FEDERAL COURT OF AUSTRALIA

Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (The Yarra’s Edge Case) [2016] FCA 772

ORDERS

THE COURT ORDERS THAT:

1.    A penalty of $12,500 be imposed on the third respondent, Elias Spernavasilis, for engaging in unlawful industrial action at the site of the construction of the “Yarra’s Edge” Tower 8 complex at 1 Point Park Crescent, Docklands, Victoria, on 17 and 19 February 2011, in contravention of s 38 of the Building and Construction Industry Improvement Act 2005 (Cth).

2.    A penalty of $14,000 be imposed on the fourth respondent, Shaun Reardon, for engaging in unlawful industrial action at the site of the construction of the “Yarra’s Edge” Tower 8 complex at 1 Point Park Crescent, Docklands, Victoria, on 17, 18 and 19 February 2011, in contravention of s 38 of the Building and Construction Industry Improvement Act 2005 (Cth).

3.    A penalty of $11,250 be imposed on the fifth respondent, Derek Christopher, for engaging in unlawful industrial action at the site of the construction of the “Yarra’s Edge” Tower 8 complex at 1 Point Park Crescent, Docklands, Victoria, on 17, 18 and 19 February 2011, in contravention of s 38 of the Building and Construction Industry Improvement Act 2005 (Cth).

4.    A penalty of $11,500 be imposed on the sixth respondent, Billy Beattie, for engaging in unlawful industrial action at the site of the construction of the “Yarra’s Edge” Tower 8 complex at 1 Point Park Crescent, Docklands, Victoria, on 17, 18 and 19 February 2011, in contravention of s 38 of the Building and Construction Industry Improvement Act 2005 (Cth).

5.    A penalty of $9,500 be imposed on the seventh respondent, Theo Theodorou, for engaging in unlawful industrial action at the site of the construction of the “Yarra’s Edge” Tower 8 complex at 1 Point Park Crescent, Docklands, Victoria, on 17 and 19 February 2011, in contravention of s 38 of the Building and Construction Industry Improvement Act 2005 (Cth).

6.    A penalty of $6,850 be imposed on the second respondent, Bill Oliver, for his involvement in the contravention referred to in Order 1 above, thereby contravening s 38 of the Building and Construction Industry Improvement Act 2005 (Cth).

7.    A penalty of $7,300 be imposed on the second respondent, Bill Oliver, for his involvement in the contravention referred to in Order 2 above, thereby contravening s 38 of the Building and Construction Industry Improvement Act 2005 (Cth).

8.    A penalty of $6,850 be imposed on the second respondent, Bill Oliver, for his involvement in the contravention referred to in Order 3 above, thereby contravening s 38 of the Building and Construction Industry Improvement Act 2005 (Cth).

9.    A penalty of $7,300 be imposed on the second respondent, Bill Oliver, for his involvement in the contravention referred to in Order 4 above, thereby contravening s 38 of the Building and Construction Industry Improvement Act 2005 (Cth).

10.    A penalty of $6,400 be imposed on the second respondent, Bill Oliver, for his involvement in the contravention referred to in Order 5 above, thereby contravening s 38 of the Building and Construction Industry Improvement Act 2005 (Cth).

11.    A penalty of $85,000 be imposed on the first respondent, the Construction, Forestry, Mining and Energy Union, for engaging in unlawful industrial action at the site of the construction of the “Yarra’s Edge” Tower 8 complex at 1 Point Park Crescent, Docklands, Victoria, on 17, 18 and 19 February 2011, in contravention of s 38 of the Building and Construction Industry Improvement Act 2005 (Cth).

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

13.    The respondents pay the applicant’s costs.

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

REASONS FOR JUDGMENT

JESSUP J:

1    In its judgment on appeal on 4 December 2015, the Full Court ordered that the orders made in this proceeding on 16 December 2014 (Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2014] FCA 1373) be set aside, and declared “that each of the respondents had contravened” s 38 of the Building and Construction Industry Improvement Act 2005 (“the BCII Act”): Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 170. The proceeding was remitted to me to make orders consequential upon that declaration.

2    There are two broad areas in which determinations are now required to be made: penalties and costs.

3    With respect to penalties, I should commence by identifying what contraventions of s 38 of the BCII Act there were, and by whom. The relevant delict was to “engage” in industrial action. At base, such action had to be “building industrial action”, which was defined in s 36 to include a ban, limitation or restriction on the performance of building work. In para 43 of my reasons of 16 December 2014, I said:

Had I been free to decide the present case by reference to the reasoning set out in the two preceding paragraphs, I would have held that the conduct of the CFMEU organisers at the gates to the site amounted to a restriction or limitation on the performance of Brinzi’s work ….

In the light of the judgment of the Full Court, that statement must now be taken as a finding of fact by reference to which, with other relevant matters, the matter presently before the court must be determined.

4    The applicant now submits that there were four discrete occasions on which, as a practical matter, the performance of Mr Brinzi’s work was restricted or limited, namely –

(a)    when he attempted to bring the mobile crane on to the site via Gate 3 at about 3.30 pm on 17 February 2011;

(b)    when he attempted to bring the mobile crane on to the site via Gate 10 at about 4.20 pm on 17 February 2011;

(c)    when he attempted to bring the mobile crane on to the site via Gate 3 some time after 7.00 am on 18 February 2011;

(d)    when he attempted to bring the mobile crane on to the site via Gate 3 at about 8.30 am on 19 February 2011.

The applicant submits that, on each of these occasions, each participating organiser engaged in a restriction or limitation on the performance of Brinzi’s work. If correct and available to the applicant, this proposition would mean that the third respondent (Spernovasilis) so engaged on three occasions (twice on 17 February and again on 19 February), the fourth respondent (Reardon) so engaged on four occasions (twice on 17 February and once on each of 18 and 19 February), the fifth respondent (Christopher) so engaged on three occasions (once on each of 17, 18 and 19 February), the sixth respondent (Beattie) so engaged on four occasions (twice on 17 February and once on each of 18 and 19 February), and the seventh respondent (Theodorou) so engaged on two occasions (once on each of 18 and 19 February).

5    Counsel for the respondents submitted, however, that it was not open to the applicant to contend for anything more than a finding of one contravention of s 38 on the part of each of these individuals. It was said that the applicant had, in his pleading, alleged a single contravention in each case, and had conducted his case by reference to that allegation. In the Further Amended Statement of Claim filed, by leave, on 14 July 2014, the applicant alleged the existence of the primary facts which, at least substantially, were reflected in my reasons of 14 December 2014. In para 41 of that pleading, the applicant then alleged as follows:

By reason of the matters alleged at paragraphs 12 to 27 and 38 herein, from 17 February 2011 until 25 February 2011, Spernovasilis, Reardon, Christopher, Beattie and Theodorou, themselves and in combination, imposed a ban, restriction or limitation on the performance of the tower crane erection work on the site and thereby engaged in building industrial action within the meaning of section 36 of the BCII Act.

In the submission of the respondents, the applicant here alleged no more than the imposition of a ban, restriction or limitation on the performance of work on the part of each of the organisers. At the level of the meaning conveyed by the text of this paragraph, that submission must be accepted.

6    It was put on behalf of the applicant that the respondents’ approach placed too much store on the pleading itself, and no sufficient store on the way the case was conducted. Subject only to the aspect of the matter dealt with in the next paragraph, however, at no point did the applicant indicate that he proposed to depart from the case as stated in para 41 of the Further Amended Statement of Claim. Counsel referred to some passages in the transcript, and in the outline filed on behalf of the applicant, which might have been consistent with what is now the case sought to be advanced, but they were not consistent only with that, and they certainly did not make clear that it was contended that, on each occasion upon which an organiser participated in an activity by which the entry of Mr Brinzi’s vehicle on to the site was prevented, he thereby engaged in industrial action separate from any like action in which he engaged at another time.

7    The closest the applicant came to articulating the case now sought to be advanced was in final submissions made on his behalf. Counsel submitted as follows:

So who was engaged in the industrial action? In my submission, if you look at that ready reckoner document summarising when and where individual respondents were seen engaging in obstructive picketing behaviour, we rely on that, and say that on each occasion that they did so, they engaged in industrial action. Further, by inference, the court can conclude that they also engaged in industrial action by their recruitment of other people – other people wearing CFMEU gear, etcetera – who formed part of the congregation at the gates.

The “ready reckoner” document referred to was no more than a summary of the affidavit evidence as to the participation of the respondent organisers “at and in the Picket” (as it was put in the heading to the document) at various times. It contained no suggestion that, at each time referred to, there had been a separate contravention of s 38 on the part of each of the organisers.

8    In final submissions made on behalf of the respondents (which followed), counsel did not advert to this point, but he made it absolutely clear that he held the applicant to the terms in which para 41 of the Further Amended Statement of Claim was expressed. The matter of specific concern was the question whether, by preventing the access of Mr Brinzi’s vehicles to the site, there had been a restriction or limitation “on the performance of the tower crane erection work on the [s]ite”. That was the aspect of the controversy with which the Full Court dealt in para 50 of their Honours’ reasons of 4 December 2015. But the position adopted on behalf of the respondents, generally, was that the applicant should be held to his allegations as pleaded.

9    In one way of looking at it, the present problem has arisen because the idea of engaging in something, by reference to which s 38 operated, and the concepts of “limitation” and “restriction”, which were contained in the definition of “building industrial action”, made sense in two alternative settings, namely, that of a person who did a specific, isolated, thing on one occasion, and that of a person who participated, at various times and to various extents, in an ongoing activity, or suite of activities. Each would be sufficient to attract liability under s 38, but the treatment of a situation of the second-mentioned kind not as a single engagement but as separate engagements at each point when the person had any involvement in some relevant action would be to allege multiple contraventions, rather than a single contravention. It would, in short, be a different case.

10    Notwithstanding the terms used – “on each occasion …” – I would not regard the brief reference to this aspect in the final submissions of the applicant as reasonably sufficient to put the respondents on notice that he was intending his case to be understood in a sense different from that articulated in the Further Amended Statement of Claim. The distinction is an important one: if the applicant’s now position is to be upheld, it would involve the exposure of these respondents to the prospect of increased penalties - in some cases by a factor of four. It was, in my view, incumbent on the applicant to bring the point clearly into the light by applying to amend. That was not done, either at trial or at the resumed hearing where the submissions the subject of these reasons were made. Absent the making of such an application, I must hold the applicant to his case as pleaded.

11    In the circumstances, I find:

(a)    that the third respondent (Spernovasilis) engaged in industrial action within the meaning of s 38 of the BCII Act when, on 17 and 19 February 2011, he restricted or limited the performance of the work of Andrew Brinzi driving a vehicle on to the site;

(b)    that the fourth respondent (Reardon) engaged in industrial action within the meaning of s 38 of the BCII Act when, on 17, 18 and 19 February 2011, he restricted or limited the performance of the work of Andrew Brinzi driving a vehicle on to the site;

(c)    that the fifth respondent (Christopher) engaged in industrial action within the meaning of s 38 of the BCII Act when, on 17, 18 and 19 February 2011, he restricted or limited the performance of the work of Andrew Brinzi driving a vehicle on to the site;

(d)    that the sixth respondent (Beattie) engaged in industrial action within the meaning of s 38 of the BCII Act when, on 17, 18 and 19 February 2011, he restricted or limited the performance of the work of Andrew Brinzi driving a vehicle on to the site; and

(e)    that the seventh respondent (Theodorou) engaged in industrial action within the meaning of s 38 of the BCII Act when, on 18 and 19 February 2011, he restricted or limited the performance of the work of Andrew Brinzi driving a vehicle on to the site

12    I turn next to the second respondent, Mr Oliver. In the Further Amended Statement of Claim, it was alleged that, on 17 February 2011, Mr Van Camp asked Mr Oliver (by telephone) why there was a picket at the site, and that Mr Oliver replied that it was because Grocon should be using a four-man crane crew and the first respondent did not want Grocon’s “roving” representatives on site. It was further alleged that, at a meeting on 25 February 2011, Mr Oliver informed Grocon that the resolution of the dispute would require it to expand its tower crane crew from three to four and not to have its roving representatives on site. It was said that, by reason of the matters so alleged, Mr Oliver aided, abetted, counselled or procured the organisers’ contraventions of s 38 of the BCII Act, and was, directly or indirectly, knowingly concerned or involved in, or a party to, those contraventions, thereby becoming liable as an accessory under s 48(2) of the BCII Act.

13    None of those allegations was dealt with in my reasons of 16 December 2014. The applicant’s case against Mr Oliver was disposed of in the following terms:

Oliver was not alleged to have contravened s 38 of the Act in a primary sense. His liability was said to arise as an accessory under s 48(2) of the Act. Since I have, in relation to those unloaders and erectors, rejected the applicant’s case in relation to those alleged to be primarily liable under s 38, it follows that there was no contravention to which Oliver could have been an accessory under s 48(2).

14    The reasons of the Full Court did not deal with the allegation of accessorial liability on the part of Mr Oliver. But their Honours made a declaration that each of the respondents, including Mr Oliver, contravened s 38 of the BCII Act. On the present occasion, it was put on behalf of the applicant that this could only have been a reference to a contravention of the kind pleaded, namely, one arising from the allegations referred to above and the operation of s 48(2). By contrast, it was submitted on behalf of the respondents that the matter of Mr Oliver’s liability had never been curially considered or passed upon. I do not agree. The matter has been judicially determined by the declaration made by the Full Court, and cannot be revisited. I accept the applicant’s submission that the factual and legal basis of that determination must be his case under s 48(2).

15    In the applicant’s written outline, the following submission was made:

Oliver was involved in each of these contraventions within the meaning of s 48(2) of the BCII Act and as such, himself contravened s 38 of the BCII Act on four separate occasions: at around 3.30pm on 17 February 2011, at around 4.20pm on 17 February 2011, on 18 February 2011 and on 19 February 2011;…

That submission does not, in my view, reflect the correct application of s 48(2) to the circumstances of Mr Oliver.

16    Under s 48(2), the starting point must be a contravention on the part of some other person. Because of the way the applicant conducted his case, I have rejected his proposition that each “occasion” represented a separate contravention of s 38 on the part of each of the organisers. Rather, over the three days on which what I would loosely call contravening conduct occurred, there was one contravention on the part of each of the organisers. By the operation of s 48(2), each of these five contraventions gave rise to a corresponding contravention on the part of Mr Oliver.

17    The applicant’s case against the CFMEU is that, by the operation of s 69 of the BCII Act, the CFMEU contravened s 38 as many times as the individuals concerned did: five in the case of the organisers and five (correspondingly) in the case of Mr Oliver.

18    Subsections (1) and (3) of s 69 relevantly provided as follows:

(1)    For the purposes of this Act, the following conduct in relation to a building association is taken to be conduct of the building association:

…

(b)    conduct of an officer or agent of the association acting in that capacity;

…

(3)    In this section:

officer, in relation to a building association, includes:

(a)    a delegate or other representative of the association; and

(b)    an employee of the association.

19    All of the organisers were employees of the CFMEU, and thus officers by the operation of s 69(3). Their conduct was attributed to the CFMEU. It does not follow, however, that the CFMEU contravened s 38 as many times as the organisers in total did. This provision had an effect which differed in an important way from s 48(2): it was the conduct, not each contravention, which was attributed to the building association (see Director of the Fair Work Building Industry Inspectorate v Robinson [2016] FCA 525 at [50]). Having attributed the conduct, the question remains: did that conduct amount to engagement in unlawful industrial action within the meaning of s 38, and if so, to how many separate instances thereof? On the facts of the present case, it would, in my opinion, be artificial to regard the conduct of the CFMEU as having amounted to a separate engagement in industrial action in respect of the conduct of each of the five organisers concerned. It may have amounted to a separate engagement on each of the discrete occasions on which those organisers prevented Mr Brinzi from bringing a vehicle on to the site, but that, as I have already held, was not the way the applicant conducted his case. I would hold, therefore, that the CFMEU contravened s 38 of the BCII Act once.

20    Having reached this point, it is probably moot whether the contraventions of s 38 by Mr Oliver also gave rise to contraventions by the CFMEU under s 69. For the sake of completeness, however, I express the view that they did not. Mr Oliver did not engage in any conduct which involved a primary contravention of s 38 on his part: his contraventions arose from the deeming provisions of s 48(2). That subsection applied only “for the purposes of this Part”, ie Pt 1 of Ch 7 of the BCII Act. Section 69 was not in that Part. Thus, the various characteristics of the situation of the person of whom s 48(2) spoke - aiding, abetting, knowing involvement, etc - if apt to be described as “conduct” in the general sense, were not to be treated as “conduct” for the purposes of s 69. In my view, s 69 did not operate to convert Mr Oliver’s contraventions into the CFMEU’s contraventions.

21    I turn next to the determination of the penalty to be imposed in respect of each of the contraventions referred to above, commencing with the five primary contraveners. The maximum penalty for a contravention of s 38 committed by an individual in February 2011 is $22,000.

22    Some general observations may be made about the industrial action in which these organisers engaged. It would be a truism to say that the purpose of action of the kind encountered in this case is to deprive someone, be it the employer in question or someone else, of the benefit of the work the performance of which is restricted or limited. But there were two features of the action taken in the present case which should cause the court to view the conduct more seriously than might be warranted in other situations. First, it was not just Mr Brinzi’s work, as such, of which Grocon was being deprived. Mr Brinzi was engaged in the task of bringing on to site machinery and equipment which were essential to the construction of one of the required tower cranes. The importance of such an activity to the progress of work on a project of this kind needs hardly to be emphasised. In truth, Mr Brinzi’s work was being restricted or limited in order to inflict a loss on Grocon well beyond the hourly value to it of his labour as such. And secondly, this was not primary industrial action; that is to say, it was not taken in support of some claim made or position adopted by the respondents in the industrial interests of Mr Brinzi himself. Rather, Mr Brinzi wanted to work, he had no claim on Grocon and he stood to derive no benefit from what might have been the successful outcome (in the respondents’ eyes) of the industrial action. In short, Mr Brinzi’s own terms and conditions of employment were irrelevant to the respondents’ campaign against Grocon. He happened to be the meat in someone else’s sandwich.

23    The contraventions were, needless to say, deliberate, and were justifiable by reference to no standard other than the sufficiency of the commercial pressure thereby placed on Grocon to cause it to accede to the respondents’ claims. Although, in their case in court, the respondents attempted to dress those claims with some kind of safety or regulatory concerns, there was never anything in that attempt. At the time of the conduct, there was no such justification advanced. Neither was there any suggestion of some recent alteration of practice or peremptory conduct on the part of Grocon having given rise to the dispute. The only basis of the dispute, I would infer, was that the respondents preferred to have Grocon conduct its business in a different way in two respects. I say that I would infer this because the respondents chose not to put a single witness in the box to explain how this industrial action could be justified, for example, in the interests of Grocon’s employees, of good industrial relations on site, of Grocon’s unreasonableness, or otherwise. In the circumstances, it is impossible to find anything to mitigate the inherent seriousness of the respondents’ actions.

24    The contraventions covered two or (in most cases) three days of industrial action. This is to be taken into account because, although I have held that there was but one contravention in the case of each organiser, in no instance was the action constituted by a single act or omission. Extending over more than one day as the action did in each case, it is to be inferred that the respondents were conducting a considered and determined campaign, as it might be called, against Grocon.

25    There is no evidence of the loss, if any, sustained by Grocon, Mirvac or any other company as a result of this industrial action, although, as mentioned at para 19 of my reasons of 16 December 2014, Grocon took the matter sufficiently seriously to commence proceedings in the Supreme Court and to obtain an interlocutory injunction the following day.

26    That brings me to the individual respondents. As mentioned above, the third respondent (Spernovasilis) took action against Mr Brinzi’s entry to the site on three occasions over two days. In addition to being an organiser employed by the CFMEU, he was a Vice-President of the Victorian Branch of the Construction and General Division. He was, therefore, in a position of some authority and would, I infer, be looked upon by other members and more junior organisers for such example, good or bad, as he chose to set.

27    My attention has been drawn to three prior occasions on which penalties have been imposed on the third respondent for contraventions of s 38 of the BCII Act or other industrial relations legislation which should be regarded as relevant in the present context:

    on 3 March 2011, in respect of conduct on 23 May and 28 August 2008 in contravention of s 38 of the BCII Act (Wotherspoon v CFMEU [2011] FCA 158);

    on 27 June 2011, in respect of conduct on 12 December 2008, 12 and 13 February 2009 (two contraventions on different sites), and from 18 February to 2 March 2009 in contravention of s 43 of the BCII Act (Gregor v CFMEU [2011] FCA 808); and

    on 11 November 2015, in respect of conduct on 17, 22, 23, 27, 28, 29, 30 and 31 August 2012 and 4 September 2012 in contravention of ss 348 and 355 of the Fair Work Act 2009 (Cth) (“the FW Act”) (nine penalties imposed in respect of 18 contraventions) (Director of Fair Work Building Industry Inspectorate v CFMEU [2015] FCA 1213).

Although the imposition of these penalties post-dated the third respondent’s conduct the subject of the present case, in each of the first two proceedings mentioned the relevant conduct predated it considerably, and both of those proceedings had been commenced well before the third respondent commenced to engage in the conduct which has brought him to court here. That is to say, he had contravened previously, and the currency of those two proceedings appears to have had little deterrent effect. From the matters referred to in the third proceeding mentioned, it seems that even the penalties imposed in the first two proceedings may not have had the intended deterrent effect.

28    For his contravention of s 38 of the BCII Act, the appropriate penalty in the case of the third respondent is, in my view, $12,500.

29    The fourth respondent (Reardon) took action against Mr Brinzi’s entry to the site on four occasions over three days. Like the third respondent, he was a Vice-President of the Victorian Branch of the Construction and General Division. He too was, therefore, in a position of some authority and would, I infer, be looked upon by other members and more junior organisers for such example, good or bad, as he chose to set.

30    My attention has been drawn to five prior occasions on which penalties have been imposed on the fourth respondent for contraventions of s 38 of the BCII Act or other industrial relations legislation which should be regarded as relevant in the present context:

    on 11 October 2010, in respect of conduct on 1 April 2009 in contravention of s 38 of the BCII Act (Wotherspoon v CFMEU [2010] FMCA 786);

    on 7 March 2011, in respect of conduct on 28 May 2008 in contravention of ss 38 and 43 of the BCII Act (White v CFMEU [2011] FCA 192);

    on 27 June 2011, in respect of conduct on 12 December 2008, 12 and 13 February 2009 (two contraventions on different sites), and from 18 February to 2 March 2009 in contravention of s 43 of the BCII Act (Gregor v CFMEU [2011] FCA 808);

    on 20 April 2015, in respect of conduct on 28 June 2013 in contravention of s 343 of the FW Act (Director of Fair Work Building Industry Inspectorate v CFMEU [2015] FCA 353); and

    on 11 November 2015, in respect of conduct on 17, 22, 23, 27, 28, 29, 30 and 31 August 2012 and 4 and 5 September 2012 in contravention of ss 348 and 355 of the FW Act (ten penalties imposed in respect of 20 contraventions) (Director of Fair Work Building Industry Inspectorate v CFMEU [2015] FCA 1213).

The imposition of the first of these penalties predated the fourth respondent’s conduct the subject of the present case by about four months. That experience was, for him, both recent and directly relevant. Yet it did not deter him from engaging in that conduct. Otherwise, although the imposition of the penalties referred to postdated the fourth respondent’s conduct the subject of the present case, in each of the second and third proceedings mentioned the relevant conduct predated it considerably, and both of those proceedings had been commenced well before the fourth respondent commenced to engage in the conduct which has brought him to court here. That is to say, he had contravened previously, and the currency of those two proceedings appears to have had little deterrent effect. From the matters referred to in the fourth and fifth proceedings mentioned, it seems that even the penalties imposed in the second and third proceedings may not have had the intended deterrent effect.

31    For his contravention of s 38 of the BCII Act, the appropriate penalty in the case of the fourth respondent is, in my view, $14,000.

32    The fifth respondent (Christopher) took action against Mr Brinzi’s entry to the site on three occasions over three days.

33    My attention has been drawn to three prior occasions on which penalties have been imposed on the fifth respondent for contraventions of s 38 of the BCII Act or other industrial relations legislation which should be regarded as relevant in the present context:

    on 3 March 2011, in respect of conduct on 14 and 28 August 2008 in contravention of s 38 of the BCII Act (Wotherspoon v CFMEU [2011] FCA 158);

    on 27 June 2011, in respect of conduct on 12 December 2008, 12 and 13 February 2009, and from 18 February to 2 March 2009 in contravention of s 43 of the BCII Act (Gregor v CFMEU [2011] FCA 808);

    on 11 November 2015, in respect of conduct on 22, 28 and 30 August 2012 in contravention of ss 348 and 355 of the FW Act (three penalties imposed in respect of six contraventions) (Director of Fair Work Building Industry Inspectorate v CFMEU [2015] FCA 1213).

Although the imposition of these penalties post-dated the third respondent’s conduct the subject of the present case, in each of the first two proceedings mentioned the relevant conduct predated it considerably, and both of those proceedings had been commenced well before the third respondent commenced to engage in the conduct which has brought him to court here. That is to say, he had contravened previously, and the currency of those two proceedings appears to have had little deterrent effect. From the matters referred to in the third proceeding mentioned, it seems that even the penalties imposed in the first two proceedings may not have had the intended deterrent effect.

34    For his contravention of s 38 of the BCII Act, the appropriate penalty in the case of the fifth respondent is, in my view, $11,250.

35    The sixth respondent (Beattie) took action against Mr Brinzi’s entry to the site on four occasions over three days.

36    My attention has been drawn to two prior occasions on which penalties have been imposed on the sixth respondent for contraventions of industrial relations legislation which should be regarded as relevant in the present context:

    on 31 May 2013, in respect of conduct on 2 and 14 September 2011 in contravention of s 43 of the BCII Act (Director of the Fair Work Building Industry Inspectorate v CFMEU [2013] FCA 515); and

    on 3 October 2013, in respect of conduct on 8 and 9 July 2010 in contravention of s 417 of the FW Act (Director of the Fair Work Building Industry Inspectorate v CFMEU [2013] FCA 981).

The conduct which was relevant in the second of these proceedings predated the conduct with which I am presently concerned by about seven months.

37    For his contravention of s 38 of the BCII Act, the appropriate penalty in the case of the sixth respondent is, in my view, $11,500.

38    My attention has been drawn to one prior occasion on which a penalty was imposed on the seventh respondent for a contravention of industrial relations legislation which should be regarded as relevant in the present context:

    on 31 May 2013, in respect of conduct on 14 September 2011 in contravention of s 43 of the BCII Act (Director of the Fair Work Building Industry Inspectorate v CFMEU [2013] FCA 515).

39    For his contravention of s 38 of the BCII Act, the appropriate penalty in the case of the seventh respondent is, in my view, $9,500.

40    The second respondent was involved, within the meaning of s 48(2) of the BCII Act, in all five of the contraventions referred to in these reasons. He was the secretary of the relevant branch of the CFMEU and manifestly had authority, on behalf of the CFMEU, either to countenance the continuation of the unlawful conduct of the organisers or to terminate it. When the court asked counsel for the respondents what explanation there might have been for five employed organisers of the CFMEU taking action against a builder on account of grievances which were obviously those of the CFMEU as an organisation rather that of any worker on site, he was unable to provide one. As I have mentioned above, Mr Oliver’s liability is now, because of the declaration made by the Full Court, incontestable, but it is also readily to be inferred, in the absence of him from the witness box, that he was an active and wilful participant in the CFMEU’s decision to take industrial action at the site.

41    The “main object” of the BCII Act was as follows:

(1)    The main object of this Act is to provide an improved workplace relations framework for building work to ensure that building work is carried out fairly, efficiently and productively for the benefit of all building industry participants and for the benefit of the Australian economy as a whole.

(2)    This Act aims to achieve its main object by the following means:

(a)    improving the bargaining framework so as to further encourage genuine bargaining at the workplace level;

(b)    promoting respect for the rule of law;

(c)    ensuring respect for the rights of building industry participants;

(d)    ensuring that building industry participants are accountable for their unlawful conduct;

(e)    providing effective means for investigation and enforcement of relevant laws;

(f)    improving occupational health and safety in building work;

(g)    encouraging the pursuit of high levels of employment in the building industry;

(h)    providing assistance and advice to building industry participants in connection with their rights and obligations under relevant industrial laws.

That section, in what is now the re-named Fair Work (Building Industry) Act 2012 (Cth), has been substantially amended, but it continues to identify the provision of “a balanced framework for cooperative, productive and harmonious workplace relations in the building industry by … ensuring compliance with workplace relations laws by all building industry participants” as an object of the legislation.

42    Other members of the court have observed that the conduct of the CFMEU and its officers at times falls short of the standard to be expected from an organisation which enjoys the benefits of registration under the Fair Work (Registered Organisations) Act 2009 (Cth) (“the RO Act”). To those observations I would add that organisations, like all corporate bodies, are made up of individuals whose decisions, and in some cases whose inaction, cause the organisation itself to behave in particular ways, good or bad. Inevitably, the leaders of organisations shoulder a substantial responsibility for what the organisations themselves do. Industrial misconduct, glaringly incongruous with the statutory objectives to which I have referred, rarely happens by accident. In the present case, it did not do so. On the evidence, the leadership which Mr Oliver gave the matters under his control fell well short of the standard which the community was entitled to expect and on which it had, through the legislation enacted by its elected representatives, insisted.

43    There is nothing in my approach to the determination of the penalties appropriate to be imposed on Mr Oliver which reflects “the Old and New Testament moralities” (Trade Practices Commission v CSR Ltd [1991] ATPR 52,135 at 52,152). Rather, the considerations referred to above are directly relevant to the matter of deterrence. Of all people, those in positions of responsibility in registered organisations should be deterred from engaging in conduct of the kind found against Mr Oliver in the present case.

44    My attention has been drawn to two prior occasions on which penalties were imposed on the second respondent for a contravention of industrial relations legislation which should be regarded as relevant in the present context:

    on 17 March 2009, and (by way of appeal) on 10 September 2009, in respect of conduct on 16 November 2005 in contravention of ss 43 and 45 of the BCII Act and s 298P of the Workplace Relations Act 1996 (Cth) (Draffin v CFMEU [2009] FCA 243 and Draffin v CFMEU [2009] FCAFC 120 respectively); and

    on 11 November 2015, in respect of conduct on 28, 29 and 31 August 2012 and 4 September 2012 in contravention of ss 348 and 355 of the FW Act (four penalties imposed in respect of eight contraventions) (Director of Fair Work Building Industry Inspectorate v CFMEU [2015] FCA 1213).

The imposition of the first of these penalties predated the second respondent’s conduct the subject of the present case by nearly four years. The appellate proceeding in that matter must surely have engraved the requirements of the BCII Act on his mind. But the second proceeding mentioned, and the facts of the present case, bespeak the inadequacy of the penalties then imposed as a measure of deterrence for him.

45    In the case of the second respondent, there are five contraventions to be dealt with. In the BCII Act, there was no statutory “course of conduct” provision the equivalent of s 557 of the FW Act, but two general sentencing principles are relevant in the circumstances: that the second respondent should not be penalised more than once for what was in truth a single instance of unlawful conduct, and the total penalties imposed on him should not be disproportionately burdensome having regard to his overall culpability. There is a sense in which the conduct of the organisers which became his own under s 48(2) amounted to no more than a single instance of wrongdoing on his part, but this must be balanced by the consideration that, for every additional organiser who was involved beyond the first, the effectiveness of the conduct, as a project of the CFMEU, was enhanced.

46    Taking these matters into account, I consider that the appropriate penalties for the second respondent’s contraventions linked to those of the third, fourth, fifth, sixth and seventh respondents should be $6,850, $7,300, $6,850, $7,300 and $6,400 respectively.

47    That brings me to the penalty to be imposed on the CFMEU. The maximum penalty for a contravention of s 38 committed by a corporation in February 2011 is $110,000. Many of the observations made above in relation to the organisers, and to Mr Oliver in particular, apply equally in the case of the CFMEU, and I shall not repeat them. It remains only to refer to the occasions in the past where the CFMEU has been found to have contravened s 38 of the BCII Act or other industrial relations legislation which should be regarded as relevant in the present context.

48    The CFMEU’s record of non-compliance with legislation of this kind has now become notorious. That record ought to be an embarrassment to the trade union movement. It has been the subject of comment by this court so frequently in recent times as to make any further recitation quite unnecessary. At the level of specifics, my attention has been drawn to the fact that, before 17 February 2011, the CFMEU (acting through the Victorian Branch of its Construction and General Division) had been found to have contravened s 38 of the BCII Act, and penalised therefor, on 16 occasions. The BCII Act was substantially amended, and re-named, in 2012, but the CFMEU continued thereafter to contravene other relevant legislation. The schedule of contraventions handed up on behalf of the applicant is extensive, and runs well beyond those 16 occasions. In a submission from which counsel for the respondents was not heard to demur, it was said for the applicant that “at least 80 of the [Union’s] previous contraventions were either dealt with (in court) before the events the subject of these proceedings, or involved contravening conduct which had occurred before the events the subject of these proceedings, but were finalised after.” Quite obviously, over the years the CFMEU has shown a strong disinclination to modify its business model in order to comply with the law.

49    These considerations resonate loudly, of course, when the court reaches the point of taking the need for specific deterrence into account in its determination of the penalty to be imposed on the CFMEU for its contravention of industrial relations legislation.

50    I consider that the appropriate penalty for the CFMEU’s contraventions is $85,000.

51    With respect to the payment of the penalties which would be imposed in this case, the applicant sought the making of an order in the following terms:

The first respondent must not directly or indirectly indemnify any of the second to seventh respondents against the penalties in paragraphs 5 to 24 above in whole or in part, whether by agreement, or by making a payment to the Commonwealth, or by making any other payment or reimbursement, or howsoever otherwise.

It was acknowledged that, in the Mitcham Rail Case [2015] FCA 1173 and in the Red and Blue Case (No 2) [2015] FCA 1462, I refused to make an order in similar terms, but it was submitted that the more recent judgment of Mortimer J in Director of Fair Work Building Industry Inspectorate v CFMEU (No 2) [2016] FCA 436 (to which I shall refer, for the sake of convenience, as the Regional Rail Case) should now be followed.

52    The idea that the CFMEU should be prohibited from indemnifying one of its officials or organisers against the penalties imposed on him or her, or from otherwise making the required payment on his or her behalf, originated in the judgment of Flick J in Director of the Fair Work Building Industry Inspectorate v Bragdon (No 2) [2015] FCA 998. In the two cases mentioned in the previous paragraph, I declined to follow that approach. It was thought that the question of the correctness of the approach would be resolved, one way or the other, in the appeal from Bragdon, but, as it happened, the penalty orders themselves were set aside: Bragdon v Director of the Fair Work Building Industry Inspectorate [2016] FCAFC 64. Although their Honours in the Full Court saw “considerable force in the reservations” which I had expressed in Mitcham Rail, they did not rule on the point which is presently controversial.

53    In Regional Rail, Mortimer J ordered the CFMEU and one of its organisers to pay penalties, and also made an order in the terms sought by the applicant in the present case. In the course of her Honour’s reasons, she said ([2016] FCA 436 at [186]):

I accept the force of the observations made by Jessup J in the Mitcham Rail Case and endorsed by the Full Court in Bragdon. Identifying the source used by an individual to pay a penalty is fraught with difficulty. No such difficulty attends an order against another party prohibiting indemnification, especially where that party is a registered organisation, the financial accounts and transactions of which are open to scrutiny.

And ([2016] FCA 436 at [195]):

There is no doubt that the discretionary considerations (covering the “practical difficulties” of such orders) raised by Jessup J in the Mitcham Rail Case and repeated by the Full Court in Bragdon remain, although in my opinion they are diminished in the current proceeding by the fact that only a prohibitory order is made against the CFMEU. The prohibitory order is capable of being effective to preclude the CFMEU from using its funds, and its members’ funds, to pay Mr Myles’ penalty.

With respect, her Honour’s premise that “the financial accounts and transactions … are open to scrutiny” may not withstand examination, at least if the purpose of such scrutiny is to identify any payments that were made to indemnify individuals against penalties paid, or required to be paid, by them.

54    In the present case, the financial report of the relevant branch of the CFMEU for the year ended 31 December 2014 (apparently the most recent available set of accounts), filed conformably with s 268 of the RO Act, was placed into evidence by the applicant. The report shows the outgoings of the branch, both as expense items on the Profit and Loss Statement and as cash flows, for that year and for the previous calendar year.

55    The schedules of the CFMEU’s previous contraventions attached to the applicant’s submissions referred to the following penalties imposed on the CFMEU which would, at least in a regular world, have been paid in the financial year to 31 December 2013, or, even if not paid in a timely way, in the following year:

    On 20 February 2013, a penalty of $10,000 to be paid by 13 March 2013: Director of the Fair Work Building Inspectorate v CFMEU [2013] FMCA 160

    On 31 May 2013, penalties totalling $84,000: Director of the Fair Work Building Industry Inspectorate v CFMEU [2013] FCA 515

    On 3 October 2013, a penalty of $12,500: Director of the Fair Work Building Industry Inspectorate v CFMEU [2013] FCA 981

    On 7 October 2013, penalties totalling $155,000 to be paid by 6 December 2013: Director of the Fair Work Building Industry Inspectorate v CFMEU [2013] FCA 1014

    On 21 November 2013, a penalty of $20,000 to be paid by 13 December 2013: Cozadinos v CFMEU [2013] FCA 1243

A total of $281,500.

56    It is not possible to identify any of these outgoings in the CFMEU’s financial report filed under s 268. So much was accepted by counsel for the applicant. In the cash flow statement for the year previous to the one of report (ie to 31 December 2013), the only item that might be relevant is “Payments to suppliers and employees” in a global sum of about $22m. Where the CFMEU’s own penalty payments are not disclosed, as such, in the accounts – and seemingly are not required to be – one could have no confidence that the absence of any identifiable reference to reimbursements, indemnifications or like payments demonstrated compliance with an order of the kind made in Regional Rail.

57    I would readily associate myself with the broad policy considerations which informed the judgment of Mortimer J in Regional Rail. I remain of the view, however, that it is for the legislature to provide the framework necessary to achieve the ends to which her Honour so persuasively referred. I do not propose to make an order of the kind sought by the applicant.

58    That leaves the matter of costs. On behalf of the applicant, it was put that he had been substantially successful in the proceeding, and that costs should follow the event. On behalf of the respondents, it was put that the applicant had been only partly successful, and that there should be no order as to costs.

59    I consider that the applicant has the better of the argument on this point. I cannot see how his costs were increased, to any material extent at least, by the inclusion in his case of the matters on which he failed. To the extent that he did fail, that arose from an analysis of the way the facts were treated under different statutory provisions. Put broadly, the applicant’s complaint was that the respondents prevented Grocon from bringing on to the site the machinery and parts necessary for the construction of the tower crane. He succeeded in demonstrating that at least important elements of the respondents’ conduct were unlawful. Beyond that, the whole story had to be told, to put the court in the best position to understand matters of background, context and purpose. In a case of this nature, I would not regard it as appropriate to qualify the applicant’s entitlement to costs by reference to statutory causes of action on which he did not succeed.

Associate:

Dated:    1 July 2016

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