FEDERAL COURT OF AUSTRALIA

Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2012] FCA 966

THE COURT NOTES THE FOLLOWING:

A.    This proceeding was heard and determined together with proceeding WAD 266 of 2011 (the civil contravention proceeding), with evidence in one proceeding being evidence in the other.

B.    The conduct on 2 February 2011 and 10 June 2011 of the First Respondent (CFMEU) and the Second Respondent (McDonald) which is the subject of the orders referred to below is also the subject of declarations and penalties that are set out in the orders in the civil contravention proceeding made the same day as these orders.

THE COURT ORDERS THAT:

1.    The name of the Applicant be amended to be "Director of the Fair Work Building Industry Inspectorate" and the title of the proceeding be amended accordingly.

2.    A fine of $25,000 be imposed on McDonald for his contempt of the order of Gilmour J made 23 December 2009 (the Order) by reason of McDonald engaging in and being involved in strike action on 2 February 2011 at the Queens Riverside Project (the Project).

3.    A fine of $50,000 be imposed on the CFMEU for its contempt of the Order by reason of McDonald's conduct as referred to in paragraph 2 above.

4.    A fine of $25,000 be imposed on McDonald for his contempt of the Order by reason of McDonald engaging in and being involved in strike action on 10 June 2011 at the Project.

5.    A fine of $50,000 be imposed on the CFMEU for its contempt of the Order by reason of McDonald's conduct as referred to in paragraph 4 above.

6.    The fines referred to above be paid into the Consolidated Revenue Fund within 60 days of the date of these orders.

7.    The CFMEU and McDonald pay the Applicant's costs of the Notice of Motion for Contempt dated 20 July 2011 on a party-party basis, including any reserved costs, such costs to be taxed in default of agreement, save and except for all costs associated with the Applicant’s application for the use of a court book.

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

THE COURT NOTES THE FOLLOWING:

A.    This proceeding was heard and determined together with proceeding WAD 106 of 2009 (the contempt proceeding), with evidence in one proceeding being evidence in the other.

B.    The conduct on 2 February 2011 and 10 June 2011 of the First Respondent (McDonald) and the Second Respondent (CFMEU) which is the subject of the declarations and penalties referred to below is also the subject of orders for fines for contempt of the orders of Gilmour J made on 23 December 2009, such fines being set out in the orders in the contempt proceeding made the same day as these orders.

THE COURT MAKES THE FOLLOWING DECLARATIONS:

1.    A declaration that McDonald has contravened s.38 of the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act) by reason of organising strike action at the building site known as the Queens Riverside Project (the Project) on 2 February 2011.

2.    A declaration that the CFMEU has contravened s.38 of the BCII Act by reason of it being liable for the conduct of McDonald as referred to in paragraph 1 above.

3.    A declaration that McDonald has contravened s.38 of the BCII Act by reason of organising strike action at the Project on 10 June 2011.

4.    A declaration that the CFMEU has contravened s.38 of the BCII Act by reason of it being liable for the conduct of McDonald as referred to in paragraph 3 above.

THE COURT ORDERS THAT:

1.    The name of the Applicant be amended to be "Director of the Fair Work Building Industry Inspectorate" and the title of the proceeding be amended accordingly.

2.    The Applicant have leave to file in Court an Amended Application dated 4 September 2012.

3.    A monetary penalty be imposed on McDonald of $10,000 by reason of him engaging in action in June and July 2011 with the intent to coerce Diploma Construction (WA) Pty Ltd to make a building enterprise agreement with the CFMEU in contravention of s.44 of the BCII Act (the coercive action).

4.    A monetary penalty be imposed on the CFMEU of $40,000 for a contravention of s.44 of the BCII Act, by reason of the coercive action.

5.    The above monetary penalties be paid into the Consolidated Revenue Fund within 60 days of the date of these orders.

6.    Paragraphs 1 and 2 of the orders of Gilmour J made on 5 July 2011 be discharged.

7.    The Respondents pay the Applicant's costs of the Proceeding, including any reserved costs, on a party-party basis, to be taxed in default of agreement, save and except for all costs associated with the Applicant’s application for the use of a court book.

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

REASONS FOR JUDGMENT

The proceedings

1    These two proceedings are concerned with: (a) charges of contempt brought against the Construction, Forestry, Mining and Energy Union (“the CFMEU”) and one of its officials, Mr Joseph McDonald; (b) proceedings against the CFMEU and Mr McDonald seeking declarations and the imposition of civil penalties for breaches of provisions of the Building and Construction Industry Improvement Act 2005 (Cth) (“the BCII Act”). The relevant facts were agreed shortly before trial. Appropriate declarations and penalties were also agreed, subject to approval by the Court.

The regulatory framework

2    The contempt charges arise from a breach by Mr McDonald (and vicariously the CFMEU) of an order made by this Court (Gilmour J) on 23 December 2009 in the following terms:

Until further determination of this application or until further order, each of the respondents [including the CFMEU and Mr McDonald] (whether by their officers, delegates, agents, employees or other representatives) be restrained from:

(a)    being engaged in or involved in any contractor (and their employees) or employee who is required to perform building work for Diploma Constructions (WA) Pty Ltd (Diploma):

(i)    failing or refusing to attend for building work or failing or refusing to perform any work after attending for building work; or

(ii)    placing a ban, limitation or restriction on the performance of building work adopted in connection with an industrial dispute, (together action)

save and except in relation to action by any employee of a contractor or of Diploma, required to perform building work for Diploma if the action by the employee is authorised or agreed to, in advance and in writing, by the employer of the employee; or action by an employer that is authorised or agreed to, in advance and in writing, by or on behalf of employees of the employer; or action based on a reasonable concern held by the employee about an imminent risk to his or her health or safety and the employee did not unreasonably fail to comply with a direction of his or her employer to perform other available work, whether at the same or another workplace, that was safe to perform.

3    Diploma Constructions (WA) Pty Ltd (“Diploma”) was at the relevant times responsible for the construction of apartments known as the Queens Riverside Apartments at 36 Adelaide Terrace, Perth, Western Australia. Inner Strength Steel Fixing Pty Ltd (“Inner Strength”) was one of its sub-contractors. Inner Strength employed a number of employees at the site. I shall deal shortly with the facts which, it is agreed, show a breach by Mr McDonald (and the CFMEU) of the order set out above. I am satisfied, on the basis of the facts agreed by the parties, that there is no reasonable doubt that Mr McDonald (and the CFMEU) breached those orders, as charged and agreed (see Witham v Holloway (1995) 183 CLR 525).

4    Section 38 of the BCII Act prohibits a person from engaging in “unlawful industrial action”. The elements of “unlawful industrial action” are identified in definitions supplied by ss 36 and 37 of the BCII Act. The parties agreed that the same conduct which represented breaches of the orders made on 23 December 2009 also disclosed breaches of s 38 of the BCII Act, and that declarations to that effect should be made. As penalties for contempt will be imposed it is neither necessary nor appropriate to fix separate penalties for breaches of s 38 of the BCII Act.

5    Section 44(1) of the BCII Act provides:

44(1)    A person must not:

(a)    take or threaten to take any action; or

(b)    refrain or threaten to refrain from taking any action;

with intent to coerce another person, or with intent to apply undue pressure to another person, to agree, or not to agree:

(c)    to make, vary or terminate, or extend the nominal expiry date of, a building enterprise agreement; or

(d)    to approve any of the things mentioned in paragraph (c).

6    Breach of s 44 is punishable by the imposition of a civil penalty. The parties agreed that Mr McDonald (and the CFMEU) breached s 44. On the basis of the facts agreed by the parties, to which I will refer hereunder, I am satisfied to the requisite standard that a breach of s 44 of the BCII Act, as alleged and accepted, was committed by Mr McDonald and the CFMEU.

The agreed facts

7    The following facts were agreed by the parties:

5.    The Construction, Forestry, Mining and Energy Union (CFMEU) is and was and at all relevant times:

(a)    an organisation of employees registered under the Fair Work (Registered Organisation) Act 2009 (Cth) (the FW(RO) Act) and by reason of being so registered, a body corporate by reason of s.27 of the FW(RO) Act;

(b)    a body corporate capable of being sued in its registered name;

(c)    an ‘organisation’ within the meaning of that term in s.4 of the Building and Construction Industry Improvement Act (Cth) (BCII Act);

(d)    an ‘industrial association’ within the meaning of that term in s.4 of the BCII Act;

(e)    a ‘building association’ within the meaning of that term in s.4 of the BCII Act; and

(f)    a ‘building industry participant’ within the meaning of that term in s.4 of the BCII Act.

6.    Joseph McDonald (McDonald) is and was at all relevant times:

(a)    a member of the CFMEU;

(b)    an employee and Assistant Secretary of the CFMEU’s Construction and General Division, Western Australian Divisional Branch;

(c)    an ‘officer’ of the CFMEU for the purposes of s.4 and s.69(3) of the BCII Act; and

(d)    in relation to the matters in respect of McDonald as set out below, acting in his capacity, and within the scope of his authority, as an employee, and/or officer of the CFMEU.

…

13.    Shortly after 10:45 am on 2 February 2011, McDonald attended the Site [the Diploma site at 36 Adelaide Terrace, Perth] with three CFMEU organisers ….

14.    Without authorisation from Diploma, McDonald and two of the CFMEU organisers attended the Site amenities area and waited until five workers of Inner Strength (Inner Strength Workers) arrived for their rostered ‘smoko’ break.

15.    At all relevant times:

(a)    the Inner Strength Workers were members of the CFMEU; and

(b)    four of the five Inner Strength Workers were employees of Inner Strength.

16.    Once the Inner Strength Workers attended the amenities area, McDonald instructed them to move to a private amenities room (private amenities room), away from the rest of the workers on Site (McDonald instruction).

17.    At or about 11:00 am, McDonald conducted a meeting with the Inner Strength Workers in the private amenities room on the Site (the 2 February 2011 meeting).

18.    During the course of the 2 February 2011 meeting, McDonald, amongst other things, told the Inner Strength Workers that:

(a)    Inner Strength owed $700,000.00 in superannuation payments;

(b)    the Inner Strength Workers should not go back to work because they were not going to get any more money from Inner Strength;

(c)    Inner Strength might be going bankrupt;

(d)    Inner Strength was engaging in ‘sham contracting’ and that this should be stopped;

(e)    the Inner Strength Workers should cease work and not go back to the Site until the situation with Inner Strength had been sorted out;

(f)    he and the other CFMEU organisers would not leave the Site until the Inner Strength Workers did; and

(g)    all other Sites where Inner Strength was working had been closed down and the Site was the last one to cease work.

19.    By reason of the conduct set out in paragraph 18, McDonald directed the Inner Strength workers to take strike action for the remainder of 2 February 2011 by ceasing to perform any further work that day and by leaving the Site after the meeting (the McDonald direction to take strike action).

20.    By reason of the McDonald direction to take strike action, the Inner Strength Workers took strike action on 2 February 2011 by not performing any further work and leaving the Site for the remainder of the day, with the exception of one Inner Strength worker, who returned to Site during the afternoon of 2 February 2011 (the Inner Strength strike action).

…

37.    At all relevant times, McDonald had actual, authority to give the McDonald direction to take strike action for and on behalf of the CFMEU.

8    The parties agreed that the facts set out immediately above sufficiently showed conduct by Mr McDonald and the CFMEU in breach of the order made by Gilmour J on 23 December 2009 and in breach of s 38 of the BCII Act. On the evidence before the Court, I accept that contention.

9    The following facts were also agreed by the parties:

41.    At all relevant times on 10 June 2011, the sub-contractors set out below (the 10 June 2011 contractors) who were in attendance at the Site, were contracted by Diploma to perform building work for Diploma at the Site:

(a)    Scorpion Scaffolding Australia;

(b)    Fineform Concrete;

(c)    Inner Strength;

(d)    National Fire Solutions Pty Limited;

(e)    Kore Construction Pty Ltd;

(f)    Pipeline Hydraulics Pty Ltd;

(g)    West Australia Mechanical Services Pty Ltd; and

(h)    Premier Building Solutions Pty Ltd.

42.    At all relevant times on 10 June 2011, the 10 June 2011 contractors employed a number of workers to perform building work for Diploma at the Site (the 10 June 2011 Workers).

…

45.    At approximately 6:30 am on 10 June 2011, McDonald attended outside the Site gates with [two CFMEU organisers] and set up a barbecue near a four wheel drive vehicle marked with the CFMEU’s Construction Skills Training Centre logo (the CFMEU barbecue).

46.    At all relevant times from 7:00 am on 10 June 2011, the 10 June 2011 Workers were required to perform building work for their employers at the Site for Diploma.

47.    Between approximately 6:30 am and 7:30 am, McDonald and [the two CFMEU organisers] encouraged approximately 95 to 100 of the 10 June 2011 Workers to attend the CFMEU barbecue and have a free breakfast.

48.    At or about 7:30 am, the CFMEU barbecue finished and McDonald and [a CFMEU organiser] organised a meeting of about 45 of the 10 June 2011 Workers.

49.    By reason of the matters in paragraph 48 above, about 45 of the 10 June 2011 Workers gathered around McDonald and [the two CFMEU organisers] present for a meeting to be conducted by McDonald (10 June 2011 meeting).

50.    The 10 June 2011 meeting commenced at approximately 7:30 am.

51.    During the 10 June 2011 meeting, McDonald said words to the effect of the following (the McDonald statements not to attend for work):

(a)    “Diploma are in financial difficulty”;

(b)    “Diploma are running out of money”;

(c)    “Diploma’s stock price is falling”;

(d)    “the steel fixers [Inner Strength] aren’t getting paid”;

(e)    “workers on site won’t be getting paid because their bosses [sub-contractors working for Diploma] aren’t getting paid”;

(f)    “all workers should check with their boss to see if they’re getting paid and let him know personally if they weren’t”; and

(g)    “if the workers continue to work, they won’t get paid for doing so”.

…

54.    The 10 June 2011 meeting concluded at about 7:40 am.

55.    By reason of McDonald’s involvement in organising and conducting the 10 June 2011 meeting approximately 45 of the 10 June Workers attended the 10 June 2011 meeting and failed to perform any building work at the Site between approximately 7:30 am and 7:40 am on 10 June 2011 (the 10 June 2011 meeting industrial action).

…

65.    McDonald’s 10 June 2011 unlawful conduct, pursuant to s.69 of the BCII Act, is taken to be conduct of the CFMEU by reason of McDonald’s 10 June 2011 unlawful conduct constituting conduct of an officer of the CFMEU acting in that capacity (s.69(1)(b) of the BCII Act).

10    The parties agreed that the facts set out immediately above sufficiently showed further conduct by Mr McDonald and the CFMEU in breach of the order made by Gilmour J on 23 December 2009 and in breach of s 38 of the BCII Act. On the evidence before the Court, I accept that contention.

11    Mr McDonald accepted that he had twice committed a contempt of the order made by Gilmour J on 23 December 2009, and of s 38 of the BCII Act, by engaging in the conduct referred to above. However, without objection he gave unchallenged evidence by affidavit that he had assumed the order made on 23 December 2009 was no longer operative in February and June 2011. He stated the basis for that assumption. He also gave evidence of concerns he had about the conduct of Inner Strength, and other contractors, in either engaging in “sham contracting” or otherwise not paying employee entitlements. I have taken this evidence into account as some evidence that Mr McDonald’s conduct referred to above was not egregious.

12    The following facts were also agreed by the parties:

75.    The McDonald statements not to attend for work made by McDonald at the 10 June 2011 meeting to the 10 June 2011 Workers were false and misleading (False and Misleading Statements).

76.    On 10 June 2011, the CFMEU, with the knowledge of McDonald, issued a media release (CFMEU Media Release) which made the following false and misleading statements (Media Release Statements) about Diploma in relation to its conduct at the Site and its contractors at the Site:

(a)    “Hundreds of thousands owed to contractors”.

(b)    “Form working company KORE it is believed haven’t been paid for up to four months and their workforce is suffering the same fate”.

(c)    “Ceiling fixers have had pay cheques bounce”.

(d)    “Steel fixers on the job have now gone two weeks without pay and have received empty promises going into the future”.

77.    On 10 June 2011, McDonald conducted an interview with radio station, 6PR (6PR Interview) wherein he made the following false and misleading allegations against Diploma in respect of its conduct at the Site (Radio Statements):

(a)    Diploma was not paying its sub-contractors working at the Site and that in some cases, sub-contractors had not been paid for four months;

(b)    cheques issued by Diploma and/or its sub-contractors had recently bounced;

(c)    Diploma owed moneys in the vicinity of $250,000.00 to $1 million in connection to work at the Site; and

(d)    Some Diploma sub-contractors are waiting up to four months to be paid.

78.    Prior to 22 June 2011, McDonald made statements to the “Australian Financial Review” which were subsequently published in the “Australian Financial Review” on 22 June 2011 concerning the Site which was entitled “Diploma restricts union access” as follows (AFR Statements):

(a)    “Nobody’s getting paid on that job [the Site];” and

(b)    “All we are saying is that the workers shouldn’t underwrite the cost of the development”.

79.    At or about 6:50 am on 23 June 2011, McDonald attended the Site with [two CFMEU organisers] and [a CFMEU officer] (the 23 June 2011 CFMEU officials).

80.    At or about 7.00 am, the 23 June 2011 CFMEU officials stood near the front entrance gates at the Site and prevented vehicles from entering for about 10 minutes (23 June 2011 blockade).

81.    A courier utility vehicle making a delivery of a pallet of materials to the Site and a truck delivering a portable bin to the Site were delayed in making their respective deliveries as a result of the 23 June 2011 blockade.

82.    On 27 June 2011, McDonald and John Norup (Norup), the Diploma Managing Director, met at the Catalano Café in Victoria Park (Café Meeting) wherein McDonald said the following to Norup:

(a)    Diploma has to have a union agreement for Phase Two of the project;

(b)    the CFMEU needs full access to the Site;

(c)    [two CFMEU organisers] had spoken to [the owner of the project] twice and told [it] of the issues the CFMEU had with Diploma;

(d)    Diploma had a week to agree to a building agreement to the CFMEU and give access to the CFMEU to the Site or the media campaign and stoppages at the Site would continue; and

(e)    If Diploma did not agree to the building agreement within a week, the CFMEU would continue its media campaign and stoppages against Diploma so that … the developer of the Site, saw Diploma as a marketing and construction risk and as a result, give Phase Two to a unionised builder –

(together, the Threats).

83.    At or about 7.05 am on 4 July 2011, McDonald entered the Site without authorisation and proceeded to remain on the Site despite numerous requests by Diploma personnel for him to leave the Site that morning (the 4 July 2011 unauthorised entry).

84.    By reason of the conduct of McDonald referred to in paragraph 83 above, work was disrupted in that personnel, being a security guard, leading hand and project manager, lost time in attempting to have McDonald leave the Site.

85.    At approximately 9:15 am on 4 July 2011, McDonald arranged for workers from other construction projects in Perth to attend the Site and picket the Site (organisation of the picket).

86.    About 15 minutes after the organisation of the picket, about 20 construction workers, that were not responsible for working at the Site, arrived at the Site, some of which arrived in a car driven by [another CFMEU organiser] (Picketing Workers).

87.    The Picketing Workers remained at the front of the Site for about 30 minutes and spoke with one or more of [three CFMEU organisers] (4 July 2011 Site Picket).

…

90.    The conduct of McDonald described…above, pursuant to s.69 of the BCII Act, is taken to be conduct of the CFMEU by reason that McDonald’s conduct constituted conduct of an officer of the CFMEU acting in that capacity (s.69(1)(b) of the BCII Act).

13    The parties agreed that the facts set out immediately above sufficiently showed conduct by Mr McDonald and the CFMEU in breach of s 44 of the BCII Act. On the evidence before the Court, I accept that contention.

The agreed penalties

14    The parties agreed that:

(a)    penalties of $25,000 should be imposed on Mr McDonald for each of his (two) admitted contempts;

(b)    penalties of $50,000 should be imposed on the CFMEU for each of its (two) admitted contempts;

(c)    declarations should be made that the conduct constituting the contempts was a breach of s 38 of the BCII Act;

(d)    a penalty of $10,000 should be imposed on Mr McDonald for his admitted breach of s 44 of the BCII Act; and

(e)    a penalty of $40,000 should be imposed on the CFMEU for its admitted breach of s 44 of the BCII Act.

15    The question of an appropriate penalty for a proven contempt, or for an established breach of a statutory prohibition (even if the contempt or the breach is admitted) is always ultimately a matter for the Court (Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72). However, in an appropriate case there is no barrier to the Court accepting a figure jointly proposed by the parties as an appropriate penalty in all the circumstances.

16    In the present case, the matter was fixed for hearing for seven days as a contest on all issues. On the evening before the trial was to commence the parties communicated their effective resolution of those issues. That resolution has ultimately avoided not only the expense and inconvenience to the parties of a contested hearing but has resulted in a significant saving of public resources. Having regard to the self-interest of the respondents, there is no basis to think that the agreed penalties are excessive in all the circumstances. Neither, having regard to the character of the applicant and its statutory role, is there any reason to think that the agreed penalties are inadequate or have been unreasonably compromised.

17    Detailed written submissions were provided by counsel for both the applicant and the respondents which discussed the relevant principles and their application to the facts of the present case. Those submissions made out a persuasive case that the penalties agreed by the parties are within the permissible range for such penalties. Although there were some differences in emphasis placed on some aspects of the task of fixing appropriate penalties it is not necessary to resolve those matters for the purposes of the present case.

18    I have already referred to Mr McDonald’s unchallenged evidence that his contempts were not knowing or wilful. Nevertheless, breach of an order of the Court is a serious matter. In my view the penalties proposed by the parties as punishment for the admitted contempts sufficiently recognise the seriousness of Mr McDonald’s conduct and the need to register the Court’s concern about even an unintended breach of its orders (see generally Bovis Lend Lease Pty Ltd v Construction, Forestry, Mining and Energy Union (No 2) [2009] FCA 650 at [11]-[12]). Similarly, the penalties proposed for the admitted breach of s 44 of the BCII Act sufficiently take account of the need to reinforce the statutory prohibition contained therein, having regard to the facts of the present case, including Mr McDonald’s own unchallenged evidence. I accept that they also are within the permissible range. I am satisfied that the penalties proposed do not offend against the “totality” principle.

19    Accordingly, I am prepared, without further detailed analysis of the facts and circumstances charged and admitted, to make the orders jointly proposed by the parties. The penalties will be paid to Consolidated Revenue. The parties have also agreed orders about costs.

Associate:

Dated:    4 September 2012