FEDERAL COURT OF AUSTRALIA

Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (“Cardigan St Case”) [2018] FCA 957

ORDERS

THE COURT DECLARES THAT:

1.    The second respondent (“Mr Theodorou”), an officer of the first respondent (the “CFMMEU”) acting in that capacity for the purposes of s 363(1)(b) of the Fair Work Act 2009 (Cth) (“FW Act”), contravened s 355 of that Act when, on 28 March 2015, he organised for the fourth respondent (“Mr Miftari”), a delegate of the CFMMEU, to prevent the performance of a crane lift for Maxstra Constructions Pty Ltd (“Maxstra”) at the “Cardigan Street” apartments construction project located at 73-81 Cardigan Street, Carlton, Victoria (“Site”) that day with intent to coerce Maxstra to not engage Australian Traffic Control (ATC) Pty Ltd (“ATC”) and to engage a traffic management company who was covered by an enterprise agreement which also covered the CFMMEU.

2.    The Third Respondent (“Mr Graauwmans”), an officer of the CFMMEU acting in that capacity for the purposes of s 363(1)(b) of the FW Act, contravened s 355 of that Act when, on 28 March 2015, he organised for three separate crane companies not to attend at the Site or otherwise perform a crane lift for Maxstra that day, with intent to coerce Maxstra to re-employ Mr Miftari, whose employment had been terminated by Maxstra earlier that day.

3.    Mr Miftari, an officer of the CFMMEU acting in that capacity for the purposes of s 363(1)(b) of the FW Act, contravened s 355 of that Act when, on 28 March 2015, he prevented the performance of a crane lift for Maxstra at the Site that day, with intent to coerce Maxstra to not engage ATC and to engage a traffic management company who was covered by an enterprise agreement which also covered the CFMMEU.

4.    Mr Miftari, a member of the CFMMEU acting with the authorisation of Mr Theodorou, an officer of the CFMMEU acting in that capacity for the purposes of s 363(1)(c)(iii) of the FW Act, contravened s 348 of that Act when, on 30 March 2015, he threatened to prevent Emerald Commercial Services Pty Ltd (“ECS”) from performing any further work on the Site or from performing any further work on any other project in Melbourne, with intent to coerce ECS to engage in industrial activity by complying with a request of the CFMMEU, communicated by Mr Miftari, that ECS not continue to perform any works at the Site.

5.    By the conduct of Mr Theodorou in declaration 1 above and by operation of ss 363(1)(b) and 363(3) of the FW Act, the CFMMEU contravened s 355 of that Act when, on 28 March 2015, it organised for Mr Miftari, its delegate, to prevent the performance of a crane lift for Maxstra at the Site that day, with intent to coerce Maxstra to not engage ATC and to engage a traffic management company who was covered by an enterprise agreement which also covered it.

6.    By the conduct of Mr Graauwmans in declaration 2 above and by operation of ss 363(1)(b) and 363(3) of the FW Act, the CFMMEU contravened s 355 of that Act when, on 28 March 2015, it organised for three separate crane companies not to attend at the Site or otherwise perform a crane lift for Maxstra that day, with intent to coerce Maxstra to re-employ Mr Miftari, whose employment had been terminated by Maxstra earlier that day.

7.    By the conduct of Mr Miftari in declaration 3 above and by operation of ss 363(1)(b) and 363(3) of the FW Act, the CFMMEU contravened s 355 of that Act when, on 28 March 2015, it prevented the performance of a crane lift for Maxstra at the Site that day, with intent to coerce Maxstra to not engage ATC and to engage a traffic management company who was covered by an enterprise agreement which also covered it.

8.    By the conduct of Mr Miftari in declaration 4 above and by operation of ss 363(1)(c)(iii) and 363(3) of the FW Act, the CFMMEU contravened s 348 of that Act when, on 30 March 2015, it threatened to prevent ECS from performing any further work on the Site or from performing any further work on any other project in Melbourne, with intent to coerce ECS to engage in industrial activity by complying with its request, communicated by Mr Miftari, that ECS not continue to perform any works at the Site.

THE COURT ORDERS THAT:

1.    The title of the proceeding be amended to show the name of the first respondent as Construction, Forestry, Maritime, Mining and Energy Union.

2.    For his contravention of s 355 of the FW Act the subject of declaration 1 above, Mr Theodorou pay a pecuniary penalty of $8,500.00.

3.    For his contravention of s 355 of the FW Act the subject of declaration 2 above, Mr Graauwmans pay a pecuniary penalty of $7,500.00.

4.    For his contravention of:

(a)    s 355 of the FW Act the subject of declaration 3 above, Mr Miftari pay a pecuniary penalty of $4,000.00; and

(b)    s 348 of the FW Act the subject of declaration 4 above, Mr Miftari pay a pecuniary penalty of $2,000.00.

5.    For its contravention of:

(a)    s 355 of the FW Act the subject of declaration 5, 6 and 7 above, the CFMMEU pay an aggregate pecuniary penalty of $80,000.00; and

(b)    s 348 of the FW Act the subject of declaration 8 above, the CFMMEU pay a pecuniary penalty of $40,000.00

6.    The penalties in orders 2 to 5 above be paid to the Commonwealth of Australia within 28 days.

7.    The applicant’s originating application dated 24 May 2016 be otherwise dismissed.

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

REASONS FOR JUDGMENT

BROMBERG J:

1    The applicant (“Commissioner”) seeks declarations and related pecuniary penalties against the respondents for contraventions of various civil penalty provisions of the Fair Work Act 2009 (Cth) (“FW Act”). By a Statement of Agreed Facts and Admissions dated 27 November 2017 (“SOAF”) the second respondent (“Mr Theodorou”) has admitted one contravention of s 355 of the FW Act in relation to conduct which occurred on 28 March 2015, the third respondent (“Mr Graauwmans”) has admitted one contravention of s 355 of the FW Act in relation to his conduct on 28 March 2015 and the fourth respondent (“Mr Miftari”) has admitted one contravention of s 355 for conduct which occurred on 28 March 2015 and one contravention of s 348 of the FW Act for conduct which occurred on 30 March 2015. The first respondent (“CFMMEU”) has admitted that the conduct the subject of the contraventions of Mr Theodorou, Mr Graauwmans and Mr Miftari was, in each case, conduct taken by those persons in their capacity as officers of the CFMMEU. By operation of s 363 that conduct is taken to be conduct of the CFMMEU and the CFMMEU has admitted that it has contravened ss 343 and 355 of the FW Act. The balance of the contraventions alleged by the Commissioner by his Statement of Claim are not pressed.

Legislative framework

2    Sections 348 and 355 of the FW Act relevantly provide as follows:

348    Coercion

A person must not organise or take, or threaten to organise or take, any action against another person with intent to coerce the other person, or a third person, to engage in industrial activity.

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

…

355    Coercion—allocation of duties etc. to particular person

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

(a)    employ, or not employ, a particular person; or

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

(c)    allocate, or not allocate, particular duties or responsibilities to a particular employee or independent contractor; or

(d)    designate a particular employee or independent contractor as having, or not having, particular duties or responsibilities.

3    The Court’s power to impose pecuniary penalties is conferred by s 546(1) of the FW Act. That section is in the following terms:

546    Pecuniary penalty orders

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

4    The maximum amount of any penalty is prescribed by s 546(2) when read together with Item 11 of the table in s 539(2). It was not in dispute that at the time the impugned conduct occurred the maximum penalty for a contravention of either ss 348 or 355 was 60 penalty units for an individual (that is, $10,200) and 300 penalty units for a body corporate (that is, $51,000).

procedural history and agreed factual background

5    Shortly prior to the commencement of the trial the parties agreed to and filed the Statement of Agreed Facts (“SOAF”). The following account of relevant events is based on the SOAF.

The parties to the proceeding and other entities

6    In accordance with s 539 of the FW Act, the Commissioner is a person with standing and authority to institute and continue these proceedings as against each respondent.

7    The CFMMEU is and was at all relevant times an organisation of employees registered under the FW Act and an “industrial association” within the meaning of that term in s 12 of the FW Act.

8    Mr Theodorou is and was at all material times employed as an organiser by the CFMMEU, an “officer” of the CFMMEU within the meaning of s 12 of the FW Act, and in relation to his admitted conduct, acting in his capacity as an officer of the CFMMEU.

9    Mr Graauwmans is and was at all material times employed as an organiser by the CFMMEU, an “officer” of the CFMMEU within the meaning of s 12 of the FW Act, and in relation to his admitted conduct, acting in his capacity as an officer of the CFMMEU.

10    Mr Miftari was at all material times a member of the CFMMEU. Prior to the termination of his employment at approximately 9.30am on 28 March 2015, he was at all material times, employed by Maxstra Construction Pty Ltd (“Maxstra”) as a labourer and health and safety representative at the “Cardigan Street” apartments construction project located at 73-81 Cardigan Street, Carlton, Victoria (“Site”), a delegate of the CFMMEU within the meaning of that expression in s 12(b) of the FW Act, an “officer” of the CFMMEU within the meaning of s 12 of the FW Act, and in relation to his admitted conduct, acting in his capacity as an officer of the CFMMEU. Mr Miftari ceased to be a delegate of the CFMMEU in February 2016.

11    At all material times relevant to the matters in this proceeding, Maxstra was a corporation duly incorporated under the Corporations Act 2001 (Cth), in the business of providing building and construction work to various building owners or principal contractors. Maxstra was contracted by Auswell Holdings Pty Ltd to build a multi-level commercial and residential development at the Site, and the principal contractor in charge of the Site.

12    A number of subcontractors were engaged by Maxstra or other companies to perform building and construction works at the Site on each of 28 and 30 March 2015.

The crane lift and lane closure scheduled for 28 March 2015

13    On Saturday 28 March 2015, Maxstra had scheduled an important crane lift at the Site (“Crane Lift”) which:

(a)    required the engagement of International Cranes Pty Ltd (“International Cranes”) to provide the use of a 100 tonne crane to elevate a three tonne Crawler onto the roof of the building being constructed at the Site, and the lifting of window panels, to enable the installation of a curtain wall and windows on the upper level of the building;

(b)    required the closure of lanes on Cardigan Street during the setting up of the crane, the conducting of the Crane Lift and the removal of the crane (“Lane Closure”);

(c)    required the engagement of traffic controllers and signage, to conduct the Lane Closure;

(d)    required a permit from the Melbourne City Council for the Lane Closure, which expired on 28 March 2015;

(e)    had been in planning for six weeks; and

(f)    was at a critical point on the critical path construction schedule for the Site.

14    Australian Traffic Control (ATC) Pty Ltd (“ATC”) was engaged by Maxstra to provide traffic management services for the Lane Closure on 28 March 2015, including the provision of two traffic controllers and signage at the Site. At all material times, ATC was not covered by an enterprise bargaining agreement which also covered (within the meaning of s 53(2) of the FW Act) the CFMMEU.

Mr Miftari – 28 March 2015

15    At approximately 8.00am on 28 March 2015, Mr Theodorou had a conversation with Mr Frank Nadinic (a Director of Maxstra), during which, in response to a comment from Mr Nadinic that Maxstra may be able to perform traffic management with its own employees until another traffic management company attended, Mr Theodorou said words to the effect “That sounds fine. If you're going to get another traffic company I'll allow your guys to do the job”.

16    At approximately 8.30am on 28 March 2015 at the Site:

(a)    International Cranes commenced the Crane Lift, lifting the crawler towards the top of the building;

(b)    Mr Miftari approached the crane when the crawler was lifted about two-thirds up and yelled words to the effect “Put it down, put it down, you stop the fucking lift you put it down now”;

(c)    Mr Miftari yelled to Mr Adam Leggett (a Director of International Cranes who was operating the crane), words to the effect “What are you doing? You're not alright to do the lift”;

(d)    Mr Leggett said to Mr Miftari words to the effect “Well what do you want me to do, I am being asked to do the lift by Maxstra”;

(e)    Mr Miftari said to Mr Leggett words to the effect “Well I haven't given the all clear yet”;

(f)    Mr Leggett then lowered the crawler back down to the ground; and

(g)    Mr Miftari said to Mr Ron Williams (Maxstra Site Manager) and Mr Justin Barnett (Maxstra Finishing Foreman), words to the effect “The lift is not happening. These guys have no EBA agreement. Stop the lift” and “There is a non-EBA traffic company and there will be no lift”.

17    The CFMMEU and Mr Miftari admit that by engaging in the conduct referred to at paragraph 16(b), (c), (e) and (g) above, Mr Miftari prevented the Crane Lift from being completed.

18    At approximately 9.30am on 28 March 2015, Mr Miftari had a discussion with Mr Arthur Visedo (part-owner of Maxstra and its Operations Manager at the Site), in which Mr Miftari:

(a)    said to Mr Visedo words to the effect “Traffic management is non-EBA so no work”;

(b)    made a phone call and during it held up his phone and said words to the effect of “I'm on the phone to Theo right now and Theo [Mr Theodorou] said the lift can't happen until they get EBA traffic management here”; and

(c)    said to Mr Visedo words to the effect “Because the traffic management are non-EBA the lifts are not going to happen and everyone has to sit in the sheds”.

19    The CFMMEU and Mr Miftari admit that by his conduct referred to at paragraphs 16(b), (c), (e) and (g) and 18 above, Mr Miftari organised and took action with the intention of, or for reasons which included the intention of, coercing Maxstra to:

(a)    not engage a particular independent contractor, namely ATC; and/or

(b)    engage a particular independent contractor, namely a traffic management company who was covered by an enterprise agreement which also covered the CFMMEU.

20    The CFMMEU admits that the conduct taken by Mr Miftari was taken in his capacity as an officer of the CFMMEU.

21    In the course of the discussion referred to at paragraph 18, Mr Visedo terminated the employment of Mr Miftari as an employee of Maxstra.

Mr Theodorou – 28 March 2015

22    The CFMMEU and Mr Theodorou admit that, including through phone calls made by Mr Theodorou at approximately 8.05am, 8.11am, 8.48am and 9.29am on 28 March 2015, Mr Theodorou organised the conduct taken by Mr Miftari on that morning.

23    They also admit that in so doing, Mr Theodorou organised and took action against Maxstra with the intention of, or for reasons which included the intention of, coercing Maxstra to:

(a)    not engage a particular independent contractor, namely ATC; and/or

(b)    engage a particular independent contractor, namely a traffic management company who was covered by an enterprise agreement which also covered the CFMMEU.

24    The CFMMEU admits that the conduct of Mr Theodorou was taken in his capacity as an officer of the CFMMEU.

Mr Graauwmans – 28 March 2015

25    In a telephone conversation between Mr Leggett (of International Cranes) and Mr Graauwmans at about 10.19am on 28 March 2015, Mr Graauwmans said to Mr Leggett words to the effect of:

(a)    “I hear the Shop Steward [Mr Miftari] has been let go”;

(b)    “The Site's going to be closed, no one's going to work today because he's been sacked” ;

(c)    “It is in your best interests to pack up and leave”;

(d)    “No other crane company is going to do the job, it's not about that”;

(e)    “This has got nothing to do with you at this stage but you don't want to be doing any lifts”.

26    At approximately 10.30am on 28 March 2015, the International Cranes crew packed up and left the Site, taking their crane and crawler with them.

27    At approximately 10.27am on 28 March 2015, Mr Graauwmans sent an SMS message to Mr Michael Clarke (Director of Clarke Cranes Pty Ltd), which read “Don't go to that job in Cardigan street”. This was a reference to the Crane Lift at the Site.

28    At approximately 3.00pm on 28 March 2015, a crane crew from Membrey Cranes Pty Ltd (“Membrey Cranes”) arrived at the Site with a crane and crawler to perform the Crane Lift (“Membrey Crew”).

29    At approximately 3.38pm on 28 March 2015 in a telephone conversation between Mr Graauwmans and Mr Craig Membrey (Director of Membrey Cranes), Mr Graauwmans said words to the effect of:

(a)    “The Shop Steward [Mr Miftari] got the sack”;

(b)    “I don't want you to work on this Site”; and

(c)    “Just don't pull your fucking boom out of the rack”.

30    At approximately 4.00pm on 28 March 2015, the Membrey Crew left the Site without commencing or completing the Crane Lift.

31    The CFMMEU and Mr Graauwmans admit that by his conduct, Mr Graauwmans organised and took action against Maxstra with the intention of, or for reasons which included the intention of, coercing Maxstra to employ a particular person, namely Mr Miftari.

32    The CFMMEU admits that the conduct of Mr Graauwmans was conduct taken in his capacity as an officer of the CFMMEU.

Mr Miftari – 30 March 2015

33    Prior to 28 March 2015, Emerald Commercial Service Pty Ltd (“ECS”) was engaged by Maxstra to perform painting services at the Site.

34    At approximately 11.19am on 30 March 2015, Mr Miftari telephoned Mr Mark Booth (Construction Manager of ECS), and said words to the effect:

(a)    “It's not in Emerald's Interest to continue working on the Site”; and

(b)    that once he [Mr Miftari] was back on the Site, there was no way he would allow ECS to continue to work not just on the Site, but on any other project in Melbourne.

35    Mr Miftari’s conduct was authorised by Mr Theodorou, acting in his capacity as an officer of the CFMMEU.

36    The CFMMEU and Mr Miftari admit that by his conduct, Mr Miftari requested or required that ECS not continue to perform any works at the Site and that the request or requirement was a request or requirement of the CFMMEU.

37    Those respondents also admit that by his conduct Mr Miftari threatened to organise and take action against ECS with the intention of, or for reasons which included the intention of, coercing ECS to engage in industrial activity, within the meaning of s 347(e) of the FW Act.

38    The CFMMEU admits that the conduct of Mr Miftari was conduct taken by him in his capacity as an officer of the CFMMEU.

39    On 1 April 2015, Maxstra agreed to re-employ Mr Miftari.

the contentions of the parties

40    Each of the respondents conceded that a finding of contravention should be made in relation to each of the allegations of contravention pressed by the Commissioner. The making of the declarations sought by the Commissioner was not opposed.

41    The Commissioner submitted that the Court should impose penalties at the very top of the available scale for the CFMMEU, Mr Theodorou and Mr Graauwmans and at the high end for Mr Miftari’s contraventions.

42    In contrast, the respondents submitted that the appropriate penalties to impose would be:

(a)    in respect of Mr Miftari’s contraventions, a penalty in the low range (being $0 to $3,400);

(b)    in respect of Mr Theodorou’s and Mr Graauwmans’ contraventions, penalties in the lower end of the middle range (the middle range being $3,400 to $6,799); and

(c)    in respect of the CFMMEU’s contraventions, a penalty in the lower end of the middle range (the middle range being $16,998 to $33,997).

findings

43    Notwithstanding the admissions and concessions made by the Respondents it remains a matter for the Court to determine whether the agreed facts provide a proper basis for the granting of the relief sought by the Commissioner.

44    I am satisfied, on the basis of the agreed facts, that each of Messrs Theodorou, Graauwmans and Miftari contravened s 355 of the FW Act once and that the CFMMEU committed three contraventions of s 355. I deal later with why the CFMMEU’s contraventions were multiple rather than singular. Additionally, I am satisfied that each of Mr Miftari and the CFMMEU contravened s 348 of the FW Act on one occasion.

declarations

45    The Commissioner sought declarations reflecting the Court’s findings of contraventions.

46    The educative value of declarations in civil remedy proceedings under the FW Act has been remarked on by the Court on many occasions: Cruse v Multiplex Limited (2008) 172 FCR 279 at [53]-[59] (Goldberg and Jessup JJ); Fair Work Ombudsman v Al Hilfi [2015] FCA 313 at [22] (Besanko J).

47    The proposed declarations are appropriate to formally record the basis upon which the proceeding has been resolved. I will make the declarations sought by the Commissioner.

PENALTY

Applicable principles

48    Section 546(1) of the FW Act provides no express guidance in relation to the determination of an appropriate pecuniary penalty in respect of the contravention of a civil remedy provision under the FW Act. The section simply says that the Court may make an order imposing a pecuniary penalty the Court considers is appropriate.

49    However, the authorities provide substantial guidance. The purpose of a civil penalty is primarily, if not wholly, protective to promote the public interest in compliance: Commonwealth of Australia v Director of the Fair Work Building Industry Inspectorate (2015) 258 CLR 482 (the “Agreed Penalties Case”) at [54]-[55] (French CJ, Kiefel, Bell, Nettle and Gordon JJ). This objective is achieved by putting a price on contraventions that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene. Both specific and general deterrence are important considerations: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 (the “QLD Infrastructure Case”) at [98] (Dowsett, Greenwood and Wigney JJ).

50    In relation to specific deterrence, it has been frequently observed that a pecuniary penalty for a contravention of the law must be fixed with a view to ensuring that the penalty is not to be regarded by the offender or others as an “acceptable cost of doing business”: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at [66] (French CJ, Crennan, Bell and Keane JJ); Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20 at [62]-[63] (Keane CJ, Finn and Gilmour JJ). On the other hand, general deterrence is directed at sending a message to a broader audience that contraventions of the kind under consideration are serious and not acceptable: Australian Securities and Investments Commission v Southcorp Ltd (No 2) (2003) 130 FCR 406 at [32] (Lindgren J).

51    The fixing of a pecuniary penalty involves the identification and balancing of all the considerations relevant to the contravention and the circumstances of the respondent, and making a value judgment as to what is the appropriate penalty in light of the protective and deterrent purposes of a pecuniary penalty. This process has been described as an “instinctive synthesis” akin to that undertaken in criminal sentencing: Markarian v The Queen (2005) 228 CLR 357 at [51] (McHugh J); QLD Infrastructure Case at [100].

52    A non-exhaustive list of the considerations that may be relevant when fixing a pecuniary penalty is conveniently set out in the QLD Infrastructure Case, where the Full Court identified those considerations that relate to the objective nature and seriousness of the offending conduct, and those that concern the particular circumstances of the respondent in question in the following terms:

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

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

53    In determining the appropriate penalty, the Court must also give consideration to the maximum penalty for the contravention. As the Full Court observed in the QLD Infrastructure Case at [106], there are at least three reasons for this: first, that the legislature has legislated for the maximum penalty as an expression of the legislature’s policy concerning the seriousness of the prescribed conduct; second, that it permits comparison between the case under consideration and the worst possible case (where the maximum penalty can be treated as the penalty appropriate for the worst possible case); and third, that the maximum penalty provides a “yardstick” which should be taken and balanced with all the other relevant factors.

54    While giving appropriate significance to the principle of deterrence, the amount of the penalty should also be proportionate to the contravention and should not be so high as to be oppressive: Trade Practices Commission v Stihl Chainsaws (Aust) Pty Ltd (1978) ATPR 40-091 (Smithers J) at 17,896; NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 293 (Burchett and Kiefel JJ); QLD Infrastructure Case at [107].

55    Although in their submissions the parties placed different emphasis on the weight which should be accorded to particular considerations, there was no dispute that, at least since the High Court’s decision in the Agreed Penalties Case, deterrence is the pre-eminent consideration to be taken into account in fixing penalties under the FW Act.

The nature and seriousness of the contravening conduct

56    The conduct engaged in by Mr Miftari on 28 March 2015 and organised by Mr Theodorou (and thus the CFMMEU in respect of each account), resulted in the scheduled Crane Lift being aborted. As set out above, a range of special measures had been put in place with respect to the Crane Lift including the obtaining of permits from the local council to close roads, the engagement of a crane company with specialist equipment, and the engagement of a traffic management company.

57    Following the initial prevention of the Crane Lift by Mr Miftari and Mr Theodorou, Mr Graauwmans’ (and thus the CFMMEU), engaged in conduct to prevent other crane companies from undertaking the lift on that date, including by contacting Membrey Cranes and threatening – implicitly – repercussions if it undertook work for Maxstra. The practical effect of that conduct was to prevent the Crane Lift occurring on 28 March 2015.

58    It may readily be inferred that the prevention of the Crane Lift caused considerable inconvenience. Whether any loss was occasioned to Maxstra or any other contractor or person was not the subject of any direct evidence. The Commissioner did not adduce evidence quantifying any economic loss suffered. I was invited by the Commissioner to draw an inference that economic loss was suffered. I was also invited to draw an inference that the entire workforce walked off the Site and that all work stopped on the day in question. However, the SOAC does not provide a sufficient foundation for drawing an inference that worked stopped. I am prepared to draw an inference that the contravening conduct would likely have resulted in some economic loss to Maxstra and one or more of the contractors on the Site. I presume that if the loss occasioned had been extensive, the Commissioner would have led direct evidence of it. In the absence of any such evidence being led, I would only infer that any loss occasioned was material without being extensive.

59    Following his dismissal on 28 March 2015, on 30 March 2015, Mr Miftari threatened to prevent ECS (the painting contractor) from carrying out other work if it continued to perform work at the Site for Maxstra. Mr Theodorou admitted to authorising that conduct. No specific evidence was adduced by the Commissioner directed at establishing that the admitted conducted had any economic or other effect.

60    In relation to each contravention, I accept that the conduct which constituted the contravention was deliberate. I would also accept that the conduct was taken in the knowledge that it was unlawful and in the expectation that it may occasion loss and inconvenience to Maxstra and other persons. In each case, the conduct was objectively serious.

The Individual Respondents

61    I do not regard the contravening conduct engaged in by the individual respondents as at the high end of the scale of seriousness. In each case, although the conduct was egregious, it occurred at a single site, was limited in time, involved no physical intimidation or violence and, on the evidence before me, either occasioned no loss or did not result in extensive loss.

62    I have considered whether an inference may be drawn that, in relation to the conduct of Mr Graauwmans which was admitted to be responsive to Maxstra having terminated Mr Miftari’s employment, and in relation to Mr Miftari’s conduct on 30 March 2015, which was also responsive to the termination of that employment, a benefit was derived as a result of that contravening conduct. The benefit in question is the re-engagement of Mr Miftari by Maxstra. I am, however, unable to draw an inference that the contravening conduct was the reason for, or at least a reason for, Mr Miftari being provided with that employment. The evidence does not sufficiently connect the contravening conduct with Maxstra’s re-engagement of Mr Miftari. For instance, there is no basis for a finding that Maxstra was even aware of the contravening conduct of Mr Miftari. Whilst Maxstra may well have been pressured by the contravening conduct to re-engage Mr Miftari and, if that was so, it ought be reflected in the penalty imposed, the evidence falls short of permitting a finding that a casual nexus existed between the contravening conduct and the re-engagement.

63    I will proceed therefore on the basis that it has not been proved that the s 348 conduct had any effect. On that basis the conduct should be regarded as less serious than the conduct in contravention of s 355 which prevented the Crane Lift.

64    As for the individual respondents, there are no other factors which appear to be relevant in assessing the seriousness of their contraventions. I reject the Commissioner’s submission that, as the CFMMEU can only act through its agents, the history of the CFMMEU’s contraventions (to which I will return) is relevant to the assessment of the appropriate penalties for the individual respondents. In essence, the Commissioner contended that the individual respondents, being employees and officers of a recidivous principal, should bear some responsibility for the principal’s prior contravening behaviour. The contention is novel and unsupported by principle. While it is necessary to take into account any prior contraventions of an agent whilst working for a principal, there is no justification for taking into account the sins of a principal with which the agent was not involved.

65    I accept the Commissioner’s submission that general deterrence is of particular relevance in respect of an individual who is an office holder or employee of an organisation such as the CFMMEU. The penalty imposed should be effective as a general deterrent for any other officer or employee to engage in similar contraventions. It should demonstrate to such persons that this Court will not tolerate that conduct and that significant penalties will be imposed irrespective of whether the conduct has been condoned by others including that person’s employer.

66    I turn then to the particular circumstances of the individual respondents and will consider first those circumstances personal to Mr Miftari. Mr Miftari has no history of contravening the FW Act. He ceased being a delegate of the CFMMEU in February 2016. He was 66 years of age at the time of the hearing, close to retirement and unlikely to have continued active involvement in either the CFMMEU or the industry in which he was engaged. Mr Miftari is a first offender and is unlikely to have the opportunity of further offending. In those circumstances, the need for specific deterrence is low. Nevertheless, general deterrence remains relevant and, for reasons already indicated, it is important to send a message to persons holding positions of the kind that Mr Miftari held that contravening conduct will not be tolerated. Additionally, for reasons which I will later record when addressing the CFMMEU, I do not regard Mr Miftari to have shown contrition or regret or otherwise conducted himself so as to justify any significant discount to the penalty which might otherwise be imposed.

67    Taking those circumstances into account, and in particular the absence of specific deterrence as a factor of significant weight, the need for general deterrence and that the conduct falls in the middle range of seriousness, and applying instinctive synthesis to the task, I will impose a penalty of $4,000 in respect of Mr Miftari’s contravention of s 355 and $2,000 in respect of the contravention of s 348.

68    Although Mr Miftari’s conduct on 30 March 2015 indirectly arose out of his contravening conduct on 28 March 2015, in that his earlier conduct led to the termination of his employment and his later conduct was responsive to that termination, I do not consider that there is sufficient commonality between the conduct of 28 March 2015 and that of 30 March 2015 to regard all of the conduct as arising out of a single course of conduct. The conduct in each case was driven by different objectives and contravened different provisions of the FW Act. It is best characterised as not constituting a single course of conduct. The conduct of 30 March 2015 was sufficiently distinct from the earlier conduct to deny the undesirable result of Mr Miftari being punished twice for the same conduct.

69    The totality principles requires that the penalties imposed for multiple contraventions do not result in the total penalties imposed exceeding what is proper having regard to the totality of the contravening conduct: McDonald v The Queen (1994) 48 FCR 555 at [19]-[26] (Burchett and Higgins JJ). I do not consider that an adjustment by reference to the totality principle is here justified.

70    Mr Theodorou and Mr Graauwmans had extensive experience in the industry and in representational roles within it, including as representatives of the CFMMEU. At the time of the hearing, they were still employed as organisers of the CFMMEU with further ongoing opportunity to contravene the FW Act. They have contravened previously, more than once. Specifically, Mr Theodorou has been the subject of a prior contravention of the FW Act and two prior contraventions of the Building and Construction Industry Improvement Act 2005 (Cth) (“BCII Act”) with total penalties of $21,200 imposed and Mr Graauwmans has been the subject of two prior contraventions of the BCII Act with total penalties of $10,000 imposed. All of those prior contraventions involved unlawful conduct taken in furtherance of industrial demands. Those circumstances demonstrate that the need for specific deterrence is, in each case, high.

71    For reasons already expressed, the need for general deterrence is also significant. There is no evidence from these individuals of any contrition or regret, and as I will explain in relation to the CFMMEU, no discount of any significance is justified.

72    The need to provide effective deterrence is large but careful attention must be given to the maximum penalty, and even where the amount necessary to provide effective deterrence is large, the amount of the penalty should be proportionate to the contravention and should not be so high as to be oppressive: QLD Infrastructure Case at [106]-[107].

73    In circumstances where I regard the conduct in relation to each of the contraventions in question to be at the middle range of seriousness, taking all of those personal considerations into account and applying instinctive synthesis to the task, I consider that the penalty of $8,500 should be imposed on Mr Theodorou for his contravention of s 355 and a penalty of $7,500 should be imposed on Mr Graauwmans for his contravention of s 355. The proceeding was conducted on the basis that all of Mr Graauwmans’ conduct constituted a single convention of s 355.

The CFMMEU

74    An assessment of the nature and seriousness of the CFMMEU’s contraventions involves considerations beyond those applicable to the individual respondents. For that purpose, and in particular to consider whether senior officials of the CFMMEU were involved and also for the purpose of assessing the particular circumstances of the CFMMEU as a contravenor, the CFMMEU’s extensive record of prior contraventions must be taken into account.

75    As has become his practice in other penalty proceedings involving the CFMMEU, the Commissioner filed a document setting out the prior contraventions of industrial laws by the CFMMEU. The accuracy of the Commissioner’s analysis was not challenged by the CFMMEU and I accept it.

76    The Commissioner’s analysis shows that the CFMMEU has regularly been involved in litigation in which it has been found to have contravened provisions of the FW Act or the BCCII Act which attract pecuniary penalties. The table shows that the CFMMEU has been ordered to pay significant penalties in relation to those contravention, including very close to (or at) the maximum available penalty. The table has 135 entries dating back to 2000.

77    While the CFMMEU did not dispute that the organisation has an extensive history of prior contraventions of industrial laws, it submitted that contraventions occurring outside of Victoria, in a different branch or division of the CFMMEU, or by different individuals within the CFMMEU, should not fall to be considered or be given weight in determining the present case.

78    There is competing authority on the weight, if any, that should be placed on contraventions by a different branch or division of the CFMMEU which the parties made reference to in their submissions. A summary of the competing authorities is given by White J in Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2014] FCA 160 at [57] (the “BDSF Case”).

79    I accept that it is necessary to be conscious of the nature and circumstances of prior contraventions: Cahill v Construction, Forestry, Mining and Energy Union (No 4) (2009) 189 IR 304 at [65] (Kenny J). I would also accept that in particular cases it may be appropriate to give less or no weight to contraventions that occurred in a different branch or division of a registered organisation. Notwithstanding this, I generally favour the approach taken by White J in the BDSF Case at [54]-[58], endorsed by Mortimer J in Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2016] FCA 436 (the “Regional Rail Link Case”) at [125], that a prior contravention by an organisation which is otherwise relevant should not be ignored altogether when imposing a penalty, or be given less weight, only because it occurred in another State and by a different branch of the organisation.

80    As White J said in the judgment of his Honour just referred to, it is open to a respondent organisation to adduce evidence to explain why the conduct of one of its branches should be seen as independent from another. Such evidence may relate to “the way in which an entity organises itself so as to make each branch autonomous” (at [58]). Many registered organisations are a product of the federation of former State based unions or an amalgamation of former national unions covering different industries or crafts. The rules of such organisations often reflect their historical antecedents and provide for governance structures which give a very high level of autonomy to the various branches or divisions of the organisation. The prior contravention of an autonomously governed branch or division different to the branch or division responsible for the instant contravention may be given no or little weight because of the extent of the independence between the two organs of the organisation in question. But that is a matter to be considered on a case to case basis and, in the present case, the CFMMEU did not present any evidence of this kind.

81    Ultimately, even if regard is had to prior contraventions only in relation to the CFMMEU’s representation of building and construction employees in Victoria, the analysis demonstrates that the CFMMEU has a significant antecedent history which supports the view that deterrence, particularly specific deterrence, is conspicuously required and should be a large consideration in the fixation of an appropriate penalty. In this regard the table provided by the Commissioner identified at least 60 cases related to conduct in Victoria and the vast majority of those cases involved building or construction related contraventions.

82    On the issue of the nature and seriousness of the contraventions, the CFMMEU submitted that there was no evidence establishing that senior management of the CFMMEU were involved in the conduct, and that this is a factor that militates in favour of the imposition of the lesser penalties proposed by the CFMMEU.

83    I reject that submission. As discussed above, it was not in dispute that the CFMMEU has an extensive history of prior contraventions of industrial laws. That history, even if limited to the building and construction industry in Victoria, is so egregious as to enable an inference to be drawn that the senior leadership of the CFMMEU responsible for governing those activities, either expressly or impliedly condones the breach by its officers or employees of industrial laws as a necessary incident of the industrial activities those persons are expected to perform. That inference is able to be drawn from the combination of the extensive and consistent record of prior contraventions and the absence of evidence that the senior leadership has taken any steps to address either the prior history of contraventions or the instant contraventions.

84    There was, for example, no evidence of the offending officials in this case being counselled, reprimanded or subjected to disciplinary action. Furthermore, there was no evidence of any compliance action taken by the organisation to counsel, educate or inform other officers and members to prevent the reoccurrence of contravening conduct in the future. 

85    Nor was there evidence of any compliance regime ever put in place by the CFMMEU to address its long history of prior contraventions. The absence of any evidence of compliance systems within the CFMMEU is particularly alarming given the heavily critical comments of the CFMMEU made by this Court in many cases over recent years: see e.g. Conzadinos v Construction, Forestry, Mining and Energy Union [2013] FCA 1243 at [43] (Tracey J); Director of the Fair Work Building Industry Inspectorate v Stephenson [2014] FCA 353 at [77] (White J); Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (“The Mitcham Rail Case”) [2015] FCA 1173 at [29] (Jessup J); Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2015] FCA 407 [103] (Tracey J); Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 1213 at [62]-[63] (Tracey J); Regional Rail Link Case at [109] (Mortimer J).

86    An organisation faced with a litany of contraventions over an extended period of time, which repeatedly incurs not only significant financial penalties but also pointed judicial criticism, would necessarily put in place measures to change the cultural or normative conduct and the contravening behaviours of its officers and employees. Unless, of course, the senior leadership of the organisation, or the relevant branch or division thereof, condones such behaviour. I am satisfied that that is the position of the senior leadership responsible for the CFMMEU’s representation of building and construction employees in Victoria. For those reasons, I consider that I ought to impose penalties on the CFMMEU on the basis that its senior leadership condoned the contravening conduct and was therefore involved in that conduct.

87    By reason of the involvement of senior management in each instance of contravening conduct, I regard the nature of each contravention of the CFMMEU to be objectively very serious and requiring a high level of specific deterrence. I take into account, however, that in relation to the s 348 conduct it has not been proven that it had any effect.

88    Further to the above, the CFMMEU’s extensive history of prior contraventions of industrial laws is also of relevance to assessing the particular circumstances personal to the CFMMEU. While prior contraventions may not warrant the imposition of a penalty that is disproportionate to the gravity of the instant offence, they are directly relevant to the principles of specific and general deterrence: Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2015] FCA 1462 at [7]-[8] (Jessup J). As Mortimer J observed in the Regional Rail Link Case at [108], they are matters relevant to an understanding of how deliberate and how knowingly unlawful the particular contraventions were.

89    While the Court must be conscious to avoid imposing a penalty for conduct that has previously been penalised, and whilst the maximum penalty is to be reserved for the worse cases, the history of the CFMMEU’s prior contraventions demonstrates a compelling need for specific deterrence.

90    Other circumstances of significance are that there is no basis for concluding that the CFMMEU has instituted, improved or modified its compliance systems since the contraventions. As explained already, the available inference is that the CFMMEU, at least in relation to its building and construction related activities in Victoria, condones non-compliance with industrial laws by its officers and employees. Furthermore, no contrition or remorse has been demonstrated.

91    All of those factors strongly point to the need for a high level of specific deterrence to be reflected in the penalties imposed. General deterrence is also a matter of significance.

92    The respondents co-operated by admitting the contraventions and assisting in the preparation of the SOAF. I accept that this co-operation has obviated the need for a contested trial on liability. However, I do not accept the respondents’ submission that these circumstances should significantly moderate the penalty which the Court would otherwise impose.

93    At the time of filing the SOAF the respondents had only filed their notice of address for service, a defence, an amended defence and an outline of submissions on legal principles. The Commissioner had filed 12 outlines of evidence and issued subpoenas to all of the witnesses in the case. On the other hand, the respondents had filed no witness statements. The SOAF corresponded closely with the Commissioner’s pleaded case. There was no explanation of why the position ultimately adopted by the respondents could not have been adopted at the time when they filed their original defence.

94    Admissions and co-operation of this kind may indicate no more than that the CFMMEU took a pragmatic approach and “cut its losses” before incurring the significant costs of a contested trial on liability. There is little to suggest that altruism of any kind was involved in the decision made by the respondents to co-operate. Nevertheless, their belated decision to co-operate has obviated the need for a contested trial and spared public expense. In the circumstances a small reduction of the penalty which would otherwise have been imposed is warranted.

95    Given that I regard the CFMMEU’s conduct to be very serious, taking into account the particular matters personal to the CFMMEU described above, noting the high level of specific deterrence required and applying instinctive synthesis to the task, I consider that a penalty of $40,000 is warranted for the CFMMEU’s contravention of s 348 and an aggregate penalty of $65,000 for the CFMMEU’s contraventions of s 355.

96    The aggregate penalty which I will impose in relation to the CFMMEU’s contraventions of s 355 is based on the following additional considerations and is guided by the principles applied in the QLD Infrastructure Case at [148]-[149]. First, that the Court should not, ordinarily, impose a single penalty for multiple contraventions. Second, where contraventions arise out of a single course of conduct, the penalties imposed in relation to the contraventions should generally reflect that fact, otherwise there is a risk of double punishment.

97    I regard the s 355 associated conduct of the CFMMEU in relation to the conduct of Messrs Miftari and Theodorou to be a single course of conduct. Mr Miftari acted at the direction of Mr Theodorou and their shared intent was to coerce Maxstra to not engage ATC and/or to engage a traffic management company who was covered by an enterprise agreement which also covered the CFMMEU. However, I regard the s 355 associated conduct of the CFMMEU in relation to the conduct of Mr Graauwmans to be separate conduct. Mr Graauwmans organised for three separate crane companies not to attend at the Site or otherwise perform a crane lift for Maxstra that day, with intent to coerce Maxstra to re-employ Mr Miftari. While in each instance the s 355 associated conduct can arguably be characterised as all conduct directed to preventing the Crane Lift, on balance I consider the difference in the nature and intent of the conduct to be significant, including because different persons were the subject of coercive conduct.

98    In the circumstances, the appropriate penalty to impose on the CFMMEU for each of the contraventions of s 355 by Mr Miftari and Mr Theodorou is $23,000. That amount takes into account that the culpability of the CFMMEU for each of the contraventions came about as a result of a single course of conduct (see QLD Infrastructure Case at [169]). The total penalty applied in respect of that course of conduct is therefore $46,000. I also consider it appropriate to apply a penalty of $46,000 for the CFMMEU’s contravention of s 355 by reason of the conduct of Mr Graauwmans.

99    I have given consideration to whether the aggregate penalty of $92,000 for the s 355 associated conduct exceeds what is proper having regard to the totality of the contravening conduct. I consider that, applying the totality principle, the aggregate penalty ought to be reduced because, even if not part of a single course of conduct, the conduct of the CFMMEU as carried out by Messrs Miftari, Theodorou and Graauwmans was closely related in so far as it was all directed to preventing the Crane Lift. Applying the totality principle I would adjust the total aggregate penalty for the s 355 associated conduct to $80,000.

100    I have also given consideration as to whether the penalties for the ss 355 and 348 conduct considered together may be excessive and whether the penalty should be adjusted so as to avoid that outcome. I do not, however, regard the total penalties to be excessive when considered against the totality of the contravening conduct. For the same reasons as those applicable in Mr Miftari’s case, I do not consider that the conduct of the CFMMEU in breach of s 348 is part of a single course of conduct with the conduct in contravention of s 355.

101    Orders will be made reflecting these reasons and otherwise dismissing the application.

Associate:

Dated:    22 June 2018

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