FEDERAL COURT OF AUSTRALIA

Australian Building and Construction Commissioner v Pauls [2017] FCA 843

ORDERS

THE COURT DECLARES THAT:

1.    On 19 August 2016, the first respondent, being an employee and officer of the sixth respondent:

(a)    engaged in four contraventions of s 355 of the Fair Work Act 2009 (Cth) (FWA) by organising workers to cease or not perform work at construction projects in Brisbane known as the Southpoint Project, the RMH Project, the Velodrome Project and the Newstead Project, for which Watpac Construction Pty Ltd (Watpac) was the principal contractor, with intent to coerce Watpac into not engaging subcontractors not covered by an enterprise agreement that covered the sixth respondent;

(b)    engaged in three contraventions of s 417 of the FWA by organising workers to cease or not perform work at the Southpoint Project, the RMH Project and the Velodrome Project before the nominal expiry dates of nine enterprise agreements that covered the sixth respondent.

2.    On 19 August 2016, the second respondent, being an employee and officer of the sixth respondent:

(a)    engaged in four contraventions of s 355 of the FWA by organising workers to cease or not perform work at construction projects in Brisbane known as the Southpoint Project, the RMH Project, the Velodrome Project and the Newstead Project, for which Watpac was the principal contractor, with intent to coerce Watpac into not engaging subcontractors not covered by an enterprise agreement that covered the sixth respondent;

(b)    engaged in three contraventions of s 417 of the FWA by organising workers to cease or not perform work at the Southpoint Project, the RMH Project and the Velodrome Project before the nominal expiry dates of nine enterprise agreements that covered the sixth respondent.

3.    On 19 August 2016, the third respondent, being an employee and officer of the sixth respondent:

(a)    engaged in two contraventions of s 355 of the FWA by organising workers to cease or not perform work at construction projects in Brisbane known as the Pullman Ibis Project and the Mary Street Project, for which Watpac was the principal contractor, with intent to coerce Watpac into not engaging subcontractors not covered by an enterprise agreement that covered the sixth respondent;

(b)    engaged in two contraventions of s 417 of the FWA by organising workers to cease or not perform work at the Pullman Ibis Project and the Mary Street Project before the nominal expiry dates of three enterprise agreements that covered the sixth respondent.

4.    On 19 August 2016, the sixth respondent:

(a)    engaged in four contraventions of s 355 of the FWA by being involved in the contraventions of that section by the first and second respondents;

(b)    engaged in three contraventions of s 417 of the FWA by engaging in the conduct constituting the contraventions of that section engaged in by the first and second respondents;

(c)    engaged in two contraventions of s 355 by being involved in the contraventions of that section by the third respondent;

(d)    engaged in two contraventions of s 417 of the FWA by engaging in the conduct constituting the contraventions of that section engaged in by the third respondent.

THE COURT ORDERS THAT:

5.    The first respondent pay a pecuniary penalty of $10,000 for his contraventions of ss 355 and 417 of the FWA.

6.    The second respondent pay a pecuniary penalty of $10,000 for his contraventions of ss 355 and 417 of the FWA.

7.    The third respondent pay a pecuniary penalty of $10,000 for his contraventions of ss 355 and 417 of the FWA.

8.    The sixth respondent pay two pecuniary penalties of $50,000, a total of $100,000, for its contraventions of ss 355 and 417 of the FWA.

9.    The penalties referred to in orders 5-8 above be paid to the Commonwealth of Australia within 30 days.

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

REASONS FOR JUDGMENT

RANGIAH J:

1    The applicant, the Australian Building and Construction Commissioner (the Commissioner) commenced proceedings in this Court alleging that seven respondents contravened ss 355 and 417 of the Fair Work Act 2009 (Cth) (the FWA). The Commissioner has now discontinued the proceedings against the fourth, fifth and seventh respondents. The remaining respondents, namely the first, second, third and sixth respondents (the respondents), admit that they organised industrial action at six construction projects in Brisbane in contravention of ss 355 and 417 the FWA.

2    The Commissioner seeks declarations and the imposition of pecuniary penalties upon the respondents. While the respondents accept that declarations should be made and that pecuniary penalties should be imposed, there remain five issues in dispute between the parties. The issues are:

(a)    whether the contraventions by the first, second and third respondents (Pauls, Steele and Bland respectively) arose out of two courses of conduct, or six separate courses of conduct;

(b)    how many findings of contraventions of ss 355 and 417 of the FWA and declarations should be made against Pauls, Steele and Bland;

(c)    how many findings of contraventions of ss 355 and 417 of the FWA should be made against the sixth respondent (the CFMEU);

(d)    whether contraventions by the CFMEU arose out of two courses of conduct, or six courses of conduct;

(e)    the quantum of the pecuniary penalties that should be imposed.

3    I will discuss the facts, the legislation and the principles relevant to determination of the appropriate penalties before considering the issues in dispute.

THE FACTS

4    The Commissioner relies upon his further amended statement of claim. In their amended defence, the respondents admit each of the allegations made in the further amended statement of claim. The parties have not called any evidence. Accordingly, the facts are to be ascertained from the pleadings alone.

5    Watpac Construction Pty Ltd (Watpac) was the head contractor for six construction projects in Brisbane. These projects are described as the Southpoint Project, the Velodrome Project, the RMH Project, the Newstead Project, the Pullman Ibis Project and the Mary Street Project.

6    Pauls, Steele and Bland are employees, officers and officials of the CFMEU. At about 6 am on 19 August 2016, Pauls and Steele attended the Southpoint Project and proceeded to convene a meeting with employees of various subcontractors. Pauls and Steele encouraged, organised for, instructed or counselled the employees to cease or not perform work. As a consequence, the employees left the site and did not perform work for the remainder of that day and the next day.

7    Pauls and Steele repeated their conduct at about 6.45 am on 19 August 2016 at the RMH Project in Brisbane, at about 8 am at the Velodrome Project and at about 9.10 am at the Newstead Project. At the Newstead Project, one of Watpac’s employees, as well as the employees of various subcontractors, attended the meeting. At each project, the employees left the site and did not work for the rest of the day and the next day.

8    At about 6 am on 19 August 2016, Bland attended the Pullman Ibis Project site and at about 8.15 am on 19 August 2016, he attended the Mary Street Project. At each project, Bland convened a meeting with employees of Watpac and various subcontractors. The employees left the site after each meeting and did not work for the remainder of that day and the next day.

9    The Commissioner pleads, and the respondents admit, that:

(a)    Pauls and Steele organised action against Watpac at the Southpoint Project, the RMH Project, the Velodrome Project and the Newstead Project in contravention of s 355 of the FWA;

(b)    Bland organised action against Watpac at the Pullman Ibis Project and the Mary Street Project in contravention of s 355 of the FWA;

(c)    by the operation of s 550 of the FWA, the CFMEU also contravened s 355 of the FWA;

(d)    Pauls and Steele organised the stoppages of work at the Southpoint Project, the RMH Project and the Velodrome Project (but not the Newstead Project) in contravention of s 417 of the FWA;

(e)    Bland organised the stoppages of work at the Pullman Ibis Project and the Mary Street Project in contravention of s 417 of the FWA;

(f)    by the operation of ss 793 and/or 550 of the FWA, the CFMEU also contravened s 417.

10    In respect of each contravention of s 355 of the FWA, the Commissioner alleges, and the respondents admit, that Pauls, Steele and Bland acted “with intent to coerce Watpac to not engage Subcontractors that were or are not covered by an Enterprise Agreement that covered or covers the CFMEU”. Those subcontractors included Wagstaff, Micos, Austral and Wideform.

THE LEGISLATION

11    The following sections of the FWA are relevant to this proceeding:

355    Coercion—allocation of duties etc. to particular person

A person must not organise or take, or threaten to organise or take, any action against another person with intent to coerce the other person, or a third person, to:

…

(b)    engage, or not engage, a particular independent contractor; or

…

Note:    This section is a civil remedy provision (see Part 4-1).

…

417    Industrial action must not be organised or engaged in before nominal expiry date of enterprise agreement etc.

No industrial action

(1)    A person referred to in subsection (2) must not organise or engage in industrial action from the day on which:

(a)    an enterprise agreement is approved by the FWC until its nominal expiry date has passed; or

…

whether or not the industrial action relates to a matter dealt with in the agreement or determination.

Note:    This subsection is a civil remedy provision (see Part 4-1).

(2)    The persons are:

(a)    an employer, employee, or employee organisation, who is covered by the agreement or determination; or

(b)    an officer of an employee organisation that is covered by the agreement or determination, acting in that capacity.

…

545    Orders that can be made by particular courts

Federal Court and Federal Circuit Court

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

…

546    Pecuniary penalty orders

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

…

Determining amount of pecuniary penalty

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

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

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

…

550    Involvement in contravention treated in same way as actual contravention

(1)    A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.

(2)    A person is involved in a contravention of a civil remedy provision if, and only if, the person:

(a)    has aided, abetted, counselled or procured the contravention; or

(b)    has induced the contravention, whether by threats or promises or otherwise; or

(c)    has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or

(d)    has conspired with others to effect the contravention.

…

556    Civil double jeopardy

If a person is ordered to pay a pecuniary penalty under a civil remedy provision in relation to particular conduct, the person is not liable to be ordered to pay a pecuniary penalty under some other provision of a law of the Commonwealth in relation to that conduct.

…

557    Course of conduct

(1)    For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if:

(a)    the contraventions are committed by the same person; and

(b)    the contraventions arose out of a course of conduct by the person.

(2)    The civil remedy provisions are the following:

…

(j)    subsection 417(1) (which deals with industrial action before the nominal expiry date of an enterprise agreement etc.);

…

(3)    Subsection (1) does not apply to a contravention of a civil remedy provision that is committed by a person after a court has imposed a pecuniary penalty on the person for an earlier contravention of the provision.

…

793    Liability of bodies corporate

Conduct of a body corporate

(1)    Any conduct engaged in on behalf of a body corporate:

(a)    by an officer, employee or agent (an official) of the body within the scope of his or her actual or apparent authority; or

(b)    by any other person at the direction or with the consent or agreement (whether express or implied) of an official of the body, if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the official;

is taken, for the purposes of this Act and the procedural rules, to have been engaged in also by the body.

…

THE PRINCIPLES

12    Section 546 of the FWA confers a discretion upon the Court to order that a person who has contravened a civil remedy provision pay a pecuniary penalty “that the court considers is appropriate”, up to the statutory maximum. There are well-established principles which guide the exercise of the Court’s discretion to determine the appropriate penalty.

13    In Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 353, Tracey J summarised the relevant principles as follows:

66    The task of the Court is to ensure that any penalty which is imposed is proportionate to the gravity of the contravening conduct.

67    The penalty is to be determined by a process of “instinctive synthesis. This process involves the Court having regard to all relevant factors before fixing a penalty which brings them all into account.

68    Where multiple contraventions arise from a series of related events which constitute a course of conduct principles of proportionality and consistency come into play in determining the appropriateness of the penalty.

69    The ultimate penalty “must be proportionate to the offence and in accordance with the prevailing standards of punishment”.

70    Consistency requires that “[l]ike cases should be treated in like manner”. The consistency principle does not require a detailed factual comparison between past cases and that presently under consideration with a view to fixing a higher or lower penalty depending on the outcome of the comparative analysis.

71    It is also necessary to ensure that a respondent is not punished twice for the same conduct…

72    This principle is to be applied separately from and anterior to the final check constituted by the application of the totality principle. It does not necessarily require the application of a single penalty for all of the contravening conduct.

73    The totality principle falls for consideration at the end of the process. It requires the Court to stand back and decide whether the aggregate of multiple penalties fixed by it is appropriate for the total contravening conduct involved. The principle is designed to “ensure that the aggregate of penalties imputed is not such as to be oppressive or crushing”. A consequence of the application of the principle is that the aggregate penalty may be reduced if it is considered to be too great.

[Citations omitted]

14    The principal, and probably the only, object of a civil penalty is to deter repetition of the relevant conduct: Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 at 52,152; Commonwealth v Director of Fair Work Building Industry Inspectorate (2015) 326 ALR 476; [2015] HCA 46 at [55]; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 53 (ABCC v CFMEU) at [90].

THE ISSUES IN DISPUTE

15    Before considering the issues in dispute between the parties, it is relevant to identify the matters about which they are in agreement.

16    Firstly, the parties agree that declarations should be made and pecuniary penalties should be imposed. They are in dispute about the number of contraventions, declarations and pecuniary penalties.

17    Secondly, the parties agree that the pecuniary penalties imposed upon the CFMEU should be close to the statutory maximum (subject to how many penalties are imposed).

18    Thirdly, the parties agree that s 556 of the FWA applies to limit the number of pecuniary penalties that may be imposed on each respondent. They agree that only one penalty may be ordered against a respondent for that respondent’s contraventions of ss 355 and 417 of the FWA in respect of each project. For example, only one penalty may be imposed on Pauls for his conduct at the Southpoint Project, and only one penalty may be imposed on the CFMEU for Pauls’ conduct at the Southpoint Project.

19    Bearing these matters in mind, I will turn to the issues in dispute between the parties.

Whether the contraventions by Pauls, Steele and Bland arose out of two courses of conduct, or six courses of conduct

20    Under s 557(1) and (3) of the FWA, two or more contraventions of s 417(1) are taken to constitute a single contravention if the contraventions arose out of a course of conduct by the person, provided that a Court has not previously imposed a pecuniary penalty on the person for an earlier contravention of that provision.

21    The Commissioner does not allege that Pauls or Steele have previously contravened s 417 of the FWA, so s 557(1) is capable of applying to their conduct. The Commissioner’s written submissions assert that Bland has had “previous involvement in similar proceedings”, but do not allege that any pecuniary penalty has previously been imposed upon him for contravention of s 417. I therefore accept that s 557(1) is capable of applying to Bland’s contravention of s 417. Pecuniary penalties have been imposed upon the CFMEU for contravention of s 417 on a number of previous occasions, so s 557(1) does not apply to its conduct.

22    Section 557(1) of the FWA does not apply to contraventions of s 355. However, the “course of conduct” or “one transaction” principle may apply to multiple contraventions of s 355. In ABCC v CFMEU, Dowsett and Rares JJ said:

[88]    In our opinion, s 557 did not cover the field and did not exclude the common law principle of taking into account, when imposing a penalty, whether the conduct complained of constituted a single course of conduct. However, s 557 provided a legislative indication that certain forms of concerted industrial action, such as multiple contraventions of ss 417(1) and 434, would be deemed, only in the case of a first contravention by the person, to be a single contravention. That contrasted with the legislative purpose of treating one contravention of s 348 differently from ones to which s 557 applied. The Parliament appears to have intended that multiple contraventions of s 348, in what, in other circumstances (such as those covered by s 557), might be treated as a course of conduct, would not necessarily attract any sentencing leniency.

23    Their Honours’ observations about s 348 of the FWA apply equally to s 355.

24    The “course of conduct” or “one transaction” principle was described in Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1; [2010] FCAFC 39 by Middleton and Gordon JJ as follows:

[39]     …The principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality. That requires careful identification of what is “the same criminality” and that is necessarily a factually specific enquiry. Bare identity of motive for commission of separate offences will seldom suffice to establish the same criminality in separate and distinct offending acts or omissions.

…

[42]    A court is not compelled to utilise the principle because, as Owen JA said in Royer at [28], “[d]iscretionary judgments require the weighing of elements, not the formulation of adjustable rules or benchmarks”. The exercise of the sentencing discretion does not fall to be exercised in a vacuum. It is a matter of judgment to be exercised according to the facts of each case and having regard to conflicting sentencing objectives... For the same reasons, and contrary to the appellants’ submissions, even if offences are properly characterised as arising from the one transaction or a single course of conduct, a judge is not obliged to apply concurrent terms if the resulting effective term fails to reflect the degree of criminality involved. Or, in the case of fines, a judge is not obliged to start from the premise that if there is a single course of conduct, the maximum fine is, in the present case, $110,000 for the CFMEU and $22,000 in the case of Mr Mates.

25    The respondents submit that the conduct of each of Pauls and Steele at the four sites they attended should be regarded as a single course of conduct. They submit that the conduct of Bland at the two sites he attended was also a single course of conduct. They submit that there should be a single pecuniary penalty imposed upon each of Pauls, Steele and Bland.

26    The Commissioner submits that Pauls, Steele and Bland each engaged in a separate episode of conduct at each of the projects they attended, and should not be regarded as engaging in a single course of conduct. The Commissioner submits that, accordingly, there should be four pecuniary penalties imposed upon Pauls, four upon Steele and two upon Bland.

27    In order to determine whether the contraventions of ss 355 and 417 of the FWA arose out of a course of conduct, it is necessary to identify the conduct engaged in by Pauls, Steele and Bland that gave rise to the contraventions. In respect of s 355, their conduct consisted of organising the stoppages of work with intent to coerce Watpac to not engage subcontractors which did not have an enterprise agreement with the CFMEU. In respect of s 417, their conduct consisted of organising the stoppages at a time when relevant enterprise agreements were in force. Their conduct involved convening meetings at which the employees were “encouraged, organised for, instructed or counselled” to not perform work.

28    The differences between the conduct of the Pauls, Steele and Bland at the six projects relied on by the Commissioner are:

(a)    the conduct took place at different projects in different locations;

(b)    the conduct took place at different meetings held at different times;

(c)    the employees of subcontractors who stopped work at the various sites were employed by different subcontractors and were covered by different enterprise agreements;

(d)    employees of Watpac also stopped work at the Pullman Ibis Project, the Newstead Project and the Mary Street Project and those employees were covered by a different enterprise agreement;

(e)    various subcontractors suffered loss as a result of the conduct;

(f)    the reasons for the stoppages were expressed in different terms at each site.

29    Two of the differences identified by the Commissioner require further analysis. First, it is true that an inference can be drawn that someone must inevitably have suffered economic loss as a result of the action taken: see ABCC v CFMEU at [80]. However, it is not inevitable that the subcontractors whose employees stopped work suffered economic loss – that depends upon their contracts with their employees and Watpac. The allegation that the subcontractors suffered economic loss can only be made out by evidence or admissions. The Commissioner has led no evidence that any subcontractors suffered loss. Nor is such an allegation pleaded and admitted. Therefore, I do not accept the Commissioner’s submission that the subcontractors suffered financial loss.

30    Second, it is true that Pauls, Steele and Bland used different language at each site to indicate why the stoppages were taking place. In respect of the contraventions of s 355 of the FWA, the Commissioner pleads that Pauls, Steele and Bland acted with intent to coerce Watpac into not engaging subcontractors that were not covered by an enterprise agreement that covered the CFMEU. The Commissioner does not plead any intention in respect of the contraventions of s 417, but, as the same conduct is relied on to establish the contraventions of both sections, their intent in engaging in the conduct must have been the same. In any event, what was said by Pauls, Steele or Bland on each occasion indicates that their aim was to pressure Watpac into only engaging subcontractors who had enterprise agreements with the CFMEU or into consulting the CFMEU before engaging subcontractors. I infer that the purpose of the latter was to allow the CFMEU to achieve the former. Therefore, whichever words were used, the purpose of Pauls, Steele and Bland was effectively the same at each project.

31    There are a number of interrelationships between the legal and factual elements of the contraventions at each project. In particular:

(a)    the actions were directed against the same entity, namely Watpac and took place at projects conducted by Watpac;

(b)    the purpose or intent of the action was the same at each project;

(c)    the conduct of Pauls, Steele and Bland was the same – involving holding meetings with employees and organising the employees to stop work;

(d)    the consequence of the conduct was the same – the employees did not work for the rest of 19 August 2016 and the next day;

(e)    the projects were geographically proximate, being in Brisbane;

(f)    the meetings were held on the same morning;

(g)    the CFMEU was covered by each of the relevant enterprise agreements;

(h)    the contraventions were of the same statutory provisions on each occasion (except that only s 355 of the FWA was contravened in respect of the Newstead Project).

32    It is not necessary for there to be identity of all the circumstances – merely that there was a single course of conduct. In this case, the interrelationships between the legal and factual elements of the contraventions extend beyond mere identity of motive for the contraventions. These interrelationships are, in my assessment, more significant in assessing whether Pauls, Steele and Bland each engaged in a single course of conduct than the differences identified by the Commissioner. In my opinion, Pauls engaged in essentially the same criminality by his conduct at the four Watpac projects he attended. I reach the same conclusion about Steele’s and Bland’s conduct at the sites they attended.

33    Under s 557(1) of the FWA, the three contraventions of s 417 by Pauls and Steele are each taken to constitute a single contravention by each of them. So too are the two contraventions of s 417 by Bland.

34    Further, the four contraventions of s 355 by Pauls and Steele fall within the “course of conduct” or “one transaction” principle. So too do the two contraventions of s 355 by Bland.

How many findings of contraventions of ss 355 and 417 of the FWA and declarations should be made against Pauls, Steele and Bland?

35    The respondents submit that s 557 of the FWA also operates upon the number of findings of contravention of s 417 that should be made and how many declarations should be made. They submit that in circumstances where Pauls’, Steele’s and Bland’s conduct at each of the projects was part of a course of conduct engaged in by each of them, there should only be one finding of contravention of s 417 and one declaration reflecting that contravention in respect of each of them. The Commissioner has not made any response to the respondents’ submission on that issue.

36    In support of their submission, the respondents refer to Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union (the Kane Constructions Case) (No 2) [2017] FCA 368, where Jessup J said:

[6]    Counsel for the respondents submitted that…s 557 operated only for the purposes of the imposition of penalties and that it was irrelevant to, and had no part to play in, the anterior point at which the court made its findings of contravention. I do not accept that submission. Section 557 of the FW Act operates for the purposes of Pt 4-1, not only for the purposes of s 546. It governs the findings available in a proceeding commenced under s 539(2), whatever may be the remedial outcomes either sought or granted.

37    Under s 557(1) of the FWA, “2 or more contraventions” of certain civil remedy provisions are “taken to constitute a single contravention” in the circumstances set out in the section. The section starts from the premise that there have been two or more contraventions of a single civil penalty provision. The provision does not operate unless there are findings by a court that a person has engaged in two or more contraventions of a relevant provision. Therefore, the respondents’ submission s 557(1) operates such that there can only be a finding of a single contravention cannot be accepted.

38    Section 557(1) describes how two or more findings of contraventions of a civil remedy provision are to be treated in the circumstances described in the provision. As Jessup J observed in the Kane Constructions Case at [6], such contraventions are taken to constitute a single contravention “for the purposes of Part 4-1”.

39    Part 4-1 of the FWA includes s 545(1), which provides for the Court to make any order it considers appropriate if the Court is satisfied that a person has contravened a civil remedy provision. The orders that may be made include declarations. Section 546(1), which allows the Court to order that a person pay a pecuniary penalty, is also found in Pt 4-1. Therefore, under s 557(1), two or more contraventions of a relevant civil penalty provision must be taken to be a single contravention of the provision for the purposes of any order made under s 545 and any pecuniary penalty imposed under s 546. Where s 557(1) applies, only a single pecuniary penalty may be imposed. It also follows that where s 557(1) applies, only a single declaratory order would usually be made under s 545(1) in respect of the single contravention. However, I would not foreclose the possibility that it might be appropriate to make more than one declaratory order in respect of a single contravention in an appropriate case.

40    I find that there were four contraventions of s 355 of the FWA and three contraventions of s 417 by Pauls. I find that there were four contraventions of s 355 of the FWA and three contraventions of s 417 by Steele. I find that there were two contraventions of s 355 of the FWA and two contraventions of s 417 by Bland.

How many contraventions of ss 355 and 417 of the FWA did the CFMEU engage in?

41    Section 557(3) of the FWA operates to exclude the CFMEU from the benefit of s 557(1). However, by reason of s 556, the CFMEU cannot be penalised twice for the same conduct where that conduct amounts to contraventions of two separate provisions. So, for example, the CFMEU cannot be penalised twice in relation to the conduct of Pauls at the Southpoint Project, even though Pauls contravened both ss 355 and 417 of the FWA.

42    Where the parties diverge is whether, by operation of s 793 of the FWA, the CFMEU is liable to a penalty for the contraventions by Pauls and another penalty for the contraventions by Steele in respect of each of the four projects at which they acted together.

43    The respondents argue that the CFMEU should be found to have contravened s 355 of the FWA once at each of the four sites that Pauls and Steele attended and to have contravened s 417 once at each of the three relevant sites they attended. The respondents submit that, applying s 556, and taking into account Bland’s contraventions at two sites, a maximum of six penalties can be imposed upon the CFMEU.

44    The Commissioner submits that by the conduct of Pauls and Steele at the Southpoint, Velodrome, RMH and Newstead Projects, the CFMEU contravened s 355 of the FWA twice at each project. The Commission submits that, similarly, the CFMEU contravened s 417 twice in respect of the first three of those projects. The Commissioner argues that, taking into account s 556 of the FWA, there were four contraventions by Pauls, four contraventions by Steele and two contraventions by Bland that may be penalised. The Commissioner submits that, accordingly, a maximum of 10 penalties may be imposed upon the CFMEU.

45    The respondents’ submission addresses the effect of s 793 of the FWA. However, the Commissioner’s further amended statement of claim relies on s 793 only to establish the CFMEU’s contraventions of s 417. The pleading relies on s 550 to establish the CFMEU’s contraventions of s 355 and as a further or alternative basis to establish the CFMEU’s contraventions of s 417. The respondents have not addressed the effect of s 550 upon their argument. I will consider the respondents’ s 793 argument before considering the effect of s 550.

46    In Director of the Fair Work Building Industry Inspectorate v Robinson [2016] 241 FCR 338, Charlesworth J held:

[48]    Section 793 does not, of itself, fix upon a body corporate liability for contraventions found to have been committed by its officers, employees or agents. Rather, it attributes to the body corporate the conduct and state of mind of its officers, employees and agents in prescribed circumstances. The question of whether the body corporate has contravened the FW Act (and, if so, on how many occasions) must be answered by assessing the facts, namely the conduct and state of mind attributed to the body corporate, against the elements of the contravention said to have been committed by it.

…

[50]    The second thing to be said about s 793 arises from my earlier observation that it does not directly operate to fix liability for a contravention on a body corporate; it is not to be regarded as a codification of the doctrine of vicarious liability: cf Trade Practices Commission v Tubemakers of Australia Ltd (No 2) (1983) 76 FLR 455 (at [474]-[475]), 47 ALR 719 (at 739) (Toohey J). The mere fact that two employees of the CFMEU have each contravened the FW Act does not of itself, demand the conclusion that the CFMEU is liable for two contraventions.

[51]    The conduct attributed to the CFMEU by the operation of s 793(1) comprises the conduct of the Yarrawonga meeting and the words spoken there, together with the conduct of the Airport meeting and the words spoken there…

[52]    The Director’s pleaded case referred to the “Yarrawonga Industrial Action” and the “Airport Industrial Action” to delineate between the organising conduct of each individual respondent. However, on examining the CFMEU’s conduct as a whole, I find that it organised a single instance of industrial action, namely, the O’Rourke employees’ refusal to attend work on 19 June 2014…

47    In Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (The Yarra’s Edge Case) [2016] FCA 772, Jessup J considered s 69 of the Building and Construction Industry Improvement Act 2005 (Cth) (the BCIAA), an equivalent of s 793 of the FWA. His Honour held:

[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…I would hold, therefore, that the CFMEU contravened s 38 of the BCII Act once.

48    Similarly, it is the conduct of Pauls, Steele and Bland that is attributed to the CFMEU by the operation of s 793 of the Act, not each of their contraventions. The Commissioner’s pleading alleges that Pauls and Steele attended the Southpoint, Velodrome, RMH and Newstead Projects and organised meetings of the subcontractors’ employees there and encouraged, organised for, instructed or counselled those employees to not perform work. The only differentiation drawn by the Commissioner’s pleading between Pauls’ and Steele’s conduct is as to the words they used to explain why the industrial action was being taken, but I have found that distinction to be of no significance. It would be artificial to regard the conduct of Pauls and Steele at the four projects they attended as amounting to two separate contraventions by the CFMEU at each of those projects. I accept the respondents’ submission that the CFMEU must be taken to have engaged in only one contravention at each of the four sites attended by Pauls and Steele to the extent that the Commissioner relies on s 793.

49    However, the Commissioner’s further amended statement of claim relies on s 550 of the FWA to establish the CFMEU’s contraventions of s 355 of the Act, not s 793. In respect of the CFMEU’s contraventions of s 417, the Commissioner’s pleading also relies “further or in the alternative” on s 550.

50    In relation to each contravention of ss 355 and 417 of the FWA by Pauls, Steele and Bland, the further amended statement of claim pleads that “the CFMEU was a person who was ‘involved in’ [the contravention] within the meaning of that term in section 550 of the FW Act” and that the CFMEU “is therefore taken to have committed the contraventions”. The pleading does not particularise the way in which the CFMEU was “involved in” the contraventions. Importantly, under s 550(1), a person who was “involved in a contravention of a civil remedy provision is taken to have contravened that provision”. Section 550(1) differs from s 793(1), which attributes conduct, not contraventions, to a party. The effect of s 550(1) is that that by being “involved in” the ten contraventions of s 355 engaged in by Pauls, Steele and Bland, the CFMEU is taken to have committed in the same ten contraventions.

51    As I have indicated, the Commissioner’s reliance on s 550 of the FWA in respect of the CFMEU’s contraventions of s 417 is expressed in its pleading to be “further or in the alternative” to the Commissioner’s reliance on s 793. The respondents’ amended defence does not say whether it admits its liability by the operation of s 550, or s 793, or both. There is no clear admission by the CFMEU that it was “involved in” Pauls’, Steele’s and Bland’s contraventions of s 417. The Commissioner carries the onus of proving the contraventions he alleges. In view of the ambiguity of the CFMEU’s admissions, and the absence of any other evidence as to how the CFMEU contravened s 417, I cannot find to the standard required under s 140(2) of the Evidence Act 1995 (Cth) that the CFMEU contravened s 417 as a person involved in the contraventions under s 550. Instead, the liability of the CFMEU for contraventions of s 417 (established by the CFMEU’s admissions that Pauls, Steele and Bland were its officials and that they engaged in the relevant conduct) arises by the operation of s 793.

52    In summary, the CFMEU is taken to have contravened s 355 of the FWA the four times it was contravened by Pauls, the four times it was contravened by Steele and the two times it was contravened by Bland. I find that the CFMEU engaged in ten contraventions of s 355 of the FWA.

53    There was a single contravention of s 417 by the CFMEU by reason of the conduct of Pauls and Bland at each of four sites they attended. There was a single contravention of s 417 by the CFMEU by reason of the conduct of Bland at each of the two projects he attended. I find that the CFMEU engaged in six contraventions of s 417.

54    It follows that the CFMEU is liable to a maximum of ten penalties.

Whether CFMEU’s contraventions arose out of two courses of conduct or six courses of conduct

55    The respondents submit that the CFMEU’s contraventions should be treated as arising out of two courses of conduct. This submission stems from the respondents’ earlier submission that Pauls and Steele engaged in a single course of conduct and that Bland engaged in a single course of conduct. The Commissioner submits that the CFMEU engaged in six separate courses of conduct.

56    Although s 557(1) of the FWA does not apply to the CFMEU because of its previous contraventions of s 417, the “course of conduct” or “one transaction” is capable of applying to its contraventions of both ss 355 and 417.

57    I have found that Pauls engaged in a single course of conduct. Consistently with that finding, the CFMEU should be taken to have engaged in a single course of conduct. The position is the same in respect of Steele’s conduct. The CFMEU’s conduct in respect of the Southpoint, Velodrome, RMH and Newstead Projects should be treated as a single course of conduct.

58    I have found that Bland engaged in a single course of conduct. Consistently, the CFMEU’s conduct in respect of the Pullman Ibis and Mary Street Projects should also be treated as a single course of conduct.

59    Accordingly, it is open to the Court to proceed on the basis that two penalties should imposed upon the CFMEU.

The quantum of the pecuniary penalties

60    Although the authorities warn against applying a rigid check-list of matters, the factors recognised as being potentially relevant to the determination of the appropriate penalty include the following:

(a)    the nature and importance of the project where the conduct was undertaken;

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

(c)    the circumstances in which that conduct took place;

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

(e)    whether there had been similar previous conduct by the respondents;

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

(g)    the size of the business enterprise involved;

(h)    whether or not the breaches were deliberate;

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

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

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

(l)    whether the party committing the breach had cooperated with the enforcement authorities;

(m)    the need for specific and general deterrence.

(Plancor v Liquor Hospitality and Miscellaneous Union (2008) 171 FCR 357 at [57]-[58]; Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at 18-19; Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2015] FCA 407 at [90]).

61    At the time of the offending conduct, the maximum penalty for a contravention of s 355 or s 417 of the FWA was $10,800 for individuals and $54,000 for a body corporate, such as the CFMEU.

62    The respondents’ attempts to coerce Watpac into acceding to the CFMEU’s industrial agenda must be regarded as a very serious matter. It is also a very serious infraction of the law to organise employees to engage in industrial action during the currency of enterprise agreements.

63    The actions of Pauls, Steele and Bland involved the disruption of six different construction products conducted by Watpac. The fact that the conduct occurred in respect of multiple sites is a relevant factor in assessing the penalty to be imposed.

64    The action taken against Watpac was taken on one day only, leading to stoppage of work for two days. The conduct was not repeated.

65    The material before the Court does not indicate the extent of the disruption to the six projects. It is not clear, for example, whether all the employees of the named subcontractors stopped work and whether the projects were completely shut down for the two days.

66    The respondents’ conduct was designed to disrupt the six projects and cause Watpac economic harm in order to persuade Watpac not to engage particular subcontractors. I infer that economic loss must have been caused to someone as a result of the stoppage of work at the six projects for two days. I am unable to make any finding as to who suffered such loss and the extent of any loss.

67    There is no evidence of any previous contraventions of industrial laws by Pauls and Steele. Bland has been found to have contravened ss 39 and 43 of the BCIIA, although pecuniary penalties were not sought against him and were not imposed: see Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2013] FCCA 2130; Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2013] FCA 846. Nevertheless, Bland did engage in similar conduct previously and that is a matter to be taken into account. On the other hand, Bland engaged in fewer contraventions than Pauls and Steele.

68    The CFMEU has a very extensive history of contraventions of industrial laws, including ss 355 and 417 of the FWA. The Commissioner provided the Court with a schedule demonstrating that there have been 123 separate cases in which this Court or the Federal Circuit Court of Australia (or its predecessor) have imposed civil penalties upon the CFMEU for contraventions of the FWA, the BCIIA or the Workplace Relations Act 1996 (Cth). Of those cases, 52 have involved contraventions of s 417 of the FWA or equivalent provisions and 17 have involved contraventions of s 355 of the FWA. The Courts have repeatedly emphasised the need for not only general deterrence, but specific deterrence of the CFMEU’s conduct. The previous contraventions justify higher penalties than might otherwise have been imposed. However, they cannot lead to penalties that are disproportionate to the gravity of the contraventions being considered in the present case: see Veen v The Queen (1988) 164 CLR 465 at 477-478.

69    There is no evidence of contrition by Pauls, Steele, Bland or the CFMEU. However, they have cooperated with the Commissioner by admitting the contraventions. That cooperation has resulted in a saving of public funds and should be taken into account in their favour.

70    Pauls, Steele and Bland were officials of the CFMEU, but there is no evidence that they were senior officials. The CFMEU does not seek mitigation of the penalty by reason of its size or financial position.

71    I have found that Pauls and Steele and Bland each engaged in one course of conduct. I have found that the CFMEU engaged in two courses of conduct, one constituted by the conduct of Pauls and Steele and the other constituted by the conduct of Bland. I have found that s 557(1) of the FWA applies to Pauls’, Steele’s and Bland’s contraventions of s 417. I have found that the “course of conduct” or “one transaction principle” applies to the respondents’ contraventions of s 355 and the CFMEU’s contravention of s 417 and that it is open to impose a single penalty upon each of Pauls, Steele and Bland and two penalties on the CFMEU for their contraventions. The Court is not obliged to limit the number of penalties in such a way if the result would fail to reflect the degree of the contravening conduct. However, I am satisfied that the imposition of a single penalty for each of Pauls, Steele and Bland and two penalties for the CFMEU will be adequate and appropriate if set close to the maximum.

72    I will impose a penalty of $10,000 on Pauls. I will impose a penalty of $10,000 on Steele. I will impose a penalty of $10,000 on Bland.

73    I will impose two penalties of $50,000 on the CFMEU, a total of $100,000. I am satisfied that the total is not disproportionate to the contraventions.

74    The Commissioner provided draft declarations after the hearing. I am satisfied that there is utility in making appropriate declarations. In particular, declarations are an appropriate vehicle to record the Court’s disapproval of the contravening conduct, serve to vindicate the Commissioner’s claim that the respondents contravened the FWA and may deter others from contravening the FWA: see Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2007] ATPR 42-140; [2006] FCA 1730 at [6].

75    The declarations should indicate “the gist of the findings of the primary judge”: Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [89]. The declarations should specifically and succinctly identify the relevant conduct and how and why the respondents contravened the FWA. I will make declarations in a form that I consider meets these requirements as far as is possible given the limits of the pleaded case.

Associate:    

Dated:    28 July 2017

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