FEDERAL COURT OF AUSTRALIA

Director of the Fair Work Building Industry Inspectorate v Bragdon (No 2) [2015] FCA 998

THE COURT DECLARES THAT:

1.    The First Respondent, Chad Bragdon, contravened s 497 of the Fair Work Act 2009 (Cth) (FW Act), on 6 June 2013, by refusing to comply with repeated requests to produce his federal entry permits for inspection while at a construction site located on Seventh Street in Mascot, NSW (the Site) at which Abigroup Contractors Pty Ltd (Abigroup) was the head contractor and occupier of the premises.

2.    The First Respondent, Chad Bragdon, contravened s 500 of the FW Act, on 6 June 2013, when hindering workers on the Site while seeking to exercise rights in accordance with Part 3-4 of the FW Act.

3.    The First Respondent, Chad Bragdon, contravened s 500 of the FW Act, on 6 June 2013, by acting in an improper manner while seeking to exercise rights in accordance with Part 3-4 of the FW Act, by directing workers to cease work when he had no authority or power under the FW Act and the Work Health and Safety Act 2011 (NSW) (NSW WHS Act) to issue such direction;

4.    The First Respondent, Chad Bragdon, contravened s 503(1) of the FW Act, on 6 June 2013, by acting in a manner with the intent of giving the impression, or being reckless as to whether the impression was given, that he was authorised to enter the Site and exercise right of entry powers under the FW Act and NSW WHS Act;

5.    The First Respondent, Chad Bragdon, contravened section 503(1) of the FW Act, on 6 June 2013 by acting in a manner with the intent of giving the impression, or being reckless as to whether the impression was given, that he was authorised to direct that workers cease work under the FW Act and the NSW WHS Act.

6.    The Second Respondent, Anthony Kong, contravened s 497 of the FW Act, on 6 June 2013, by refusing to comply with repeated requests to produce his federal entry permits for inspection while at the Site.

7.    The Second Respondent, Anthony Kong, contravened s 500 of the FW Act on 6 June 2013, by acting in an improper manner while seeking to exercise rights in accordance with Part 3-4 of the FW Act, by falsely identifying himself as “Steve Irwin” when asked by Agibroup who he was, in the circumstances that he was not “Steve Irwin”.

8.    The Second Respondent, Anthony Kong, contravened s 500 of the FW Act, on 6 June 2013, when hindering workers on the Site while seeking to exercise rights in accordance with Part 3-4 of the FW Act.

9.    The Second Respondent, Anthony Kong, contravened s 500 of the FW Act, on 6 June 2013, by acting in an improper manner while seeking to exercise rights in accordance with Part 3-4 of the FW Act, by directing workers to cease work when he had no authority or power under the FW Act and the NSW WHS Act to issue such direction.

10.    The Second Respondent, Anthony Kong, contravened s 503(1) of the FW Act, on 6 June 2013, by acting in a manner with the intent of giving the impression, or being reckless as to whether the impression was given, that he was authorised to enter the Site and exercise right of entry powers under FW Act and NSW WHS Act.

11.    The Second Respondent, Anthony Kong, contravened section 503(1) of the FW Act by acting in a manner with the intent of giving the impression, or being reckless as to whether the impression was given, that he was authorised to direct that workers cease work under the FW Act and the NSW WHS Act.

12.    By reason of s 793 of the FW Act, the Third Respondent, the Construction, Forestry, Mining and Energy Union, is taken to have contravened sections 497, 500 and 503 of the FW Act by the conduct of its officers constituting their respective contraventions in Declarations 1 to 11 hereof.

AND THE COURT ORDERS THAT:

1.    The First Respondent, Chad Anthony Bragdon, is to pay to the Commonwealth on or before 2 November 2015 a pecuniary penalty of $20,000.

2.    The Second Respondent, Anthony Kong, is to pay the Commonwealth on or before 2 November 2015 a pecuniary penalty of $27,500.

3.    The Third Respondent, the Construction, Forestry, Mining and Energy Union, is to pay the Commonwealth on or before 2 November 2015 a pecuniary penalty of $225,000.

4.    The First Respondent personally must pay the pecuniary penalty the subject of Order 1, and is not to seek or receive reimbursement (in whole or in part) of any monies from the Third or Fourth or Fifth Respondents (or any related entity), or to cause or occasion such penalty to be paid, either directly or indirectly, by the Third or Fourth or Fifth Respondents (or any related entity).

5.    The Second Respondent personally must pay the pecuniary penalty the subject of Order 2, and is not to seek or receive reimbursement (in whole or in part) of any monies from the Third or Fourth or Fifth Respondents (or any related entity), or to cause or occasion such penalty to be paid, either directly or indirectly, by the Third or Fourth or Fifth Respondents (or any related entity).

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

REASONS FOR JUDGMENT

1    On 21 February 2014 an Originating Application was filed in this Court by the Director of the Fair Work Building Industry Inspectorate (the “Director”). In that proceeding, the Director sought a variety of relief including the making of declarations and the imposition of penalties pursuant to the Fair Work Act 2009 (Cth) (the “Fair Work Act”).

2    A hearing as to whether contraventions of the Fair Work Act had in fact been made out was held in June 2015. It was concluded that the Director had established contraventions of ss 497, 500 and 503 of the Fair Work Act: Director of the Fair Work Building Industry Inspectorate v Bragdon [2015] FCA 668. It was concluded that the First and Second Respondents (Messrs Chad Bragdon and Anthony Kong) had contravened each of those provisions; the Third Respondent, the Construction, Forestry, Mining and Energy Union (the “CFMEU”), was taken to have contravened those provisions by reason of s 793 of the Fair Work Act.

3    The present hearing is in respect to the relief to be granted.

4    Declaratory relief substantially in the form sought by the Director, it is concluded, should be granted. It is further concluded that the following penalties should also be imposed, namely:

    Mr Bragdon: $20,000;

    Mr Kong: $27,500; and

    the CFMEU: $225,000.

It has further been concluded that orders should also be made that both Mr Bragdon and Mr Kong pay the penalties imposed personally and should not be reimbursed, directly or indirectly, from the CFMEU or from any other associated entity or individual.

The statutory regime

5    The ultimate source of the power to impose a pecuniary penalty and the statutory regime relevant to the imposition of any such penalty is to be found within Part 4-1 of Chapter 4 of the Fair Work Act.

6    Within Division 1 to that Part, s 538 provides that the terms “employee and employer have their ordinary meanings”.

7    Within Division 2 to Part 4-1, s 539 sets forth a Table which identifies those provisions of the Fair Work Act for which a civil penalty may be imposed, the Court that may impose a penalty and the maximum penalty attaching to each provision. Of present relevance are the penalties prescribed for contraventions of ss 497, 500 and 503. The Table in s 539(2) provides in respect to those sections the following:

The “persons” referred to in Column 2, subject to qualifications, are those “persons” who may apply for orders.

8    Also within Division 2 to Part 4-1, s 545(1) provides as follows:

The Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.

Section 546, in its entirety, provides as follows:

Pecuniary penalty orders

(1)    The Federal Court, the Federal Circuit Court or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.

Determining amount of pecuniary penalty

(2)    The pecuniary penalty must not be more than:

(a)    if the person is an individual – the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2); or

(b)     if the person is a body corporate – 5 times the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2).

Payment of penalty

(3)    The court may order that the pecuniary penalty, or a part of the penalty, be paid to:

(a)    the Commonwealth; or

(b)    a particular organisation; or

(c)    a particular person.

Recovery of penalty

(4)    The pecuniary penalty may be recovered as a debt due to the person to whom the penalty is payable.

No limitation on orders

(5)    To avoid doubt, a court may make a pecuniary penalty order in addition to one or more orders under section 545.

The relevant principles

9    As a very general proposition, it is recognised that there are broadly three purposes for imposing penalties for breaches of industrial law: punishment, deterrence and rehabilitation. See: Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65 at [93], (2007) 158 FCR 543 at 559 (approved in Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59 at [68] to [69], (2015) 105 ACSR 403 at 427 to 428); Director of the Fair Work Building Industry Inspectorate v Upton [2015] FCA 672 at [9] per Gilmour J.

10    And when assessing the penalty to be imposed, a Court must give careful attention to the maximum penalty that may be imposed: Markarian v R [2005] HCA 25, (2005) 228 CLR 357 at 372. Gleeson CJ, Gummow, Hayne and Callinan JJ there held that:

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

Although that case involved sentencing principles to be applied in respect to a criminal offence, these observations nevertheless remain apposite to the imposition of civil penalties: Minister for the Environment v Karstens [2015] FCA 649 at [21] per Jagot J.

11    The task of fixing the quantum of a penalty to be imposed has been said to be a process of “instinctive synthesis”: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8, (2008) 165 FCR 560 at [26] to [28] per Gray J; at [54] per Graham J.

12    Notwithstanding this “instinctive synthesis”, many decisions of this Court have attempted to give greater content to, or greater clarification of, the reasoning process to be followed by providing a list – albeit in a non-exhaustive manner – of those considerations which may assume relevance. In Kelly v Fitzpatrick [2007] FCA 1080 at [14], (2007) 166 IR 14 at 18 to 19 Tracey J set forth one such list as follows:

    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 co-operated 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.

As his Honour has subsequently pointed out, “each of these considerations has the potential to have both an ameliorative and aggravating impact in the course of the instinctive synthesis”: Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2015] FCA 407 at [91]. See also: Australian Federation of Air Pilots v HNZ Australia Pty Ltd [2015] FCA 755 at [28] per Mortimer J.

13    When addressing the question of whether “the breaches were properly distinct or arose out of the same course of conduct”, Middleton and Gordon JJ observed in Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39, (2010) 269 ALR 1 at 12 to 13:

[39]    … [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.

…

[41]    … [T]he 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, the court must ensure that the offender is not punished twice for the same conduct. In other words, where two offences arise as a result of the same or related conduct that is not a disentitling factor to the application of the single course of conduct principle but a reason why a court may have regard to that principle, as one of the applicable sentencing principles, to guide it in the exercise of the sentencing discretion … It is a tool of analysis … which a court is not compelled to utilise …

[42]    A court is not compelled to utilise the principle because … “[d]iscretionary judgments require the weighing of elements, not the formulation of adjustable rules or benchmarks”. The exercise of the sentencing discretion does not fall to be exercised in a vacuum. It is a matter of judgment to be exercised according to the facts of each case and having regard to conflicting sentencing objectives …

14    When addressing the relevance of deterrence, Perram J in Australian Competition and Consumer Commission v Singtel Optus Pty Ltd (No 4) [2011] FCA 761, (2011) 282 ALR 246 at 265 helpfully summarised some of the principles as follows:

[75]    How should the above factors be approached in the formulation of a penalty or penalties? One begins of course, with the obvious: the purpose of a penalty is deterrence; deterrence of the contravener, no doubt, but deterrence also of those onlookers who might, but for the penalty inflicted on the contravener, be tempted to engage in the same behaviour themselves. In the realm of financial penalties for economic wrongs this latter aspect of the punishment is especially important. The principal purpose of a financial penalty in this context is, as French J has observed, “to put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act”: Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 at 52,152. I regard this as an important matter and take comfort from the Full Court’s explanation in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 ; 141 ALR 640 that the “Court should not leave room for any impression of weakness in its resolve to impose penalties sufficient to ensure the deterrence, not only of the parties actually before it, but also of others who might be tempted to think that contravention would pay, and detection lead merely to a compliance program for the future” at CLR 294–5; ALR 648 per Burchett and Kiefel JJ.

Factual errors led to an appeal being allowed: Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20 at [45] to [50], (2012) 287 ALR 249 at 261. But in respect to the “proper place of deterrence” in quantifying the penalty to be imposed, Keane CJ, Finn and Gilmour JJ expressed substantial agreement with the approach of the primary Judge as follows:

[62]    There may be room for debate as to the proper place of deterrence in the punishment of some kinds of offences, such as crimes of passion; but in relation to offences of calculation by a corporation where the only punishment is a fine, the punishment must be fixed with a view to ensuring that the penalty is not such as to be regarded by that offender or others as an acceptable cost of doing business. The primary judge was right to proceed on the basis that the claims of deterrence in this case were so strong as to warrant a penalty that would upset any calculations of profitability. The purpose of Optus’s conduct was to generate sales, and hence, profits. The advertising deployed by Optus was calculated to win business from its rivals. The same share of business might not have been attracted by a more balanced presentation of the advantages of the plans. There is no reason to doubt that Optus knows its business sufficiently well that it is safe to proceed on the footing that its course of conduct in the campaign reflected informed calculation. While one cannot isolate the profits attributable to the campaign, it is necessary and desirable to impose a penalty which is apt to affect in a substantial way the profitability of Optus’s misconduct.

[63]    Generally speaking, those engaged in trade and commerce must be deterred from the cynical calculation involved in weighing up the risk of penalty against the profits to be made from contravention. The primary judge did not engage in a surgical exercise calculated to deprive Optus of the profits referable to the increase in business generated by the campaign. It cannot seriously be suggested that this Honour was concerned to engage in an exercise in “profit stripping”. To so describe his Honour’s approach is to distract from the legitimate claims of deterrence in a case like the present: (2012) 287 ALR at 265.

See also: DP World Sydney Ltd v Maritime Union of Australia (No 2) [2014] FCA 596 at [18], (2014) 318 ALR 22 at 27 per Flick J; Minister for the Environment v Karstens [2015] FCA 649 at [23] per Jagot J.

15    It is also relevant to consider the past conduct of those involved in a contravention: Director of the Fair Work Building Industry Inspectorate v Stephenson [2014] FCA 1432, (2014) 146 ALD 75. The following observations were there expressed by White J in respect to past contraventions by the CFMEU:

The CFMEU record

[76]    The Director provided a schedule of the occasions on which the CFMEU has been dealt with by courts for non-contraventions of industrial legislation. It is fair to describe the CFMEU record as dismal.

[77]    Since 1999, the CFMEU has had penalties imposed on it by a court on numerous occasions. Many of the court decisions involved multiple contraventions. Of particular relevance presently is that before 1 March 2014, the CFMEU and/or its employees have been dealt with for contraventions of right of entry provisions on 13 occasions, involving some 40 separate contraventions. In addition, since the subject contraventions, Mansfield J in Director of the Fair Work Building Industry Inspectorate v Cartledge [2014] FCA 1047 (delivered on 2 October 2014) (DFWBI v Cartledge), imposed penalties on the CFMEU and its employees in respect of seven different contraventions of s 500 of the FW Act committed on 19 and 20 March 2014. The record indicates an attitude of indifference by the CFMEU to compliance with the requirements of the legislation regarding the exercise of rights of entry. It also indicates that deterrence must be a prominent consideration in the fixing of penalties in the present cases.

Counsel for the Respondents in the present case did not cavil with the proposition that the Court in the present case could take into account when assessing the penalty to be imposed the history of past contraventions of the Fair Work Act or its predecessor and, in particular, the history of past contraventions of statutory provisions comparable to those in issue in the present proceeding. Although accepting such propositions, Counsel for the Respondents properly posed the necessary qualification that any assessment of penalty must be guided by the facts and circumstances of each individual case that may come before the Court.

16    Having taken into account each of those considerations relevant to a quantification of the penalty to be imposed, it remains necessary to consider whether the penalty otherwise considered appropriate is proportionate to the gravity of the contravening conduct: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977 at [5], (2010) 199 IR 373 at 376 per Barker J. The “totality principle”, as it has been called, has been explained by Middleton J in Australian Competition and Consumer Commission v AGL Sales Pty Ltd [2013] FCA 1030 as follows:

[61]    Lastly, I must consider the totality principle, parity and deterrence.

[62]    With respect to the totality principle, it is trite law that the total penalty for related offences should not exceed what is proper for the entire contravening conduct involved … Put another way, the totality principle involves a final consideration of the sum of the penalties determined. Goldberg J, in Safeway Stores [(1997) 145 ALR 36 at 53] noted that the Court:

must, as an initial step, impose a penalty appropriate for each contravention and then as a check, at the end of the process, consider whether the aggregate is appropriate for the total contravening conduct involved.

See also: Director of the Fair Work Building Industry Inspectorate v Upton [2015] FCA 672 at [9] to [11] per Gilmour J.

The quantum of the penalties to be imposed

17    Applied to the circumstances of the present proceeding, the following table sets forth the contraventions that have been found and the maximum penalty that may be imposed for each contravention:

18    In fixing penalties in respect to Messrs Bragdon and Kong, consideration has been given to each of the considerations identified by Tracey J in Kelly v Fitzpatrick, and in particular:

    the legislative object and purpose sought to be achieved by issuing “entry permits” – including the important functions and rights of those who seek to exercise such rights and the extent to which the common law rights of occupiers are correspondingly diminished;

    the nature and extent of the conduct each pursued – including the fact that both entered the site knowing they should have waited for personal protective equipment to have been provided and to be escorted on site; the rejection of Mr Bragdon’s account that he thought he had an entry permit and Mr Kong’s acknowledgment that he knew he had no such permit; and the fact that they both knew they had no power to stop the concrete pour which was taking place and the fact that time was a critical element. Once on site they behaved in a manner which was both “abusive and misleading” and “contemptuous of the limits of their power and the people on site with whom they were dealing”: ([2015] FCA 668 at [109]);

    the fact that the conduct in which they engaged was deliberate and intentional;

    the fact that such conduct persisted for a period of two to three hours, albeit during the course of a single visit, and did not occasion any loss or damage to the occupier; and

    the fact that the forensic course pursued by the Respondents was to require a hearing rather than the matter proceeding, as is frequently the case, by way of an agreed statement of facts. It nevertheless remained the case that there was limited agreement as to some of the facts and some factual matters were not put in dispute during the course of the hearing. Some factual matters (e.g., whether the entry upon site was pursuant – as the Respondents contended – pursuant to an “invitation”) remained contested and occupied some considerable time in their resolution.

Also of relevance is:

    the fact that Mr Bragdon is no longer employed by the CFMEU reduces any continuing need for specific deterrence.

The conduct of Mr Kong, it is concluded, attracts a greater penalty than that to be imposed upon Mr Bragdon by reason of the fact that:

    he has been found to have engaged in an additional contravention; and

    when asked to provide his name when he failed to produce his entry permit, he responded: “Steve Irwin”. This answer, as he accurately described it, was that of a “smart-arse”.

Contrary to the submissions advanced on behalf of the Respondents:

    no conclusion can be reached that the “motivation behind the conduct was to ensure the safety of employees on site” – the conclusion previously reached was that the “professed concerns” of Messrs Bragdon and Kong with respect to safety did “not sit comfortably with the inspections carried out on site prior to 6 June 2013 and to the comments made by Mr Gregoriou” ([2015] FCA 668 at [71]).

Although it may be possible, when entertaining submissions on penalty, for a Court to make findings of fact in addition to those previously found, it should not normally do so. A Court that has separated the hearing as to whether contraventions have been made out from any subsequent hearing as to relief should normally proceed upon the basis of the facts already found. That is, after all, the basis upon which the parties return before the Court for the purposes of making submissions on penalty. A Court certainly could not make any further or additional finding of fact at a penalty hearing in respect to which the parties had not been given an opportunity to be heard, or any finding of fact which would involve a departure from the manner in which a case was advanced for resolution at hearing. In the present proceeding, it is not considered appropriate to go back and re-visit the reservation previously expressed regarding the “professed concerns” of Messrs Bragdon and Kong.

19    Although the conclusion has been reached that Messrs Bragdon and Kong have each contravened ss 497, 500 and 503 of the Fair Work Act, consideration has been given to whether their conduct on that day constituted a “single course of conduct”. Each of the contraventions unquestionably involved different factual elements – the failure to produce an entry permit (s 497) involved a very different factual matrix to that involved in intentionally hindering those carrying out the concrete pour (s 500). The facts relevant to the contravention of s 503 on the part of Mr Kong in identifying himself as “Steve Irwin” may, however, overlap with those facts involved in his failure to produce his entry permit. That assumption has been made in his favour. The submission advanced on behalf of the Respondents that the events on the day constituted a “single course of conduct” is otherwise rejected.

20    In fixing the penalty in respect to the CFMEU, particular consideration has been given to:

    the fact that there was no evidence that the “senior management” of the CFMEU were involved in the contraventions.

Consideration has also been given to:

    the past history of contraventions by the CFMEU, that history being summarised in a schedule prepared on behalf of the Director; and

    the observations of White J in Stephenson.

With reference to the relevance of the past history of contraventions, two courses are open to the Court: one course is simply to quantify an overall penalty; the other course is separately to assess the appropriate penalty free from any consideration as to that past history and then to assess whether that penalty remains appropriate after taking it into account. In choosing between these two courses, the Director made reference to the following observations of Gleeson CJ, Gummow, Hayne and Callinan JJ in Markarian v R [2005] HCA 25, (2005) 228 CLR 357 at 375:

[39]    Following the decision of this Court in [Wong v The Queen (2001) 207 CLR 584] cannot now be doubted that sentencing courts may not add and subtract item by item from some apparently subliminally derived figure, passages of time in order to fix the time which an offender must serve in prison. That is not to say that in a simple case, in which, for example, the circumstances of the crime have to be weighed against one or a small number of other important matters, indulgence in arithmetical deduction by the sentencing judges should be absolutely forbidden. An invitation to a sentencing judge to engage in a process of “instinctive synthesis”, as useful as shorthand terminology may on occasions be, is not desirable if no more is said or understood about what that means. The expression "instinctive synthesis" may then be understood to suggest an arcane process into the mysteries of which only judges can be initiated. The law strongly favours transparency. Accessible reasoning is necessary in the interests of victims, of the parties, appeal courts, and the public. There may be occasions when some indulgence in an arithmetical process will better serve these ends. This case was not however one of them because of the number and complexity of the considerations which had to be weighed by the trial judge.

As these observations make apparent, they were made in the context of sentencing principles to be applied to a criminal offence. Although they may have been made in that context, these observations serve as a useful reminder to remain cautious before too readily quantifying a civil penalty by reference to “arithmetical” calculations. The process of quantifying a civil penalty in the present context remains a process of “instinctive synthesis” informed by reference to well-recognised considerations. Reference was also made to the observations of Moore J in Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39 at [21], (2010) 269 ALR 1 at 8. Whilst recognising that the law was not “free from subtlety”, his Honour there noted that it “is wrong, in principle to increase a sentence beyond what is considered to be appropriate having regard to the seriousness of the offence because of prior convictions”.

21    In the circumstances of the present case it is respectfully concluded that the latter of the two courses should be pursued. But for the past history of contraventions on the part of the CFMEU, a penalty would have been imposed of $175,000; when that past history is taken into account it is considered that the penalty should be $225,000. Approached in this manner, the reasoning at least has the advantage of transparency. The penalty of $225,000 is proportionate to the contraventions that have been found to have occurred. Rather than the penalty of $225,000 being seen as an increase in the penalty “because of prior convictions”, it is more correctly characterised as a penalty that may better serve the objective of deterrence. To employ the language of Buchanan J in Cahill, a penalty in the sum of $225,000 is not “to increase a sentence beyond what is considered to be appropriate having regard to the seriousness of the offence because of prior convictions”. A penalty in that amount, it is concluded, is appropriate having regard to all of the facts and circumstances relevant to the present case – including the past history of contraventions.

22    As a final consideration, attention has been given to whether the penalty imposed in respect to each Respondent is otherwise proportionate to the contraventions that have been found. That final consideration has not led to any different penalty being imposed in respect to any of the Respondents.

The deterrent effect on individuals – personal responsibility for payment

23    The statutory regime relevant to the identification of those against whom a penalty may be imposed is relevantly no more confined than the power conferred by s 546(1) to “order a person to pay a pecuniary penalty”. That phrase encompasses a power to impose a penalty against “an individual” and “a body corporate”: s 546(2).

24    Supplementing those powers, and confined to the provisions of the Fair Work Act, s 545(1) contains the power to “make any order the court considers appropriate…”.

25    It is concluded that the power to impose a penalty on an “individual” includes a power to ensure that the penalty is in fact paid personally by the “individual” and that he is not reimbursed – either directly or indirectly – by any union of which he is a member or by any associated entity. That conclusion is founded upon the natural and ordinary meaning of the relevant statutory provisions, the object and purpose sought to be achieved by the Legislature in providing for the imposition of penalties on “individuals” and by reference to prior judicial considerations of the principles to be applied.

26    Any other conclusion, it is respectfully concluded, would be to embrace the proposition that the Court lacks power to ensure that any penalty imposed upon an “individual” can truly act as a deterrent to that “individual”. A penalty, if it were to be paid or reimbursed by an employing union, would cease to act as a deterrent to the contravening “individual”. An “individual” so reimbursed could act with impunity in full knowledge that his employing union conferred what could be seen as a licence for him to continue his past transgressions. The legislative power to revoke or suspend (for example) an entry permit should not be seen as a constraint upon the power conferred by ss 545 and 546 to ensure that a penalty imposed upon an “individual” acts truly as a deterrent.

27    Rejected is the submission advanced on behalf of the Respondents that the Court’s sole source of power in respect to the imposition of a penalty is to be found within s 546. Rejected is the submission advanced on behalf of the Respondents that if the source of power is not confined to s 546, it would necessarily have the consequence that the power conferred by s 545 could be exercised (for example) to:

    increase the maximum penalty otherwise imposed by s 546(2); or

    order that any penalty be payable to a person or entity other than one identified in s 546(3).

Also rejected is the suggestion that invoking s 545 as a source of power to ensure that any penalty imposed upon an “individual” be truly paid by the “individual” and not by (for example) an employing union:

    could be construed as potentially exposing an individual offender to a sanction different in character to that otherwise contemplated by s 546(4) – the sanction potentially being an action for contempt rather than an action simply to recover a “debt”; and

    would create difficulties of enforcement.

Where it is considered appropriate to order that a penalty be imposed upon an “individual”, it is not considered that there is to be found within s 546 any constraint upon the power to ensure that the penalty imposed is to as act as a true deterrent. The power conferred by s 545 may thus be exercised if it is considered “appropriate” to ensure that the penalty acts as a deterrent. It is unnecessary to consider whether ss 22 and 23 of the Federal Court of Australia Act 1976 (Cth) could also be invoked as additional sources of power.

To whom should the penalty be paid?

28    When considering the former s 356 of the Industrial Relations Act 1988 (Cth), Gray J in Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 at 223 to 224:

A question also arose as to what order should be made as to the recipient of the penalties. Section 356 of the Act empowers the court to order payment into the Consolidated Revenue Fund or to a particular organisation or person. The usual order, when the proceeding is not brought by an inspector appointed under the Act, is for payment to the person or organisation applying for the penalty. The reasons for this are canvassed in Vehicle Builders’ Employees’ Federation of Australia v General Motors Holden's Pty Ltd (1977) 32 FLR 100 at pp 111-114 and Seymour v Stawell Timber Industries Pty Ltd (1985) 9 FCR 241, at pp 245-246 in the judgment of Northrop J. In the present case, the applicant has brought the proceeding on behalf of the Union, to enforce the Award for the benefit of the Union and its members. Had the applicant brought the proceeding in his personal capacity, and at his own expense, it would have been appropriate to order that the penalties be paid to him. It is unlikely that the applicant has become responsible personally for the costs of the proceeding and more likely that those costs will be met by the Union. In the circumstances, it is appropriate that the Union should be the recipient of the penalties.

These views were later embraced by Branson and Lander JJ in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union [2008] FCAFC 170 at [64] to [65], (2008) 171 FCR 357 at 377.

29    The penalties in the present case should be paid to the Commonwealth.

CONCLUSIONS

30    Contraventions of the Fair Work Act have been made out.

31    Declaratory relief, substantially in the form advanced on behalf of the Director, should be granted.

32    Penalties should also be imposed. Orders should be made to ensure that the penalties imposed upon Mr Bragdon and Mr Kong are paid by those individuals personally. The penalty to be imposed upon the CFMEU should be increased from that which would otherwise be considered appropriate, by reason of its past history of contraventions.

THE COURT DECLARES:

1.    The First Respondent, Chad Bragdon, contravened s 497 of the Fair Work Act 2009 (Cth) (FW Act), on 6 June 2013, by refusing to comply with repeated requests to produce his federal entry permits for inspection while at a construction site located on Seventh Street in Mascot, NSW (the Site) at which Abigroup Contractors Pty Ltd (Abigroup) was the head contractor and occupier of the premises.

2.    The First Respondent, Chad Bragdon, contravened s 500 of the FW Act, on 6 June 2013, when hindering workers on the Site while seeking to exercise rights in accordance with Part 3-4 of the FW Act.

3.    The First Respondent, Chad Bragdon, contravened s 500 of the FW Act, on 6 June 2013, by acting in an improper manner while seeking to exercise rights in accordance with Part 3-4 of the FW Act, by directing workers to cease work when he had no authority or power under the FW Act and the Work Health and Safety Act 2011 (NSW) (NSW WHS Act) to issue such direction;

4.    The First Respondent, Chad Bragdon, contravened s 503(1) of the FW Act, on 6 June 2013, by acting in a manner with the intent of giving the impression, or being reckless as to whether the impression was given, that he was authorised to enter the Site and exercise right of entry powers under the FW Act and NSW WHS Act;

5.    The First Respondent, Chad Bragdon, contravened section 503(1) of the FW Act, on 6 June 2013, by acting in a manner with the intent of giving the impression, or being reckless as to whether the impression was given, that he was authorised to direct that workers cease work under the FW Act and the NSW WHS Act.

6.    The Second Respondent, Anthony Kong, contravened s 497 of the FW Act, on 6 June 2013, by refusing to comply with repeated requests to produce his federal entry permits for inspection while at the Site.

7.    The Second Respondent, Anthony Kong, contravened s 500 of the FW Act on 6 June 2013, by acting in an improper manner while seeking to exercise rights in accordance with Part 3-4 of the FW Act, by falsely identifying himself as “Steve Irwin” when asked by Agibroup who he was, in the circumstances that he was not “Steve Irwin”.

8.    The Second Respondent, Anthony Kong, contravened s 500 of the FW Act, on 6 June 2013, when hindering workers on the Site while seeking to exercise rights in accordance with Part 3-4 of the FW Act.

9.    The Second Respondent, Anthony Kong, contravened s 500 of the FW Act, on 6 June 2013, by acting in an improper manner while seeking to exercise rights in accordance with Part 3-4 of the FW Act, by directing workers to cease work when he had no authority or power under the FW Act and the NSW WHS Act to issue such direction.

10.    The Second Respondent, Anthony Kong, contravened s 503(1) of the FW Act, on 6 June 2013, by acting in a manner with the intent of giving the impression, or being reckless as to whether the impression was given, that he was authorised to enter the Site and exercise right of entry powers under FW Act and NSW WHS Act.

11.    The Second Respondent, Anthony Kong, contravened section 503(1) of the FW Act by acting in a manner with the intent of giving the impression, or being reckless as to whether the impression was given, that he was authorised to direct that workers cease work under the FW Act and the NSW WHS Act.

12.    By reason of s 793 of the FW Act, the Third Respondent, the Construction, Forestry, Mining and Energy Union, is taken to have contravened sections 497, 500 and 503 of the FW Act by the conduct of its officers constituting their respective contraventions in Declarations 1 to 11 hereof.

AND THE COURT ORDERS THAT:

1.    The First Respondent, Chad Anthony Bragdon, is to pay to the Commonwealth on or before 2 November 2015 a pecuniary penalty of $20,000.

2.    The Second Respondent, Anthony Kong, is to pay the Commonwealth on or before 2 November 2015 a pecuniary penalty of $27,500.

3.    The Third Respondent, the Construction, Forestry, Mining and Energy Union, is to pay the Commonwealth on or before 2 November 2015 a pecuniary penalty of $225,000.

4.    The First Respondent personally must pay the pecuniary penalty the subject of Order 1, and is not to seek or receive reimbursement (in whole or in part) of any monies from the Third or Fourth or Fifth Respondents (or any related entity), or to cause or occasion such penalty to be paid, either directly or indirectly, by the Third or Fourth or Fifth Respondents (or any related entity).

5.    The Second Respondent personally must pay the pecuniary penalty the subject of Order 2, and is not to seek or receive reimbursement (in whole or in part) of any monies from the Third or Fourth or Fifth Respondents (or any related entity), or to cause or occasion such penalty to be paid, either directly or indirectly, by the Third or Fourth or Fifth Respondents (or any related entity).

Associate:    

Dated:    10 September 2015