FEDERAL COURT OF AUSTRALIA

Lend Lease Project Management & Construction (Australia) Pty Ltd v Construction, Forestry, Mining and Energy Union (No 5) [2012] FCA 1144

THE COURT ORDERS THAT:

1.    A total penalty of $550,000 be imposed on the first respondent (CFMEU), in proceedings QUD 79 of 2011, QUD 110 of 2011 and QUD 126 of 2011, the fourth respondent (CFMEU (Qld)) in proceedings QUD 79 of 2011, and the fifth respondent (CEPU) in proceedings QUD 79 of 2011 and QUD 126 of 2011 in respect of their contraventions of the Building and Construction Industry Improvement Act 2005 (Cth) (“BCII Act”).

2.    The CFMEU, CFMEU (Qld) and CEPU are jointly and severally liable for the $550,000 penalty specified in order 1.

3.    Pursuant to s 49(5) of the BCII Act, the penalty specified in order 1 be paid to Lend Lease Project Management & Construction (Australia) Pty Ltd (Lend Lease) within 60 days of the date on which these orders are made.

4.    A penalty of $6,450 be imposed on the second respondent (Pearson) in proceedings QUD 126 of 2011 in respect of his contraventions of the BCII Act.

5.    The penalty specified in order 4 be paid to the Commonwealth.

6.    A penalty of $6,450 be imposed on the third respondent (Vink) in proceedings QUD 126 of 2011 in respect of his contraventions of the BCII Act.

7.    The penalty specified in order 6 be paid to the Commonwealth.

8.    A penalty of $4,300 be imposed on the fourth respondent (O’Doherty) in proceedings QUD 126 of 2011 in respect of his contraventions of the BCII Act.

9.    The penalty specified in order 8 be paid to the Commonwealth.

10.    A penalty of $7,750 be imposed on the sixth respondent (Hanna) in proceedings QUD 126 of 2011 in respect of his contraventions of the BCII Act.

11.    The penalty specified in order 10 be paid to the Commonwealth.

12.    A penalty of $6,450 be imposed on the seventh respondent (Jarvis) in proceedings QUD 126 of 2011 in respect of his contraventions of the BCII Act.

13.    The penalty specified in order 12 be paid to the Commonwealth.

14.    A penalty of $6,450 be imposed on the eighth respondent (Olsen) in proceedings QUD 126 of 2011 in respect of his contraventions of the BCII Act.

15.    The penalty specified in order 14 be paid to the Commonwealth.

16.    A penalty of $2,150 be imposed on the ninth respondent (Malone) in proceedings QUD 126 of 2011 in respect of his contraventions of the BCII Act.

17.    The penalty specified in order 16 be paid to the Commonwealth.

18.    Each party pay its own costs of the proceedings in QUD 79 of 2011, QUD 110 of 2011 and QUD 126 of 2011.

THE COURT FURTHER ORDERS THAT:

19.    The parties file written submissions in respect of undertakings and injunctions in these proceedings by 4.00 pm on 5 November 2012.

20.    The proceedings be adjourned to 10.15 am on 8 November 2012 in respect of argument concerning undertakings and injunctions in these proceedings.

Definitions

In these orders the following definitions apply:

“GCUH Project” means the construction of the Gold Coast University Hospital Project at the GCUH Site.

“GCUH Site” means the site of the construction of the Gold Coast University Hospital at the corner of Parklands Drive and Olsen Avenue, Parklands.

“Industrial Action” means:

(a)    a failure or refusal by a person to attend for work or a failure or refusal to perform any work at all by one or more employees who attend for work;

(b)    a ban, limitation or restriction on the performance of work by a person or on the acceptance of or offering for work by a person; or

(c)    the performance of work by a person in a manner different from that in which it is customarily performed, or the adoption of a practice in relation to work by a person, the result of which is a restriction or limitation on, or a delay in, the performance of work.

Industrial Action does not include:

(d)    protected industrial action within the meaning of s 408 of the Fair Work Act 2009 (Cth);

(e)    action by employees that is authorised or agreed to by the employer; or

(f)    action by an employee or subcontractor if:

(i)    the action was based on a reasonable concern by the employee about an imminent risk to his or her health or safety; and

(ii)    the employee did not unreasonably fail to comply with a direction by Lend Lease or his/her employer to perform other available work, whether at the same or another workplace, that was safe and appropriate for the employee to perform.

“Involved in” has the meaning given in s 48(2) of the BCII Act.

“Law Courts Project” means the construction of the Brisbane District and Supreme Court at the Law Courts Site.

“Law Courts Site” means the site of the construction of the Brisbane Supreme Court and District Court building at 419 George Street, Brisbane (corner of George Street, Roma Street and Herschel Street), Queensland.

“Practical Completion” means the date specified as such in the contract for the construction of the GCUH Project and the Law Courts Project.

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

REASONS FOR JUDGMENT

1    These proceedings arise from significant industrial conflict which took place on two major construction project sites in south-east Queensland in 2011. In respect of both projects the applicant in QUD 79 of 2011 and QUD 110 of 2011 (“Lend Lease”) was the principal contractor. Those projects were:

    the project known as the Brisbane Supreme Court and District Court project (“Law Courts Project”), located at 419 George Street Brisbane; and

    the project known as the Gold Coast University Hospital (“GCUH Project”), located at the corner of Parklands Drive and Olsen Avenue, Parklands.

2    The industrial conflict resulted in the commencement of three separate applications. As I have already indicated, applications QUD 79 of 2011 and QUD 110 of 2011 were commenced by Lend Lease. The named respondents in QUD 79 of 2011 were:

    the Construction, Forestry, Mining and Energy Union (“CFMEU”);

    the Construction, Forestry, Mining and Energy Union, Industrial Union of Employees, Queensland (“CFMEU (Qld)”); and

    the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (“CEPU”).

3    The named respondent in QUD 110 of 2011 was the CFMEU.

4    The Australian Building and Construction Commissioner (“ABCC”), now known as the Director, Fair Work Building Industry Inspectorate (“Director”), intervened in those proceedings.

5    Those applications were brought:

    pursuant to ss 421(3), 545 and 546 of the Fair Work Act 2009 (Cth) (“Fair Work Act”) for injunctive relief, the imposition of penalties and compensation;

    pursuant to s 39 and s 49 of the Building and Construction Industry Improvement Act 2005 (Cth) (“BCII Act”) for injunctive relief, the imposition of penalties and compensation; and

    pursuant to s 23 and s 32 of the Federal Court of Australia Act 1976 (Cth) (“Federal Court Act”) for injunctive and other relief.

6    On 25 May 2011 Dowsett J ordered that QUD 110 of 2011 be adjourned to a date to be fixed, or to the hearing of QUD 79 of 2011, whichever was the later.

7    The third application – QUD 126 of 2011 – was commenced by the ABCC and named as respondents:

    The CFMEU

    Kane Pearson

    Scott Vink

    Patrick O’Doherty

    The CEPU

    David Hanna

    Tim Jarvis

    Adam Olsen

    Beau Malone.

8    That application was brought:

    pursuant to ss 417, 545 and 546 of the Fair Work Act for the imposition of penalties and compensation;

    pursuant to s 421(1) and s 546 of the Fair Work Act for the imposition of penalties;

    pursuant to s 39 and s 49 of the BCII Act for the imposition of penalties and compensation; and

    pursuant to s 500 and s 546 of the Fair Work Act for the imposition of penalties.

9    On 23 December 2011 the parties filed a Statement of Agreed Facts and Contentions in respect of QUD 79 of 2011 and QUD 126 of 2011. In summary, all parties agreed as to:

    the injunctive relief to which the respondents should be subject;

    the imposition of penalties on the respondents; and

    the quantum of those penalties.

10    I understand that the proceeding in QUD 110 of 2011 has been, in substance, subsumed into QUD 79 of 2011 and that the relief to which the parties agreed in respect of QUD 79 of 2011 was intended to similarly dispose of QUD 110 of 2011. Accordingly, in this judgment I deal with the issues of injunctive relief and penalties relevant to all three applications.

11    Separate compensatory orders sought against the respondents are not addressed in this judgment.

Background

12    I take the background primarily from the Statement of Agreed Facts and Contentions filed by the parties.

13    As I have already noted, Lend Lease was, at all material times, principal contractor in respect of the Law Courts Project and the GCUH Project. In summary, the respondents to QUD 79 of 2011 and QUD 110 of 2011 were unions representing workers engaged in those projects. The respondents to QUD 126 of 2011 were those unions as well as:

    employees, officials or organisers of the CFMEU and/or CFMEU (Qld) (Messrs Pearson, Vink, O’Doherty, Hanna, Jarvis and Olsen); and

    an employee, official or organiser of the CEPU (Mr Malone).

14    At all material times the Director (or its predecessor, the ABCC) was entitled to bring proceedings and make application for relief sought by operation of s 49 and s 73 of the BCII Act.

15    Lend Lease engaged, at all material times, up to 86 subcontractors to perform building work on the GCUH Project and up to 28 subcontractors to perform building work on the Law Courts Project. Lend Lease also employed workers on both projects who were members of the CFMEU and the CEPU.

16    In 2011, the CFMEU conducted a campaign called “Stop the Sham” which was intended to prevent a practice known as “sham contracting” in the construction industry. An allegation of “sham contracting” contemplates a sub-contractor purporting to engage workers as independent contractors when in reality they are employees of the sub-contractor, with those workers receiving lower wages and fewer entitlements than employees.

17    On 18, 19, 20, 21, 23, 24, 25 and 26 May 2011 employees of Lend Lease at the GCUH site took industrial action.

18    On 24, 25, 26 and 27 May 2011 employees of Lend Lease at the Law Courts site took industrial action.

19    The parties have agreed that this industrial action was variously engaged in and organised by the CFMEU, the CFMEU (Qld) and/or the CEPU, and Messrs Vink, Hanna, Jarvis and Olsen, and was unlawful industrial action in breach of ss 36(1), 37 and 38 of the BCII Act. In particular:

    On 18 May 2011 at the GCUH site – unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Messrs Vink, Hanna, Jarvis and Olsen involved (inter alia) the following elements:

o    protests, a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day;

o    a meeting convened and addressed by Messrs Hanna, Olsen, Jarvis and Vink, as well as Mr Michael Ravbar, the State Secretary of the Queensland Construction and General Divisional Branch of the CFMEU; and

o    a meeting between Messrs Hanna and Ravbar and Lend Lease senior management.

    On 19 May 2011 at the GCUH site – unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Messrs Hanna and Jarvis involved (inter alia):

o    a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and

o    meetings between employees and senior CFMEU officials including Messrs Hanna and Jarvis.

    On 20 May 2011 at the GCUH site – unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Mr Hanna involved (inter alia):

o    a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and

o    a meeting convened and addressed by senior officials of the CFMEU, namely Mr Jamie McQueen and Mr Hanna.

    On 21 May 2011 at the GCUH site – unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Messrs Jarvis and Olsen involved (inter alia):

o    a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and

o    attendance at the GCUH site by delegates and officials from the CFMEU and/or CFMEU (Qld), including Messrs Jarvis and Olsen, and indication by those delegates to the workers that they should leave the site.

    On 23 May 2011 at the GCUH site – unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Mr Hanna involved (inter alia):

o    a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day;

o    a meeting convened and addressed by delegates and senior officials from the CFMEU and/or CFMEU (Qld), including Messrs Hanna and Ravbar; and

o    an address by Mr Hanna to workers, including an invitation to sign a petition in relation to the industrial action.

    On 24 May 2011 at the GCUH site, unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Mr Hanna involved (inter alia):

o    a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and

o    an address by Mr Hanna to workers, including an invitation to participate in a convoy that day during work hours that involved driving vehicles from the GCUH site to Brisbane (which occurred).

    Similarly on 24 May 2011 at the Law Courts site, unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Messrs Pearson and O’Doherty involved (inter alia):

o    a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and

o    a meeting convened and addressed by officials from the CFMEU and/or CFMEU (Qld) and/or CEPU.

    On 25 May 2011 at the GCUH site, unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Messrs Hanna and Vink involved (inter alia):

o    a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and

o    a meeting convened and addressed by Messrs Hanna, Ravbar and Vink.

    Similarly on 25 May 2011 at the Law Courts site, unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Mr Pearson involved (inter alia):

o    a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and

o    organisers for the CFMEU and/or CFMEU (Qld) and Mr Pearson informing workers that there was a strike and they should not be working.

    On 26 May 2011 at the GCUH site, unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Messrs Malone and Jarvis involved (inter alia):

o    a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day;

o    a meeting convened and addressed by organisers and senior officials from the CFMEU and the CEPU including Messrs Malone, Jarvis and McQueen; and

o    Mr Malone making comments concerning “crossing the picket line”, and Mr Jarvis making comments concerning “the commitment as the union to man this gate…”.

    Similarly on 26 May 2011 at the Law Courts site, unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Messrs Pearson and O’Doherty involved (inter alia):

o    a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and

o    organisers and delegates for the CFMEU and/or CFMEU (Qld), including Messrs Pearson and O’Doherty and Mr Pat Maher, telling workers who attended for work not to enter the Law Courts site but to attend a meeting at the Roma Street Parklands.

    On 27 May 2011 at the Law Courts site, unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Mr Pearson involved (inter alia):

o    a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and

o    organisers for the CFMEU and/or CFMEU (Qld), including Mr Pearson, telling workers who attended for work not to enter the Law Courts site but to attend a meeting at the Roma Street Parklands.

20    As a result of this combined activity, the CFMEU, CFMEU (Qld), CEPU and Messrs Pearson, Vink, O’Doherty, Hanna, Jarvis, Olsen and Malone each admit:

1.    to engaging in unlawful industrial action within the meaning of s 36 and s 37 of the BCII Act on each of the dates I have listed, thereby separately contravening s 38 of the BCII Act on each of those dates.

2.    that they were “involved in” a contravention of a civil penalty provision within the meaning of s 48(2) of the BCII Act, and are thereby to be treated to have contravened s 38 of the BCII Act by aiding, abetting, counselling and procuring the unlawful industrial action on each of those dates.

3.    that by s 69 of the BCII Act:

    the CFMEU and the CFMEU (Qld) are liable for the conduct and contraventions of Messrs Pearson, Vink, O’Doherty, Hanna, Jarvis and Olsen; and

    the CEPU is liable for the conduct and contraventions of Mr Malone.

21    It is not in dispute that the unlawful industrial action had a significant effect on both the GCUH Project and the Law Courts Project because no work was undertaken on any of the days in question on either project. The respondents admit that this unlawful industrial action caused a delay to the critical path of each project of:

    8 days in respect of the GCUH Project; and

    5 days in respect of the Law Courts Project.

22    Lend Lease has estimated that the daily cost of operating the respective projects on the delayed days was:

    on the GCUH Project – $115,722 per day; and

    on the Law Courts Project – $56,998.93 per day.

23    It is not in dispute that the unlawful industrial action on these days caused Lend Lease to suffer significant loss and damage.

Agreed Penalties

24    After the hearing in these proceedings Ch 5 and Ch 6 of the BCII Act were repealed by Item 51 of Sch 1 of the Building and Construction Industry Improvement Amendment (Transition to Fair Work) Act 2012 (Cth). The legislative scheme by which these provisions of the BCII Act, which include provisions pursuant to which penalties are sought in these proceedings, were repealed is discussed in detail by Greenwood J in Construction, Forestry, Mining and Energy Union v Abigroup Contractors [2012] FCA 1134 at [45]-[53]. It is not in dispute, however, that the provisions of the BCII Act relevant to the imposition of penalties for unlawful industrial action taking place before the repeal of Ch 5 and Ch 6 (including s 38 BCII Act) remain in force pursuant to transitional provisions in s 2.3 of the Building and Construction Industry Improvement Amendment (Transition to Fair Work) Regulation 2012 (Cth). Accordingly I now turn to consideration of those provisions.

25    Section 38 of the BCII Act is a Grade A civil penalty provision. In accordance with s 49(2) of the BCII Act, the maximum penalty for each offence is 1,000 penalty units for a body corporate and 200 penalty units otherwise, including for an individual. A “penalty unit” is $110 (s 4AA(1) Crimes Act 1914 (Cth)).

26    It follows that the maximum penalty for each contravention of s 38 of the BCII Act is:

    for a corporate respondent (which includes the unions in these proceedings): $110,000; and

    otherwise, including for an individual respondent: $22,000.

27    In these proceedings the respondents admit multiple contraventions of s 38 of the BCII Act. In particular:

    The CFMEU and/or CFMEU (Qld) admit 12 separate contraventions of s 38 (on 18, 19, 20, 21, 23, 24, 25 and 26 May 2011 in respect of the GCUH Project and on 24, 25, 26 and 27 May 2011 in respect of the Law Courts Project).

    The CEPU admits one contravention of s 38 on 26 May 2011 in respect of the GCUH Project.

    Mr Pearson admits four separate contraventions of s 38, all in respect of the Law Courts Project, on 24, 25, 26 and 27 May 2011.

    Mr Vink admits two separate contraventions of s 38, both in respect of the GCUH Project, on 18 and 25 May 2011.

    Mr O’Doherty admits two separate contraventions of s 38, both in respect of the Law Courts Project, on 24 and 26 May 2011.

    Mr Hanna admits six separate contraventions of s 38, all in respect of the GCUH Project, on 18, 19, 20, 23, 24 and 25 May 2011.

    Mr Jarvis admits four separate contraventions of s 38, all in respect of the GCUH Project, on 18, 19, 21 and 26 May 2011.

    Mr Olsen admits two separate contraventions of s 38, both in respect of the GCUH Project, on 18 and 21 May 2011.

    Mr Malone admits one contravention of s 38 in respect of the GCUH Project on 26 May 2011.

28    Pursuant to s 49(5) of the BCII Act, Lend Lease and the Director seek an order from the Court that the respondents pay certain penalty amounts in respect of these contraventions, and the respondents have agreed to an order from the Court in the terms sought by the applicants. The penalty amounts the parties have proposed to the Court in these proceedings are as follows:

    The CFMEU, CFMEU (Qld) and CEPU pay a penalty of $550,000 in total; and

    Messrs Pearson, Vink, O’Doherty, Hanna, Jarvis, Olsen and Malone pay a penalty of $40,000 in total, to be apportioned as follows:

o    Mr Pearson: $6,450

o    Mr O’Doherty: $4,300

o    Mr Vink: $6,450

o    Mr Hanna: $7,750

o    Mr Jarvis: $6,450

o    Mr Olsen: $6,450

o    Mr Malone: $2,150.

29    The unions have further agreed to undertake to, in summary, refrain from organising, engaging in or being involved in industrial action in relation to the projects. The individual respondents have also agreed to undertake, in summary, that until the practical completion of the projects, they will not intentionally hinder or obstruct any person legitimately exercising or seeking to exercise a right of entry on to the GCUH site or the Law Courts site.

Consideration of penalties

30    The respondents concede breaches of s 38 of the BCII Act, which provides that a person must not engage in unlawful industrial action. Building industry action is unlawful industrial action if:

(a)    the action is industrially-motivated; and

(b)    the action is constitutionally-connected action; and

(c)    the action is not excluded action.

(s 37 BCII Act)

31    In this case although the parties have reached agreement in respect of both culpability of the respondents and appropriate sanctions, it is ultimately for the Court to determine both the nature and quantum of any penalties to be imposed on the respondents. It is also clear, however, that the Court should give weight to any agreement reached by the parties as to penalties, and should generally give effect to the agreed penalty provided it falls within the appropriate range: NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 291 and 298; Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [129]; White v Construction, Forestry, Mining and Energy Union [2011] FCA 192 at [5]. This is particularly so in light of the support given by the Director to the agreed penalty: cf Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993 at [51] and Hardwick v Australian Manufacturing Workers’ Union (2010) FCA 818 at [13] and [19].

32    In Australian Building & Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977 Barker J summarised general principles relevant to imposition of civil penalties in the following terms:

[4]    Sentencing (which the imposition of a civil penalty is an instance of) is one of the most, if not the most difficult tasks that judicial officers perform: CFMEU v Williams [2009] FCAFC 171; (2009) 262 ALR 417 (Williams) at [28].

[5]    The overriding principle is to ensure that the sentence is proportionate to the gravity of the contravening conduct: Attorney-General (SA) v Tichy (1982) SASR 84 at 92-93.

[6]    The purpose to be served by the imposition of penalties is at least threefold:

(1) Punishment, which must be proportionate to the offence and in accordance with prevailing standards;

(2) Deterrence, both personal (assessing the risk of re-offending) and general (a deterrent to others who might be likely to offend); and

(3) Rehabilitation.

See Ponzio v BP Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543 (Ponzio), Lander J at [93]-[94].

[7]    The task which a sentencing judge is faced with is one of “instinctive synthesis”: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560 (Australian Ophthalmic Supplies), Gray J at [27] and Graham J [55]. Such a process requires that a court take into account all relevant factors and to arrive at a single result which takes due account of them all: see Wong v The Queen [2001] HCA 64; [2001] HCA 64; (2001) 207 CLR 584 at [74]-[76]; Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 (Markarian), Gleeson CJ, Gummow, Hayne and Callinan JJ at [37]-[39]. The penalty must not be so great as to crush the person upon whom the penalty is imposed or reveal the person as a scapegoat: Ponzio at [93] (Lander J); McDonald v R (1994) 48 FCR 555 at 563. The maximum penalty is reserved for only the most serious of contraventions: Markarian at [31]. Proportionality and consistency commonly operate as a final check on the penalty assessed: Australian Ophthalmic Supplies at [53].

33    I respectfully adopt his Honour’s summary as providing an overall guide to the approach of the Court in relation to the imposition of civil penalties.

34    Further, and more recently, Tracey J in Alfred v Construction, Forestry, Mining and Energy Union [2011] FCA 556 summarised factors which, in his Honour’s view, were relevant to consideration of the penalty upon which the parties in that particular case had agreed. Those factors were as follows (at [70]):

•    The nature and extent of the conduct which led to the breaches.

•    The circumstances in which that relevant conduct took place.

•    The nature and extent of any loss or damage sustained as a result of the breaches.

•    Whether there had been similar previous conduct by the respondent.

•    Whether or not the breaches were deliberate.

•    Whether the respondent had exhibited contrition.

•    Whether the respondent had taken corrective action.

•    Whether the respondent had co-operated with the enforcement authority.

•    The need for specific and general deterrence.

35    In my view this list is a helpful guide to the exercise of the discretion of the Court in the current circumstances in determining an appropriate penalty. With reference to these factors, I now make the following observations concerning appropriate penalties in this case.

36    First, it is not in dispute that both the Law Courts Project and the GCUH Project are major projects in south-east Queensland, with projected values of approximately $570 million in relation to the Law Courts Project and $1.76 billion in relation to the GCUH Project. Further, the unlawful industrial action was protracted, conspicuously public, and co-ordinated across the two project sites. Hundreds of workers on both sites ceased work on the days I listed earlier in this judgment, causing delays to the critical path of each project (5 days in respect of the Law Courts Project and 8 days in respect of the GCUH Project).

37    Second, the unlawful industrial action was not taken by the respondents in relation to specific concerns relevant to the particular sites, but rather was taken as part of an industry-wide campaign relating to union claims of sham contracting.

38    Third, and importantly, the unlawful industrial action was taken despite orders from Fair Work Australia that it should not occur.

39    Fourth, it is clear that the unlawful industrial action of the respondents caused serious disruption to Lend Lease. It is not in dispute that, as a result, Lend Lease suffered estimated loss and damage totalling $1,210,770.65.

40    Fifth, it is not in dispute that the contravening conduct of the respondents was deliberate, in pursuit of general and (in the final result in these proceedings) unsubstantiated claims by the unions of sham contracting, and in contravention of orders of Fair Work Australia. This is not a case where, for example, the contravention was inadvertent.

41    Sixth, it is questionable whether the respondents have demonstrated contrition in respect of the contraventions of the legislation. Rather, in their written submissions they vaguely referred to a “willingness to facilitate justice”. Nonetheless, the respondents have conceded that contraventions of the legislation occurred, and have reached agreement with the applicants – including the Director – in relation to appropriate penalties and injunctive relief. I note that the proceedings were set down for hearing for a combined period of several weeks. The agreement of the parties obviated the need for trials, and the associated expenditure which would have been incurred by all parties.

42    Seventh, to the extent that the respondents agreed to facts, penalties and other remedial orders, the respondents have demonstrated co-operation with the regulatory authorities in these proceedings.

43    Eighth, as observed by Lander J in Ponzio at [93] the penalty must recognise the need for deterrence, both personal and general. As his Honour further explained:

In regard to personal deterrence, an assessment must be made of the risk of re-offending. In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217.

44    As at the date of hearing it appeared that the respondents had an ongoing involvement, not only in the construction industry, but in activity at the sites of both projects. To that extent, specific deterrence in relation to unlawful industrial activity is of particular significance. The continuing involvement of the unions and the individual respondents (being officials of those unions) in the building and construction industry in Australia emphasises the importance of general deterrence in preventing similar contraventions of the legislation.

45    In this case penalties at different levels are submitted as appropriate for the unions – which are large and well-funded organisations – and the individual respondents. In my view this is a proper approach. I also note that, in reaching agreement, the parties clearly do not consider that the penalties proposed are such as, in the words of Lander J in Ponzio, “to crush the person upon whom the penalty is imposed or … to make that person a scapegoat”.

Penalties: conclusion

46    These proceedings arise from repeated contraventions of the BCII Act, resulting in substantial damage to Lend Lease, in circumstances where the respondents acted in defiance of orders of Fair Work Australia, for reasons which appeared to be of more relevance to a broad campaign than conditions on the particular sites. The penalties upon which the parties have reached agreement are, in relation to the unions, relatively high, but not so in respect of the individual respondents. Indeed, the penalties proposed in respect of the individual respondents are relatively low when considering the maximum penalties which could be imposed in the circumstances. However I am persuaded that the total amount of the penalties agreed by the parties is within the permissible range, and neither manifestly excessive nor manifestly inadequate having regard to the conduct in question.

47    The parties have also consented to the penalties imposed on the unions being paid to Lend Lease, and the penalties imposed on the individual respondents being paid to the Commonwealth. In my view an order pursuant to s 49(5) of the BCII Act that the penalties payable by the unions be paid to Lend Lease is appropriate in light of the damage suffered by Lend Lease as a result of the conduct of those respondents. I note that an order in such terms is consistent with the approach taken by the Court in Woodside Burrup Pty Ltd v Construction, Forestry, Mining and Energy Union [2011] FCA 949 at [116] and [149].

Injunctive relief and bank guarantee

48    The unions are prepared to undertake to refrain from (in summary) organising, engaging in or being involved in unlawful industrial action on or in connection with the GCUH Project and the Law Courts Project until the practical completion of those projects. The individual respondents are prepared to undertake to refrain from (in summary) hindering or obstructing third parties entering the relevant sites. In this context, the parties propose that the CFMEU be restrained from organising, engaging in, or being involved in the unlawful industrial action in respect of the project sites, and that the CFMEU provide a bank guarantee in the sum of $150,000 in favour of Lend Lease as security for compliance by the unions with the terms of the agreed undertakings and injunctive relief.

49    Prior to the repeal of Ch 5 and Ch 6 of the BCII Act, where a person contravened a civil penalty provision of that Act, the Court had a broad discretion to make orders it considered appropriate, including injunctions: s 49(1)(c) and s 49(3) BCII Act. The power to grant injunctive relief is also granted by s 23 of the Federal Court Act. Following the recent decision in Abigroup Contractors, however, the power of the Court to make orders for injunctive relief as agreed by the parties in this case is uncertain. Accordingly, I will invite the parties to make further submissions in relation to that issue, as well as the undertakings and bank guarantee offered by the respondents.

Associate:

Dated:    19 October 2012