FEDERAL COURT OF AUSTRALIA

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The Quest Apartments Case) (No 2) [2018] FCA 163

ORDERS

THE COURT DECLARES THAT:

1.    The Second Respondent, an officer of the First Respondent acting in that capacity for the purposes of s 363(1)(b) of the Fair Work Act 2009 (Cth) (“the FW Act”), contravened:

(a)    s 349(1)(a) of the FW Act when, on 17 March 2014, during the course of an induction session held at the Quest Apartments site at Tullamarine, Melbourne in Victoria (“the Site”), he knowingly made a false representation about the obligation of Mr Zivislav Matic and Mr Iraj Hani to engage in industrial activity within the meaning of s 347(b)(vi) by paying fees to the Construction, Forestry, Mining and Energy Union (“the CFMEU”) in order to work on the Site;

(b)    s 348 of the FW Act when, on 17 March 2014, during the course of an induction session held at the Site, he threatened to prevent Mr Matic from working on the Site, with intent to coerce him to engage in industrial activity within the meaning of s 347(b)(vi) by paying a fee to the CFMEU in order to work on the Site;

(c)    s 348 of the FW Act when, on 31 March 2014, he took action against Mr Matic by preventing him from working on the Site and directing him to leave the Site with intent to coerce him to engage in industrial activity within the meaning of s 347(b)(vi) by paying a fee to the CFMEU in order to work on the Site;

(d)    s 346(b) of the FW Act when, on 17 March 2014, during the course of an induction session held at the Site, he took adverse action against Mr Matic within the meaning of s 342, by threatening to prevent him from working on the Site and thereby prejudicing him in his employment or in relation to his performance of a contract for services, because he had engaged in industrial activity within the meaning of s 347(b)(vi) by not paying a fee to the CFMEU;

(e)    s 346(b) of the FW Act when, on 31 March 2014, he took adverse action against Mr Matic within the meaning of s 342, by preventing him from working on the Site and directing him to leave the Site, and thereby prejudicing him in his employment or in relation to his performance of a contract for services, because he had engaged in industrial activity within the meaning of s 347(b)(vi) by not paying a fee to the CFMEU.

2.    By the conduct of the Second Respondent in the previous declaration and by operation of ss 363(1)(b), 363(3) and 793 of the FW Act, the First Respondent contravened:

(a)    s 349(1)(a) of the FW Act when, on 17 March 2014, during the course of an induction session held at the Site, it knowingly made a false representation about Mr Matic’s and Mr Hani’s obligations to engage in industrial activity within the meaning of s 347(b)(vi) by paying fees to the CFMEU in order to work on the Site;

(b)    s 348 of the FW Act when, on 17 March 2014, during the course of an induction session held at the Site it threatened to prevent Mr Matic from working on the Site, with intent to coerce him to engage in industrial activity within the meaning of s 348(b)(vi) by paying a fee to the CFMEU in order to work on the Site;

(c)    s 348 of the FW Act when, on 31 March 2014, it took action against Mr Matic by preventing him from working on the Site and directing him to leave the Site with the intent to coerce him to engage in industrial activity within the meaning of s 347(b)(vi) by paying a fee to the CFMEU in order to work on the Site;

(d)    s 346(b) of the FW Act when, on 17 March 2014, during the course of an induction session held at the Site, it took adverse action against Mr Matic within the meaning of s 342, by threatening to prevent him from working on the Site and thereby prejudicing him in his employment or in relation to his performance of a contract for services, because he had engaged in industrial activity within the meaning of s 347(b)(vi) by not paying a fee to the CFMEU;

(e)    s 346(b) of the FW Act when, on 31 March 2014, it took adverse action against Mr Matic within the meaning of s 342, by preventing him from working on the Site and directing him to leave the Site and thereby prejudicing him in his employment or in relation to his performance of a contact for services, because he had engaged in industrial activity within the meaning of s 347(b)(vi) by not paying a fee to the CFMEU.

THE COURT ORDERS THAT:

3.    The Second Respondent pay the following pecuniary penalties:

(a)    a penalty of $4,000 in respect of his contravention of s 348 of the FW Act referred to in paragraph 1(b) above; and

(b)    a penalty of $6,000 in respect of his contravention of s 348 of the FW Act referred to in paragraph 1(c).

4.    The First Respondent pay the following pecuniary penalties:

(a)    a penalty of $45,000 in respect of its contravention of s 348 of the FW Act referred to in paragraph 2(b) above; and

(b)    a penalty of $50,000 in respect of its contravention of s 348 of the FW Act referred to in paragraph 2(c).

5.    The pecuniary penalties referred to in paragraphs 3 and 4 above be paid to the Commonwealth of Australia within 28 days of these orders being made by the Court.

6.    The proceeding otherwise be dismissed.

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

REASONS FOR JUDGMENT

TRACEY J:

1    In November 2017, in a proceeding brought by the Australian Building and Construction Commissioner (“the Commissioner”), I found that the second respondent, Mr Godwin Farrugia, had contravened various provisions of the Fair Work Act 2009 (Cth) (“the Act”) and that the first respondent, the Construction, Forestry, Mining and Energy Union (“the CFMEU”) was also liable for these contraventions by operation of ss 363 and 793 of the Act: see Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The Quest Apartments Case) [2017] FCA 1398 (“the liability judgment”).

2    These reasons should be read in conjunction with the liability judgment.

3    The contraventions arose from attempts, by Mr Farrugia, to enforce a “no ticket no start” regime on a large construction site in Tullamarine. On 17 March 2014 two workers, Mr Zivislav Matic and Mr Iraj Hani, attended the site with a view to undertaking painting work. They were engaged by a painting sub-contractor, Arteam Pty Ltd (“Arteam”). The owner and sole director of Arteam was Mr Michael Hanna.

4    The two workers were required to attend an induction conducted by Mr Farrugia in his joint capacities as a health and safety officer employed by the head contractor and as the CFMEU’s representative or “shop steward” on site. Both workers produced CFMEU membership cards to Mr Farrugia. Those cards disclosed that both workers had been financial members of the CFMEU but, before 17 March 2014, they had fallen into arrears with their subscriptions.

5    Mr Farrugia told both workers, in substance, that the Tullamarine site was a “union site” and that he would not permit them to work on the site unless they had rectified their arrears. He told one worker that he had two days’ grace to make good his arrears and the other was accorded two weeks. Both worked on the site on 17 March 2014.

6    In the liability judgment I found that this conduct by Mr Farrugia contravened ss 349(1)(a) of the FW Act (knowingly making a false representation), 348 (threatening to take action against another person with intent to coerce the person) and 346(b) (threatening to take adverse action against another person).

7    Both workers returned to the site on 31 March 2014. Mr Matic had not made good his arrears and decided that he was under no legal obligation to do so in order to perform work on the site. Mr Farrugia told him that he would not be permitted to enter and work on the site and directed him to leave the site.

8    This conduct led to a finding that Mr Farrugia had contravened both ss 348 and 346(b) of the Act.

9    The CFMEU was deemed by the Act to also have contravened these provisions. Its liability was co-extensive with that of Mr Farrugia: see ss 363 and 793.

10    The parties filed written submissions on the penalties which should be imposed by the Court. Oral submissions were made at a hearing on 5 February 2018.

DECLARATIONS

11    The Commissioner proposed that the Court should make a series of declarations to reflect and explain its findings in the liability judgment.

12    Subject to some suggested amendments, the respondents did not oppose the making of the proposed declarations.

13    There can be no doubt that the Court may grant declaratory relief in appropriate circumstances: see s 21(1) of the Federal Court of australia Act 1976 (Cth).

14    It is appropriate for the Court, in its discretion, to grant declaratory relief in such cases as the present: see Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 1213 at [6] and [7] (Tracey J). In particular, declarations which are precisely framed and based on facts found by the Court, serve the educative purpose of making clear that identified conduct contravenes specific provisions of the Act.

15    The first amendment proposed by the respondents was agreed to by the Commissioner. It involved the deletion of the words “a shop steward and” when describing the status of Mr Farrugia in the prefatory words of declaration 1.

16    The second amendment, proposed by the respondents, involved a variation of the description of the offending conduct, by Mr Farrugia, on 31 March 2014. The Commissioner described that conduct as “preventing [Mr Matic] from working”. It was submitted that the words “directing him to leave the Site” should be substituted. In my view the two acts are related but different. Consistently with my findings at [74], [75], [82] and [89] of the liability judgment I consider that the relevant declarations should refer to both acts. The declarations which are amended in this way appear in paragraphs 1(c), 1(e), 2(c) and 2(e).

PECUNIARY PENALTIES

Maximum available penalties

17    At the time at which the various contraventions occurred the maximum penalties for each contravention by the CFMEU was $51,000. The maximum penalty which could be imposed on an individual, such as Mr Farrugia, was $10,200 for each contravention. See s 546(2) and item 11 in s 539(2) of the Act. A penalty unit was, at the relevant time, valued at $170: see Crimes Act 1914 (Cth) s 4AA(1); s 12 of the Act.

Number of penalties to be imposed

18    It is next necessary to determine the number of penalties which should be imposed on each of the respondents.

19    The Commissioner proposed that a single penalty should be imposed on Mr Farrugia for contraventions of s 348 of the Act in respect of his contravening conduct on 17 March 2014 and that a second penalty be imposed for his conduct on 31 March 2014 which also contravened that section. Additional penalties for the contraventions of ss 346 and 349 of the act were not warranted given that those contraventions had arisen out of the same conduct and because of the provisions of s 556 of the Act. The CFMEU’s deemed liability for the conduct of Mr Farrugia meant that it should be penalised for contraventions of s 348 of the Act on each of the two days.

20    The Commissioner, relying on dicta in the judgment of Ryan J in Canturi v Sita Coaches Pty Ltd (2002) 116 FCR 276 at 298; [2002] FCA 349 at [84], submitted that it was open to him to elect to apply for penalties for contraventions of s 348 in preference to other provisions which had also been contravened.

21    The respondents did not oppose the imposition of single penalties for multiple contraventions of the Act arising from the same conduct.

22    Section 556 of the Act provides:

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

23    The section is enlivened even if the constituent elements of the contraventions are not the same. What is critical is that the contraventions arise out of the same particular conduct by a respondent. In Australian Building and Construction Commissioner v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (The Australian Paper Case) (No 2) [2017] FCA 367 at [40] Jessup J said that:

The better view is that the reference to “particular conduct” in s 556 is to what the person actually did, with all of its attributes and in its whole context. If that conduct gives rise to liability to penalty under two or more provisions, the section is, in my view, engaged. In the present case, the conduct of the workers who took the industrial action attracted liability under s 417(1) and under s 421(1). It is true that, additionally to that conduct, there were adjectival elements the presence of which were necessary ingredients of the provisions respectively, and that these elements differed as between the two (the in-term agreement under s 417(1) and the Commission’s order under s 421(1)), but, as it happened, both were in fact present on 31 March 2014 and both gave legal consequences to what the workers actually did. In my view, s 556 would stand in the way of penalties being imposed on the workers themselves under both sections, and the same applies where others, such as the organisers, were deemed to have contravened because of their involvement in that very conduct.

See also: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (the Webb Dock case) [2017] FCA 62 at [74] (Jessup J); Australian Building and Construction Commissioner v Pauls [2017] FCA 843 at [18], [41] (Rangiah J); Australian Building and Construction Commissioner v Huddy (No 2) [2017] FCA 1088 at [54]-[59] (White J).

24    The same maximum penalty applies for contraventions of ss 346, 348 and 349(1). As I understood the Commissioner’s argument, his invitation to the Court to proceed only to impose penalties for the breaches of s 348 was because he considered that coercion was to be treated more seriously than the conduct which was proscribed by the other provisions. There may well be cases in which coercive conduct might be adjudged to be objectively more serious than, for example, making false and misleading statements. Nothing turns on such a distinction in the present circumstances because the legislature has attached the same maximum penalties to each of ss 346, 348 and 349, thereby treating them as equally serious.

25    There remains the question of whether the Court, in fixing penalties for contravention of one section of the Act, may also have regard to aspects of the respondents’ conduct which gave rise to additional contraventions but which were not essential to establishing the contravention on which the Commissioner had elected to proceed.

26    In Canturi Ryan J considered two provisions of the Workplace Relations Act 1996 (Cth). Both provided for the same maximum civil penalties to be imposed when the same conduct gave rise to contraventions of two separate provisions. There was no provision in that Act equivalent to s 556 at the time of the judgment in Canturi. Nonetheless, his Honour held that penalties could not be imposed under both provisions because this would give rise to double jeopardy. His Honour therefore determined to impose a single penalty “nominally” in respect of one of the two provisions. He went on to observe (at 299 [86]):

However, that is not to say that were a single fine is to be imposed for an act or series of acts contravening two different provisions, regard may not be had to each provision to discern how gravely the legislature viewed a contravention of it.

27    More recently, in a decision which was, apparently, not cited to Jessup J, McKerracher J considered the operation of s 556 of the Act where the same conduct had given rise to contraventions of both provisions of the Act and the Building and Construction Industry Improvement Act 2005 (Cth) (“the BCII Act”): see United Group Resources Pty Ltd v Calabro (No 7) (2012) 203 FCR 247; [2012] FCA 432. His Honour considered it appropriate to impose a single penalty for the contraventions. He said (at 276 [84]) that:

Imposing a single penalty on a respondent under s 38 of the BCII Act, the Court has regard to the overall conduct of each individual respondent including the fact that the industrial action in which the respondent engaged in contravention of s 38 of the BCII Act also constituted one or two contraventions of the FW Act. A similar approach was taken by Burchett J in Trade Practices Commission v TNT Australia Pty Ltd (Express Freight case) [1995] ATPR 41-375 at [20] in which his Honour held that it was appropriate to select certain only of the contraventions for the imposition of penalties, taking into others into account, but not imposing separate penalties in respect of them. A similar approach was also taken by Mansfield J in Australian Competition and Consumer Commission v Rural Press Ltd [2001] ATPR 41-833 at [16]-[17] and Finkelstein J in ABB Transmission and Distribution Ltd (No 2) at [38].

28    I accept that, having regard to these authorities, s 556 operates in the circumstances of the present case. The consequence is that multiple penalties may not be imposed in respect to Mr Farrugia’s conduct on each of the two days. The appropriate course is to impose one penalty in respect of his conduct on each day. In each case the penalty will be imposed for a contravention of s 348 of the Act. In assessing the quantum of the penalties I will have regard to the whole of the conduct even though all elements of it may not be necessary to make good the adverse findings which have been made in relation to s 348.

The nature and the extent of the contravening conduct

29    Mr Farrugia’s impugned acts on both 17 and 31 March 2014 were directed to enforcing a “no ticket no start” regime on the site. They involved the making of threats and false representations to the two workers. They were told, in substance, that, unless they paid their arrears in subscriptions within a relatively short period, they would not be allowed to work on the site. When one of the workers failed to comply with the demand he was told by Mr Farrugia that he could not work on the site and was directed to leave.

30    Mr Farrugia well knew that the Act proscribed such conduct. Yet he arrogated to himself the right to enforce the regime because, as he said, the site was a “union site”.

31    These were not isolated incidents. The Commissioner provided a list of cases in which the CFMEU and its officials had been found to have contravened the Act and its predecessors by insisting on financial union membership as a necessary pre-condition to working on construction sites. The contraventions in 14 of these cases had occurred over a 15 year period prior to the events presently under consideration. Liability and penalties in 13 of those cases had been judicially determined prior to 2014. At any point during that period the CFMEU could have, but did not, direct its officials not to enforce “no ticket no start” regimes, monitor the conduct of its officials in order to ensure that the directive was complied with and so advise the Court. It has not done so in the present proceeding. The irresistible inference is that the CFMEU, acting through its site-based officials, persists in insisting on union membership as a condition for working on construction sites which it regards as “union sites”. At the very least it condones the actions of its onsite officials. Such misconduct continues notwithstanding the CFMEU and its officials being aware, as a result of the various judgments, that it is proscribed by various provisions of the Act.

32    One of the objects of Part 3-1 of the Act (in which ss 346, 348 and 349 appear) is the protection of freedom of association: see s 336(1)(b). As Barker J observed in Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (No 2) (2011) 205 IR 465 at 469; [2011] FCA 394 at [19]:

The law of Australia has for a long time emphasised the importance of industrial freedom of association. The FW Act marks out industrial freedom of association as one of its important objectives. I take into account in this case the need for a pecuniary penalty to reflect the importance of the maintenance of that objective of the FW Act.

33    Resort to coercion and other proscribed conduct in order to undermine this objective of the Act must be deprecated. Coercion is, as Dowsett and Rares JJ observed in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 249 FCR 458 at 480; [2017] FCAFC 53 at [97], “a particularly serious form of industrial (mis)conduct.” The unsatisfactory nature of such conduct was emphasised by Mortimer J in Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2016] FCA 436 at [136] her Honour their said:

Coercion and intimidation as methods of achieving desired ends can occur in many walks of life, not only in industrial activity. Such conduct involves abuse, and misuse, of power. Coercive and intimidatory conduct is part of an ‘end justifies the means’ way of thinking which is frequently inconsistent and incompatible with the rule of law. The Court by its civil penalty orders should make it clear that coercion and intimidation contrary to law will not be tolerated and will be the subject of sanctions. Significant penalties are required to give some public confidence that those who administer the law will not condone coercive and intimidatory conduct, in this case in the sphere of industrial activity, but also more generally.

Financial capacity of the respondents to pay penalties

34    There was no evidence before the Court, one way or another, about Mr Farrugia’s capacity to pay any penalty imposed on him for his contraventions of the Act.

35    The Commissioner did, however, provide the Court with uncontroversial evidence as to the financial position of the Construction and General Division of the Victoria/Tasmania Divisional Branch of the CFMEU. That evidence disclosed that, in the calendar year ending on 31 December 2016, the Branch had received revenue of $30,958,899, had a net surplus of $226,856, and held net assets valued at $58,517,458. This latter sum included $9,230,132 in cash or cash equivalents.

36    I am, therefore, well satisfied that the CFMEU has the capacity to pay any pecuniary penalty that the Court might impose in the present proceeding.

Deterrence – specific and general

37    The predominant purpose of civil penalty provisions is deterrence, both specific and general: see Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at 506; [2015] HCA 46 at [55] (French CJ, Kiefel, Bell, Nettle and Gordon JJ); Australian Competition and Consumer Commission v High Adventure Pty Ltd (2006) ATPR ¶42-091 at 44,564; [2005] FCAFC 247 at [11] (Heerey, Finkelstein and Allsop JJ).

38    In the first of these cases the High Court emphasised the pre-eminence of deterrence as a guiding principle where the fixing of civil penalties is concerned. In their joint judgment, French CJ, Kiefel, Bell, Nettle and Gordon JJ said (at 506 [55]) that:

No less importantly, whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:

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.”

(Citations omitted.)

39    The comments of Keane J in the same case (at 523-524 [110]) also bear mention:

It is because the Commissioner may, on occasion, be too pragmatic in taking such a stance that the court must exercise its function to ensure that the penalty imposed is just, bearing in mind competing considerations of principle, including that of equality before the law and the need to maintain effective deterrence to other potential contraveners. In this latter regard, in Australian Competition and Consumer Commission v TPG Internet Pty Ltd, French CJ, Crennan, Bell and Keane JJ approved the statement by the Full Court of the Federal Court in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission that a civil penalty for a contravention of the law:

must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business.

(Citations omitted.)

40    More recently, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 249 FCR 458; [2017] FCAFC 53 (“the Perth Airport Case”), Dowsett and Rares JJ (at 481 [100]-[101]) made these general observations about the need for industrial laws to be obeyed and the penal consequences of breaches:

100    In a liberal democracy, it is assumed that citizens, corporations and other organisations will comply with the law. Such compliance is not a matter of choice. The community does not accept that a citizen, corporation or other organisation may choose to break the law and simply pay the penalty. The courts certainly do not accept that proposition. Such acceptance would pose a serious threat to the rule of law upon which our society is based. It would undermine the authority of Parliament and could lead to the public perception that the judiciary is involved in a process which is pointless, if not ridiculous.

101    The Parliament’s purpose in legislating to provide that particular proscribed conduct will attract a civil penalty was to deter persons, including but not limited to trade unions or corporations, from engaging or continuing to engage in such conduct. A civil penalty would lose its utility if the person on whom it was imposed simply treated it as a cost of continuing to carry on with the very conduct that had just been penalised.

See also Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [98] (Dowsett, Greenwood and Wigney JJ).

41    Unlike Mr Farrugia, whose position I will consider separately, the CFMEU has accumulated a deplorable record of contravening civil remedy provisions of the Act and its predecessors. The Commissioner provided the Court with a table which showed that the CFMEU had been found to have contravened industrial legislation of 135 separate occasions in the past 15 years.

42    In Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The Footscray Station Case) [2017] FCA 1555 I made the following observations which are equally apposite in the present proceeding:

49    The present case thus falls into a pattern of repeated disregard for the law. To adopt the language of Mortimer J in Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2016] FCA 436 at [142]: the ongoing misconduct evidences a willingness “by the CFMEU to engage in whatever action, and make whatever threats, it wishes, without regard to the law, and then, once a prosecution is brought, to seek to negotiate its way into a position in which the [penalties] for its actions can be tolerated as the price of doing its industrial business.” See also Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (Perth Childrens’ Hospital Contraventions Case) [2017] FCA 491 at [83]-[90] (Barker J) and the authorities there cited and Australian Building and Construction Commissioner v Parker (No 2) [2017] FCA 1082 at [30]-[32] (Flick J); Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCA 1269 at [34]-[38] (Reeves J).

50    The officials who constitute the councils of the CFMEU and those holding full-time office in the organisation are, or should be, aware, of the many decisions in which the union has been found liable for contraventions of the Act and related legislation. They are also aware, or should be aware, of the many judicial pronouncements about the gravity and unacceptability of this ongoing misconduct. They are, or should be, aware that millions of dollars of union funds, which could otherwise be utilised for the benefit of the members, have had to be expended in paying penalties for these persistent contraventions. They are, or should be, aware of the considerable advantages and responsibilities conferred on registered organisations by the Act and the Fair Work (Registered Organisations) Act 2009 (Cth). These include the right of officials, such as Messrs Myles and MacDonald who held entry permits granted under the Act, to enter construction sites.

51    Despite this knowledge the contravening conduct has continued. At no point has the CFMEU expressed any remorse for the misconduct of its officials. Nor has it undertaken to take any steps to ensure that there will be no repetition of the contravening conduct. At no point has it expressed any contrition for the misconduct which has led to liability findings.

52    In these circumstances an irresistible inference arises that the CFMEU, despite being well aware of the obligations which fall on it and its officials under the Act, has made a considered decision to continue to pursue its industrial ends by resort to conduct proscribed by the Act. Any resultant penalties are to be regarded as a “cost of doing business”. The penalties, available under the Act, and imposed by the Court, have not been sufficient to persuade the union and its officials to obey the law. Such was the position when the contravening conduct, presently under consideration, occurred. Nothing has since changed.

53    In Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 1213 at [63] I observed that the longer that the CFMEU’s recidivism continued, the greater the weight which would be accorded to specific deterrence when fixing appropriate penalties.

43    For so long as the CFMEU persists in contravening the Act in pursuit of its industrial ends, the harder it will be to persuade the Court that misconduct which might otherwise be regarded as falling towards the lower end of the range should be so treated.

44    In the present case the respondents argued that the acts of Mr Farrugia were isolated, only affected the employment of two workers and that there was no evidence that Mr Farrugia had received any direction from the CFMEU to enforce a “no ticket no start” regime.

45    I do not accept these submissions. The present contraventions were not isolated. They have given rise to an addition to what is a very long list of contraventions of the Act and its predecessors which arose from attempts to enforce closed union sites. At all relevant times it was within the power of the CFMEU to take corrective action. It has chosen not to do so. Rather it has chosen to pursue its industrial ends in disregard of the Act and to pay the penal consequences of the unrestrained acts of its officials.

46    In these circumstances the need for both specific and general deterrence weigh heavily when fixing penalties to be imposed on the CFMEU.

47    Mr Farrugia has no prior history of contravening the Act.

48    The need for deterrence weighs less heavily in his case. It remains, nonetheless, an important consideration. Mr Farrugia could have, but did not, apologise for his misconduct and undertake to the Court not to repeat it. In these circumstances I have no confidence that Mr Farrugia acknowledges that he has erred by contravening the Act and will not do so again.

Contrition

49    Neither the CFMEU nor Mr Farrugia exhibited any contrition for their misconduct; nor, as has already been noted, did they acknowledge error and undertake to avoid any repetition.

50    Although these failures are not aggravating factors, they do not assist the respondents in mitigating the gravity of their offending.

Parity

51    The respondents sought to invoke the “parity principle”. That principle, derived from criminal sentencing jurisprudence, maintains that similar misconduct should incur similar penalties, all else being equal. Put another way: consistency requires that “[l]ike cases should be treated in like manner”: see Wong v The Queen (2001) 207 CLR 584 at 591; [2001] HCA 64 at [6] (Gleeson CJ).

52    They referred to an earlier judgment in this proceeding in which the Court dealt with Arteam and its principal officer, Mr Hanna, who had engaged the two workers to perform painting work on the site: see Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (Quest Apartments and Greek Community Centre) [2016] FCA 1262. In that judgment the company and its principal were each penalised for contraventions of s 349 of the Act. The first contravention was found to have occurred on 11 March 2014 when the director recklessly made false or misleading representations to the effect that Mr Matic was obliged to be a member and pay membership fees to the CFMEU in order to perform work at the site. A similar misrepresentation was found to have been made on 27 March 2014, on the eve of Mr Matic’s return to the site on 31 March 2014. The company was required to pay a penalty of $8,800 in respect of each of these contraventions and Mr Hanna was required to pay $1,200 in respect of each of them.

53    The respondents contended that these penalties, in each case, fell at the lower end of the range and that, accordingly, so should the penalties which the Court might be minded to impose on them in the same proceeding.

54    The penalties imposed on the company and its sole director were proposed by the parties. In accepting the proposal I said that:

29    The proposed penalties were at the lower end of the appropriate range. The aggregate penalty proposed for Arteam was, for each contravention, about 17 per cent of the maximum available penalty. The aggregate penalty proposed for Mr Hanna was, again in each case, around 12 per cent of the maximum applicable to an individual.

30    The leniency is explicable for a number of reasons. The contraventions were reckless rather than deliberate. Mr Hanna had become immersed in the culture of at least some commercial construction sites on which compulsory union membership was accepted by both employers and employees. Mr Hanna had not familiarised himself with the relevant provisions of the Act. It is, perhaps, surprising that, despite working in the construction industry for some 11 years at the time of the contraventions, Mr Hanna had remained ignorant about the laws protecting freedom of association and had not made enquiries when Mr Matic told him that he was not obliged to be a member of the CFMEU. Arteam was a small company with a transient workforce and a limited capacity to pay monetary penalties. It was accepted that some difficulty would be occasioned by the need to assemble funds necessary to pay the proposed penalties. There was no suggestion that either Arteam or Mr Hanna had, on any previous occasion, contravened the Act. Furthermore, there was no evidence that Mr Matic (or anyone else) had suffered any economic loss as a result of the contraventions. Once the proceeding had commenced Arteam and Mr Hanna were co-operative. They made an early admission of liability and became parties to an agreed statement of facts. These steps obviated the need for a trial of contested issues.

31    I should add that I accept that Mr Hanna (and, through him, Arteam) have, by making a public apology, exhibited contrition for the contraventions. I am also mindful of their undertaking to ensure that, in future, they understand their legal obligations and comply with them.

55    It is also to be noted that the various contraventions of s 349 by Arteam and Mr Hanna occurred because of reckless rather than intentional misconduct.

56    The passages which I have extracted above at [54] make plain that the sentencing considerations which applied to Arteam are radically different from those which apply to the CFMEU. Arteam had not previously contravened the Act. It was a small company. It co-operated with the Commissioner. It made early admissions of liability. It was a party to an agreed statement of facts. It made a public apology for its contraventions and exhibited contrition for them. It undertook to the Court to ensure future compliance with its statutory obligations.

57    The CFMEU and Mr Farrugia did none of these things. No issue of parity arises.

Mitigating factors

58    The respondents relied on what they said were a number of mitigatory factors which supported the moderation of any penalties which the Court might be minded to impose. Both respondents emphasised the lack of any evidence that anyone had suffered loss and damage as a result of their contravening conduct.

59    Mitigatory factors on which the CFMEU relied were that:

    Mr Farrugia held no position in the “hierarchy” of the CFMEU.

    There was no evidence that any senior elected officials of the CFMEU had been involved in the contraventions.

    There was no evidence that Mr Farrugia was implementing a policy of the CFMEU.

    The liability of the CFMEU was entirely derivative.

60    I accept the first two contentions. They pale into relative insignificance, however, when the repeated attempts (some successful) of the CFMEU over many years to undermine the freedom of association provisions of the Act and its predecessor are acknowledged. Whilst it is true to say that the liability of the CFMEU was entirely derivative, it arose from the misconduct of one of its officials whose actions were sanctioned, if not directed, by the CFMEU.

61    Mr Farrugia relied on the following considerations:

    He was only a workplace delegate of the CFMEU.

    He played no role in the management of the Union.

    He was not paid a salary for the performance of his CFMEU duties.

    He was a volunteer.

    He was, at all times, subject to the supervision and control of his employer, Merkon.

    He had been subjected to “stress and approbation” by reason of his involvement in a public trial.

    Any pecuniary penalty would be a “heavy burden” on him.

62    I accept that each of these considerations have some relevance in the sentencing process. None of them, however, tend strongly in favour of a penalty low in the range. While Mr Farrugia may not have held any position of authority or influence within the CFMEU hierarchy and while he was no doubt under a contractual obligation to act in accordance with the lawful and reasonable directions of his employer, he held a position of considerable responsibility and power on the site. He was, in a real sense, a “gatekeeper”. He assumed the authority to determine whether or not unfinancial members of the CFMEU would be allowed to work on the site and the authority to direct that an unfinancial member should leave the site. He did this without reference to his employer.

63    The claim that any penalty would constitute a “heavy burden” on him is no more than an assertion in the absence of any evidence that he would pay any penalty, imposed by the Court, out of his own pocket.

A suspended penalty?

64    Mr Farrugia submitted that any pecuniary penalty imposed on him should be wholly suspended. He suggested that any suspension be for a two year period. He did not propose any conditions which might be attached to any such suspension. He relied on the same mitigatory factors which I have set out above at [61]. He also submitted that, in the four years since the contraventions had occurred, he had not been found to have engaged in any further misconduct. The proposed declarations, he contended, were a sufficient public acknowledgement of his contravening conduct. In making these submissions Mr Farrugia referred to the judgment of McKerracher J in Calabro (No 7) in which his Honour had wholly suspended agreed pecuniary penalties for certain breaches of the Act.

65    The Commissioner opposed the granting of any suspension.

66    The Court has a discretionary power to suspend the operation of a pecuniary penalty order for a specific period and subject to conditions. That power is to be found in s 545(1) of the Act which empowers the Court to make “any order the court considers appropriate” if satisfied that a contravention of a civil remedy provision, such ss 346, 348 and 349 of the Act, has occurred.

67    In Director of the Fair Work Building Industry Inspectorate v Ellen (The Longford Gas Plant Case) [2016] FCA 1395 at [45]-[61] I reviewed the relevant authorities and identified a range of considerations which were potentially relevant in the exercise of the Court’s discretion.

68    One of the authorities with which I dealt was Calabro (No 7). That case arose out of protracted strike action by workers at a natural gas project in Western Australia. It was anticipated that the project would be ongoing for many years. The strike action constituted unprotected industrial action. The Court granted interim injunctions which required the workers to cease taking that action. When final orders were made they included wholly suspended daily monetary penalties for breaches of various provisions of the Act. The suspended penalties were to become payable in the event that a respondent was found to have contravened the Act at any time within seven years from the date on which the orders were made. In addition, each respondent was restrained, by injunction, for a period of seven years, from taking industrial action of the kind which led to the imposition of the penalties. In determining that it was appropriate wholly to suspend the monetary penalties, his Honour had regard particularly to “the length and breadth of the terms of the injunction” (at 274 [74]).

69    Having examined Calabro (No 7) and other cases in which suspended penalties had been sought, I continued (at [57]-[59]):

57    The Court’s discretion to suspend a pecuniary penalty, imposed under the Act, is not to be constrained by prescriptive principles. Nonetheless, some general observations may be made. Any penalty imposed must be meaningful and operate as a deterrent both to the contravenor and any others who might, in future, be tempted to engage in similar conduct. The penalty must also reflect the need to maintain public confidence in the operation of the enterprise agreements which regulate the employment of large numbers of Australian workers: cf Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at 580. A meaningful penalty will be one that falls within a permissible range, having regard to all of the circumstances of a particular case. Any suspension of whole or part of the penalty will necessarily reduce the amount immediately payable. If the penalty imposed is in the low end of the range then a suspension may take the penalty payable outside the range. Conversely, if the penalty imposed is at the high end of the range there may be greater scope for suspension with the reduced figure remaining within the permissible parameters.

58    The penalty must be meaningful, not only for the purpose of specific deterrence, but also taking into account the important need for general deterrence. If the suspension is conditional on the contravenor’s good conduct during a particular period it may be justified on the basis that it will operate as an incentive to the contravenor to be of good behaviour during that period. In this regard it is notable that the main reason why McKerracher J was prepared wholly to suspend the pecuniary penalties which he had imposed in Calabro (No 7) was that the contravenors were also restrained, by injunction, from any repetition of the contravening conduct for a period of seven years. If, during that period, any further contraventions occurred a contravenor would be liable to pay the suspended penalty and be subject to prosecution for contempt of Court. General deterrence, on the other hand, requires that the amount imposed must be sufficiently high as to serve to dissuade others from acting in a similar way. This object will not be achieved if the amount payable, following suspension, is very low.

59    Other considerations which may, in a given case, have a bearing on the question of whether or not to suspend (wholly or in part) a monetary penalty include the seriousness of the offending conduct, the contravenor’s prior conduct and the prospect of any future contravention coming to the attention of the applicant in a particular proceeding. This latter consideration may weigh more heavily in industries, such as the construction industry, in which workers regularly move between employers and projects and may assume greater relevance where the project on which the misconduct occurred has been completed by the time the Court comes to consider appropriate penalties and whether or not to suspend them.

70    As I have already said, the mitigatory factors on which Mr Farrugia relied were neither individually, nor collectively, compelling. He is under no injunctive restraint from repeating his misconduct. He has offered no assurance to the Court that his conduct will not be repeated. By the time of the hearing on liability Mr Farrugia was no longer working at the site and was working elsewhere for another employer. His contraventions of the Act, and, in particular, s 348, were both deliberate and serious.

71    In the circumstances I am not satisfied that any suspended penalty would be meaningful and operate to deter Mr Farrugia from further contravening the Act.

72    Any penalty imposed will not be suspended.

Appropriate penalties

73    Bearing in mind these general principles I turn to consider the quantum of pecuniary penalties for each of the contraventions of s 348 of the Act. I do so, in each case, having regard to all of the relevant conduct.

74    In fixing penalties I have drawn a distinction between Mr Farrugia’s conduct on 17 March 2014 and that engaged in on 31 March 2014. I regard the latter conduct as more grievous because the earlier contraventions, whilst serious, did not prevent the two workers from performing their duties on the site on that day. On 31 March 2014 Mr Matic was prevented from working and ordered by Mr Farrugia to leave the site. The power purportedly exercised (and its consequences) was qualitatively more egregious than that exercised by Mr  Farrugia on the earlier occasion.

75    A penalty of $4,000 should be imposed on Mr Farrugia for his contravention of s 348 on 17 March 2014 and a penalty of $6,000 should be imposed in respect to his contravention of that section on 31 March 2014.

76    Penalties will also be imposed on the CFMEU having regard to the various matters outlined earlier in these reasons and the need, to the limited extent possible under the Act, to deter the organisation from any repetition of such misconduct. Penalties of $45,000 and $50,000 will be imposed on the CFMEU for its contraventions of s 348 on 17 March 2014 and 31 March 2014 respectively.

77    In fixing these penalties I have had regard to the totality principle to the extent that it is relevant.

DISPOSITIOn

78    Orders and declarations will be made to give effect to these findings.

Associate:

Dated:    26 February 2018