Federal Court of Australia

Australian Building and Construction Commissioner v Australian Workers’ Union [2022] FCAFC 143

ORDERS

THE COURT ORDERS THAT:

1.    The appellant have leave to amend his notice of appeal to include grounds 9 and 10 (as set out in the proposed amended notice of appeal annexed to his written submission dated 3 May 2022).

2.    The notice of appeal be treated as so amended.

3.    The appellant forthwith file and serve the amended notice of appeal.

4.    The appeal be allowed.

5.    Paragraphs 1, 2 and 3 of the orders made by the primary judge on 28 July 2021 be set aside.

6.    The first respondent pay penalties of:

(a)    $80,000 in respect of the contraventions of s 46 of the Building and Construction Industry (Improving Productivity) Act 2016 (Cth) (the BCIIP Act); and

(b)    $40,000 in respect of the contravention of s 475(2) of the Fair Work Act 2009 (Cth) (the FW Act).

7.    The second respondent pay penalties of:

(a)    $9,000 in respect of the contraventions of s 46 of the BCIIP Act; and

(b)    $3,000 in respect of the contravention of s 475(2) of the FW Act.

8.    The penalties referred to in paragraphs 6 and 7 be paid to the Commonwealth of Australia within 28 days.

9.    There be no order as to costs in relation to the appeal.

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

REASONS FOR JUDGMENT

MOSHINSKY AND O’CALLAGHAN JJ:

Introduction

1    The appellant, the Australian Building and Construction Commissioner (the Commissioner) appeals from part of a judgment of a judge of this Court: Australian Building and Construction Commissioner v Australian Workers’ Union (2021) 308 IR 195; [2021] FCA 861. The part of the judgment appealed from concerns the pecuniary penalties imposed by the primary judge on the respondents. The respondents are the Australian Workers’ Union (the AWU) and Craig Kelly (Kelly), an officer of the AWU.

2    In the proceeding at first instance, the Commissioner alleged that the respondents had contravened s 46 of the Building and Construction Industry (Improving Productivity) Act 2016 (Cth) (the BCIIP Act) and s 475(2) of the Fair Work Act 2009 (Cth) (the FW Act). The respondents admitted the contraventions, and the primary judge made declarations of contravention. There is no appeal in relation to those declarations.

3    The primary judge imposed penalties totalling $80,000 on the AWU and penalties totalling $7,000 on Mr Kelly. In certain parts of his reasoning, the primary judge relied on the reasoning of the Full Court of this Court in Pattinson v Australian Building and Construction Commissioner (2020) 282 FCR 580 (Pattinson (FFC)). There can be no criticism of the primary judge in doing so, as the judgment was, at that time, a relevant and binding authority.

4    After the appeal in this matter had been heard, and while judgment was reserved, the High Court of Australia handed down judgment in Australian Building and Construction Commissioner v Pattinson (2022) 399 ALR 599 (Pattinson (HC)), which overturned Pattinson (FFC). The parties sought, and were granted, leave to file supplementary submissions in relation to the judgment of the High Court. In his supplementary submission, the Commissioner applied to amend his notice of appeal to rely on two additional grounds of appeal based on the judgment of the High Court. In their responding written submission, the respondents do not oppose leave to amend being granted, and accept that those grounds of appeal are established. It follows that, at least on these grounds, the appeal is to be allowed.

5    Both parties’ submissions proceed on the basis that, if the appeal is allowed, the Full Court should re-exercise the discretion in relation to penalties. We have considered the issue of the appropriate penalties afresh and consider the following penalties to be appropriate in the circumstances. We consider that the AWU should be ordered to pay penalties totalling $120,000 and Mr Kelly should be ordered to pay penalties totalling $12,000.

Background facts

6    The following statement of the background facts is substantially based on the reasons of the primary judge at [2]-[12]. There is no challenge to that part of the primary judge’s reasons.

7    At all material times, the AWU was a “building industry participant” as defined in s 5 of the BCIIP Act and an “industrial association” as defined in s 12 of the FW Act. In relation to the matters forming the subject-matter of this proceeding, Mr Kelly acted in his capacity as an “officer” of the AWU as defined in s 5 of the BCIIP Act and s 12 of the FW Act.

8    OneSteel Reinforcing Pty Ltd (OneSteel) manufactures steel products for major construction projects at a site located at 180 Browns Road, Noble Park, Victoria (the site). The parties agreed at first instance that OneSteel is a “constitutionally‑covered entity” as defined in s 5 of the BCIIP Act and conducted “building work” within the meaning of s 6(1)(d) of the BCIIP Act.

9    In October 2018, Mr Kelly organised for the employees at the site to attend a rally, described as the “Change the Rules” rally, organised by the Australian Council of Trade Unions. The rally was held on 23 October 2018 (the rally). Mr Kelly gave evidence at first instance that he genuinely believed that it was not unlawful for the employees to attend the rally and conveyed this to the AWU’s delegate on the site before the rally. That evidence was not challenged.

10    Before the rally, Mr Kelly contacted OneSteel’s Site Manager to inform him that the majority of AWU members on the site wanted to attend the rally. The site manager did not protest, say that the employees should not attend the rally, or request any further details.

11    After 23 October 2018, OneSteel began interviewing employees about their absences from the site at the time of the rally.

12    On 31 October 2018, Mr Kelly arrived at the site and discussed the interviews with the employees. Mr Kelly gave unchallenged evidence at first instance that the employees appeared angry, stressed and upset by the interviews. Mr Kelly spoke with the Health and Safety Representative (the HSR) at the site, who told Mr Kelly that he did not think it was safe for the employees to continue working.

13    Mr Kelly then discussed the interviews with representatives of OneSteel. The representatives told him that management had a right to speak to employees about the rally and that the employees’ pay may be docked if they did not return to work. Following this discussion, OneSteel’s representatives addressed the employees. They explained that disciplinary action may be taken if the employees did not return to work. OneSteel’s representatives then left the meeting.

14    Mr Kelly addressed the employees and after hearing their concerns arranged for them to leave work for the remainder of the day. Mr Kelly left the site with the employees.

15    At or around 3.15 pm on 31 October 2018, Mr Kelly returned to the site and met with the representatives of OneSteel and the AWU’s delegate at the site. During the meeting, Mr Kelly told the representatives of OneSteel that the afternoon-shift employees would not continue working unless the day-shift employees received full pay for the day shift and the interviews were suspended indefinitely (the Pay Request). OneSteel did not accept the proposal. Mr Kelly then organised for the afternoon-shift employees to leave work for the remainder of the day. Mr Kelly also organised for the three night-shift employees not to attend the site that evening.

16    Over the course of 31 October 2018, 51 employees across three shifts ceased performing or did not attend the site to perform work. The respondents admit that this action was organised by Mr Kelly and not authorised by OneSteel in writing.

17    On 1 November 2018, 26 employees attended the site but did not commence work. Mr Kelly returned to the site and the HSR again advised him that the employees did not feel safe to work while the interviews were on foot. Acting on those concerns, Mr Kelly organised for the employees not to commence work. The employees did not work until 1.45 pm, when they were advised that the Fair Work Commission (the FWC) had made an order requiring them to return to work pursuant to s 418 of the FW Act.

The admitted contraventions

18    The admitted contraventions were outlined by the primary judge at [13]-[17] of his reasons. The following summary is substantially based on that part of the primary judge’s reasons.

19    Section 46 of the BCIIP Act provides that “[a] person must not organise or engage in unlawful industrial action”.

20    At first instance, the respondents admitted that the 31 October industrial action and the 1 November industrial action constituted “unlawful industrial action” for the purpose of the BCIIP Act and that Mr Kelly had organised each incident in contravention of s 46 of the BCIIP Act. The AWU admitted that, by operation of s 94(1) of the BCIIP Act, the conduct of Mr Kelly was imputed to it and that it too had therefore contravened s 46 of the BCIIP Act.

21    Section 475(2) of the FW Act relevantly provides that:

475 Accepting or seeking payments relating to periods of industrial action

…

(2)    An employee organisation, or an officer or member of an employee organisation, must not ask an employer to make a payment to an employee if the employer would contravene section 474 by making the payment.

22    Section 474(1) prohibits employers from making payments to employees in respect of a period in which employees undertake industrial action that is not protected industrial action under the FW Act.

23    The respondents admitted at first instance that the 31 October industrial action constituted “industrial action” within the meaning of s 19(1)(c) of the FW Act and that it was not protected industrial action under that Act. Further, it was admitted that OneSteel would have breached s 474(1) if it had accepted Mr Kelly’s request and paid the workers in relation to the period of the 31 October industrial action. Accordingly, the respondents admitted that Mr Kelly had contravened s 475(2) of the FW Act by making the Pay Request. By operation of s 793(1)(a) of the FW Act, the AWU admitted that it was derivatively liable for Mr Kelly’s conduct and had therefore also contravened s 475(2).

24    The primary judge made declarations in the following terms:

1.    On 31 October 2018, the Second Respondent (Kelly) organised employees of OneSteel Reinforcing Pty Ltd (OneSteel), who were employed at 180 Browns Road, Noble Park, Victoria (the Site), to take industrial action that day in contravention of s 46 of the Building and Construction Industry (Improving Productivity) Act 2016 (BCIIP Act) (the 31 October 2018 s 46 Kelly Contravention).

2.    By operation of ss 94(1)(a) and 95(1)(b) of the BCIIP Act, the First Respondent (AWU) has contravened s 46 of the BCIIP Act in respect of the 31 October 2018 s 46 Kelly Contravention (the 31 October 2018 s 46 AWU Contravention).

3.    On 1 November 2018, Kelly organised employees of OneSteel to take industrial action at the Site that day in contravention of s 46 of the BCIIP Act (the 1 November 2018 s 46 Kelly Contravention).

4.    By operation of ss 94(1)(a) and 95(1)(b) of the BCIIP Act, the AWU has contravened s 46 of the BCIIP Act in respect of the 1 November 2018 s 46 Kelly Contravention (the 1 November 2018 s 46 AWU Contravention).

5.    On 31 October 2018, Kelly, at a meeting at the Site with OneSteel management, in contravention of s 475(2) of the Fair Work Act 2009 (FW Act), made a request that OneSteel pay its day shift employees for their shift that day in circumstances where those employees had taken industrial action for the majority of that shift (the 31 October 2018 s 475(2) Kelly Contravention).

6.    By operation of s 793(1) of the FW Act, the AWU has contravened s 475(2) of the FW Act in respect of the 31 October 2018 Kelly s 475(2) Contravention (the 31 October 2018 s 475(2) AWU Contravention).

The primary judge’s reasons in relation to penalties

25    The primary judge noted at [22] that s 46 of the BCIIP Act and s 475(2) of the FW Act are both civil penalty provisions. The primary judge set out in a table the maximum penalties in respect of each contravention and the parties’ positions as regards the contraventions. The Commissioner’s position was that penalties totalling $378,000 should be imposed on the AWU and penalties totalling $43,470 should be imposed on Mr Kelly. The respondents put forward particular amounts for each of the contraventions (totalling $63,000 in respect of the AWU and $4,830 in respect of Mr Kelly), but also submitted that the course of conduct principle and the totality principle should then be applied to these figures to reduce the quantum of pecuniary penalties imposed on the respondents by a significant margin.

26    The primary judge summarised the applicable principles at [24]-[29]. It is not submitted that his Honour erred in this statement of the applicable principles.

27    The primary judge considered the nature and seriousness of the contraventions at [30]-[41], dealing first with the industrial action on 31 October and 1 November 2018, and then with the Pay Request.

28    In relation to the industrial action, the primary judge stated, at [30], that the contraventions of s 46 were “deliberate and objectively serious” contraventions of the BCIIP Act. After indicating that he would treat the industrial action on 31 October and that on 1 November as “roughly equivalent” in terms of seriousness (at [31]), the primary judge stated that he inferred that each of the contraventions “was calculated to exert pressure by exposing OneSteel to loss or damage” (at [32]).

29    The primary judge stated, at [32], that although any actual loss incurred by OneSteel was not established, he would infer from the AWU’s preparedness to pay $90,000 in compensation to OneSteel and the Commissioner’s agreement as to the sum to be paid, that loss or damage of that order was suffered. The primary judge then stated (at [32]):

Nevertheless, I accept the submission of the AWU that any loss or damage has been appropriately remedied by the AWU’s willingness to pay $90,000 in compensation to OneSteel (see [79] below). I therefore proceed on the basis that no loss or damage has gone without a remedy. The absence of any enduring loss or damage diminishes the seriousness of the respondents’ contraventions of s 46 of the BCIIP Act.

30    At [34], the primary judge stated that he accepted the respondents’ contention that the contraventions should be regarded as less serious than would otherwise have been the case because:

(a)    in organising the industrial action, Mr Kelly was not hostile, rude or threatening to OneSteel management; his communications with management, including his attempts to resolve the dispute through consultations, were initially appropriate before he organised the unlawful industrial action; and

(b)    in respect of the AWU, there was no involvement of senior management or senior officials in the contravening conduct.

31    The primary judge accepted, at [36], that Mr Kelly genuinely believed that it was not unlawful for the employees to attend the rally. His Honour then stated (at [36]):

However, his conduct in organising the industrial action was nevertheless deliberate. I do not accept that Kelly did not appreciate that the industrial action taken on 31 October and 1 November (as distinct from that taken to attend the rally) was not unlawful.

32    The primary judge accepted, at [36], the AWU’s contentions that in organising the industrial action Mr Kelly was genuinely concerned about the health and safety of the employees due to the employees being distracted, angry and upset by the interviews which OneSteel were conducting. The primary judge continued (at [37]):

Those considerations demonstrate that, though unlawful, Kelly’s behaviour was, at a subjective level, genuinely regarded by him as reasonably justified. True it is that options short of industrial action may have been available to Kelly to further the cause he was pursuing. To some extent, the weight to be afforded to these considerations is therefore diminished by the existence of more reasonable alternatives to address the unfairness and the unsafe working conditions Kelly had in mind. Nevertheless, these considerations deserve some weight. To my mind, they inform the seriousness of the contraventions in question because they demonstrate that the need for specific deterrence is somewhat lower than it would have been in their absence. That is so because they enable the conduct to be characterised as a specific reaction to peculiar circumstances which is unlikely to recur in the context of the lessons likely learned through this proceeding. The conduct can therefore be regarded as isolated rather than driven by systemic factors which, if not appropriately addressed by specific deterrence, would likely result in conduct of a like kind being repeated.

(Emphasis added.)

33    In the context of considering the nature and seriousness of the Pay Request, the primary judge stated, at [38], that the conduct of the respondents undermined the objective of ss 474 and 475 of the FW Act. The primary judge stated that the “conduct was deliberate even if it be the case that Kelly did not mean to act unlawfully”. It is convenient to observe that, in this sentence, the primary judge did not make a finding that Mr Kelly did not mean to act unlawfully; this is indicated by the words “even if it be the case”.

34    The primary judge also stated, at [38], that the conduct was “objectively serious”.

35    At [39]-[40], the primary judge rejected a submission of the respondents that relied on BlueScope Steel Ltd v Australian Workers’ Union [2019] FCA 182 (BlueScope), considering the facts to be “very different”. The primary judge found, at [40], that Mr Kelly’s conduct must be regarded as a “deliberate contravention” of s 475(2). However, the primary judge accepted the respondents’ submission that Mr Kelly did not “wilfully flout” the provision or make any threats or unduly forceful demands. The primary judge also stated (at [40]): “I accept that the conduct arose out of Kelly’s genuine belief that the workers had been treated unfairly.” Further, the primary judge stated at [41]:

The nature of the circumstances which drove the request for pay deserve some consideration. Again, I consider that the unlawful conduct occurred in peculiar and isolated circumstances, in relation to which the need for specific deterrence is diminished. I do not accept that in making the request for payment, Kelly did not intend that the workers be paid in relation to a period during which unlawful industrial action was taken. From the perspective of the AWU, there was no involvement by senior management.

(Emphasis added.)

36    The primary judge then considered a series of factors under the following headings:

(a)    Contrition and Remorse;

(b)    Co-operation;

(c)    Prior Contraventions;

(d)    Culture of Compliance; and

(e)    Capacity to Pay.

37    In relation to contrition and remorse, the primary judge accepted, at [42], the submission of the respondents that both Mr Kelly and the AWU had demonstrated genuine contrition and remorse. The primary judge stated that the evidence before him of Mr Kelly and the Victorian Branch Secretary of the AWU demonstrated genuine regret about the events. The primary judge noted that the Commissioner accepted that the respondents had shown true regret and remorse. The primary judge also stated, at [43], that the willingness of the AWU to pay substantial compensation to OneSteel further demonstrated its contrition and remorse.

38    In relation to co-operation, the primary judge accepted, at [44], the respondents’ submission that they had demonstrated significant co-operation with the Commissioner by admitting the contraventions. His Honour considered that the admissions were provided in a timely manner, in the circumstances of the case.

39    In the context of considering prior contraventions, the primary judge made the following observations, referring to Pattinson (FFC):

48    The appropriate approach to the consideration of prior contraventions was affirmed in Pattinson. The majority in Pattinson provided a detailed and scholarly analysis of the authorities on the correct approach to assessing the relevance of prior contraventions in the exercise of the discretion to issue a civil penalty. Their Honours concluded that prior contraventions may bear upon the seriousness of the offence but cannot justify a penalty that is disproportionate to the gravity of the instant offence: see, eg, at [180] and [194] (Allsop CJ, White and Wigney JJ).

49    That position was put succinctly by Besanko and Bromwich JJ, agreeing with the majority, at [227(3)]: “Prior history may be relevant to an assessment of the seriousness or gravity of the instant contravening conduct, but neither that history, nor the object of deterrence, can result in a penalty that is disproportionate to the contravening conduct itself, having regard to the maximum penalty provided.”

50    In assessing the weight to be given to prior offending, it is also important to bear in mind the comments of King CJ in R v McInerney (1986) 42 SASR 111 at 113 that prior contraventions will be:

more cogent if they have been the subject of conviction before the immediate offence. In such cases, the offender has committed the immediate offence notwithstanding the formal judgment and condemnation of the law in respect of the earlier offences and notwithstanding the warning as to the future which the conviction experience implies.

40    The primary judge noted, at [51], that the Pay Request occurred shortly after Wigney J determined that the AWU had breached s 475(2) of the FW Act in BlueScope Steel Ltd v Australian Workers’ Union [2018] FCA 1574 (BlueScope (Liability)) (but before the decision in BlueScope on the quantum of penalty). The primary judge stated that, in these circumstances, the AWU committed the contravention “in spite of the condemnation of the law in relation to its previous conduct of the same kind”.

41    At [52], the primary judge stated that three of the AWU’s previous contraventions were not committed by officials of the Victorian branch of the AWU, and that these contraventions should be afforded less weight because they did not go directly to the “culture of compliance” of the Victorian branch.

42    At [53], the primary judge stated that the majority of the past contraventions occurred over a decade ago, and that, in the intervening period, there had been relatively few incidents. The primary judge considered that there was no basis for an inference to be drawn that the AWU has a policy of disobedience or of a determined refusal to comply with the law, and noted that no contention to that effect had been made by the Commissioner.

43    The primary judge described, at [55], evidence given by the Secretary of the Victorian Branch of the AWU regarding compliance training.

44    The primary judge considered the course of conduct principle at [58]-[66]. The primary judge held that the contraventions of s 46 of the BCIIP Act and s 475(2) of the FW Act could not be regarded as a single course of conduct (at [65]). However, his Honour held that Mr Kelly’s contraventions of s 46 did constitute a single course of conduct (at [66]). It followed that the AWU’s contraventions of s 46 also constituted a single course of conduct.

45    The primary judge then considered the appropriate penalty (in light of the considerations already discussed) at [67]-[78].

46    The primary judge set out the applicable maximum penalties at [68]. In relation to the contraventions of s 46 of the BCIIP Act, the maximum penalty is $210,000 for the AWU and $42,000 for Mr Kelly: see s 81 of the BCIIP Act. In relation to the contraventions of s 475(2) of the FW Act, the maximum penalty is $210,000 for the AWU and $12,600 for Mr Kelly: see s 539 of the FW Act and s 49(c) of the BCIIP Act.

47    The primary judge then stated, with reference to Pattinson (FFC):

69    The maximum penalty does not only provide an upward limit on the power of the Court to impose a penalty; it establishes a statutory indication of the appropriate punishment for the worst type of case. By this yardstick a proportionate penalty for lesser cases can be assessed: Pattinson at [62] (Allsop CJ, White and Wigney JJ).

70    The contraventions here in question are far from the worst types of case. Each contravention was nevertheless deliberate and objectively serious. The industrial action contraventions, which occurred in a single course of conduct, resulted in significant economic pressure being imposed on an innocent party. The unlawful request for strike pay was also deliberate and serious. However, in neither case was any enduring loss or damage suffered. In both cases, the conduct was that of a single organiser without the condonance of the organisation for which he works, which would have been demonstrated if senior management had been involved.

(Emphasis added.)

48    The primary judge reasoned, at [71], that the need for general deterrence demanded a meaningful penalty, but one which also “takes into account the somewhat peculiar and isolated industrial circumstances which drove each of the contraventions”.

49    The primary judge considered that the need for specific deterrence was not substantial in the case of Mr Kelly (at [72]). The primary judge imposed the following penalties on Mr Kelly (at [73]):

(a)    for the contraventions of s 46 of the BCIIP Act, a total penalty of $5,400, being $2,700 for each contravention; and

(b)    for the contravention of s 475(2) of the FW Act, a penalty of $1,600.

50    The primary judge considered that the need for specific deterrence in relation to the AWU was greater and there was a greater need for a meaningful penalty to address general deterrence (at [74]). The primary judge imposed the following penalties on the AWU (at [77]):

(a)    for the contraventions of s 46 of the BCIIP Act, a total penalty of $50,000, being $25,000 for each contravention; and

(b)    for the contravention of s 475(2) of the FW Act, a penalty of $30,000.

The appeal

51    The Commissioner appeals from part of the judgment of the primary judge, namely the part concerning the imposition of penalties. By his notice of appeal dated 24 August 2021, the Commissioner relies on eight grounds of appeal. The first of these is that the penalties imposed by the primary judge were manifestly inadequate. The other grounds challenge particular aspects of the primary judge’s reasoning. These grounds are described later in these reasons.

52    The respondents rely on a notice of contention dated 16 September 2021. They contend that the judgment of the primary judge should be affirmed on two additional bases.

53    As noted in the Introduction to these reasons, following the judgment of the High Court in Pattinson (HC), the parties filed (with leave) supplementary submissions. In his supplementary written submission, the Commissioner applied for leave to amend his notice of appeal to add two additional grounds of appeal:

The principle of proportionality

9.    Further to Ground 1(d), the primary judge erred in concluding that the penalties to be imposed on the Respondents needed to be proportionate to their contravening conduct, rather than imposing penalties which are appropriate to secure the protection of the public interest in compliance by deterring future contraventions ([48]-[50]).

The role of the statutory maximum

10.    Further to Ground 1(e), the primary judge erred in concluding that the statutory maximum penalty establishes an indication of the appropriate punishment for the worst type of case, and is a yardstick by which a proportionate penalty for lesser cases can be assessed ([69]-[70]).

54    The parties were given the opportunity to make submissions in writing on both the question of leave to amend and the substance of the proposed grounds of appeal (should leave to amend be granted).

55    It will be convenient to deal first with the proposed new grounds of appeal, and then with the other grounds of appeal.

Grounds of appeal 9 and 10

56    In our view, it is appropriate to grant the Commissioner leave to amend his notice of appeal to include these grounds of appeal. There is an explanation for why the grounds were not included in the original notice of appeal: the grounds rely on a judgment of the High Court that had not been handed down at that time. The grounds of appeal have merit. In their supplementary submission dated 11 May 2022, the respondents do not make any submissions against a grant of leave to amend.

57    By ground 9, the Commissioner contends that the primary judge erred in concluding that the penalties to be imposed on the respondents needed to be proportionate to their contravening conduct, rather than imposing penalties which are appropriate to secure the protection of the public interest in compliance by deterring future contraventions, referring to [48]-[50] of the primary judge’s reasons (which have been set out above).

58    At [48]-[49] of the primary judge’s reasons, his Honour relied on the reasoning of the Full Court in Pattinson (FFC) in the context of considering the appropriate approach to the consideration of prior contraventions. For example, the primary judge stated at [48] that “[t]he appropriate approach to the consideration of prior contraventions was affirmed in Pattinson [(FFC)]”. The primary judge also relied on specific parts of the judgments in Pattinson (FFC) that emphasised that, while prior contraventions may bear upon the seriousness of the contravention, they cannot justify a penalty that is disproportionate to the instant contravention: see Pattinson (FFC) at [180], [194], [227(3)].

59    In Pattinson (HC), the High Court overturned Pattinson (FFC) and criticised aspects of the Full Court’s approach. The plurality in Pattinson (HC) (Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ) stated at [10]:

The Full Court’s critical error was that it was distracted by a concern, drawn from the criminal law, that a penalty must be proportionate to the seriousness of the conduct that constituted the contravention. The power conferred by s 546 of the [FW] Act is not subject to constraints drawn from the criminal law and there is no place for a “notion of proportionality”, in the sense in which the Full Court used that term, in a civil penalty regime.

60    Further, the plurality stated at [38]:

The “notion of proportionality” derived by the Full Court from Veen (No 2) [(1998) 164 CLR 465] is so closely connected to the central role of retribution in criminal sentencing that it cannot be translated coherently into the civil penalty context of the Act.

See also the judgment of the plurality at [39]-[43], [68]-[72].

61    In particular, the plurality indicated that it was open to take past contraventions into account in setting a penalty of appropriate deterrent value: see at [43], [70].

62    In circumstances where the primary judge relied on the approach to proportionality and past contraventions taken by the Full Court in Pattinson (FFC) and that approach has now been overturned by the High Court, the reasoning of the primary judge now appears to be in error.

63    It follows that, as accepted by the respondents in their written submission dated 11 May 2022, ground 9 is established.

64    By ground 10, the Commissioner contends that the primary judge erred in concluding that the statutory maximum penalty establishes an indication of the appropriate punishment for the worst type of case, referring to the primary judge’s reasons at [69]-[70] (which have been set out above).

65    At [69]-[70] of the primary judge’s reasons, his Honour stated that the maximum penalty “establishes a statutory indication of the appropriate punishment for the worst type of case”, citing Pattinson (FFC) at [62].

66    In Pattinson (HC), the plurality rejected that proposition. In particular, the plurality stated at [10]:

Further, and relatedly, their Honours [in the Full Federal Court] were misled by the view that the [FW] Act required that the maximum penalty be reserved for only the most serious examples of the offending comprehended by s 349(1), and that this principle could prevent the court from imposing the maximum penalty even though a penalty in that amount might reasonably be considered to be necessary to deter future contraventions of a like kind. Nothing in the text, context or purpose of s 546 requires that the maximum penalty be reserved for the most serious examples of misconduct within s 349(1). What is required is that there be “some reasonable relationship between the theoretical maximum and the final penalty imposed”. That relationship is established where the maximum penalty does not exceed what is reasonably necessary to achieve the purpose of s 546: the deterrence of future contraventions of a like kind by the contravenor and by others.

(Footnotes omitted; emphasis added.)

See also the plurality judgment at [49]-[55].

67    In circumstances where the primary judge relied on the approach to the maximum penalty taken by the Full Court in Pattinson (FFC) and that approach has now been overturned by the High Court, the reasoning of the primary judge now appears to be in error.

68    It follows that, as accepted by the respondents in their written submission dated 11 May 2022, ground 10 is established.

69    It follows that the appeal is to be allowed.

Grounds of appeal 1 to 8

70    In light of the above conclusion, it is not necessary to determine the other grounds of appeal. However, we consider it appropriate to make the following brief observations about these grounds.

Ground 1

71    By ground 1, the Commissioner contends that the penalties imposed by the primary judge were manifestly inadequate, having regard (in particular) to the following facts and matters:

(a)    that the contraventions committed by the AWU and Mr Kelly were “deliberate and objectively serious” (see the primary judge’s reasons at [30], [38], [40] and [70]);

(b)    that the contraventions of s 46 of the BCIIP Act were committed with the knowledge that the contraventions were unlawful (see the primary judge’s reasons at [36]);

(c)    that the contraventions of s 46 of the BCIIP Act caused loss and damage of $90,000 (see the primary judge’s reasons at [32]);

(d)    the need for effective specific and general deterrence; and

(e)    the maximum penalties fixed by the legislature for the relevant contraventions.

72    In support of this ground, the Commissioner also relies on the specific matters raised by grounds 2 to 8.

73    The Commissioner in his submissions refers to the statements of general principle, in relation to this ground, discussed in Dinsdale v The Queen (2000) 202 CLR 321 at [6] per Gleeson CJ and Hayne J; see also Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Palmerston Police Station Case) [2021] FCAFC 7 at [11] per Bromwich J, with whom Katzmann J and Griffiths J agreed.

74    Had it been necessary to decide ground 1, we would not have been persuaded that the ground was made out. As the Full Court of this Court (Greenwood, Middleton and Foster JJ) stated in Australian Securities and Investments Commission v Wooldridge [2019] FCAFC 172 (ASIC v Wooldridge) at [53]:

To the extent ASIC says the penalty was ‘manifestly inadequate’, the inadequacy must be ‘obvious, plain, apparent, easily perceived or understood and unmistakeable. It must be so far outside the range of reasonable discretionary judgement as to itself bespeak error’: Hanks v The Queen [2011] VSCA 7 at [22]; Zerafa v The Queen [2013] VSCA 42 at [41]. Mere disagreement, or a difference of opinion, between an appellate court and a primary judge over the penalty imposed is not sufficient.

75    The primary judge took into account the facts and matters relied on by the Commissioner in support of higher penalties. His Honour also took into account a number of matters relied on by the respondents that supported lower penalties being imposed. Having regard to the facts and matters considered by the primary judge (and also our observations, below, in relation to grounds of appeal 2 to 8), we are not satisfied that the penalties imposed by the primary judge were manifestly inadequate.

76    We note that reasonable minds will often differ as to the appropriate pecuniary penalty for the contravention of a civil penalty provision. Given this, a ground of appeal contending that a penalty imposed by a judge is manifestly inadequate (or manifestly excessive) may be difficult to establish in circumstances where the judge has had regard to all relevant considerations and not had regard to any extraneous considerations.

Ground 2

77    By ground 2, the Commissioner contends that the primary judge erred when fixing the penalties for the contraventions by treating the fact that Mr Kelly genuinely regarded himself as reasonably justified in committing the contraventions as a mitigating factor (see the primary judge’s reasons at [37], [40]).

78    In support of this ground, the Commissioner submits that Mr Kelly’s own view about his justification in contravening industrial legislation ought not to have been given any weight by the primary judge in assessing the quantum of penalties. The Commissioner submits that it is against the weight of authority; it has been held on numerous occasions that any purported “benevolent” motivation for contravening legislation cannot be treated as mitigating the seriousness of the contravention: see Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 (Ponzio) at [90]-[91] per Lander J and [143] per Jessup J; see also Australian Building and Construction Commissioner v Ingham (No 2) (The Enoggera Barracks Case) [2018] FCA 263 (Ingham) at [72] per Rangiah J and Australian Building and Construction Commissioner v Menon [2020] FCA 1418 (Menon) at [94]-[95] per White J. The Commissioner submits that the primary judge’s approach only encourages courts to make subjective assessments of the justification of unlawful conduct; this should not be part of the penalty-fixing function; such an approach runs close to courts being seen to condone the motives of unlawful action; and such an approach was expressly disavowed in Draffin v Construction, Forestry, Mining and Energy Union (2009) 189 IR 145 (Draffin) at [85] per Goldberg, Jacobson, and Tracey JJ.

79    At the outset, we note that the primary judge did not refer to Mr Kelly’s genuine belief that the conduct was reasonably justified as a “mitigating factor”. Rather, this matter formed part of the primary judge’s consideration of the nature and seriousness of the contraventions. It may be accepted, however, that the primary judge regarded this as a matter that ameliorated the seriousness of the contraventions for the purposes of assessing the penalty required for the purposes of specific and general deterrence.

80    For the following reasons, had it been necessary to decide this ground, we would not have been persuaded that the ground was made out.

81    First, insofar as the contraventions of s 46 of the BCIIP Act are concerned, s 81(6) of the BCIIP Act includes as mandatory considerations the nature of the contravention and the circumstances in which it took place. As a matter of principle, matters concerning state of mind may be relevant to the nature of the contravention and may form part of the circumstances in which the contravention took place.

82    Secondly, a number of authorities have accepted that a belief as to the lawfulness of the conduct may be relevant for the purposes of determining the nature and seriousness of the contravention, and thus the appropriate penalty for the purposes of specific and general deterrence: see Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) (2018) 260 FCR 68 at [64] per Allsop CJ, Davies and Wigney JJ (see also at [61], [63], [71]); ASIC v Wooldridge at [62] per Greenwood, Middleton and Foster JJ (see also at [59]); Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corporation Ltd (2007) 168 IR 368 at [18] per Gordon J. See also Pattinson (HC) at [46] (the reference to ignorance of the law).

83    Thirdly, and closer to the present case, in a number of cases, perceptions of justification have been taken into account as part of the relevant circumstances in the context of determining the appropriate penalty: see Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68 at [22], [29], [156] and [163] per Dowsett, Greenwood and Wigney JJ; Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union (2018) 280 IR 173 at [46]-[47] per Jagot J.

84    Fourthly, the cases relied on by the Commissioner are distinguishable:

(a)    The Commissioner relies on Menon at [94]-[95]. The issue discussed there was whether it was mitigatory that the improper conduct occurred in the pursuit of a legitimate industrial objective. It was held that this was not mitigatory. However, that is quite different to the present case – it was not suggested here that Mr Kelly’s conduct was directed to the pursuit of a legitimate industrial objective.

(b)    The Commissioner relies on Draffin at [85]. However, that case concerned whether it was mitigatory that the union was seeking to pursue certain ends. The Full Court held that this was not mitigatory (the end does not justify the means). That is unlike the issue in the present case.

(c)    The Commissioner relies on Ponzio. However the approach of the primary judge in that case (which is apparent from [59]-[60]) was quite different from that of the primary judge in the present case. Thus the Full Court’s criticisms of the primary judge’s approach in that case (see [92], [143]) are inapposite here.

(d)    The Commissioner relies on Ingham. At [72], Rangiah J rejected a submission that it was a mitigating factor that the conduct was directed to a legitimate industrial objective, namely making an Enterprise Agreement. That is quite a different matter from that in issue in the present case.

Grounds 3, 4 and 5

85    It is convenient to consider these grounds together. By these grounds, the Commissioner challenges the primary judge’s characterisation of the conduct as being “a specific reaction to peculiar circumstances which is unlikely to recur” (at [37]) and as having occurred in “peculiar and isolated circumstances” (at [41]) and taking these matters into account by way of mitigation or in reducing what would otherwise have been the appropriate penalties (at [71]).

86    Had it been necessary to decide these grounds, they would not have been made out. It was open to the primary judge to characterise the facts and circumstances in these ways, and to take these matters into account in considering the appropriate penalty to serve the purposes of specific and general deterrence.

Ground 6

87    By this ground, the Commissioner contends that the primary judge erred in his application of the “course of conduct” principle by treating each of the two contraventions of s 46 of the BCIIP Act by Mr Kelly (and thus, by extension, the AWU) as, in effect: (a) one contravention by each of them of that provision (at [66]); and (b) involving no additional level of culpability by reason of the respondents having committed a second contravention of s 46 of the BCIIP Act on 1 November 2018.

88    In our view, the premise of this ground is incorrect. While the primary judge considered the two contraventions of s 46 by Mr Kelly to constitute a single course of conduct, his Honour did not treat these contraventions as “in effect … one contravention” by Mr Kelly of that provision. This is evident from the declarations made by his Honour and the fact that his Honour fixed a separate penalty for each contravention of s 46 by Mr Kelly.

89    More generally, we consider that his Honour’s application of the “course of conduct” principle (at [58]-[66]) was correct, for the reasons his Honour gave.

Ground 7

90    By this ground, the Commissioner contends that the primary judge erred in determining that the seriousness of the contraventions of s 46 of the BCIIP Act was diminished by the fact that the AWU had agreed to an order to pay compensation to the object of these contraventions (see the primary judge’s reasons at [32] and [70]).

91    The Commissioner accepts that the payment of the $90,000 by the AWU is mitigatory. However, the Commissioner submits that the fact that the AWU paid that compensation, and that therefore there was no enduring loss suffered by OneSteel, does not diminish the seriousness of the unlawful industrial action contraventions. The Commissioner submits that, in assessing the seriousness of these contraventions, it was not only important that substantial economic pressure was placed on OneSteel, it was also important that the contraventions caused actual and substantial loss. The Commissioner submits that the primary judge failed to have regard to the extent of the loss and damage in assessing the seriousness of the unlawful industrial action contraventions.

92    Had it been necessary to decide this ground, we would not have been persuaded that it was made out. While the primary judge had regard (at [32] and [70]) to the fact that the AWU had agreed to pay the compensation, his Honour also stated (at [32]) that he would infer that loss or damage in the order of $90,000 was suffered by OneSteel. This statement was made in the section dealing with the nature and seriousness of the contraventions of s 46. Despite the fact that his Honour did not specifically refer to that matter again in the concluding section of his reasons (eg at [70]), we are not persuaded that he failed to have regard to it in determining the appropriate penalties for the s 46 contraventions.

Ground 8

93    By this ground, the Commissioner contends that the primary judge erred in failing to have regard to the fact that the AWU had recently also engaged in unlawful industrial action in contravention of s 417 of the FW Act when fixing the penalties for the s 46 contraventions (compare the primary judge’s reasons at [51] and [77]).

94    Had it been necessary to decide this ground, we would not have been persuaded that it was made out. Although the primary judge referred, at [51], to the past contravention of s 475(2) of the FW Act and not to the past contravention of s 417 of the FW Act, we are not satisfied that he failed to have regard to the past contravention of s 417 in the context of considering the appropriate penalties for the s 46 contraventions. The past contravention of s 417 was specifically referred to in the table in [47] of the primary judge’s reasons, and the primary judge was evidently familiar with the circumstances of BlueScope (Liability) (the case in which the AWU admitted contravening s 417), as indicated by his discussion of that case in [51]. Further, the primary judge referred, at [53], to past contraventions concerning “unlawful industrial action”.

Notice of contention

95    In light of our observations in relation to grounds 1 to 8, we do not consider it necessary to make any observations about the matters raised by the notice of contention. Insofar as the respondents challenge the primary judge’s finding that OneSteel suffered loss or damage in the order of $90,000, we do not accept that contention. It was open to the primary judge to infer this from the agreement by the AWU to pay compensation in that amount.

Re-exercise of the discretion

96    Given our conclusion that the appeal is to be allowed, it is necessary for the discretion to impose penalties to be re-exercised. Both parties’ submissions proceed on the basis that, if the appeal is allowed, this Court should re-exercise the discretion (rather than the matter being remitted). To that end, the Full Court has been provided with all of the evidence that was before the primary judge. This comprises:

(a)    annexure 1 to the Commissioner’s submissions at first instance (being a list of past contraventions by the AWU);

(b)    two affidavits of Ben Vallence, a solicitor employed by the Commissioner, dated 19 June 2020 and 24 February 2021;

(c)    an affidavit of Bridie Murphy, a solicitor employed by Maurice Blackburn Lawyers, dated 4 March 2021 (being an affirmed version of her un-affirmed affidavit dated 10 July 2020);

(d)    an affidavit of Benedict Davis, the Secretary of the Victorian Branch of the AWU, dated 4 March 2021 (being an affirmed version of his un-affirmed affidavit dated 12 February 2021); and

(e)    an affidavit of Mr Kelly dated 4 March 2021 (being an affirmed version of his un-affirmed affidavit dated 12 February 2021).

97    There was no cross-examination of any of the deponents during the hearing at first instance.

98    Insofar as the contraventions of s 46 of the BCIIP Act are concerned, s 81(6) of the BCIIP Act provides that, in determining a pecuniary penalty under s 81(1)(a), the court must take into account all relevant matters, including:

(a)    the nature and extent of the contravention;

(b)    the nature and extent of any loss or damage suffered because of the contravention;

(c)    the circumstances in which the contravention took place; and

(d)    whether the person has previously been found by a court (including a court in a foreign country) to have engaged in any similar conduct.

99    The applicable principles as regards the imposition of pecuniary penalties are set out in the judgment of the plurality in Pattinson (HC). Those principles need not be referred to in detail for present purposes. As the plurality emphasised in Pattinson (HC) at [9]:

Under the civil penalty regime provided by the [FW] Act, the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the Act by the deterrence of further contraventions of the Act.

100    In that regard, the plurality cited with approval the following passage from the judgment of French CJ, Kiefel, Bell, Nettle and Gordon JJ in Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at [55]:

[W]hereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:

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

(Footnotes omitted.)

101    The relevant considerations in fixing a penalty of appropriate deterrent value were referred to by the High Court plurality in Pattinson (HC) at [18], by reference to the judgment of French J (as his Honour then was) in Trade Practices Commission v CSR Ltd (1991) ATPR ¶41-076 at 52,152-52,153. The plurality observed, at [19], that “[i]t may readily be seen that this list of factors includes matters pertaining both to the character of the contravening conduct … and to the character of the contravenor”. The plurality also noted that “[i]t is important, however, not to regard the list of possible relevant considerations as a ‘rigid catalogue of matters for attention’ as if it were a legal checklist” (footnotes omitted). See also Pattinson (HC) at [46]-[47].

102    The background facts have been set out above. Further detail is provided by the unchallenged evidence relied on by the parties at first instance. In circumstances where the evidence was unchallenged, we accept that evidence. In relation to the nature and seriousness of the contraventions (of both s 46 of the BCIIP Act and s 475(2) of the FW Act), we consider that they were deliberate and objectively serious. The contraventions caused substantial loss and damage to OneSteel, albeit that this would appear to have been remedied by the payment of compensation by the AWU. The context of the contraventions included: Mr Kelly’s belief that the employees had a right to attend the rally; his belief that OneSteel was unfairly conducting interviews into attendance at the rally in circumstances when that attendance was not illegal (having regard to his belief); Mr Kelly’s guilt and regret that his encouragement to attend the rally (based on his belief) had led workers to be questioned by OneSteel; and Mr Kelly’s concern that the interviews were causing the workers to be distracted, angry and upset. In Mr Kelly’s affidavit he states (and we accept) that he did not intend to breach any industrial law in acting as he did.

103    The AWU and Mr Kelly have demonstrated co-operation in admitting the contraventions and thus resolving the liability aspect of the proceeding at first instance. In his affidavit, Mr Kelly expresses regret and remorse as to what occurred. Further, Mr Davis, on behalf of the AWU, expresses regret and remorse in his affidavit. The affidavit of Mr Davis demonstrates that the AWU has taken significant steps to ensure that its officers comply with industrial laws.

104    The AWU has been found to have contravened other similar provisions in the past, as set out in annexure 1 to the Commissioner’s submissions at first instance, which forms the basis of the table in [47] of the primary judge’s reasons.

105    The maximum penalties for the contraventions of s 46 of the BCIIP Act and s 475(2) of the FW Act are set out above.

106    As indicated above, we consider that the two contraventions of s 46 of the BCIIP Act by Mr Kelly constituted a single course of conduct. By extension, the two contraventions of that provision by the AWU constituted a single course of conduct. We note that the primary judge, at [66], accepted a submission by the Commissioner that he should fix a separate penalty for each contravention of s 46 by Mr Kelly (and each contravention of s 46 by the AWU). However, we do not consider it necessary to do so. We consider it sufficient (and simpler) to fix a single penalty for Mr Kelly’s two contraventions of s 46 and a single penalty for the AWU’s two contraventions of s 46.

107    In the circumstances of this matter, we consider the following penalties to be appropriate. We consider that the AWU should be ordered to pay penalties of:

(a)    $80,000 in respect of the contraventions of s 46 of the BCIIP Act; and

(b)    $40,000 in respect of the contravention of s 475(2) of the FW Act.

108    We consider that Mr Kelly should be ordered to pay penalties of:

(a)    $9,000 in respect of the contraventions of s 46 of the BCIIP Act; and

(b)    $3,000 in respect of the contravention of s 475(2) of the FW Act.

109    In our view, penalties in these amounts are appropriate in all the circumstances and are necessary to achieve the objects of specific and general deterrence.

Conclusion

110    We will therefore make orders that: the appeal be allowed; the relevant orders of the primary judge be set aside; and the AWU and Mr Kelly pay penalties in the amounts set out above.

111    In relation to costs, the Commissioner states in his outline of submissions that he does not seek costs as the appeal is covered by s 570 of the FW Act. We will therefore make an order that there be no order as to costs.

Associate:

Dated:    29 August 2022

REASONS FOR JUDGMENT

SNADEN J:

112    I have had the benefit of reviewing a draft of the reasons of Moshinsky and O’Callaghan JJ. For the reasons that they identify, I respectfully agree with their Honours that the appellant should have leave to amend his notice of appeal and that the appeal should succeed on the strength of the grounds to which that amendment gives voice (namely, appeal grounds 9 and 10). I also agree with the orders that their Honours propose in determination of the appeal and with the reasons for which they propose them.

113    In the absence of needing to (see, for example, Boensch v Pascoe (2019) 268 CLR 593, 600-601 [7]-[8] (Kiefel CJ, Gageler and Keane JJ), 629-630 [101] (Bell, Nettle, Gordon and Edelman JJ)), I would prefer not to express any views about the appellant’s other grounds of appeal, nor about the respondents’ notice of contention.

Associate:

Dated:    29 August 2022