FEDERAL COURT OF AUSTRALIA

Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (The Mitcham Rail Case) [2015] FCA 1173

THE COURT ORDERS THAT:

1.    The first respondent pay a penalty of $22,500 in respect of its contravention of s 348 of the Fair Work Act 2009 (Cth) when, on 1 August 2013, Joseph Myles, an officer of the first respondent for the purposes of s 363(1)(b) of that Act, threatened to organise action by way of the disruption of normal work on the site of the rail separation and station upgrade project at the Mitcham train station, with intent to coerce John Holland Pty Ltd to engage in industrial activity by complying with the first respondent’s lawful request that it employ or engage a person as a delegate of the first respondent on that site.

2.    The first respondent pay a penalty of $26,250 in respect of its contravention of s 348 of the Fair Work Act 2009 (Cth) when, on 22 August 2013, Joseph Myles, an officer of the first respondent for the purposes of s 363(1)(b) of that Act, organised action by persuading and encouraging employees of subcontractors on the site of the rail separation and station upgrade project at the Mitcham train station not to work on that site that day, with intent to coerce John Holland Pty Ltd to engage in industrial activity by complying with the first respondent’s lawful request that it employ or engage a person as a delegate of the first respondent on that site.

3.    The second respondent pay a penalty of $3,000 in respect of his contravention of s 348 of the Fair Work Act 2009 (Cth) when, on 1 August 2013, he threatened to organise action by way of the disruption of normal work on the site of the rail separation and station upgrade project at the Mitcham train station, with intent to coerce John Holland Pty Ltd to engage in industrial activity by complying with the first respondent’s lawful request that it employ or engage a person as a delegate of the first respondent on that site.

4.    The second respondent pay a penalty of $3,375 in respect of his contravention of s 348 of the Fair Work Act 2009 (Cth) when, on 22 August 2013, he organised action by persuading and encouraging employees of subcontractors on the site of the rail separation and station upgrade project at the Mitcham train station not to work on that site that day, with intent to coerce John Holland Pty Ltd to engage in industrial activity by complying with the first respondent’s lawful request that it employ or engage a person as a delegate of the first respondent on that site.

5.    The said penalties be paid to the Commonwealth of Australia within 30 days.

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

REASONS FOR JUDGMENT

1    In this proceeding, which was commenced on 3 September 2014, the applicant, the Director of the Fair Work Building Industry Inspectorate, alleges that the respondents, the Construction, Forestry, Mining and Energy Union (“the Union”) and one of its officials, Joseph Myles, contravened s 348 of the Fair Work Act 2009 (Cth) (“the FW Act”) –

(a)    on 1 August 2013, when Mr Myles threatened that, if John Holland Pty Ltd (“John Holland”), the principal contractor responsible for the construction of a rail separation and upgrade to the existing train station and car park facilities at the Mitcham train station (“the Project”), did not comply with his request to employ or otherwise to engage a worker on the Project as delegate of the Union, he (Myles) would organise a large number of people to occupy the entrance to the site of the Project (“the site”) and stop or prevent building works being carried out at the site; and

(b)    on 22 August 2013, when Mr Myles, in the company of others, (1) directed, advised, counselled, encouraged, induced, incited or procured the employees of subcontractors engaged by John Holland to work at the site not to work at the site that day, (2) advised, counselled, encouraged, induced, incited or procured managers of those subcontractors to reallocate their employees to another site or to send them home until the Union’s dispute with John Holland was resolved, and (3) threatened the managing director of one of those subcontractors that, if his employees presented for work at the site on the following day, his company would not have a job in Melbourne.

2    Mr Myles denies those allegations. The Union does not admit the allegations because it does not know the facts concerned: see Federal Court Rules 2011 (Cth), r 16.07(3).

3    On the afternoon of the day before the commencement of the trial in the proceeding, the parties executed a statement of agreed facts and admissions. My setting out of the facts of the case in the reasons which follow below is based on that statement. That statement stops short of making good the applicant’s allegations referred to above, but only slightly so. The respondents have admitted that they engaged in conduct on 1 and 22 August 2013 which amounted to contraventions of s 348. The remaining task for the court is to decide what, if any, penalties should be imposed on the respondents in respect of those contraventions.

4    The Project involved the design and construction of civil, track and structural works including:

(a)    a grade separation of Mitcham Road and Rooks Road by lowering the Belgrave/Lilydale railway line underneath the roads;

(b)    the realignment and construction of two new tracks to the south of the existing tracks within the existing rail corridor; and

(c)    the construction of a new premium train station.

5    John Holland employed persons to undertake certain tasks on the Project, and engaged subcontractors to carry out specific building works on the Project, including:

(a)    Baksey Pty Ltd trading as Wessell Drilling (“Wessell”): drilling and blasting; ground anchors and grouting;

(b)    Denfam Constructions Pty Ltd (“Denfam”): steel fixing works; and

(c)    Vibro-pile (Aust) Pty Ltd (“Vibro-pile”): piling works.

The Union and each of these subcontractors were parties to separate enterprise agreements approved under the FW Act.

6    At about 3:00 pm on 10 July 2013, Mr Myles met with Stephen Litterick, John Holland’s Alliance General Manager, and John Trace, John Holland’s Project General Superintendent at Miss Polly’s Cafe at 26 Britannia Mall, Mitcham. Mr Myles requested that there be a delegate on the site overseeing all “CFMEU work”. He said, “the CFMEU wants representation on the Project”. Mr Litterick’s response was that, if the workforce on the Project made such a request then the Union could have representation on the site. He also told Mr Myles that John Holland would not be employing any of the construction workers directly, but that there would be subcontractors on the site with agreements with the Union, through which Union representation could be addressed. Mr Myles said that this would not be received well by the Union, adding that he would communicate John Holland’s position back to Ralph Edwards, the President of the Union, and that he expected that the parties would be talking again in the weeks ahead.

7    At about 7:30 am on 1 August 2013, Mr Myles met with Messrs Litterick and Trace at Mishou’s Cafe, at 546 Whitehorse Road, Mitcham. He repeated his earlier request that John Holland employ or engage a delegate on the site. They (Litterick and Trace) told him that the workforce was within its rights to request representation, and that they would be happy to facilitate his entry to the site under a legitimate right of entry (presumably pursuant to s 484 of the FW Act), during which he could discuss representation with the workforce. In response to this, Mr Myles stated that he would not provide a right of entry notice until there was a delegate on site. In the meantime, he would get entry on to the site with an “ARREO” (ie, as an authorised representative of a registered employee organisation pursuant to s 87 of the Occupational Health and Safety Act 2004 (Vic)). Mr Myles said that, unless the delegate situation was sorted by the middle of the following week, John Holland should expect the first such authorised entry then, and it would probably be something to do with access and egress.

8    Mr Myles put forward the names of two persons, Robert Smit and Jimmy Baird, as persons he considered suitable to be engaged as delegates for the Union on the Project. He told Mr Litterick that John Holland, as principal contractor, was responsible for “IR management” across the entire Project, and accordingly should arrange for the engagement of the Union delegate on the Project. He stated that, if John Holland did not have Union representation on site, there would be “war”, adding that it would be easy for him to mobilise “100 guys” at the site gate very soon. Mr Litterick interpreted the statements made by Mr Myles as a threat to take action against John Holland if it did not agree to the request which he had made.

9    John Holland did not employ or engage a person as Union delegate on the site as requested by Mr Myles.

10    John Holland engaged and scheduled its subcontractors to assist with the provision of labour and the performance of tasks, together with its own workforce at the site, on 22 August 2013. The following preparatory works were scheduled to be undertaken that day:

(a)    Brunswick St car park partially closed for concrete barriers to be picked up;

(b)    Long term lane closure on Mitcham Rd to be set up (north bound) Telstra works; and

(c)    Long term land closure to be set up on Rooks Rd (north bound) Telstra works.

Denfam was scheduled to perform steel fixing and barrier footings on the south east concourse. Vibro-pile was scheduled to perform piling at Gate 3. Wessell was scheduled to complete the trimming of soil nails, to continue strip drain installation, and to undertake drilling for and the installation of soil nails.

11    At about 6:15 am on that day, 22 August 2013, Mr Myles attended the site, accompanied by several other persons wearing clothing displaying the Union’s badges. They stood at the entrance gate to the compound on the site. Mr Myles remarked to representatives of John Holland, “C’mon guys you know what I want. Package B and Springvale have got it and they’ve got no issues’”. This was interpreted as a reference to the Regional Rail Link “Package B Project”, another rail project in Melbourne on which John Holland was contracted, where Mr Myles had made a similar request for a Union delegate.

12    As the employees of the subcontractors prepared to commence work that day – by attending a pre-start meeting at 7:00 am – Mr Myles and those then present with him arranged a meeting with the employees outside the compound. The purpose of this meeting was to persuade and to encourage those employees not to undertake work at the site because John Holland had not acceded to the Union’s request to employ or to engage a delegate on the site. At the meeting, Mr Myles proceeded conformably with that intention. After the meeting, none of the employees of Denfam or of Vibro-pile attended the normal pre-start meeting at 7:00 am.

13    Subsequently, Mr Myles saw some of the employees of a subcontractor re-entering the site work area and stated, “Ah shit, I told them to nick off before”.

14    As a consequence of the conduct of Mr Myles as set out above, by about 9:30 am on 22 August 2013 a number of the employees of subcontractors had left the site and did not perform any work at the site that day. As a consequence, the works schedule at the Project was disrupted. Work which was not then completed included work on steel fixing and barrier footings at the south-east concourse by Denfam, piling at Gate 3 by Vibro-pile, and completion of the trimming of the soil nails, strip drain installation and drilling for and installation of soil nails by Wessell.

15    At about 11:00 am on 22 August 2013, Mr Myles, while at the site, said to Phill De Nittis, Managing Director of Denfam, “Don’t come in tomorrow because there’s no way your men will be working tomorrow. If your men go out to work, Denfam won’t have a job in Melbourne”. Mr Myles’ intent in saying this was to apply pressure to Denfam not to perform work on the site the following day.

16    As mentioned above, the applicant relies on s 348 of the FW Act. It provides as follows:

A person must not organise or take, or threaten to organise or take, any action against another person with intent to coerce the other person, or a third person, to engage in industrial activity.

The “industrial activity” on which the applicant relies is that for which s 347(b)(iv) of the FW Act provides, namely, not complying with a lawful request made by an industrial association, ie the request by Mr Myles to John Holland that it employ or engage a person on site as a delegate.

17    The threat made by Mr Myles to John Holland on 1 August 2013, referred to in para 8 above, was a threat to organise action against John Holland. It was made with intent to coerce John Holland to employ or to engage a person on site as a delegate. It amounted to a contravention of s 348.

18    The conduct of Mr Myles on 22 August 2013 in persuading and encouraging the employees of subcontractors not to undertake work at the site because John Holland had not acceded to the Union’s request to employ or to engage a delegate on the site, referred to in para 12 above, was action taken by him with intent to coerce John Holland to employ or to engage a person on site as a delegate. The threat made by Mr Myles to Denfam on 22 August 2013, referred to in para 15 above, was a threat to organise action against Denfam. It was made with intent to coerce John Holland (relevantly a “third person” within the meaning of s 348) to employ or to engage a person on site as a delegate. Together, this conduct and threat amounted to a contravention of s 348.

19    Mr Myles was an officer of the Union (as defined in the FW Act) and was, at the relevant time, acting in that capacity. By the operation of s 363(l)(b) of the FW Act, the threats and actions of Mr Myles referred to above were also made and taken by the Union.

20    In the light of these facts and admissions, what penalties should be imposed?

21    The first issue which arises involves the matter of grouping. It was submitted on behalf of the respondents that the facts disclosed a “course of conduct” on the part of Mr Myles, whereby the threat which he made on 1 August 2013 and everything which he did and threatened to do on 22 August 2013 should be treated as a single contravention of s 348 of the FW Act. The applicant accepted that Mr Myles’ conduct, including his threat to Mr De Nittis, on 22 August 2013 constituted a single course of conduct, notwithstanding that the conduct involved both actions and threats. That was, in my view, an appropriate concession to make: Construction, Forestry, Mining and Energy Union v Williams (2009) 262 ALR 417. However, it was submitted on behalf of the applicant that that conduct was not part of a single course of conduct apropos the threat that had been made on 1 August 2013.

22    That submission should be accepted. Section 348 makes a distinction between organising or taking, and threatening to organise or to take, action. It is one thing to say that action combined with a threat to continue the action if the demand in question were not acceded to amounts to a single course of conduct, as was the case in Williams. It would be a very different thing, in my view, to say that the making of a threat, the intercession of a three-week period to see if the threat would produce the desired result, and the taking of consequential action when it was apparent that it had not done so amounted to but a single course of conduct. There were, I consider, two distinct contraventions here, as submitted on behalf of the applicant. Indeed, so much is implicit in para 43 of the agreed statement of facts: “By virtue of paragraphs 41 and 42 above, the CFMEU admits that it contravened s 348 of the FW Act once on 1 August 2013 and once on 22 August 2013.”

23    Turning then to the first of the two contraventions, on 1 August 2013 Mr Myles threatened that there would be “war” if his request were not complied with, and that he would bring about 100 people to the site gate in that regard. The obvious implication of that threat was, in my view, that he had it within his power to prevent anyone entering the site, and thus to prevent any work being done there; and that he would exercise that power if his request were not complied with. In the submission of the applicant, that was, objectively, a serious contravention of s 348. In the submission of the respondents, this was a contravention “at the low end of the scale”.

24    It was also put on behalf of the respondents that what was sought by the threat was “something that John Holland had ‘given’ to the [Union] before.” I am not sure that that circumstance should be accepted as established on the agreed facts, but, assuming that it is, I must say that the fact that the submission was made tends to suggest that John Holland should have regarded it as outside the range of its own choice to decide whether or not to comply with a request made by an official of the Union. In my view, that bespeaks an industrial culture which is antagonistic to the objects of Pt 3-1 of the FW Act: see s 336(1)(b)(iii). Mr Myles may have had a very persuasive case as to why a delegate should be employed or engaged on the site, but Pt 3-1 is concerned not with the merits of such case but with the freedom of the addressee of the request to decide whether to comply with it; and, of course, with his or her freedom from coercion in the making of that decision.

25    Beyond saying that I accept the applicant’s submission that Mr Myles’ contravention of s 348 on 1 August 2013 was objectively serious, I do not propose to contemplate where on a notional “scale” of contraventions, ranked by seriousness, this one would sit. Inevitably, as it seems to me, that would require some degree of contemplation of the seriousness of other facts and other situations which are not before the court. The other matters that I have been invited by the parties to take into account relate not to Mr Myles’ conduct on 1 August 2013 as such but to more general considerations. I shall return to them presently.

26    With respect to Mr Myles’ conduct on 22 August 2013, the parties commenced by making the same submissions as I have referred to above: the applicant submitted that the conduct was “objectively serious” and the respondents submitted that the “objective seriousness” of the offence was “at the low end of the scale”. The respondents submitted that the conduct “did not involve serious, continuing and damaging industrial action or like conduct.” That latter submission was not altogether accurate: the employees of the subcontractors who, encouraged by Mr Myles, refused to work normally that day undoubtedly engaged in industrial action within the meaning of s 19 of the FW Act and, in that sense, Mr Myles’ conduct “involved” industrial action. It was not “continuing” in the sense that, on the evidence at least, it took place on one day only. The extent – or, for that matter, the existence – of damage is not the subject of evidence, but, on any view, the conduct was disruptive of the normal operation of work on the site, for John Holland, for the subcontractors concerned and for their employees.

27    It was pointed out on behalf of the respondents that what actually happened on 22 August 2013 was much less than the attendance of 100 persons at the gate of the site as foreshadowed on 1 August 2013. I accept that. The methods used by Mr Myles were persuasive rather than obstructive. But, for a trading concern such as John Holland, the target of the coercion, what mattered, I infer, was that normal operations on the site were disrupted. Indeed, that they should be disrupted must surely have been Mr Myles’ purpose. That is to say, his instrument of coercion was a purely economic one, albeit that it was relatively peaceful in the way he deployed it. For him to have disrupted this construction activity, undertaken in an industry in which the Union had coverage and its members worked, was, I would hold, a serious contravention of s 348. I do not regard it as less serious than the contravention of 1 August 2013.

28    Turning to general considerations, the Union is a substantial organisation with members in the construction industry. It was not submitted that Mr Myles did not fully appreciate that his conduct amounted to a contravention of a provision of the FW Act. Given the extent of the Union’s encounters with statutory prohibitions such as that set out in s 348, to which I refer below, it would be naïve not to infer that Mr Myles’ conduct was wilful not only in the sense of being intentional rather than accidental but also in the sense of him, and of course those to whom he reported, being well aware that his conduct was unlawful.

29    As has become customary in cases such as this, the applicant has placed before the court a schedule of the Union’s previous contraventions of civil penalty provisions in the FW Act, and of corresponding provisions in the Building and Construction Industry Improvement Act 2005 (Cth). The pattern of contravention which emerges from material such as this has been the subject of comment by the court on a number of occasions. The schedule paints, one would have to say, a depressing picture. But it is more than that. I am bound to say that the conduct referred to in the schedule bespeaks an organisational culture in which contraventions of the law have become normalised. In this context, the following words of Tracey J in Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2015] FCA 407 at [99] have more than in-principle relevance in a case in which the Union is involved:

A penalty for contraventions of Part 3-1 of the Act must be fixed at a level that is sufficiently high to deter repetition by a contravener and by others who might be tempted to follow suit: cf DP World Sydney Limited v Maritime Union of Australia (No 2) [2014] FCA 596 at [18]; Ponzio v B & P Caelli Constructions Pty Ltd … (2007) 158 FCR 543 at 559-560 (Lander J). In Grocon Constructors (Victoria) Pty Ltd v Construction, Forestry, Mining and Energy Union (No 2) (2014) 241 IR 288 at 357 Cavanough J observed that: “... few things could be more destructive to the authority of the Court and to the rule of law than the idea that fines or similar punishment are akin to a tax that, once budgeted for, enable the use of unlawful conduct to achieve industrial outcomes.” Put another way (as has been done in the context of contraventions of consumer law) a penalty “must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business.”: see Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249 at 265.

Like his Honour, I am disposed to the view that considerations of specific deterrence speak very loudly in a case such as the present, making it not only legitimate but nigh inevitable that the Union will be “punished more severely than it would have been had it had no adverse record or been responsible for only a few isolated incidents over a period of many years”: [2015] FCA 407 at [107].

30    Neither is Mr Myles a first-time contravener. My attention has been drawn to two occasions, before the events of the present case, in which he engaged in conduct that was later found to have been in contravention of provisions having some relevance to the assessment of penalties in the present case: Director of the Fair Work Building Industry Inspectorate v Myles [2014] FCCA 1429 and Director, Fair Work Building Industry Inspectorate v Cradden [2015] FCA 614. The first of these proceedings was commenced on 31 October 2011, and the second was not commenced until 12 March 2014, notwithstanding that it related to unlawful conduct in March 2012. It may, therefore, be concluded, in relation to Mr Myles’ position in August 2013, that his attention had already been drawn to the possible consequences of not complying with industrial legislation and that he already had a history of non-compliance (notwithstanding that the curial outcomes of the relevant events lay then in the future).

31    It was submitted on behalf of the respondents that their readiness to co-operate in the preparation of a statement of agreed facts demonstrated their remorse and contrition. The submission cannot be taken seriously. Given the timing of the relevant events, I regard the respondents’ eleventh-hour admissions as nothing more than them taking the pragmatic road of avoiding what was to have been a five-day trial, the result of which, in the light of those admissions, would surely have been inevitable. Here it must be remembered that Mr Myles’ Defence, prepared by counsel (not the one who appeared for the respondents) and certified by their solicitor denied everything of any substance which was alleged against him by the applicant. For its part, the Union either denied the substantive allegations made against it or, remarkably I would have to say, claimed not to know about the matters alleged. The submission that the respondents have shown remorse and contrition was, I am bound to say, little short of heroic.

32    By reference to the law which applied at the time of the contraventions admitted in this case, the maximum penalty for each contravention is $51,000 in the case of the Union and $10,200 in the case of Mr Myles.

33    For Mr Myles’ conduct on 1 August 2013 looked at in isolation, I consider that a penalty of $4,000 would be appropriate in his own case, and that a penalty of $30,000 would be appropriate in the case of the Union. For Mr Myles’ conduct on 22 August 2013 looked at in isolation, the appropriate penalties would be $4,500 and $35,000 respectively.

34    Were those to be the penalties imposed as a result of this case, I consider that the result would be disproportionate to the overall wrongdoing to which the respondents have admitted. It is here that the totality principle comes into play. Taking account of that principle, the appropriate penalties are, in relation to 1 August 2013, $3,000 and $22,500 for Mr Myles and the Union respectively and, in relation to 22 August 2013, $3,375 and $26,250 for Mr Myles and the Union respectively.

35    The applicant submitted that I should make an order in terms corresponding to those made by Flick J in Director of the Fair Work Building Industry Inspectorate v Bragdon (No 2) [2015] FCA 998:

The [individual] 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 [union] Respondents (or any related entity), or to cause or occasion such penalty to be paid, either directly or indirectly, by the [union] Respondents (or any related entity).

Counsel for the respondents submitted that the court did not have power to make such an order, at the same time informing me that an appeal had been lodged from the judgment in Bragdon. He invited me, alternatively to departing from the view as to power taken by Flick J, to adjourn further consideration of this aspect of the applicant’s case pending the hearing and determination of that appeal.

36    Under the circumstances, it would be wrong for me, sitting as a single Judge, to depart from the view taken in Bragdon as to the availability of an order of the kind made by Flick J in an appropriate case. Neither, however, do I propose to adjourn consideration of this aspect of the applicant’s case.

37    During the hearing of the case, it became apparent that little or no thought had been given, on behalf of the applicant, to the practicalities of the enforcement of an order in the terms proposed. Specifically, it was made quite clear that the applicant had no intention of monitoring the doings of Mr Myles and the Union over the next month, year or decade, for example, to ensure that any request by Mr Myles for reimbursement, or any payment to him by the Union which could be characterised as a reimbursement, was brought to light and made the subject of an enforcement proceeding. In the conventional case, at least one of the parties to litigation will have it in his or her interests to ensure that court orders are complied with by the other party; and, furthermore, by being affected, will know when they have not been. In the case contemplated by the order sought by the applicant, it would be in the interests of neither of the parties presumptively involved in a contravention of the order to draw that circumstance to the attention of the court, much less to take enforcement proceedings. While I assume, of course, that all court orders will be observed, practical considerations of the kind referred to must be regarded as relevant in a situation in which the court is being asked, in its discretion, to step outside the bounds of conventional process.

38    Responsively to concerns of these kinds, counsel for the applicant indicated that his client would be content with a modified form of Bragdon order, one which specifically required Mr Myles to pay any penalty personally, ie rather than have someone else pay it on his behalf. This would avoid the problem of reimbursement, but, ultimately, I have come to the view that practical issues of the kind referred to would remain. As I understand the applicant’s position, the order he seeks should be such that payment from any source other than a fund to which Mr Myles is solely beneficially entitled would be prohibited. The potential for such an order to open up a previously undisturbed can of worms, as it were, is all too obvious. Anyone may act by an agent. Where Mr Myles would source the funds to meet any penal obligation imposed on him is not, in my view, a matter with which the court should concern itself.

39    While these reasons should not be understood as casting any doubt upon the existence of a power to make an order of the kind sought by the applicant, in my view the exercise of such a power would be problematic in the absence of some greater legislative definition of the procedures and protocols that would provide the necessary support for the effectiveness of such an order.

40    For the reasons I have given, I propose to confine myself to the conventional form of order imposing penalties on Mr Myles.

Associate:

Dated:    4 November 2015