Australian Building and Construction Commissioner v D'Arcy & Construction, Forestry, Mining and Energy Union

[2019] FCCA 563

FEDERAL CIRCUIT COURT OF AUSTRALIA

AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER v D’ARCY & CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION [2019] FCCA 563

Catchwords:
INDUSTRIAL LAW – Admission of contraventions of s. 349 of Fair Work Act – blatant contraventions – mitigating factors – declarations of contraventions made – pecuniary penalties imposed.

Legislation:

Fair Work Act 2009 (Cth), ss.567(c), 566(3), 349, 3(e), 336,

Cases cited:

Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (No.2) [2018] FCA 1968

Auimatagi v Australian Building and Construction Commissioner [2018] FCAFC 191

Applicant: AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER

First Respondent: PETER JOSEPH D’ARCY

Second Respondent: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION

File Number: BRG 305 of 2018

Judgment of: Judge Egan

Hearing date: 1 March 2019

Date of Last Submission: 1 March 2019

Delivered at: Brisbane

Delivered on: 7 March 2019

REPRESENTATION

Counsel for the Applicant: Mr. L. Dollar

Solicitors for the Applicant: K&L Gates

Counsel for the Respondent: Mr. C. Massey

Solicitors for the Respondent: Hall Payne Lawyers

IT IS DECLARED THAT:

1. On 27 March 2017, during the course of an induction session held at the Grand Central Shopping Centre project construction site, at Toowoomba, in the State of Queensland, (‘the Project’), the First Respondent, contravened s.349(1)(a) of the Fair Work Act 20019 (Cth) by recklessly making a false or misleading representation about the obligation of Mr Phillip Potter to engage in industrial activity within the meaning of s.347, namely, his obligation to become a member of the Construction, Forestry, Mining and Energy Union (‘the CFMEU’) and pay a membership fee to the CFMEU in order to work on the Project; and

2. By the conduct of the First Respondent in the previous declaration, and by operation of ss.363 and 793 of the Fair Work Act 2009 (Cth), the Second Respondent contravened s.349(1)(a) of the Fair Work Act 2009 (Cth) when, on 27 March 2017, during the course of an induction session held at the Project, it recklessly made a false or misleading representation about the obligation of Mr Phillip Potter to engage in industrial activity within the meaning of s.347, namely, his obligation to become a member of the CFMEU, and pay a membership fee to the CFMEU in order to work on the Project.

AND IT IS ORDERED THAT:

1. The First Respondent pay a penalty in the sum of $6,480.00 in respect of the contravention the subject of declaration (1) herein;

2. The Second Respondent pay a penalty in the sum of $48,600.00 in respect of the contravention the subject of declaration (2) herein;

3. Each of the First and Second Respondents pay the said penalties to the Commonwealth of Australia within twenty-eight (28) days of this order.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRG 305 of 2018

AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER

Applicant

And

PETER JOSEPH D’ARCY

First Respondent

And

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION

Second Respondent

REASONS FOR JUDGMENT

Introduction

1. By an amended application filed on 17 September 2018, the applicant sought declaratory relief against both respondents pursuant to the provisions of s. 567(c) of the Fair Work Act 2009 (Cth) (‘the FWA’). It also sought orders for the imposition of pecuniary penalties against both of the respondents pursuant to the provisions of s.546(3) of the FWA.

2. The relief sought relates to admitted contraventions by each of the first respondent and the second respondent of the provisions of s.349 of the FWA, which section relevantly provides as follows:

   Misrepresentations

   
   
   

   349.

   (1) A person must not knowingly or recklessly make a false or misleading representation about either of the following:

   a) another person’s obligation to engage in industrial activity;

   b) another person’s obligation to disclose whether he or she, or a third person:

   i) is or is not, or was or was not, an officer or member of an industrial association; or

   ii) is or is not engaging, or has or has not engaged, in industrial activity.

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

   (2) Subsection (1) does not apply if the person to whom the representation is made would not be expected to rely on it.

Background

1. The first respondent was an on-site delegate of the second respondent. The respondents have admitted each of the allegations pleaded in the Amended Statement of Claim filed on 17 September 2018. Paragraphs 4-20 inclusive thereof are as follows:

   4. In or around March 2017, Probuild was the head contractor for the "Grand Central Shopping Centre" project (the Project) located at 222 Margaret Street, Toowoomba, Queensland (the site).

   5. Probuild was the occupier of the site on which the Project was being constructed.

   6. The Project involved the development of a shopping complex which included the construction of buildings and structures, as well as the carrying out of landscaping works, on the land at the site.

   Events of 27 March 2017

   On 27 March 2017:

   a) Mr D’Arcy:

   i) was a delegate of the CFMEU at the site; and

   ii) in that capacity, at or about 6:30a.m., attended at the room where inductions for workers on the site were carried out (induction room) shortly before an induction session for workers on the site was to occur (the induction); and

   b) Dig It Landscapes Pty Ltd (Dig It):

   i) was engaged at the site in the performance of landscaping work on the Project; and

   ii) directed two of its employees, Phillip Potter (Mr Potter) and Ross Stewart (Mr Stewart), to attend the site to carry out landscaping works for Dig It on the Project; and

   c) Mr Potter and Mr Stewart:

   i) upon arriving at the site, made their way to the induction room; and

   ii) waited in the induction room for the induction to commence, together with approximately ten other workers; and

   d) the events occurred as pleaded in paragraphs 0 to 0 below herein, in the course of which all references by Mr D’Arcy to “the Union” or “a union” were to the CFMEU, which is to be inferred by reason of the matters pleaded below and, more particularly, that:

   i) Mr D’Arcy was attending the induction room in his capacity as a delegate and officer of the CFMEU; and

   ii) Mr D’Arcy required Mr Potter to join the CFMEU as a condition of being at liberty to work on the Project at the site.

   8. Prior to 27 March 2017, Mr Potter had:

   a) been a member of the CFMEU; and

   b) ceased to be a member of the CFMEU and had not renewed his membership as at 27 March 2017.

   9. Prior to the commencement of the induction, and shortly after Mr Potter and Mr Stewart entered the induction room, Mr D’Arcy:

   a) entered the induction room;

   b) said words to the effect, “I am from the Union”;

   c) placed a piece of paper on the table where Mr Potter was sitting with about 4 or 5 other workers; and

   d) gave instruction to the effect that each person at the table write their names on the sheet of paper and pass it to the next person.

   10. Mr D’Arcy then commenced asking each of the persons at the tables if they were members of the Union.

   11. When Mr D’Arcy came to Mr Potter:

   a) he asked Mr Potter if he was a Union member;

   b) Mr Potter replied using words to the effect “not any more”;

   c) Mr D’Arcy then said to Mr Potter words to the effect that “You’ll have to re-join [the Union]”;

   d) Mr Potter responded saying words to the effect “do I have to join [the Union]?”;

   e) Mr D’Arcy answered saying words to the effect that “Yes.  The reason that I am here before the induction starts is to make sure that everyone is in the Union”;

   f) Mr Potter then responded with words requesting to the effect of: “what if I don’t join the Union?”; and

   g) in response to Mr Potter’s question, Mr D’Arcy said words to the effect  of: “That’s fine, but you can’t work here, you’ll have to go and work somewhere else.”

   12. Mr Stewart, who was sitting with Mr Potter in the induction room, then:

   a) joined the conversation; and

   b) said to Mr D’Arcy words to the effect of “Isn’t that illegal” or “That’s illegal”.

   13. In response to Mr Stewart’s question or statement (as referred to in the preceding paragraph), Mr D’Arcy said to Mr Potter and Mr Stewart, words to the effect that “If you want to work here then you have to be part of the Union”.

   Mr D’Arcy then:

   a) placed an application form for CFMEU membership in front of Mr Potter; and

   b) said to Mr Potter words to the effect that “you’ll have to fill this in. We’re not starting the induction until it’s done”.

   15. Following the above:

   a) Mr Potter phoned Dig It’s site manager, Ron Jones, and informed him to the effect that the delegate was telling Mr Potter to join the Union;

   b) Mr Potter said words to Mr D’Arcy to the effect that he had just spoken with Ron Jones who said that he would sort it out later; and

   c) Mr D’Arcy responded by saying words to Mr Potter to the effect that “No, we’ve got to sort it out now.  We’re not doing the induction until you sign up.”

   16. As a result of the matters said to him by Mr D’Arcy, Mr Potter:

   a) concluded that:

   i) Mr D’Arcy would prevent the induction for himself and the other workers from proceeding until he acted to join the CFMEU by filling out the application form presented by Mr D’Arcy; and

   ii) he would not be able to work on the Project until he had he acted to rejoin the CFMEU by filling out the said form; and

   iii) he had no alternative but to complete and provide the application form to Mr D’Arcy and join the CFMEU in order for:

   (A)the induction to commence;

   (B)for Mr Potter to be able to participate in the induction; and

   (C)for Mr Potter to be able to work for Dig It at the site and on the Project; and

   b) on the basis of those conclusions:

   i) relented and agreed to join the Union by filling out the application form and submitting it to Mr D’Arcy; and

   (ii) filled out the said form presented by Mr D’Arcy and returned it to him.

   17. Following the above:

   a) Mr D’Arcy then placed another form in front of Mr Potter, being a form authorizing the deduction of union fees from Mr Potter’s wages (payroll deduction form);

   b) upon placing the said form in front of Mr Potter, Mr D'Arcy said words to the effect that “You’ll have to fill this in too”;

   c) Mr Potter asked Mr D’Arcy to the effect of “How much is this going to cost me?”;

   d) Mr D’Arcy responded by saying to Mr Potter words to the effect that he would need to pay five hundred and something dollars;

   e) Mr Potter responded by saying to Mr D’Arcy words to the effect that “I’m only up here for a couple of days.  So I’m basically coming up here to work for nothing.”; and

   f) Mr D’Arcy responded to Mr Potter by saying words to the effect that “Well, that’s just the way it is”.

   18. As a result of the matters said to him by Mr D’Arcy, as pleaded in the preceding paragraph and in paragraphs 0 to 0 and 17 hereof, Mr Potter:

   a) concluded that:

   i) Mr D’Arcy would prevent the induction for himself and the other workers from proceeding until he filled out the payroll deduction form presented by Mr D’Arcy;

   ii) he would not be able to work on the Project until he had joined the CFMEU or taken such steps as were necessary to become a member of the CFMEU; 

   iii) he had no alternative but to complete and provide the application form to Mr D’Arcy and join the CFMEU in order for:

   (A)the induction to commence;

   (B)for Mr Potter to be able to participate in the induction; and

   (C)for Mr Potter to be able to work for Dig It at the site and on the Project; and

   b) on the basis of those conclusions:

   i) relented and agreed to join the Union by filling out the payroll deduction form and submitting it to Mr D’Arcy; and

   ii) filled out the said form presented by Mr D’Arcy and returned it to him.

   19. Upon Mr Potter filling out and providing the said forms to Mr D’Arcy:

   a) Mr D’Arcy left the induction room; and

   b) the induction then proceeded, after which the workers (including Mr Potter) worked on the Project for the remainder of 27 March 2017.

   20. After Mr Potter completed work on 27 March 2017, he telephoned the Dig It office, speaking to the Human Resources Manager, Karen Leggett, saying words to the effect “please do not process the CFMEU fee deduction from my pay.”

2. The conduct on the part of the first respondent during the course of the work induction process had the effect of promoting a “closed union shop”. That conduct offended against the object of the FWA relating to a worker’s right to freedom of association as set out in s.3(e) of the FWA, which section relevantly provides as follows:

   Objects of this Act

   3. The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:

   (a) …

   (e)  enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and
   
   …

3. The conduct also offended against the provisions of s.336(1)(b)(i) of the FWA, which section specifically protects the rights of a worker to become, or not to become, a member of a union. Section 336 of the FWA provides as follows:

   Objects of this Part
   
   336

   (1)  The objects of this Part are as follows:

   (a) to protect workplace rights;

   (b) to protect freedom of association by ensuring that persons are:

   (i)  free to become, or not become, members of industrial associations; and

   (ii)  free to be represented, or not represented, by industrial associations; and

(iii)  free to participate, or not participate, in lawful industrial activities;

(c) to provide protection from workplace discrimination;

(d) to provide effective relief for persons who have been discriminated against, victimised or otherwise adversely affected as a result of contraventions of this Part.

(2)The protections referred to in subsection (1) are provided to a person (whether an employee, an employer or otherwise).

1. At this hearing, it was agreed by all parties that the conduct the subject of the contravention was “reckless” conduct. As such, the representations made by the first respondent, admitted by the respondents, and as pleaded in paragraph 37. of the Amended Statement of Claim, were:

   a.Made without having made any inquiry to ascertain the truth or accuracy of the representations; and

   b.Made without any or any due care or regard to their truth or accuracy.

Approach to Imposition of Penalty and Proportionality:

1. In Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (No.2) [2018] FCA 1968, O’Callaghan J at [46] – [47] said:

   46. In my view, the question of the assessment of penalties is to be approached consistently with the joint judgment of the Full Court (comprised of the Chief Justice, White J and myself) in Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) [2018] FCAFC 97 (The Non-Indemnification Personal Payment Case) in particular at [22], viz:

   The overwhelming importance of deterrence as the protective purpose of the penalty does not exclude the need to determine a penalty which is proportionate to the contravening conduct. The history of contravention is to be taken into account in fixing the proper level of penalty for the proportionate response to the contravention in question. Proportionality has within it the need to characterise the seriousness of the contravention. Proportionality of penal response to a contravention assessed by reference to its seriousness and gravity is an essential characteristic of the application of the statute. The penal response is for that contravention, not earlier contraventions: Veen v The Queen [No 2] (1988) 164 CLR 465 at 477-478. Prior contraventions may reveal an apparent disregard for the Act and the need for deterrence by a penalty at a level appropriate to achieve that objective. It is to be borne in mind, however, that it is for the conduct in question that the penalty is imposed, not for prior conduct.

   47. To the extent that the submissions of the applicant suggested that the judgments of the majority in Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Broadway on Ann Case) [2018] FCAFC 126 may be read to suggest otherwise, I respectfully disagree.

2. The Full Court of the Federal Court in Auimatagi v Australian Building and Construction Commissioner [2018] FCAFC 191 at [176] said as follows:

   176. It is a fundamental principle, at the core of the judicial power to impose a penalty, that the imposition is for the contravention in question.  Prior contraventions, even so many and often so serious as the Union may have engaged in in the past, is a factor which may be taken into account in determining the appropriate quantum for the contravention; it cannot be taken to lead to a penalty that is disproportionate to the gravity of the instant contravention.  The maximum is for the worst category of cases.  See the points of principle set out in the reasons of Bromwich J (dissenting in the result, but not in point of principle) in Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Broadway on Ann Case) [2018] FCAFC 126 at [93] and [102] to [110], and see Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) [2018] FCAFC 97 at [22].

3. The Court adopts the approaches as set out in each of the above cases.

4. During the course of submissions, counsel for the applicant provided a host of earlier decided cases involving contraventions of provisions of the FWA. Though of considerable assistance for the purposes of constituting a historical record of union contraventions, a consideration of the appropriate penalties to be imposed in this case turns on a consideration of the particular facts before the Court.

Analysis of Circumstances of Contravention

1. The unlawful conduct of the first respondent was confrontational. The worker was told by the first respondent that if he didn’t sign up for union membership then he couldn’t work on site, and that he would have to go and work somewhere else. [1] Having been prevailed upon to do so, the worker signed the application form to join the union.

   [1]     Para. 11(f) and (g) of Amended Statement of Claim

2. That unlawful conduct was further compounded by the first respondent requiring the worker to fill out a “payroll deduction form” which enabled the union membership joining fee to be deducted from the worker’s pay. When the worker said to the first respondent “I’m only up here for a couple of days. So I’m basically coming up here to work for nothing.” the first respondent replied “Well, that’s just the way it is.”

3. Clearly, there was effectively, and practically, an element of coercion on the part of the first respondent, both in relation to the worker being required by him to join the union, as well as the requirement for the worker to pay the full union membership fee, notwithstanding that in doing so, the worker would effectively be working to pay the union its dues rather than working for his own monetary gain. After paying the union fee, the worker would have had nothing to show for his having provided his labour.

4. It was submitted on behalf of the applicant that the conduct on the part of the first respondent, when told by the worker that he would be working for nothing if he signed both forms, was one of indifference to the plight of the worker. Clearly it was.

5. Such conduct on the part of the first respondent must also be looked at not only in the context of the first respondent having wrongfully told the worker that he had to join the union before he would be allowed to work on-site, but further in the context of the first respondent having persisted in his coercion of the worker in the face of another worker having contemporaneously said to him at the induction meeting “Isn’t that illegal?”, or words to that effect, when referring to the first respondent’s requirement that all workers on site be union members.

1. When looked at in context, the first respondents’ conduct cannot be categorised as a low level contravention.

Contrition

1. Neither the first respondent nor the second respondent has shown any remorse for the offending conduct. There has been no apology. Neither has there been any undertaking proffered to the effect that the second respondent has taken, or will take, steps to ensure, as best it can, that delegates such as the first respondent will be positively counselled not to do in the future that which was done by the first respondent in this instance.

2. It was submitted on the part of the respondents that the second respondent had arranged for the first respondent to undertake a course whereby a greater awareness of his responsibilities under the FWA will be sheeted home to him. Such course ought to have been undertaken before the first respondent acted as the second respondent’s delegate on-site, rather than afterwards, but nevertheless it is a positive step to lessen the likelihood of recidivism.

Loss Suffered By Worker

1. The worker in question was ultimately able to cancel the authority given to his employer which would have enabled the second respondent to deduct union membership fees from the worker’s pay. The worker, in the circumstances, did not suffer any pecuniary loss.

2. The fact that the worker did not suffer any pecuniary loss does not diminish the seriousness of the contravening conduct.

Early Admission of Contravention

1. The admission by each of the respondents of the alleged contraventions has saved considerable court time and costs.  Due regard has been had to the making of such admissions, and the consequences of same, when assessing what ought to be appropriate pecuniary penalty orders.  

Penalty

1. The maximum applicable penalty able to be imposed upon the first respondent for the subject contravention is in the amount of $10,800.00. The applicant submits that an appropriate range of penalty is in the order of 40% - 60% of such amount, whereas the respondents submit that the proper range is in the order of (25.46% - 32%).

2. The maximum applicable penalty able to be imposed upon the second respondent is in the amount of $54,000.00. The applicant submits that an appropriate range of penalty is in the order of 80% - 90% of such amount, whereas the respondents submit that the proper range is in the order of 70% - 80%.

3. As to the first respondent, it is appropriate and proportionate that he be ordered to pay a pecuniary penalty which represents 60% of the maximum penalty – namely the amount of $6,480.00.

4. The fact that the first respondent had not previously been found to have contravened any provision of the FWA has been taken into account when assessing his penalty. Such has been weighed up and balanced against the blatant and uncaring nature of the clearly unlawful conduct engaged in by him.

5. As to the second respondent, the cases provided to the Court by the applicant indicate a long history of union contraventions. The imposition of a penalty which reflects a proportionate response to the facts of the matter before the Court, as well as a recognition of the need for deterrence in respect of future conduct of delegates for which it is vicariously responsible, requires that the second respondent be ordered to pay a pecuniary penalty which represents 90% of the maximum penalty - namely the amount of $48,600.00.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Judge Egan

Date: 6 March 2019