Australian Building and Construction Commissioner v Dig It Landscapes Pty Ltd
[2017] FCCA 2128
•5 September 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER v DIG IT LANDSCAPES PTY LTD & ORS | [2017] FCCA 2128 |
| Catchwords: INDUSTRIAL LAW – Penalty hearing – unlawful industrial action under the Fair Work Act 2009 (Cth) – First, Third, Fourth and Fifth Respondent admitted contravention – imposition of appropriate penalty – worst category – s.354 discrimination. |
| Legislation: Fair Work Act 2009, ss.340, 354, 556, 793 |
| Cases cited: Commonwealth of Australia v Fair Work Building Industry Inspectorate [2015] HCA 46 |
| Applicant: | AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER |
| First Respondent: | DIG IT LANDSCAPES PTY LTD (ACN 010 813 957) |
| Third Respondent: | DAVID MERCER |
| Fourth Respondent: | CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION |
| Fifth Respondent: | KURT PAULS |
| File Number: | BRG 204 of 2016 |
| Judgment of: | Judge Vasta |
| Hearing date: | 4 September 2017 |
| Date of Last Submission: | 4 September 2017 |
| Delivered at: | Brisbane |
| Delivered on: | 5 September 2017 |
REPRESENTATION
| Counsel for the Applicant: | C. Murdoch QC |
| Solicitors for the Applicant: | ASHURST AUSTRALIA |
| Counsel for the First and Third Respondents: | Mr J. Dwyer |
| Solicitors for the First and Third Respondents: | WOTTON & KEARNEY INSURANCE LAWYERS |
| Counsel for the Fourth and Fifth Respondents: | Mr R. Reitano |
| Solicitors for the Fourth and Fifth Respondents: | HALL PAYNE LAWYERS |
THE COURT DECLARES
First and Third Respondents
In contravention of section 340 of the Fair Work Act 2009 (Cth) (FW Act), the First Respondent took adverse action against Polyseal Waterproofing (QLD) Pty Ltd (Polyseal) by:
(a)on 7 May 2014, terminating a contract for services with Polyseal dated 24 April 2014 (Polyseal Contract); and
(b)refusing to make use of, or agreeing to make use of, services offered by Polyseal from 6 to 7 May 2014,
(c)because:
(d)Polyseal had the benefit of the Polyseal Waterproofing QLD Pty Ltd Enterprise Agreement 2011-2015 (Polyseal Agreement); and
(e)Polyseal had not exercised its workplace right to make an enterprise agreement that covered the Fourth Respondent.
In contravention of section 354 of the FW Act, the First Respondent discriminated against Polyseal by taking the action set out in paragraphs (a) and (b) of declaration 1 above, where a substantial and operative reason was that employees of Polyseal were not covered by an enterprise agreement that also covered the Fifth Respondent.
On 7 May 2014 the Third Respondent aided, abetted, induced or was knowingly concerned in, the contraventions of the First Respondent set out in declarations 1 and 2 hereof within the meaning in sections 550(2)(a), 550(2)(b) and 550(2)(c) of the FW Act, thereby contravening sections 340 and 354 of the FW Act.
Fourth and Fifth Respondents
In contravention of section 340 of the FW Act, on 6 May 2014 the Fourth Respondent took adverse action against Polyseal by:
(a)informing a Polyseal employee, Mr Jason Kalopulu, that he was to stop work on 6 May 2014;
(b)informing agents of Polyseal that they were to do no work on the Central Village Project located at Water St, Fortitude Valley, despite the Polyseal Contract;
(c)acting so as to cause the Polyseal Contract to be terminated,
because:
(d)Polyseal had the benefit of the Polyseal Agreement;
(e)Polyseal had not exercised its workplace right to make an enterprise agreement that covered the Fourth Respondent.
In contravention of section 354 of the FW Act, the Fourth Respondent discriminated against Polyseal by taking the action set out in paragraphs (a), (b) and (c) of declaration 4 above, where a substantial and operative reason was that employees of Polyseal were not covered by an enterprise agreement that also covered the Fourth Respondent.
On 6 May 2014 by the conduct of the Fourth Respondent referred to in declarations 4 and 5 hereof and the operation of section 793 of the FW Act, the Fifth Respondent engaged in the contravening conduct of the Fourth Respondent and thereby contravened sections 340 and 354 of the FW Act.
THE COURT ORDERS:
Pursuant to s.546(1) of the FW Act the First Respondent pay pecuniary penalties fixed in the sum of $40,800.00 in respect of the contravention referred to in declaration 2 above.
Pursuant to s.546(1) of the FW Act the Third Respondent pay pecuniary penalties fixed in the sum of $6,120.00 in respect of each of the contraventions referred to in declarations 2 and 3 above.
Pursuant to s.546(1) of the FW Act the Fourth Respondent pay pecuniary penalties fixed in the sum of $47,175.00 in respect of the contravention referred to in declaration 5 above.
Pursuant to s.546(1) of the FW Act the Fifth Respondent pay pecuniary penalties fixed in the sum of $7,650.00 in respect of each of the contraventions referred to in declarations 5 and 6 above.
Pursuant to s.546(3)(a) of the FW Act, any pecuniary penalties ordered to be paid by the First, Third, Fourth and Fifth Respondent be paid to the Commonwealth within twenty-eight (28) days of the date of this Order.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 204 of 2016
| AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER |
Applicant
And
| DIG IT LANDSCAPES PTY LTD (ACN 010 813 957) |
First Respondent
| DAVID MERCER |
Third Respondent
| KURT PAULS |
Fourth Respondent
| CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION |
Fifth Respondent
REASONS FOR JUDGMENT
Introduction
This matter involves breaches of the Fair Work Act 2009 (Cth) (“the FW Act”) committed at a construction site in Water Street Fortitude Valley in May 2014. The principal constructor is PBS Building (Qld) Pty Ltd. That company contracted Dig It Landscapes Pty Ltd (“the First Respondent”) to do a number of works at the site.
The First Respondent subcontracted Polyseal Waterproofing (Qld) Pty Ltd (“Polyseal”) to do some waterproofing works at that site. Polyseal has its own Enterprise Bargaining Agreement (“EBA”) which has been registered by the Fair Work Commission. That EBA does not have the Construction, Forestry, Mining and Energy Union (“the Fourth Respondent”) as a party.
When Polyseal personnel turned up to start working at the site, they were approached by Kurt Pauls (“the Fifth Respondent”). The Fifth Respondent is an employee of the head contractor, PBS, and is engaged in the position of CFMEU delegate.
The Fifth Respondent told Polyseal that they could not work at the premises as they did not have an EBA that included the CFMEU. Eventually, David Mercer (“the Third Respondent”), who was the project manager for the First Respondent, terminated the contract that the First Respondent had with Polyseal.
Such actions by all four Respondents constitute breaches of the FW Act. Those breaches are admitted and this matter has resolved to a penalty hearing only.
The Facts
The following persons are employees of Polyseal:
i)Jason Kalopulu who is a construction worker;
ii)Gavin Larkin, who is a site supervisor; and,
iii)Ashley Edgeworth who is the state manager of Polyseal.
Polyseal signed a contract with the First Respondent on 29 April 2014 to provide waterproofing works at the site in Fortitude Valley.
Polyseal workers were mobilised to the site to commence duties under the Polyseal Contact on 6 May 2014.
On the morning of 6 May 2014, Mr Kalopulu attended the site to perform the Polyseal works. He underwent induction and then began performing preparatory work on site.
Either at, or shortly after, the time Mr Kalopulu began working on site, he was joined by another person named ‘Garth’ who was not a Polyseal employee.
Shortly after he commenced working, the Fifth Respondent, Mr Pauls, approached Mr Kalopulu and words to the following effect were exchanged:
“Pauls: Are you in the union?
Kalopulu: Yes.
Pauls: Can I have your start card or your name and date of birth?
Kalopulu: Jason Taniela Kalopulu, 02/01/92.
Pauls: I’ll get back to you shortly.”
Mr Kalopulu continued working. Mr Pauls returned approximately five minutes later and words to the following effect were exchanged:
“Pauls [to both men]: Do you want the good news or the bad news?
Garth [to Pauls]: Nothing is ever good.
Pauls [to both men]: You’re [referring to Mr Kalopulu] not allowed to work here, because Polyseal doesn’t have an EBA.
Kalopulu: No worries.”
Mr Kalopulu called the Site Supervisor, Mr Larkin, and informed him of the conversation with Mr Pauls.
Mr Larkin arrived on the site shortly afterwards, and had a conversation with Mr Pauls in which words to the following effect were exchanged:
“Larkin: What is the root cause for you stopping our work?
Pauls: You don’t have an EBA.
Larkin: We do have an EBA, and we’ve got a contract here.
Pauls: You don’t have a union EBA and this is a union EBA job.”
Mr Larkin, in the presence of Mr Pauls, then called the State Manager, Mr Edgeworth. Mr Larkin informed Mr Edgeworth that there was an issue with the union on site and Polyseal couldn’t continue working, and that Mr Larkin was speaking to the ‘the union representative’. Mr Larkin then handed the phone to Mr Pauls so that he could speak to Mr Edgeworth.
Mr Pauls and Mr Edgeworth had a conversation where words to the following effect were exchanged:
“Edgeworth: My name is Ashley Edgeworth from Polyseal. What’s the problem?
Pauls: You are not able to work on this project because you don’t have a union EBA.
Edgeworth: We have a mirror EBA with all the same entitlements for the workers as their CFMEU EBA’s have.
Pauls: You don’t have CFMEU EBA, so you can’t continue working this site.
Edgeworth: We do have an EBA, and we have a contract to complete this work with Dig It.
Pauls: It doesn’t matter.
Edgeworth: How can I get an EBA?
Pauls: I can’t help you with that. You’ll have to talk to someone else.”
Mr Pauls then handed the phone back to Mr Larkin. Mr Larkin and Mr Edgeworth arranged for Mr Edgeworth to drive to Mr Larkin and pick him up.
After Mr Edgeworth arrived to pick up Mr Larkin, they rang Mr Pauls in an attempt to resolve the issue, and he referred them to the CFMEU office at 16 Campbell St, Bowen Hills.
Mr Edgeworth and Mr Larkin arrived at the CFMEU office shortly afterwards. They asked to speak to someone about getting an EBA. They were told by the receptionist words to the effect that they would not be able to see anyone. A short time later, Mr Edgeworth and Mr Larking left the CFMEU office.
Mr Edgeworth and Mr Larkin then left the CFMEU Office and drove to the Dig It office in Fortitude Valley, opposite the site, where they asked to see the Third Respondent, Mr Mercer. Mr Mercer came out to meet Mr Edgeworth and Mr Larkin, accompanied by Mr Greg Mann who is the Managing Director of Dig It.
There was a discussion in relation to the problem Polyseal had encountered on the Project. Words to the following effect were exchanged:
“Edgeworth: What can we do to proceed with the works you’ve engaged us to undertake?
Mercer: I didn’t realise you didn’t have a union EBA. That is causing us a problem.
Edgeworth: We have an EBA that is identical in every facet. I’m not sure what else we can do. We can’t get an EBA, we just tried.”
Mr Mann then left, and Mr Edgeworth, Mr Larkin and Mr Mercer walked outside to smoke. Mr Mercer then confirmed to Mr Edgeworth and Mr Larkin words to the effect of “If we can’t fix this issue, we will have to terminate your contract”.
No work was performed by any Polyseal workers or employees on the site from the time the time that the Fifth Respondent spoke to Mr Kalopulu.
As Mr Kalopulu was packing his possessions and preparing to leave the Project on 6 May 2014, Mr Pauls said to him words to the effect of “I don’t like your chances of getting an EBA. I’ve got another eight EBA waterproofing companies to choose from”.
At approximately 7.00am on 7 May 2014, Mr Kalopulu was waiting out the front of the site when he was again approached by Mr Pauls, who said words to the effect “You’ve lost the contract. Any material Polyseal has purchased will be paid back to them.”
Later on 7 May 2014, Mr Edgeworth called Mr Mercer and words to the following effect were exchanged:
“Edgeworth: Have you had any luck finding a way to make peace with the union?
Mercer: No. We will have to terminate the contract.
Edgeworth: Okay. Well, there’s nothing else that I can do, so please send me a letter advising that you’ve terminated the contract because we don’t have an EBA.
Mercer: No problem.”
Mr Mercer sent Mr Edgeworth an e-mail at 12:50pm on 7 May 2014, copied to Mr Futyma, Construction Manager of Dig It. The email had a letter attached, dated 6 May 2014 and signed by Mr Futyma, terminating the Polyseal Contract with the following words:
“In accordance with clause 40.0 of the conditions of sub contract we need to terminate the agreement forthwith because of your failure to comply with one of the requirements of that agreement.”
In truth, cl.40.0 had nothing to do with the reason that the contract was terminated. As was conceded during the hearing, the whole reason that the contract was terminated was that the First Respondent did not want to have any trouble with the Fourth Respondent. The First Respondent took what it considered to be a “pragmatic approach” and simply terminated the contract with Polyseal.
The FW Act
As Polyseal had a valid EBA and were ready, willing and able to perform the waterproofing works under the contract they had signed on 29 April 2014, the following provisions of the FW Act have been breached.
“340 Protection
(1) A person must not take adverse action against another person:
a)because the other person:
i) has a workplace right; or
ii) has, or has not, exercised a workplace right; or
ii) proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or
b) to prevent the exercise of a workplace right by the other person.
(2) A person must not take adverse action against another person (the second person) because a third person has exercised, or proposes or has at any time proposed to exercise, a workplace right for the second person’s benefit, or for the benefit of a class of persons to which the second person belongs.”
354 Coverage by particular instruments
(1) A person must not discriminate against an employer because:
a) employees of the employer are covered, or not covered, by:
i) provisions of the National Employment Standards; or
ii) a particular type of workplace instrument (including a particular kind of workplace instrument within a type of workplace instrument); or
iii) an enterprise agreement that does, or does not, cover an employee organisation, or a particular employee organisation; or
b) it is proposed that employees of the employer be covered, or not be covered, by:
i) a particular type of workplace instrument (including a particular kind of workplace instrument within a type of workplace instrument); or
ii) an enterprise agreement that does, or does not, cover an employee organisation, or a particular employee organisation.”
Clearly, the First Respondent, Third Respondent, Fourth Respondent and Fifth Respondent have taken adverse action against Polyseal because that company has exercised a workplace right to have its own EBA.
As well is this, all four Respondents have discriminated against Polyseal because employees of Polyseal were covered by an enterprise agreement that does not cover the CFMEU.
Whilst there are two provisions of the FW Act that have been breached, they arise out of the one course of conduct or set of actions. Pursuant to s.556 of the FW Act, I can only impose one penalty for those two breaches.
The maximum penalty is $51,000 for the First and Fourth Respondents and $10,200 for the Third and Fifth Respondents. For reasons that will become clear, I will impose the penalties for the breach of s354 as this is a blatant case of discrimination against Polyseal.
Chronology of this Action
This application was filed on 4 March 2016 with the Applicant filing a statement of claim that day. The matter came before me on 4 April 2016 where I made a number of orders regarding the filing of material and the attending upon a registrar for mediation.
I had set the matter for further directions on 26 September 2016. On 13 May 2016, I varied some of the filing dates by consent in Chambers. The Applicant had filed an application in the case in June 2016 but on 19 September 2016, asked for me to dismiss that application.
To obviate the need for appearances on 26 September 2016, by consent I made orders in Chambers on 23 September 2016 which adjourned this matter to a trial call over on 4 November 2016. On that date, I made trial directions and set the matter down for a three-day hearing commencing 19 April 2017.
On 20 March 2017, I was asked to vacate the hearing dates and instead list a penalty hearing for the First and Third Respondents only on 21 April 2017. This was a tentative listing because none of the parties could assure me that the matter would be ready to proceed on that date.
Because all parties wished the matter to be disposed of in the 2017 calendar year, I set the matter down for a three-day hearing commencing 4 September 2017. It was anticipated that if the penalty hearing did not proceed on 21 April 2017, that the matter would proceed as a hearing in September 2017. The hearing did not proceed in April 2017.
On 18 August 2017, I was asked to allow the Fourth and Fifth Respondents to amend their pleadings and to have the matter set down as a penalty hearing on 4 September 2017 in respect of those Respondents. On 22 August 2017, I was asked to make similar orders in respect of the First and Third Respondents.
It was submitted by the Applicant that there had been ongoing negotiations with the First and Third Respondents during the year while the Fourth and Fifth Respondents conceded that their change in attitude had come about only in recent times.
Nevertheless, the actions of all four Respondents have now saved the court two days of sitting time as well as the need for witnesses to give evidence and be cross-examined.
Principles in determining penalty
The purpose of civil penalties was explained by the High Court in the Commonwealth of Australia v Fair Work Building Industry Inspectorate [2015] HCA 46, where, at paragraph 55, the Court said:
“...whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:
‘Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. ... The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act.’”
In doing so, what the High Court has done is to emphasise that there is a reason for civil penalties and one should never lose sight of the purpose of the legislature in giving the Court power to impose such penalties.
I have had regard to all the relevant authorities including what Merkel J said in Finance Sector Union of Australia v Commonwealth Bank of Australia (2005) 224 ALR 467 and the factors enunciated by Mowbray FM in Mason & Harrington Corporation Pty Ltd t/as Pangea Restaurant & Bar [2007] FMCA 7
Relevant considerations in this matter
I have had regard to the size of the First Respondent. I have been told that there are around 110 employees but it is still very much a family business. I’ve had regard to the fact that the events leading to these breaches occurred over the course of just over 24 hours.
I have had regard to evidence given from the Bar table that the First Respondent has subsequently given a contract to Polyseal which indicates that it has learned from its mistake.
I have had regard to the cooperation of the First and Third Respondents and that neither of those Respondents has had any previous contravention of the FW act. I have also had regard to the filing of a statement of agreed facts and the affidavit of the Third Respondent of 21 April 2017. I’ve also had regard to the statements of contrition by Mr Mann.
I have had regard to the fact that the conduct of the Fourth Respondent is limited to the conduct of the Fifth Respondent pursuant to s.793. I have had regard to the fact that there is no evidence that there was any senior management figure of the CFMEU “pulling the strings” of the Fifth Respondent.
I’ve had regard that there was no violence, abusive language or property damage inflicted by the Fifth Respondent. I have had regard to the fact that, at the time of this breach, the Fifth Respondent had not committed any contraventions of the FW Act.
I also take into account that there has been no statement of contrition by either of the Fourth or Fifth Respondents; this is in clear contrast to the actions of the First and Third Respondents.
I am of the view that these breaches were deliberate. There was a targeting of Mr Kalopulu when he started working at the site. There was absolutely no need for the Fifth Respondent to make any enquiries of Mr Kalopulu; he could have made those enquiries of the First or Third Respondents.
This was a very clear and deliberate action to illustrate to Mr Kalopulu, and any other officer of Polyseal, that it was the CFMEU who alone decided who worked on that particular site.
Polyseal had complied with the law. It had an EBA with its employees that gave them all the rights and protections that the law prescribed. The agreement had the imprimatur of the Fair Work Commission who had registered it.
There was no reason that Polyseal could not have worked on that site. Polyseal had the right to work on that site. No entity should ever interfere or take away that right. This goes to the heart of the industrial relations regime of this country.
It beggars belief that the CFMEU believe that they can act in a manner where they are the ones who dictate who can or cannot work on a construction site.
The Parliament is the only entity that sets the law in this country and the Parliament is directly responsible to the people of this country. It seems that the CFMEU feel that they can usurp Parliament and that they can set the law in this country. There is no place for such an attitude in Australian society.
While the actions of the Fifth Respondent were cordial and were not attended with the thuggish elements often seen in this Court by representatives of the Fourth Respondent, there was a large degree of arrogance in his behaviour.
Amazingly, the Fifth Respondent knew that the contract between Polyseal and the First Respondent was at an end before Polyseal knew. This illustrates an inordinate amount of power wielded by the Fourth Respondent. The fact that the Fifth Respondent was the one who informed Mr Kalopulu before the Third Respondent informed Mr Larkin or Mr Edgeworth of the fate of the contract, paints a compelling picture of how things can go wrong in the industrial landscape of this country.
In Director, Fair Work Building Inspectorate v J Hutchinson Pty Ltd & Ors [2016] FCCA 2175, which is a similar case factually to the present case, I noted that the need for “industrial harmony” often leads to contractors lacking the intestinal fortitude to “do the right thing” because doing the right thing will end up costing time and money.
But what happened to Polyseal simply should never have happened. To be discriminated against and to lose lawfully acquired contracts simply because of an exercising of a workplace right cannot be minimised and sanitised as has attempted to be done in this case.
Despite the valiant submissions of Mr Reitano, I cannot accept that this matter is not in the worst category. It may be possible to imagine worse cases of discrimination and worse cases of the destruction of the freedom of association, but that is not the point.
I am reminded of the words of Wanstall SPJ (as His Honour then was) in R v Manson [1974] Qd R 191, who said at 202:
“It would … be difficult to imagine a worse case … I am not in the least attracted by the argument that the maximum penalty should never be imposed because the sentencing court cannot be sure that some day there will not be a worse case. Though that may be true, it is irrelevant. This case is bad enough to justify the imposition of the maximum penalty – its evil is sufficient unto this day; let the morrow take thought for the things of itself. If its case should be even more evil the precedent of this case will be relevant and helpful.”
There is nothing in Veen v The Queen (No.2) (1988) 164 CLR 465 or in the very astute observations made by Keane JA (as His Honour then was) in R v Keenan [2009] QCA 236 which would derogate from my view that the maximum penalty is appropriate in this case.
Penalty
Whilst I am of the view that the circumstances of this case call for the maximum penalty, there are matters of mitigation, of which I have already mentioned, which would call for me to reduce that penalty.
In the case of the First and Third Respondents, there has been contrition and an acknowledgement that their actions were morally reprehensible. I accept that there was pressure on the Third Respondent to ensure “industrial harmony” but this can never be an excuse for illegal behaviour.
I will discount the penalty by 20% for the First Respondent and 40% for the Third Respondent.
Much was made of the fact that the Fifth Respondent was not a senior member of the Fourth Respondent. To my mind, that does not mean that the culpability of the Fourth Respondent is diminished in any way shape or form.
Given the appalling history of the Fourth Respondent, it is incumbent upon them to ensure that any person acting on their behalf conducts themselves according to law. There is no suggestion that the Fifth Respondent was acting against the wishes of the Fourth Respondent.
I will discount the penalty of the Fourth Respondent by 7.5% and the penalty for the Fifth Respondent by 25%.
I will make the declarations sought and order that:
a)the First Respondent pay a pecuniary penalty of $40,800.00;
b)the Third Respondent pay a pecuniary penalty of $6,120.00;
c)the Fourth Respondent pay a pecuniary penalty of $47,175.00; and
d)the Fifth Respondent pay a pecuniary penalty of $7,650.00.
All penalties are to be paid to the Commonwealth of Australia within 28 days.
I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of Judge Vasta
Date: 5 September 2017
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