FEDERAL COURT OF AUSTRALIA

Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2016] FCA 798

ORDERS

THE COURT DECLARES THAT:

1.    Under s 21 of the Federal Court of Australia Act 1976 (Cth), that the 5th, 9th, 13th, 15th, 16th, 17th, 18th, 19th, 20th, 22nd, 23rd, 24th, 25th, 26th, 27th, 28th, 29th, 30th, 32nd, 33rd, 35th, 36th, 37th, 39th, 43rd, 46th, 48th and 51st respondents contravened s 417(1)(a) of the Fair Work Act 2009 (Cth), as alleged in [34] of the amended statement of claim filed 13 June 2016.

2.    Under s 21 of the Federal Court of Australia Act 1976, that the second respondent contravened s 417(1)(a) of the Fair Work Act 2009, as alleged in [35] of the amended statement of claim filed 13 June 2016.

3.    Under s 21 of the Federal Court of Australia Act 1976, that the conduct of the second respondent is taken to be the conduct of the first respondent, pursuant to s 793 of the Fair Work Act 2009 and, accordingly, the first respondent has contravened s 417(1)(a) of the Fair Work Act 2009, as alleged in [40] and [41] of the amended statement of claim filed 13 June 2016.

THE COURT ORDERS THAT:

4.    Pursuant to s 546(1) of the Fair Work Act 2009, there be a pecuniary penalty imposed on the first respondent for contravening s 417(1)(a) of the Fair Work Act 2009 in the sum of $27,500.

5.    Pursuant to s 546(1) of the Fair Work Act 2009, there be a pecuniary penalty imposed on the second respondent for contravening s 417(1)(a) of the Fair Work Act 2009 in the sum of $5,500.

6.    Pursuant to s 546(1) of the Fair Work Act 2009, there be a pecuniary penalty imposed on each of the 5th, 9th, 13th, 15th, 16th, 17th, 18th, 19th, 20th, 22nd, 23rd, 24th, 25th, 26th, 27th, 28th, 29th, 30th, 32nd, 33rd, 35th, 36th, 37th, 39th, 43rd, 46th, 48th and 51st respondents for contravening s 417(1)(a) of the Fair Work Act 2009 in the sum of $1,000.

7.    Pursuant to s 546(3)(a) of the Fair Work Act 2009, that the pecuniary penalties be paid to the Commonwealth.

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

REASONS FOR JUDGMENT

BARKER J:

1    This proceeding commenced by the Director of the Fair Work Building Industry Inspectorate concerns what penalties should be ordered against a number of respondents in respect of their admitted contraventions of s 417(1)(a) of the Fair Work Act 2009 (Cth) (FW Act) by their actions at a construction project known as the Lakeside Joondalup Redevelopment Project (project) in Joondalup, Western Australia on 4 June 2014.

2    Section 417(1)(a), when read with subs (2), in effect provides that an employee or employee organisation or officer of an employee organisation that is covered by an enterprise agreement, must not organise or engage in industrial action from the day on which an enterprise agreement is approved by the Fair Work Commission until its nominal expiry date has passed.

3    The head contractor of the project was Lend Lease Building Pty Ltd and it engaged a number of subcontractors to perform work at the project.

4    The second respondent, Mr Joseph McDonald, is and was at material times an official of the first respondent, the Construction, Forestry, Mining and Energy Union (CFMEU).

5    The following 28 respondents (employee respondents) at material times were employees of subcontractors performing work at the project. They are the 5th, 9th, 13th, 15th, 16th, 17th, 18th, 19th, 20th, 22nd, 23rd, 24th, 25th, 26th, 27th, 28th, 29th, 30th, 32nd, 33rd, 35th, 36th, 37th, 39th, 43rd, 46th, 48th and 51st respondents. (As against other respondents, the proceeding is yet to be finalised.)

6    The CFMEU, Mr McDonald, the employee respondents (together, the represented respondents) and the Director have agreed to resolve the question of liability by way of an amended originating application, amended statement of claim and substituted defences. See the Director’s amended substituted originating application and statement of claim dated 13 June 2016; substituted defences of the represented respondents dated 14 June 2016.

7    The admitted contraventions of s 417(1)(a) of the FW Act by the represented respondents are set out in the substituted defences. The substituted defences admit [1]-[41] of the amended originating application and amended statement of claim.

8    The facts and nature of the contraventions are different in respect of the CFMEU, Mr McDonald and the employee respondents. Accordingly, each respondent is dealt with separately below.

9    Section 417(1)(a) of the FW Act is a civil remedy provision. The maximum penalty available for a contravention of this provision is 300 penalty units for a body corporate and 60 penalty units for an individual. See s 546 and s 539 of the FW Act. The value of a penalty unit as of 4 June 2014 was $170. See s 4AA(1) of the Crimes Act 1914 (Cth). Accordingly, the maximum penalty for a contravention of s 417(1)(a) of the FW Act is:

(1)    for the CFMEU, $51,000; and

(2)    for Mr McDonald and each of the employee respondents, $10,200.

10    The question is what relief should be granted. The parties are agreed that there should be relevant declarations of contraventions of s 417(1)(a) by the represented respondents.

11    The parties also submit that the Court, having regard to the principles usually regarded in such cases, should impose a pecuniary penalty order against each of the employee respondents in the sum of $1,000. As explained below, the Court considers a penalty in this sum is appropriate.

12    In respect of Mr McDonald and the CFMEU, the parties agree on the principles to be regarded when assessing penalty, but not on the amount that should be ordered against each of these respondents.

13    Thus, the primary issue now arising for consideration is the appropriate pecuniary penalty to be imposed in respect of Mr McDonald and the CFMEU.

14    It should be noted that the CFMEU is made liable under the Act by reason of the conduct of its official, Mr McDonald. The CFMEU agrees that the penalty imposed on the CFMEU should be a multiple of five of whatever the penalty is that is imposed on Mr McDonald.

General principles

15    The general principles for determining the appropriate penalties in a case such as this are well established. There are indeed numerous decisions of the Court, including my own, where these have been addressed, sometimes at length. It is sufficient for me presently to note that these principles were addressed by Mansfield J relatively recently in Director of the Fair Work Building Industry Inspectorate v Cartledge [2014] FCA 1047 at [50] to [59].

16    In the circumstances, I will address below only those considerations which are agreed by the parties, and the Court, to be relevant to the assessment of the pecuniary penalties in this case.

17    The Court must be mindful to impose a pecuniary penalty in each case that is proportionate to the contravention in question, which is in accordance with prevailing standards, and which provides both a specific and general deterrent to repetition of the contravention conduct.

18    While the authorities sometimes also refer to the purpose of rehabilitation when imposing a pecuniary penalty, it is a little difficult to see how that concept, drawn from the general criminal law, is of any great relevance in an industrial law context. Rather, what might be said is that if an appropriate penalty, designed to achieve specific deterrence, is imposed, an offender may be considered likely not to offend again. At least that is the theory. This is not an area of human behaviour, however, where personal rehabilitation is otherwise usually spoken of in the context of penalty imposition. I note that in Cartledge at [54], by reference to authority, Mansfield J appears to have drawn a similar conclusion.

19    The Court arrives at a single result, in relation to the imposition of penalty, by a process of what is called “instinctive synthesis”, whereby it takes into account all relevant factors and instinctively assesses the appropriate penalty.

20    It is generally accepted that consistency in penalty imposition, between apparently like cases, as well as the totality principle, are regarded to ensure that the penalty finally imposed is appropriate.

21    Prior relevant conduct of a contravener is also taken into account in this process.

22    The parties generally accept, as does the Court, that on this occasion the relevant factors that contribute to the instinctive synthesis that the Court is obliged to undertake are:

    the nature and extent of the conduct and the circumstances in which it occurred;

    the seriousness of that conduct;

    the nature and extent of the loss or damage;

    prior relevant conduct;

    whether or not the contraventions were deliberate;

    the size of the CFMEU and the involvement of senior management;

    contrition, corrective action and cooperation with enforcement authorities; and

    the need for specific and general deterrence.

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

23    As to this factor, the Director makes the following submissions:

    The CFMEU, Mr McDonald and the employee respondents each have a different degree of culpability and are dealt with separately below.

    Mr McDonald has admitted one contravention of s 417(1)(a) of the FW Act.

    On 30 May 2014, Mr McDonald attended the project and organised a meeting of construction workers which started at around 6.45am and continued until approximately 7.07am (CFMEU 30 May meeting).

    The project workers who attended the CFMEU 30 May meeting were rostered to start work at 6.45am or earlier on 30 May 2014.

    As a consequence of the CFMEU 30 May meeting, a number of construction workers were late starting work that day. Their shifts commenced with a 6.45am pre-start meeting each morning and the CFMEU 30 May meeting did not conclude until approximately 7.07am.

    Pursuant to s 474(1) of the FW Act, a number of workers who failed to attend at the start of their shift on 30 May 2014 because of attendance at the CFMEU 30 May meeting were docked the statutory minimum four hours' pay for engaging in industrial action.

    On 3 June 2014, Mr McDonald attended the project and met with Mr Benjamin Brown, Lend Lease's senior construction manager on the project, and was advised by Mr Brown that the FW Act required a minimum four hours’ deduction to be made when employees engaged in industrial action. Despite this, Mr McDonald advised that the CFMEU would hold another meeting with construction workers on 4 June 2014.

    On 4 June 2014, Mr McDonald attended the project and, at approximately 6.45am, organised a meeting of construction workers (CFMEU 4 June meeting).

    At 7.00am on 4 June 2014, Mr McDonald addressed the meeting of construction workers.

    The CFMEU 4 June meeting was held to discuss the fact that some workers had been docked pay as a result of starting work late on 30 May 2014.

    At approximately 7.20am, Mr McDonald left the CFMEU 4 June meeting to speak with Lend Lease site management about whether the workers who were in attendance at that meeting would also be docked four hours’ pay. Mr McDonald was informed that workers' pay would be docked for their absence from work during shift time.

    Mr McDonald returned to the CFMEU 4 June meeting. Mr McDonald informed the workers that they would be docked four hours’ pay. It was decided that a vote should be held on whether workers wished to withdraw their labour from the project for the entirety of the day (4 June 2014). Mr McDonald organised the vote by way of a show of hands.

    The majority of those present at the meeting voted in favour of withdrawing their labour for the entirety of 4 June 2014.

    Following on from the CFMEU 4 June meeting and vote, 50% of the project workforce (approximately 300 construction workers), including the employee respondents, did not perform any work on 4 June 2014.

    Mr McDonald had a significant role in organising the industrial action on 4 June 2014.

    Mr McDonald is the Assistant State Secretary of the Western Australian CFMEU Construction and General Division, which is a senior position in the CFMEU in Western Australia.

    Mr McDonald organised the CFMEU 30 May meeting and allowed it to continue until approximately 7.07am. This resulted in workers missing the start of their shifts at 6.45am.

    Mr McDonald knew that workers were subsequently docked pay. Despite this, on 4 June 2014, Mr McDonald organised a meeting of project workers at approximately 7.00am.

    Mr McDonald knew that starting the CFMEU 4 June meeting at 7.00am meant workers whose shifts started at 6.45am would miss the start of their shift and, in all likelihood, lead to the docking of their wages.

    Mr McDonald leaving the CFMEU 4 June meeting to ask whether workers would be docked wages for starting work late again on 4 June 2014 was theatre.

    Mr McDonald returned to the CFMEU 4 June meeting with the message that workers' pay would indeed be docked and parlayed the workers' consequent indignation into a vote in favour of industrial action.

    Mr McDonald organised the industrial action. His contravention was intentional and serious.

    The CFMEU has admitted that the conduct of Mr McDonald should be taken to be the conduct of the CFMEU and has accordingly admitted contravening s 417(1)(a) of the FW Act.

    The Court should make a declaration pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) that the CFMEU has contravened s 417(1)(a) of the FW Act by virtue of Mr McDonald's conduct and the accessorial liability provisions of s 363 and s 793 of the FW Act.

24    The represented respondents make the following submissions.

    Mr McDonald conducted the CFMEU 30 May meeting with workers at the project to discuss workers being pressured to work a rostered day off (RDO) on 3 June 2014.

    The CFMEU 30 May meeting commenced between 6.30am and 6.45am, with the workers commencing work at around 7.07am. They say it is unclear on the evidence when the workers were rostered to start work, but it appears to have been between 6.45am and 7.00am. The workers were therefore between 7 and 22 minutes late to start work on 30 May 2014.

    For being late to start work on 30 May 2014, the 3rd, 5th, 6th, 8th, 9th, 11th, 12th, 13th, 16th, 18th, 19th, 20th and 23rd respondents had four hours’ pay deducted by their employers.

    The employers' conduct in docking four hours’ pay rested, presumably, on a reading of s 474(1) of the FW Act, and an assertion that the relevant employees' late attendance to work amounted to the taking of unprotected industrial action. That assertion has been neither tested nor vindicated. The Director has withdrawn his claim that the employees' late attendance to work amounted to the taking of unprotected industrial action.

    Despite being docked four hours’ pay, each of the relevant respondents worked a full day on 30 May 2014, and were not made aware of the docking issue until after they had worked a substantial part of the day on 30 May 2014 or on a later day.

    Mr McDonald attempted to resolve the docking issue through meetings and discussions on 3 June 2014 with Mr Brown and Mr Matthew Donoghue, the Lend Lease site manager for the project. Mr McDonald also attempted to resolve the docking issue through a meeting with Mr Brown on the morning of 4 June 2014, prior to the employee respondents withdrawing their labour for the day.

    Mr McDonald caused the CFMEU 4 June meeting to discuss the docking issue. The CFMEU 4 June meeting commenced at around 6.45am. At the CFMEU 4 June meeting, Mr McDonald explained the docking issue, and that the relevant respondents had worked on 30 May 2014 for three hours for no pay.

    Mr Craig Gunnis, a director of WA Universal Rigging Co Pty Ltd, gives evidence that at the CFMEU 4 June meeting:

Workers from the gathering had a bit to say, mainly the labour hire workers. They thought it was ‘bullshit’ having to work 3 hours for no pay.

A few workers from the gathering spoke up that we should go home. Someone else from the gathering suggested that Mr McDonald go to the Lend Lease site office and talk to whoever to get their four hours’ pay back. I cannot recall who said this.

    Mr McDonald then went to the project office and attempted to resolve the docking issue through a meeting with Mr Brown. Mr Brown refused to resolve the docking issue and also informed Mr McDonald that the employee respondents would be docked pay for attending the CFMEU 4 June meeting.

    Mr McDonald then returned to the CFMEU 4 June meeting and asked the workers present, "What do you want to do?". Mr Gunnis then walked to the front of the group and said words to the effect of:

I think the labour hire company should pay the workers 4 hours as WAURC, the bricklayers and whoever else was an EBA company paid their workers.

    Mr Gunnis also said that it was "bullshit" and that his company had "never docked workers for a site union meeting that ran 7 minutes over", or words to that effect.

    Mr McDonald then put a vote to go home, which was seconded by one of the workers. 70% of the group voted in favour of the motion, with about 10 workers voting against it.

    Mr McDonald and the employee respondents then left the project for the rest of the day. Mr McDonald told the employee respondents to return to work the next day "as normal".

    Later on 4 June 2014, Mr Brown received a telephone call from Mr McDonald in which Mr McDonald stated that the workers would return to work the next day.

    There is no doubt that Mr McDonald was centrally involved in attempting to resolve the docking issue and in organising the CFMEU 4 June meeting. Mr McDonald attempted on a number of occasions to resolve the docking issue through discussions with Mr Brown and Mr Donoghue prior to the industrial action.

    It is also clear that Mr McDonald's actions reflected the thoughts and actions of the workers at the CFMEU 4 June meeting. On Mr Gunnis' evidence, the workers (and he himself) were agitated at the CFMEU 4 June meeting and strongly disagreed with the actions of the employers in relation to the docking issue.

    Indeed, Mr McDonald sought the views of the workers, and put the resolution to leave the project to a vote. That vote was carried by a large margin.

    Contrary to [53] of the Director’s submissions, the workers' indignation preceded Mr McDonald returning to the meeting from his discussions with Mr Brown. There is no evidence that Mr McDonald "parlayed" the workers' indignation into industrial action, contrary to the wishes of the workers or otherwise.

    Mr McDonald's conduct was not notably serious, and tends to the imposition of a penalty at the lower end of the scale.

    The employee respondents' conduct was not serious. While the employee respondents withdrew their labour for a day, they returned to the project on the next day and there is no evidence of any other industrial difficulties at the project. The industrial action was relatively brief in duration, being limited to one day.

    The industrial action occurred in response to the docking issue. The workers were understandably agitated at having been docked pay for hours that they had worked on 30 May 2014. It is clear that the relevant employers chose not to inform the workers that they would be docked pay for that day until a later time, and thereby took the advantage of their labour at no cost.

    Furthermore, Mr McDonald and the employee respondents made persistent and civil efforts to resolve the docking issue with Mr Brown and Mr Donoghue prior to taking the industrial action and those efforts were rebuffed.

    The actions of the employers in relation to the docking issue were provocative and may have been unlawful. The circumstances in which the represented respondents' conduct occurred therefore supports the imposition of a lower penalty.

Nature and extent of loss or damage

25    As to this factor, the Director submits:

    The Director cannot quantify the economic loss and damage which was suffered as a result of the represented respondents' contraventions. Nonetheless, he submits that the Court should not understand this inability to mean that their actions did not have serious and tangible ramifications.

    As a consequence of the actions of the represented respondents, over 300 construction workers withdrew their labour from the project for an entire day on 4 June 2014. The logistical and financial consequences of a project losing so many workers simultaneously and without notice are significant.

26    The represented respondents submit that the Director has not merely failed to quantify the economic loss and damage suffered as a result of the represented respondents’ actions, he has failed to produce any evidence of actual loss or damage. They say that is despite leading evidence from Mr Brown, the senior construction manager at the project, and Mr Leif Aleksic, the foreman responsible for organising on-site labour and subcontractors, both of whom occupied positions that would enable them to attest to the issue.

27    The represented respondents say that instead, the Director merely asserts that significant logistical and financial consequences would flow from "over 300 construction workers" withdrawing their labour from the project, and appears to rely on such consequences being obvious and "tangible".

28    In response, the represented respondents make two submissions.

    First, [58] of the Director’s submissions mischaracterises the evidence. Mr Aleksic's evidence is to the effect that 50% of around 300 workers were not at the project on 4 June 2014 (not that "over 300 construction workers withdrew their labour"), and Mr Brown makes no comment on the number of construction workers who withdrew their labour. They say it is also impossible to know which subcontractors, and which parts of the project, were affected by the industrial action.

    Second, if it is likely that harm was suffered by reason of the contraventions, as is submitted by the Director; then it is incumbent upon him to have led that evidence. They note that in Australian Competition and Consumer Commission v MSY Technology Pty Ltd (ACN 093 529 401) and Others (No 2) (2011) 279 ALR 609; [2011] FCA 382, Perram J considered how to factor a failure to adduce evidence of loss and damage into the quantification of pecuniary penalties. His Honour stated at [79] that:

if harm is likely to have been suffered by reason of the contravening conduct but no evidence is led which suggests that it was, the respondent is entitled to be sentenced on the basis that the conduct has not caused harm which, plainly enough, will be a mitigating circumstance.

Perram J's comments were endorsed by the Full Court in Singtel Optus Pty Ltd (ACN 052 833 208) v Australian Competition and Consumer Commission (2012) 287 ALR 249 at [58]; [2012] FCAFC 20.

    They say the Director has failed to lead evidence suggesting any harm was actually suffered as a result of the actions of the represented respondents in circumstances where he says such harm was likely. They say they are accordingly entitled to be sentenced on the basis that their conduct has not caused harm, and for that to be considered in mitigation.

    Furthermore, the represented respondents note, evidence before the Court establishes that several employers at the project actually gained at least three hours of labour on 30 May 2014 for which they did not pay wages. They say the only evidence as to the financial consequences, therefore, is that those employers profited in relation to the events of 30 May 2014.

Prior relevant conduct

29    As to this factor, the Director submits the CFMEU and Mr McDonald have a history of non-compliance with industrial legislation and, in that regard, refers to the table attached to his written submissions that summarises that history.

30    With regard to the CFMEU, the Director specifically submits that:

    In a recent case concerning contraventions of s 500 of the FW Act, Judge Burnett in Director, Fair Work Building Industry Inspectorate v Myles & Ors [2014] FCCA 1429 made the following comments, at [45]-[47], in relation to the CFMEU's industrial history and lack of evidence of corrective action:

The only reasonable conclusion to be drawn [from the CFMEU's history of contraventions] is that the organisation either does not understand or does not care for the legal restrictions on industrial activity imposed by the legislature and the courts …

If BHP, Rio Tinto or other large corporate bodies were engaging in such conduct through their officers or agents there would be, quite properly, public outcry about such omissions. I see no reason why a trade union ought not be subject to the same principles of reasonable and appropriate corporate governance and compliance as a commercial organisation. It is the failure of the unions to enact corrective action that I find most egregious.

    In Cartledge, Mansfield J stated, at [93], “I consider that the CFMEU's record of contraventions    ... demonstrates that a particularly persuasive form of personal deterrence against similar conduct in the future is appropriate”.

31    With regard to Mr McDonald, the Director specifically submits that, as the table provided to the Court demonstrates, Mr McDonald has been found liable for breaches of various industrial laws on more than 50 occasions over a decade.

32    Accordingly, the Director submits that the appropriate penalty should take into account the fact that previous penalties have failed to deter Mr McDonald. In view of the extraordinary extent of Mr McDonald's recidivism, he says it is apparent that a “particularly persuasive” form of deterrence against future misconduct by Mr McDonald is required.

33    Finally, with regard to the employee respondents, the Director says the seriousness of their conduct in this matter is mitigated by their respective clean records.

34    The represented respondents submit:

    That the prior conduct of the CFMEU and Mr McDonald is relevant to the imposition of penalties, but the represented respondents reiterate that those prior contraventions cannot operate so as to increase the penalties beyond those which would be appropriate to the conduct in question.

    None of the employee respondents have any record of prior contravention.

Whether or not the contraventions were deliberate

35    As to this factor, the Director submits that each of the represented respondents have admitted to intentionally engaging in or organising industrial action in the form of withdrawal of labour from the project on 4 June 2014.

36    The represented respondents submit:

    That there is no doubt that the actions of the represented respondents were deliberate.

    However, the actions of the employers in relation to the docking issue were also deliberate, provocative, and may have been unlawful.

    It is also likely that all contraventions of s 417(1)(a) would be deliberate. There is no evidence of planning or pre-meditation that would elevate this case above an ordinary case. In fact, they say the evidence discloses that Mr McDonald deliberately attempted to avoid recourse to industrial action by discussing the docking issue with Mr Brown and Mr Donoghue.

    This factor should have little or no effect on the amount of penalty imposed.

Size of the CFMEU and involvement of senior management

37    As to this factor, the Director submits the CFMEU is a large, prominent and influential national union. There is no evidence of incapacity to pay.

38    As set out earlier, Mr McDonald is, and was at all material times, the Assistant Secretary of the CFMEU's Construction and General Division, Western Australian Divisional Branch.

39    The submissions are not contested by the represented respondents.

Contrition, Corrective action and cooperation with enforcement authorities

40    As to this factor, the Director submits that:

    The CFMEU, Mr McDonald and the employee respondents are entitled to credit for the admissions contained in the substituted defences.

    It should be noted, however, that the admissions came at a time when the proceeding was otherwise programmed to a trial and only after the Director had incurred the time and expense associated with preparing and filing his liability evidence. The Court should have regard to the fact that the represented respondents were well aware of the Director's case to be presented at trial, and in the face of its strength, made the necessary and inevitable admissions.

    There is no evidence of any contrition by the CFMEU, Mr McDonald or the employee respondents.

    Further, despite Burnett J's 2014 admonition in Myles, there is no evidence that the CFMEU have acted to undertake corrective action to curb their unlawful conduct.

41    The represented respondents submit that:

    The represented respondents have negotiated amended pleadings, admitted liability, and agreed on the appropriate evidence to go before the Court, pursuant to settlement discussions with the Director at the first mediation listed on 11 May 2016. That settlement avoided the parties incurring the considerable costs of a trial on liability, and saved the resources of the Court.

    This is a matter relevant to the determination of penalty and is to their credit.

    The Director’s submission at [70] of his submissions, that the Court should have regard to the fact that settlement was achieved at a late stage and after the Director had filed his liability evidence, is a matter of no substance, for two reasons.

    First, the Director sought the represented respondents' consent to orders that mediation not be listed until after the Director had filed its evidence.

    Second, the represented respondents entered into agreement with the Director, and filed substituted defences, at the earliest time after the Director had amended his claim and abandoned his allegations of contravention concerning events on 30 May 2014.

Specific and general deterrence

42    The Director submits:

    The penalty must reflect the need for specific and general deterrence. In Ponzio v B & P Caelli Constructions Pty Ltd and Others (2007) 158 FCR 543 at [93]; [2007] FCAFC 65, Lander J observed:

The penalty must recognise the need for deterrence, both personal and general. In regard to personal deterrence, an assessment must be made of the risk of re-offending. In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend .... The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section.

    To achieve the purpose of general deterrence, the penalty must be sufficiently high that it sends the message to others that this sort of conduct is unacceptable and will be met with serious consequences.

    In this case, there is a strong need for specific deterrence given the extent of the CFMEU and Mr McDonald's prior breaches of industrial legislation. The fact that the CFMEU and Mr McDonald have a significant prior history of non-compliance and yet continue to contravene indicates that previous penalties have proven ineffective. The penalties to be imposed must be significant enough to act as a deterrent. This point was emphasised by Tracey J in Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 1213 at [63]:

The longer such recidivism continues the more likely it is that this consideration will carry greater weight than the principle that the maximum available penalty must be reserved for the worst possible offending.

43    In his oral submissions at the hearing, senior counsel for the Director also drew attention to Stuart-Mahoney v Construction, Forestry, Mining and Energy Union (2008) 177 IR 61 at [44]; [2008] FCA 1426; Temple v Powell (2008) 169 FCA 169 at [64]; [2008] FCA 714 and Brookfield Multiplex FSH Contractor Pty Ltd v McDonald [2013] FCA 1380 at [24] and [25].

44    The represented respondents submit:

    That while the past conduct of the CFMEU and Mr McDonald are relevant for the purposes of assessing the appropriateness of a penalty in achieving specific deterrence, it must be balanced against the principle of proportionality. As Siopis J commented in Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2016] FCA 616 at [74]:

In many instances, the past conduct of the CFMEU and, in particular, Mr McDonald, would require the Court to impose a heavy penalty to reflect the requirement for deterrence. However, the principle of proportionality requires that the circumstances of each case must be viewed separately to ensure that past history of the offender does not result in an imposition of a penalty which is disproportionate to the gravity of the offence concerned.

    Considering the particular circumstances of the present case separately, there are a number of relevant factors that lessen the need for a higher penalty against the CFMEU and Mr McDonald in the context of specific and general deterrence, including:

(a)    the existence of the docking issue, which was deliberate and provocative conduct on the part of the relevant employers;

(b)    the understandable agitation of the workers in response to the docking issue;

(c)    Mr McDonald's persistent attempts to resolve the docking issue without recourse to industrial action;

(d)    the relatively short duration of the industrial action, being limited to one day;

(e)    the absence of any offensive conduct on the part of Mr McDonald or any other officer of the CFMEU;

(f)    the absence of any evidence of loss and damage; and

(g)    the represented respondents' cooperation with the Director in resolving the proceeding as at the first mediation.

Submissions as to the appropriate penalty

45    The Director makes the following submissions as to penalty.

    In relation to Mr McDonald, he has committed one contravention of s 417(1)(a) of the FW Act with the maximum available penalty being $10,200. The nature of his conduct during the contravention in the present proceeding warrants, as set out above, a penalty in the range of $7,000–$9,000 for the admitted contravention.

    In relation to the CFMEU, the CFMEU should be found to have committed one contravention of s 417(1)(a) of the FW Act with the maximum available penalty being $51,000. Taking into account the CFMEU's significant record of non­compliance with industrial legislation, a penalty in the total range of $35,000–$45,000 ought to be imposed.

    Each of the employee respondents have committed one contravention of s 417(1)(a) of the FW Act, and a penalty of $1,000 ought to be imposed against each employee respondent for their admitted contravention of s 417(1)(a) of the FW Act.

    A penalty sum of $1,000 per employee respondent was the subject of agreement between the Director and the employee respondents. The appropriateness of such a penalty is not objected to by any of the represented respondents.

    The decision in Director of the Fair Work Building Industry Inspectorate v Merkx [2015] FCA 316 concerned similar factual circumstances and an order was made for individual respondents to each pay $1,000 penalties.

46    The represented respondents submit:

    That applying instinctive synthesis and taking into account the factors discussed, as well as the particular circumstances of the contraventions, the following penalties should be imposed:

(a)    A penalty of $1,000 on each of the employee respondents. The Director and the employee respondents have agreed that a penalty of $1,000 would be appropriate in all the circumstances. This agreement is relevant (although of course, not determinative) in fixing the appropriate penalty.

(b)    A penalty in the order of $3,000 on Mr McDonald.

(c)    A penalty in the order of $15,000 on the CFMEU.

    The represented respondents further submit that the imposition of penalties in these terms would not offend the totality principle but that the penalties proposed by the Director would be manifestly excessive.

Payment of penalties to the Commonwealth

47    The Director submits the penalties should be paid to the Commonwealth as a matter of course under s 546(3)(a) of the FW Act.

48    There is no disagreement about this submission.

Court’s consideration of penalty

49    As to the nature and extent of the conduct and circumstances in which it occurred and its seriousness, there is not a lot of difference between the parties as to the factual narratives that they recount, although there are some subtle differences and, of course, they place quite different constructions on the conduct of Mr McDonald when it comes to its seriousness.

50    The Director seeks to construe Mr McDonald’s conduct at material times as quite deliberate and conscious, especially on 4 June 2014 when the employee respondents walked off the job. The Director submits that Mr McDonald knew or ought to have known a number of things:

(1)    that it was highly probable, if not certain, that the meeting called for the morning of 4 June 2014 would result in the employee respondents meeting beyond the scheduled times they were due to commence work and so would result in their pay being docked pursuant to s 474;

(2)    that the workers would again lose four hours’ pay for so doing; and

(3)    that there was a possibility that there would be further industrial action as a result of the meeting.

51    I note that the Director does not submit that the possibility of further industrial action – that the workers might walk off the job – was an inevitability or an intended consequence of the CFMEU 4 June meeting so far as Mr McDonald, or the employees, were concerned.

52    The Director submits, however, that at the meeting, Mr McDonald’s conduct was such that in the result he positively encouraged the subsequent industrial action; that he was the “architect” of what happened, not caring about the consequences. None of the employees are so characterised.

53    These characterisations of Mr McDonald’s conduct were encapsulated in senior counsel’s oral submissions at the hearing.

54    For my part, I am not satisfied that Mr McDonald’s conduct, on this occasion, should be characterised in quite that way.

55    First, the origins of the actions that have led to the admitted contraventions are to be found in the 30 May 2014 events. I accept the submission made by the represented respondents that the meeting that morning, off-site, was to address the question of whether work might be conducted on 3 June 2014 – a day scheduled as an RDO.

56    It also does not seem seriously to be in issue that persons attending that meeting were some minutes – between seven and 22 perhaps, depending on whether their scheduled start was at 6.45am or 7am – late in returning to work.

57    The simple fact is that Mr Brown, considering that s 474(1)(b) of the FW Act required, in effect, that four hours’ pay be docked from workers engaged in “industrial action”, took that action and did not cause the affected employees to be advised that they would be so docked until after at least a significant part of the day had expired.

58    While this proceeding, when it was commenced, included an allegation that the employee respondents had engaged in industrial action on 30 May 2014, as well as 4 June 2014, by failing to attend work on that earlier day as rostered, following mediation in this proceeding and the amendment of the originating application and the pleadings, that allegation was withdrawn.

59    It is not necessary for the Court to express any opinion as to whether being seven or 22 minutes late for work, or the like, in the circumstances that presented themselves on 30 May 2014, constituted “industrial action” as defined by s 19(1)(c) of the FW Act. All that might be said is that on an apparent literal reading of that provision, any failure to attend for work as agreed might possibly be construed as industrial action. That seems to have been Mr Brown’s approach.

60    Mr McDonald, for the relevant employees, once he learned of the docking of pay, spoke to Mr Brown about the issue and suggested to him that there ought to be some flexibility afforded in the circumstances. The evidence before the Court indicates that Mr Brown did not take that view. Rather, he took what he considered to be a strict but correct view of what industrial action comprises under the FW Act and the obligation under s 474(1)(b) to dock pay.

61    Following Mr McDonald’s unsuccessful attempt to mediate an acceptable outcome from the affected employees’ point of view, the meeting on 4 June 2014 was called. It was called for an approximate 6.45am start. It is apparent that in so doing, Mr McDonald knew or must have known, if for no other reason than because of the events of 30 May 2014, that employees who started at 6.45am would arguably be engaging in industrial action, as Mr Brown perceived it, and those starting at 7am would also very likely be late for work, as there was every possibility, if not likelihood, that the meeting would not be concluded by 7am.

62    To that extent it may reasonably be inferred that Mr McDonald took a calculated gamble in scheduling the meeting to discuss the docking of pay issue, that was designed at least to annoy Lend Lease.

63    After the meeting commenced it became apparent to Mr McDonald that the sentiment of the meeting was that the employees’ pay should not be docked by reason of being late for work on 30 May 2014. At this point it must be noted that Mr McDonald did not, as the caller of that meeting and the leader of it, then call for a vote or any immediate action – such as taking a day off – but met again with Mr Brown to see whether some flexibility could, at that point, be accorded on the docking issue.

64    As confirmed in Mr Brown’s affidavit at [25], in Mr McDonald’s further meeting with Mr Brown, Mr Brown not only indicated that there was no flexibility in respect of the docking issue from 30 May 2014, but also that employees who were late in attending for work that day, 4 June 2014, would also be docked in accordance with s 474 of the FW Act.

65    In the result, the admitted further industrial action was taken, when employees numbering some 100 to 150 voted, at the resumed meeting, to leave work for the day. While the Director submits that Mr McDonald was the “architect” of the walk off and effectively encouraged that result, I do not consider, on all of the materials before me, that all the blame for the walk-off should be sheeted home to Mr McDonald. Mr McDonald first attended the meeting, then went back to Mr Brown, then came back to the meeting and reported to it. While Mr McDonald’s conduct, his words and actions, undoubtedly encouraged the vote taken, plainly there was a general sentiment to support the vote amongst the employees at the meeting.

66    For these reasons, while serious, I do not view Mr McDonald’s conduct as being at the high end of the penalties scale.

67    So far as the effect, either practical or financial, of the walk-off on 4 June 2014 should be seen, the Director frankly acknowledges that no evidence has been led to show any particular financial loss and damage by Lend Lease or any subcontractors and the like. There is some evidence given by Mr Gunnis that he called his head office and made arrangements to redirect about six or seven employees to other sites and let another four employees go home for the day as he did not have any other available work to direct them to. But there is not much else.

68    While the represented respondents submit that the Court should assess the penalty on the basis that there is no evidence of any financial loss, relying on dicta of Perram J in MSY Technology referred to above, it must be said the statutory setting in which his Honour made those observations is different from that here and, in any event, there is clear evidence of prejudice or harm in terms of the conduct of construction activities in this case flowing from the industrial action taken on 4 June 2014. What might be said is that unless there is further evidence led as to the extent of harm suffered, in terms of particular financial loss or damage, the Court should not assume that the harm disclosed was extensive. As the represented respondents say, perhaps more in passing than substantively, the employers relevantly saved on some wages that they would otherwise have had to pay that day.

69    In all the circumstances, I consider that Mr McDonald’s conduct on the day was serious, but not as serious as other industrial conduct one can imagine. The employee respondents’ conduct, in the circumstances, was of a much lesser nature.

70    The Director submits that in assessing the penalty, the Court should also take into account that on numerous occasions Mr McDonald has engaged in the same or similar conduct to that which is complained of here. By reference to the table of earlier contraventions, senior counsel for the Director identified 15 occasions upon which there was such similar conduct, none of which were contradicted by the represented respondents. I take into account that Mr McDonald is a recidivist contravener in this respect and that the penalty to be imposed on him must take his record of contraventions into account, even if on this occasion the circumstances of themselves are not as serious as other industrial conduct one can imagine and indeed some of the cases referred to in the table suggest has been the case in the past.

71    The fact of the matter is that the history of contraventions attributable to Mr McDonald shows that he uses unlawful industrial action as a calculated tool to further the interests of members of his union and the standing of the CFMEU. The provisions of the Act are designed to outlaw unlawful industrial action.

72    There is no doubt the conduct of all represented respondents was deliberate.

73    When it comes to the question of contrition and cooperation and the like, there is also no doubt that, following mediation, the parties were able to arrive at the position where the industrial action allegations of 30 May 2014 were withdrawn, in effect, and the represented respondents acknowledged their liability for the unlawful industrial action that occurred on 4 June 2014. Both sides are to be commended for the practical and sensible approach to the resolution of this matter that they adopted and, to that extent, the Court takes into account the reasoned approach of the represented respondents to the resolution of the proceeding.

74    The Court also takes into account the undoubted size of the CFMEU and the involvement of Mr McDonald, a senior officer, in the conduct of the CFMEU in this case. As noted above, under the FW Act Mr McDonald’s conduct is taken to be the conduct of the CFMEU.

75    Having taken into account these various relevant factors, I consider the suggested imposition of a pecuniary penalty of $1,000 on each of the employee respondents to be appropriate to reflect the nature and extent and seriousness of the contraventions in which each was involved on 4 June 2014; as well as the fact that none have been shown to have any prior record of contraventions and that they have admitted the contraventions. Pecuniary penalties in that sum will be imposed on each of them.

76    As to Mr McDonald, I consider his conduct is to be described as serious, but having regard to my observations above, on this occasion towards the middle/lower end of the penalty scale, rather than at the higher end – $7,000 to $9,000 – suggested by the Director. The suggestion, however, made on behalf of Mr McDonald that a penalty in the order of $3,000 would be appropriate, is far too low, failing to recognise his long record of contraventions. A higher penalty than that is required by way of specific deterrence. I would set the penalty at $5,500 in the case of Mr McDonald.

77    In those circumstances, I would impose a penalty on the CFMEU in the sum of $27,500.

Declaration and orders

78    The Court will then grant the following relief:

THE COURT DECLARES THAT:

(1)    Under s 21 of the Federal Court of Australia Act 1976 (Cth), that the 5th, 9th, 13th, 15th, 16th, 17th, 18th, 19th, 20th, 22nd, 23rd, 24th, 25th, 26th, 27th, 28th, 29th, 30th, 32nd, 33rd, 35th, 36th, 37th, 39th, 43rd, 46th, 48th and 51st respondents contravened s 417(1)(a) of the Fair Work Act 2009 (Cth), as alleged in [34] of the amended statement of claim filed 13 June 2016.

(2)    Under s 21 of the Federal Court of Australia Act 1976, that the second respondent contravened s 417(1)(a) of the Fair Work Act 2009, as alleged in [35] of the amended statement of claim filed 13 June 2016.

(3)    Under s 21 of the Federal Court of Australia Act 1976, that the conduct of the second respondent is taken to be the conduct of the first respondent, pursuant to s 793 of the Fair Work Act 2009 and, accordingly, the first respondent has contravened s 417(1)(a) of the Fair Work Act 2009, as alleged in [40] and [41] of the amended statement of claim filed 13 June 2016.

THE COURT ORDERS THAT:

(4)    Pursuant to s 546(1) of the Fair Work Act 2009, there be a pecuniary penalty imposed on the first respondent for contravening s 417(1)(a) of the Fair Work Act 2009 in the sum of $27,500.

(5)    Pursuant to s 546(1) of the Fair Work Act 2009, there be a pecuniary penalty imposed on the second respondent for contravening s 417(1)(a) of the Fair Work Act 2009 in the sum of $5,500.

(6)    Pursuant to s 546(1) of the Fair Work Act 2009, there be a pecuniary penalty imposed on each of the 5th, 9th, 13th, 15th, 16th, 17th, 18th, 19th, 20th, 22nd, 23rd, 24th, 25th, 26th, 27th, 28th, 29th, 30th, 32nd, 33rd, 35th, 36th, 37th, 39th, 43rd, 46th, 48th and 51st respondents for contravening s 417(1)(a) of the Fair Work Act 2009 in the sum of $1,000.

(7)    An order, pursuant to s 546(3)(a) of the Fair Work Act 2009, that the pecuniary penalties be paid to the Commonwealth.

Associate:

Dated:    8 July 2016

SCHEDULE OF PARTIES