Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union

[2016] FCCA 3265

FEDERAL CIRCUIT COURT OF AUSTRALIA

AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER v CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION & ANOR [2016] FCCA 3265

Catchwords:
INDUSTRIAL LAW – Application for imposition of pecuniary penalties – consideration of penalty.

Legislation:

Fair Work Act 2009 (Cth), ss.340(1), 342(1), 418, 421, 539(2), 793

Cases cited:
Alfred v CFMEU [2011] FCA 556; Director of the Fair Work Building Industry Inspectorate v CFMEU [2015] FCA 226
Director of the Fair Work Building Industry Inspectorate v CFMEU [2015] FCA 226
Director of the Fair Work Building Industry Inspectorate v CFMEU (No 2) [2015] FCA 407
Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2016] FCA 616
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union & Ors [2016] FCCA 1692
Lend Lease Project Management & Construction (Australia) Pty Ltd v Construction, Forestry, Mining and Energy Union (No 5) [2012] FCA 1144

Applicant: AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER

First Respondent: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION

Second Respondent: DAVID HANNA

File Number: BRG 161 of 2016

Judgment of: Judge Jarrett

Hearing date: 13 December 2016

Date of Last Submission: 13 December 2016

Delivered at: Brisbane

Delivered on: 15 December 2016

REPRESENTATION

Counsel for the Applicant: Mr Herbert

Solicitors for the Applicant: Norton Rose Fulbright

Counsel for the First Respondent: Mr Dowling

Solicitors for the First Respondent: Hall Payne Lawyers

Counsel for the Second Respondent: Mr McCarthy

Solicitors for the Second Respondent: Fisher Dore Lawyers

FEDERAL CIRCUIT COURT OF AUSTRALIA

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union & Anor [2016] FCCA 3265

CORRIGENDUM

1. In paragraph 7 of the Reasons for Judgment remove the words “Mr Jade Ingham” and replace with the word “and”.

2. In paragraph 8 of the Reasons for Judgment remove the words “Mr Jade Ingham” and replace with the words “and another officer of the first respondent”.

I certify that the preceding two (2)

numbered paragraphs are a true copy of the

Corrigendum to the Reasons for Judgment

herein of Judge Jarrett.

Associate:

Dated: 22 March 2017

THE COURT ORDERS THAT:

1. The name of the applicant be changed to Australian Building and Construction Commissioner;

THE COURT DECLARES THAT:

1. On 11 April, 2014 the second respondent contravened s.340(1)(b) of the Fair Work Act 2009 (Cth); and

2. That by reason of the contravention of s.340(1)(b) of the Fair Work Act 2009 (Cth) by the second respondent, and by reason of s.793 of the Fair Work Act 2009 (Cth), the first respondent has also contravened s.340(1)(b) of the Fair Work Act 2009 (Cth;

THE COURT ORDERS THAT:

1. Pursuant to s.545 of the Fair Work Act 2009 (Cth), a penalty be imposed upon the first respondent of $35,000;

2. Pursuant to s.545 of the Fair Work Act 2009 (Cth), a penalty be imposed upon the second respondent of $2,500;

3. The penalties imposed on each of the Respondents are to be paid to the Commonwealth of Australia.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRG 318 of 2014

AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER

Applicant

And

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION

First Respondent

DAVID HANNA

Second Respondent

REASONS FOR JUDGMENT

1. These proceedings concern the imposition of pecuniary penalties upon each of the respondents for taking adverse action against a construction company, Hindmarsh Construction Australia Pty Ltd, in breach of s.340(1)(b) of the Fair Work Act 2009 (Cth) at a construction site in Brisbane on 11 April, 2014. There is no dispute that the CFMEU and Mr Hanna contravened the Fair Work Act as the applicant alleges. There is also no issue that pecuniary penalties ought to be imposed upon them for those contraventions. The matter for determination is the amount of the pecuniary penalties to be imposed.

The facts

1. The Brooklyn Project, at Brookes Street, Fortitude Valley, Brisbane, was a construction project for the completion of a 14-floor residential apartment building.  The value of the project was about $105m.  Hindmarsh Construction Australia Pty Ltd was the head contractor for the Brooklyn project.  Hindmarsh and the subcontractors engaged by it collectively employed some 130 people to work on the project. 

2. A number of employees engaged on the Brooklyn project took unprotected industrial action on each of 3, 4, 5, 7, 8, 9, 10, 11 and 12 April, 2014.  The employees failed or refused to attend for work.  If they were at work, they refused to perform their work.  Each of the nominated days was a normal working day for most or all of the employees and so they should have been at work.  Clearly, this action undertaken by the employees on those days was industrial action for the purposes of the Fair Work Act 2009 (Cth). Because the employment of each of those employees was covered by an enterprise agreement that was within its nominal term when they took that industrial action, the industrial action was unprotected industrial action for the purposes of the Fair Work Act. This unprotected industrial action was organised and encouraged by the CFMEU and some of its officials and delegates.

3. I have previously dealt with an application by the present applicant for the imposition of penalties upon the CFMEU and its officials that were involved in organising that unprotected industrial action: Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union & Ors [2016] FCCA 1692. This application concerns yet other conduct that contravened the Fair Work Act that took place in the context of the unprotected industrial action that occurred on the dates specified above.

4. Soon after the unprotected industrial action commenced, on 3 April, 2014 Hindmarsh instituted proceedings in the Fair Work Commission pursuant to s.418 of the Fair Work Act against CFMEU, a number of its organisers and officials and others. On 4 April, 2014 orders were made by Senior Deputy President Richards in the Fair Work Commission in respect of:

   a)Hindmarsh;

   b)the CFMEU and its officials, employees and delegates; and

   c)employees of any subcontractor to Hindmarsh who worked at the Brooklyn Project and were members or eligible to be members of the CFMEU and who were taking unprotected industrial action.

   The orders directed that all persons and organisations bound by the order stop, not engage in and/or not organise industrial action as defined in s.418 of the Fair Work Act at the Brooklyn project.

5. The parties agree that a number of officials and organisers of the CFMEU, who were acting within their respective official capacities with the CFMEU, organised further ongoing unprotected industrial action at the Brooklyn project after the Fair Work Commission order was made. That conduct was in contravention of s.421 of the Fair Work Act.

6. The parties agree that at approximately 1:20pm on 11 April, 2014 and whilst the unprotected industrial action was underway as I have set out above, Mr Hanna, and another officer of the CFMEU, met with Mr Ian Busch and Mr Edward Alarcon of Hindmarsh at a coffee shop.  The meeting was convened to discuss the unprotected industrial action then occurring at the Brooklyn project.

7. At that meeting and in the presence of Mr Hanna and another officer of the first respondent handed Mr Busch two identical documents entitled “Deed of Settlement”.  The Deed is in evidence and is an annexure to the statement of agreed facts tendered in these proceedings. 

8. The parties agree that the principal effects of the Deed of Settlement, if executed in the form that it was provided to the Hindmarsh representatives, were that:

   a)Hindmarsh would be required to keep confidential and not disclose to any person the terms of the Deed and the circumstances leading up to and surrounding the entering into of the Deed.  Those matters would have included the Fair Work Commission proceedings and the order made by the Fair Work Commission, which were noted as a recital to the Deed;

   b)the CFMEU and its officials, employees and delegates would be released by Hindmarsh from all claims by Hindmarsh and all liability to Hindmarsh arising out of, or in any way connected with, the unprotected industrial action; and

   c)the CFMEU and its officials, employees and delegates could use the Deed, including as a bar, against Hindmarsh in any court or other proceedings brought by Hindmarsh.

9. During the meeting, Mr Hanna said to Mr Busch and Mr Alarcon words to the effect of:

   a)“This is a way of settling this issue. This is what everybody does. Have a read through it”; and

   b)“To resolve the issue the deed was to be signed and otherwise the action would continue”.

10. During the meeting, Mr Hanna also:

    a)referred to the “Children’s Hospital” and said words to the effect that “it went for 12 weeks” and that Hindmarsh were “only into week 2” , and “you saw how that ended out for them”;

    b)stated to Mr Busch and Mr Alarcon words to the effect that either “we” or “the union” was “prepared to fight” and “even if it takes as long as the Children’s Hospital”;

    c)said to Mr Busch and Mr Alarcon that the only deal the first respondent would consider was Hindmarsh agreeing to sign the Deed and to send an email “reinstating” a former site delegate of the CFMEU, Mr Zoran Bogdanovic, as a delegate;

    d)said to Mr Busch and Mr Alarcon that if Hindmarsh did not sign the Deed of Settlement, “the industrial action was continuing’’; and

    e)said to Mr Busch and Mr Alarcon that if the Deed was not signed, the dispute would not go away.

11. During the meeting, Mr Hanna also said to Mr Busch and Mr Alarcon words to the effect of “I’ll have the site back to work tomorrow” if the Deed was signed by Hindmarsh.

12. Hindmarsh did not sign the Deed of Settlement and the unprotected industrial action continued the next day.  However, it ceased soon thereafter.

The contravention

1. By 11 April, 2014 certain rights had accrued to Hindmarsh under the Fair Work Act arising out of the unprotected industrial action at the Brooklyn project. Hindmarsh was entitled to initiate proceedings against the CFMEU and its officers for orders against them pursuant to s.539(2) items 14, 15 of that Act. Hindmarsh also had the right to make a complaint to the Fair Work Building Industry Inspectorate, or one of its officers, about the conduct of the CFMEU and Mr Hanna.

2. The entitlement to initiate, or participate in, a process or proceedings under the Fair Work Act and the ability to make a complaint to, or an inquiry with, the Fair Work Building Industry Inspectorate were workplace rights for the purposes of s.341(1) of the Fair Work Act. In the circumstances that had developed, Hindmarsh was entitled to exercise those rights.

3. Section 340(1)(b) of the Fair Work Act provides that a person must not take adverse action against another person to prevent the exercise of a workplace right by that other person.  Subsection 340(1) is a provision in respect of which a civil penalty might be imposed if breached.

4. An industrial association such as the CFMEU, or an officer or member of an industrial association, such as Mr Hanna, takes adverse action against a person if the industrial association, or the officer or member of the industrial association:

   a)organises or threatens to organise or take industrial action against the person and organises such action: s.342(1) item 7(a) of the Fair Work Act; or

   b)takes action or threatens to take action that has the effect, directly or indirectly, of prejudicing an independent contractor in relation to a contract for services: s.342(1) item 7(c) of the Fair Work Act.

5. The parties agree that on 11 April, 2014 Mr Hanna took adverse action against Hindmarsh because he made a threat to Hindmarsh to continue the unprotected industrial then occurring at the Brooklyn project in the event that Hindmarsh did not execute the Deed of Settlement.  The Deed of Settlement, if executed, would have had the effect of causing Hindmarsh to relinquish each of the workplace rights I have identified above.  The parties agree that the adverse action was taken so as to procure the execution of the Deed with the intended result that Hindmarsh would no longer have those rights or any benefit from those rights.

6. The unprotected industrial action was continued on 12 April, 2014 after the threat was made. 

7. The parties also agree that Mr Hanna took the identified adverse action because he wished to prevent Hindmarsh from exercising of one or more of its workplace rights. By taking that action for that reason, Mr Hanna contravened s.340(1)(b) of the Fair Work Act and thereby rendered himself liable to the imposition of a civil penalty.

8. It is uncontroversial that by reason of s.793 of the Fair Work Act, the conduct of Mr Hanna must be taken to be the conduct of the CFMEU. In the premises, they agree that the CFMUE also contravened s.340(1)(b) of the Act.

Penalty

1. At the outset it is necessary to set a few matters that were emphasised in submissions:

   a)The relevant contravening conduct is the threat made by Mr Hanna on 11 April, 2014.  Whilst the threat was made in the context of ongoing industrial action, those responsible for organising that industrial action and the CFMEU, have already been the subjects of penalties for that conduct;

   b)Mr Hanna or the CFMEU should not be penalised for the unprotected industrial action undertaken at the Brooklyn project in this proceedings;

   c)Hindmarsh did not execute the Deed of Settlement and for that reason the threat was ineffective;

   d)the threat to continue the unprotected industrial action was not carried into execution beyond 12 April, 2014 when it came to an end. 

2. The maximum penalty for the contravention by Mr Hanna is 60 penalty units or $10,200.  For the CFMEU it is 300 penalty units or $51,000.

3. The threat made by Mr Hanna is a serious matter.  The unprotected and therefore unlawful industrial action which preceded the production of the Deed of Settlement and the making of the threat to continue the unlawful action was a significant event in the life of the construction of the project.  At the time the threat was made building work on the Brooklyn project had been delayed by over a week.  The threat was to delay the work further.  Mr Hanna’s reference to the “Children’s Hospital” and the “12 weeks” of industrial action at that project underscored the seriousness of the threat.  That reference also made the threat to continue the unprotected industrial action credible and significant.

4. The threat was intended to bring pressure to bear on Hindmarsh to relinquish the rights that it had accrued pursuant to the Fair Work Act. Whilst Hindmarsh and the CFMEU could agree to a relinquishment of those rights quite legitimately, any attempt to have Hindmarsh do that could not be accompanied by the threat to which Mr Hanna has admitted.

5. The threat is also a serious matter because it was made by an official of the CFMEU, the principal employee industrial association in the building and construction industry.  As the very many reported cases reveal, it is an organisation with a long and sorry history of industrial disputation in which its willingness to disregard the industrial laws of this country seems to know no bounds.  The threat was plainly credible and significant.

6. The terms of the proposed Deed of Settlement provided:

   2. Payment

   2.1. The CFMEU will pay to the Contractor, within seven (7) days of the date on which the Contractor provides an executed copy of this Deed to the CFMEU, a sum equal to $100.00 (the “Payment”;

   2.2. The Contractor agrees and acknowledges that the Payment represents fair and reasonable settlement of the Sub Contractors claims in respect of the Industrial Action.

   2.3. The Payment is made in full and final satisfaction of all claims the Contractor has or may have or would have had against the CFMEU or any other person arising out of or connected with the Industrial Action.

7. Whilst the applicant points to the contemptuous nature of the CFMEU’s offer of only $100 to Hindmarsh in exchange for it relinquishing its workplace rights in circumstances where the CFMEU knew or ought reasonably to have known that the damage suffered by Hindmarsh as a result of the industrial action was likely to be very much greater, it is a matter of relatively modest importance given that Hindmarsh did not execute the Deed of Settlement.

8. The applicant also submits that the purpose of the Deed of Settlement was a desire on the part of the CFMEU to obtain indemnity and protection from liability for the unlawful conduct in which it, by its officers, delegates and members, had already engaged and in which it was continuing to engage, at the time of the threat.  Plainly that was its purpose.  But its purpose, without anything more was not illegal.  However, given the circumstances in which the Deed of Settlement was proffered it was highly unlikely that Hindmarsh would execute the Deed and accept $100 for its trouble.  Indeed, it did not do so.  Clearly some incentive was required to persuade Hindmarsh to execute the Deed.  The threat was made for that purpose.

9. I accept the applicant’s submission that the uncontroversial facts demonstrate that the CFMEU and Mr Hanna made the threat as part of a strategy to protect the CFMEU, its officials, organisers, employees or delegates from the consequences of the past and continuing contraventions of the Fair Work Act, by the mechanism of threatening further contraventions. The production of the Deed of Settlement, which is clearly a document prepared carefully and deliberately, underscores that proposition.

10. Both Mr Hanna and the CFMEU has been the subject of proceedings for contravening provisions of the Fair Work Act in the past. However, it is not suggested that either has contravened the Act before in the precise way as that to which they now admit. But both have had penalties imposed upon them for organising and continuing unlawful industrial action, even after orders of the Fair Work Commission to cease that conduct (for example see Lend Lease Project Management & Construction (Australia) Pty Ltd v Construction, Forestry, Mining and Energy Union (No 5) [2012] FCA 1144). It must be the case then that both knew that threatening to continue unprotected industrial action was, or was likely to be, a contravention of the Fair Work Act.

11. Having said that, whilst I am mindful that similar prior relevant conduct might be taken into account in assessing penalty, I cannot give it such weight as to lead to the imposition of a penalty that is disproportionate to the gravity of the present contravention under consideration. Nonetheless, it is tolerably clear from the cases set out in the table to the applicant’s written submissions that insofar as the CFMEU is concerned, the imposition of penalties in the past do not appear to have acted as much of a disincentive. That the CFMEU has not been found to have contravened the Fair Work Act in this particular way before is not particularly to the point. The proscription in the Fair Work Act against taking adverse action is a significant feature of the Act. As the peak employee organisation in the building and construction industry, the CFMEU has, no doubt, more than a passing familiarity with the relevant provisions.

12. Neither Mr Hanna or the CFMEU have expressed any remorse for the actions constituting the contravention in this case.  There is no evidence of contrition.  It was said on behalf of both that I should take into account that the application resolved into a penalty hearing after the respondents and the applicant’s reached agreement about the facts and reflected those facts in a statement of agreed facts that has been filed in the proceedings.

1. Whilst there was agreement reached between the parties as to the way in which the matter was to proceed (including agreement as to the facts of the matter) that agreement was only achieved shortly before the first day fixed for the commencement of the trial in this matter.  The late concessions by the respondents reflect, in my view, not so much contrition for their actions and an acceptance of their wrongdoing, but rather an acceptance of the inevitable outcome of the proceedings. 

2. Moreover, the way in which this application has proceeded in this Court tends against the proposition that the respondent should receive any consideration for conceding the case, or part of the case, against them.  The defence filed by the CFMEU consisted only of denials or non-admissions.  So too, the defence filed by Mr Hanna.  No positive answer to the case made by the applicant was advanced. 

3. On 21 March, 2016 I made directions for the conduct of these proceedings.  One direction provided for the applicant to file and serve any evidence on which he intended to rely by way of affidavit on or before 27 May, 2016.  Another required the respondents to file and serve any evidence, on which they intended to rely by way of affidavit on or before 17 June, 2016.  The applicant filed his evidence in accordance with the directions.  The respondents filed no affidavits of evidence in chief by any witness.  The matter was referred to mediation before a registrar.  That occurred on 28 June, 2016, but despite the respondent’s not having filed any evidence and therefore not having indicated that they intended to advance no positive case, the application or any part of it, was not resolved.  I say that no part of the application was resolved because when the matter was returned to court on 15 July, 2016 following the mediation, I was asked to allocate two days for the hearing of the application.  Further directions were made for Mr Hanna to file affidavits of evidence in chief, with which he never complied.  Orders were made in the nature of discovery which required the applicant to provide certain documents to the respondents within 28 days of 15 July, 2016.

4. I have taken into account that the matter has proceeded upon an agreed statement of facts, but given the timing of the respondents’ concessions the discount for that matter is slight.

5. General deterrence is of considerable importance in this case.  The penalties must be imposed at a meaningful level so as to act as a general deterrent to others who may be minded to engage in similar conduct.  The penalties must cause union officials, delegates and employees to pause and reflect on the options available to them to pursue their legitimate industrial objectives. 

6. In so far as Mr Hanna is concerned, the submissions made on his behalf emphasised three matters.  First, it was said that the delay of nearly two years in the applicant commencing these proceedings is relevant and inconsistent with the need for a deterrent penalty to be imposed upon him.  I accept that the delay in the commencement of proceedings is relevant in the sense suggested.  I take it into account. 

7. The second, Mr Hanna takes issue with description of the seriousness of his conducted ascribed by the applicant’s submissions.  I have set out my view of the seriousness of the conduct earlier in these reasons.

8. Finally, he argues that he has resigned from his position with the CFMEU and did so in August, 2015.  He argues that I should not proceed on the basis that the penalty to be imposed, or his legal costs, will be paid other than by the second respondent personally.  However, in my view, there is no basis to proceed on the assumption that they would be met if he remained employed by the CFMEU.  In my view this matter is of no consequence to my deliberations.

9. In my view, an appropriate response, proportionate with the gravity of the contravention committed by Mr Hanna is a pecuniary penalty in the sum of $2,500.

10. I accept that the circumstances of this case require that the penalty to be imposed upon the CFMEU must reflect the particular need for specific deterrence in respect of that organisation.  The level of penalty must reflect what is plainly a significant need to deter unlawful industrial conduct given the litany of cases that now deal with actions of the CFMEU and its organisers, delegates and employees.  In my earlier reasons in Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union & Ors [2016] FCCA 1692 I referred to some of those cases such as Alfred v CFMEU [2011] FCA 556; Director of the Fair Work Building Industry Inspectorate v CFMEU [2015] FCA 226 and Director of the Fair Work Building Industry Inspectorate v CFMEU (No 2) [2015] FCA 407. There are many others.

11. The CFMEU does have an egregious record of repeated and wilful contraventions of all manner of industrial laws, and I accept that the penalty to be imposed in this case should reflect that record and be more severe than it would have been if it had no or limited adverse record.  The penalty, nonetheless must be proportionate to the gravity of the contravention.  I have had regard to the remarks to which my attention was drawn made by Siopis J in Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2016] FCA 616 at [74].

12. The penalty in respect of the CFMEU should, in my view be $35,000.  In my view, that penalty properly reflects the gravity of the contravention having regard to the matters I have set out above and in particular, the need for specific deterrence.

13. I make the orders set out at the commencement of these reasons.

I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered on 15 December, 2016.

Date: 15 December, 2016