FEDERAL COURT OF AUSTRALIA

Ponzio v B & P Caelli Construction Pty Ltd

[2006] FCA 1221

GARY PONZIO v B & P CAELLI CONSTRUCTION PTY LTD and CONSTRUCTION FORESTRY MINING AND ENERGY UNION and ILLIA CRNAC and ELIAS SPERNOVASILIS

VID 1640 OF 2004

NORTH J

11 SEPTEMBER 2006

MELBOURNE

THE COURT ORDERS THAT:

1. The application is dismissed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     This is an application under s 187AD of the Workplace Relations Act 1996 (Cth) (the Act) for the imposition of penalties against the first respondent for contravention of s 187AA, and against the second, third and fourth respondents for contravention of s 187AB of the Act. It is convenient to deal first with the case against the first respondent under s 187AA.

2                     Section 187AD prescribes the orders that the Court may make in respect of contraventions of ss 187AA and 187AB as follows:

(1) In respect of contraventions of section 187AA or 187AB, the Court may, if the Court considers it appropriate in all the circumstances of the case, make one or more of the following orders:

(a) an order imposing on a person who contravened or is contravening that section a penalty of not more than $10,000;

(b) if the person contravened or is contravening section 187AB – an order requiring the person to pay to an employer compensation of such amount as the Court thinks appropriate;

(c) injunctions (including interim injunctions), and any other orders, that the Court considers necessary to stop the contravention or remedy its effects;

(d) any other consequential orders.

(2) The Court must not make an order under paragraph (1)(b) requiring compensation to be paid to an employer who has contravened subsection 187AA(1) in connection with the contravention referred to in that paragraph.

3                     Section 187AA provides:

(1)               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:

(a)               the employer or employee was or is a member of an organisation during that period; or

(b)               the employer was or is a constitutional corporation bound by an award, a certified agreement or an AWA during that period; or

(c)                the industrial action was taken, or is being taken, in connection with work regulated by an award, a certified agreement or an AWA; or

(d)               the industrial action was taken, or is being taken, in relation to an industrial dispute; or

(e)                the industrial action was or is of a kind referred to in paragraph (a), (b) or (c) of the definition of industrial action in subsection 4(1); or

(f)                 the industrial action was taken, or is being taken, in a Territory.

(2)               An employee must not accept a payment from an employer if the employer would contravene subsection (1) by making the payment.

(3) A contravention of subsection (1) or (2) is not an offence.

4                     The first respondent admits that it contravened s 187AA of the Act in circumstances which are set out in a statement of agreed facts. The statement contains admissions by the first respondent of all the elements necessary to found a contravention of s 187AA.

5                     In addition, the applicant and the first respondent have agreed on proposed orders which the Court should make as follows:

21.1          Subject to order 2, a penalty of $6,000.00 be imposed on the First Respondent in respect of the contraventions of s. 187AA of the Workplace Relations Act 1996 (C’th), such penalty to be paid into the Consolidated Revenue Fund on or before [date].

21.2          Notwithstanding order 1, the First Respondent is not obliged to pay the said penalty if between the day of this order and [date, 12 months later], it has not been adjudged to have breached any provision of the Workplace Relations Act 1996 (C’th).

6                     Notwithstanding the parties’ agreement, the responsibility for determining the appropriate penalty remains with the Court. The proper approach was explained in Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 (Mobil) at [53] as follows:

…

(vi) Where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure is, in the Court’s view, appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if within the permissible range.

7                     Against those principles it is necessary to examine the circumstances of the contravention. There is nothing to suggest that the Court should not rely on the statement of agreed facts. The circumstances of the contravention are taken from that statement.

8                     The first respondent is a building contractor. On 1 August 2003, it was engaged by Multiplex Limited on the Concept Blue Apartment project (‘the Concept Blue site’) at 336 Russell Street, Melbourne. On that day, a construction worker who was a member of the second respondent, the Construction Forestry Mining and Energy Union (the union), died as a result of an industrial accident in Shepparton. There was no connection between the work which was being performed in Shepparton and the work on the Concept Blue site.

9                     The union had a written policy concerning fatalities on building sites. The policy provided that mass meetings would be held on all sites in the industry on the day following a fatality to report on the incident. Further, productive work would stop while a full safety audit was conducted by the safety committee and all occupational health and safety problems would be rectified.

10                  On the next working day after 1 August 2003, namely 5 August 2003, the first respondent had 54 workers on site at the Concept Blue site. They started work at 7.00 am. Under the certified agreement which governed their employment, they were obliged to work for eight hours. At 8.30 am they stopped work in order to allow the safety audit to be conducted in accordance with the union policy following the fatality in Shepparton. No work was done for the rest of the day. The workers remained in the sheds on site.

11                  On the following day, 6 August 2003, work was again due to start at 7.00 am. The workers arrived at work but sat in the sheds until 7.30 am when a mass meeting was commenced. They returned to work at 10.00 am.

12                  On about 26 August 2003, in circumstances which will be outlined later, the first respondent made payments to workers for the period during which they did not work on 5 August 2003. Payments were made to 50 workers in a total sum of $7,601.23. Most of the workers involved in the stoppage on 5 August 2003, were also involved in the stoppage on 6 August 2003. The first respondent also made payments to the workers for the period during which they did not work on 6 August 2003. Payments were made to 51 workers in a total sum of $3,187.80.

13                  The application against the first respondent is limited to the payments of $7,601.23 and $3,187.80 to workers on the Concept Blue site. As a result of the issue of these proceedings, the first respondent provided additional information to the applicant of payments amounting to $20,165.83 made to 292 workers, employed by it on six other sites, who stopped work on 5 August 2003 in similar circumstances. While not the subject of this proceeding, this information provides background to the alleged contraventions.

14                  At the time of the stoppages, the first respondent had in place a procedure which was meant to prevent the payment of strike pay. The site foreman prepared a report of any stoppages, and also prepared the time sheets of the workers on site. Where the stoppage did not relate to a health and safety issue, the time sheets would record that no payment was to be made. As a result of this procedure, most of the workers did not initially receive pay for the period of the stoppages.

15                  Payments were made several weeks later as a result of action taken by the union and the third and fourth respondents. On 25 August 2003, the first respondent was engaged on the LU Simon ID Apartment site in Port Melbourne. At 12.30 pm the third respondent, who was the union delegate on site, placed bans on the use of forklifts on the site. Then at 2.00 pm the union lifted those bans and imposed bans on access to certain balconies. At 7.00 am on the following day, the third respondent notified the first respondent that the union had placed bans on the use of forklifts on the site. At 10.15 am the third respondent and the fourth respondent, who was an organiser employed by the union, met with representatives of the first respondent and said that further action would be taken because the first respondent had not paid workers for the time not worked on 5 and 6 August 2003. The third respondent said that if the first respondent did not pay the workers for that time, he would find an excuse to call Workcover to the site. The fourth respondent asked for Mr Caelli, a director of the first respondent, to come to the site and discuss the issue. The third and fourth respondents told Mr Caelli that they wanted him to agree that the first respondent would pay workers for the time not worked on 5 and 6 August 2003, and they threatened further industrial action if he did not agree. They told Mr Caelli that the first respondent was the only employer not to have paid workers for the stoppages on 5 and 6 August 2003, and that the union would not let the matter go. Mr Caelli said that the first respondent would pay the workers. This decision was made because of the persistent threats of ongoing action made by members and officials of the union. The third and fourth respondents then agreed to lift the bans, and shortly afterwards the bans were lifted.

16                  The applicant contended that the first respondent knowingly contravened s 187AA because it was industrially convenient for it to do so. But the applicant also accepted that there were a number of factors which should be considered in mitigation of penalty.

17                  First, the respondents did not resist the application and cooperated from an early stage.

Second, the first respondent has not been involved in any prior contraventions of Part VIIIA of the Act.

Third, the first respondent has reviewed its strike pay procedure, and is aware that claims for lost time for health and safety reasons must be scrutinised carefully.

Fourth, although the payments were made in knowing contravention of the Act, they were made under significant pressure from the other respondents.

Fifth, since August 2003, the first respondent has resisted making payments in contravention of s 187AA of the Act. Thus, it did not pay:

• 100 employees who engaged in industrial action for a period of 8 hours on the Freshwater Residential site on 25 February 2004;
• 93 employees who engaged in industrial action for a period of 10 hours on the Freshwater Commercial site on 25 February 2004;
• 70 employees who engaged in industrial action for a period of 8 hours on the Freshwater Residential site on 7 September 2004. This incident followed a death in the industry which took place on 3 September 2004; and
• 67 employees who engaged in industrial action for a period of 4 hours on the Freshwater Commercial site on 7 September 2004. This incident followed a death in the industry which took place on 3 September 2004.

Sixth, the first respondent drew attention to the fact that the conduct of the legal proceeding has been costly to it.

18                  The applicant contended that each of the 101 payments made constituted a separate contravention of s 187AA. However, as they were part of a course of conduct, the Court should approach the imposition of penalties on the totality principle. This requires that in imposing penalties for numerous offences, the penalties in aggregate are just and appropriate: CPSU v Telstra Corporation Limited (2001) 108 IR 228 at [7].

19                  The applicant urged the Court to take into account the background of the prosecution outlined in the affidavit of the original applicant, Ms Lisette Pine. She explained that she brought the prosecution as a member of the Building Industry Taskforce which was formed in response to the 2003 Royal Commission into the Building and Construction Industry (the Royal Commission). The Royal Commission found that breaches of s 187AA were widespread and offered the view that such lawlessness should not be tolerated.

20                  This general background sets the context of the proceedings. An important step in assessing the appropriateness of the penalty to be imposed is for the Court to locate the contravention within the range of conduct sought to be addressed by the section. The general background outlined by Ms Pine does not assist much in this task because the affidavit does not address the specific issue of responses to fatalities in the building industry. Neither does the second reading speech of the minister in relation to s 187AA advance the issue. Nonetheless, there are obviously different levels of seriousness of the conduct of making payments for periods in which industrial action is undertaken.

21                  In the building and construction industry there are many dangerous workplaces. Serious accidents are too frequent a phenomenon. The Royal Commission reported in the Final Report of the Royal Commission into the Building and Construction Industry:

Nationally between 1994 and 1999, there were 259 fatalities in the construction industry. Twenty-seven per cent of these deaths occurred in Victoria. During 1998-1999 16 fatalities occurred in the Victorian construction industry. The transport and storage industry is the only industry with a higher risk of fatality than the building and construction industry. (volume 12, [263])

22                  The concern of workers in the industry in ensuring safe workplaces can be readily understood. It is easy to accept that a fatality on a site in the industry, even if not on the site on which a particular worker is engaged, raises immediate feelings of insecurity and threat. No doubt these responses explain the establishment of the union policy which required that mass meetings be called on all sites in the industry in Victoria to explain any such incident, and a stoppage of work for the period necessary to undertake a safety audit on sites. It is reasonable to expect that employers would fund the taking of steps necessary to assure their workforces of the safety of the workplaces in view of the shock engendered by the death of a fellow worker in the industry. However, the strict terms of s 187AA do not permit employers to pay workers for the period during which the safety audit is conducted if work is stopped. It may be that such a harsh result was not contemplated by Parliament when the section was enacted. It is probable that Parliament had in mind that the law would stop payments made for stoppages which were designed to put undue pressure on employers in support of industrial claims for increased pay or improved conditions. In those circumstances, it generally would not be reasonable to expect employers to fund the industrial action taken against them. Even though the text of the section covers the present circumstances where payments were made in respect of stoppages undertaken to ensure safety on building sites in response to a fatality in the industry, the making of payments in those circumstances is at the lower end of the spectrum of seriousness of the conduct intended to be addressed by s 187AA.

23                  There is another consideration which is related to the level of seriousness of the contravention. The Court must take care that the fixing of penalties does not bring the law into disrepute. If penalties are imposed on employers who pay workers for stoppages which reasonable people would see as understandable and justified in all the circumstances, the law itself will be seen to be out of step with reasonable community expectations. Then, instead of prosecutions enhancing law abiding behaviour, they will generate disrespect for the law. The point may be illustrated by the homely example of the actions of the police at times waiting with speed detectors at the bottom of a hill where, although in a 60 kilometre zone, it is impossible for most drivers, driving responsibly and carefully, to avoid exceeding the speed limit. Those drivers who are caught and fined do not accept that they have done anything wrong. Rather they think the law is an ass.

24                  Finally, the applicant drew attention to a number of other cases decided by the Court concerning payments made for stoppages on building sites on 5 and/or 6 August 2003 in response to the death in the industry which occurred in Shepparton.

25                  The most relevant authorities for present purposes are Ponzio v D and E Air Conditioning Pty Ltd [2005] FCA 964 (decided 15 June 2005)(D and E) , Pine v Expoconti Pty Ltd [2005] FCA 1434 (decided 12 October 2005) (Expoconti), Pine v Casello Constructions Pty Ltd [2005] FCA 1854 (decided 23 November 2005) (Casello). These three cases involved significantly higher numbers of employees than the other authorities referred to. They involved 34, 28 and 21 employees respectively. In each case no penalty was imposed. In essence it was held that the respondents were unlikely to contravene in the future, and that the trouble and cost of defending the proceeding served the purpose of general deterrence.

26                  Against these three judgments stands the case of Ponzio v Maxim Electrical Services (Vic) Pty Ltd (ACN 088 037 290) [2006] FCA 579 (delivered 17 May 2006) (Ponzio v Maxim). This case involved payments totalling $2901.80 to 27 workers on the Three Towers site. A penalty of $900 was imposed. The circumstances were not materially different from those in D and E, Expoconti, and Casello, but these cases were not referred to in the judgment.

27                  In Pine v Seelite Windows & Doors Pty Ltd [2005] FCA 500 (decided 29 April 2005) (Seelite) and Ponzio v Firebase Sprinkler Systems Pty Ltd [2005] FCA 733 (decided 27 May 2005) (Firebase) no penalties were imposed. In both cases the number of employees (respectively four and eight) and the amounts of the payments (about $327 in the former and $1143 in the latter case) were small. In both cases the Court found that the contraventions were not likely to occur again and there was no need to punish the respondent because nothing would be achieved by the imposition of a pecuniary penalty. Further, if a penalty was imposed it would be so low that it would not act as a general deterrent. The Court also found that no harm had been done to anyone, and the contravention was inadvertent. Seelite was expressly followed in Furlong v Maxim Electrical Services (Aust) Pty Ltd [2005] FCA 1518 (decided 27 October 2005) (Maxim) where nine workers were paid $1542. Similar reasoning was also applied in Furlong v APN Developments [2005] FCA 1915 (decided 30 November 2005) (APN), involving 17 workers, where no penalty was imposed, although Seelite was not expressly referred to. A number of these considerations are present in the instant case, although the scale of the contraventions is greater and the contraventions were not inadvertent in the present case. Consequently, these judgments provide some but limited guidance in the present circumstances.

28                  Against the outcomes in Seelite, Firebase, Maxim, and APN can be placed the outcomes in Ponizo v BVM Builders Pty Ltd [2005] FCA 238 (decided 15 March 2005) (BVM) and Pine v Austress Freyssinet (Vic) Pty Ltd (ACN 089 766 576) [2005] FCA 583 (decided 5 May 2005) (Austress). BVM involved payments totalling $405.85 to two workers on the Concept Blue site. The circumstances were relatively indistinguishable from those in Seelite. However, a penalty of $200 was imposed. This decision was not referred to in Seelite. Later in Austress, payments totalling $900.70 were made to four workers on the Concept Blue site. A penalty of $800 was imposed which was said by Ryan J to be broadly in line with the comparable cases including BVM, although Seelite was not referred to.

29                  The highest penalty imposed in the applications relating to the events of 5 and 6 August 2003 is to be found in Pine v Multiplex Construction (Vic) Pty Ltd [2005] FCA 1428 (decided 11 October 2005) (Multiplex) which involved the payment of $3336.08 to ten employees for stoppages on the Concept Blue site. A penalty of $4000 was imposed. However, the features of this case distinguishing it from previous authorities were described at [8] as follows:

…Multiplex was the head contractor; it is a large corporation with ready access to legal advice concerning its obligations under the Act; it had adopted a practice of paying employees who stopped work during safety audits; and it either was aware, or ought to have been aware, that its practice was unlawful.

30                  These cases show that where there have been 20 to 30 contraventions in generally similar circumstances, the outcomes have ranged from the imposition of no penalty to the imposition of a penalty of $900. The preponderance of these authorities supports the former result. The range of outcomes demonstrates that the fixing of penalties is not an exact science.

31                  In several important respects, the present case is similar to the circumstances addressed by the authorities just mentioned. The first respondent is a first time contravenor. It is unlikely to contravene again. It has cooperated with the applicant and not resisted the application. The circumstances of the contravention are at the lower end of seriousness, and the first respondent has been punished by the cost, time and trouble involved with defending the proceeding. The circumstances of the present case differ from previous authorities in two notable respects. First, there are a greater number of contraventions, and second, whilst the contraventions were deliberate, the first respondent initially did not make the payments and only did so later under pressure from the other respondents.

32                  The decided cases suggest that the permissible range of outcomes for the present circumstances would be from the imposition of no penalty to the imposition of a total maximum penalty of $3000. However, the proposed orders potentially expose the first respondent to liability to a penalty of $6000. As this is double the maximum appropriate penalty, the proposed order is outside the permissible range. Although the operation of the proposed orders would result in the first respondent not paying any penalty if it did not contravene any provision of the Act in the following twelve months, the appropriateness of the proposed penalty must be assessed on the basis that the first respondent would become liable to pay it. The conduct of the first respondent in the twelve months following the making of the proposed order could not affect the quantum of the penalty. That is set by reference to the circumstances of the conduct when it occurred. Consequently, the Court should not make the orders proposed but should determine the penalty for itself.

33                  There are several factors which militate in favour of imposing a pecuniary penalty in this case. The scale of contravention is high in that a large number of payments were made. The payments were made deliberately. Further, it is important that the law be obeyed.

34                  On the other hand, all the payments were made in respect of stoppages on two days. Further, they were made in response to significant pressure from the second, third and fourth respondents. The payments were made for stoppages arising from a death in the industry. As explained earlier in these reasons, such circumstances place the contravention at the lower end of seriousness. In addition, the first respondent has not contravened s 187AA before. It has been cooperative and not resisted the application. Importantly, it has suffered a degree of punishment from the cost, time and trouble involved in defending the proceedings. In my view, this constitutes a reasonable punishment for the contraventions. It is also likely to be sufficient to deter the first respondent from further contraventions. That assessment is supported by the fact that the first respondent has resisted further contraventions since August 2003.

35                  The question of general deterrence is a little harder to resolve. It would be an undesirable outcome of this proceeding if others in the building and construction industry concluded from this case that no real consequences flow from a breach of s 187AA. However, the fact that proceedings were taken against the first respondent for contravention with the attendant expense, time and trouble will be a deterrent to others in the industry. In my view, this level of deterrence is proportionate to the seriousness of the contraventions. Indeed, as earlier explained, there is a danger that a greater penalty may generate disdain for the law. This would be counter-productive. Instead of the enforcement proceeding generating a greater respect for the law, the opposite result might be produced. In all the circumstances, the Court should dismiss the application against the first respondent without penalty.

36                  It remains to deal with the application against the second, third and fourth respondents for contravention of s 187AB. That section provides:

(1) An organisation, or an officer, member or employee of an organisation, must not:

(a)               make a claim for an employer to make a payment to an employee in relation to a period during which the employee engaged, or engages, in industrial action; or

(b)               organise or engage in, or threaten to organise or engage in, industrial action against an employer with intent to coerce the employer to make such a payment.

(2) For the purpose of subsection (1), action done by one of the following bodies or persons is taken to have been done by an organisation:

(c)                the committee of management of the organisation;

(d)               an officer, employee or agent of the organisation acting in that capacity;

(e)                a member or group of members of the organisation acting under the rules of the organisation;

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

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

(a)               a committee of management of the organisation; or

(b)               a person authorised by the committee; or

(c)                an officer of the organisation;

has taken reasonable steps to prevent the action.

(4) A contravention of subsection (1) is not an offence.

37                  This is the first case against a union and its officials under s 187AB. A separate statement of agreed facts has been filed on behalf of the applicant and the second, third and fourth respondents. The second, third and fourth respondents admit that the agreed facts demonstrate all the elements which the applicant needs to prove to establish contravention of s 187AB(1)(a).

38                  These parties have not agreed on an appropriate penalty to be imposed.

39                  Neither have they agreed that the applicant has proved all the elements necessary to establish a contravention of s 187AB(1)(b). The second, third and fourth respondents agree that they organised industrial action within the meaning of s 187AB(1)(b) by imposing the bans on the use of forklifts and access to the balconies. They deny that the applicant has discharged the onus of proof on the intent to coerce the first respondent to make the payments.

40                  The statement of agreed facts between the applicant and the first respondent includes an agreement that on 25 August 2003, the third and fourth respondents threatened further industrial action if Mr Caelli did not agree to make the payments, and further, that his decision to pay was made because of the persistent threats of ongoing action made by members and officials of the union. These facts are not agreed between the applicant and the second, third and fourth respondents. On the contrary, at the hearing, the second, third and fourth respondents contended that the bans related to genuine safety concerns. Further, an additional fact is agreed between the applicant and these latter parties, namely, that when the third and fourth respondents agreed to lift the balconies bans and the forklift bans the first respondent agreed to tie all kickboards into position, and the operation of the forklift on the road would be assisted by traffic management.

41                  The facts agreed between the applicant and the first respondent cannot be used to establish a contravention of s 187AB by the second, third and fourth respondents. However, it would be inappropriate for the Court to proceed on the basis of agreed facts between different parties in the same proceeding if the facts agreed between the different parties were inconsistent. In this case the agreed facts are not inconsistent. The agreement between the applicant and the first respondent asserts that the third and fourth respondents made threats. The agreement between the applicant and the second, third and fourth respondents is silent on the subject. I infer from the circumstances in which the bans were imposed and lifted and the discussions which accompanied those events, that the third and fourth respondents intended to pressure the first respondent into making the payments. The applicant has discharged the onus of establishing a contravention of s 187AB(1)(b) as alleged.

42                  The approach of the applicant to the number of contraventions involved was not well defined. Various alternative analyses were proposed at different times. Some of the strands of argument were as follows. In its written contentions filed before the hearing, the applicant submitted that the second, third and fourth respondents had committed 101 contraventions of s 187AB(1)(a) by the third and fourth respondents, acting on behalf of the second respondent, making demands for the payment for the 50 workers who stopped work on 5 August 2003, and the 51 workers who stopped work on 6 August 2003. It further alleged 101 contraventions of s 187AB(1)(b) on 25 and 26 August 2003, by the third and fourth respondents, acting on behalf of the second respondent, imposing bans at the LU Simon site for the predominant purpose of securing 101 payments for the stoppages which occurred on 5 and 6 August 2003. At one point in the argument counsel for the applicant submitted that there were 101 demands for payment made on each of the three occasions when the bans were imposed. Thus, 303 contraventions of s 187AB(1)(a) were involved. Alternatively, the imposition of each ban could be seen as amounting to a separate contravention of s 187AB(1)(b) and, hence, there were at least three contraventions of that section. The applicant, however, recognised that the events of 25 and 26 August 2003 should be treated as a course of conduct, and that the totality principle should apply in fixing the appropriate penalty.

43                  In the written contentions, the applicant proposed a global penalty of $30,000 on the basis that the penalty should equal the amount paid by the first respondent to its workers for the stoppages, including stoppages not the subject of this proceeding. When invited to articulate the principles to be applied in setting an appropriate penalty, a number of other possible approaches were discussed in the course of argument. One approach would be to view all the conduct as amounting to a single contravention, thereby attracting a maximum penalty of $10,000. Counsel for the applicant contended that on such a basis, a penalty of $5,000 would be an appropriate reflection of the seriousness of the contravention. But, in the end, counsel for the applicant argued that the imposition of each new ban would amount to three separate contraventions, so that the contraventions would attract a maximum total penalty of $30,000. On that basis, it was submitted that a penalty of $15,000 would reflect the gravity of the contraventions committed by the second, third and fourth respondents.

44                  The applicant argued that the contraventions were at the higher end of the scale of seriousness. The first respondent had a policy of not making payments for stoppages and had initially acted in accordance with the policy. The second, third and fourth respondent knew that the first respondent would be acting unlawfully if it made the payments. Nonetheless, the second, third and fourth respondents deliberately applied pressure to force the first respondent to make the payments.

45                  By way of mitigation, the applicant accepted that the union had not committed any prior contraventions of s 187AB, although it had committed contraventions of other sections of the Act. There was no indication that the third or fourth respondents had committed any prior contraventions of the Act.

46                  There are several other factors which favour mitigation. As previously explained in these reasons, that the stoppages responded to a fatality in the building and construction industry differentiates the stoppages from those taken in support of better wages or conditions, and thereby render the payments less culpable than payments for stoppages arising out of material self interest alone.

47                  In addition to the nature of the stoppage, the history of the establishment of the union policy provides a compelling reason to treat this matter with leniency. The history was explained by Mr Martin Kingham, the state secretary of the union, in an affidavit sworn on 12 April 2006. The applicant did not seek to cross-examine Mr Kingham on his affidavit. His evidence stands uncontradicted. He deposed in part as follows:

3                  … at the relevant periods the general practice in the construction industry that following a death of a construction worker that a safety audit of the site is conducted and this is followed by safety rectification work. This practice is generally agreed to by the employers and the employees are paid while this process is undertaken. …

4                  The historical reasons behind the policy which lead to this prosecution dates back to the spate of deaths which occurred in the construction industry in 1999. During the course of 1999 there were 15 deaths of construction workers in the industry. This was an issue of major concern for the union and our members. At this time the CFMEU Executive, both Construction & General and the FEDFA Divisions determined, that to highlight the large number of deaths, on each occasion of a death in the industry there would be a 24 hour stoppage of work across the industry. Payment was not sought in relation to these stoppages as it was a matter of principle and determined to highlight the serious issue.

5                  The reason behind this practice was twofold. Firstly, as a sign of respect for a dead worker and secondly, to try to highlight the issue to the Victoria State Government. The reason that the issue was to be highlighted to the State Government was to try to put pressure on them to engage more Worksafe inspectors as the union believed that many of the deaths occurred on smaller sites in the suburbs where safety standards was not as good as the bigger construction projects. The CFMEU believed that if there was a campaign by the State Government to target the smaller sites then it may assist in improving the safety standards on these sites and prevent further deaths of our members.

6                  I was involved in discussions with the Workcover Minister in 2000 to resolve this issue. As a result of those discussions the Minister eventually agreed to engage more Worksafe inspectors. During the course of 2001 the State Government agreed to put on more Worksafe inspectors.

7                  I believe that the practice of having a 24 hour stoppage on the occasion of each construction industry worker’s death assisted in the union achieving our desired result which was the engagement of more Worksafe inspectors and the re-establishment of a separate construction industry inspectorate.

8                  Whether as a consequence of the introduction of more Worksafe inspectors and a designated construction inspectorate or due to the union highlighting the safety issues in the industry there has been a decrease in the number of deaths in the industry in Victoria since that time.

9                  Accordingly, the practice I have described was modified after discussions between the union and a number of the major builders in the State. Those discussions took place in the forum known as the Victorian Building Industry Agreement Consultative Committee (“VBIA Consultative Committee”). Representatives of the all the construction unions and construction companies attend the VBIA Consultative Committee.

10              I recall that some of the employer representatives, including Laurie Cross from the Master Builders’ Association, made very strong representations to the VBIA Consultative Committee that the old practice penalised employers who had not done anything wrong but were being punished just because there was a death in the industry. I also recall that major employers were in favour of changing the practice to having the site safety audit and then undertaking the safety rectification work and the members not being disadvantaged, that is they would be paid, while the process was being undertaken. In this case they may only lose up at a couple of hours of productive work in most instances rather than a day of lost production.

11              The CFMEU representatives at those discussions, including myself, could see sense in what the employer representatives said and agreed to amend the practice in the manner that they suggested.

12              As a consequence of those discussions a new practice was agreed to. The new practice would be that a site safety audit would be conducted while the members did not perform any productive work. During the conduct of the site safety audit any necessary safety rectification work would be undertaken. When areas of a site were deemed to safe them [sic] normal productive work would recommence. Also there would be a report back meeting to the members engaged on each project to inform them of the nature of the death and what assistance that the union would be taking or seeking on behalf of the deceased member. For instance, if there is a young family who is involved then usually there would be a levy or donations of the workers on the site to help out the family of the deceased worker.

13              This new procedure was eventually agreed to during the course of 2002. Since that time the employers have generally complied with the practice or agreement that was reached through the VBIA Consultative Committee process.

48                  Finally, Mr Kingham explained that, in consequence of the threat of prosecution, the union has amended its policy so that in future when there is a death in the industry, safety audits will take place while normal productive work continues.

49                  Having regard to all these factors, and in particular to the circumstances of the contravention, including the history of the union policy, the absence of prior contraventions of s 187AB and the probability that the union will not commit contraventions of s 187AB in the future, there should be no penalty imposed on the second respondent.

50                  For the same reasons, together with the additional facts that the third and fourth respondents were acting as shop steward and organiser respectively of the second respondent as its servants or agents to give effect to the policy concerning fatalities on building sites, no penalty should be imposed on the third or fourth respondent.

51                  As the contraventions of s 187AB (1)(a) were admitted, and these reasons contain findings of contraventions of s 187AB(1)(b), there is no purpose in making declarations that the second, third and fourth respondents have contravened that section. The application against them should also be dismissed.

Associate:

Dated: 11 September 2006