FEDERAL COURT OF AUSTRALIA

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCA 1269

ORDERS

Pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth), THE COURT DECLARES THAT:

1.    The first respondent committed one contravention of section 343 of the Fair Work Act 2009 (Cth) by organising and taking action at the Carrara Sports and Recreation project (Project), that action being the calling and conducting of two-hour union meetings between 9 May 2016 and 1 June 2016, with intent to coerce Hansen Yuncken Pty Ltd to exercise a workplace right, or to exercise a workplace right in a particular way, namely to enter into an enterprise agreement with the Construction, Forestry, Mining and Energy Union or enter into an enterprise agreement with the Construction, Forestry, Mining and Energy Union on terms required by the Construction, Forestry, Mining and Energy Union.

2.    The first respondent committed one contravention of section 348 of the Fair Work Act 2009 (Cth) by organising and taking action at the Project, that action being the calling and conducting of two hour union meetings between 9 May 2016 and 1 June 2016, with intent to coerce Hansen Yuncken Pty Ltd to engage in industrial activity, namely to comply with a lawful request or requirement of the Construction, Forestry, Mining and Energy Union to enter into an enterprise agreement with the Construction, Forestry, Mining and Energy Union, or enter into an enterprise agreement with the Construction, Forestry, Mining and Energy Union on terms required by the Construction, Forestry, Mining and Energy Union.

3.    The second respondent committed one contravention of section 343 of the Fair Work Act 2009 (Cth) by organising and taking action at the Project, that action being organising and conducting two-hour union meetings between 9 May 2016 and 1 June 2016 and statements made by him during the period from 9 May 2016 to 12 May 2016 to Hansen Yuncken Pty Ltd staff that Hansen Yuncken Pty Ltd had to sign an enterprise agreement with the Construction, Forestry, Mining and Energy Union, with intent to coerce Hansen Yuncken Pty Ltd to exercise a workplace right, or to exercise a workplace right in a particular way, namely to enter into an enterprise agreement with the Construction, Forestry, Mining and Energy Union or enter into an enterprise agreement with the Construction, Forestry, Mining and Energy Union on terms required by the Construction, Forestry, Mining and Energy Union.

4.    The second respondent committed one contravention of section 348 of the Fair Work Act 2009 (Cth) by organising and taking action at the Project, that action being organising and conducting two-hour union meetings between 9 May 2016 and 1 June 2016 and statements made by him during the period 9 May 2016 to 12 May 2016 to Hansen Yuncken Pty Ltd staff that Hansen Yuncken Pty Ltd had to sign an enterprise agreement with the Construction, Forestry, Mining and Energy Union, with intent to coerce Hansen Yuncken Pty Ltd to engage in industrial activity, namely to comply with a lawful request or requirement of the Construction, Forestry, Mining and Energy Union to enter into an enterprise agreement with the Construction, Forestry, Mining and Energy Union, or enter into an enterprise agreement with the Construction, Forestry, Mining and Energy Union on terms required by the Construction, Forestry, Mining and Energy Union.

5.    The third respondent committed one contravention of section 343 of the Fair Work Act 2009 (Cth) by organising and taking action at the Project, that action being the calling and conducting of two-hour union meetings between 9 May 2016 and 1 June 2016, with intent to coerce Hansen Yuncken Pty Ltd to exercise a workplace right, or to exercise a workplace right in a particular way, namely to enter into an enterprise agreement with the Construction, Forestry, Mining and Energy Union or enter into an enterprise agreement with the Construction, Forestry, Mining and Energy Union on terms required by the Construction, Forestry, Mining and Energy Union.

6.    The third respondent committed one contravention of section 348 of the Fair Work Act 2009 (Cth) by organising and taking action at the Project, that action being the calling and conducting of two-hour union meetings between 9 May 2016 and 1 June 2016, with intent to coerce Hansen Yuncken Pty Ltd to engage in industrial activity, namely to comply with a lawful request or requirement of the Construction, Forestry, Mining and Energy Union to enter into an enterprise agreement with the Construction, Forestry, Mining and Energy Union, or enter into an enterprise agreement with the Construction, Forestry, Mining and Energy Union on terms required by the Construction, Forestry, Mining and Energy Union.

THE COURT ORDERS THAT:

7.    (a)    Pursuant to s 546(1) of the Fair Work Act 2009 (Cth), the first respondent pay a penalty of $54,000 for its contraventions of ss 343 and 348 of the Fair Work Act 2009 (Cth) referred to in paragraphs 1 and 2 above.

(b)    Pursuant to s 546(1) of the Fair Work Act 2009 (Cth), the second respondent pay a penalty of $5,000 for his contraventions of ss 343 and 348 of the Fair Work Act 2009 (Cth) referred to in paragraphs 3 and 4 above.

(c)    Pursuant to s 546(1) of the Fair Work Act 2009 (Cth), the third respondent pay a penalty of $5,000 for his contraventions of ss 343 and 348 of the Fair Work Act 2009 (Cth) referred to in paragraphs 5 and 6 above.

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

REASONS FOR JUDGMENT

REEVES J:

Introduction and agreed matters

1    In Australian Building and Construction Commissioner v Construction, Forestry, Mining, and Energy Union [2017] FCA 157 (the liability judgment), I decided to make declarations against each of the respondents consistent with my reasons at [155]. Accordingly, I ordered the parties to make written submissions on the form that those declarations should take and the penalties that should be applied for the respondents’ contraventions of the Fair Work Act 2009 (Cth) (the FWA). Subsequently, I heard oral submissions on those questions. At the completion of oral submissions, there was a large number of issues that were no longer in contention and a limited number of issues that remained so. Of particular importance to the present exercise, the parties agreed upon the following matters:

(a)    the conduct involving the contraventions of ss 343 and 348 of the FWA is the same, so only one penalty may be imposed on each respondent for their contraventions of both those sections;

(b)    as at May and June 2016, the maximum penalties for contraventions of ss 343 and 348 of the FWA were:

(i)    60 penalty units, which equals $10,800 at $180 per penalty unit, for an individual; and

(ii)    300 penalty units, which equals $54,000 at $180 per penalty unit, for a body corporate.

2    There remain three issues that are in dispute between the parties for the purposes of this penalty judgment. They are:

(a)    the seriousness of the contraventions;

(b)    the number of contraventions committed by the Construction, Forestry, Mining and Energy Union (CFMEU), as distinct from its officials Mr Desmond and Mr Watson; and

(c)    the quantum of the pecuniary penalties to be imposed.

I will address these issues in the above order hereunder.

The seriousness of the contraventions

3    In assessing the seriousness of its contravening conduct, the CFMEU submitted that I should take account of the fact that the union meetings which its officials called and conducted at the Carrara project site were lawful in the sense that they were provided for in the union meeting clauses in the various structural subcontractor enterprise agreements (see the liability judgment at [7]–[9]). I do not accept this contention. In my view, it fails to appreciate the true nature of the CFMEU’s contravening conduct as outlined in the liability judgment. The essence of that conduct was not the act of calling and conducting the union meetings per se, but rather the manner in which those union meetings were employed to coerce Hansen Yuncken to exercise a workplace right and to engage in industrial activity in contravention of ss 343 and 348 of the FWA. Specifically, by calling and conducting two such meetings twice daily, each of a two hours duration; by staging those meetings during the working day at times that ensured that effectively no work was performed on the Carrara project site; and by continuing that pattern of calling and conducting those meetings for 17 work days. As I found in the liability judgment, it was that pattern of use of the union meeting clauses that constituted the tort of intentionally procuring breaches of contract and, therefore, the unlawful conduct element of coercion under ss 343 and 348. That pattern of use also underpinned my findings on the illegitimate conduct element (see the liability judgment at [121]–[123] and [153] respectively). The undisputed lawfulness of the union meeting clauses, themselves, did not, therefore, detract from the seriousness of the CFMEU’s contravening conduct. In reaching this conclusion, I have had regard to the whole of the contravening conduct of the CFMEU and its two officials, as discussed further below.

The number of contraventions

4    On the issue of the number of contraventions the CFMEU committed, the Commissioner contended that, since the conduct and state of mind of its officials, Mr Desmond and Mr Watson, is attributed to the CFMEU under s 793 of the FWA, that meant it had committed three contraventions, rather than one. That is, one contravention by its own conduct and two further contraventions, one each by the conduct and state of mind of Mr Desmond and Mr Watson.

5    To deal with the Commissioner’s contention, it is necessary to outline the way in which he advanced his liability case at trial. I begin by noting that, in the liability judgment, I identified the various provisions of the FWA upon which the Commissioner relied (at [36]–[41]). Initially, the Commissioner sought to establish that the CFMEU, as a corporate body, had contravened ss 343 and 348 by two separate courses: as a principal contravener within the terms of the text of those two sections; and vicariously relying upon s 793 of the FWA and the conduct and state of mind of its officials. Both of those courses were available to the Commissioner.

6    The principal contravener allegations against all three respondents were pleaded in paragraphs 57 and 58 of the Commissioner’s further amended statement of claim (FASC) (see the liability judgment at [42]). Before summarising the effect of those allegations, it is important to note that, at paragraph 2(b) and (c) of the FASC, the Commissioner pleaded that the CFMEU was “a ‘person’ within the meaning of that term in ss 343 and 348 of the FWA” and that it was a “body corporate by virtue of s 27 of the Fair Work (Registered Organisations) Act 2009 (Cth)”. Both of these allegations were admitted in the CFMEU’s defence.

7    These pleas are important because, stated compendiously, ss 343 and 348 of the FWA provide that “a person” must not “organise or take” action against another “with intent to coerce” that person to exercise, or not exercise, a workplace right. With respect to the word “person”, s 2C of the Acts Interpretation Act 1901 (Cth) provides that “expressions used to denote persons generally (such as “person” …) “include a body politic or corporate as well as an individual”. There is nothing in the text, context or purpose of ss 343, or 348, of the FWA that would justify the exclusion of a corporate person from the word “person” in those sections where a corporate body is acting as a principal through the agency of its officers or employees (see Hamilton v Whitehead (1988) 166 CLR 121 at 127, Hanley v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2000) 100 FCR 530; [2000] FCA 1188 at [51] per Ryan, Moore and Goldberg JJ, Director of the Fair Work Building Industry Inspectorate v Robinson (2016) 241 FCR 338; [2016] FCA 525 (Robinson) at [42], Fair Work Ombudsman v Australian Workers’ Union [2017] FCA 528 at [89] per Bromberg J and Australian Building and Construction Commissioner v McDermott (No 2) [2017] FCA 797 (McDermott) at [86]–[87] per Charlesworth J). Accordingly, ss 343 and 348 of the FWA provide that a body corporate such as the CFMEU may be held to be liable for a contravention of those sections as a principal contravener.

8    Returning to the FASC, paragraph 57 pleaded the contravening conduct of each of the CFMEU, Mr Watson and Mr Desmond and then it was alleged that (paragraph 58):

By reason of the matters pleaded in paragraph 57 hereof, the CFMEU, Desmond and Watson breached s.343 and s.348 of the [FWA].

9    To make out these allegations against the respondents, the Commissioner sought to rely upon the presumption in s 361(1) of the FWA. That presumption focused on the allegations set out above and applied “unless the person proves otherwise” (see s 361(1) set out at [41] of the liability judgment). However, as I recorded in the liability judgment (at [43]): “[n]either Mr Watson nor Mr Desmond gave any evidence at the trial and the CFMEU itself did not call any evidence”. Accordingly, from [43]–[51] of the liability judgment, I analysed the interaction between that choice and s 361, particularly as it related to the elements of the coercive conduct proscribed by ss 343 and 348 as illuminated in a number of authorities to which I referred. Then, at [52] of the liability judgment, I reached a series of conclusions about that interaction as it played out in this proceeding. The import of those conclusions (particularly the second, fifth and sixth) was that the combination of the allegations pleaded in paragraphs 57 and 58 of the FASC above and the presumption in s 361(1) of the FWA would make each of the three respondents – the CFMEU, Mr Watson, and Mr Desmond – individually liable for the contraventions of ss 343 and 348, should they fail to discharge their onus with respect to the third element as referred to in my sixth conclusion. That element was described at [50(c)] of the liability judgment, as follows: “in taking the action of calling and conducting the two hour union meetings, the pressure it applied to Hansen Yuncken was not unlawful, illegitimate or unconscionable.” In the end result, I concluded that the CFMEU (meaning, in this context, each of the three respondents: see liability judgment at [3]) failed to discharge that onus and thereby contravened ss 343 and 348 of the FWA (see liability judgment at [127] and [154]). Accordingly, I found that each of the three respondents contravened those two sections as a principal contravener (at [155] of the liability judgment).

10    The second course that was available to, and relied upon by, the Commissioner was to endeavour to fix liability on the CFMEU vicariously relying on s 793 of the FWA. With respect to that section, I noted in the liability judgment (at [40]) that “the Commissioner claimed that, as a body corporate, the CFMEU was liable for the conduct of its officials, Mr Watson and Mr Desmond, pursuant to s 793 of the FWA”. Section 793 provides:

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.

State of mind of a body corporate

(2)    If, for the purposes of this Act or the procedural rules, it is necessary to establish the state of mind of a body corporate in relation to particular conduct, it is enough to show:

(a)    that the conduct was engaged in by a person referred to in paragraph (1)(a) or (b); and

(b)    that the person had that state of mind.

Meaning of state of mind

(3)    The state of mind of a person includes:

(a)    the knowledge, intention, opinion, belief or purpose of the person; and

(b)    the person’s reasons for the intention, opinion, belief or purpose.

Disapplication of Part 2.5 of the Criminal Code

(4)    Part 2.5 of Chapter 2 of the Criminal Code does not apply to an offence against this Act.

Note:    Part 2.5 of the Criminal Code deals with corporate criminal responsibility.

(5)    In this section, employee has its ordinary meaning.

I interpose that s 363 of the FWA contains similar provisions to s 793, although the Commissioner did not expressly rely upon that section in this case.

11    In Robinson, Charlesworth J made an important point about the effect of s 793. Her Honour observed that it did not fix liability for a contravention on the body corporate concerned, but rather attributed the conduct and state of mind of its officers, employees and agents to the body corporate in the prescribed circumstances. Her Honour went on to observe that it was therefore necessary to pay close attention to the conduct and state of mind of the officers concerned to determine whether the body corporate had, by that attributed conduct and state of mind, committed the contravention as alleged. She said (at [48] and [50]):

48    … 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 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.

In this case the critical elements of the contraventions of ss 343 and 348 were the negation of choice and the use of unlawful, illegitimate or unconscionable conduct (see the liability judgment at [45]–[46]).

12    The particular allegations in the Commissioner’s FASC that sought to rely upon s 793 were the following (at paragraph 56):

The conduct of each of Desmond, Watson and Sutherland described at paragraphs 24, 26 to 29, 32 to 34, 39 to 48, 52 and 53 above was conduct which:

(a)    Was engaged in by an officer, employee or agent of the CFMEU;

(b)    Was engaged in within the scope of his actual authority on behalf of the CFMEU; and

(c)    Was engaged in within the scope of that person’s apparent authority on behalf of the CFMEU,

and thereby is taken to have been engaged in by the CFMEU by operation of section 793 of the [FWA].

13    Consistent with these allegations, the Commissioner had earlier pleaded in paragraphs 3 and 4 of his FASC that Mr Watson:

was at all material times:

(a)    an employee of Bosform Pty Ltd (Bosform);

(b)    from at least 1 May 2016, a delegate, or other representative, of the CFMEU;

(c)    in the premises set out in paragraph 3(b), an officer of the CFMEU within the meaning of sections 12 and 793 of the FW Act.

As well, he pleaded that Mr Desmond:

is and was at all material times:

(a)    an employee of the CFMEU;

(b)    an organiser of the CFMEU;

(c)    in the premises set out in paragraphs 4(a) and/or 4(b), an official, and therefore an officer, of the CFMEU within the meaning of sections 12 and 793 of the FW Act.

These allegations were admitted in the CFMEU’s defence.

14    It will be noted that Mr Sutherland’s conduct was expressly mentioned in paragraph 56 of the FASC above. It is therefore important to digress to note a number of things about that inclusion. First, Mr Sutherland was, as is mentioned in passing in the Commissioner’s FASC (at paragraph 24), the Assistant State Secretary of the CFMEU. Secondly, he was not named as a respondent party in this proceeding and, consequently, no reliance could have been placed on the presumption in s 361(1) with respect to his reasons, intentions or conduct. Thirdly, unlike with Mr Watson and Mr Desmond above, Mr Sutherland’s status as an officer, representative, or employee of the CFMEU was not expressly pleaded in the FASC. Fourthly, however, Mr Sutherland’s involvement in the events constituting the CFMEU’s contraventions of ss 343 and 348 was pleaded at a number of points throughout the FASC. In particular, his involvement in four conversations – one in person and three by telephone – which occurred on 11, 18, 20 and 24 May 2016. In this respect, it is important to note that the union meetings that were central to the CFMEU’s contraventions of ss 343 and 348 of the FWA were called and conducted between 9 May 2016 and 1 June 2016 (see the liability judgment at [23]). The pleading of those conversations in the FASC was as follows:

39.    On or about 11 May 2016, Baumann and Michael Vicenzino, Queensland Construction Manager of Hansen Yuncken (Vicenzino) met with Sutherland, at the offices of the CFMEU at Bowen Hills.

40.    During the course of the meeting referred to in the preceding paragraph, an exchange to the following effect occurred: Baumann said: The Draft CFMEU Agreement has been assessed by external parties engaged by Hansen Yuncken who advised that the Draft CFMEU Agreement included clauses that were non-compliant with the Building Code and that Hansen Yuncken were not able to proceed with a noncompliant collective agreement. Sutherland said: The wording of clause 41 is for the purpose of amending the agreement to enable contractors to bid for Government work. Baumann said: The communication meetings are inappropriate and disruptive. Sutherland did not respond.

41.    On or about 18 May 2016, Baumann had a telephone conversation with Sutherland.

42.    During the course of the telephone call referred to in the preceding paragraph, an exchange to the following effect occurred: Baumann said: Will the communication meetings cease if Hansen Yuncken execute the draft collective agreement? Sutherland said: I am not saying that.

43.    On 20 May 2016, Baumann and Vicenzino spoke by telephone with Sutherland.

44.    During the course of the telephone call referred to in the preceding paragraph, an exchange to the following effect occurred: Baumann said: We are reviewing your clause 41 and seeking external advice. The amended clause 41 does not address the concerns we have. The ongoing two-hour meetings are damaging to Hansen Yuncken, our client, stakeholders and subcontractors. They should cease while we are continuing discussions in good faith. Vicenzino said: Andy, please stop the 2 hour meetings, let’s talk. The subbies have had a gutful of this. Sutherland said: Our lawyers have advised that the amended clause 41 would enable building contractors to renegotiate a different collective agreement if it was determined that they could not bid for future government work. I’ll have to go and talk to others about this. I’ll get back to you. Sutherland made no response to Baumann’s statement concerning the two-hour meetings.

47.    On 24 May 2016 at approximately 4pm, Baumann, Vicenzino and Sutherland spoke by telephone.

48.    During the course of the telephone discussion referred to in the preceding paragraph, an exchange to the following effect occurred: Baumann said: The stoppages are receiving significant media attention. Let’s stop the 2 hour meetings, get back to work and promote a message that the CFMEU and Hansen Yuncken are progressing towards a mutually acceptable agreement. Sutherland said: I am in Darwin at present together with Michael Ravbar. I’ll have to discuss with him and get back to you, but I don’t know. Baumann or Vicenzino said: That would be appreciated as the stoppages are really hurting all parties and it’s unfair to continue the current actions.

As can be seen from paragraph 56 of the FASC above, all of the above paragraphs describe conduct which the Commissioner sought to attribute to the CFMEU under s 793. I will return to the significance of Mr Sutherland’s role later in these reasons.

15    Having outlined how the Commissioner pleaded his case that the CFMEU had contravened ss 343 and 348 by means of the second course, it is necessary to return to the way in which these two courses were pursued, or not pursued, at the trial of this matter. As I have already mentioned above, because of the application of the presumption in s 361(1) of the FWA and the forensic choice the three respondents made not to call any evidence to attempt to displace that presumption, the Commissioner was ultimately able to establish that the CFMEU, as a corporate body, and Mr Watson and Mr Desmond had all contravened ss 343 and 348 as principal contraveners. Namely by the first course that was available to him. In that process, it was not necessary to analyse the reason or intent that Mr Watson or Mr Desmond had as individuals, or which the CFMEU itself had, when they variously engaged in the conduct constituting the contraventions. In the unusual forensic circumstances that emerged at the trial of this matter, the operation of the presumption in s 361(1) of the FWA therefore resulted in the conduct and state of mind of the CFMEU and its two officials being considered together as a whole. Furthermore, since those three persons were found to be principal contraveners, there was no necessity to consider the Commissioner’s reliance on s 793 of the FWA to fix liability on the CFMEU vicariously by reason of the conduct and state of mind of its officials (see the liability judgment at [52]: third conclusion).

16    It can therefore be seen that the trial of this matter was conducted solely on the Commissioner’s primary case and that resulted in the CFMEU being found liable as a principal contravener. It follows that, by raising this issue at this stage of this proceeding, the Commissioner is effectively contending that the Court should now embark upon his undetermined alternative case for the sole purpose of visiting an additional penalty on the CFMEU. For the reasons that follow, I do not consider this is a course that should, or could, be adopted.

17    In the first place, since the liability trial in this matter is complete, the Commissioner’s proposal would essentially require me to now conduct a hypothetical trial on the Commissioner’s alternative case. In my view, that course would constitute an extraordinary waste of resources, both public and private. It would be akin to conducting a hypothetical trial for the sole purpose of determining costs in a proceeding, an approach which courts have generally rejected as wasteful (see Ann Street Mezzanine Pty Ltd v KPMG [2011] FCA 453 at [24] per Kenny J and the cases there cited).

18    But apart from being wasteful, there is another equally compelling reason why the Commissioner’s proposal cannot be adopted. It arises from the observations of Charlesworth J in Robinson (see at [11] above). If the course now contended for by the Commissioner were to be taken, that would require an assessment of the conduct and state of mind of Mr Watson and Mr Desmond to determine whether, if that conduct and state of mind were attributed to the CFMEU, it would be sufficient to establish all of the elements of a contravention by it of ss 343 and 348 of the FWA, namely the negation of choice and the use of unlawful, illegitimate or unconscionable conduct. There is a number of reasons why that assessment is neither feasible nor possible.

19    First, as I have endeavoured to explain above, because of the operation of the presumption in s 361 of the FWA and the peculiar forensic circumstances that emerged at the trial of this matter, it was unnecessary to examine the conduct and state of mind of Mr Watson and Mr Desmond separately from the conduct of the CFMEU. Nonetheless, if the Commissioner’s proposed course were to be adopted, Robinson demonstrates that that examination would be required. To attempt that exercise at this stage of this proceeding would be very difficult, if not impossible. Secondly, even if their conduct and state of mind could now be separated for the purposes of that assessment, that process would be unlikely to establish all of the critical elements of the contraventions of ss 343 and 348. That is so because Mr Watson’s and Mr Desmond’s main involvement in those contraventions was to call and conduct the union meetings between 9 May 2016 and 1 June 2016. However, as I have already mentioned above in dealing with the seriousness of the CFMEU’s contravening conduct (see at [3]), it was not the calling and conduct of those union meetings per se that comprised the unlawful and illegitimate conduct elements of the contraventions. Rather it was the pattern in which those meetings were called. This is important because, based on the evidence called at the trial, that pattern was most likely to have been devised by someone in a position of authority in the CFMEU hierarchy, above Mr Watson and Mr Desmond, both of whom were the CFMEU’s local officials at the Carrara project site. That being so, if the conduct and state of mind of Mr Watson and Mr Desmond were to be attributed to the CFMEU, it would most likely be insufficient, by itself, to establish all of the necessary elements of the contraventions. Which brings me to the involvement of Mr Sutherland. As I have already observed above, the Commissioner’s pleaded case on s 793 placed particular reliance on Mr Sutherland’s involvement in the events of May 2016. Because of the way in which the Commissioner’s primary case was determined, it was unnecessary to consider that involvement, associated, as it was, with the Commissioner’s alternative case relying on s 793. However, if the Commissioner’s alternative case were now to be considered, the matters mentioned above demonstrate why Mr Sutherland’s role would become quite significant. Some of the difficulties associated with attempting to examine his role at this late stage of the proceeding have already been outlined above (see at [14]). It is difficult to see how those difficulties could be overcome. For instance, overcoming Mr Sutherland’s non-party status, or the lack of any pleading in the FASC about his status as an employee or officer of the CFMEU. In any event, the Commissioner has not sought to attempt to address either of these matters.

20    So, having regard to all the complications outlined above, I do not consider it is appropriate, or even possible, to now attempt to embark upon a consideration of the Commissioner’s alternative case for the purposes of this penalty judgment. Instead, I consider the only sensible and feasible approach is that taken in the liability judgment. That is, to treat the CFMEU’s contraventions of ss 343 and 348 as one whole contravention relying, in part only, on the conduct of Mr Watson and Mr Desmond.

21    It is worth adding that, even if it had been appropriate, or possible, to adopt the course proposed by the Commissioner, it is likely that it would have resulted in the same outcome as I have come to above. I say that because Charlesworth J took a course similar to that proposed by the Commissioner and reached a similar conclusion to that above in Robinson, albeit with respect to a different provision of the FWA (s 417). The contravening conduct at issue in Robinson occurred at two separate meetings on the same day as a result of which a group of employees failed to attend work. Section 417 relevantly provided that a person must not “organise or engage in industrial action” in those circumstances. As has already been mentioned above, her Honour found that this section attached liability to the CFMEU as a principal contravener (Robinson at [42]), however, a question arose in Robinson whether the CFMEU had committed two contraventions because of the operation of s 793 (see Robinson at [43]). On this question, her Honour examined the CFMEU’s conduct “as a whole” and concluded that it organised a single instance of industrial action and had therefore committed one contravention (see Robinson at [52] and [54]).

22    Furthermore, Jessup J took a similar approach in The Yarra’s Edge Case. That matter also involved a contravention of s 417 of the FWA. The circumstances of the contravention and the conclusion his Honour reached about there being only one contravention appears from the following observations:

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

23    Three other recent cases are also worth mentioning on this aspect. In Australian Building and Construction Commissioner v Harris [2017] FCA 733 (Harris), Siopis J dealt with a contravention of s 500 of the FWA which relevantly concerns a “permit holder” rather than a person (as to which see further at [23] below). On the issue of the number of contraventions, his Honour cited Robinson and The Yarra’s Edge Case above and concluded that, in the circumstances of that matter, there had only been one contravention by the CFMEU (see Harris at [51]). On the other hand, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 3) [2017] FCA 10 (CFMEU (No 3)), Besanko J considered Robinson and The Yarra’s Edge Case (at [31]–[35]) together with a number of decisions upon which the Commissioner relied (see at [36]) and concluded that, since two separate threats had been made, that justified his Honour finding that two distinct contraventions had been committed (see at [37] and [39]).

24    Finally, in McDermott, Charlesworth J dealt with a contravention of s 500 of the FWA which, like ss 343 and 348, is a civil remedy provision. However, that provision applies to a permit holder, rather than a person. This gave rise to the question whether the CFMEU, as a corporate body, could be held to have contravened that provision. Relying upon the decision of Siopis J in Harris, Charlesworth J concluded that it could not. However, in the course of her reasons (at [9]), her Honour noted that s 545 of the FWA allowed this Court to make such order as it considers appropriate if it is satisfied that “a person” has contravened a civil remedy provision. Her Honour then conducted a detailed and comprehensive examination of the differences between fixing liability for a contravention on a principal contravener, and establishing liability for a contravention vicariously under s 793, or as an accessory under s 550. Apart from citing the following observation, it is unnecessary, for the purposes of this issue, to review her Honour’s reasons on those questions. At [88], however, her Honour made the following pertinent observations about the operation of s 545 of the FWA:

I have already observed that Section 545 of the Act empowers the Court to grant certain remedies if satisfied that a person “has contravened” a civil remedy provision. The words “has contravened” to my mind indicate that the person in question must be shown to have actually (or otherwise deemed to have actually) contravened the prohibition in question. For an example of a deeming provision, see s 550 of the Act, extracted at [94] below. The text of s 545 tends against an outcome where a permit holder may pay a penalty for his or her contravention and a registered organisation also pay a penalty in respect of liability that is truly vicarious in its nature, rather than direct or deemed to be direct.

The observation in the last sentence is important in this matter. That is so because the deeming provision in s 550 of the FWA is similar in its effect to the presumption in s 361, albeit that it applies to the whole contravention rather than particular elements of it. However, importantly, it is to be contrasted with the provisions of s 793, which, as is noted above, does not fix any liability for the contravention on the body corporate concerned.

25    For these reasons, I reject the Commissioner’s contention that the CFMEU should, in the particular circumstances of this matter, be found to have committed more than one contravention of each of ss 343 and 348 of the FWA.

The appropriate pecuniary penalties

26    Having dealt with these two issues, I now turn to the third issue, which is the central issue to be determined in this penalty judgment: the appropriate pecuniary penalties to be imposed on the respondents for their contraventions. It is convenient to begin by briefly outlining some relevant legislative provisions and the principles relevant to this exercise.

Some relevant legislative provisions

27    Section 546(1) of the FWA confers a broad discretion on the Court to impose pecuniary penalties for contraventions of civil remedy provisions such as ss 343 and 348. Under that section, the Court may impose such penalty as it “considers is appropriate”. This discretion must, of course, be exercised judicially and not arbitrarily.

28    At [1(b)] above, I have set out the agreed maximum penalties for the contraventions in this matter.

The relevant principles

29    As to the relevant principles, I can be brief because, in Director of The Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 353 at [66]–[73], Tracey J conveniently summarised those principles as follows (citations omitted):

(a)    at [66], the task of the court is to ensure that any penalty which is imposed is proportionate to the gravity of the contravening conduct;

(b)    at [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;

(c)    at [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;

(d)    further, at [68], the ultimate penalty “must be proportionate to the offence and in accordance with the prevailing standards of punishment”;

(e)    at [69], consistency requires that “[l]ike cases should be treated in like manner”. However, this 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;

(f)    at [70], it is also necessary to ensure that a respondent is not punished twice for the same conduct;

(g)    at [71], the above 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;

(h)    and finally at [72], 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. A consequence of the application of the principle is that the aggregate penalty may be reduced if it is considered to be too great.

30    To the above may be added some observations that were made in the more recent decisions of the High Court in Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; [2015] HCA 46 and the subsequent, and related, decision of the Full Court of this Court in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 53 (CFMEU 2017). Pertinently, in the former decision, the High Court adopted (at [55]) the following observations of French J in Trade Practices Commission v CSR Limited (1991) ATPR ¶41-076 at 52,152 to underscore the protective and deterrent purpose of a civil penalty (at [40]):

Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act] … The principal, and I think probably the only, object of the penalties imposed by s.76 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 the Act.

(Emphasis added)

31    An element of the deterrent object of civil penalties is the need to fix a penalty which is not “regarded by [the] offender or others as an acceptable cost of doing business” (see Construction, Forestry, Mining and Energy Union v Decmil Engineering Pty Ltd (No 2) [2017] FCA 1237 (Decmil) at [38] per Tracey J and the cases there cited).

32    Finally, in CFMEU 2017, the majority of the Full Court (Dowsett and Rares JJ) made the following observation which is particularly pertinent to the contravening conduct at the centre of this matter (at [97]):

… It is important to recognise that coercion is a particularly serious form of industrial (mis)conduct. If more principal actors are involved in unlawful coercion, there is a potentially greater impact on the target. Of course, all will depend on the facts.

To similar effect, see also Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2016] FCA 1225 at [79] per Collier J.

Three factors of particular significance

33    Before expressing what I consider to be the appropriate penalties to be imposed on each of the respondents, I will highlight three factors to which I have had particular regard in assessing the appropriate penalty to be imposed on the CFMEU. They are: the CFMEU’s prior contraventions of a similar kind; the deliberateness of its contraventions; and the absence of any contrition.

Prior contraventions

34    First, it was agreed that neither Mr Watson nor Mr Desmond has been found to have committed any contraventions of the FWA in the past. However, it is a notorious fact that the CFMEU has. The Commissioner provided a schedule of many, but not all, of those prior contraventions, as they applied to coercion, or related or similar offences. That schedule shows that, in relation to coercion or related offences, the CFMEU has committed 23 contraventions since 2010; and 11 since 2013. Similar figures have been presented to courts in recent penalty judgments involving the CFMEU: see, for example, Decmil at [26]–[27].

35    Prior contraventions, however, are not to be used to punish an offender again for prior misconduct (The Queen v McInerney (1986) 42 SASR 111 at 113 and Veen v The Queen (1988) 164 CLR 465 at 477). However, as Tracey J observed in Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 1213 at [63], an offender’s:

… continued willingness to engage in contravening conduct supports the view that earlier penalties, some of them severe, had not had a deterrent effect: cf Veen v R (No 2) (1988) 164 CLR 465 at 477-8. The longer such recidivism continues the more likely it is that this consideration will carry greater weight than the principle that the maximum available penalty must be reserved for the worst possible offending.

36    Accordingly, the Commissioner’s schedule of prior contraventions is to be used in a limited way, not to make a detailed factual comparisons between past decisions and the present one, but “to offer informed submissions as to the effects of contravention on the industry and the level of penalty necessary to achieve compliance” (see The Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; [2015] HCA 46 at [60]).

37    The CFMEU’s status as a “recidivist offender” and the consequential need for specific deterrence was the subject of the following recent observations by Flick J in Australian Building and Construction Commissioner v Parker (No 2) [2017] FCA 1082 (at [31]–[32]):

31    … The CFMEU assumes a prominent role in the industrial affairs of this country and has consistently exhibited a contempt for compliance with the law. The conduct of its officers and employees has consistently shown a total contempt for the rights of occupiers and a total contempt for the constraints imposed by the law. It is difficult to perceive how such conduct can be regarded as in the best interests of the bulk of its members and the workers it supposedly represents. Such conduct may promote the CFMEU as a “militant” union. But the constraints imposed by the law apply to all – including the CFMEU.

32    … The prior imposition of penalties – some nearing the maximum – against the CFMEU has not deterred it from engaging in clearly unlawful industrial action. … The CFMEU’s conduct exposes a cavalier disregard for the prior penalties imposed by this Court and exposes the fact that such prior impositions of penalties have failed to act as a deterrent against further unlawful industrial action.

See also Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2016] FCA 436 per Mortimer J at [140]; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (the Webb Dock case) [2017] FCA 62 at [65] per Jessup J; and CFMEU 2017 at [83]–[84] and [99]–[101] per Dowsett and Rares JJ.

38    For all these reasons, I consider there is a heightened need to include an element of specific deterrence in the penalty to be imposed on the CFMEU in this matter.

The deliberateness of the conduct

39    On this factor, it will suffice to refer to the findings I made in the liability judgment (at [123]) as follows:

… I find that both the pattern in which the two hour union meetings were called and their duration was a part of a deliberate strategy by the CFMEU to divert the structural subcontractors’ employees from performing the work on the Carrara project site that was essential to the performance of the structural subcontractors’ contracts with Hansen Yuncken. Further, I find that, to reinforce this strategy, the CFMEU persisted in calling and organising union meetings with the same pattern and duration after 11 May 2016 for a further 14 work days with the deliberate intention of procuring the structural subcontractors’ withdrawal from the Carrara project site and thereby effectively bringing about a complete cessation of work at that site.

(Emphasis added)

The deliberateness of the CFMEU’s conduct in the events of May 2016 at the Carrara Sports Project significantly compounds the seriousness of their contraventions and is a particular factor which I intend to have regard to in fixing the appropriate penalty to be imposed on it.

The lack of contrition

40    In his written submissions, the Commissioner drew attention to the lack of contrition on the part of the CFMEU as a matter which I should take into account in fixing the penalty to be imposed on it. In particular, he submitted that:

Right up until the close of the Applicant’s case at trial, the First Respondent had run a positive defence. It had filed (but ultimately not read at trial) affidavits. It had pleaded a defence alleging that the meetings were genuine meetings called to discuss a number of matters relevant to the workforce. It was not until after the close of the Applicant’s case at trial that it abandoned that positive case. It instead ran a case that rather than the meetings being for some legitimate purpose at pleaded at paragraph 35 of its defence, the Union was perfectly entitled to use the meeting clauses in a way to put “maximum pressure” on Hansen Yuncken.

41    I agree with the thrust of these submissions and I will therefore also reflect the CFMEU’s lack of contrition in the penalty which I will impose on it.

The penalties contended for

42    Both the Commissioner and the CFMEU proposed a range of penalties which they contended was appropriate for the contraventions in this matter. With respect to the CFMEU, the Commissioner contended that the penalties to be imposed should be close to, if not at, the maximum penalty allowed, namely in the range of $50,000 to $54,000. In response, the CFMEU submitted that its penalty should be in the moderate range of approximately $40,000. With respect to the two individuals – Mr Desmond and Mr Watson – the Commissioner submitted that the penalty to be imposed should be in the range of $4,000 to $6,000. In response, the CFMEU submitted that their penalty should be set at $2,500.

Only one penalty for each contravention

43    Finally, I should reiterate the agreement I recorded at the outset of these reasons that only one penalty is to be imposed for each respondent’s contraventions of both ss 343 and 348 of the FWA. Further, since I have rejected the Commissioner’s contention with respect to the CFMEU having committed two further contraventions, I will only impose one penalty on each of the three respondents. This outcome obviates the necessity to consider the proportionality principle.

Conclusions

44    To sum up, with respect to the CFMEU, this was a very serious instance of coercive conduct which is, itself, a serious contravention of the FWA. It was deliberate and it was repeated over a relatively long period: 17 work days in all. It continued after its immediate unlawful effect was achieved, namely, the withdrawal of the structural subcontractors’ workers from the Carrara project site. It was only brought to an end when the Commissioner obtained an interim injunction order at the beginning of this proceeding. The coercive conduct caused significant damage to Hansen Yuncken. As I recorded in the liability judgment, Mr Vicenzino estimated that the total cost impact for Hansen Yuncken was over $700,000 (liability judgment at [28]). Despite all this, there has been no indication of any contrition on behalf of the CFMEU. The CFMEU’s attempt to diminish the seriousness of the contraventions has been rejected (see at [3] above). No other factors have been advanced which could act to ameliorate the penalty.

45    In addition to reflecting all these factors in the CFMEU’s penalty, I consider there is a particular need to reflect specific and general deterrence in its penalty. As to the former, the history of contraventions by the CFMEU highlighted above requires a penalty that forces it to stop using such coercive conduct as a business model and the resulting penalty as a cost of doing business. On the latter, there is a need to include an element of deterrence, to impress on others in the industry that such conduct will not be tolerated by the Courts.

46    Having regard to the combined weight of all of these factors, I consider it is necessary to take the unusual step, in this matter, of fixing the CFMEU’s penalty at the maximum penalty of $54,000.

47    In relation to the two individuals, Mr Desmond and Mr Watson, their role in the contraventions was less significant. They also do not have a history of prior convictions. I, therefore, broadly agree with the Commissioner’s submissions and consider that a penalty of $5,000 is appropriate to impose on each of them.

48    Finally, I consider it is appropriate to make the declarations sought by the Commissioner. The educative value of declarations in these circumstances has been remarked on frequently by the Courts: see, most recently, Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [93] per Dowsett, Greenwood and Wigney JJ.

49    I therefore propose to make orders consistent with these reasons for judgment.

Associate:    

Dated:    27 October 2017