the aggregate figure.
140 In Beekink the respondents each admitted contraventions of three civil penalty provisions in the Corporations Act 2001 (Cth) which related to their statutory duties as officers of a company which was the responsible entity of a managed investment scheme. While the primary judge ultimately imposed a single pecuniary penalty in relation to each respondent, it is clear from his Honour’s reasons that he arrived at the single penalty by imposing separate penalties for each of the contraventions and then reducing the aggregate penalty having regard to the totality principle. The Full Court allowed the appeal from the penalties imposed by the primary judge on the basis that they were manifestly inadequate. The Full Court did not give any consideration to the question whether it was permissible to impose a single penalty for multiple contraventions, no doubt because it was clear from the primary judge’s reasoning that separate penalties were in effect imposed for each contravention, and then reduced having regard to the totality principle.
141 In TPG Internet, the High Court overturned the decision of the Full Court and restored the primary judge’s orders which had the effect of grouping multiple contraventions of ss 52, 53 and 53C of the Trade Practices Act (and cognate provisions in the Australian Consumer Law: Schedule 2 to the Australian Competition and Consumer Act 2010 (Cth)) into nine classes of contraventions. The contraventions related to the publication of misleading and deceptive advertisements. When consideration is given to the reasoning of the primary judge, however, it is readily apparent that it was uncontroversial that he should not treat each publication of the contravening advertisements separately for the purposes of penalty: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2) [2012] FCA 629 at [71]. Importantly, however, that was because s 76E(4) of the Australian Competition and Consumer Act at that time provided that a person was not liable for more than one pecuniary penalty in respect of “the same conduct”. Both parties proposed that the contraventions be grouped into separate classes representing separate courses of conduct having regard to that provision.
142 Finally, the Commissioner contended that it was “commonplace” for single judges to impose single penalties for multiple contraventions of civil pecuniary penalty provisions in a large number of statutory regimes, despite there being no provision in those regimes to explicitly authorise such an approach. It may be accepted that there are many cases where single judges have imposed single penalties for multiple contraventions of pecuniary penalty provisions. It is, however, not fruitful to attempt to analyse those cases, particularly as the Commissioner did not attempt to do so. It is sufficient to refer to two cases that received some attention in the submissions.
143 In Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2015] FCA 330; 327 ALR 540, Allsop CJ imposed pecuniary penalties in respect of multiple contraventions of ss 18(1), 29(1)(a) and s 33 of the Australian Consumer Law arising from misleading representations made in advertisements concerning bread products sold in the respondent’s stores. His Honour imposed a single penalty of $2.5 million. Importantly, however, it is clear that the joint position of the parties was that there were so many contraventions that it was not helpful to seek to make a finding as to the precise number of contraventions, or to calculate a maximum aggregate penalty by reference to such a number: see [18]. The applicant had estimated that there may have been some 85 million contraventions. His Honour accepted that the potential aggregate maximum penalty from the “vast number of contraventions” was a number well beyond what the Court would ever impose: see [82]. A similar approach was taken in the recent Full Court decision in Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181 at [139]-[145].
144 In Registrar of Aboriginal and Torres Strait Islander Corporation v Matcham (No 2) [2014] FCA 27, Jacobson J imposed pecuniary penalties in respect of multiple contraventions of provisions of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth). Section 386-10(1) of that Act provided that the Court could order a person to pay a pecuniary penalty if, inter alia, a declaration of contravention by the person had been made under s 386-1 of the Act. The applicant sought, and the Court made, 26 declarations of contravention by the respondent. Jacobson J made separate pecuniary penalty orders for each contravention in respect of which a declaration had been made. In its submissions in this matter, the Commissioner relied on the fact that three of the declarations that attracted separate penalties in Matcham in fact encapsulated multiple contraventions. Jacobson J accepted that a single penalty should be imposed in respect of those “compendious” declarations because that was the way the contraventions had been expressed in the statement of agreed facts and because the individual payments that constituted the contraventions were small.
145 The decisions in both Coles Supermarkets and Matcham tend to suggest that that it may be permissible and appropriate for the Court to impose a single pecuniary penalty for multiple contraventions of a civil penalty provision or provisions having regard to the approach jointly taken by the parties in the pleadings, statement of agreed facts, and submissions. In particular, where the parties jointly propose to the Court that, having regard to the particular facts and nature of the contraventions, it would be appropriate to impose a single penalty, or to group the contraventions in terms of separate courses of conduct and impose single penalties in respect of those groups, the Court may accept that proposal and order a single penalty, or single penalties in respect of groups of contraventions.
146 That approach is, in many respects, not dissimilar to the approach that the High Court has said should be taken to agreed penalty submissions in civil penalty cases: Commonwealth v Director, FWBII. Just as the Court may approve a compromise of pecuniary penalty proceedings on terms proposed by the parties, provided that the Court is persuaded that what is proposed is appropriate, the Court may also accept a proposal to impose a single penalty for multiple contraventions where it is persuaded that such a course is appropriate in the circumstances of the case.
147 It is also consistent with the practical and pragmatic approach that is sometimes taken in criminal sentencing cases involving multiple offences, where the prosecutor presents an indictment that contains a single “rolled-up” count or charge that in fact alleges multiple transgressions: Best v R [2015] VSCA 151; (2015) 46 VR 196 at [66]. Such a single charge would, if challenged by the accused, be considered to be duplicitous and impermissible, however a guilty plea may be accepted in relation to such a rolled-up charge and a single sentence imposed: R v Richard [2011] NSWSC 866 at [104]. Importantly, however, where the Crown, with the consent of the accused, presents an indictment with a single rolled-up count that involves multiple contraventions, the maximum penalty is the maximum penalty for one offence only: R v Richard at [105]; R v Donald [2013] NSWCCA 238 at [85].
148 The important point to emphasise is that, contrary to the Commissioner’s submissions, neither the course of conduct principle nor the totality principle, properly considered and applied, permit, let alone require, the Court to impose a single penalty in respect of multiple contraventions of a pecuniary penalty provision. There is no doubt that, in an appropriate case involving multiple contraventions, the Court should consider whether the multiple contraventions arose from a course or separate courses of conduct. If the contraventions arose out of a course of conduct, the penalties imposed in relation to the contraventions should generally reflect that fact, otherwise there is a risk that the respondent will be doubly punished in respect of the relevant acts or omissions that make up the multiple contraventions. That is not to say that the Court can impose a single penalty in respect of each course of conduct. Likewise, there is no doubt that in an appropriate case involving multiple contraventions, the Court should, after fixing separate penalties for the contraventions, consider whether the aggregate penalty is excessive. If the aggregate is found to be excessive, the penalties should be adjusted so as to avoid that outcome. That is not to say that the Court can fix a single penalty for the multiple contraventions.
149 In an appropriate case, however, the Court may impose a single penalty for multiple contraventions where that course is agreed or accepted as being appropriate by the parties. It may be appropriate for the Court to impose a single penalty in such circumstances, for example, where the pleadings and facts reveal that the contraventions arose from a course of conduct and the precise number of contraventions cannot be ascertained, or the number of contraventions is so large that the fixing of separate penalties is not feasible, or there are a large number of relatively minor related contraventions that are most sensibly considered compendiously. As revealed generally by the reasoning in Commonwealth v Director, FWBII, there is considerably greater scope for agreement on facts and orders in civil proceedings than there is in criminal sentence proceedings. As with agreed penalties generally, however, the Court is not compelled to accept such a proposal and should only do so if it is considered appropriate in all the circumstances. It is also at the very least doubtful that such an approach can be taken if it is opposed or the proceedings are defended.
Appropriate penalties – CFMEU
150 The agreed facts demonstrate that the CFMEU, through the actions of its officials at each of the three relevant construction sites, was knowingly concerned and party to, and therefore involved in, contraventions against s 38 of the BCII Act by approximately 605 workers: 165 at the QCH project site, 260 at the BCEC project site and 180 at the QIMR project site. It is unclear how many of the workers were CFMEU members and how many were CEPU members, though that does not matter. By their actions, the CFMEU officials encouraged all of the 605 workers to engage in unlawful industrial action, whether they were members of the CFMEU, the CEPU or neither union. Each of those workers contravened s 38 only once because, while the workers failed or refused to attend work over a three day period, that was properly considered as a single episode of unlawful industrial action, particularly in light of s 36(2)(b). So much so was accepted by the Commissioner.
151 The CFMEU is accordingly, by reason of s 48 of the BCII Act, to be treated as if it contravened s 38 of the BCII Act 605 times. The question whether a single penalty should be imposed in respect of those 605 contraventions is considered later.
152 The following matters are relevant to a consideration of the appropriate penalty or penalties to impose in respect of the CFMEU’s contraventions.
153 First, the maximum penalty for each contravention is $110,000. The aggregate maximum penalty for 605 contraventions is approximately $66,550,000. That is no more than a yardstick. In the circumstances of this matter, it is not a particularly useful or reliable yardstick. Plainly an aggregate penalty anywhere near that amount would be manifestly excessive.
154 Second, the nature and extent of the contraventions reveal them to be very serious. The CFMEU, through its officials, deliberately encouraged 605 workers at three major Queensland Government related construction sites to fail or refuse to attend work on the sites over a three day period. Work on those sites was significantly disrupted over those three days. The value of the contracted work at the three sites was over $1 billion. The CFMEU accepted that there was a significant disruption of work on each of the sites over the three day period and that this would have had a financial impact and risked delaying the projects. There is no evidence concerning the precise extent of the loss or damage, though it is fairly obvious that it would have been significant.
155 The actions of the CFMEU officials were part of a highly coordinated and deliberately orchestrated campaign designed to apply pressure to the Queensland Government through unlawful industrial action. The CFMEU was plainly aware that the action was unlawful. The action specifically targeted government funded construction sites, took place simultaneously and involved the coordinated efforts of a number of CFMEU officials: two officers were responsible for the actions at the QCH site, a total of 4 were involved in the action at the BCEC site and 2 were involved at the QIMR site.
156 In the CFMEU’s favour, it may be accepted that the unlawful industrial action that their officials encouraged was part of its campaign concerning sham contracting of construction workers. The concerns it held about that practice were genuinely held. However, the CFMEU did not seek to substantiate those concerns in legal proceedings. Rather than engage in available legal processes to address its concerns, the CFMEU chose to encourage workers to take unlawful industrial action and thereby deliberately flout the law. The contraventions were, on any view, very serious.
157 It may be accepted that the encouragement of the 605 workers at the three sites to engage in unlawful industrial action was part of campaign of collective action. Self-evidently, the officials did not individually encourage workers to engage in the action. They organised and addressed meetings attended by groups of workers at each of the sites. In that regard, their actions formed part of a course of conduct. Whether there was one overall course of conduct, or separate courses of conduct at each of the three sites barely matters. Either way, the penalties to be imposed in respect of the contraventions must reflect this aspect of the conduct. That said, the CFMEU officials knew that they were addressing and encouraging large numbers of workers to take unlawful industrial action. The number of workers involved, and the number of contraventions, must be borne in mind in considering the overall penalty. It could not sensibly be suggested that a course of conduct that resulted in 10 workers engaging in unlawful industrial action should attract the same aggregate penalty or penalties as a course of conduct that resulted in 605 contraventions.
158 As for the position of the CFMEU itself, the Commissioner tendered schedules of prior cases involving the CFMEU that on any view reveal a lamentable, if not disgraceful, record of deliberately flouting industrial laws. At the time of the hearing, the CFMEU and its officials had been involved in 37 separate cases involving breaches of s 38 of the BCII Act, as well as countless other cases involving contraventions of other industrial laws. It is unnecessary and probably undesirable to discuss the specifics of those cases, including the penalties imposed in them, in any detail. The conduct involved in the cases covers a broad range of unlawful industrial action. In most of the cases the contraventions were admitted and the penalties were agreed between the parties. In all the circumstances, it is not possible to discern any meaningful pattern or range in the penalties that have been imposed that would assist in fixing the penalties in this case.
159 The most significant point to emerge from the schedules of past cases is that the CFMEU is a recidivist when it comes to contravening industrial laws. No penalties that have been imposed in the past have appeared to reduce its willingness to breach the law. It continues to thumb its nose at the industrial laws, including the BCII. The Court should nevertheless not shy away from imposing stern sentences with a view to attempting to deter the CFMEU from engaging in, or encouraging others to engage in, further unlawful industrial action. Considerations of deterrence, both specific and general, undoubtedly loom large in fixing the appropriate penalties.
160 Equally, the CFMEU’s record of past transgressions means that there is no reason to afford it any particular leniency based on its past behaviour. That is not to say that it should be penalised again for its past contraventions. The CFMEU’s conduct in the past should be given significant weight in determining the appropriate penalties, but it should not lead to penalties that are disproportionate to the nature and circumstances of the relevant contraventions.
161 It should also perhaps be noted that the schedules reveal that the CFMEU officials involved in the contraventions in this matter have been involved in many of the past contraventions by the CFMEU. Nevertheless, for reasons that remain largely unexplained, the Commissioner did not commence proceedings and seek penalties against the officials in this matter. The relief sought was limited to the union itself.
162 It is uncontroversial, and in any event is a matter of common knowledge not reasonably open to question, that the CFMEU is a significant organisation with real power and influence in the building industry. There is, however, no evidence or agreed fact about its financial capacity.
163 About the only thing that could be said in favour of the CFMEU, other than that the conduct was related to genuine concerns about sham contracting, is that it cooperated with the Commissioner in relation to these proceedings by admitting the contraventions and reaching agreement in relation to the facts. Importantly, the admissions and agreed facts were also not withdrawn after the initial agreement in relation to the penalty amounts was withdrawn by the Commissioner. There is no doubt that the CFMEU should receive credit for this cooperation. From a public policy perspective, it is important to encourage such cooperation by reflecting it in the penalties imposed. It also shows willingness on the part of the CFMEU to accept responsibility for its actions and to facilitate the course of justice. The fact that the proceedings were not defended saved the community the expense of a potentially lengthy contested hearing.
164 It is, however, doubtful in all the circumstances that the CFMEU’s cooperation with the regulator could really be said to demonstrate contrition or remorse. In some respects the cooperation reflects nothing more than an acceptance of the inevitable. The CFMEU did not adduce any evidence of contrition or remorse. Indeed, there was not even an expression of contrition or remorse in its submissions. There was no evidence from which it could be inferred that the CFMEU intended to change its ways. There was certainly no suggestion, let alone evidence, to the effect that the CFMEU intended to set up any systems, processes, procedures or education to ensure that its officers did not encourage unlawful industrial action in the future.
165 The principles in relation to taking admissions and cooperation into account are well-known and do not need to be repeated. It is sufficient to note that the authorities make it clear that it is not necessary for the Court to specify a specific discount or percentage discount in respect of cooperation.
166 It is also important to reiterate, at this juncture, that the process of fixing appropriate pecuniary penalties should not be approached as a mathematical exercise. It is not appropriate, for example, to adopt a starting point, by reference to the maximum penalty or otherwise, and to then increase or reduce that amount having regard to aggravating or mitigating considerations. It would also generally not be appropriate to approach the course of conduct and totality principles as if they were simply part of a mathematical equation.
167 As touched on earlier, the approach taken in the Commissioner’s submissions was to group the CFMEU’s contraventions into four courses of conduct, one course of conduct in respect of each of the QCH and QIMR project sites, and two courses of conduct for the BCEC project site. It was said that there were two courses of conduct at the BCEC site because the CFMEU arranged for two votes, one on 24 May that resulted in a 24 hour stoppage and one on 25 May that resulted in a two day stoppage. The Commissioner then put forward a “starting point” in respect of a single penalty for each of the courses of conduct. The starting point for QCH was $65,000 to $75,000. The starting point for BCEC on 24 May was $45,000 to $55,000 and the starting point for 25 and 26 May was $75,000 to $80,000. The starting point for QIMR was $75,000 to $85,000. It is not entirely clear how the Commissioner came up with those starting points. In any event, that analysis resulted in a total or aggregate penalty range of $260,000 to $295,000. The Commissioner then submitted that a discount of 25-30% should be applied to that range, resulting in a single penalty in the range of $180,000 to $205,000. The CFMEU, in its submissions, did not dispute this method of arriving at the penalty. It also accepted that the range put forward by the Commissioner was appropriate, but submitted that the Court should adopt the lower figure in the range.
168 Given that this approach to fixing the appropriate pecuniary penalty was essentially agreed by the parties, it would have been open to the Court to adopt it if thought appropriate. The better view, however, is that separate penalties should be fixed in relation to each contravention of s 38 in which the CFMEU was involved, having regard to all the considerations to which reference has already been made.
169 In all the circumstances, the appropriate penalty for each of the 605 contraventions of s 38 is $1,000. That figure takes into account the fact that the CFMEU’s culpability for each of the contraventions came about as a result of a course or courses of conduct whereby its officials attended the three sites and encouraged the workers at those sites, in a collective manner, to engage in the unlawful industrial action. The number of contraventions was largely a product of the number of workers on each site. The individual penalties would have been higher had the contraventions not arisen from a course of courses of conduct. Nonetheless, as noted earlier, the number of workers who were encouraged, and therefore the number of contraventions, is important. The CFMEU officials knew how many workers they were addressing and plainly intended to encourage as many of them as possible to take the unlawful industrial action. If only a small number had in fact been encouraged to take the action, the action may ultimately have had little or no effect.
170 The penalty of $1,000 for each contravention also takes into account the CFMEU’s admissions and cooperation referred to earlier. It is unnecessary and, in the particular circumstances of this case, undesirable to specify, in either percentage or dollar terms, a specific discount given in that regard. Suffice it to say that but for the admissions and cooperation, the penalties would have been significantly higher.
171 A penalty of $1,000 for each contravention would result in an aggregate penalty of $605,000, based on the estimate of the number of workers in whose contraventions of s 38 the CFMEU was involved. It is then necessary to consider whether the penalties should be adjusted having regard to the totality principle. There could be no doubt that an aggregate penalty of $605,000 would be a very large penalty. The size of the penalty is in many respects the product of the number of contraventions.
172 Consideration must also be given to the Commissioner’s submission that an appropriate overall penalty within the range $180,000 to $205,000 would be appropriate and that a penalty within that range would be of appropriate deterrent value. It has been suggested that the Court should generally have regard to the views of a specialist regulator, as the Commissioner undoubtedly is, in relation to such matters: see generally NW Frozen Foods; Commonwealth v Director, FWBII. So much so may be accepted in principle, however in this matter it was somewhat difficult to ascertain the basis or reasoning behind the Commissioner’s view that a penalty within that range would be of appropriate deterrent value. It will also be recalled that the Commissioner originally agreed to a penalty of $110,000 in respect of the CFMEU’s contraventions.
173 In all the circumstances, and particularly having regard to the Commissioner’s submissions and views concerning the appropriate penalty range, it is appropriate to apply the totality principle. It may be accepted that an aggregate penalty of $605,000 would be excessive. In all the circumstances it is appropriate to reduce the penalties by 50%. But for the Commissioner’s submissions, such a large discount may not have been applied. A reduction of the otherwise appropriate penalties by 50% would result in an overall or aggregate penalty of $302,500.
174 Despite the fact that the aggregate penalty has been worked out by fixing the appropriate penalties for each individual contravention, having regard to the common position taken by the parties concerning the making of a single pecuniary penalty order, it would be expedient to impose a single pecuniary penalty representing that aggregate. The single penalty representing that aggregate should be rounded down to $300,000. The rounding down would reflect, amongst other things, the fact that the figure of 605 workers who were encouraged to engage in the unlawful industrial action was an approximate figure.
Appropriate penalties – CEPU
175 Most of the considerations that have just been referred to in the context of the penalties to be imposed on the CFMEU apply equally to the CEPU. It is necessary to refer only to the material differences in relation to both the objective and subjective circumstances.
176 One of the most significant considerations is that the CEPU was a party to, and therefore involved in, less contraventions of s 38 than was the CFMEU. The CEPU was not involved in any of the contraventions by workers at the BCEC project site. The CEPU was involved in approximately 165 contraventions by workers at the QCH project site, and approximately 180 contraventions by workers at the QIMR site, making a total of 345 contraventions. Consideration should also be given to the fact that less CEPU officials were involved in the coordinated action than CFMEU officials, though that consideration is not a particularly weighty matter.
177 The other significant difference between the CFMEU and the CEPU is that the CEPU’s prior record of contraventions against industrial laws is not nearly as woeful as the CFMEU’s record. The Commissioner’s schedules revealed that the CEPU had previously been involved in a relatively small number of transgressions, including two cases involving contraventions of s 38 of the BCII Act. That is relevant not only in assessing the CEPU’s “character”, but also in considering the level of penalties that would have an appropriate deterrent effect.
178 Otherwise, the observations made concerning the nature, extent and seriousness of the contraventions by the CFMEU essentially apply equally in the CEPU.
179 The Commissioner proposed, and the CEPU essentially accepted, the following method in calculating the appropriate penalty to impose in respect of the CEPU’s contraventions. First, the contraventions should be grouped in accordance with a course of conduct at the QCH project site and a course of conduct at the QIMR project site. On the Commissioner’s approach, a single penalty should be applied to those two courses of conduct. The Commissioner proposed a “starting point” for the QCH course of conduct of between $55,000 and $70,000 and a starting point for the QIMR course of conduct of $45,000 to $55,000, resulting in a total penalty range of $100,000 to $125,000. A discount for cooperation of 25-30% should then be applied, resulting in a penalty range of $70,000 to $90,000.
180 As was the case with the CFMEU, however, the preferable approach is to impose a separate penalty in relation to each contravention in which the CEPU was involved. Having regard to the CEPU’s considerably better record in terms of past contraventions, an appropriate penalty for each contravention in the CEPU’s case would be $800. As was the case with the CFMEU’s penalties, that penalty amount takes into account the fact that the contraventions arose out of a course of courses of conduct, in the sense earlier explained. It also takes into account the CEPU’s cooperation and admissions. The aggregate penalty in the CEPU’s case would accordingly be $276,000.
181 As was also the case with the CFMEU, it would also be appropriate to apply the totality principle and reduce the penalties by 50%. The size of the aggregate penalty, which is largely a produce of the fact that there were many contraventions, may be accepted to be excessive, particularly in light of the Commissioner’s views and submissions concerning the size of the penalty that would provide sufficient deterrence. But for the Commissioner’s views and submissions, the Court may not have been inclined to adjust or reduce the penalties by such a large percentage having regard to the totality principle. A reduction of the penalties by 50% would result in an aggregate penalty of $138,000.
182 Having regard again to the common position taken by the parties in relation to imposing a single pecuniary penalty, and having regard to the fact that the figure of 345 contraventions was an approximation, it would again be expedient to impose a single pecuniary penalty, representing that aggregate, but rounded down to $130,000.
Conclusion and Disposition
183 The Court should grant the declaratory relief sought by the Commissioner. Declarations recording the contraventions of s 38 of the BCII Act by the CFMEU and the CEPU will be made. An order imposing a pecuniary penalty of $300,000 on the CFMEU in respect of its contraventions will be made. An order imposing a pecuniary penalty of $130,000 on the CEPU in respect of its contraventions will also be made. The Commissioner did not apply for any costs order and none will be made.
I certify that the preceding one hundred and eighty-three (183) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Dowsett, Greenwood and Wigney. |
Associate:
