FEDERAL COURT OF AUSTRALIA

Australian Building and Construction Commissioner v J Hutchinson Pty Ltd T/A Hutchinson Builders [2019] FCA 667

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be allowed.

2.    Orders 1 and 2 of the Federal Circuit Court made on 22 February 2019 in the matter of Director, Fair Work Building Industry Inspectorate v J Hutchinson Pty Ltd t/a Hutchinson Builders & Ors [2019] FCCA 402 be set aside.

3.    Pursuant to section 545 of the Fair Work Act 2009 (Cth) the First Respondent pay pecuniary penalties in the total sum of $20,000, comprised of a pecuniary penalty of $2,000 for each of the 10 contraventions of section 474(1)(b) of the Fair Work Act 2009 (Cth) declared by the Federal Circuit Court in that proceeding to have been committed by the First Respondent.

4.    The penalties payable pursuant to Order (3) hereof be paid within 28 days into the Consolidated Revenue Fund of the Commonwealth.

5.    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

(REVISED FROM TRANSCRIPT)

LOGAN J:

1    At about 9.40am on 9 December 2013 as part of the respondent’s, (Hutchinson), demonstration of its compliance with Queensland Government Implementation Guidelines for the Queensland Code of Practice for the building and construction industry, two investigators from the Building Construction Compliance Branch of the Queensland Government attended one of Hutchinson’s worksites at its request for the purpose of auditing its compliance with that code. The worksite concerned was, at the time, the place where what was known as Arena Apartments at Edmondstone Street, South Brisbane was being constructed.

2    The project entailed the construction of a multi-storey residential tower containing 191 residential apartments and ground floor retail outlets. Hutchinson was the head contractor in respect of that project. At the time when those Queensland Government investigators attended the worksite, work was in process. At about 11am, at the behest of two organisers of the then Construction, Forestry, Maritime, Mining and Energy Union (CFMEU), 10 of Hutchinson’s employees at the worksite ceased work. The CFMEU’s action was responsive to the presence on site of the investigators.

3    The employees went to the lunch room where they remained for about 45 minutes. They only returned to work when directed so to do by the CFMEU organisers. Hutchinson did not, as it should have, having regard to s 474 of the Fair Work Act 2009 (Cth) (Fair Work Act), deduct from the wages of each of the 10 employees four hours’ pay in respect of their actions that day in the first pay period following 9 December 2013. Instead, in that pay period, the full wages were paid to the employees. It was only some months later that the withholding came to be made.

4    The Director Fair Work Building Industry Inspectorate, the predecessor to the present appellant, came to institute proceedings against Hutchinson in respect of alleged contraventions of s 474 of the Fair Work Act. The Director also instituted proceedings against the CFMEU and the two organisers. As to the latter, contraventions were found and penalties imposed in the Federal Circuit Court: see Director, Fair Work Building Industry Inspectorate v J Hutchinson Pty Ltd T/A Hutchinson Builders & Ors [2019] FCCA 401. The present appeal concerns not that aspect of the events of 9 December 2013, but rather the proceedings against Hutchinson in respect of the alleged s 474 contraventions.

5    More particularly, the subject of the appeal is not the finding of contraventions but rather the resultant penalty imposed by that court, as to which, see: Director, Fair Work Building Industry Inspectorate v J Hutchinson Pty Ltd T/A Hutchinson Builders & Ors (No 2) [2019] FCCA 402.

6    There are two grounds of appeal. Those grounds on close examination are not strictly separate but rather are, for reasons I shall indicate, interrelated. The grounds are:

1.    The Court erred in law by failing to treat deterrence as the principal object of the exercise of discretion to impose a civil penalty.

2.    The penalty of $1,200 imposed on Hutchinson Builder was, in the circumstances of the proceeding before the primary judge, including the facts as found by his Honour, manifestly inadequate, considering that:

a.    no explanation was given by Hutchinson Builders as to why the deductions the subject of the contraventions of s.474(1)(b) of the Fair Work Act 2009 (Cth) were not made;

b.    the conduct of Hutchinson Builders was inconsistent with the purposes of s.474(1)(b) of the Fair Work Act 2009 (Cth);

c.    the maximum penalty payable for single contravention of s.474(1)(b) of the Fair Work Act 2009 (Cth) was $51,000.00;

d.    the matters the subject of the contraventions involved senior management of Hutchinson Builders;

e.    Hutchinson Builders offered no apology or contrition or significant co-operation and the matter proceeded for the most part by way of a contested liability hearing; and

f.    the application of the principle of general deterrence ought to have led to a higher penalty against Hutchinson Builders in the circumstances of this case.

7    As was correctly submitted on behalf of Hutchinson, the imposition of civil penalties on it by the Federal Circuit Court called for the exercise of a judicial discretion by the learned primary judge. In those circumstances, a court exercising appellate jurisdiction is entitled to interfere with the exercise of that discretion only if an error of the kind referred to in the well-known case, House v The King (1936) 55 CLR 499 at 505, is revealed. The appellant submitted that an error of principle of the kind permitting interference with the exercise of the discretion was to be found in a failure on the part of the learned primary judge to appreciate the primacy of general deterrence in relation to the imposition of a pecuniary penalty.

8    This is not a case where regard to the reasons for judgment of the primary judge discloses an absence of any reference to general deterrence as a relevant consideration in relation to the imposition of penalty. Rather, at [59] his Honour stated:

The purposes to be served by the imposition of a pecuniary penalty upon a party who contravenes the Fair Work Act are threefold: punishment, deterrence and rehabilitation. In my view, the making of the declaration I have earlier set out provides a public record of [Hutchinson’s] contraventions of the Act. Given the nature and extent of the relevant contraventions as I have set them out above, the making of the declaration against the first respondent serves the purpose of punishment. The facts of the case do not tend to suggest that any particular attention needs to be addressed to the question of rehabilitation or specific deterrence. The matters I have referred to above point towards conclusion that there is little purpose to be served in this case by imposing any penalty at all. There is no particular need for specific deterrence and the nature and extent of the contraventions in this case is very limited. There is, however, a question of general deterrence which is always a relevant consideration.

[emphasis added]

9    As to matters referred to “above” in the excerpt just quoted, his Honour appreciated – see [53] – that the maximum applicable aggregate penalty in respect of the 10 contraventions was $510,000. He further appreciated, again with respect correctly, that, while the provisions of s 557(1) of the Fair Work Act did not apply to a contravention of s 474, that did not mean that the general sentencing principle in relation to circumstances which revealed a single course of conduct was irrelevant. Having recorded this understanding his Honour stated:

55.     The contraventions involved 10 employees. The amount improperly paid to those employees was about $1,300. The applicant submitted that notwithstanding the modest amount that was paid to the employees wrongly, what is important is to recognise that the policy of s.474(1) of the Act was thwarted by the first respondent’s conduct. It was not suggested that any party suffered any particular loss by reason of the first respondent’s contraventions.

56.     Mr Berlese, who was ultimately responsible for the payments being made through his failure to follow up a direction from Mr Quinn, occupied a senior managerial role in respect of first respondent’s business structure.

57.     Whilst the first respondent’s witnesses, Mr Quinn and Mr Berlese cooperated with the applicant by participating in recorded interviews, these proceedings comprised a contested liability hearing. It cannot be said, in my view, that the matter has proceeded by way of agreement between the parties or that the first respondent is apologetic or contrite about the contraventions.

58.     Mr Quinn gave evidence that since April, 2014 “there have been quite a few events of unprotected industrial action”. He put the number of occasions at about 25 and gave evidence that “on every one of those occasions deductions have been made in the very next pay run”. I take that matter into account. It demonstrates that the need for specific deterrence in the present case is very low. It was not suggested that the first respondent has been found to have contravened the Fair Work Act in any respect relevant to these proceedings on any other occasion.

10    Hutchinson’s submission was that, having regard to the reference by his Honour to general deterrence, it could not be said that there was an error of principle revealed. The difficulty about accepting that submission is that, in the interval between when judgment was reserved and when it was delivered in the Federal Circuit Court, two highly significant cases in relation to the purpose of civil penalty regimes in an industrial context were delivered in the High Court: namely, Commonwealth of Australia v Director Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director Fair Work Building Industry Inspectorate (2015) 258 CLR 482 (Commonwealth v Director, Fair Work Building Industry Inspectorate) and Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157. Also during that period a Full Court of this court made notable and pertinent observations in relation to the purpose of the imposition of civil penalties in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68.

11    It is necessary to refer in some detail to each of these cases, but the long and the short of such reference is that merely to refer, as with respect the primary judge did, to general deterrence as always a relevant consideration is, in light of these authorities, to fail to appreciate that that consideration is primarily, if not wholly, the purpose of the civil penalty regime found in the Fair Work Act.

12    In Commonwealth v Director, Fair Work Building Industry Inspectorate at [55] French CJ and Kiefel, Bell, Nettle and Gordon JJ stated:

… whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:

“Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act] … The principal, and I think probably the only, object of penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.”

[footnote references omitted]

13    The significance, in my respectful view, of the High Court’s judgment in Commonwealth v Director, Fair Work Building Industry Inspectorate lies in its transposition of – and highlighting of principles from – other civil penalty regimes, notably in relation to the regulation of trade practices, into Federal industrial law. Necessarily also, that High Court case and that highlighting means that one must view with caution penalty cases in industrial matters decided prior to it.

14    Hindsight is, of course, a great teacher and, at least in hindsight, the statements made in Commonwealth v Director, Fair Work Building Industry Inspectorate apply to Federal industrial law penalisation sentiments already well evident at ultimate appellate level from Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 in relation to the purpose of civil penalties regimes generally.

15    Were there any doubt about the overarching importance of deterrence as a means of ensuring compliance with statutorily ordained norms of behaviour, that doubt was most emphatically put to rest by Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at [116], where the following statement was made by Keane, Nettle and Gordon JJ:

As has been observed, the principal object of an order that a person pay a pecuniary penalty under s 546 is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners. According to orthodox sentencing conceptions as they apply to the imposition of civil pecuniary penalties, specific deterrence inheres in the sting or burden which the penalty imposes on the contravener. Other things being equal, it is assumed that the greater the sting or burden of the penalty, the more likely it will be that the contravener will seek to avoid the risk of subjection to further penalties and thus the more likely it will be that the contravener is deterred from further contraventions; likewise, the more potent will be the example that the penalty sets for other would-be contraveners and therefore the greater the penalty’s general deterrent effect. Conversely, the less the sting or burden that a penalty imposes on a contravener, the less likely it will be that the contravener is deterred from further contraventions and the less the general deterrent effect of the penalty. Ultimately, if a penalty is devoid of sting or burden, it may not have much, if any, specific or general deterrent effect, and so it will be unlikely, or at least less likely, to achieve the specific and general deterrent effects that are the raison d’être of its imposition.

[footnote references omitted]

16    Like sentiments are to be found in the judgment of the Full Court of this Court in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68 at [98]:

Whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty is primarily, if not wholly, protective in promoting the public interest in compliance: Trade Practices Commission v CSR Ltd [1991] ATPR 41-076 at 52,152; Commonwealth v Director, FWBII at [55] (per French CJ, Kiefel, Bell, Nettle and Gordon JJ). The principal object of a pecuniary penalty is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene; both specific and general deterrence are important: Chemeq at [90]; Ponzio at [93]. A pecuniary penalty for a contravention of the law must be fixed with a view to ensuring that the penalty is not to be regarded by the offender or others as an acceptable cost of doing business: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 (TPG Internet) at [66]; Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249 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 (2003) 130 FCR 406 at [32].

17    The learned primary judge did not, of course, have the benefit – because these cases were handed down during the period when judgment was reserved – of having these cases drawn to his attention.

18    It necessarily follows, though, from the passages in these cases to which I have referred, that an error of principle is, in my view, demonstrated by the passing reference to the relevance of general deterrence in [59] of his Honour’s reasons for judgment. Further, in adverting in that same paragraph to a threefold purpose, his Honour is also, with respect, at odds with the sentiments revealed in the passages to which I have referred in the High Court and Full Court cases.

19    That error of principle necessarily also infects the question of whether the penalty imposed, $1300, was manifestly inadequate for the penalty has not been cast with reference to an understanding of the importance centrally of deterrents.

20    As to manifest inadequacy, Hutchinson quite correctly drew attention to the observations made on that subject in the High Court in Hili v The Queen (2010) 242 CLR 520 at [59] and [60]:

59    As was said in Dinsdale v The Queen, “[m]anifest inadequacy of sentence, like manifest excess, is a conclusion”. And, as the plurality pointed out in Wong, appellate intervention on the ground that a sentence is manifestly excessive or manifestly inadequate “is not justified simply because the result arrived at below is markedly different from other sentences that have been imposed in other cases”. Rather, as the plurality went on to say in Wong, “[i]ntervention is warranted only where the difference is such that, in all the circumstances, the appellate court concludes that there must have been some misapplication of principle, even though where and how is not apparent from the statement of reasons”. But, by its very nature, that is a conclusion that does not admit of lengthy exposition. And, in the present matters, the Court of Criminal Appeal, having described the circumstances of the offending and the personal circumstances of the offenders, said that “the sentence imposed in these matters is so far outside the range of sentences available that there must have been error”.

60    The Court of Criminal Appeal also said that “manifest error is fundamentally intuitive”. That is not right. No doubt, as the Court went on to say, manifest error “arises because the sentence imposed is out of the range of sentences that could have been imposed and therefore there must have been error, even though it is impossible to identify it”. But what reveals manifest excess, or inadequacy, of sentence is consideration of all of the matters that are relevant to fixing the sentence. The references made by the Court of Criminal Appeal to the circumstances of the offending and the personal circumstances of each offender were, therefore, important elements in the reasons of the Court of Criminal Appeal.

[footnote references omitted]

Those statements were made in relation to the deciding in the criminal jurisdiction as to whether a sentence was manifestly inadequate, but I well accept they are no less applicable in relation to an exercise of appellant jurisdiction with respect to whether a civil penalty imposed in an original jurisdiction is or is not manifestly inadequate.

21    As it happens, because of the error in principle in relation to the understanding of the centrality of general deterrence, it is not necessary, in my view, separately to consider whether, had there been no such error, the penalty imposed by the primary judge could have been regarded as manifestly inadequate. Indeed, it would be something of a sterile exercise to embark upon that course, given that it would be premised on an error as to the centrality of general deterrence. The long and the short of it is that an error of principle having been revealed, it falls to me to make the order as to penalty which ought to have been made in the absence of an error of principle, in other words, to re-exercise the sentencing discretion.

22    Within a generation, there have been two notable Federal Royal Commissions into the building and construction industry: one, focusing on the position in New South Wales, undertaken by Commissioner Roger Gyles QC, (as he then was), between 1990 and 1992, the other, focussed nationally, undertaken by Commissioner the Honourable Terence Cole between 2001 and 2003. A common theme in respect of each of those Royal Commissions was the confirmation, not revelation, that pervasive in the building and construction industry in Australia was a culture of lawlessness.

23    The right of a worker to withhold labour has historically been seen as something of a last resort in industrial relations. Sometimes, of course, it is not even a last resort. The exercise of that right is a powerful, and perhaps the most potent, means by which workers collectively can deploy a degree of bargaining power with employers in what can otherwise be a situation of power imbalance. The Fair Work Act does not absolutely prohibit the right of a worker to withhold his or her labour. Rather, in Part 3-3 with respect to industrial action, there is to be found a very careful Parliamentary value judgment and related regulation of the ability to engage in industrial action. Parliament has distinguished in Part 3-3 between what is termed protected and unprotected industrial action. A very particular role has been given by Parliament to the Fair Work Commission in relation to industrial action which includes a withholding of labour.

24    What occurred on 9 December 2013 at Hutchinson’s Arena Apartments construction site was unprotected industrial action instigated by the CFMEU. It was outlaw behaviour. A purpose of s 474 of the Fair Work Act is to provide, via the withholding of pay, a disincentive for workers to engage in unprotected industrial action, in other words and in the circumstances of this case, to succumb to the solicitations of the CFMEU to engage in outlaw behaviour. To fail to make deductions in respect of pay during unprotected industrial action is to appease outlaw behaviour.

25    There is no suggestion on the evidence in this case that Hutchinson had any corporate policy of appeasement at all. Rather, having regard to the findings made by the primary judge in respect of what his Honour plainly saw as conflicting evidence, it appears that Hutchinson’s then managing director, Mr Quinn, did give a direction in relation to withholding to an immediate subordinate, Mr Berlese, a supervisor of the workers concerned, for withholding, but that withholding did not take place at the time when it should have.

26    There is no finding by the primary judge that Mr Berlese deliberately chose not to carry into effect, the direction in relation to withholding. Mr Berlese, on the evidence, gave no explanation. What is of concern to me, though, is the statement Mr Quinn made in evidence in terms of explaining what had occurred. He stated:

On this occasion, our John Berlese assumedly has – has taken the – pragmatic call and said, “This will cause so much drama on our – on our site to not pay,” what he would refer to – he didn’t – hasn’t said this to me – refer to as, “a measly hour and a half’s pay”. Let’s just get on with business, and we’ll hobble into Christmas, and when we’re ready to do this, and take the strong action that we know is needed to be taken in the future, we will be ready for whatever fallout occurs.” So he has taken a pragmatic position.

27    It is apparent that Mr Quinn, as managing director, was aware that unprotected industrial action had occurred. He gave a direction but never followed up whether or not – as there should have been at the first pay period – there was compliance. There also appears to be a view on his part that, an explanation is to be found in pragmatism or perhaps better turned expediency.

28    Hutchinson has no history at all of any contraventions of this kind before the pay period when deductions should have been made. Further, on the evidence, since then, on about 25 occasions, it has made the requisite deductions. It did ultimately make deductions of the required amount some months later in this case.

29    Inferentially, on the evidence, Hutchinson was and is a major building company. Mr Quinn’s evidence was that, as at November 2015, the company had 150 different types of building jobs at any given time. Its payroll entailed some 1300 weekly payments. I infer from that that its workforce at the time directly employed was some 1300 employees.

30    In Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68 at [105] the Full Court stated:

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 (Coles Supermarkets) 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 at [39]; Australian Competition and Consumer Commission v Apple Pty Ltd [2012] ATPR 42-404 at [38].

31    The Full Court also observed in that case, at [106]:

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

32    The parties approached the question of penalty both in the court below and on the appeal on the basis that the common law sentencing principle of a course of conduct was applicable. I accept that this principle is applicable. Fortuitously, authoritative guidance in relation to that principle has been the subject of a recent summary by the Full Court in Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (The Nine Brisbane Sites Appeal) [2019] FCAFC 59 at [124]. There, by reference to Transport Workers’ Union of Australia v Registered Organisations Commissioner (No 2) (2018) 363 ALR 464 at [84] - [91], the Full Court stated:

124    In Transport Workers’ Union of Australia v Registered Organisations’ Commissioner [No 2] [2018] FCAFC 203; 363 ALR 464 at [84]–[91], the Full Court, referring to other judgments of the Full Court, considered the application of the course of conduct principle in the assessment of pecuniary penalties. The principles include the following:

(1)    The purpose of the common law course of conduct principle is to ensure that, having regard to the circumstances (factual and legal), a party is not penalised more than once for the same conduct.

(2)    That phrase should not simplistically be adopted to transfer multiple contraventions into one contravention, or, necessarily, to impose one penalty by reference to one maximum amount.

(3)     The principle cannot, of itself, operate as a de facto limit on the penalty to be imposed.

(4)    The application of the principle must be informed by the particular legislative provisions relevant to the proceedings. In particular, weight must be given to the fact that the legislature has deliberately and explicitly created separate contraventions for each relevant action.

(5)    The application and utility of the principle must be tailored to the circumstances.

(6)    A judge is not obliged to apply the principle if the resulting penalty fails to reflect the seriousness of contraventions.

(7)     The task is to evaluate the conduct and its course and assess what penalty is, or penalties are, appropriate for the contraventions.

(8)     It is necessary to examine all the conduct and enquire how its course and its explanation factually and legally informs the imposition of penalties, in order to avoid double punishment.

[see Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) [2018] FCAFC 97 at [31]; Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73; 357 ALR 55 at [231]–[236]; Construction, Forestry, Mining and Energy Union v Williams [2009] FCAFC 171; 262 ALR 417 at [16]–[19]; Australian Building and Construction Commissioner v Construction Forestry, Mining and Energy Union [2017] FCAFC 113; 254 FCR 68 at [148].]

33    There were here 10 separate contraventions. That means that the applicable maximum is $51,000 per contravention, the total maximum thereby being $510,000. That collective maximum is the yardstick in respect of this contravention but it must be tempered in the way stated above by reference to the particular circumstances of this case.

34    In theory, of course, it would be open to me, if so persuaded, to impose a penalty of the order given by the primary judge on the basis that that it sufficiently recognised general deterrence. But a penalty of that order would, in my view, trivialise what has occurred here. Equally, and this point was well made on behalf of Hutchinson, with respect, it is necessary to bear in mind that this case is not one where there is or was a corporate culture of tolerating unprotected industrial action and not making the required payments.

35    It is always necessary to look to the maximum penalty as a yardstick rather than using particular cases for that purpose, as so to do can divert attention from the ordained maximum.

36    Nonetheless, because it featured in submissions, I feel compelled to make particular reference to Pine v Multiplex Constructions (Vic) Pty Ltd [2005] FCA 1428 (Multiplex). There, at a time when the then maximum penalty in respect of the cognate provision, s 187AA of the Workplace Relations Act 1996 (Cth), had a prescribed maximum penalty of $10,000 per contravention, the court imposed a total penalty of $4,000 in respect of 10 contraventions (the total potential maximum for which was $100,000).

37    The factors that led Merkel J to that penalty outcome are set out at [6]:

The following factors are of particular relevance to the imposition of a penalty in the present case:

(a)    the totality principle should be applied and, as a consequence, an aggregate penalty that is just and appropriate in the circumstances should be imposed in respect of Multiplex’s contraventions (see CPSU, The Community and Public Sector Union v Telstra Corporation Ltd (2001) 108 IR 228);

(b)    Multiplex admitted that, between approximately 1999 to 2003, it had adopted a practice of paying employees who stopped work during periods in which safety audits were conducted on Multiplex sites following a death in the building and construction industry in Victoria, but it has now adopted, and is prepared to proffer undertakings to enforce, a policy that rejects that practice;

(c)    Multiplex was aware of all of the facts that constituted the contraventions, namely that the relevant employees had engaged in industrial action and that the payments made to those employees included pay for the period during which they were engaged in industrial action;

(d)    the amount paid by Multiplex to the relevant employees in respect of the period they were engaged in industrial action was likely to be less than $3366.08;

(e)    Multiplex made its admissions in respect of the contraventions at a relatively early stage of the proceeding;

(f)    Multiplex had not previously been found to be liable for a contravention of s 187AA, or any other relevant section, of the Act.

38    Multiplex is one of the cases decided before the central importance of deterrence was emphasised by the High Court, which greatly qualifies in any event any use of it as a comparative. This case, in my view, stands in marked contrast to the Multiplex case in that there is no prior history of toleration and related failure to make there statutorily ordained deductions. Had there been such a history, a very much greater penalty would have been dictated both for specific deterrence as well as, even more so, general deterrence.

39    Events afterwards can serve to highlight that a particular occurrence was a singular lapse rather than indicative of a particular culture of toleration. As I have observed, it is a matter of concern that Mr Quinn, the managing director, considered that an explanation for the absence of the compliance with his direction might have been a desire to have harmony on the site. But it is a considerable step, and one I do not take, to translate from that a conclusion of a culture of toleration. Rather it appears that there an inadequate system of checks inside Hutchinson to ensure that the particular directive was complied with.

40    The learned primary judge referred to other cases in reaching his particular conclusion as to penalty. Because, as with Multiplex, each of those was decided prior to the High Court cases I have mentioned, and the underscoring by them of the importance of general deterrence, I do not consider, with all respect, that there is any advantage at all in referring to those earlier cases save, for the reason which I have given, to the Multiplex case.

41    In my view, a penalty needs to be imposed at sufficient level to indicate an imperative need on the part of employers to ensure that their payroll systems and general industrial understanding are sufficiently robust to make certain that unprotected industrial action is the subject of payroll deduction. The absence of a prior history of conduct is a tempering factor. So, too, is the relatively small amount involved, although the danger in failing to make deductions, even in respect of relatively small amounts, is to engender an understanding in a workforce what unprotected industrial action of a minor duration is without a price.

42    The penalty then has to be sufficiently high to ensure the robustness I have mentioned but not so high as to be at odds with a situation where there is a concerted history of failure to make payroll deduction. Further, and there is some merit in this submissions of Hutchinson, in my view, as Hutchinson submitted, the penalty imposed should not be disproportionate to that visited upon the CFMEU, the instigator of the unprotected industrial action. I am not therefore going to impose a penalty greater than that imposed on the CFMEU.

43    It seems to me that a penalty of $20,000, made up of individual penalties of $2,000 in respect of each contravention is, when one takes into account its totality, appropriate to the particular circumstances. In effect, it tempers the need for general deterrence with the particular isolated aberration that this case appears to be on Hutchinson’s part. The penalties should be paid to the Consolidated Revenue, the case being one brought by a public official. There will be judgment accordingly.

Associate:    

Dated:    15 May 2019

SCHEDULE OF PARTIES