FEDERAL COURT OF AUSTRALIA

Helal v Brookfield Multiplex Limited [2012] FCA 653

THE COURT DECLARES THAT:

1.    By the conduct of its officer on 1 August 2009, the second respondent, in contravention of s 43(1) of the Building and Construction Industry Improvement Act 2005 (Cth), threatened to organise or take action with intent to coerce Permark Group Pty Ltd to employ each of Matthew Davis and Marco Grunwald as building employees.

THE COURT ORDERS AS FOLLOWS (NOTING THE CONSENT TO THE MAKING OF THESE ORDERS OF THE APPLICANT AND THE SECOND AND THIRD RESPONDENTS):

1.    A penalty of $30,000 be imposed upon the second respondent on account of its having, through the conduct of its officer on 1 August 2009, in contravention of s  43(1) of the Building and Construction Industry Improvement Act 2005 (Cth), threatened to organise or take action with intent to coerce Permark Group Pty Ltd to employ each of Matthew Davis and Marco Grunwald as building employees.

2.    The penalty referred to in order 1 be paid into the Consolidated Revenue Fund of the Commonwealth within 28 days of the date of these orders.

3.    The applicant have leave to discontinue the proceeding as against the third respondent within seven days of the payment of the penalty referred to in order 1.

4.    Other than with respect to the matters that are the subject of the declaration, and the penalty referred to in order 1, the applicant have leave to discontinue the proceeding as against the second respondent within seven days of the payment of the penalty referred to in order 1.

5.    There be no order as to costs.

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

REASONS FOR JUDGMENT

1    Within its field of operation, s 43(1)(a) of the Building and Construction Industry Improvement Act 2005 (Cth) (“the BCII Act”), prohibits a person from organising or taking action, or threatening to organise or take action, with intent to coerce another person to employ a person as a “building employee”.

2    This proceeding concerns an aggressive telephone discussion that the third respondent (“Mates”) had on 1 August 2009 with the general manager of a joinery contractor, Permark Group Pty Ltd (“Permark”). On the previous day, Permark had dismissed two of its employees for misconduct. In response to those dismissals, Mates threatened to organise industrial action against Permark – and to otherwise “make things very difficult for Permark” in terms of its future pursuit of work – unless the dismissed employees were reinstated.

3    That conduct (“the threat”) is conduct which the second respondent (“the CFMEU”) admits was in contravention of s 43 of the BCII Act. At the relevant time, Mates was a shop steward of the CFMEU. The threat made by him was made in Mates’ capacity as an officer of the CFMEU. The CFMEU admits that for the purposes of s 69 of the BCII Act, the making of the threat is properly attributed to it and that accordingly, a contravention by the CFMEU of s 43(1) of the BCII Act occurred.

4    The proceeding against the first respondent (“Brookfield Multiplex”) was discontinued. The relief which is now to be considered, is the subject of an agreement between the remaining parties. The applicant, who is an Inspector appointed pursuant to s 57 of the BCII Act (“the Inspector”), seeks the Court’s leave to discontinue proceedings as against Mates. That leave should be granted is a matter of agreement between the remaining parties. Additionally, the remaining parties have proposed, by agreement, that the Court make a declaration that the threat made by Mates contravened s 43(1) of the BCII Act and that a penalty of $30,000 be imposed on the CFMEU in relation to that conduct. There are other consequential orders proposed.

5    Whilst the consent of the parties is a consideration of some importance, as the submissions of the parties recognise, the question of relief remains in the discretion of the Court. The penalty that the Court should impose requires serious and careful consideration. For that purpose, the remaining parties have put before the Court a Statement of Agreed Facts. By reference to the agreed facts and having examined each of the relevant considerations, to which I will shortly refer, I am satisfied that the penalty proposed is an appropriate penalty and that the other relief proposed should be granted. I will now turn to explain why I have reached that conclusion.

The Agreed Contravening Conduct

6    Permark was engaged by Brookfield Multiplex to undertake construction and installation of joinery at a building construction project known as “Southbank One” located at Southbank, Victoria (“the site”).

7    Permark employed (amongst others) Marco Grunwald (“Grunwald”) and Matthew Davis (“Davis”) to perform building work in connection with the construction and installation of joinery at the site.

8    It is admitted that each of Grunwald and Davis was a “building employee” for the purposes of s 43(1)(a) of the BCII Act. It is further admitted that the work performed at the site by Grunwald and Davis was “building work” within the meaning of s 5 of the BCII Act. Those facts serve to bring the threat made within the field of operation of s 43(1)(a).

9    On Friday 31 July 2009, Permark terminated its employment of each of Grunwald and Davis for misconduct, consisting of two unexplained and unauthorised failures by those employees to attend for work at the site. On Saturday 1 August 2009, Grunwald nevertheless attended for work.

10    On that same day, Mates telephoned the General Manager of Permark, during which he said, in a threatening and angry tone, words to the following effect:

(a)    You had no right to dismiss Davis and Grunwald. Permark will have to pay Grunwald whether or not he is actually performing any work today. Permark either pays him to sit in the sheds, or it pays him to work;

(b)    I will stop all Permark employees from working on the site if Permark does not reinstate Davis and Grunwald; and

(c)    I can make things very difficult for Permark – you will have difficulty getting another job.

11    The making of the threat caused the General Manager of Permark to feel upset and frightened.

12    As a consequence of the threat, Permark re-employed Grunwald with effect from Saturday 1 August 2009, and Davis with effect from Tuesday 4 August 2009.

13    On the basis of the admissions made by the CFMEU in the context of the agreed facts, I am satisfied that the CFMEU contravened s 43(1) of the BCII Act.

Relevant Principles for determining Penalty

14    The relevant considerations required for an assessment of the appropriate penalty to be imposed for a breach of the BCII Act have been discussed at length by this Court: see Stuart-Mahoney v Construction, Forestry, Mining and Energy Union [2008] FCA 1426 at [40] (Tracey J); Temple v Powell (2008) 169 FCR 169 at [56] (Dowsett J); Cahill v Construction, Forestry, Mining and Energy Union (No 4) [2009] FCA 1040 at [9]–[10] (Kenny J).

15    As the parties have proposed an agreed penalty, the relevant question for the court is whether that agreed penalty is “appropriate in all the circumstances”: Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at [51] (Branson, Sackville and Gyles JJ) where the Full Court adopted the reasoning of Burchett and Kiefel JJ (with whom Carr J agreed) in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 298–299.

16    In Mobil at [51], the Full Court listed the principles enunciated in NW Frozen Foods including that:

    it is the Court’s responsibility to determine the appropriate penalty;

    determining the quantum of a penalty is not an exact science;

    there is a public interest in promoting settlement of litigation, particularly where it is likely to be lengthy;

    the view of the regulator, as a specialist body, is a relevant, but not determinative consideration on the question of penalty;

    in determining whether the proposed penalty is appropriate, the Court examines all the circumstances of the case;

    where the parties have put forward an agreed statement of facts, the Court may act on that statement if it is appropriate to do so in the circumstances of the case;

    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; and

    it will be appropriate if within the ‘permissible range’.

17    In Ponzio v B&P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at 565, Jessup J expressed the view, which a number of judges (including myself) have agreed with, that the phrase “permissible range” may be regarded as referring to that range that would be permitted by the Court, which is neither manifestly inadequate nor manifestly excessive: Hills v Sutton [2007] FCA 2033 at [7] (Tracey J); Wells v Locarno Management Pty Ltd [2008] FCA 1034 at [23] (Jessup J); Alfred v Construction, Forestry, Mining and Energy Union [2011] FCA 556 at [68] (Tracey J); Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2012] FCA 189 at [22] (Bromberg J); Fair Work Ombudsman v Tiger Telco Pty Ltd (in liq) [2012] FCA 479 at [23] (Bromberg J).

18    The CFMEU contended, and I agree, that the following principles should also inform the exercise of the Court’s discretion:

(a)    Proportionality: that any penalty imposed should not exceed that which is appropriate or proportionate to the gravity of the contravention found proven in the light of its objective circumstances: Hoare v R (1989) 167 CLR 348 at 354 (Mason CJ, Deane, Dawson, Toohey and McHugh JJ). See also the Veen v R (No 1) (1979) 143 CLR 458 at 467 (Stephen J) and 482–483 (Jacobs J) and 495 (Murphy J); Veen v R (No 2) (1988) 164 CLR 465 at 472 (Mason CJ, Brennan, Dawson and Toohey JJ), 485–486 (Wilson J), 490–491(Deane J) and 496 (Gaudron J). This approach has been adopted in relation to contraventions of the BCII Act: Stuart v Construction, Forestry, Mining and Energy Union (2010) 185 FCR 308 at [30] (Moore J).

(b)    Penalty maximum: that the maximum penalty should be reserved for the worst type of contravention: Veen v R (No 2) at 478 (Mason CJ, Brennan, Dawson and Toohey JJ); Stuart v Construction, Forestry, Mining and Energy Union at [30] (Moore J). It is not appropriate to look first to a maximum penalty, and to then simply make a proportional deduction from it: Markarian v R (2005) 228 CLR 357 (Gleeson CJ, Gummow, Hayne and Callinan JJ) at [31]. That is an approach which has been followed in civil penalty proceedings arising in the industrial context: Setka v Gregor (No 2) [2011] FCAFC 90 (Lander, Tracey and Yates JJ) at [46].

Is the proposed penalty within the permissible range?

19    I have considered the relevant and applicable considerations for determining an appropriate penalty by reference to the summary of such considerations helpfully provided by Tracey J in Stuart-Mahoney at [40].

20    The contravention in this case consisted of deliberate conduct on the part of Mates who made a threatening phone call to Permark’s General Manager, which left her feeling upset and frightened. The conduct was aggressive and intimidatory and ultimately achieved its prohibited purpose. It was unacceptable conduct which warrants a penalty which sends that message, for reasons of both specific and general deterrence. However, the evidence does not identify any adverse effect of the conduct upon Permark. There is no evidence of any loss or damage sustained as a result of the conduct. Those are mitigating factor of some significance.

21    The CFMEU does not seek to suggest that by reason of its size or financial position, it would be unable to pay a penalty imposed by the Court of the kind which is proposed by agreement.

22    The Inspector submitted that the CFMEU had failed to demonstrate any contrition for its conduct, and that there was nothing before the Court indicating that the CFMEU had apologised for, or recognised the severity of, its conduct and its impact upon Permark’s General Manager, nor that it had taken steps to prevent reoccurrence of the contravening conduct. It is appropriate that I take those matters into account, recognising that lack of contrition is not necessarily an aggravating circumstance that might increase the penalty to be imposed: BHP Steel (AIS) Pty Ltd v Construction, Forestry, Mining and Energy Union [2001] FCA 336 at [10] (Kiefel J) and Cahill v Construction, Forestry, Mining and Energy Union (No 4) at [87] (Kenny J). Further, I take into account that the CFMEU has demonstrated a degree of contrition in admitting the contraventions: Cozadinos v Construction, Forestry, Mining and Energy Union [2010] FCA 48 at [38] (Marshall J).

23    The CFMEU has cooperated with the enforcement authority by conceding those facts necessary to prove the admitted contravention and by agreeing to the proposed penalty. The Inspector acknowledges that this conduct is to the credit of the CFMEU. It has saved the parties the significant time and expense of a lengthy trial. It has also reduced the time and costs expended by the Court and in that regard, from a public policy perspective, such cooperative conduct by the parties in forging a pre-trial agreement should be regarded as beneficial: Wells at [23] (Jessup J).

24    I have taken into account the need for both specific and general deterrence. On the question of deterrence, the Inspector submitted that coercion in the construction industry attracts a special significance, as reflected by a dedicated legislative regime (the BCII Act) and by the higher maximum penalties which apply under that regime ($110,000 per contravention for a corporation) compared with that applicable to equivalent conduct under the Fair Work Act 2009 (Cth) (i.e. $33,000). I accept that the level at which a maximum penalty has been set must be taken into account. As Gleeson CJ, Gummow, Hayne and Callinan JJ said in Markarian v The Queen (2005) 228 CLR 357 at [31]:

…careful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick.

25    The Inspector set out in its submissions that there have been at least 35 cases in which the CFMEU had been found to have contravened the BCII Act, and 12 of those cases involved unlawful coercive conduct. It is unnecessary that each of the prior contraventions relied upon are set out. Counsel for the CFMEU submitted that, given the relevant conduct in this case occurred on 1 August 2009, events which occurred after that date, cannot properly be considered prior contraventions. I accept that submission. However, I nevertheless accept that the CFMEU has a long history of engaging in coercive conduct, relevantly similar to the kind in question in this case. Accordingly, those prior contraventions have weighed heavily in my consideration as to whether the proposed penalty is appropriate. However, I have also taken into account that prior contraventions should not lead to the imposition of a penalty that is disproportionate to the gravity of the instant offence: Veen v R (No 2) (1988) at 477 (Mason CJ, Brennan, Dawson and Toohey JJ).

Conclusion as to Penalty

26    The imposition of a penalty is a discretionary exercise, involving the synthesising of relevant factors, in order to arrive at a conclusion as to where the contravenor’s conduct sits on a scale of wrongdoing set by reference to the maximum penalty which could be imposed. Taking that approach to the question of whether the proposed penalty is appropriate, in the context of the relevant factors earlier identified, I have concluded that it is.

27    The proposed penalty is neither manifestly inadequate nor manifestly excessive. The conduct concerned was deliberate and serious but its intimidatory effect was short lived and it caused no loss or damage. I harbour a concern as to whether the penalty which I will impose is sufficiently meaningful to operate as a deterrent upon the CFMEU to engage again in conduct of this kind. However, I may only impose a penalty which is appropriate and proportionate to the gravity of the contravening conduct. The co-operation shown by the CFMEU, mitigates against the imposition of a harsher penalty than that which has been agreed.

28    I have also arrived at my conclusion, having taken into account the regulator’s view that the agreed penalty is appropriate. Additionally, there is, as I have indicated earlier, a strong public interest in courts exercising restraint in overly scrutinising proposed settlements, so that settlements may be encouraged and potentially lengthy and expensive litigation avoided.

29    I will impose a penalty of $30,000 upon the CFMEU in relation to a single contravention of s 43(1) of the BCII Act.

Declarations and other Orders

30    There is a proper and appropriate basis, including that of advancing the public interest, for the Court to exercise its discretionary power to make a declaration under s 21 of the Federal Court of Australia Act 1976 (Cth). I will make a declaration in the terms agreed by the parties which declares the CFMEU’s breach of s 43(1) of the BCII Act. I will also make the consequential orders proposed by the parties, including that there be no order as to costs.

Associate:

Dated:    21 June 2012