FEDERAL COURT OF AUSTRALIA

Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining & Energy Union [2014] FCA 126

THE COURT DECLARES THAT:

1.    On 13 September 2012, the second respondent, Joseph McDonald, contravened s 348 of the Fair Work Act 2009 (Cth) (the FW Act) by making a threat (the Threat) against NW Construction Management Pty Ltd (NWC) to picket 901 William Street, Northbridge (the Site) with the intent to coerce NWC to comply with his lawful request that NWC discuss with the first respondent, the Construction, Forestry, Mining and Energy Union (CFMEU), altering the amount NWC was to pay Legend Contractors Pty Ltd (Legend) for work completed by Legend under contract to NWC (the Industrial Activity).

2.    On 13 September 2012, the CFMEU contravened s 348 of the FW Act by reason of the second respondent making the Threat against NWC with the intent to coerce NWC to engage in the Industrial Activity.

3.    On 17 September 2012, the second respondent contravened s 348 of the FW Act by conducting a picket at the Site (the Picket) with the intent to coerce NWC to engage in the Industrial Activity.

4.    On 17 September 2012, the CFMEU contravened s 348 of the FW Act by reason of the second respondent conducting the Picket with the intent to coerce NWC to engage in the Industrial Activity.

5.    On 17 September 2012, the second respondent contravened s 348 of the FW Act by making a further threat against NWC (the Further Threat) to again picket the Site with the intent to coerce NWC to renegotiate its contract with, or make payments to, Legend at the demand of the second respondent (the Further Industrial Activity).

6.    On 17 September 2012, the CFMEU contravened s 348 of the FW Act by reason of the second respondent making the Further Threat against NWC with the intent to coerce NWC to engage in the Further Industrial Activity.

THE COURT ORDERS THAT the second respondent, Joseph McDonald, pay the following penalties:

1.    $1,980 for his contravention of s 348 of the FW Act by reason of his Threat;

2.    $1,980 for his contravention of s 348 of the FW Act by reason of him conducting the Picket;

3.    $1,980 for his contravention of s 348 of the FW Act by reason of the Further Threat;

AND THE COURT FURTHER ORDERS THAT the first respondent, Construction, Forestry, Mining and Energy Union, pay the following penalties:

4.    $9,900 for its contravention of s 348 of the FW Act by reason of the second respondent’s Threat;

5.    $9,900 for its contravention of s 348 of the FW Act by reason of the second respondent conducting the Picket;

6.    $9,900 for its contraventions of s 348 of the FW Act by reason of the second respondent’s Further Threat.

AND THE COURT FURTHER ORDERS THAT pursuant to s 546(3)(a) of the FW Act the pecuniary penalties set out in paragraphs 1-6 of these orders be paid to the Consolidated Revenue Fund of the Commonwealth such payment to be made within 90 days of this order.

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

REASONS FOR JUDGMENT

1    The applicant is the Director of the Fair Work Building Industry Inspectorate (the DFWBII). The DFWBII and the respondents have filed a Statement of Agreed Facts and Admissions (SOAF) in this matter for the purposes of the Court determining the questions of the liability of the respondents and the appropriate penalties to be ordered but for no other purpose. It has been signed by the solicitors for the parties and constitutes the evidence in the application.

2    In the SOAF, the first respondent (CFMEU) and the second respondent (McDonald) each admits liability for three contraventions of s 348 of the Fair Work Act 2009 (Cth) (the FW Act).

3    The applicant, the CFMEU and McDonald are agreed upon as to the appropriate pecuniary penalties for each contravention.

The agreed facts

The DFWBII

4    The DWFBII is:

(a)    a statutory appointee of the Commonwealth appointed by the Minister for Employment and Workplace Relations by written instrument pursuant to s 16 of the Fair Work (Building Industry) Act 2012 (Cth) (the FWBI Act); and

(b)    a person with standing and authority to bring these proceedings.

The CFMEU

5    The CFMEU is and was at all relevant times:

(a)    an organisation of employees registered under the Fair Work (Registered Organisations) 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 the term in s 4 of the FWBI Act and s 12 of the FW Act;

(d)    a “building association” within the meaning of that term in s 4 of the FWBI Act; and

(e)    a “building industry participant” within the meaning of that term in s 4 of the FWBI Act.

McDonald

6    McDonald 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 12 and s 363(1)(b) of the FW Act;

(d)    a “building industry participant” within the meaning of s 4 of the FWBI Act;

(e)    acting in his capacity as an officer of the CFMEU.

NW Construction, Legend and the Site

7    NW Construction Management Pty Ltd (NWC) at all relevant times:

(a)    engaged employees in the construction industry whose employment included building work;

(b)    was a person who had entered into contracts for services under which it arranged for building work to be carried out;

(c)    was a “building industry participant” within the meaning of s 4 of the FWBI Act; and

(d)    was the head contractor responsible for the construction of a project at 901 William Street, Northbridge, Western Australia (the Site).

8    Shao Su Xing (Xing), known as Sean, at all relevant times was an employee of NWC and the Construction Manager for the Site.

9    Kim Ashley Hay (Hay) at all relevant times was an employee of NWC and the Site Manager for the Site.

10    William Tim Wong (Wong) at all relevant times was an employee of NWC and the Site Manager for the Site.

11    Legend Contractors Pty Ltd (Legend) at all material times:

(a)    was a subcontractor of NWC performing work at the Site;

(b)    engaged employees in the construction industry whose employment included building work; and

(c)    was a “building industry participant” within the meaning of s 4 of the FWBI Act.

The Threat

12    At about 7.00 am on 13 September 2012, McDonald entered the Site and met with about 17 workers engaged as either employees or contractors by Legend and three employees of NWC, outside the crib huts located on the Site and about 25 metres from the entrance gates of the Site (the Meeting).

13    McDonald told those present at the Meeting words to the effect that:

(a)    workers for Legend were not being provided with their lawful entitlements;

(b)    the reason that workers for Legend were not being provided with their lawful entitlements was that Legend was not receiving enough money under its contract with NWC;

(c)    McDonald was going to try and renegotiate Legend's contractual terms with NWC; and

(d)    if this could not be achieved by 17 September 2012, the CFMEU would picket the front gates of the Site and invite the media to attend.

14    Following the Meeting, at about 7.20 am on 13 September 2012, McDonald entered the Site and spoke to Hay. McDonald asked to speak to "Sean". McDonald said words to the effect that, if Sean did not speak to him, the CFMEU would picket the front gate of the Site on 17 September 2012 and bring the media (the Threat).

15    McDonald made the Threat with intent to coerce NWC and Xing to comply with a lawful request made by, or requirement of, the CFMEU, namely, to meet with McDonald to discuss the terms of Legend's contract with NWC (the Lawful Request).

16    In the circumstances, each of McDonald and the CFMEU, by virtue of s 363 of the FW Act, contravened s 348 of the FW Act.

The Picket

17    At about 7.00 am on 17 September 2012, McDonald and 12 other officials of the CFMEU attended the Site.

18    One of the CFMEU officials, in the presence of McDonald, physically removed ropes and poles securing the gates of the Site to gain entry.

19    Between about 7.00 am and 9.00 am on 17 September 2012, at least two CFMEU officials, including McDonald, conducted a picket (the Picket) at the Site.

20    During the period when the Picket was being conducted, and by reason of the Picket, three employees of NWC were prevented from performing, and did not perform, any work at all.

21    McDonald conducted the Picket with intent to coerce NWC and Xing to comply with the Lawful Request.

22    In the circumstances, each of McDonald and the CFMEU, by virtue of s 363 of the FW Act, contravened s 348 of the FW Act.

The Further Threat

23    During the period when the Picket was being conducted, McDonald spoke to Wong and, on about five occasions, said words to the effect that the CFMEU would conduct a big picket with 120 to 200 people for the next two weeks if NWC did not comply with the CFMEU's request to renegotiate its contract with, and make payments to, Legend, so as to enable workers engaged by Legend to be paid superannuation and leave loading (the Further Threat).

24    McDonald made the Further Threat with intent to coerce NWC and Xing to comply with a lawful request made by, or requirement of, the CFMEU, namely, to comply with the CFMEU's request to renegotiate its contract with, and make payments to, Legend.

25    In the circumstances, each of McDonald and the CFMEU, by virtue of s 363 of the FW Act, contravened s 348 of the FW Act.

Appropriate declarations

26    The respondents admit the following contraventions on the basis of the agreed facts set out above and agree that the Court should make the following declarations:

(a)    On 13 September 2012, McDonald contravened s 348 of the FW Act by making a threat (the Threat) against NWC to picket 901 William Street, Northbridge (the Site) with the intent to coerce NWC to comply with his lawful request that NWC discuss with the CFMEU altering the amount NWC was to pay Legend for work completed by Legend under contract to NWC (the Industrial Activity).

(b)    On 13 September 2012, the CFMEU contravened s 348 of the FW Act by reason of McDonald making the Threat against NWC with the intent to coerce NWC to engage in the Industrial Activity.

(c)    On 17 September 2012, McDonald contravened s 348 of the FW Act by conducting a picket at the Site (the Picket) with the intent to coerce NWC to engage in the Industrial Activity.

(d)    On 17 September 2012, the CFMEU contravened s 348 of the FW Act by reason of McDonald conducting the Picket with the intent to coerce NWC to engage in the Industrial Activity.

(e)    On 17 September 2012, McDonald contravened s 348 of the FW Act by making a further threat against NWC (the Further Threat) to again picket the Site with the intent to coerce NWC to renegotiate its contract with, or make payments to, Legend at the demand of McDonald (the Further Industrial Activity).

(f)    On 17 September 2012, the CFMEU contravened s 348 of the FW Act by reason of McDonald making the Further Threat against NWC with the intent to coerce NWC to engage in the Further Industrial Activity.

Appropriate penalties

27    The parties submit that penalties should be imposed by the Court as follows:

(a)    $1,980 against McDonald for his contravention of s 348 of the FW Act by reason of his Threat;

(b)    $1,980 against McDonald for his contravention of s 348 of the FW Act by reason of him conducting the Picket;

(c)    $1,980 against McDonald for his contravention of s 348 of the FW Act by reason of the Further Threat;

(d)    $9,900 against the CFMEU for its contravention of s 348 of the FW Act by reason of McDonald's Threat;

(e)    $9,900 against the CFMEU for its contravention of s 348 of the FW Act by reason of McDonald conducting the Picket;

(f)    $9,900 against the CFMEU for its contraventions of s 348 of the FW Act by reason of McDonald’s Further Threat.

Maximum penalties

28    Section 348 of the FW Act is a civil remedy provision. The maximum penalty available for a contravention of s 348 is 300 penalty units for a body corporate and 60 penalty units for an individual: ss 546(2) and 539(2) of the FW Act.

29    A "penalty unit" is $110: s 4AA(1) of the Crimes Act 1914 (Cth). The maximum penalty for each contravention of s 348 is:

(1)    For a body corporate, such as the CFMEU, $33,000; and

(2)    For an individual, such as McDonald, $6,600.

30    Each proposed agreed penalty is 30% of the maximum available penalty for that contravention.

Principles for determining penalties

General principles

31    The overriding principle when fixing a penalty for a civil remedy contravention is to ensure that it is proportionate to the gravity of the contravening conduct: Attorney-General v Tichy (1982) 30 SASR 84 at 92-93.

32    The authorities have recognised that the purposes to be served by the imposition of penalties are threefold:

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

(2)    deterrence, both personal and general; and

(3)    rehabilitation.

Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [93] per Lander J.

33    The task which a court is faced with is one of "instinctive synthesis": Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [27] per Gray J and [55] per Graham J. This requires a court to take into account all relevant factors and to arrive at a single result which takes due account of them all: Wong v The Queen (2001) 207 CLR 584 at [74] - [76].

34    Proportionality and consistency commonly operate as a final check on the penalty: Australian Ophthalmic Supplies at [54] per Graham J.

35    Courts exercising industrial jurisdiction have identified a range of factors which may be relevant to the circumstances of a particular case when assessing the appropriate penalty, for example, Construction, Forestry, Mining & Energy Union v Coal & Allied Operations Pty Ltd (No 2) (1999) 94 IR 231 at [8]; Construction, Forestry, Mining and Energy Union v Hamberger (2003) 127 FCR 309 at [51], quoting Cooper J in Hamberger v Construction, Forestry Mining & Energy Union [2002] FCA 585 at [15].

36    The courts have, however, warned against reliance on checklists because it risks transforming the process of instinctive synthesis into the application of a rigid catalogue of matters for attention. In Australian Ophthalmic Supplies at [91] Buchanan J observed:

[91] … At the end of the day the task of the Court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations.

37    The courts also warn against comparing the case the subject of the assessment with any other particular case so as to derive from it the amount of penalty to be fixed: NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 295.

38    The courts now regard more seriously any contravention of industrial laws than has generally been the case in the past: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) (2010) 199 IR 373 at [12]; Finance Sector Union v Commonwealth Bank of Australia (2005) 224 ALR 467 at [72].

39    The relevant observations by Merkel J in Finance Sector Union were endorsed in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357 at [62] per Branson and Lander JJ.

Relevance of agreement between the parties on penalty

40    The parties have agreed on the proposed penalties to be submitted to the Court.

41    The principles generally applicable in this circumstance were identified in NW Frozen Foods and conveniently summarised in Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd (2004) ATPR ¶41-993 at [51] as follows:

(1)    It is the responsibility of the Court to determine the appropriate penalty.

(2)    Determining the amount of a penalty is not an exact science. Within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another.

(3)    There is a public interest in promoting settlement of litigation, particularly where it is likely to be lengthy.

(4)    The view of the regulator, as a specialist body, is a relevant but not determinative consideration on the question of penalty.

(5)    In determining whether the proposed penalty is appropriate, the Court examines all of the circumstances of the case. Where the parties have put forward agreed facts, the Court may act on that statement if it is appropriate to do so.

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

42    In Mobil Oil, the Full Court further observed at [54]:

[54]    … the sixth proposition drawn from the reasoning in NW Frozen Foods does not mean, in our opinion, that the Court must commence its reasoning with the proposed penalty and limit itself to considering whether that penalty is within the permissible range. A Court may wish to take that approach. However, it is open to a Court, consistently with the reasoning in NW Frozen Foods, first to address the appropriate range of penalties independently of the parties' proposed figure and then, having made that judgment, determine whether the prepared penalty falls within the range.

Relevant considerations in the assessment of penalty

43    Bearing in mind the warning against applying a rigid checklist of matters, the authorities have recognised the following factors, amongst others, as potentially relevant to the assessment of a penalty in an industrial context:

(1)    the nature and extent of the conduct which led to the breaches;

(2)    the circumstances in which the relevant conduct took place;

(3)    the nature and extent of any loss or damage sustained as a result of the breaches;

(4)    previous contraventions of industrial legislation;

(5)    whether the breaches were properly distinct or arose out of the one course of conduct;

(6)    the size of the business enterprise involved;

(7)    whether or not the breaches were deliberate;

(8)    whether senior management was involved in the breaches;

(9)    whether the party committing the breach had exhibited contrition;

(10)    whether the party committing the breach had taken corrective action;

(11)    whether the party committing the breach had co-operated with the enforcement authorities; and

(12)    the need for specific and general deterrence.

Stuart-Mahoney v Construction, Forestry, Mining and Energy Union (2008) 177 IR 61 at [40].

Totality principle

44    The Court must also take into account the totality principle in determining the appropriate level of penalty: Johnson v The Queen (2004) 205 ALR 346 at [35].

45    In accordance with the totality principle, the Court must fix a penalty appropriate for each individual contravention and then, as a check at the end of the process, consider whether the aggregate is appropriate for the total contravening conduct: McDonald v The Queen (1994) 48 FCR 555 at 556, citing Mill v The Queen (1988) 166 CLR 59 at 62-63; Pearce v The Queen (1998) 194 CLR 610 at [45] per McHugh, Hayne and Callinan JJ.

46    The principle is designed to "ensure that the aggregate of penalties imputed is not such as to be oppressive or crushing": Stuart-Mahoney at [60].

47    At 30% of the aggregate maxima, the total penalty is 90% of the maximum that would apply if the three breaches were viewed as aspects of a single breach. In the circumstances set out below, that does not breach the totality principle.

Applicable considerations

Nature and extent of the conduct and circumstances in which it occurred

48    The DFWBII submits, and I accept, that the respondents' contraventions of s 348 of the FW Act as reflected in the SOAF are serious in that:

(1)    McDonald and the CFMEU are both experienced operators in industrial relations;

(2)    McDonald engaged in deliberately coercive conduct by:

(i)    making the Threat to organise a picket if his demands were not met within the specified timeframe of five days;

(ii)    organising the Picket when, after five days, his demands had not been met; and

(iii)    making the Further Threat to organise a larger picket over a two week period, should his demands not be met.

(3)    McDonald tried to take advantage of the commercial pressure on NWC to avoid the significant financial losses that would flow from a picket and the associated disruption of work.

(4)    McDonald chose not to attempt a resolution of the issues through lawful means such as negotiation, dispute resolution procedures or court action.

(5)    McDonald was not exercising, or purporting to exercise, any statutory right of entry at the time of the contraventions because his right of entry permit has been revoked.

Nature and extent of loss or damage

49    The Picket prevented three workers from performing work for two hours.

Course of conduct

50    The respondents engaged in a course of conduct over a five day period involving three separate and distinct contraventions. I accept the joint submission that each contravention requires the imposition of a separate penalty.

Prior relevant conduct

51    McDonald and the CFMEU have been held liable for a significant number of prior contraventions of industrial laws. The DFWBII put before the Court a table of what was asserted to be prior relevant conduct involving each of the respondents. The respondents contend that the table is not accurate. As they point out it is only contraventions of other legislative provisions involving similar conduct which are relevant and that conduct of a different character is not directly relevant to the assessment of penalty: Stuart-Mahoney at [44].

52    It is unnecessary to identify the relevant prior conduct. The DFWBII is satisfied that even taking these contraventions at their highest the proposed agreed penalties are within an appropriate range. I have no reason to conclude otherwise.

53    Nonetheless, against a background of some relevant prior contraventions specific deterrence is a significant relevant consideration, although it cannot operate so as to increase any penalty beyond that which would be appropriate to the conduct in question: Temple v Powell (2008) 169 FCR 169 at [63].

Whether or not the contraventions were deliberate

54    McDonald is a very experienced industrial relations operative. He has a significant history of failing to comply with industrial laws. There can be no suggestion that he was unaware of the unlawful nature of his actions.

Size of the CFMEU and involvement of senior management

55    The CFMEU is a large, prominent and influential national union. There is no evidence of incapacity to pay.

56    McDonald is, and was at all material times, the Assistant Secretary of the CFMEU's Construction and General Division, Western Australian Divisional Branch.

57    Senior management should be held to a higher standard of conduct and McDonald's status as a senior official of the CFMEU is an aggravating factor.

Contrition, corrective action and cooperation with enforcement authorities

58    It is to the respondents' credit that four weeks prior to the scheduled trial of this matter they have conceded liability and agreed on facts and penalty: Draffin v Construction, Forestry, Mining and Energy Union (2009) 189 IR 145 at [95]. The respondents, by their admissions, have avoided the time and expense of a trial.

59    However, I do not accept that the respondents have thereby demonstrated contrition although, as I have described it, their cooperation avoided the need for a trial.

60    There is nothing to evidence that any steps have been taken toward corrective conduct by the respondents.

The need for specific and general deterrence

61    The penalty must reflect the need for specific and general deterrence.

62    There is a strong need for specific deterrence in this case given the respondents' history of repeated disregard for industrial laws.

63    Further, the penalty must be sufficiently high that it sends the message to others who are likely to act unlawfully that conduct such as that engaged in by McDonald and, by implication, the CFMEU is unacceptable and will be met with serious consequences.

Conclusion

64    I am satisfied, in the circumstances of this case, that a penalty for each contravention constituting 30% of the maximum is within the permissible range and appropriate to meet the needs of general and specific deterrence.

65    I am also satisfied that the aggregate is not excessive.

66    There will be declarations and orders accordingly. There will, by agreement, be no order as to costs.

Associate:

Dated:    24 February 2014