FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v Communications, Electrical, Electronic, Energy Information, Postal, Plumbing and Allied Services Union of Australia [2023] FCA 828

ORDERS

PENAL NOTICE

THE COURT DECLARES THAT:

1.    On 1 December 2017 the respondent contravened s 46 of the Building Construction (Improving Productivity) Act 2016 (Cth) and s 417 of the Fair Work Act 2009 (Cth).

THE COURT ORDERS THAT:

1.    Pursuant to s 323 of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth), the Fair Work Ombudsman be substituted as the applicant.

2.    Pursuant to s 81 of the Building Construction (Improving Productivity) Act 2016 (Cth), and in respect of the above declared contravention, the respondent pay a pecuniary penalty of $70,000.00 to the Consolidated Revenue Fund of the Commonwealth within 30 days.

3.    There be no order as to costs.

4.    These Orders be served by the applicant on the respondent in accordance with r 10.04 of the Federal Court Rules 2011 (Cth).

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

REASONS FOR JUDGMENT

COLLIER J

1    By further amended originating application filed on 27 July 2022, the applicant, formerly known as the Australian Building and Construction Commissioner, sought payment of pecuniary penalties by the respondent, Communications, Electrical, Electronic, Energy Information, Postal, Plumbing and Allied Services Union of Australia (CEPU), in circumstances where the CEPU admitted liability for an alleged contravention of s 46 of the Building Construction (Improving Productivity) Act 2016 (Cth) (BCIIP Act) and s 417 of the Fair Work Act 2009 (Cth) (FW Act). In particular the orders sought were as follows:

17.    A declaration that section 46 of the BCIIP Act was contravened on 1 December 2017 at the Southpoint A Site, by the Third Respondent Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing, and Allied Services Union of Australia (CEPU), by virtue of the conduct of the Second Respondent Andrew Blakeley, who organised the conduct of the Fourth to Twenty-eighth Respondents Southpoint A Employees (refusal to commence work), for which the Third Respondent CEPU is liable by virtue of section 94 of the BCIIP Act.

…

19.    A declaration that section 417 of the FW Act was contravened on 1 December 2017 at the Southpoint A Site, by the CEPU Third Respondent, by virtue of the conduct of the Second Respondent Andrew Blakeley who organised the refusal to commence work by the Fourth to Twenty-eighth Respondents Southpoint A Employees listed in the schedule, for which the Third Respondent CEPU is liable by operation of section 793 of the BCIIP FW Act.

Imposition of pecuniary penalties

28.    For each of the respective contraventions of section 46 of the BCIIP Act by the Third Respondent CEPU the subject of the declarations above, the imposition of a pecuniary penalties penalty under section 546 of the FW Act and s.81 of the BCIIP Act.

…

29.    An order under section 546(3) of the FW Act and s.81(6) of the BCIIP Act that the Respondents CEPU pay the penalty penalties to the Consolidated Revenue Fund of the Commonwealth.

(mark-up as original)

BACKGROUND

2    The relevant contravention arose from conduct of a former employee of the CEPU, Mr Andrew Blakeley, on 1 December 2017 at a construction site known as “Southpoint A” located at 269 Grey Street, Brisbane (Site). J Hutchinson Pty Ltd was the Site occupier. The project involved construction of a 22 storey apartment hotel. Planet Plumbing (QLD) Pty Ltd (Planet Plumbing) was contracted to undertake the plumbing work at the Site.

3    On the day of the relevant conduct, Mr Blakeley entered the Site at around 6:00 am, having given notice in accordance with both s 484 of the FW Act and s 119 of the Work Health and Safety Act 2011 (Qld). Mr Blakeley then met with 21 employees of Planet Plumbing. At this meeting, Mr Blakeley moved a motion to the effect that employees of Planet Plumbing could not conduct building works unless Mr Travis Walkley, the Project Manager for Planet Plumbing, was removed from the Site.

4    Subsequently, employees of Planet Plumbing at the Site did not commence work at their scheduled start time of 6:30am. It is common ground that:

    The employees did not commence working until around 9:30am or 10:00am, following the departure of the Project Manager from the Site. This constituted a delay of 3 to 3.5 hours in the commencement of work at the Site.

    This refusal to work amounted to industrial action within the meaning of s 7 of the BCIIP Act and s 19 of the FW Act.

    This industrial action was not protected industrial action within the meaning of s 8 of the BCIIP Act and s 408 of the FW Act.

    It was unlawful industrial action in that it contravened s 46 of the BCIIP Act and s 417 FW Act.

RELEVANT LEGISLATION

5    Section 417 of the FW Act relevantly provides:

Industrial action must not be organised or engaged in before nominal expiry date of enterprise agreement etc.

No industrial action

(1)    A person referred to in subsection (2) must not organise or engage in industrial action from the day on which:

(a)     an enterprise agreement is approved by the FWC until its nominal expiry date has passed; or

(b)     a workplace determination comes into operation until its nominal expiry date has passed;

whether or not the industrial action relates to a matter dealt with in the agreement or determination.

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

(1)     The persons are:

(a)    an employer, employee, or employee organisation, who is covered by the agreement or determination; or

(b)    an officer of an employee organisation that is covered by the agreement or determination, acting in that capacity.

Injunctions and other orders

(2)    If a person contravenes subsection (1), the Federal Court or Federal Circuit and Family Court of Australia (Division 2) may do either or both of the following:

(a)    grant an injunction under this subsection;

(b)     make any other order under subsection 545(1);

that the court considers necessary to stop, or remedy the effects of, the contravention.

(3)    The court may grant an injunction under subsection (3) only on application by a person referred to in column 2 of item 14 of the table in subsection 539(2).

(4)    Despite subsection 545(4), the court may make any other order under subsection 545(1) only on application by a person referred to in column 2 of item 14 of the table in subsection 539(2).

Note: Section 539 deals with applications for orders in relation to contraventions of civil remedy provisions.

6    Section 46 of the BCIIP Act provides:

Unlawful industrial action prohibited

A person must not organise or engage in unlawful industrial action.

Note: Grade A civil penalty.

7    The applicant sought relief for the contravention under s 81 of the BCIIP Act which relevantly provides:

Penalty etc. for contravention of civil remedy provision

(1)    A relevant court, on application by an authorised applicant, may make one or more of the following orders relating to a person (the defendant) who has contravened a civil remedy provision:

(a)    an order imposing a pecuniary penalty on the defendant;

(b)    an order requiring the defendant to pay a specified amount to another person as compensation for damage suffered by the other person as a result of the contravention;

(c)    any other order that the court considers appropriate.

Note: An authorised applicant may not be able to make an application for an order if there is an enforceable undertaking in force or a compliance notice has been given (see subsections 98(4) and 99(5)).

Maximum penalty for civil remedy provisions

(2)    The maximum pecuniary penalty is:

(a)     for a Grade A civil remedy provision--1,000 penalty units if the defendant is a body corporate and otherwise 200 penalty units; and

(b)     for a Grade B civil remedy provision--100 penalty units if the defendant is a body corporate and otherwise 20 penalty units.

…

Pecuniary penalties

(5)     A pecuniary penalty under paragraph (1)(a) is payable to the Commonwealth, or to some other person if the court so directs. It may be recovered as a debt.

(6)    In determining a pecuniary penalty under paragraph (1)(a), the court must take into account all relevant matters, including:

(a)    the nature and extent of the contravention; and

(b)     the nature and extent of any loss or damage suffered because of the contravention; and

(c)     the circumstances in which the contravention took place; and

(d)     whether the person has previously been found by a court (including a court in a foreign country) to have engaged in any similar conduct.

(7)    The Consolidated Revenue Fund is appropriated for the purposes of a debt due to a person other than the Commonwealth in relation to a penalty under paragraph (1)(a). The Financial Management and Accountability Act 1997 does not apply in relation to those amounts.

SUBMISSIONS

Applicant’s Submissions

8    In summary the applicant submitted as follows:

    A penalty cannot be imposed for contraventions of both s 46 of the BCIIP Act and s 417 of the FW Act. The applicant sought a penalty for contravention of s 46 of the BCIIP Act.

    The CEPU has contravened industrial laws on 16 occasions since 2003.

    There was no legitimate industrial end until Mr Walkley left the Site.

    The CEPU abused its industrial power by targeting an individual. Mr Blakeley’s conduct as a CEPU official was deliberate and calculated.

    In respect of the affidavit of Mr O’Halloran, the Queensland Branch Secretary of the Plumbing Division of the CEPU:

•    Annexed to Mr O’Halloran’s affidavit was a report prepared by Mr Lacy AO discussing training Mr Lacy stated he had provided to officials of the Plumbing Division of the CEPU following the contravention. That material was not admissible because it was hearsay. In any event, Mr Lacy had offered training concerning officials’ obligations since at least February 2020. Despite the conduct which occurred here taking place in late 2017, no training occurred until 24 August 2022. The appropriate inference to be drawn was that the training was delivered in an attempt to ameliorate the likely penalty for the contravention.

•    On Mr O’Halloran’s evidence, Mr Blakeley ceased work for the CEPU some 18 months after the conduct occurred, however there was no suggestion that he was disciplined in any way for his conduct.

    The maximum penalty for contravention of section 46 of the BCIIP Act was $210,000.00, and the contravention in this case was serious.

    The circumstances of the contravener in addition to issues of general deterrence, particularly relating to industrial lawlessness occurring on construction sites, should be considered when fixing a penalty.

    Ultimately an appropriate penalty in the circumstances was 75% of the maximum penalty, namely $157,500.00.

Respondent’s Submissions

9    In summary the respondent submitted as follows:

    A penalty may be disproportionate or oppressive if it is greater than necessary to achieve the object of deterrence.

    The maximum penalty was not warranted simply because the respondent has a record of prior contravening conduct.

    The relevant criteria to determine the appropriate penalty were:

•    the nature and extent of the contraventions;

•    the nature and extent of the loss and damage caused by the contraventions;

•    whether there had been any similar previous conduct found to have been committed by the respondent;

•    whether there has been any co-operation from the respondent;

•    the need for specific and general deterrence; and

•    the size of the respondent.

    The contravention resulted in industrial action that was short, not repeated and did not involve any swearing, abuse, violence, threats of violence or damage to property.

    Mr Blakely was not part of senior management of the CEPU.

    The applicant did not claim that there was any significant loss from the contravention.

    No person had engaged in similar conduct since the conduct occurred.

    The respondent had cooperated by making admissions. While the admission had come late in the proceeding, they had been made in circumstances where there had also been substantial abandonment of a number of claims by the applicant.

    The respondent’s admission saved significant court time and costs.

    The respondent had not been found to have previously contravened the BCIIP Act. Only 2 of the 16 “occasions” of industrial law contraventions by the CEPU or a representative of the CEPU had occurred after the events the subject of this proceeding.

    The fact the respondent was a large union with multiple divisions and branches throughout the country was relevant in considering the prior record of the respondent and the extent to which deterrence was necessary.

    There was only one other matter concerning the Queensland branch of the Plumbing Division, which had occurred in 2011. Other contraventions did not involve the Queensland branch.

    Mr Blakeley was no longer employed by the respondent.

    Training had since occurred for all Queensland officials.

    The respondent did not seek any mitigation of penalty by reference to its size or financial position.

10    The respondent submitted that the penalty imposed should not be at the top end of maximum penalty, but rather should be around 25% to 33% of the maximum. The numerical value range should be between $52,500 and $70,000.

CONSIDERATION

11    Section 81(6) of the BCIIP Act requires that I take into account all relevant matters, as well as:

(a)    the nature and extent of the contravention; and

(b)    the nature and extent of any loss or damage suffered because of the contravention; and

(c)    the circumstances in which the contravention took place; and

(d)    whether the person has previously been found by a court (including a court in a foreign country) to have engaged in any similar conduct.

12    In Australian Building and Construction Commissioner v Pattinson (2022) ALR 599; [2022] HCA 13 the majority at [18] cited with approval the factors listed by French J in Trade Practices Commission v CSR Ltd [1991] ATPR 41-076 as informing the assessment of a penalty of appropriate deterrent value, including:

1.     The nature and extent of the contravening conduct.

2.     The amount of loss or damage caused.

3.     The circumstances in which the conduct took place.

4.    The size of the contravening company.

5.    The degree of power it has, as evidenced by its market share and ease of entry in the market.

6.     The deliberateness of the contravention and the period over which it extended.

7.    Whether the contravention arose out of the conduct of senior management or at a lower level.

8.    Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention.

9.    Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention.

13    As Katzmann J subsequently observed in Fair Work Ombudsman (formerly Australian Building and Construction Commissioner) v Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) (Constitution Place Case) (No 2) [2023] FCA 13 at [26]:

While the Act to which their Honours were referring was the FW Act, not the BCIIP Act, it was common ground in the present case that the principles in Pattinson apply equally to the approach to civil penalties under the BCIIP Act.

14    I agree with these observations of her Honour.

15    The above list of factors is not a legal checklist, and only relevant factors should be considered: Pattinson at [19]. The Court is required to exercise discretion in accordance with the circumstances before it, by conducting a balancing exercise in order to arrive at an appropriate penalty to be imposed: Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (Toowoomba Bypass Case) [2021] FCA 1128 at [55]. The purpose of civil penalties is primarily for the promotion of public interest in compliance with the relevant Act, by deterring the contravener from further contraventions of that Act: Pattinson at [9]. The penalty should be sufficiently high to deter a like kind contravention (specific deterrence), and to deter others from contravening (general deterrence): Australasian Meat Industry Employees Union v Dick Stone Pty Ltd (No 2) [2022] FCA 1263 at [25]. In saying this, the penalty imposed should be “no more and no less than is necessary for that purpose”: Commonwealth v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at [55] (French CJ, Kiefel, Bell, Nettle and Gordon JJ), citing Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 at 52, 152 (French J).

16    The statutory maximum provided under the BCIIP Act is not solely reserved for the most serious or blatant contraventions. As the plurality noted in Pattinson at [10], there must be:

… “some reasonable relationship between the theoretical maximum and the final penalty imposed”. That relationship is established where the maximum penalty does not exceed what is reasonably necessary to achieve the purpose of s 546: the deterrence of future contraventions of a like kind by the contravener and by others.

17    Their Honours went on to note that there was scope for the imposition of the maximum penalty even in instances where the relevant contraventions were not the most serious of their kind. The plurality in Pattinson No 2 stated at [46]:

It is important to recall that an “appropriate” penalty is one that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case. A contravention may be a “one-off” result of inadvertence by the contravener rather than the latest instance of the contravener’s pursuit of a strategy of deliberate recalcitrance in order to have its way. There may also be cases, for example, where a contravention has occurred through ignorance of the law … or where the official responsible for a deliberate breach has been disciplined ... In such cases, a modest penalty, if any, may reasonably be thought to be sufficient to provide effective deterrence against further contraventions.

18    In this respect, as Katzmann J noted in Dick Stone No 2 at [33]:

Some of these factors will weigh in favour of a heavy penalty, some will pull in the opposite direction. A court might consider it “appropriate to impose only a moderate penalty” where those responsible for a contravention of the Act express “genuine remorse” or the conduct is unlikely to recur because of changes implemented by the contravener: Pattinson at [47].

19    Any penalty imposed must be fixed with a view to ensuring that the penalty is not such as to be regarded by the contravener 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]. A small penalty is unlikely to be regarded as a sufficient deterrence by a well-resourced contravener: Pattinson at [60].

Appropriate Penalties

20    I now turn to the appropriate penalty to be imposed on the respondent for its contravention of s 46 of the BCIIP Act.

Nature of the Contravention

21    The nature of the relevant contravention is not in dispute. The respondent admitted liability for contravention of s 46 of the BCIIP Act and s 417 of the FW Act, referable to conduct of Mr Blakeley in his capacity as a CEPU official.

Circumstances in which the contravention occurred

22    The contravention occurred on 1 December 2017 when Mr Blakeley directed the employees of Planet Plumbing to cease work while Mr Walkley was on the Site. The resultant unlawful industrial action took place during the following 3.5 hours. The unlawful industrial action was of relatively short duration, and only occurred once.

Seriousness of the contravention

23    No verbal or physical abuse was identified referable to the contravening conduct and, on the material before the Court, there was a low risk to employees on the Site. I note however that the unlawful industrial action only came to an end when Mr Walkley voluntarily walked off the Site rather than the CEPU causing the unlawful industrial action to cease.

Circumstances of the Contravener and Similar Conduct

24    The respondent is a relatively large and well-resourced union organisation. The respondent also has the capacity to pay any penalty imposed by this Court. I am not satisfied that 16 past contraventions of the FW Act, Building and Construction Industry Improvement Act 2005 (Cth) and Workplace Relations Act 1996 (Cth) since 2003 by the respondent or representatives of the respondent is a substantial record of contravening.

25    On the other hand I do not accept the submission by the respondent that it would be appropriate to limit weight given to similar contraventions in other parts of the country. In particular I note the following comments of Jessup J in Williams v the CFMEU (No. 2):

[21] The respondents’ case on this question was based on the proposition, said to be apparent from the rules of the Union, that the Union consisted of a series of autonomous divisions and branches. I shall turn to a consideration of the correctness of that proposition in a moment, but, assuming it to be correct, I do not accept that it follows that prior contraventions by the Union through the agency of one division or branch should never be regarded as relevant to the fixing of a penalty for unlawful conduct by the Union done through the agency of another division or branch. How the Union — or any incorporated body — organises itself internally is a matter for its own members. Some bodies employ a highly centralised system of control. Others vest the real decision-making power in divisions, branches or, indeed, groups of members at the workplace. In the latter case, however, no less than in the former, it is the body itself which acts when the internal group or individual having generic responsibility for the relevant area of activity does something with legal consequences. In the case of trade unions, if ever there was any doubt about that proposition, it was laid to rest by Heatons Transport (St Helens) Ltd v Transport and General Workers’ Union [1973] AC 15. And just as a union may not, by a judicious decentralisation of authority, avoid responsibility for things done by its servants or agents acting within the scope of their authority, neither, in my view, can a union (or, for that matter, any like body) by the same process render irrelevant to the matter of fixing penalties its own prior contraventions merely by reason that they were committed in some other section, division or branch of the larger body.

(emphasis added)

Other Considerations

26    The respondent gave evidence of training provided for its officials by Mr Lacy following the occurrence of the contravening conduct. While the applicant submitted that there was an ulterior motive for the CEPU organising the relevant training, there is no reason for me consider that

    the message to training recipients delivered by that training, referable to the obligations of union officials under workplace laws, was not real, or

    the CEPU did not accept that its officials were bound by such obligations.

27    I consider the provision of training to CEPU officials following the contravening conduct is a factor to be taken into account in mitigation of the penalty to otherwise be imposed on CEPU.

28    Further, it does not appear to be in dispute that because the CEPU admitted liability to the contraventions, the result was the reduction of costs to be incurred by the parties and a concomitant reduction in Court resources. While the applicant submitted that the admission of liability by the CEPU came late in the proceedings, I also note that the applicant did not press many of the claims originally pleaded in the proceedings. The admission of liability by the CEPU is a factor to be taken into account as a further mitigating factor in assessing the appropriate penalty.

29    Finally, I note that Mr Blakeley is no longer employed by CEPU. In my view this is a neutral factor in the circumstances of the case.

CONCLUSION

30    As I have already observed, there was one instance of contravening conduct on the part of the respondent, of relatively short duration, and not involving any physical or verbal abuse. While plainly a union official endeavouring to dictate the presence or otherwise of a project manager was unacceptable in this case, I am ultimately satisfied that the contravening conduct was at the lower end of the range of seriousness. The admission of liability by the CEPU spared the applicant costs and time, freeing its resources to increase the chances that other contraveners would be detected and brought before the courts: Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72; (2004) ATPR ¶41-993 at [53] (Branson, Sackville and Gyles JJ); Hardwick v Australian Manufacturing Workers’ Union [2010] FCA 818; 198 IR 312 at [19] (Gordon J).

31    The statutory maximum pecuniary penalty at the time of the contravention was $210,000. In my view the appropriate penalty in the circumstances of the case is $70,000.00, such penalty to be paid by the respondent to the Consolidated Revenue Fund of the Commonwealth within 30 days of the date of these Orders.

Associate:

Dated:    24 July 2023