FEDERAL COURT OF AUSTRALIA

Construction, Forestry, Mining and Energy Union v Director of the Fair Work Building Industry Inspectorate [2017] FCA 1166

ORDERS

THE COURT DECLARES THAT:

The respondent contravened s 503(1) of the Fair Work Act 2009 (Cth) (FW Act), when on 19 December 2013, he directed staff employed by the Office of the Fair Work Building Inspectorate (known as “Fair Work Building and Construction” (FWBC)) that no changes were to be made to existing FWBC educational material concerning right of entry under Pt 3-4 of the FW Act, in circumstances where a reasonable person, with the knowledge of the respondent, could reasonably be expected to have foreseen that that action would lead to the impression being given, by the continued availability of the educational material on the FWBC website, that an employer or occupier was authorised to give a union official exercising a right of entry a reasonable request which had to be followed by the union official, about the room or areas they may use on the site for holding discussions or interviews with employees, when such a thing was not so authorised.

THE COURT ORDERS THAT:

The respondent pay a pecuniary penalty in the amount of $8,500 to the applicant pursuant to s 546(3) of the FW Act within 30 days of the date of this order.

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

REASONS FOR JUDGMENT

COLLIER J:

1    This matter concerns an amended originating application and further amended statement of claim filed on 21 October 2016 by the applicant (the CFMEU). The CFMEU sought declarations and an order for the imposition of a pecuniary penalty pursuant to the Fair Work Act 2009 (Cth) (FW Act) in respect of conduct of the respondent. Notwithstanding that the respondent’s position is now more properly described as the Australian Building and Construction Commissioner, at the time of relevant conduct he was the Director of the Fair Work Building Industry Inspectorate (the Director). The parties were content for the respondent to remain so described.

2    On 11 September 2017, the day the hearing was listed to commence, the parties sought a number of adjournments for the purpose of discussions. The parties returned the next day and informed me that they had agreed on a statement of facts, wherein the Director made a number of admissions. The statement of agreed facts was formally filed on 13 September 2017.

3    In light of the admissions in the statement of facts, the CFMEU pressed for a declaratory order and an order for the imposition of a penalty, forgoing the balance of the relief originally sought.

4    On resumption of the hearing, it then became apparent that there were three issues requiring resolution. These issues were:

(1)    Notwithstanding the agreed statement of facts – the admissibility of additional evidence the CFMEU sought to tender;

(2)    An appropriate declaratory order; and

(3)    The appropriate penalty (if any).

5    At the hearing, I ordered that the additional evidence tendered by the CFMEU be admitted, and indicated that I would give my reasons for that ruling at a later date. Before turning to this, and the two remaining issues for determination, it is convenient to summarise the facts as agreed by the parties.

Agreed facts

Background

6    The CFMEU is an industrial association and organisation within the meaning of the FW Act. It has members who work at building sites, where work is also performed by building contractors and building employers.

7    The Director was appointed by the Minister of Employment on 15 October 2013 pursuant to s 15(1) of the Fair Work (Building Industry) Act 2012 (Cth) (FWBI Act) to head the statutory agency then known as the Office of the Fair Work Building Industry Inspectorate (also known as “Fair Work Building and Construction” (FWBC)).

8    I note that the FWBI Act was repealed by Sch 1 Pt 1 of the Building and Construction Industry (Consequential and Transitional Provisions) Act 2016 (Cth). That the FWBI Act is applicable in these proceedings is, however, common ground.

9    The functions of the Director were set out in s 10 of the FWBI Act as follows:

(a)    to promote:

(i)    harmonious, productive and cooperative workplace relations in the building industry; and

(ii)    compliance with designated building laws and the Building Code by building industry participants;

    including by providing education, assistance and advice to building industry participants;

(b)    to monitor compliance with designated building laws and the Building Code by building industry participants;

(c)    to inquire into, and investigate, any act or practice by a building industry participant that may be contrary to a designated building law, a safety net contractual entitlement or the Building Code;

(d)    to commence proceedings in a court, or to make applications to the FWC, to enforce designated building laws and safety net contractual entitlements as they relate to building industry participants;

(e)    to refer matters to relevant authorities;

(f)    to represent building industry participants who are, or may become, a party to proceedings in a court, or a party to a matter before the FWC, under a designated building law, if the Director considers that representing the building industry participants will promote compliance with designated building laws;

(g)    to disseminate information about designated building laws and the Building Code, and about other matters affecting building industry participants, including disseminating information by facilitating ongoing discussions with building industry participants;

(h)    to make submissions and provide information to the Independent Assessor in accordance with this Act;

(i)    any other functions conferred on the Director by any Act.

Note:    The Director also has the functions of an inspector (see section 59A).

10    The Director was supported by approximately 130 staff at the time of his appointment, including approximately 20 lawyers and 30 officers undertaking corporate functions. “Corporate functions” included communications/media. “Communications/media” staff were responsible for, inter alia, the maintenance of the FWBC intranet and website, and the production of educational materials by the FWBC. The legal group was responsible for the preparation of the content of those educational materials.

11    The Director acknowledged that he had ultimate responsibility for the operations of the FWBC, including managing personnel, agency finances and engaging with stakeholders. He also had responsibility for major decisions in relation to the commencement, conduct and settlement of litigation by the FWBC.

12    From prior to the time of the Director’s appointment until 28 July 2016, the following material was available for download on the FWBC website:

    A document entitled “What to do when a union official comes on your site” (Factsheet);

    A poster on right of entry (Poster); and

    A pocket guide on right of entry (Pocket Guide).

13    The Factsheet, Poster and Pocket Guide gave the impression that an employer or occupier was authorised to give a union official a reasonable request, which had to be followed by the official, about the room or areas they could use on the site for holding discussions or interviews with employees.

14    It was not in dispute that, prior to the commencement of these proceedings, the Director had not read any of the Factsheet, the Poster or the Pocket Guide, and was not aware of their specific content.

15    The parties agreed that the Poster was displayed in lunch rooms where employees ordinarily took meal and other breaks at various building sites in Western Australia between April and July 2016.

Legislative developments

16    Prior to 31 December 2013, s 492 of the FW Act provided, relevantly, that in relation to the location of interviews and discussions between employees and permit holders exercising right of entry under Pt 3-4 of the FW Act, a union official was required to comply with a reasonable request by the occupier about the rooms or areas they could use for holding discussions or interviews with employees.

17    On 28 June 2013, the Fair Work Amendment Act 2013 (Cth) (Amending Act) received Royal Assent. Section 7 of Sch 4 to the Amending Act repealed s 492 of the FW Act and replaced it with a new provision in the following terms:

492 Location of interviews and discussions

(1)    The permit holder must conduct interviews or hold discussions in the rooms or areas of the premises agreed with the occupier of the premises.

(2)    Subsection (3) applies if the permit holder and the occupier cannot agree on the room or area of the premises in which the permit holder is to conduct an interview or hold discussions.

(3)    The permit holder may conduct the interview or hold the discussions in any room or area:

(a)    in which one or more of the persons who may be interviewed or participate in the discussions ordinarily take meal or other breaks; and

(b)    that is provided by the occupier for the purpose of taking meal or other breaks.

Note 1:    The permit holder may be subject to an order by the FWC under section 508 if rights under this section are misused.

Note 2:    A person must not intentionally hinder or obstruct a permit holder exercising rights under this section (see section 502).

18    Additional provisions were enacted including s 492A (route to location of interview and discussions determined under s 492) and Pt 3-4 Div 7 (accommodation and transport arrangements in remote areas for the purpose of permit holders exercising rights under that Part of the FW Act). It is convenient to refer to these amendments cumulatively as the right of entry amendments.

19    Section 2 of the Amending Act provided that, inter alia, the right of entry amendments would commence on 1 January 2014.

20    In August and September 2013, FWBC staff drafted amendments to the Factsheet, Poster and Pocket Guide referable to the right of entry amendments including removal of references to union officials being required to comply with reasonable requests about rooms or areas for interviews or discussions, and insertion of information consistent with s 492 as amended by the Amending Act. Senior legal officers of the FWBC cleared the amendments to the Factsheet, Poster and Pocket Guide for publication by 17 December 2013.

21    Following a federal election on 7 September 2013, the government changed. In mid-December 2013, the new government announced its intention to repeal the right of entry amendments in early 2014.

22    When Parliament resumed sitting on 11 February 2014, the government did not have a majority in the Senate. A Bill was introduced to the House of Representatives to, inter alia, repeal and substitute s 492 of the FW Act. However, the proposed changes to s 492 were not passed by Parliament.

Relevant directions

23    On 19 December 2013, the Director directed Mr Matthew Hurst (Assistant Director, Education at FWBC) and staff member Tone Doyle to not make changes to FWBC educational material reflecting the right of entry amendments. The Director’s admission of this direction is identified at [29] of the statement of agreed facts.

24    The Director’s reasons for this direction as summarised from [30]-[38] were:

(1)    The new Minister for Employment had expressed an intention that the Federal government would repeal the right of entry amendments when Parliament resumed sitting in February 2014. If FWBC educational materials were amended in January 2014, the FWBC would be required to amend its materials again in the very near future to put them back to the way they stood prior to the right of entry amendments. The Director wished to avoid confusion from having multiple and conflicting versions of materials issued over a few months. This was particularly so in circumstances where, over the December/January period, the building and construction industry largely shuts down. The Director did not turn his mind to the possibility that legislation repealing the right of entry amendments might not be passed.

(2)    Although the Director had not studied the right of entry amendments or read the Amending Act, he generally understood the broad nature of the right of entry amendments from contemporaneous media reports and commentary. He understood that the amendments permitted union officials access to lunchrooms for meetings and to cast a new obligation on employers to transport union officials to meet workers. As a result, the Director believed that the amendments concerning transporting union officials were relevant for remote locations and were not relevant to the building and construction industry (especially in the central business districts of capital cities).

(3)    The Director did not believe that the right of entry amendments were likely to cause dispute or disagreement because meetings in the building and construction industry almost always occur in crib rooms or car parks.

(4)    The Director understood that the FWBC educational materials were not intended to be an exhaustive statement of all of the statutory provisions which may apply in every situation which could conceivably arise at a building site – rather they were intended to provide a fair and useful summary only. The FWBC materials could, in the Director’s view, remain a fair and accurate summary without additional material relating to the right of entry amendments.

25    As a result of the Director’s direction, the Factsheet, Poster and Pocket Guide were not revised and remained in their unamended form on the FWBC website until 28 July 2016.

26    Between 20 December 2013 and 9 January 2014, there was email correspondence between the Director, Mr Hurst and Mr Adam Copp (Director, Stakeholder Engagement, FWBC) concerning the nature of internal information (including an intranet article) which was to be provided to FWBC staff concerning the right of entry amendments. The tenor of an intranet article subsequently produced by Mr Copp was that, although right to entry amendments had been made, the new Federal government intended to roll back those amendments, and therefore no changes had been made to FWBC materials.

27    The uncontested evidence before the Court was that the Director was fully aware of this approach, and that senior staff were concerned about it. For example, on 9 January 2014 following receipt of Mr Copp’s intranet article, Mr Jeff Radisich (the Executive Director of the FWBC Operations North/West) emailed Mr Copp as follows:

Do we have any idea when the roll-back will occur? I thought we would be stuck with these provisions until the Senate change over in July. If that’s the case we are running something of a political and industrial risk by withholding info on the law as it currently stands. Ref penultimate line of para under “Advice” below.

28    On 10 January 2014, Mr Copp sent the following response to Mr Radisich:

To be honest, I do share your concerns and talked to Nigel about it last year.

However, he was absolutely adamant that he didn’t want us to change anything as the Government intention is to change the legislation. He said he was extremely comfortable handling it in Estimates or the media or wherever. He felt pretty strongly about it.

I double checked the intranet story and email off with him as well yesterday and he was happy with these (see attached).

29    It was not in dispute that the FWBC continued to promulgate a position where the right of entry amendments had not taken effect. For example, on 21 January 2014, Mr Copp emailed the Director in relation to the request of the Master Builders Association of the Australian Capital Territory (MBA ACT) to review MBA ACT documents concerning right of entry and proposed FWBC comments on those documents. The comments included that new laws began on 1 January 2014, however the government indicated it would change the laws back to the previous provisions, and therefore the FWBC was not changing its public facing content to reflect the new laws.

30    Between February and June 2014, there were numerous public instances of the FWBC stating that right of entry material was available on its website, and that information about right of entry was important for building and construction industry participants. These instances included FWBC industry updates (in February, March and July 2014), public speeches by the Director (in March and May 2014), an FWBC media release on 11 June 2014 and an interview with the Director published on 27 February 2015.

31    In March 2016, the Director commenced proceedings against officers and agents of the CFMEU in the Western Australian Registry of the Federal Court of Australia, alleging contraventions of the FW Act (including s 492) relating to the exercise of rights of entry. In May 2016, the Director commenced an action in the Fair Work Commission concerning the exercise of rights of entry. There were also a significant number of investigations by the FWBC of alleged contraventions of right of entry provisions, and proceedings commenced by the FWBC, between 2013 and 2016.

32    On 25 July 2016, Mr David Noonan, the National Secretary of the Construction and General Division of the CFMEU, wrote to the Director and informed him that the Factsheet, Poster and Pocket Guide misrepresented the requirements of s 492 of the FW Act. On 28 July 2016, the Director directed that the Factsheet, Poster and Pocket Guide be removed from circulation and the FWBC     website pending receipt of advice concerning Mr Noonan’s letter.

33    Amended versions of the Factsheet, Poster and Pocket Guide, updated to reflect s 492 of the FW Act, were published on the FWBC website on 2 August 2016.

Admitted contravention

34    At [74] of the statement of agreed facts, the Director admited contravention of s 503 of the FW Act in the following terms:

The First Respondent contravened s 503(1) of the FW Act by giving the direction referred to in paragraph 29 above in circumstances where, whilst the First Respondent did not intend, believe or advert to the possibility that an impression would or might be given that something was authorised by Pt 3-4 of the FW Act when it was not so authorised, a reasonable person, with the knowledge of the First Respondent, could reasonably be expected to have foreseen that that action would lead to the impression being given, by the continued availability of the Factsheet, Poster and Pocket Guide on the Website, that an employer or occupier was authorised to give a union official a reasonable request which had to be followed by the union official about the room or areas they may use on the site for holding discussions or interviews with employees. An employer or occupier was not authorised to give such a request by the FW Act from 1 January 2014. From that date and to this day, s 492 provided that if a permit holder and occupier did not agree on the rooms or areas of the premises where interviews or discussions could be held, the permit holder may conduct the interview or hold the discussion in any room or area in which one or more of the person who may be interviewed or participate in the discussions ordinarily take meal or other breaks and that is provided by the occupier for the purpose of taking meal or other breaks.

35    I now turn to my reasons for admission of evidence and the two remaining issues requiring determination in this case.

Admissibility of additional evidence

36    It was common ground at the hearing that, in light of s 191(2) of the Evidence Act 1995 (Cth) (Evidence Act), leave of the Court was required for the admission of additional evidence sought to be adduced by the CFMEU. In particular, s 191(2)(b) provides that evidence may not be adduced to contradict or qualify an agreed fact unless the Court gives leave.

37    The additional evidence was an email from the Director sent at 9.36 pm on 21 January 2014 to Mr Copp in which the Director responded to an email sent to him earlier that day by Mr Copp concerning the material the MBA ACT sought reviewed by the FWBC. Relevantly, Mr Copp’s earlier email provided:

Dear Nigel

As you may recall, MBA ACT asked if we could review their ROE materials.

We have consulted with Liz Hayes on updating this content and some of the advice is quite complex and technical. It may be beneficial if John and the other reps from MBA review the changes we are suggesting, and we offer to let them talk to Liz if they would like to discuss further.

The advice is summarised below. Full advice is available in the attached documents that have been marked up.

ROE Summary for members

•    We have included our suggested changes from Liz, including strengthening the sections referring to misconduct from permit holders on site.

•    We have added a section specifically about the role of FWBC and where we can provide assistance. This addresses other areas of concern that may flow on from misconduct on site e.g. coercion breaches, unlawful industrial action etc.

•    There is still a bit of an open question on who is the intended audience for ths document? Will it be the IR Managers for larger organisations? It is well researched and referenced, however it will be difficult to digest for members not as familiar with the specifics of the legislation. A simplified version without footnotes may assist this.

Full marked up advice available attached and here: MBA ACT Right of Entry summary. (Please note on page 7 there is advice around the changes gto RoE from the previous government. You may want to review that section to make sure the messaging is ok with you.)

ROE Flowcharts

•    The structure and visual design of the content could be reviewed – currently it is not particularly straight forward.

•    FWBC’s ROE pocket guide provides an example of how the content could be summarised and structured. We would be happy for MBA to use and adapt this content as they see fit.

•    Suggest removing FW Act section numbers throughout content.

•    It would be good for them to emphasise FWBC’s hotline number throughout these resources – particularly following sections where entry is not permitted or reused.

•    In “Permit holder’s duties”, we recommend the removal of the section that references ‘a breach will not allow removal from site’. This is the main area where this can be strengthened, as head contractors do not have to tolerate misconduct on-site and can ask that they are removed (or contact the police if the union official refuses).

•    For the WHS Act flowchart it is important that members are also told to ask for the FW Act permit, as this is also a requirement.

Marked up versions of the flow charts are attached to this email.

Happy to discuss.

(Original emphasis.)

38    In his emailed response, the Director wrote:

Agreed Adam. Please proceed as per your recommendation.

Many thanks, particularly Liz for her work involving a safety regime apparently unique to the ACT.

39    Relevantly to s 191(2)(b) of the Evidence Act, the email of the Director appeared to add to material in [50]-[53] of the statement of agreed facts concerning the Director’s knowledge of material relating to right of entry publications of the MBA ACT.

40    After hearing submissions, I granted leave for the Director’s email to be adduced as evidence.

41    I did so for the following reasons:

    I accepted the submission of Mr Agius SC for the CFMEU that, at least from his client’s perspective, the email had been inadvertently omitted from material annexed to the agreed statement of facts.

    The contents of the email constituted a potential answer to a point made in the submissions of the lawyers for the Director, namely that the Director had not read, and no-one had drawn to his attention, a document that was to be a publication of the MBA ACT dealing with rights of entry of permit holders.

    While I note the submission of Mr Wheelahan QC for the Director that the email was not relevant for the purposes of s 55 of the Evidence Act because the contravention was the direction referred to in [74] of the statement of agreed facts, nonetheless the breadth of conduct referable to the contravention and the proposed declaration was a matter of dispute notwithstanding the agreed facts. To that extent the email was relevant.

    I note the submission of Mr Wheelahan QC for the Director that what the Director appeared to be agreeing with in his email was a suggestion of Mr Copp that “John and other reps from MBA review the changes we are suggesting, and we offer to let them talk to Liz if they would like to discuss further”. While this may be the case, nonetheless the Director’s email acknowledged the Director’s receipt from Mr Copp of material concerning the MBA ACT which is detailed in the statement of agreed facts, including Mr Copp’s comment “(Please note on page 7 there is advice around the changes to RoE from the previous government. You may want to review that section to make sure the messaging is ok with you.)” To that extent the import of the Director’s email is not as narrow as he has advanced.

    It is important for the Court to have access and regard to comprehensive and accurate evidence in the proceedings.

    The email was relevant to the objective seriousness of the matter, in that it demonstrated knowledge on the part of the Director as to materials reviewed (and to that extent, approved) by the FWBC.

    Ultimately, Counsel for the Director informed me that my decision concerning the admissibility of the email would not affect the course of his submissions.

Issues for determination

Form of the declaratory relief

42    The Court is empowered to order declaratory relief pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) or s 545 of the FW Act. It is common ground between the parties that the Court should make a declaration in respect of the conduct of the Director.

43    I consider that a declaration of contravention of the legislation by the Director is appropriate. The conduct of the Director was serious. The Director admitted to contravening a law he was required to police. The consequence of his conduct was the dissemination by the FWBC – at his direction – of false information to the industry of which the FWBC was not only the regulator, but supposedly a trustworthy source of reliable information for industry participants. Making matters worse, the wrongdoing was exacerbated by the fact that right of entry is commonly a source of industrial dispute in a frequently volatile industrial environment. Indeed the Director has not hesitated to commence legal proceedings against the CFMEU in circumstances where the FWBC alleges CFMEU officers or agents infringe rights of entry on to building sites.

44    However, whilst the parties agree that a declaration of contravention of s 503 of the FW Act ought be made, they disagree on the terms of such a declaration.

45    The CFMEU sought a declaration in the following terms:

The First Respondent contravened s.503(1) of the Fair Work Act 2009 (Cth) between 1 January 2014 and 28 July 2016 by directing that no changes be made to a Factsheet, Poster and Pocket Guide published on a website of the Office of the Fair Work Building Industry Inspectorate, in circumstances where a reasonable person with the knowledge of the First Respondent could reasonably be expected to have foreseen that that action would lead to the impression being given, by the continued availability of the Factsheet, Poster and Pocket Guide on the website, that an employer or occupier was authorised to give a union official a reasonable request which had to be followed by the union official about the rooms or areas they may use on the site for holding discussions or interviews with employees, when the giving of such a direction was not authorised from 1 January 2014 by Part 3-4 of the Fair Work Act 2009 (Cth).

(the CFMEU’s version)

46    The Director sought a different order, as follows:

The first respondent contravened section 503(1) of the Fair Work Act 2009 (Cth) (FW Act), when on 19 December 2013, he directed staff employed by the Office of the Fair Work Building Inspectorate (known as “Fair Work Building and Construction” (FWBC)) that no changes were to be made to existing FWBC educational material concerning right of entry under Part 3-4 of the FW Act, in circumstances where a reasonable person, with the knowledge of the first respondent, could reasonably be expected to have foreseen that that action would lead to the impression being given, by the continued availability of the educational material on the FWBC website, that an employer or occupier was authorised to give a union official exercising a right of entry a reasonable request which had to be followed by the union official, about the room or areas they may use on the site for holding discussions or interviews with employees, when such a thing was not so authorised.

(the Director’s version)

47    The terms of these draft orders are substantially identical. The key difference concerns the relevant date(s) identified in each draft. The CFMEU submitted, in summary:

    There is no warrant to limit the declaration to the act of the Director on 19 December 2013 directing staff employed by the FWBC not to make changes to the website;

    If the Director’s direction occurred in December 2013, but the effect of the direction was to leave on the website information which was false until 2016, the effect is relevant to the objective seriousness of the matter.

    The language proposed in the CFMEU’s version is compatible with [74] of the statement of agreed facts.

48    The Director submitted, in summary:

    The wording proposed by the CFMEU is a significant and material departure from the agreed basis on which liability was admitted, as reflected in [74] of the statement of agreed facts.

    The agreed contravention is the direction of the Director on 19 December 2013.

    Section 503 of the FW Act requires an action and leaves no room to construe action as including omission for the purposes of that section. The agreed fact focuses on an action, that being the direction of the Director of 19 December 2013.

49    Section 503 of the FW Act provides:

Misrepresentations about things authorised by this Part

(1)    A person must not take action:

(a)    with the intention of giving the impression; or

(b)    reckless as to whether the impression is given;

    that the doing of a thing is authorised by this Part if it is not so authorised.

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

(2)    Subsection (1) does not apply if the person reasonably believes that the doing of the thing is authorised.

50    Although the heading of s 503 refers to misrepresentations about “things” authorised by Pt 3-4 of the FW Act, s 503(1) specifically states that a person must not take action with the proscribed intention or recklessness. I am not aware of authority which casts light on the concept of “taking action” in the context of s 503(1). Some assistance can be derived from [2001] of the Explanatory Memorandum to the Fair Work Bill 2008 which stated:

2001.    This clause provides that a person must not take action with the intention of giving the impression, or reckless as to whether the impression is given, that the action is authorised by the Part when this is not the case. An example of behaviour that this clause would cover is where a person represents himself or herself as a permit holder when she or he does not hold a valid entry permit. Other examples would include where a person asserts she or he is entitled to represent particular employees when the union’s eligibility rules do not extend to that class of employees, or where an employer asserts to employees that the union is not allowed to talk to them when it can.

51    The examples to which [2001] refers, involving “represents himself or herself” and “asserts”, were all positive actions on the part of the contravenor. Indeed the expression “take action” is defined by the Oxford English Dictionary as including:

(more generally) to take steps in regard to any matter, to act.

(Emphasis added.)

52    “Taking” action connotes positive action and would not, as a general proposition, mean a failure to “take action”. However, it is unnecessary for me to conclusively decide this point. At [74] of the statement of agreed facts the parties agreed that the Director contravened s 503(1) of the FW Act by giving the direction referred to in [29]. Paragraph 29 read:

On 19 December 2013, the First Respondent met with Matthew Hurst (Hurst) who was the Assistant Director, Education at FWBC and Tone Doyle who was a staff member of FWBC. This meeting is recorded in the First Respondent’s diary as having occurred at 3:00 PM. During the meeting, the First Respondent directed that no changes be made to FWBC educational material concerning right of entry to reflect the amendments to the FW Act. The First Respondent’s reasons for this decision were as follows.

53    It is clear from [74] that it is the direction of 19 December 2013 by the Director which contravened s 503. It is that direction which was the relevant “action” within the meaning of s 503 of the FW Act.

54    While [74] goes on to refer to the terms of s 492 of the FW Act from 1 January 2014 “to this day” the contravention as agreed by the parties did not refer to actions of the Director “to this day”. I do not accept the submission of the CFMEU that there was no warrant to limit the declaration to one act on 19 December 2013 when the parties agreed that the contravention was constituted by that one act. That is not to say that the effect of that misrepresentation until 2016 was not material – however it was relevant to the objective seriousness of the action of the Director and not part of the agreed contravention.

55    The form of declaratory relief is at the discretion of the Court, and I am not bound to make orders in the terms advanced by either party. However in light of the statement of agreed facts, and in particular the terms of [29] and [74], I am satisfied that the Director’s version accurately reflects the declaratory relief agreed by the parties, and that it is appropriate for the Court to make a declaration in those terms.

Penalty

56    The CFMEU sought the imposition of a pecuniary penalty on the Director pursuant to s 546 of the FW Act. The maximum penalty which the Court could impose on the Director for the contravention of s 503(1) of the FW Act is 60 penalty units (Column 4 of item 25 of s 539(2) of the FW Act). As I have decided that the contravention of s 503(1) was the action taken on 19 December 2013, the value of the penalty unit is that at the time of the conduct: Murrihy v Betezy.com.au Pty Ltd and Another (No 2) [2013] FCA 1146; (2013) 221 FCR 118 at [6]-[28]; Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union (The Kane Constructions Case) (No 2) [2017] FCA 368 at [9]. The penalty unit on 19  December 2013 was $170 as per the amendment to the s 4AA of the Crimes Act 1914 (Cth) in item 7, Sch 3 of the Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Act 2012 (Cth). The maximum penalty the Court could impose in this case is therefore $10,200.

57    The CFMEU has further urged the Court to impose a penalty on the Director at the highest end of the scale. Conversely, the Director has submitted that the imposition of a pecuniary penalty will serve no purpose, and that this is an appropriate case for making no more than a declaration of contravention.

58    Recently the Full Court of this Court reviewed principles and authorities pertinent to the imposition of pecuniary penalties. In Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, Dowsett, Greenwood and Wigney JJ said:

98    Whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty is primarily, if not wholly, protective in promoting the public interest in compliance: Trade Practices Commission v CSR Ltd [1990] FCA 521; (1991) ATPR 41-076 at 52,152 [42]; Commonwealth v Director, FWBII at [55] (per French CJ, Kiefel, Bell, Nettle and Gordon JJ). The principal object of a pecuniary penalty is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene; both specific and general deterrence are important: Chemeq at [90]; Ponzio at [93]. A pecuniary penalty for a contravention of the law must be fixed with a view to ensuring that the penalty is not to be regarded by the offender or others as an acceptable cost of doing business: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at 659 [66]; Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 at 265 [62]-[63]. In relation to general deterrence, it is important to send a message that contraventions of the sort under consideration are serious and not acceptable: Australian Securities and Investments Commission v Southcorp Ltd (No 2) (2003) 130 FCR 406 at 418 [32].

99    The question whether a pecuniary penalty involves an element of punishment remains somewhat controversial: see the discussion in Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2016] FCA 453; 242 FCR 389 at [76]; ACCC v ANZ at [78]–[83]; Construction, Forestry, Mining and Energy Union v Australian Building and Construction Commissioner [2016] FCAFC 184; 341 ALR 383 at [8], referring to NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 296-7; Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 75 FCR 238 at 241; Trade Practices Commission v Stihl Chainsaws (Aust) Pty Ltd (1978) ATPR 40-091 at 17,896; Australian Competition and Consumer Commission v Ithaca Ice Works Pty Ltd [2001] FCA 1716; (2002) ATPR 41-851 at 44,543 [50]. To a certain extent, that debate appears to be more semantic or philosophical than real. It is sufficient to say that, accepting that the primary purpose of imposing a pecuniary penalty is to protect and deter, that purpose is achieved by imposing a punishment in the form of a pecuniary penalty: ACCC v ANZ at [83].

(Emphasis omitted.)

59    Their Honours noted that the fixing of a pecuniary penalty may be likened to the “instinctive synthesis” involved in criminal sentencing. This entails the identification and balancing of all factors relevant to the contravention and the circumstances of the defendant, and making a value judgment as to what the appropriate penalty is in light of the protective and deterrent purpose of a pecuniary penalty (at [100]). Importantly, the Court then turned to relevant considerations in respect of evaluation of penalty:

101    In fixing the amount of a civil penalty, reference is frequently made to the lists of factors or considerations identified by Santow J in Australian Securities and Investments Commission v Adler (No 5) [2002] NSWSC 483; (2002) 42 ACSR 80 at 114-115 [126] and French J in Chemeq at 534 [99]. Those lists of relevant considerations, which have been approved and elaborated on by many subsequent decisions of this Court, were not, and plainly were not intended to be, exhaustive. Nor was it suggested that each of the factors referred to in the respective lists was necessarily relevant or important in every case. These lists of factors should not be treated as a rigid catalogue or checklist of matters to be applied in each case; the overriding principle is that the Court should weigh all relevant circumstances: Australian Securities and Investments Commission v GE Capital Finance Australia [2014] FCA 701 at [72].

102    In general terms, the factors that may be relevant when fixing a pecuniary penalty may conveniently be categorised according to whether they relate to the objective nature and seriousness of the offending conduct, or concern the particular circumstances of the defendant in question.

103    The factors relating to the objective seriousness of the contravention include: the extent to which the contravention was the result of deliberate, covert or reckless conduct, as opposed to negligence or carelessness; whether the contravention comprised isolated conduct, or was systematic or occurred over a period of time; if the defendant is a corporation, the seniority of the officers responsible for the contravention; the existence, within the corporation, of compliance systems and whether there was a culture of compliance at the corporation; the impact or consequences of the contravention on the market or innocent third parties; and the extent of any profit or benefit derived as a result of the contravention.

104    The factors that concern the particular circumstances of the defendant, particularly where the defendant is a corporation, generally include: the size and financial position of the contravening company; whether the company has been found to have engaged in similar conduct in the past; whether the company has improved or modified its compliance systems since the contravention; whether the company (through its senior officers) has demonstrated contrition and remorse; whether the company had disgorged any profit or benefit received as a result of the contravention, or made reparation; whether the company has cooperated with and assisted the relevant regulatory authority in the investigation and prosecution of the contravention; and whether the company has suffered any extra-curial punishment or detriment arising from the finding that it had contravened the law.

105    ...

106    Careful attention must also be given to the maximum penalty for the contravention. That is so for at least three reasons: first, because the legislature has legislated for the maximum penalty and it is therefore an expression of the legislature’s policy concerning the seriousness of the prescribed conduct; second, because it permits comparison between the worst possible case and the case that the Court is being asked to address; and third, because the maximum penalty provides a “yardstick” which should be taken and balanced with all the other relevant factors: Markarian at 372 [31] (per Gleeson CJ, Gummow, Hayne and Callinan JJ).

60    These principles are apposite to the circumstance of the present case.

61    Whether there is utility to imposing a penalty on the Director in this case is a question which properly arises in the context of considering the issue of deterrence. In many ways this is a seminal question, given that a primary purpose of the imposition of civil penalties is deterrence, both general and specific: Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482 at [55], [59].

62    The Director relied on a number of authorities in relation to this point to support his contention that a pecuniary penalty was not warranted, in particular Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corporation Ltd [2007] FCA 1607; Pine v Seelite Windows & Doors Pty Ltd [2005] FCA 500; Ponzio v Firebase Sprinkler Systems Pty Ltd [2005] FCA 733; Ponzio v D and E Air Conditioning Pty Ltd [2005] FCA 964; Pine v Expoconti Pty Ltd [2005] FCA 1434; Pine v Casello Constructions Pty Ltd [2005] FCA 1854; and Carr v Higgins Coatings Pty Ltd [2005] FCA 1809.

63    In CEPU v Telstra Corporation Ltd [2007] FCA 1607, Gordon J noted at [13] that there is no principle that a Court must impose a penalty in all cases of proven breach. In that case her Honour considered that there was no purpose to be served by the imposition of a penalty where:

    the unlawful conduct arose out of an arguable but erroneous construction of a relevant term of an enterprise agreement,

    the subsequent breach could not be characterised as demonstrating a flagrant or wilful disregard for the relevant enterprise agreement, and

    the complainant had been fully compensated for the loss suffered as a result of the breach.

64    The other authorities on which the Director relied all concerned circumstances where an employer had paid employees wages while the employees were engaged in industrial stoppages in contravention of the Workplace Relations Act 1996 (Cth), and where the Court found that there was no utility in imposing a pecuniary penalty on the employer.

65    So:

    In Pine v Seelite Windows & Doors Pty Ltd [2005] FCA 500 the relevant application concerned the imposition of a pecuniary penalty under s 187AD(1) of the Workplace Relations Act 1996 (Cth). The respondent had contravened s 187AA of that Act in respect of the payment of two days wages totalling $656.72 to four employees during a period when the employees were engaged in industrial action. Finkelstein J noted that the managing director of the employer had not been informed that the relevant employees had not worked on the particular days, but on learning of the days not worked had taken steps including communicating with the employees and informing them that they would not be paid for any lost time arising out of industrial action other than in circumstances where they were exposed to an immediate safety risk. In relation to the issue of imposition of penalty on the company his Honour continued:

9    In these circumstances this action is much ado about nothing. True it is that the laws of the land must be obeyed. It is also true that the Building Industry Taskforce is entitled to take all reasonable steps to ensure that the laws, for which it has some responsibility in enforcing, are complied with. As I have said, not every contravention of every law needs to be punished. Often a caution will suffice. But, as it has been decided that there should be an action, I must deal with it.

10    Should I impose a penalty on the respondents? No harm has been done to anyone. The contravention was inadvertent. It is unlikely to occur again. The amount of wages involved is insignificant. In these circumstances it would be quite wrong to punish the respondents. Nothing would be achieved by the imposition of a pecuniary penalty. There is no need for a specific deterrent: it is simply not necessary. And if any penalty were imposed it would be so low that it could not act as a general deterrent.

    In Ponzio v Firebase Sprinkler Systems Pty Ltd [2005] FCA 733, Merkel J declined to impose a penalty, emphasising that it was most unlikely the respondent would reoffend, and the respondent did not make the relevant payments recklessly or indifferently. His Honour observed, however, that the circumstances of the case were exceptional (at [10]).

    In Ponzio v D and E Air Conditioning Pty Ltd [2005] FCA 964, an application for imposition of penalty was again sought against an employer for paying employees in respect of periods when those employees were engaged in industrial action as defined in the legislation. After examining relevant authorities and the facts, North J concluded:

30.    Given the nature of the breaches, the record of the respondent, its subsequent conduct and the amount of disadvantage already suffered, I do not regard the imposition of a penalty as serving the purpose of either particular deterrence or general deterrence.

    In Pine v Expoconti Pty Ltd [2005] FCA 1434, in similar circumstances Kenny J said:

15    The present case involves payments to 28 employees at two sites in respect of periods of industrial action over two days by a subcontractor. The payments totalled a little less than $3,500. At the time they were made, the respondent believed there was a safety issue preventing its employees from working. It believed that its employees were ready and willing to work but that the alimaks and lifts had been shut down because of a safety audit, thereby preventing them from working. There was an absence of harm as a result of the stoppages. The respondent has no prior contraventions of Pt VIII of the Act and has since changed its policy to prevent a recurrence of this conduct. The respondent has admitted the contraventions at the earliest opportunity and co-operated with the applicant in dealing with the matter efficiently. There appears little likelihood that the respondent will repeat the contravening conduct. Further, the respondent has plainly incurred significant costs in defending these proceedings; and the applicant accepted that they were not insignificant.

16.    I accept that this is not an appropriate case for particular weight to be given to the matter of general deterrence; and, in any event, this interest has been served by the bringing of this proceeding and the time and cost that the respondent has as a consequence been required to spend in relation to the proceeding, although I note the comments of Merkel J in Multiplex at [9]. I do not consider that this case is materially different from Firebase or D and E Air Conditioning; and, in this particular case, which arises out of the same factual background, interests of parity should prevail. I note too that the contraventions arise out of essentially the same course of conduct. Accordingly, although I regard the course as suited only to the exceptional case, I would make declarations concerning the respondent’s contravening conduct but not impose a penalty in this case.

    In Pine v Casello Constructions Pty Ltd [2005] FCA 1854, again involving payment of workers during industrial stoppages in contravention of the Workplace Relations Act, North J observed at [8]-[9] that:

    The relevant conduct occurred on two days and the issue was different on each day;

    In the circumstances where the respondent had been require to incur costs in its defence of $8,000, in respect of a payment to its workers of $2,000, it was unlikely it (or any other employer) would be inclined to make similar payments to employees. General deterrence did not require the imposition of a monetary penalty;

    Given the record of the respondent, its co-operation with the applicant, acknowledgment of the alleged contravention early on and the amount of disadvantage already suffered, it was unlikely the respondent will be involved in any further contraventions of the Act

    In Carr v Higgins Coatings Pty Ltd [2005] FCA 1809, Gray J noted that the respondent had had no prior contravention of the relevant legislation, had co-operated, was “essentially innocent” of wrongdoing, and the applicant conceded that there would be no utility in the imposition of a pecuniary penalty.

66    So far as concerns specific deterrence, the Director has resigned from his statutory appointment and there is no present risk of any recurrence or prospect of him contravening the FW Act again. The Director submits that his resignation is itself an adverse consequence of his contravention.

67    I accept the submission of the Director so far as concerns the need for specific deterrence in this case. It is fair to say that the Director has had a long and distinguished career in public service, and that his resignation from office was a direct result of his admission of contravention in this case. In that respect, I do not consider that any pecuniary penalty the Court could impose referable to specific deterrence would meaningfully add to the price the Director has already paid for his contravention of s 503(1) of the FW Act.

68    A different issue arises however insofar as concerns principles of general deterrence in this context. In this case, the Director submitted that there was no case for general deterrence, in circumstances where there is only one Australian Building and Construction Commissioner, and to his knowledge there has never been a recorded contravention of s 503(1) of the FW Act by any person within any of the organisations established under or in relation to the FW Act. The Director further submitted that, unlike industrial protagonists or participants, there is no need for broader deterrence because the FWBC is not selling anything, has no interests to pursue or preserve, and has no profit to make or anything to gain from the conduct of its affairs.

69    In cases of contravention of civil penalty provisions, the Court has a duty to consider whether a penalty should be imposed as a factor preventing the commission of similar contraventions by those who may otherwise be tempted by the prospect that only light punishment will be imposed (see R v Harrison (1997) 93 A Crim R 314 at 320-321, Comcare v Post Logistics Australasia Pty Limited [2012] FCAFC 168 at [46]). In this context I note apt comments of Finkelstein J in Community and Public Sector Union v Telstra Corporation Ltd [2001] FCA 1364 at [9] where his Honour observed:

On the other hand, the basic objective of punishment should be to enhance social welfare by minimising the net social cost of wrongdoing. This is achieved by deterrence. Here I speak not only of specific deterrence but also general deterrence. In a case such as the present, that may be of some importance. The reason is that Telstra submits that there is no need to impose any penalty because it will not offend again. That may be true. But even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law’s disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct: R v Thompson (1975) 11 SASR 217.

(Emphasis added.)

70    The authorities to which the Director referred as supporting his submission that no pecuniary penalty should be imposed in this case are of little assistance in considering whether the principles of general deterrence are relevant. This is because:

    Unlike in the circumstances of the present case, none of the cases to which the Director referred involved a contravenor who was the industry regulator, whose role it was to ensure that accurate information be promulgated to industry participants as well as the broader public;

    Unlike in the present circumstances where the conduct occurred at the Director’s specific direction, in a number of the cases the conduct resulting in the contravention occurred without the knowledge of the contravenor (for example Carr [2005] FCA 1809 and Pine v Seelite Windows & Doors Pty Ltd [2005] FCA 500);

    The present circumstances can be contrasted with CEPU v Telstra [2007] FCA 1607 where the contravention arose from an arguable interpretation of an enterprise agreement. In the current proceedings there was no ambiguity concerning the status of the relevant law – rather in making the direction the Director appeared to take a calculated risk that the Federal government would eventually get the numbers to pass its legislation and in the interim the FWBC should not amend the information either on its website or in its published materials;

    Most of the relevant cases involved payments of relatively small amounts of wages in specific companies, and involved conduct confined to a few days. In the current proceedings, the Director’s action resulted in a misrepresentation concerning the state of the law being perpetuated by the FWBC over several years;

    In Carr [2005] FCA 1809, the applicant conceded that there would be no utility in the imposition of a pecuniary penalty. That is clearly not the case here.

71    Further, while the Director is correct in submitting that the FWBC does not, and could not, profit from the misrepresentation to which he admits, this in itself is not a standard against which the need for deterrence should be judged in this case. The conduct in question exhibited on the Director’s part a degree of carelessness and, indeed, somewhat arrogant ignorance, in respect of the truth of information concerning the right of entry of industry participants in an often charged industrial environment. His careless conduct resulted in incorrect information remaining on the FWBC website for several years, in apparent disregard of the reputational risk to the FWBC, and in circumstances where the Director promoted the supposed accuracy of that information in communications with industry and the general public. Whether the CFMEU was misled by the misrepresentation on the FWBC website resulting from the Director’s conduct is not the test. There is utility in ensuring that any successor to the Director, other staff of the FWBC, and staff of other regulators are adequately warned against engaging in similar conduct.

72    The Director did not intend to contravene s 503(1) of the FW Act. I note the contrition expressed by the Director, his remorse for his actions, the fact that he has no record of previous contravention of the FW Act, and that fact that he has paid a high personal price in the loss of his position as a result of his contravention.

73    The Director referred to his co-operation with the CFMEU in enabling appropriate discovery orders to be made unopposed, and his admission of the contravention of s 503(1) of the FW Act in the statement of agreed facts. I accord little weight to the Director refraining from opposing discovery orders. I give more weight to the fact that the Director reached a position of agreement with the CFMEU on key facts, and admitted the contravention, thus obviating the need for a five day trial with associated costs on the parties and Court time. In saying so, I give less weight to this concession than I would have accorded had the Director’s admission occurred before the first listed day for hearing, rather than after (as was the case here).

74    Taking into consideration the factors I have mentioned, I consider that there is utility in a pecuniary penalty order. I consider that the conduct of the Director is at the higher end of the scale of seriousness so far as concerns breach of s 503(1) of the FW Act. The penalty should reflect that fact. The penalty should, however, also reflect the circumstances of remorse, extra-curial consequences to the Director, his co-operation and his record.

75    It is appropriate that the Director be ordered to pay a penalty in the amount of $8,500.

76    The CFMEU has sought an order that the Director pay the pecuniary penalty to the CFMEU pursuant to s 546(3) of the FW Act, on the basis that it is “the usual position”. That an order in such terms is usual is clear from principles explained by the Full Court in Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4; (2016) 239 FCR 336 at [72] et seq and [117]-[118]. The Director did not oppose an order in such terms, were the Court minded to order payment of a pecuniary penalty. I will order that the pecuniary penalty of $8,500 be paid to the CFMEU within 30 days of the date of this order.

Associate:

Dated:    29 September 2017