Federal Court of Australia

Construction, Forestry and Maritime Employees Union v Canberra Contractors Pty Ltd [2025] FCA 440

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be allowed.

2.    Orders 1-5 of the orders of the Federal Circuit and Family Court of Australia (Division 2) made on 28 February 2024 be set aside and, in lieu thereof, the following orders be substituted:

(a)    Pursuant to ss 546 and 793 of the Fair Work Act 2009 (Cth), the first respondent pay pecuniary penalties:

(i)    for the contravention of s 502(1) of the Fair Work Act by the second respondent, in the sum of $15,000;

(ii)    for the contravention of s 502(1) of the Fair Work Act by the third respondent, in the sum of $15,000;

(iii)    for the first contravention of s 503(1) of the Fair Work Act by the second respondent, in the sum of $10,000;

(iv)    for the second contravention of s 503(1) of the Fair Work Act by the second respondent, in the sum of $10,000; and

(v)    for the contravention of s 503(1) of the Fair Work Act by the third respondent, in the sum of $10,000.

(b)    Pursuant to s 546 of the Fair Work Act, the second respondent pay pecuniary penalties:

(i)    for the contravention of s 502(1) of the Fair Work Act, in the sum of $4,800;

(ii)    for the first contravention of s 503(1) of the Fair Work Act, in the sum of $3,200; and

(iii)    for the second contravention of s 503(1) of the Fair Work Act, in the sum of $3,200.

(c)    Pursuant to s 546 of the Fair Work Act, the third respondent pay pecuniary penalties:

(i)    for the contravention of s 502(1) of the Fair Work Act, in the sum of $3,800; and

(ii)    for the contravention of s 503(1) of the Fair Work Act, in the sum of $2,800.

3.     There be no order as to the costs of the appeal.

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

REASONS FOR JUDGMENT

MCDONALD J:

Introduction

1    In Construction, Forestry, Maritime, Mining and Energy Union v Canberra Contractors [2023] FedCFamC2G 754 (Liability Judgment), a judge of the Federal Circuit and Family Court of Australia (Division 2) (FCFCOA) determined that, on 11 August 2021, the respondents, Canberra Contractors Pty Ltd (Canberra Contractors), Angelo Cerullo and John Graham, had each committed contraventions of ss 502(1) and 503(1) of the Fair Work Act 2009 (Cth) (FW Act) while on a construction site occupied and controlled by Canberra Contractors.

2    On 28 February 2024, the primary judge delivered a separate judgment setting out his reasons for imposing penalties on each of the respondents for their contraventions of the FW Act: Construction, Forestry and Maritime Employees Union v Canberra Contractors [2024] FedCFamC2G 166 (Penalty Judgment).

3    The appellant (CFMEU) appeals against the orders made by the FCFCOA on 28 February 2024 on the basis that the primary judged erred in imposing a single penalty for multiple contraventions, and misapplied the principles regarding the imposition of penalties articulated by the High Court in Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; [2022] HCA 13 (Pattinson). The CFMEU also contends that the pecuniary penalties imposed on Canberra Contractors were manifestly inadequate.

4    The respondents concede that the primary judge’s decision as to penalties is affected by certain errors and that, in the circumstances, this Court on appeal is required to make a fresh assessment of the pecuniary penalties to be imposed.

5    For the reasons that follow, I will allow the appeal and order that penalties be imposed as set out in the orders at the beginning of these reasons.

Factual background

6    The following summary of the events of 11 August 2021 is largely taken from the Liability Judgment, the Penalty Judgment, and the parties’ submissions filed on the appeal.

7    On the morning of 11 August 2021, two CFMEU officials, Luke Poskus and Seamus Maher, attended a construction site at the Canberra Institute of Technology Campus in Woden in the Australian Capital Territory (Site), which was occupied and controlled by Canberra Contractors. Each of Mr Poskus and Mr Maher held permits issued under s 512 of the FW Act and s 134 of the Work Health and Safety Act 2011 (ACT) (WHS Act). In seeking to enter the Site, Mr Poskus and Mr Maher sought to exercise a right in accordance with Part 3˗4 of the FW Act, namely to investigate a suspected contravention of the WHS Act.

8    Upon arrival at the Site office, Mr Poskus and Mr Maher presented a notice of entry in accordance with s 119 of the WHS Act to Mr Cerullo in his capacity as an employee of Canberra Contractors. Mr Cerullo was (and remains) a director of Canberra Contractors and its Operations Manager. The notice of entry specified that Mr Poskus and Mr Maher were to attend the Site to investigate a suspected contravention of the WHS Act that was posing a risk to the health and safety of workers on the Site, namely that the onsite amenities were allegedly kept in a poor condition.

9    Mr Cerullo permitted Mr Poskus and Mr Maher to investigate the suspected contravention identified in the notice of entry. Mr Poskus and Mr Maher were required to walk along a narrow walkway to inspect the amenities. The walkway consisted of star pickets and small flags to mark out its boundaries from the road next to it. After inspecting the amenities, Mr Poskus, Mr Maher and Mr Cerullo returned to the Site office along the same walkway. During their return, one of the CFMEU officials felt a gust of wind after a truck drove past them. Mr Poskus and Mr Maher observed that there were no appropriate physical barriers to separate mobile plant operating on site and workers working at the Site.

10    Based on this observation, Mr Poskus and Mr Maher became concerned that the safety of workers and visitors on site was diminished due to the lack of adequate safety barriers. Mr Poskus and Mr Maher formed a reasonable suspicion that Canberra Contractors was contravening its obligation under s 19(1) of the WHS Act to ensure, as far as reasonably practicable, the health and safety of workers at the Site by eliminating or minimising risks posed by the potential interaction between mobile plant and people present at the Site. Mr Poskus and Mr Maher also reasonably suspected that Canberra Contractors was contravening its obligation under reg 214(d) of the Work Health and Safety Regulations 2011 (ACT) (WHS Regulations) by not managing risks in accordance with Part 3.1 of the WHS Regulations, which required Canberra Contractors to eliminate the risk or, if elimination was not reasonably practicable, to minimise the risk so far as reasonably practicable. Based on their observations and their belief that physical barriers should have been installed, Mr Poskus and Mr Maher also suspected that Canberra Contractors was not complying with its obligation under reg 215(4) of the WHS Regulations to ensure that plant did not collide with pedestrians.

11    Mr Poskus and Mr Maher informed Mr Cerullo that they sought to exercise rights in relation to the further suspected contravention of s 19(1) of the WHS Act. Section 118(5) of the WHS Act authorised Mr Poskus and Mr Maher to investigate the safety of the walkway barrier while at the Site for the purpose of inquiring into the original suspected contravention. Mr Cerullo refused to allow them to investigate the further suspected contravention and asserted that they were not entitled to do so, as they had already identified and addressed the suspected contravention that was stated in the notice of entry. Mr Cerullo then directed Mr Poskus and Mr Maher to leave the Site.

12    Mr Cerullo called Mr Graham, who was the Risk Manager for Canberra Contractors, purportedly to ask for his advice and instruction. Mr Cerullo placed his mobile phone on loudspeaker and Mr Poskus explained to Mr Graham that he and Mr Maher sought to inspect the area around the barriers. Mr Graham indicated that he would need to ask WorkSafe ACT for clarification and that Mr Poskus and Mr Maher would not be permitted to proceed with their inspection whilst he sought that clarification.

13    Mr Cerullo ended the telephone call with Mr Graham, and Mr Poskus and Mr Maher were required to wait at the Site office. Mr Cerullo then directed Mr Poskus and Mr Maher to leave the Site, as they were not permitted to investigate suspected contraventions which had not been identified in the original notice of entry. Mr Poskus and Mr Maher left the Site.

14    By preventing the union officials from investigating a suspected further contravention of the FW Act, Mr Cerullo contravened s 502(1). By twice representing that the union officials were not authorised to investigate further suspected contraventions of the FW Act and were required to leave the Site, Mr Cerullo committed two contraventions of s 503(1) of the FW Act. By representing that Canberra Contractors was entitled to make Mr Poskus and Mr Maher wait until WorkSafe ACT had been consulted, Mr Graham contravened s 503(1) of the FW Act.

15    Later that morning, Mr Poskus and Mr Maher returned to the Site with new notices of entry which identified the further suspected contravention of the WHS Act. Mr Poskus and Mr Maher presented Mr Graham with the new notices of entry and sought to re-enter the Site to investigate the further suspected contravention. Mr Graham refused to allow Mr Poskus and Mr Maher entry to the Site and indicated that they would need to wait for a WorkSafe Inspector to arrive. After waiting for a few minutes, Mr Graham allowed Mr Poskus and Mr Maher onto the Site to investigate the further suspected contravention.

16    By not permitting the union officials to enter the Site immediately upon the presentation of the new notices, Mr Graham hindered or obstructed the exercise of their rights, contrary to s 502(1) of the FW Act.

Relevant legislative provisions

17    Part 3-4 of the FW Act concerns the rights of officials of organisations, such as the CFMEU, who hold entry permits authorising them to enter premises for purposes related to their representative roles under the FW Act, and the relevant work health and safety legislation.

18    Section 502 of the FW Act states:

502 Person must not hinder or obstruct permit holder etc.

(1)     A person must not intentionally hinder or obstruct a permit holder exercising rights in accordance with this Part, or otherwise act in an improper manner.

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

(2)     To avoid doubt, a failure to agree on a place as referred to in paragraph 483(5)(b), 483C(6)(b) or 483E(6)(b) does not constitute conduct referred to in subsection (1).

(3)     Without limiting subsection (1), that subsection extends to conduct that occurs after an entry notice is given but before a permit holder enters premises.

19    Section 503 of the FW Act states:

503 Misrepresentations about things authorised by this Part

(1)    A person must not take action:

(a)     with the intention of giving the impression; or

(b)     reckless as to whether the impression is given;

that the doing of a thing is authorised by this Part if it is not so authorised.

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

(2)    Subsection (1) does not apply if the person reasonably believes that the doing of the thing is authorised.

20    Sections 502 and 503 of the FW Act are civil remedy provisions. If the Court is satisfied that a person has contravened a civil remedy provision, it may make any order it considers appropriate pursuant to s 545 of the FW Act. If the Court is satisfied that a person has contravened a civil remedy provision, the Court may also order a person to pay an appropriate pecuniary penalty pursuant to s 546 of the FW Act. Section 546 relevantly provides:

546 Pecuniary penalty orders

(1)    The Federal Court, the Federal Circuit and Family Court of Australia (Division 2) or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.

Note 1:    Pecuniary penalty orders cannot be made in relation to conduct that contravenes a term of a modern award, a national minimum wage order or an enterprise agreement only because of the retrospective effect of a determination (see subsections 167(3) and 298(2)).

Note 2:    Pecuniary penalty orders cannot be made in relation to conduct that contravenes a term of an enterprise agreement only because of the retrospective effect of an amendment made under paragraph 227B(3)(b) (see subsection 227E(2)).

Determining amount of pecuniary penalty

(2)    Subject to this section, the pecuniary penalty must not be more than:

(a)    if the person is an individual—the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2); or

(b)    if the person is a body corporate—5 times the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2).

21    Section 793 of the FW Act provides that any conduct engaged in by an officer or employee of a body corporate, within the scope of their authority as an officer or employee of that body corporate, is taken to have been engaged in by the body corporate for the purposes of the FW Act.

The primary judge’s judgment on penalty

22    Following the events of 11 August 2021, the CFMEU commenced proceedings in the FCFCOA seeking pecuniary penalties against each of the respondents for breaches of ss 501, 502 and 503 of the FW Act. Following a contested hearing on liability, the primary judge found that Mr Cerullo had hindered or obstructed Mr Poskus and Mr Maher in the exercise of their rights under Part 3˗4 of the FW Act, and consequently had committed one contravention of s 502(1) and two contraventions of s 503(1) of the FW Act. The primary judge found that Mr Graham had also hindered or obstructed the union officials in the exercise of their rights and had committed one contravention of s 502(1) and one contravention of s 503(1) of the FW Act. The primary judge determined that, by operation of s 793 of the FW Act, Canberra Contractors had committed two contraventions of s 502(1) and three contraventions of s 503(1).

23    At a separate hearing on penalty, Mr Cerullo and Mr Graham gave evidence. It became apparent that Mr Cerullo and Mr Graham had not read the Liability Judgment and had not fully understood the effect of the findings made against them. They maintained that the CFMEU officials had behaved inappropriately on 11 August 2021, contrary to the primary judge’s findings based on CCTV footage of the events on 11 August 2021. The primary judge determined that neither Mr Cerullo or Mr Graham had showed any contrition nor made any apology for the conduct that had led to their contraventions of the FW Act.

24    In his assessment of the penalties to be imposed on Mr Cerullo and Mr Graham, the primary judge had particular regard to the first three matters identified by Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ in Pattinson at 460 [18], namely the nature and extent of the contravening conduct, the amount of loss or damage caused by the conduct, and the circumstances in which the conduct took place: Penalty Judgment at [70]. At that point in the Penalty Judgment, his Honour also noted Mr Cerullo and Mr Graham’s seniority and long-standing experience in the construction industry, and their familiarity with the rights and responsibilities of permit holders seeking to exercise rights of entry to building sites to inspect suspected health and safety issues.

25    The primary judge characterised Canberra Contractors as having a “modest” history of contravening the FW Act right of entry provisions, having admitted two earlier contraventions of the FW Act. Canberra Contractors admitted contravening ss 501 and 502(1) of the FW Act on 11 and 15 January 2018 (for which it had been penalised in March 2020) and contravening s 502(1) of the FW Act on 26 August 2019 (in respect of which the FCFCOA had made a declaration recording the contravention in February 2021). The primary judge considered that the penalty range sought by Canberra Contractors was too low and did not meet the requirement in Pattinson at 470 [46] of an “appropriate” penalty that “strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case”.

26    Having regard to the findings in the Liability Judgment, and the principles regarding the imposition of pecuniary penalties as endorsed by the High Court in Pattinson, the primary judge made the following orders regarding the penalties to be imposed on each of the respondents:

ON A FINAL BASIS, THE COURT ORDERS THAT:

1.    [Canberra Contractors] is to pay a total penalty, pursuant to s 793 of the [FW Act], for the contraventions of ss 502(1) and 503(1) of the [FW Act] in the sum of $45,000.

2.    [Mr Cerullo] is to pay a penalty for the contravention of s 502(1) of the [FW Act] in the sum of $4,600.

3.    [Mr Cerullo] is to pay a total penalty for the two contraventions of s 503(1) of the [FW Act] in the sum of $6,200.

4.    [Mr Graham] is to pay a penalty for the contravention of s 502(1) of the [FW Act] in the sum of $3,500.

5.    [Mr Graham] is to pay a penalty for the contravention of s 503(1) of the [FW Act] in the sum of $2,500.

6.    The penalties ordered in Orders 1-5 hereof be paid to the [CFMEU] within 60 days of this Order.

7.    Within 60 days …, the Respondents are to pay the costs of the [CFMEU] fixed in the sum of $15,060.

Grounds of appeal

27    The CFMEU appeals against the orders made in relation to penalty (orders 1-5 of the primary judge’s orders) on seven grounds. The grounds identify particular errors which the CFMEU alleges were made by the primary judge in respect of the penalties imposed on Canberra Contractors, Mr Cerullo and Mr Graham.

28    The grounds of appeal are expressed as follows:

1.    The primary judge erred in imposing a single penalty on [Canberra Contractors], purportedly under s 793 of the [FW Act], in respect [of] its [two] contraventions of s 502(1) of the FW Act and its [three] contraventions of s 503(1) of the FW Act in circumstances where s 546(1) of the FW Act does not permit the imposition of a single aggregate penalty for multiple contraventions.

2.    The primary judge erred in imposing a single penalty on [Mr Cerullo] in respect to his [two] contraventions of s 503(1) of the FW Act, in circumstances where s 546(1) of the FW Act does not permit the imposition of a single aggregate penalty for multiple contraventions.

3.    The primary judge erred in imposing a single penalty of $45,000 on the [CFMEU] for its [two] contraventions of s 502(1) of the FW Act and [three] contraventions of s 503(1) of the FW Act, representing 13.5% of the maximum penalty available, in circumstances where he had imposed penalties totalling $16,800 and representing 25.23% of the maximum penalty available on [Mr Cerullo] and [Mr Graham] for their respective contraventions.

4.    The primary judge misapplied the principles articulated in ABCC v Pattinson (2022) 274 CLR 450, including at [69]-[70] [of the Penalty Judgment] and in the penalties ultimately imposed, by tethering or limiting the penalties to the objective circumstances of the contraventions.

5.    The primary judge erred by failing to take into account a relevant consideration that contraventions arose out of deliberate conduct by the respondents.

6.    The primary judge erred in mistaking the facts at [80] [of the Penalty Judgment] in holding that the contraventions arose out of conduct not by senior management, but at a lower level in [Canberra Contractors’] hierarchy, in circumstances where:

a.    [Mr Cerullo] was a director of [Canberra Contractors] and its ‘Operations Manager’; and

b.    [Mr Graham] was [Canberra Contractors’] ‘Risk Manager’.

7.    The primary judge erred in imposing a single penalty on [Canberra Contractors] for its [five] contraventions that was manifestly inadequate.

Particulars

The [CFMEU] relies on grounds 3-6 above.

Further, the primary judge gave no, or inadequate weight, to:

(a)    the imperative to achieve general deterrence of contraventions of ss 502(1) and 503(1) of the FW Act where rights of entry are sought to be exercised relating to the safety of workers and the workplace in question;

(b)    the imperative to achieve specific deterrence including by reference to [Canberra Contractors’] size and means, and the extent of its ongoing work;

(c)    [Canberra Contractors’] antecedent contraventions of Part 3-4 of the FW Act;

(d)    the seniority of [Mr Cerullo] and [Mr Graham]; and

(e)    the deliberateness of the contraventions.

Concession as to error by the primary judge in fixing penalties

29    The respondents concede that the primary judged fell into error in the manner described in each of grounds 1 and 2. That is, the primary judge erred by identifying a single penalty in respect of Mr Cerullo’s two contraventions of s 503(1) and a single penalty in respect of Canberra Contractors’ five contraventions as a total or aggregate penalty, without first specifying the individual penalties for each contravention: see Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2016] FCA 413 at [50]-[52]; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68; [2017] FCAFC 113 (ABCC v CFMEU) at 95 [129], 99-100 [148]-[149].

30    The respondents accept that the consequence is that this Court, on appeal, should itself re˗exercise the discretion to impose penalties for each of the respondents’ contraventions “afresh”. The authorities establish that that concession is correct: see, eg, Australian Competition and Consumer Commission v Cement Australia Pty Ltd (2017) 258 FCR 312; [2017] FCAFC 159 at 476 [573]; see also, by analogy with criminal sentencing, Kentwell v The Queen (2014) 252 CLR 601; [2014] HCA 37 at 617˗18 [42].

31    The exercise undertaken by the primary judge involved imposing penalties on two individuals who directly committed contraventions, and on Canberra Contractors for its commission of the same contraventions by virtue of the conduct of its two employees. The exercise of discretion involved in fixing penalties for Canberra Contractors and Mr Cerullo, which was affected by the conceded errors, cannot be artificially separated from the exercise of discretion involved in fixing the penalty for Mr Graham. In the circumstances, the appropriate course is to re-exercise the discretion to impose penalties in respect of all three respondents. In any event, for reasons explained at [39]-[53] below, I also consider that the primary judge imposed penalties on an incorrect factual basis, and I would re-exercise the discretion to impose penalties on all three respondents for that reason in any event.

32    In light of these conclusions, it is not necessary to determine whether the primary judge made the remaining errors attributed to him by the CFMEU or whether, if he did make those errors, they are errors of a kind that would themselves warrant setting aside orders arrived at in the exercise of a discretion, having regard to the principles set out in House v The King (1936) 55 CLR 499 at 504-5.

33    The CFMEU submits that I should have regard to the issues raised by each of the remaining grounds of appeal when re-exercising the discretion to impose penalties, and that the penalties that I impose should be substantially higher than those that were imposed by the primary judge. The respondents submit that the admitted errors did not result in the primary judge imposing penalties that were too low to fulfil the objectives of the pecuniary penalty regime and that, in re-exercising the discretion, I should impose penalties which, in aggregate, are at or around the same level as those imposed by the primary judge.

Principles applicable to determination of penalties and re-determination on appeal

34    Section 546 of the FW Act states that the Court may “order … a person to pay a pecuniary penalty that the court considers appropriate if the court is satisfied that the person has contravened a civil remedy provision”.

35    The principles regarding the imposition of penalties are well established, and were usefully summarised by Abraham J in Construction, Forestry, Maritime, Mining and Energy Union v Fair Work Ombudsman (Boggo Road Cross River Rail Case) [2023] FCA 507 at [32]-[34]:

The primary purpose of any civil penalty regime is to ensure compliance with the statutory regime by deterring future contraventions: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482 (Agreed Penalties Case) at [24]. Civil pecuniary penalties are “primarily if not wholly protective in promoting the public interest in compliance [with the statute]”: Agreed Penalties Case at [55] and [59], [68], [110], see also Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 175 ALD 282 (Pattinson (High Court)) at [15]˗[16], [43], [45]. The principal object of a pecuniary penalty is directed to deterrence. That is, specific deterrence of the contravenor and, by that example, general deterrence of other would-be contravenors: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; (2018) 262 CLR 157 at [116].

The process of assessing a penalty is guided by a consideration of a number of well-accepted factors: Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14 at [14], and see Trade Practices Commission v CSR Ltd [1990] FCA 762; (1991) ATPR 41-076 at 52,152-52,153; Rojas v Esselte Australia Pty Ltd (No 2) [2008] FCA 1585; (2008) 177 IR 306 at [64]-[65]. It is important to remember that those lists of factors are judicial descriptions of likely relevant considerations applicable to the task of coming to the appropriate penalty, and such lists are useful as long as they “do not become transformed into a rigid catalogue of matters for attention”: Australian Opthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560 at [91]; Pattinson (High Court) at [19]. Relevant factors in a case of this nature include:

(a)    the nature and extent of the contravention;

(b)    the circumstances in which the contravention took place;

(c)    the nature and extent of loss and damage suffered as a result of the contravention;

(d)    whether the contravenor has engaged in any similar conduct in the past;

(e)    the size and nature of the contravenor;

(f)    whether the contraventions involve senior management;

(g)    any contrition or corrective action taken; and

(h)    any cooperation with authorities which has been shown.

The principle of totality requires the Court to make a “final check” of the penalties to be imposed on a wrongdoer, considered as a whole, to ensure that the total penalty does not exceed what is proper for the entire contravening conduct: Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd [1997] FCA 450; (1997) 145 ALR 36 at 53, citing Mill v The Queen [1988] HCA 70; (1988) 166 CLR 59.

36    In the absence of agreement between the parties, the Court must determine a single penalty for each individual contravention when exercising its discretion. In circumstances where multiple contraventions arose out of the same “course of conduct”, such an approach may result in an aggregate penalty that is excessive. In ABCC v CFMEU, the Full Court said (at 99-100 [148]):

… [N]either the course of conduct principle nor the totality principle, properly considered and applied, permit, let alone require, the Court to impose a single penalty in respect of multiple contraventions of a pecuniary penalty provision. There is no doubt that, in an appropriate case involving multiple contraventions, the Court should consider whether the multiple contraventions arose from a course or separate courses of conduct. If the contraventions arose out of a course of conduct, the penalties imposed in relation to the contraventions should generally reflect that fact, otherwise there is a risk that the respondent will be doubly punished in respect of the relevant acts or omissions that make up the multiple contraventions. That is not to say that the Court can impose a single penalty in respect of each course of conduct. Likewise, there is no doubt that in an appropriate case involving multiple contraventions, the Court should, after fixing separate penalties for the contraventions, consider whether the aggregate penalty is excessive. If the aggregate is found to be excessive, the penalties should be adjusted so as to avoid that outcome. That is not to say that the Court can fix a single penalty for the multiple contraventions.

37    The maximum individual penalty for each contravention by Mr Cerullo and Mr Graham (as applicable at the time of the offending) was $12,600. The maximum penalty for each contravention found to have been committed by Canberra Contractors was $63,000: see FW Act, ss 539(2), 546(2); Crimes Act 1901 (Cth), s 4AA.

38    Where there is no challenge to the factual findings of the primary judge, the re-determination of penalties is made on the basis of the findings of the trial judge and the material before the sentencing judge: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Registered Organisations Commissioner (2020) 283 FCR 404; [2020] FCAFC 232 at 436 [132]-[133]; Transport Workers’ Union of Australia v Registered Organisations Commissioner (No 2) (2018) 267 FCR 40; [2018] FCAFC 203 at 65 [124]; Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25; [2016] FCAFC 181 at 38 [45].

Appreciation of law relating to rights of entry and deliberateness of contravening conduct

39    The CFMEU submits that the primary judge erred by failing to take into account the deliberateness of Mr Cerullo’s and Mr Graham’s contravening conduct as a relevant consideration to the determination of the penalties imposed pursuant to s 546 of the FW Act.

40    The CFMEU reiterates the submission it made at the penalty hearing that the conduct engaged in by Mr Cerullo and Mr Graham was deliberate in that it was calculated to frustrate Mr Poskus’ and Mr Maher’s attempts to exercise their rights as permit holders under Part 3-4 of the FW Act. The CFMEU argues that the primary judge’s finding that Mr Cerullo and Mr Graham misapprehended the rights conferred by s 118(5) of the WHS Act was erroneous, as Mr Cerullo had in fact acknowledged that he was aware of the law at the time of the contravening conduct while under cross-examination, and Mr Graham had stated in his affidavit that he was aware of his rights and obligations in relation to rights of entry.

41    The respondents submit that the findings of the primary judge regarding their misapprehension of the effect of s 118(5) of the WHS Act were findings regarding Mr Cerullo’s state of mind at the time of the contraventions. The respondents also submit that these findings in the Liability Judgment mean that deliberateness was not a feature of either Mr Cerullo’s or Mr Graham’s contraventions. The respondents also note that the CFMEU did not seek to challenge the primary judge’s factual findings in the Liability Judgment before proceeding to the penalty hearing, despite knowing that deliberateness is a consideration relevant to the assessment of penalty. The respondents submit that this Court should not make a new finding in relation to the deliberateness of the contravening conduct of the individuals. They contend that I should re-exercise the discretion to impose penalties on the basis that Mr Cerullo and Mr Graham did not understand the law and not on the basis that they deliberately breached the law.

42    Mr Graham provided an affidavit but did not present to give oral evidence at the trial on liability. The primary judge did not accept that an adequate explanation had been provided for his failure to give evidence and found that there was sufficient foundation to draw an inference that his evidence was unlikely to assist the respondents: Liability Judgment at [97]. Certain paragraphs of his affidavit were tendered by the CFMEU as admissions. The parts of Mr Graham’s affidavit that were admitted included [7], the last sentence of which read: “I would say that I have a sound knowledge of my rights and obligations when it comes to right of entry.” In the same paragraph, and apparently to provide support for the conclusion that he had a sound knowledge of his rights and obligations regarding rights of entry, Mr Graham deposed to the fact that he had undertaken training with the Australian Building and Construction Commission and with the Master Builders ACT. Mr Graham had also admitted in his defence an allegation in the CFMEU’s statement of claim that Mr Graham was “a person with knowledge of the rights of trade union officials issued with entry permits under the FW Act and the WHS Act”.

43    Mr Cerullo provided an affidavit and gave oral evidence at the trial. Part of his evidence was described by the primary judge at [111] of the Liability Judgment as follows:

Mr Cerullo acknowledged he was aware that the law at the time dictated that the Union officials were permitted to investigate additional contraventions, other than those contained on their notice.

44    At [115]-[116] of the Liability Judgment, the primary judge described a further aspect of Mr Cerullo’s evidence under cross-examination, saying:

Mr Cerullo was asked whether, while speaking to Mr Graham on the phone, part of the conversation took place on loudspeaker, while another part took place after the phone was taken off loudspeaker. Mr Cerullo responded that this may have occurred. Mr Cerullo strongly denied requesting an additional notice from Mr Poskus in order to investigate further contraventions, noting “they were already on site”. It was put to Mr Cerullo that Mr Poskus had asked whether he was acting under Mr Graham’s direction. Mr Cerullo responded that he could not recall any such question from Ms [sic] Poskus.

Subsequently, video footage was shown to Mr Cerullo which identified him asking Mr Poskus for a further notice. Further, Mr Cerullo acknowledged he continued to speak to Mr Graham after Mr Poskus and Mr Maher had left the side office. Nevertheless, Mr Cerullo denied advising Mr Poskus and Mr Maher they were not permitted to look further onsite that was not contained on the written notices already provided [sic].

(Emphasis added; footnotes omitted.)

45    The actual evidence given by Mr Cerullo in the course of cross-examination was as follows:

Q:    Did you understand that he could investigate that additional contravention?

A:    Not a problem.

Q:    You knew that was the law at the time?

A:    Yes.

46    Findings of the primary judge that are relevant to whether Mr Cerullo’s conduct was “deliberate” were recorded at [84]-[85] of the Liability Judgment as follows:

Of some significance, during this recording/transcript, Mr Graham has a telephone conversation with WorkSafe who confirm that, because of the second [notice of entry], the Union officials can go onto the site. In my view, this unfortunately showed, among other things, the concerning lack of knowledge on the part of the Respondents regarding the detail of the relevant and standard WHS Regulations, the standard operating procedure regarding Right of Entry Permits, and the no less concerning lack of problem-solving capacity at the time simply to check the WHS Regulations. Further, and the converse of the lack of knowledge of the Respondents noted, is the fact that they were ultimately delegating to WorkSafe the determination of what was and what was not compliance with Regulations on the Respondents’ own building site! How and why Mr Graham did not simply “pull up” the WHS Act and Regulations to check his “understanding” on the day in question regarding the rights of permit holders whilst on site, and as suggested to him by Mr Poskus, was, of course in the light of his non-attendance to give evidence, a very unfortunate omission.

Further still, the WorkSafe Report earlier referenced confirmed not only that the Respondent Company agreed to clean the amenities but also to arrange for a “refresher course” regarding Right of Entry Permits, thus indicating some acknowledgement that the knowledge of the Respondents was rather likely “not up to speed.”

47    Further, at [88] of the Liability Judgment, the primary judge said:

It should also be recalled that, notwithstanding him ultimately not being called to give oral evidence, on the Applicant’s Application, the Court admitted into evidence paragraphs 1-4 and 7 of Mr Graham’s primary Affidavit, the substance of which attested to his experience in the building and construction industry and, following his “Right of Entry training”, that he had “a sound knowledge of my rights and obligations when it comes to right of entry.” Respectfully, according to his actions recorded in the video transcripts just discussed, he clearly was nowhere as near as familiar or expert in such matters as he averred.

(Emphasis added.)

48    These paragraphs of the Liability Judgment suggest that the primary judge inferred partly based on the conduct of Mr Cerullo and Mr Graham, that they were not aware of the law relating to entry and inspection in relation to the Site.

49    I do not consider that the recording of these findings by the primary judge in the Liability Judgment precludes the CFMEU from contending, on the appeal, for a different finding in relation to Mr Cerullo and Mr Graham’s knowledge of the law and whether they deliberately contravened the law. Nor do I consider that the failure of the CFMEU to appeal against those findings before the penalty hearing could prevent them from contending for a different finding at the penalty hearing or on appeal. The CFMEU had successfully established certain contraventions of civil remedy provisions by Mr Cerullo and Mr Graham. It was not open to the CFMEU to appeal against particular findings of fact that had been recorded by the primary judge in the course of the Liability Judgment. It is open to the CFMEU on this appeal to ask this Court to reconsider factual findings made by the primary judge which it disputes.

50    On the appeal, the CFMEU contends that I should act on the admissions made by Mr Graham and Mr Cerullo to the effect that they were aware of the law relating to union officials’ rights of entry.

51    In relation to Mr Cerullo, the acknowledgment recorded by the primary judge at [111] of the Liability Judgment and set out at [43] above amounted to an admission not merely that he was generally aware of the applicable law but that he knew that the law permitted union officials to investigate additional contraventions, other than those identified in the notice. The position taken by Mr Cerullo at trial, which was rejected by the primary judge, was that, although he understood the law, the union officials had not in fact indicated that they were seeking to inquire into other suspected contraventions but had, rather, requested that Mr Cerullo escort them around the entire Site. Mr Cerullo denied insisting that the union officials were required to provide another notice in respect of other safety concerns. The answers reproduced at [45] above demonstrate that Mr Cerullo’s position was that he well appreciated that union officials were entitled to investigate further safety issues once they had entered the Site.

52    I do not consider that there is any sufficient reason not to act on this evidence. Even having regard to the advantages of the primary judge in hearing the evidence of Mr Cerullo, I find, on the basis of Mr Cerullo’s own admissions, that he did understand, at least, that the union officials, once they were on the Site, were entitled to investigate further suspected contraventions that had not been identified on the original notice of entry. I find that the contraventions of the FW Act that the primary judge found Mr Cerullo to have committed involved deliberate conduct in the sense that Mr Cerullo knew that the union officials were entitled to conduct the investigations they sought to conduct. I will re-exercise the discretion to impose pecuniary penalties on that basis.

53    In relation to Mr Graham, his “admission” at trial only took the form of a general assertion in his affidavit that he had “a sound knowledge of his rights and obligations when it comes to rights of entry”. However, he was the employee of Canberra Contractors who was responsible for risk management and safety and was apparently deferred to by Mr Cerullo in relation to the issue of the union officials’ rights of entry; it is probable that he had at least as good an understanding of rights of entry as Mr Cerullo. I also take into account the express admission in Mr Graham’s defence as to his knowledge of the law relating to rights of entry. Mr Graham’s pleaded case was similar to Mr Cerullo’s. This was not a case where any of the respondents suggested that they were under any misunderstanding as to the applicable law; in particular, they did not attempt to suggest that they had been unaware of then-recent changes in the law relating to union officials’ rights regarding site entry. The primary judge did not enjoy any significant advantage in assessing Mr Graham’s evidence for the purpose of the Liability Judgment because he did not give oral evidence at the hearing on liability. I do not regard the fact that WorkSafe ACT saw fit to recommend a “refresher course” as sufficient to rebut the inference that Mr Graham was not aware of the law with respect to rights of entry; such a course was likely to have been recommended in any case where Canberra Contractors had acted inconsistently with the union officials’ rights, whether deliberately or inadvertently. For these reasons, on balance, I find that Mr Graham, too, was aware that the union officials were entitled to conduct the further investigations that they sought to conduct.

Seniority of individual contraveners

54    At [80] of the Penalty Judgment, the primary judge stated that “[i]t cannot be disputed that the contraventions here, pursuant to the operation of s 793 FW Act, arose out of conduct, not by senior management, but at a lower level in the Company hierarchy”. The CFMEU submits that this was an error in circumstances where Mr Cerullo, at least, was part of senior management and Mr Graham held a senior position within the company. However, the primary judge also observed at [16] that Mr Cerullo’s understanding of the Liability Judgment “was very poor, especially so for someone in a senior position in [Canberra Contractors]” and, at [71] described Mr Cerullo and Mr Graham as “senior and long-experienced personnel in the building industry”. It is difficult to know what to make of this possible internal inconsistency in the primary judge’s reasons. Given that I will need to re-exercise the discretion in any event, it is not necessary to determine on which basis the primary judge proceeded. I will identify the basis on which I will re-exercise the discretion to impose penalties.

55    I accept that Mr Cerullo, as a director and “operations manager” or “director of operations” of Canberra Contractors, should be regarded as a member of its senior management. I also accept that Mr Graham held a relatively high-level position in the company. While he was not of equivalent status to Mr Cerullo in that he was not an executive director, he was nevertheless the person allocated responsibility for designing and implementing project risk management plans and safety management plans, and conducting site inspections to ensure safety measures were in place. I further accept the CFMEU’s submission that Mr Graham appears to have been the “go-to person” for right of entry matters within Canberra Contractors and that Mr Cerullo appeared to defer to him in relation to such matters.

56    I accept that the fact that Mr Cerullo was part of the senior management of Canberra Contractors at the time of the contraventions and the fact that Mr Graham held a fairly high-level position relating to risk management and safety are considerations that weigh in favour of imposing a relatively higher penalty for Canberra Contractors: Construction, Forestry, Maritime, Mining and Energy Union v Richard Crookes Constructions Pty Ltd [2022] FCA 992 at [175], [178].

57    Mr Graham has subsequently left the company and Mr Cerullo, while still a director and the operations manager, no longer has a role that sees him deal directly with union officials. To some extent, I accept the respondents’ submission that this suggests that somewhat less weight should be given to the seniority of the persons involved in the contravention within the company at the time of the contraventions. The weight to be given to this consideration should take into account all the circumstances, including the fact that Canberra Contractors no longer has Mr Cerullo and Mr Graham in the roles that they occupied at the time of the contraventions: cf Pattinson at 470 [47]. However, I would nevertheless give substantial weight to this consideration as an indication of a need for effective deterrence for Canberra Contractors as a corporation in exercising the discretion to impose penalties.

Other matters relied on to support higher penalties for Canberra Contractors

58    In light of the conceded errors, it is unnecessary to decide whether the penalty imposed by the primary judge was “manifestly inadequate”. I must simply impose the penalties that I consider appropriate in a fresh exercise of the discretion. The CFMEU nevertheless relies on the arguments advanced in connection with grounds 3 and 7 as salient to the re-exercise of the penalty discretion.

59    The CFMEU submits that the level of the single penalty imposed on Canberra Contractors gave inadequate weight to the relevant considerations described in Pattinson, including, in particular, the principle goal of achieving general deterrence from contravening the FW Act, Canberra Contractors’ history of prior contraventions of the FW Act, and the imperative to achieve specific deterrence by reference to Canberra Contractors’ size, financial records and the extent of its ongoing work. I am not convinced that the primary judge failed to take these matters into account or failed to give effect to the principles in Pattinson. I accept that these are relevant considerations in fixing penalties for Canberra Contractors, and I will take them into account when I re˗exercise the penalty discretion.

60    The CFMEU further submits that the penalties imposed on Canberra Contractors are anomalous and inadequate in comparison to the penalties imposed on the individual respondents, when considered as a percentage of the available maximum penalty for each contravention. The CFMEU points out that, if the primary judge had imposed on Canberra Contractors penalties that represented the same percentage of the maximum penalties as the penalties he imposed on the individual respondents, the total of the penalties to be imposed on Canberra Contractors would have been $84,000, rather than the $45,000 that was imposed by the primary judge. I do not consider that there can or should necessarily be any strict mathematical relationship between the penalty imposed on individuals and the penalty imposed on a company that is responsible for those same contraventions. Although the maximum penalty applicable in respect of contraventions by a company at the time of these contraventions was some five times the penalty applicable in respect of contraventions by an individual, it does not follow that the penalties imposed on the company should always be five times the total of the penalties imposed on the individual contraveners. They may be higher or lower than that. The availability of much higher maximum penalties for contraventions by companies partly reflects the very wide range of financial and industrial circumstances that may apply to different companies and the wide range of financial benefits a company may derive from contravening conduct. Moreover, in the circumstances of this case, Mr Cerullo’s contravening conduct is not entirely separate from the conduct of Mr Graham; they are connected and all of that conduct formed part of a course of conduct that was undertaken on behalf of Canberra Contractors. It is appropriate to take that kind of “overlap” into account in fixing the penalties to be imposed on the company.

61    The primary judge heard the evidence of Mr Cerullo at the hearing on liability, and of both Mr Cerullo and Mr Graham at the penalty hearing. He evidently formed a highly unfavourable impression of Mr Cerullo and Mr Graham as witnesses: see Liability Judgment at [99]-[124]; Penalty Judgment at [3], [7]-[20]. The primary judge appears to have formed a more favourable impression of Mr Macor, the managing director of Canberra Contractors, who gave evidence on behalf of Canberra Contractors at the penalty hearing: Penalty Judgment at [21]-[26]. I am not in a position to make an independent assessment of the witnesses and I think it is appropriate to proceed on the basis that, while Mr Cerullo and Mr Graham acknowledged the findings of the primary judge, they did not make an effort to understand them and did not express genuine contrition. Mr Macor’s evidence was that “the company takes this very seriously and accept[s] the findings”, that training had been organised, and that he personally attended relevant training in response to the findings of contraventions. The primary judge took the view that “only Mr Macor’s evidence [as opposed to Mr Cerullo and Mr Graham’s evidence] assisted the Court”. He accepted that Mr Macor’s evidence was “relatively straight-forward” (which I take to mean he accepted it) but considered that the response of the company in its re-education of employees was barely sufficient. I will proceed on this view of the evidence given by Mr Macor on behalf of Canberra Contractors.

Further consideration of matters relevant to fixing pecuniary penalties

62    The above discussion has focussed on the issues joined between the parties on the appeal. I will address the other factors that are relevant to the fixing of penalties only briefly.

63    The circumstances, nature and extent of the contraventions have been identified above. The respondents engaged in a course of conduct aimed at preventing, deterring or hindering union officials from exercising their rights in relation to entry. Those are important industrial rights in that they have as their object ensuring safety in the workplace. I have found above that the conduct was deliberate in the sense that the respondents were aware of the law relating to rights of entry and intentionally acted to frustrate the rights of the union officials. There is no evidence of any specific loss or damage resulting from the contraventions, or of any specific financial advantage obtained by Canberra Contractors on account of the contraventions.

64    In fixing the penalties, it is necessary to appreciate that the contraventions of s 503(1) of the FW Act, involving the making of misleading statements about the union officials’ rights of entry, were in each case closely connected with the contraventions of s 502(1). I will take this into account in fixing the penalties for all the contraventions. I also bear in mind that the practical effect of the contraventions was relatively minor, since the union officials, having been frustrated in their attempts to carry out a lawful inspection, returned on the same day with new notices of entry and were thereafter only precluded from carrying out their intended inspection for a short period of time.

65    The trial judge found, and I accept, that Canberra Contractors is a company of substantial means. The financial statements produced in response to an order made at the penalty hearing indicate that its assets included several million dollars in cash and that it had a turnover of tens of millions of dollars in some years. It earned profits of around $220,000 and $200,000 in the two years before the penalty hearing, but paid dividends of some $3.6 million out of retained profits in those years.

66    Canberra Contractors has a history of previous contraventions of the FW Act, but as the primary judge correctly stated, that history of contraventions is relatively “modest”. I accept that the contraventions involved relatively senior employees and that Mr Cerullo, in particular, was a senior manager of Canberra Contractors. I see no reason to depart from the primary judge’s assessment (at [73] of the Penalty Judgment) that he had reservations about the “degree of contrition” displayed by Mr Cerullo and Mr Graham. The respondents were not co-operative in relation to the proceedings generally, refusing to admit the contraventions and advancing a factual case that the trial judge rejected by reference to the objective evidence.

Re-exercise of penalty discretion

67    Taking into account the matters referred to above, and the principles relevant to the fixing of pecuniary penalties, and re-exercising the discretion afresh, I would impose penalties as follows.

68    In relation to Mr Cerullo, I would impose a penalty of $4,800 for his contravention of s 502(1) of the FW Act, and a penalty of $3,200 for each contravention of s 503(1) of the FW Act. I accept that, in relation to Mr Cerullo, he remains a director of Canberra Contractors and its operations manager, and it remains important to impose a penalty that has both general and personal deterrent value, even though he apparently does not currently have a role that would ordinarily see him deal directly with union officials. There is no evidence that he was removed from that role by Canberra Contractors because of concerns about his involvement in the contraventions. The total of the penalties to be imposed on Mr Cerullo is $11,200.

69    In relation to Mr Graham, I have regard to the evidence that, by the time of the penalty hearing, he had left his employment with Canberra Contractors and was no longer in a position where he dealt with union officials’ rights of entry. It is nevertheless important to impose a penalty that will operate as an appropriate general deterrent. Exercising the discretion afresh, I would impose penalties of $3,800 for Mr Graham’s contravention of s 502(1), and $2,800 for his contravention of s 503(1). The total of the penalties to be imposed on Mr Graham is $6,600.

70    In relation to Canberra Contractors, I would impose a penalty of $15,000 for each of the two contraventions of s 502(1) and $10,000 for each of the three contraventions of s 503(1). The total of the penalties to be imposed on Canberra Contractors is therefore $60,000.

71    I acknowledge that the penalties to be imposed on Canberra Contractors represent a smaller percentage of total of the maximum available penalties than in the case of the two individual respondents. However, in my view the penalties I have identified should be adequate to serve the requirements of specific and general deterrence in the circumstances of this case. I accept that Canberra Contractors’ history of previous contraventions of the FW Act suggests a real need for deterrence, but that does not mean that the penalties must necessarily approach the maximum available. It is not apparent that the contraventions in this case produced any particular tangible financial benefit for Canberra Contractors, such that the penalty needs to be very large in order to make contraventions of this kind financially unattractive to the company. Total penalties amounting to $60,000 – just under a third of its annual profit in the year the contravention occurred, albeit, I acknowledge, only a small proportion of its cash assets and turnover – should encourage compliance with the law and demonstrate that contravention of the law is not an economically rational choice: cf Pattinson at 475 [66] (Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ).

72    Standing back from these penalties, I do not consider that any further reduction in recognition of the totality principle is warranted. They adequately recognise that the conduct of the respondents formed part of a course of conduct with overlapping elements, occurring on a single day. Although I recognise that I am not limited by the maximum penalty applicable to a single contravention, I note that the penalties to be imposed on Canberra Contractors and on Mr Cerullo approach that level. I consider that penalties fixed at the levels I have identified will adequately serve the deterrent purposes of civil penalties, without being excessive or oppressive.

Conclusion

73    For the reasons given above, I will allow the appeal, set aside the orders of the primary judge imposing penalties, and in lieu thereof, exercising the discretion afresh, impose separate penalties on the respondents in the amounts I have identified. Having regard to s 570 of the FW Act, there should be no order as to the costs of the appeal.

Associate:

Dated:    6 May 2025