FEDERAL COURT OF AUSTRALIA

Construction, Forestry, Mining and Energy Union v De Martin & Gasparini Pty Limited (No 3) [2018] FCA 1395

ORDERS

THE COURT DECLARES THAT:

1.    On 3 July 2017, the first respondent, De Martin & Gasparini Pty Limited, contravened s 340 of the Fair Work Act 2009 (Cth) in that, by the words and conduct of two if its senior officers, Mr Louie Mazzarolo and Mr Greg Miller, it took adverse action against all employees covered by the De Martin & Gasparini/CFMEU Collective Agreement 2015-2018 (Enterprise Agreement) by threatening to dismiss the employees, injuring the employees in their employment and altering the position of the employees to their prejudice because:

(a)    the employees had a workplace right, namely being entitled to the benefit of a workplace instrument under the Fair Work Act, being the Enterprise Agreement; and

(b)    the employees having, or having exercised, a workplace right, namely being able to initiate or participate in a process under the Fair Work Act, being the process of voting on whether or not to approve a variation to the Enterprise Agreement.

THE COURT ORDERS THAT:

1.    The first respondent pay a pecuniary penalty of $30,000 to the applicant.

2.    The amended originating application be otherwise dismissed.

3.    There be no order as to costs.

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

REASONS FOR JUDGMENT

WIGNEY J:

1    On 1 September 2017, I found that De Martin & Gasparini Pty Limited had, by the words and conduct of two of its senior officers, Mr Louie Mazzarolo and Mr Greg Miller, contravened s 340 of the Fair Work Act 2009 (Cth): see Construction, Forestry, Mining and Energy Union v De Martin & Gasparini Pty Ltd (No 2) [2017] FCA 1046 (the Liability Judgment). The basis of that finding was, in short terms, that the words and conduct of Mr Mazzarolo and Mr Miller at a meeting they held with workers employed by De Martin & Gasparini on 3 July 2017 amounted to adverse action. This was because their words and conduct constituted a threat to dismiss the workers, or an action which injured the workers in their employment, or an action which altered the workers’ positions to their prejudice. It was presumed, by reason of s 361 of the Fair Work Act, that the adverse action had been taken by De Martin & Gasparini because the workers had, or had exercised, workplace rights. De Martin & Gasparini did not prove otherwise. The relevant workplace rights were the benefits the workers had under their enterprise agreement with De Martin & Gasparini and their right, which they had exercised, to vote against a proposed variation of that enterprise agreement.

2    It is now necessary to determine what relief should be granted as a consequence of that finding. The applicant, the Construction, Forestry, Mining and Energy Union (CFMEU), sought a declaration and an order for the payment of a pecuniary penalty. For reasons that will become apparent later, the CFMEU did not press its initial claim for injunctive relief. There was no real dispute that a declaration should be made, or that De Martin & Gasparini should be ordered to pay a pecuniary penalty. There was, however, a dispute about the appropriate amount of that pecuniary penalty. That is the main issue for determination.

FACTS

3    The relevant factual findings that underpin the finding that De Martin & Gasparini contravened s 340 of the Fair Work Act are set out at length in the Liability Judgment. These reasons should be read and considered in conjunction with that judgment. Following is a short summary of the key facts.

4    De Martin & Gasparini is a company engaged in the building and construction industry. Amongst other things, it provides specialist concrete pumping and placement services. It is a wholly owned subsidiary of Boral Limited, which is a well-known international building and construction company. At the time of the events in question, De Martin & Gasparini operated out of premises at Homebush and employed about 110 construction workers. Many of those workers were members of the CFMEU.

5    Mr Mazzarolo was a director of De Martin & Gasparini. He was also its general manager. He reported to Mr Ross Harper, who was the executive general manager of Boral Cement, a business unit of Boral, a member of the executive committee of Boral, and also a director of De Martin & Gasparini. Mr Miller was the general manager of finance and operations at De Martin & Gasparini. He reported to Mr Mazzarolo.

6    On 9 March 2015, De Martin & Gasparini, its workers, and the CFMEU entered into an Enterprise Agreement. The relevant provisions of the Fair Work Act relating to enterprise agreements are referred to in paragraphs 44 to 53 of the Liability Judgment. The key provisions of the Enterprise Agreement are set out in paragraphs 72 to 77 of the Liability Judgment.

7    It is sufficient, for present purposes, to note four things about the Enterprise Agreement and the relevant provisions of the Fair Work Act. First, the Enterprise Agreement provided that it was to remain in force until 31 March 2018. Second, s 54(2) of the Fair Work Act deals with how enterprise agreements cease to operate. Third, ss 207 to 209 of the Fair Work Act provide for the variation of enterprise agreements and require, in general terms, that a majority vote of the affected employees is required. Fourth, cl 31 of the Enterprise Agreement provided for consultation between De Martin & Gasparini, the workers, and the CFMEU in the event that De Martin & Gasparini was considering the introduction of “major workplace changes that [were] likely to have a significant effect” on the workers.

8    On 2 December 2016, the Code for the Tendering and Performance of Building Work 2016 (Cth) commenced operation. The history and nature of the Code and its key provisions are dealt with in paragraphs 54 to 68 of the Liability Judgment. In very general terms, the Code provided, amongst other things, that building industry participants were not to be covered by enterprise agreements that included certain types of clauses. It also provided a significant disincentive to building industry participants who had non-complying enterprise agreements. In short, they, and their related entities, would be ineligible to tender for, be awarded, or perform Commonwealth Government funded building work after a specified transitional period. It was initially provided that building industry participants had until 29 November 2018 to ensure that their enterprise agreements complied with the Code. In February 2017, however, that date was moved forward to 1 September 2017.

9    Those provisions of the Code presented a major problem for De Martin & Gasparini. The problem was that the Enterprise Agreement did not comply with the Code. It followed that, if that circumstance did not change before 31 August 2017, neither De Martin & Gasparini, nor its related companies in the Boral Group, would be eligible to tender for or perform building work funded by the Commonwealth Government. If that came to pass, it would obviously have serious financial implications for, not only De Martin & Gasparini, but also for Boral and all its related companies.

10    In February 2017, De Martin & Gasparini sought to deal with that problem by attempting to vary the terms of the Enterprise Agreement to ensure that it complied with the Code. As already noted, the proposed variation required the agreement of a majority of the workers. Securing that agreement was made difficult for De Martin & Gasparini by at least two considerations. First, the proposed varied enterprise agreement was perceived by some of the workers and the CFMEU to diminish various rights or conditions the workers had under the Enterprise Agreement. Second, the CFMEU was generally opposed to varying enterprise agreements to make them Code-compliant in any circumstances while there was still a prospect that the Code might be disallowed as a result of a motion which was to be moved in the Senate in early August 2017.

11    The initial steps taken by De Martin & Gasparini to vary the Enterprise Agreement are referred to in paragraphs 78 to 92 of the Liability Judgment. De Martin & Gasparini’s proposal to vary the Enterprise Agreement was eventually put to the vote of the workers on 28 June 2017. The facts and evidence concerning the vote are referred to in paragraphs 93 to 97 of the Liability Judgment. In short, a majority of the workers voted against the proposal. That was, or was at least was perceived by De Martin & Gasparini to be, at least in part, due to the stance taken by the CFMEU in relation to the proposal.

12    The voting down of the proposed variation to the Enterprise Agreement was of obvious concern to senior management of both De Martin & Gasparini and Boral. On the afternoon of 28 June 2017, a number of senior officers of De Martin & Gasparini and Boral, and their internal and external lawyers, met and conferred to consider the “next steps”. The question of what exactly was discussed and decided at that meeting was a matter of considerable controversy at the trial. The evidence relating to that question is discussed at length at paragraphs 98 to 100 and 161 to 210 of the Liability Judgment. The key findings concerning the meeting are recorded in paragraphs 211 to 220 of the Liability Judgment. The important points to note are as follows.

13    First, the meeting was called to discuss and decide what action management should take in response to the failure to secure the agreement of workers to the proposed variation of the Enterprise Agreement.

14    Second, it was agreed between the meeting participants that there was little point in De Martin & Gasparini arranging a second vote of the workers unless that vote was instigated by the workers and supported by the CFMEU. It was considered that the support of the CFMEU was unlikely at any time before the motion for the disallowance of the Code was considered and determined by the Senate.

15    Third, the consensus reached by those present at the meeting was that, if no second vote was instigated by the workforce, the only viable option for De Martin & Gasparini to achieve Code compliance by 1 September 2017 was to make all of the approximately 110 employees who were covered by the Enterprise Agreement redundant by 31 August 2017. It was accordingly decided that, unless the employees instigated, and the CFMEU supported, a second vote, which was considered highly unlikely, the employees would be made redundant by 31 August 2017. Mr Harper, who was the most senior executive at the meeting, agreed with and endorsed that decision.

16    Fourth, it was agreed that, because redundancies would constitute a “major workplace change”, De Martin & Gasparini was required by cl 31 of the Enterprise Agreement to consult with the employees and the CFMEU about that change. It was decided to instigate that consultation. The decision to instigate that process, however, was only made once it was effectively decided that the employees would be made redundant on 31 August 2017. Mr Mazzarolo and Mr Miller were given the task of arranging a meeting with the workers on the following Monday, 3 July 2017. That meeting was supposed to be part of the consultation process.

17    Fifth, much of the evidence given by Mr Harper, Mr Mazzarolo, and Mr Miller about the discussions that occurred, and the decisions that were made, at the 28 June 2017 meeting was found to be neither credible nor reliable. That was particularly the case in relation to their evidence that the fact that the employees had the benefit of the Enterprise Agreement, and had the right under the Fair Work Act to vote in relation to any variation of that agreement, did not play any role in the reasons for making or approving the relevant decision concerning redundancies.

18    On 3 July 2017, Mr Mazzarolo and Mr Miller held a meeting with the workers. Both Mr Mazzarolo and Mr Miller addressed the workers and a memorandum signed by Mr Mazzarolo was handed out towards the end of the meeting. The evidence concerning the 3 July 2017 meeting is considered at length in paragraphs 101 to 105 and 221 to 257 of the Liability Judgment. The terms of the memorandum are extracted in paragraph 103 of the Liability Judgment. The important points to note are as follows.

19    First, Mr Mazzarolo spoke first. He said words to the effect that the meeting had been arranged because the workers had voted against the variation of the Enterprise Agreement to make it compliant with the Code. He then conveyed to the workers that, because they had voted against the variation, it was necessary to consult with the workers about major workplace changes and the possibility of making everyone redundant. He also said, in that context, something along the lines of “we told you that this was going to happen if you didn’t vote yes”. Mr Mazzarolo also read from the memorandum.

20    Second, Mr Miller spoke next and answered questions from some of the workers. The gist of what Mr Miller said in response to the questioning was that it was “real” and not “bullshit” that De Martin & Gasparini was proposing or intending to make the workers redundant if it was not “Code-compliant” by 31 August 2017. He also conveyed to the workers that they were the only ones who could change the situation and avoid redundancy.

21    Third, despite the references to consultation, the words and actions of Mr Mazzarolo and Mr Miller at the meeting on 3 July 2017 constituted a threat to dismiss the workers. The combined effect of the statements made by Mr Mazzarolo and Mr Miller was to intimidate and communicate an intention to inflict harm in the form of redundancies if De Martin & Gasparini was unable to become Code-compliant by 31 August 2017. The statements made by Mr Mazzarolo and Mr Miller were also undoubtedly inflammatory and intimidatory.

22    Fourth, the actions of De Martin & Gasparini, through Mr Mazzarolo and Mr Miller, at the 3 July 2017 meeting altered the position of the workers to their prejudice because, amongst other things, they affected the workers’ job security and caused a level of upset, distress, and anxiety amongst some of the employees. The actions also injured the workers in their employment for essentially the same reasons.

23    Fifth, for the reasons explained in paragraphs 281 to 294 of the Liability Judgment, the actions taken at the 3 July 2017 meeting were not authorised by or under the Fair Work Act.

24    Adverse action only contravenes s 340 of the Fair Work Act if it was taken because the person against whom the action was taken had a workplace right, or had exercised a workplace right. The CFMEU alleged that De Martin & Gasparini took the adverse action against the workers because they were entitled to the benefit of the Enterprise Agreement and had voted against De Martin & Gasparini’s proposal to vary the Enterprise Agreement. As explained in paragraph 25 of the Liability Judgment, an enterprise agreement is a “workplace instrument” and a benefit under a workplace instrument is a “workplace right” by reason of s 341(1)(a). The workers’ right to engage in the process provided in the Fair Work Act in relation to the variation of an enterprise agreement is also a workplace right by reason of s 341(1)(b) of the Fair Work Act.

25    By reason of s 361 of the Fair Work Act, it was presumed that the adverse action taken by De Martin & Gasparini on 3 July 2017 was taken because the workers had those rights, or had exercised those rights, unless De Martin & Gasparini proved otherwise. There was considerable controversy at trial about whether De Martin & Gasparini had proven otherwise. That issue is dealt with in paragraphs 295 to 327 of the Liability Judgment.

26    Ultimately I found, on balance, that De Martin & Gasparini had not discharged its burden of proving that the adverse action taken at the 3 July 2017 meeting was not taken because the employees had, or had exercised, the relevant workplace rights. I was not satisfied that the evidence demonstrated that the fact that the employees were entitled to the benefit of the Enterprise Agreement, or that the employees were able to participate in, and had participated in, a vote to vary the Enterprise Agreement, and the fact that those rights had the character of workplace rights, were not the operative reasons for the decision taken by Mr Harper on 28 June 2017. It was Mr Harper’s decision which was effectively put into effect by the words and actions of Mr Mazzarolo and Mr Miller at the 3 July 2017 meeting.

27    It followed that De Martin & Gasparini was presumed to have taken the adverse action on 3 July 2017 because the workers had the relevant workplace rights.

28    It should perhaps be noted in this context that the CFMEU also alleged that Mr Mazzarolo and Mr Miller were involved in De Martin & Gasparini’s contravention of s 340, and were therefore taken to also have contravened s 340 by reason of s 550 of the Fair Work Act, because they aided, abetted, counselled, or procured, or were otherwise knowingly concerned in or party to De Martin & Gasparini’s contravention. I found, however, that the evidence did not support the inference that Mr Mazzarolo and Mr Miller aided, abetted, counselled, or procured, or were otherwise knowingly concerned in or party to the contravention by De Martin & Gasparini.

29    My findings in that regard are set out in paragraphs 329 to 337 of the Liability Judgment. In summary, s 361 of the Fair Work Act does not apply to accessorial liability. It was therefore necessary for the CFMEU to prove that Mr Mazzarolo and Mr Miller knew all of the essential facts and circumstances which together constituted the contravention. The CFMEU was therefore required to prove, most significantly, that Mr Mazzarolo and Mr Miller knew that the decision made by Mr Harper, which they put into effect at the meeting on 3 July 2017, was taken because the workers had the relevant workplace rights. I found, however, that the evidence did not support such a finding. The evidence clearly indicated that Mr Mazzarolo and Mr Miller knew that the decision made by Mr Harper was temporally and causally linked to the fact that the employees continued to have the benefit of the non-compliant Enterprise Agreement, and to the fact that the employees had exercised their right under the Fair Work Act to vote down the proposed variations to the agreement which were intended to make it Code-compliant. The evidence did not, however, support the inference that Mr Mazzarolo and Mr Miller knew that Mr Harper had made the decision because those matters had the character of workplace rights.

30    It should also be noted that the CFMEU alleged that each of De Martin & Gasparini, Mr Mazzarolo and Mr Miller contravened s 54 of the Building and Construction Industry (Improving Productivity) Act 2016 (Cth), and that Mr Mazzarolo and Mr Miller were involved in De Martin & Gasparini’s contravention of that provision. For the reasons given in paragraphs 356 to 382 of the Liability Judgment, however, I was not satisfied that any of those contraventions had been made out on the evidence.

FIXING PECUNIARY PENALTIES – RELEVANT PRINCIPLES

31    The relevant principles to apply in fixing pecuniary penalties for contraventions of provisions such as s 340 of the Fair Work Act are well established. The following summary of the principles is taken primarily from the judgment of the Full Court in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68; [2017] FCAFC 113 at [98]-[107].

32    Whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty is primarily, if not wholly, protective in promoting the public interest in compliance: Trade Practices Commission v CSR Ltd [1990] FCA 762 at 43; (1991) ATPR 41-076 at 52,152; Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at [55] (Commonwealth v Director FWBII) (per French CJ, Kiefel, Bell, Nettle and Gordon JJ).

33    The principal object of a pecuniary penalty is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene; both specific and general deterrence are important: Re Chemeq Ltd; Australian Securities and Investments Commission v Chemeq Ltd (2006) 234 ALR 511; [2006] FCA 936 at [90]; Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; [2007] FCAFC 65 at [93].

34    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]; Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249; [2012] FCAFC 20 at [62]-[63]. In relation to general deterrence, it is important to send a message that contraventions of the sort under consideration are serious and not acceptable: Australian Securities and Investments Commission v Southcorp Ltd (No 2) (2003) 130 FCR 406 at [32].

35    The fixing of a pecuniary penalty involves the identification and balancing of all the factors relevant to the contravention and the circumstances of the defendant, and making a value judgment as to what is the appropriate penalty in light of the protective and deterrent purpose of a pecuniary penalty. While there may be differences between the criminal sentencing process and the process of fixing a pecuniary penalty (cf. Commonwealth v Director, FWBII at [56]-[57]), the fixing of a pecuniary penalty may, to an extent, be likened to the “instinctive synthesis” involved in criminal sentencing: Markarian v The Queen (2005) 228 CLR 357 at [74]-[76]; TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 294.

36    Instinctive synthesis is the “method of sentencing by which the judge identifies all the factors that are relevant to the sentence, discusses their significance and then makes a value judgment as to what is the appropriate sentence given all the factors of the case”: Markarian at [51] (per McHugh J). Or, as the plurality put it in Markarian (at [37], per Gleeson CJ, Gummow, Hayne and Callinan JJ), quoting from Wong v The Queen (2001) 207 CLR 584, “the sentencer is called on to reach a single sentence which … balances many different and conflicting features”. Like the exercise of imposing a sentence for an offence, the process of fixing an appropriate pecuniary penalty should not be approached as a mathematical exercise involving increments to or decrements from a predetermined range of sentences: Wong at [74]-[76].

37    In fixing the amount of a civil penalty, reference is frequently made to the list of factors or considerations identified by Santow J in Re HIH Insurance Ltd (in liq) and HIH Casualty and General Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler (2002) 42 ACSR 80; [2002] NSWSC 483 at [126] and French J in Chemeq at [99]. Those lists of relevant considerations, which have been approved and elaborated on by many subsequent decisions of this Court, are not, and plainly were not intended to be, exhaustive. Nor was it suggested that each of the factors referred to in the respective lists was necessarily relevant or important in every case. The lists of factors should not be treated as a rigid catalogue or checklist of matters to be applied in each case; the overriding principle is that the Court should weigh all relevant circumstances: Australian Securities and Investments Commission v GE Capital Finance Australia, in the matter of GE Capital Finance Australia [2014] FCA 701 at [72].

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

39    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 respondent 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 innocent third parties; and the extent of any profit or benefit derived as a result of the contravention.

40    The factors that concern the particular circumstances of the respondent, particularly where the respondent 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.

41    Where the defendant is a body corporate, the size of the body does not of itself justify a higher penalty than might otherwise be imposed: Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd (2015) 327 ALR 540; [2015] FCA 330 at [89]-[92]. The size of the corporation may, however, be particularly relevant in determining the size of the pecuniary penalty that would operate as an effective deterrent. The sum required to achieve that object will generally be larger where the company has vast resources: Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) (2005) 215 ALR 301; [2005] FCA 265 at [39]; Australian Competition and Consumer Commission v Apple Pty Ltd [2012] FCA 646 at [38].

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

43    Even where the maximum penalty for the contravention is high, and 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: Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd (1978) ATPR 40-091 at 17,896; NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 293; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) (2010) 199 IR 373; [2010] FCA 977 at [5].

44    It has been observed that no “light handed approach” should be taken to “serious, wilful and ongoing breaches of the industrial laws”: Finance Sector Union v Commonwealth Bank of Australia (2005) 224 ALR 467; [2005] FCA 1847 at [72]; Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; [2008] FCAFC 170 at [61]-[62].

THE APPROPRIATE PECUNIARY PENALTY

45    It is convenient to first consider the factors concerning the objective nature and seriousness of the offending conduct. Consideration can then be given to the factors that relate to the relevant subjective circumstances of De Martin & Gasparini.

The nature and circumstances of the contravention

46    It was common ground that, while the conduct in question was directed at all of the approximately 110 employees of De Martin & Gasparini, there was a single contravention of s 340 of the Fair Work Act. A contravention of s 340 carries a maximum penalty of 60 penalty units: see item 11 in the table to s 539(2) of the Fair Work Act. As at 3 July 2017, a penalty unit was $210.00: s 12 of the Fair Work Act; s 4AA Crimes Act 1914 (Cth). Section 546(2)(b) of the Fair Work Act provides that the maximum penalty for a body corporate is five times the maximum number of penalty units referred to in the relevant item in the table to s 539(2) of the Fair Work Act. The maximum penalty applicable to De Martin & Gasparini’s contravention is accordingly $63,000.00.

47    De Martin & Gasparini’s contravention of s 340 of the Fair Work Act was undoubtedly very serious. It involved threatening the company’s entire workforce with redundancy. While the threat occurred in the course of what was supposed to be consultation with the workforce, there was, as events transpired, no real or effective consultation: Liability Judgment at [293]. Instead, Mr Mazzarolo and Mr Miller acted in a way which appeared to be intended to intimidate and instil fear in the workers: Liability Judgment at [264]. It certainly had, or at least was likely to have had, that effect. The threat to terminate the workers’ employment, which was the product of decisions made by senior management of De Martin & Gasparini, also undoubtedly caused upset, distress, and anxiety amongst the workers: Liability Judgment at [264], [274], [280]. The threat continued to hang over the heads of the workers for some considerable time.

48    The contravention struck at the very rights that s 340 of the Fair Work Act is designed to protect. One of the principal objects of Part 3-1 of the Fair Work Act, which includes s 340, is to protect valuable workplace rights which are often subject to challenge: s 336(1)(a) of the Fair Work Act; Construction, Forestry, Mining and Energy Union v State of Victoria (No 2) [2013] FCA 1034 at [53]. The workers were entitled to the benefit of the Enterprise Agreement and were equally entitled to vote against the variations to that agreement that had been proposed by De Martin & Gasparini.

49    The action taken by De Martin & Gasparini was taken because the workers had those workplace rights, or had exercised them. The fact that the finding that De Martin & Gasparini took the action for that reason, or with that intent, was the outcome of the presumption in s 361 of the Fair Work Act, as opposed to a positive finding, does not lessen the seriousness of the contravention. The fact remains that De Martin & Gasparini was unable to prove that the action was not taken for that reason, mainly because the evidence of their senior officers was found to be unreliable and to lack credibility.

50    In considering the seriousness of the contravention, the parties were in heated dispute about whether the contravention was, or was not, deliberate. The CFMEU contended that the contravention was deliberate. De Martin & Gasparini disputed that contention, principally on the basis of the finding that the evidence did not establish that Mr Mazzarolo and Mr Miller aided, abetted, counselled, or procured, or were otherwise knowingly concerned in or party to, the contravention. The submissions of both parties, however, tended to miss the point.

51    There could be little doubt that Mr Mazzarolo and Mr Miller knew and intended that their words and actions at the meeting on 3 July 2017 would, in effect, constitute a threat to dismiss the workers: Liability Judgment at [263], [264], [333]. Their words and actions were effectively the product of the decision made by senior management of De Martin & Gasparini, in particular Mr Harper, at the meeting on 28 June 2017, though the decision perhaps may not have authorised or justified some of the more aggressive and threatening language ultimately used by Mr Mazzarolo and Mr Miller. In any event, it follows that De Martin & Gasparini, through Mr Mazzarolo and Mr Miller, deliberately threatened to dismiss the workers and, in that sense at least, deliberately took the action which constituted adverse action.

52    As already indicated, there was also little doubt that Mr Mazzarolo and Mr Miller knew that the decision made by Mr Harper was temporally and causally linked to the fact that the workers continued to have the benefit of the Enterprise Agreement, and had exercised their right to vote against the proposed variation of that agreement: Liability Judgment at [337]. The evidence did not establish, however, that Mr Mazzarolo and Mr Miller knew that Mr Harper made the decision because those benefits or rights had the character of workplace rights. It was for that reason that Mr Mazzarolo and Mr Miller were found not to have been involved in the contravention by De Martin & Gasparini: Liability Judgment at [333], [337]. In short, they did not have knowledge of all of the essential matters which together constituted the contravention: Liability Judgment at [330]. It must also follow that it cannot be concluded that Mr Mazzarolo and Mr Miller knew and intended that their actions, on behalf of De Martin & Gasparini, contravened s 340 of the Fair Work Act.

53    De Martin & Gasparini must also be taken to have known and intended that the actions taken by Mr Mazzarolo and Mr Miller to put into effect the decision made at the 28 June 2017 meeting would amount to a threat to dismiss the workers: s 793(2) of the Fair Work Act. In that sense at least, it may also be concluded that De Martin & Gasparini deliberately took the action which was found to have constituted adverse action. Since De Martin & Gasparini did not prove that the adverse action was not taken because the workers had, or had exercised, workplace rights, it must also be presumed that the adverse action was taken for that reason: s 361 of the Fair Work Act. While it was not necessary, for the purposes of finding that De Martin & Gasparini contravened s 340, to go beyond finding that it had not rebutted the presumption in s 361 of the Fair Work Act, the evidence did nonetheless indicate that Mr Harper, who was the relevant decision-maker, decided to threaten to terminate the workers because they had the relevant workplace rights: Liability Judgment at [318]. It follows that, unlike Mr Mazzarolo and Mr Miller, De Martin & Gasparini may be taken to have known all of the elements that together constituted the contravention.

54    It does not follow, however, that it can be positively concluded that De Martin & Gasparini deliberately contravened s 340, in the sense that it knew that its conduct would contravene s 340 of the Fair Work Act, but deliberately went ahead nonetheless. The evidence does not go that far. It accordingly cannot be said that the contravention was flagrant or contumacious, at least in that respect. De Martin & Gasparini was not deliberately thumbing its nose at the Fair Work Act and s 340 in particular. That is a relevant, though, in all the circumstances, not a particularly weighty, consideration in assessing the seriousness of the contravention.

55    Perhaps more significantly, in determining the seriousness of the contravention, the contravening conduct must be considered in the context of the difficulties faced by De Martin & Gasparini in July 2017, given the impending commencement of the relevant parts of the Code. As has already been noted, there could be little doubt that De Martin & Gasparini was put in the unenviable position that it and its related companies would be unable to perform any Commonwealth Government funded building work after 1 September 2017 if it was unable to vary the Enterprise Agreement. That would, undoubtedly, have been financially and commercially very damaging, if not almost catastrophic, not only for De Martin & Gasparini, but also Boral and its related companies. De Martin & Gasparini was effectively put in that difficult position through no fault of its own. The Enterprise Agreement had been negotiated and entered into well before the Code was finalised.

56    The adverse action was only taken by De Martin & Gasparini after it had failed to secure the votes of the workers to vary the agreement. That was, at least in part, due to the CFMEU’s general opposition to the variation of enterprise agreements to make them Code-compliant while there was still a prospect that the Code would be disallowed.

57    The difficult position that De Martin & Gasparini found itself in did not, and does not, excuse or justify the unlawful action it ultimately took. It does, however, tend to explain it. The action was, in a sense, an ill-conceived, poorly considered and rather desperate response to the difficult circumstances that De Martin & Gasparini found itself in.

58    As events transpired, the impugned actions taken by De Martin & Gasparini were also ultimately entirely unnecessary. Once the Senate had refused the disallowance motion on 9 August 2017, and there was no doubt that the Code would come into effect, the parties to the Enterprise Agreement were able to negotiate and agree on variations to the Enterprise Agreement which made it compliant with the Code before 1 September 2017. Evidence to that effect was adduced at the penalty hearing.

59    Within five days of the failure of the disallowance motion, De Martin & Gasparini and the CFMEU had agreed to vary the Enterprise Agreement and had obtained preliminary advice from the Australian Building and Construction Commission (ABCC) that the proposed varied agreement would comply with the Code. The varied agreement was approved unanimously by the workers on 23 August 2017. The varied agreement was approved by the Fair Work Commission and its compliance with the Code was confirmed by the ABCC the following day. It was for this reason that the CFMEU did not ultimately need to press for injunctive relief.

60    The evidence concerning the eventual variation of the Enterprise Agreement to some extent cuts both ways. On the one hand, it tends to reveal that the inability to negotiate an acceptable variation to the Enterprise Agreement in June 2017 was, at least in part, due to the invariable position that the CFMEU had taken to oppose any variation to enterprise agreements that did not comply with the Code while there was still a chance that the Code would be disallowed. On the other hand, it tends to suggest that De Martin & Gasparini’s concerns that it would not have sufficient time to renegotiate variations to the Enterprise Agreement after 9 August 2017 were entirely unfounded. That, in turn, tends to confirm that its actions were an ill-conceived, knee-jerk reaction to the workers voting down the initial proposal to vary the agreement. Had De Martin & Gasparini waited until after 9 August 2017 to put its proposed variation of the Enterprise Agreement to the workers, the perceived need to threaten the workers with dismissal would have been averted.

61    Nevertheless, the difficult circumstances faced by De Martin & Gasparini at the time no doubt mitigates the seriousness of the contravention to an extent. The evidence certainly shows that De Martin & Gasparini was not gratuitously seeking to vary the Enterprise Agreement to water down the workers’ benefits, conditions, or rights: Liability Judgment at [275]-[276]. Rather, it was acting in the face of significant commercial concerns and its perception at the time, which appears to have been reasonably and genuinely held, that, given the attitude displayed by the CFMEU, it had little choice but to take the action it did.

62    The contravention involved senior management of, not only De Martin & Gasparini, but also its parent company, Boral. The contravention was, however, an isolated event and was not in any sense systematic or part of a course of conduct. Nor was it the product of inadequate or defective compliance systems. Rather, as has already been noted, it was the product of rather exceptional circumstances and an ill-conceived or poorly considered response to those circumstances. De Martin & Gasparini did not profit in any way from the adverse action and, ultimately, nobody suffered any substantial loss or damage. The damage caused by the contravention was essentially limited to the upset, distress, and anxiety felt by the workers during the period that the threat to dismiss them hung over their heads.

De Martin & Gasparini’s subjective circumstances

63    De Martin & Gasparini has not previously been found to have contravened the Fair Work Act, nor has any of its predecessors. By all accounts, it has been a good corporate industrial citizen which, in the construction industry at least, is a significant achievement. De Martin & Gasparini’s exemplary industrial record is a matter which must be afforded considerable weight.

64    While De Martin & Gasparini vigorously defended the proceedings, it gave undertakings in response to the CFMEU’s application for an interlocutory injunction and acted in a way which facilitated the early final hearing of the proceeding. De Martin & Gasparini’s vigorous defence of the proceedings should be viewed more as an indication of its belief that it had done nothing wrong than as a mark of its lack of cooperation or its unwillingness to facilitate the course of justice. Given the difficulty and complexity of the issues raised by the proceeding, De Martin & Gasparini’s defence of the proceeding was, by no means, unreasonable or a sign of intransigence. De Martin & Gasparini’s belief that it had done nothing wrong perhaps also explains the absence of any specific evidence of contrition or remorse.

65    As was explained earlier, the principal object of a pecuniary penalty is to attempt to put a price on contravention that is sufficiently high to deter repetition, not only by the specific contravenor, but also by others who might be tempted to contravene. It is largely for that reason that, where the contravenor is a corporation, the size and financial position of the corporation is a relevant consideration in fixing the size of the pecuniary penalty.

66    The evidence concerning the size and financial position of De Martin & Gasparini was very limited. As noted earlier, De Martin & Gasparini is a wholly owned subsidiary of Boral. In the 2016 financial year, De Martin & Gasparini earned revenue of approximately $120 million. There was no evidence concerning De Martin & Gasparini’s assets and liabilities or its profits in the 2016 or 2017 financial years.

67    Despite the relative paucity of the specific financial evidence, it may nevertheless be readily inferred that the size and financial capacity of De Martin & Gasparini is such that it is likely that even the maximum penalty of $63,000 may not be a particularly effective deterrent. In those circumstances, assessing the appropriate penalty by reference to the “price” that will achieve specific deterrence is somewhat difficult.

68    Much the same thing can be said about general deterrence. Many corporate participants in the building and construction industry are as large as, if not significantly larger than De Martin & Gasparini. It is difficult to imagine that even the maximum penalty of $63,000 is likely to achieve general deterrence in that industry.

69    Nevertheless, both specific and general deterrence remain important considerations in fixing the appropriate pecuniary penalty for the contravention by De Martin & Gasparini. The penalty must be sufficiently high that it will not be simply regarded by De Martin & Gasparini as an acceptable cost of doing business. It must also send a message to other participants in the industry that contraventions of s 340 of the Fair Work Act of the sort engaged in by De Martin & Gasparini are serious and not acceptable.

Balancing the relevant considerations – The appropriate penalty

70    The fixing of an appropriate penalty for De Martin & Gasparini’s contravention of s 340 of the Fair Work Act involves balancing all of the relevant factors that have just been identified having regard to the “yardstick” maximum penalty of $63,000 and the primarily protective and deterrent purpose of a pecuniary penalty. The serious nature of the contravening conduct and the effect it had on the workers, on the one hand, must be balanced against De Martin & Gasparini’s exemplary record, on the other. The need for specific and general deterrence must also be balanced against the extenuating and extraordinary circumstances in which the conduct occurred.

71    The assessment of the appropriate penalty is not an exact science and there is no single correct penalty. Neither De Martin & Gasparini, nor the CFMEU, referred the Court to any comparative cases which might offer guidance in determining the appropriate penalty in this case.

72    In all the circumstances, an appropriate pecuniary penalty to impose is $30,000. That penalty reflects, so far as possible, both the objective circumstances of the contravening conduct as well as De Martin & Gasparini’s individual subjective circumstances.

To whom should the pecuniary penalty be paid?

73    Section 546(3) provides that the Court may order that the pecuniary penalty, or a part of the penalty, be paid to the Commonwealth, or a particular organisation, or a particular person. The usual order in cases such as this, where the applicant is not a regulator or the Commonwealth, is that the penalty be paid to the successful applicant: Sayed v Construction, Forestry, Mining and Energy Union (2016) 239 FCR 336; [2016] FCAFC 4 at [101]. The CFMEU submitted that there was no reason to depart from that usual order. De Martin & Gasparini did not suggest otherwise. It follows that the pecuniary penalty of $30,000 should be paid to the CFMEU.

OTHER RELIEF

74    The fact that the parties have agreed that a declaration of contravention should be made does not relieve the Court of the obligation to satisfy itself that the making of such a declaration is appropriate: Commonwealth v Director, FWBII at [59]; Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No 2) (2011) 279 ALR 609; [2011] FCA 382 at [7] (overturned by the Full Court in Australian Competition and Consumer Commission v MSY Technology Pty Ltd (2012) 201 FCR 378; [2012] FCAFC 56 on a separate issue). It is not the role of the Court to merely rubber stamp orders that are agreed as between a regulator and a person who has admitted contravening a public statute: Chemeq at [100]; Commonwealth v Director, FWBII at [31], [48], [58]. There is no reason why the same principle would not apply where the applicant is not a regulator.

75    The Court has a wide discretionary power to make declarations under s 21 of the Federal Court of Australia Act 1976 (Cth): Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437-438 (per Gibbs J, citing Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 at 448); Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 at 99 (per Sheppard J). Before making a declaration, the Court should be satisfied that the question is real, not hypothetical or theoretical, that the applicant has a real interest in raising the issue, and that there is a proper contradictor: Forster at 437-438.

76    Declarations relating to contraventions of legislative provisions are likely to be appropriate where they serve to record the Court’s disapproval of the contravening conduct, vindicate a regulator’s claim that the respondent contravened the provisions, assist a regulator to carry out its duties, and deter other persons from contravening the provisions: Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union (2007) ATPR 42-140; [2006] FCA 1730 at [6], and the cases there cited; Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [95]. There is again no reason that this principle would not apply where the applicant is not a regulator, particularly where, as here, the applicant is a major industrial association.

77    In all the circumstances, this is an appropriate case for the making of a declaration that De Martin & Gasparini contravened s 340 of the Fair Work Act.

CONCLUSION AND DISPOSITION

78    A declaration should be made in the following terms:

On 3 July 2017, the first respondent, De Martin & Gasparini Pty Limited, contravened s 340 of the Fair Work Act 2009 (Cth) in that, by the words and conduct of two of its senior officers, Mr Louie Mazzarolo and Mr Greg Miller, it took adverse action against all employees covered by the De Martin & Gasparini/CFMEU Collective Agreement 2015-2018 (Enterprise Agreement) by threatening to dismiss the employees, injuring the employees in their employment and altering the position of the employees to their prejudice because:

(a)    the employees had a workplace right, namely being entitled to the benefit of a workplace instrument under the Fair Work Act, being the Enterprise Agreement; and

(b)    the employees having, or having exercised, a workplace right, namely being able to initiate or participate in a process under the Fair Work Act, being the process of voting on whether or not to approve a variation to the Enterprise Agreement.

79    De Martin & Gasparini should be ordered to pay a pecuniary penalty of $30,000 to the CFMEU.

80    In light of s 570 of the Fair Work Act, there should be no order as to costs. Neither party contended otherwise.

Associate:

Dated:    12 September 2018