FEDERAL COURT OF AUSTRALIA

Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 5) [2013] FCA 1384

THE COURT ORDERS THAT:

1.    Within 30 days of this order the respondent pay the applicant a pecuniary penalty of $60,000, being the total penalties payable in respect of two contraventions of s 346 of the Fair Work Act 2009 (Cth).

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

REASONS FOR JUDGMENT

1    The background facts to this judgment are set out in detail in Construction, Forestry, Mining and Energy Union v BHP Coal Ltd (No 4) [2013] FCA 762. In that decision I found that the respondent had contravened s 346 of the Fair Work Act 2009 (Cth) (“Fair Work Act”) by terminating the employment of Mr Kevin Adams and Mr Justin Winter, and I ordered that the respondent treat as null and void those terminations of employment.

2    Section 346 is a civil penalty provision. Section 546 of the Fair Work Act provides that the Court may order a person to pay a pecuniary penalty which the Court considers appropriate if the Court is satisfied that a person has contravened a civil penalty provision.

3    In this case it is not in dispute that the respondent is liable to pay a pecuniary penalty in respect of contravention of the Fair Work Act. The maximum penalty payable for a body corporate for a single contravention of a civil penalty provision is 300 penalty units (s 546(2) Fair Work Act). At material times, a penalty unit was $110 (s 12 Fair Work Act, s 4AA(1) Crimes Act 1914 (Cth)). It follows that the maximum penalty the Court can impose on the respondent for a single contravention is $33,000.

4    Key issues for determination now are:

    whether the respondent should be liable to pay pecuniary penalties in respect of two contraventions of the Fair Work Act or whether it is appropriate that the Court take the approach that there has been a single course of conduct and therefore only one contravention of the Fair Work Act has occurred warranting one penalty; and

    whether the conduct of the respondent warrants a finding of conduct at the more serious end of the scale, and a concomitant penalty payable.

Two contraventions or one?

5    It is not in dispute that the Court may, in the exercise of its discretion to order pecuniary penalties paid in respect of a contravention of s 346 of the Fair Work Act, conclude that breaches of the Fair Work Act arose from one course of conduct as distinct from properly distinct breaches, and that accordingly only one contravention has occurred. As the Full Court observed in QR Limited v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (2010) 204 IR 142; [2010] FCAFC 150 at [49]:

Even if s 557(2) does not apply to a case to oblige to treat as one contravention all the consequences of a particular piece of conduct, it is open to the Court, in an appropriate case, to take into account, as a matter of discretion, the circumstance that the same acts or omissions have resulted in multiple contraventions by multiple breaches of a term cast in similar language in each of multiple agreements, by imposing a lesser penalty or even no penalty in respect of breaches of some terms, while imposing a substantial penalty in respect of breaches of other terms (Gibbs v Mayor, Councillors and Citizens of Altona (1992) 37 FCR 216 at 233; Kelly v Fitzpatrick (2007) 166 IR 14 at 17).

6    In Construction, Forestry, Mining and Energy Union v Cahill (2010) 194 IR 461; [2010] FCAFC 39 Middleton and Gordon JJ further observed at [39]:

As the passages in Williams [2009] 262 ALR 417 explain, a “course of conduct” or the “one transaction principle” is not a concept peculiar to the industrial context. It is a concept which arises in the criminal context generally and one which may be relevant to the proper exercise of the sentencing discretion. The principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality. That requires careful identification of what is “the same criminality” and that is necessarily a factually specific enquiry. Bare identity of motive for commission of separate offences will seldom suffice to establish the same criminality in separate and distinct offending acts or omissions.

(emphasis added.)

7    In this case, the applicant submits (in summary) that the conduct of the respondent constitutes two separate contraventions of the Fair Work Act, and that the respondent should be penalised accordingly.

8    The respondent submits that its conduct can properly be characterised as a single course of conduct because, in summary:

    Mr Adams’ and Mr Winter’s circumstances were the same and treated similarly by the respondent;

    allegations of bullying and harassment against Mr Adams and Mr Winter arose from the same course of conduct;

    McGill DCJ’s comments related to both Mr Adams and Mr Winter;

    Mr Craig’s decision to dismiss Mr Adams and Mr Winter was made as part of the one exercise.

9    In my view there were two separate contraventions of the Fair Work Act by the respondent. The submissions of the applicant in respect of this point are, in my view, persuasive. While there were common factual issues – namely, the circumstances surrounding Mr Cramond’s resignation from the union and the discussions between Mr Cramond and (at different times) Mr Adams and Mr Winter in relation to Mr Cramond rejoining the union – on balance I am satisfied that this was not a single course of conduct by the respondent warranting one penalty. I form this view in light of the facts that:

    Mr Adams and Mr Winter acted independently, and their employment was terminated following decisions made by the respondent in respect of that independent conduct.

    Separate inquiries were made by the respondent’s human resources section in respect of separate complaints made by Mr Cramond concerning Mr Adams and Mr Winter.

    Mr Brandon Craig of the respondent gave evidence that he conducted separate inquiries concerning the alleged conduct of Mr Adams and Mr Winter. This is not surprising, considering that the alleged conduct of Mr Adams and Mr Winter related to separate incidents involving Mr Cramond.

    While Mr Cramond’s resignation from the union constituted a common theme in relation to the conduct of Mr Adams and Mr Winter, this does not mean that the conduct of the respondent in respect of Mr Adams and Mr Winter overlapped to the extent that there was one course of conduct. Circumstances may have been different, for example, if Mr Adams and Mr Winter had jointly engaged with Mr Cramond, or if the conduct of Mr Adams and Mr Winter had been part of a collective or organised action. On the evidence before the Court, however, this did not occur.

Amount of penalty

10    The parties have not agreed on appropriate penalties to be imposed on the respondent. In summary, the applicant claims that this is a very bad case, and that the maximum penalty of $33,000 for each contravention is appropriate. The respondent submits that a penalty at the lower end of the range would be a meaningful penalty in the circumstances.

11    The Court has on many occasions considered principles to be applied in determining appropriate penalties for contravention of the Fair Work Act provisions. In Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 Lander J said:

[93]    There are three purposes at least for imposing a penalty: punishment; deterrence; and rehabilitation. The punishment must be proportionate to the offence and in accordance with the prevailing standards of punishment: R v Hunter (1984) 36 SASR 101 at 103. Therefore the circumstances of the offence or contravention are especially important. The penalty must recognise the need for deterrence, both personal and general. 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. In some cases, although hardly in this type of contravention, rehabilitation is an important factor.

[94]    The individual or personal circumstances of the contravenor must be taken into account as also any relevant matter in mitigation. For a contravention of these sections the minimum penalty which addresses punishment and deterrence, both personal and general, will be appropriate. Where one act may involve a number of contraventions, as in this case, it would be generally inappropriate to impose separate penalties because almost inevitably that would offend against the totality principle as known to the criminal law. The better approach is to assess the culpability of the contravenor and have regard to the number of employees affected by that action.

(emphasis added.)

12    In Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [14] Tracey J outlined a non-exhaustive list of relevant considerations to which the Court could have regard in determining an appropriate penalty:

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

    The circumstances in which that 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 the breaches were properly distinct or arose out of the one course of conduct.

    The size of the business enterprise involved.

    Whether or not the breaches were deliberate.

    Whether senior management was involved in the breaches.

    Whether the party committing the breach had exhibited contrition.

    Whether the party committing the breach had taken corrective action.

    Whether the party committing the breach had cooperated with the enforcement authorities.

    The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and

    The need for specific and general deterrence.

13    In my view it is useful to have regard to these considerations in considering an appropriate penalty in this case, while noting that they in no way constrain the discretion of the Court in examining the particular circumstances before it (and note the very similar approach taken in such cases as Construction, Forestry, Mining and Energy Union v Pilbara Iron Company (Services) Pty Ltd (No 4) (2012) 225 IR 113; [2012] FCA 894, General Manager of Fair Work Australia v Health Services Union [2013] FCA 1306, Australian Building & Construction Commissioner v Inner Strength Steel Fixing Pty Ltd [2012] FCA 499, Fair Work Ombudsman v Maclean Bay Pty Ltd (No 2) [2012] FCA 557, Sterling Commerce (Australia) Pty Ltd v Iliff (2008) 173 IR 378; [2008] FCA 702, Automotive, Food, Metals Engineering, Printing and Kindred Industries Union v Mechanical Engineering Services Pty Ltd (No 2) [2008] FCA 1249 and Blandy v Coverdale NT Pty Ltd ACN 102 611 423 [2008] FCA 1533).

14    In this case I consider the following issues relevant in considering the seriousness of the contraventions before me.

15    First, as I explained in Construction, Forestry, Mining and Energy Union v BHP Coal Ltd (No 4) [2013] FCA 762, the respondent dismissed Mr Adams and Mr Winter in circumstances where:

    It was deeply involved in defamation proceedings in the District Court of Queensland prosecuted by Mr Adams, including financially supporting Mr Cramond in respect of that litigation.

    The termination decision was harsh compared with the response of the respondent to more extreme bullying in the workplace.

    Mr Winter was not a party to the District Court proceedings but was dismissed by the respondent on the basis of comments made by his Honour in those proceedings despite previous findings by the respondent’s Human Resources department that complaints by Mr Cramond concerning Mr Winter were unsubstantiated.

    Similarly, Mr Adams was dismissed despite previous findings by the respondent’s Human Resources department that complaints by Mr Cramond concerning Mr Adams were unsubstantiated.

    The respondent saw the dismissal of Mr Adams and Mr Winter as the natural progression of the success of Mr Cramond (and the respondent) in the District Court proceedings.

16    The applicant submits that the respondent’s conduct was contrary to the objects of the Fair Work Act and undermined the principles of freedom of association in that legislation. I agree.

17    Second, while Mr Adams and Mr Winter were ordered reinstated into their positions pending determination of the proceedings by me, the result of the respondent’s contraventions was that these workers stood under threat of permanent dismissal, for reasons which related to their union roles and activities rather than any substantiated evidence of workplace bullying. In my view this situation constituted damage to these workers and the applicant.

18    Third, the respondent has demonstrated no contrition for its conduct, and it has not taken any corrective action in relation to these contraventions.

19    Fourth, while the respondent may not have specifically intended to contravene the Fair Work Act, it is clear that the dismissal of Mr Adams and Mr Winter was the result of deliberate actions of decision-makers in the respondent, which were in contravention of the legislation. In my view a suggestion that the respondent did not deliberately breach the Fair Work Act in the circumstances is at the very least hollow, and more likely simply incorrect.

20    Fifth, the decision-maker in the respondent was Mr Brandon Craig, at material times the General Manager and site senior executive of the Peak Downs mine. The evidence before the Court was that Mr Craig reported on his decisions concerning Mr Adams and Mr Winter to Mr Stephen Dumble, the president of the respondent. Senior human resources officers including Mr Mark Stroppiana provided assistance to Mr Craig. It is clear that members of senior management of the respondent were involved in the contraventions.

21    Sixth, from the point of view of general deterrence the penalty should be of a kind to act as a deterrent in preventing similar contraventions by like-minded persons or organisations. In my view the contraventions of the Fair Work Act by the respondent were serious, and a proportionately serious penalty should be imposed. No distinction of substance was drawn between the circumstances of the dismissal of Mr Adams and Mr Winter in relation to the nature of penalty.

22    Finally, it is not in dispute that the respondent is a major and profitable Australian corporation, with thousands of employees. In relation to the need for specific deterrence, a penalty of substance is required. However I also note that there is no history of substance of prior conduct. The applicant contends that the respondent has recently been found to have contravened s 346 of the Fair Work Act by dismissing an employee in Victoria (Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) [2012] FCA 1218) although it appears that this decision is currently on appeal and a decision of the Full Court is imminent. Even putting to one side the issue of the appeal, I am not persuaded that I should properly draw the inference in relation to an organisation the size of the respondent that there is a systemic issue of prior legislative contravention such as to influence the penalty the Court may impose.

23    Further, while I consider that the decision of his Honour in the District Court provided an excuse for the respondent to dismiss the two workers, I note the submissions of Mr Kenzie for the respondent that Mr Craig placed significance on the decision of his Honour and that this fact removed this case from the realm of “bad cases”. I accept this submission, and consider that a 10% discount should be applied such that the respondent should be liable to pay a pecuniary penalty of $30,000 in respect of each contravention of s 346.

Conclusion

24    Finally, the applicant seeks an order that any penalties be payable to it. The respondent does not oppose such an order.

25    There is extensive authority supporting the proposition that, in circumstances where penalty proceedings in an industrial context were commenced by a party other than an enforcement agency, any pecuniary penalties ordered payable by the Court are ordinarily be paid to the party prosecuting the proceedings. Such an order has been referred to as the “usual” order: Woodside Burrup Pty Ltd v Construction, Forestry, Mining and Energy Union [2011] FCA 949 at [148], Gibbs v The Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216 at 223, Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (No 2) (2001) 110 IR 372; [2001] FCA 672 at [8], and Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357 at [44], [65].

26    The applicant submits that it has been put to the trouble, risk and expense of bringing proceedings which are in the public interest, which advance the objects of the legislation, and which benefit the wider community. This submission is not contested by the respondent.

27    In the circumstances I consider it appropriate to order that the pecuniary penalties payable in respect of the two contraventions of the Fair Work Act by the respondent be paid to the applicant.

Associate:

Dated:    17 December 2013