CFMEU v Merhis Constructions Pty Ltd
[2010] FMCA 751
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CFMEU v MERHIS CONSTRUCTIONS PTY LTD | [2010] FMCA 751 |
| INDUSTRIAL LAW – Union rights of entry – entry to premises under NSW occupational health and safety legislation – prior notice and demonstrated justification are not required – construction manager refusing entry to authorised union officials – union application for imposition of penalty on company under Commonwealth legislation – agreed facts and penalty – penalty of $12,000 was within permissible range. |
| Fair Work Act 2009 (Cth) Industrial Relations Act 1996 (NSW) Occupational Health and Safety Act 1989 (ACT) Occupational Health and Safety Act 1983 (NSW), ss.24, 31 Occupational Health and Safety Act 2000 (NSW), ss.77, 78, 79, 81 WorkCover Legislation Amendment Act 1995 (NSW) Workplace Relations Act 1996 (Cth), ss.756, 758, 759, 767, 769, 824, 826, 841 Workplace Relations Amendment (Work Choices) Act2005 (Cth) Workplace Relations and Other Legislation Amendment Act 1996 (Cth) |
| Australian Federation of Air Pilots v Australian Airlines Ltd (1991) 28 FCR 360 BGC Contracting Pty Ltd v Construction Forestry Mining and Energy Union of Workers (2004) 140 FCR 53 Dalzell v Ferguson (2009) 185 IR 392 Dimella Constructions Pty Ltd v Stocker and Stocker (1976) 14 SASR 215 Hogan v Riley [2010] FCAFC 30 Hogan v Riley (No.2) [2010] FMCA 760 John Holland Pty Ltd v Construction, Forestry, Mining and Energy Union (New South Wales Branch) (2009) 178 FCR 461 Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 Tran v The Commonwealth [2009] FCA 474 Being There: Changing Union Rights of Entry under Federal Industrial Law’ (2000) 13 AJLL 1 |
| Applicant: | CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION |
| Respondent: | MERHIS CONSTRUCTIONS PTY LTD |
| File Number: | SYG 697 of 2010 |
| Judgment of: | Smith FM |
| Hearing date: | 15 September 2010 |
| Delivered at: | Sydney |
| Delivered on: | 29 October 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr I Latham |
| Solicitors for the Applicant: | CFMEU |
| Counsel for the Respondent: | Mr P Dunn (QC) |
| Solicitors for the Respondent: | Nasser Lawyers |
THE COURT DECLARES THAT:
The respondent, Merhis Constructions Pty Ltd, contravened s.767(3)(b) of the Workplace Relations Act 1996 (Cth), in that it refused entry to premises by permit holders who were entitled to enter the said premises on 5 June 2009.
THE COURT ORDERS THAT:
The respondent, Merhis Constructions Pty Ltd, pay a penalty of $12,000 in respect of its involvement in that contravention pursuant to s.769(1) of the Workplace Relations Act 1996 (Cth).
Pursuant to s.841(1) of the Workplace Relations Act 1996 (Cth), the penalty shall be paid to the applicant.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 697 of 2010
| CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION |
Applicant
And
| MERHIS CONSTRUCTIONS PTY LTD |
Respondent
REASONS FOR JUDGMENT
The CFMEU commenced these proceedings on 31 March 2010, seeking the imposition of pecuniary penalties on Merhis Constructions Pty Ltd (“Merhis Constructions”) for contraventions of s.767(3)(b) and (7)(b) of the Workplace Relations Act 1996 (Cth). It alleged that Merhis Constructions was responsible for actions of its construction manager, Khalil Merhi, on 3 March 2009 and 5 June 2009, which refused, delayed, hindered, or obstructed duly authorised officers of the CFMEU from entering two construction sites at Chapel Road, Bankstown, and from exercising their rights of investigation of suspected breaches of NSW occupational health and safety legislation. Affidavits of the relevant officials were filed in support of the allegations.
Merhis Constructions filed a response, which denied that the CFMEU officers had rights of entry and investigation, denied any contraventions of legislation, and alleged that the officers were themselves in contravention of legal requirements in relation to their right of entry, inter alia by failing to provide sufficient details of their safety concerns and by abuse of power. Affidavits in support were filed, including by Khalil Merhi, by the site managers of both sites, and by the consultant OH&S manager for Merhis Constructions.
Further affidavits in reply were filed by the CFMEU witnesses, and the matter appeared to be headed for a substantial trial, in which there was little common ground in relation to the actions, words, and motivations of all of the witnesses.
However, at the commencement of the trial, their counsel announced that the parties had arrived at an agreed outcome, which was recorded in a short statement of facts. In effect, the parties had agreed that the Court should impose a penalty of $12,000 for a single contravention of s.767(3)(b) occurring on 5 June 2009. I was invited to consider the appropriateness of imposing the agreed penalty in the light of the agreed facts, without receiving any of the controversial evidence in the affidavits. Counsel for the CFMEU presented a written submission, which addressed my jurisdiction and the general principles of sentencing. Counsel for Merhis Constructions made brief oral submissions addressing the agreed facts.
A degree of artificiality attends the sentencing exercise which I was invited to accept, particularly in view of the sparseness of detail in the agreed facts concerning the surrounding circumstances of Khalil Merhi’s now admitted conduct on 5 June 2009. However, I had provisionally read all the affidavits in chambers, and took their contents into account only for the purpose of satisfying myself as to the appropriateness of exercising the Court’s jurisdiction by the procedure proposed. As I indicated to counsel, I considered that the parties should be congratulated upon arriving at an outcome to the litigation which spared their clients and the public purse a lengthy and difficult trial, and which might better assist them to engage cooperatively in their future relationships in the building industry. I have satisfied myself that the agreed statement of facts genuinely addresses the legal and factual issues in the proceedings, and that it provides a sufficient basis for exercising the Court’s jurisdiction to impose penalties under s.769(1)(a) of the Act.
The approach of the Court when exercising its jurisdiction in relation to a jointly proposed penalty, was explained by Jessup J in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [129]:
In Mobil Oil [2004] ATPR 41-993, the Full Court considered NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 and extracted therefrom a number of propositions (Mobil Oil [2004] ATPR 41-993 at [53]), one of which was that set out in [6] of the reasons the trial Judge in the present matter, namely:
Where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure is, in the Court’s view, appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if within the permissible range.
Neither in NW Frozen Foods 71 FCR 285 nor in Mobil Oil [2004] ATPR 41-993 did the Full Court expand on the meaning of the phrase “permissible range”. I consider that the phrase refers to a range which would be permitted by the Court, that is, a range within which the penalty is neither manifestly inadequate nor manifestly excessive.
The parties’ agreement
The parties’ agreed statement of facts is:
1.The applicant is the Construction, Forestry, Mining and Energy Union (CFMEU).
2.Brian (Jock) Miller (Jock Miller), Mark Cunningham and Andrew Quirk are employees of the CFMEU. Jock Miller, Mark Cunningham and Andrew Quirk are CFMEU Organisers.
3.The Workplace Relations Act 1996 (Cth) provides a regime dealing with the right of authorised representatives to enter workplaces for the purposes of investigating breaches of the Occupational Health and Safety Act.
4.Jock Miller, Mark Cunningham and Andrew Quirk have each been issued with an authority under the Industrial Relations Act 1996 (NSW), and are therefore each “authorised representatives” within the meaning of the Occupational Health and Safety Act 2000 (NSW).
5.Jock Miller, Mark Cunningham and Andrew Quirk, have each been issued with permits under s.740(2) of the Workplace Relations Act 1996 (Cth).
6.As authorised representatives under the Occupational Health and Safety Act 2000 (NSW), and permit holders under s.740(2) of the Workplace Relations Act 1996 (Cth), Jock Miller, Mark Cunningham and Andrew Quirk are each entitled to enter certain premises. Section 77 of the Occupational Health and Safety Act 2000 (NSW) provides:
Powers of Entry of Places of Work
An authorised representative of an industrial organisation of employees may, for the purpose of investigating any suspected breach of the Occupational Health and Safety legislation, the Coal Mine Health and Safety Act 2002 or the Mine Health and Safety Act 2004, enter any premises the representative has reason to believe is a place of work where members of that organisation (or persons who are eligible to be members of that organisation) work.
Events of 5 June 2009
7.On 5 June 2009, Jock Miller and Mark Cunningham attended a building site at 136 Chapel Road South (the south Chapel Road site). The respondent was the “builder” on this site, and was also the controller or occupier of this site.
8.Before entering the south Chapel Road site, Jock Miller observed safety risks on the site. Jock Miller and Mark Cunningham walked to the site office, and at the site office had a discussion with Gary Hunter, the site manager. After approximately 15 minutes, Jock Miller and Mark Cunningham were joined on the site by Andrew Quirk who left the room at different stages.
9.While Jock Miller and Mark Cunningham were in the site office at the south Chapel Road site, Khalil Merhi came into the site office. Andrew Quirk then returned to the room. Jock Miller was sitting at a desk in the office writing out a safety rectification notice when Merhi entered the office. Khalil Merhi repeatedly shouted words to the effect:
Khalil Merhi: “Get the fuck off my site”.
10.It is not disputed that at the time that Khalil Merhi entered the site office he was acting under a misapprehension as to the CFMEU’s Right of Entry powers.
11.Khalil Merhi then grabbed the edge of the desk where Jock Miller was sitting, lifted the desk and threw it against the wall. The desk may have hit Jock Miller’s right hand. Khalil Merhi continued to repeatedly shout words to the effect:
Khalil Merhi: “Get the fuck off my site”.
12.Khalil Merhi confronted Andrew Quirk. A conversation took place in words to the effect:
Khalil Merhi: “Get the fuck off my site”.
Jock Miller: “Look, we’ll go off site right now. Can I get my paperwork?”
Khalil Merhi: “Get the fuck off my site”.
13.Mark Cunningham, Andrew Quirk and Jock Miller left the site office. As they were leaving, Khalil Merhi said words to the effect:
Khalil Merhi: “Keep off my site. Don’t come back”.
14.Mark Cunningham, Andrew Quirk and Jock Miller left the south Chapel Road site.
15.The Respondent contravened section 767(3)(b) of the Act in that it refused entry to premises by permit holders who are entitled to enter the said premises.
16.The maximum penalty for each breach is $33,000 for a body corporate and $3,300 for a natural person. The parties have agreed on a penalty of $12,000 and that the penalty be paid to the applicant.
The scheme of the legislation
The legislative background to the admitted contravention can be summarised briefly. At the time of giving this judgment I am also preparing my judgment in Hogan v Riley (No.2) [2010] FMCA 760, in which I also consider the scheme of the Act in relation to rights of access conferred on union officials under State and Territory OH&S legislation. The evidence which I considered in that case, as with the present, illustrates a need for better education of the managers and supervisors of building sites as to OH&S rights of entry by authorised union officers and permit holders, and the need for site managers to appreciate the distinctive features of those rights of entry, when compared with other union rights of entry recognised by Commonwealth legislation.
The enforcement of safety requirements in workplaces has historically been a concern of State and Territory legislation, rather than Commonwealth industrial legislation. It remains so, although
there are proposals for a national approach (see http://>
In NSW, legislation has long recognised an interest of employees and their organisations in participating in OH&S workplace committees, and in supporting government OH&S inspectors (see, for example, ss.24 and 31 of the Occupational Health and Safety Act 1983 (NSW) as first enacted). In 1995, the legislation was amended to give to authorised employees’ representatives an important additional role in the supervision of OH&S requirements. The Workcover Legislation Amendment Act 1995 (NSW) conferred entry and inspection powers on employees’ representatives, which were explained in the Minister’s Second Reading speech:
In line with the arrangements applicable elsewhere in Australia and in most comparable overseas jurisdictions, the amendments will make clear that WorkCover safety inspectors can enter workplaces without giving prior notice. New provisions will allow authorised union officers also to enter workplaces to check in relation to safety breaches. Provisions on improvement and prohibition notices, which WorkCover inspectors can issue in the interests of safety, are transferred by this bill from the regulations to the Act itself. As a result, penalties for failure to comply with these notices are increased to more realistic levels. In addition, appropriate review and appeal avenues are made available to employers affected. (Hansard, NSW Legislative Assembly, 6 December 1995 – emphasis added).
These provisions were carried over into the current legislation by Division 3 of the Occupational Health and Safety Act 2000 (NSW). Section 77 confers a right of entry in the terms quoted in the above agreed statement of facts on a defined group of union officials, who must hold instruments of authority issued under the Industrial Relations Act 1996 (NSW) (see John Holland Pty Ltd v Construction, Forestry, Mining and Energy Union (New South Wales Branch) (2009) 178 FCR 461 at [18]-[27]). When exercising the right, the authorised union official is obliged to present evidence of his or her State authority only “if required to do so by the occupier” (see s.79). The right of entry may be exercised without formal or informal notice being given to anyone before entry. The authorised official is not required to explain or justify his or her entry to anyone, before being allowed to enter or remain on site. Informal notice of the official’s presence on site after entry is usually required “as soon as reasonably practicable”, but is not required where this would defeat the purpose of the investigation, or cause unreasonable delay, or where the occupier is aware of the entry (see s.78). The official has powers to make searches and inspections, take photographs and recordings, require assistance, and require production of documents concerning OH&S matters (see s.81).
The conferral of these powers on authorised union officials should not be regarded by employers and other persons potentially affected by their exercise as an unjustified imposition. As well as recognising the legitimate concerns of unions for the safety of their members and potential members on worksites, the OH&S legislation serves important public purposes when vesting these powers in non-government agents who are independent of the employers and occupiers of workplaces. Although government agencies and government inspectors are appointed under the legislation, and are given more extensive powers of investigation and remedy for OH&S breaches, the successful operations of these agencies will often depend upon initial inquiries being conducted speedily by union officials unimpeded by employers and occupiers.
The benefits to safety in the building industry from all of its participants’ having accurate knowledge of, and giving full effect to, union rights of immediate OH&S entry can never be dismissed lightly. Marshal J commenced his judgment in Ponzio (supra) by explaining how “safety in the workplace is a matter of paramount importance, especially in the construction industry”. The character of the NSW OH&S rights of entry was described by Walton, Kavanagh, Haylen and Backman JJ in Dalzell v Ferguson (2009) 185 IR 392 at [42]:
Sections 77-79 are intended to be enabling or beneficial provisions. The rights conferred on an authorised representative under the provisions are significant and play an important role in ensuring the safety of members of an industrial organization (and those eligible to be members) at work. They also play a vital role in facilitating the investigation and enforcement of suspected breaches of occupational health and safety law. … (citation omitted).
The State Act regulates the conferral of OH&S authorities on identified union officials, and imposes important legal obligations on them, including, of course, compliance with OH&S requirements themselves. Substantial sanctions are available under both the State and the Commonwealth legislation, where a union official’s right of entry for OH&S purposes is abused, in particular, if improperly used as a cloak for pursuing other industrial objectives.
An employer or occupier in the building industry is at risk of substantial penalty if it asserts a right to refuse entry or obstruct investigations on the ground of lack of prior notice or other formality not provided under the legislation, or insists upon knowing and verifying the safety concern motivating the union inspector. Misconceptions in this respect were recently pointed out by the Full Court of the Federal Court, when addressing similar provisions in the Occupational Health and Safety Act 1989 (ACT) (see Hogan v Riley [2010] FCAFC 30 at [22]).
Different rights of entry have also been conferred on union officials under Commonwealth legislation, with different objectives. Commonwealth legislation was historically directed at regulating award conditions which allowed entry and inspection of records and premises, to allow unions to police compliance with award and other statutory entitlements of workers, and also allowed entry for discussions with members and prospective members. The history of this legislation prior to the 2006 WorkChoices amendments, was explained by W J Ford in ‘Being There: Changing Union Rights of Entry under Federal Industrial Law’ (2000) 13 AJLL 1. Notably, amendments were made in 1996 which restricted union rights of entry to premises for the purpose of investigating suspected breaches of entitlement provisions and holding discussions (see the Workplace Relations and Other Legislation Amendment Act 1996 (Cth) which inserted Division 11A (ss.285A – 285G) into Part IX of the renamed Workplace Relations Act 1996 (Cth). These amendments required the holding of special Commonwealth permits, and imposed other preconditions to the exercise of rights of entry, including the giving of 24 hours prior notice.
However, until the WorkChoices amendments of 2006 the Commonwealth legislation left the State OH&S rights of immediate entry untouched and fully effective (see BGC Contracting Pty Ltd v Construction Forestry Mining and Energy Union of Workers (2004) 140 FCR 53 at [5], and [92], addressing WA industrial legislation which included OH&S rights of entry (see [39]).
Substantial amendments to union rights of entry under Commonwealth legislation were made by the Workplace Relations Amendment (Work Choices) Act2005 (Cth), and the concurrent State OH&S regimes were recognised. The amendments repealed old Div.11A of Pt.IX, and inserted a new (renumbered) Part 15 regulating rights of entry. The amendments continued and extended the previous restraints.
The legislation was also intended to ‘cover the field’, to the exclusion of State legislation and award provisions, “to reduce the extent of disruptive union entry into Australian workplaces” (see the Explanatory Memorandum for the Bill, at pp.27-28, and 364 and following). In accordance with these objects, OH&S entry rights were recognised in new provisions inserted as Div.5 of Pt.15, which the explanatory memorandum explained:
2481. Division 5 would impose additional conditions on right of entry pursuant to State or Territory OHS legislation. No additional rights of entry would be conferred by Division 5.
2482 State and Territory OHS laws contain their own limitations and obligations for permit holders for when they seek to exercise OHS right of entry. These limitations would continue to apply.
In effect, the WorkChoices amendments introduced dual regulation of union officials with OH&S rights of entry, by continuing to require them to hold State or Territory authorisations and requiring them also to obtain Commonwealth permits under that Part (see ss.756, 758, and 759). Moreover, use of OH&S rights to gain access to records concerning employees’ entitlements, as distinct from those concerning employees’ safety, was precluded without 24 hours written notice (see s.757).
However, the WorkChoices amendments did not impose any additional restraints on the exercise of OH&S rights of immediate entry under State and Territory legislation. Rather, they gave additional effect to that legislation under Commonwealth law, and provided a new Commonwealth regime for its enforcement. The new enforcement regime “takes the provisions of the OHS Act as its starting point”, and does not impose new obligations to give prior notice except in relation to access to some employee records. Nor do they require a union permit holder to justify his or her proposed exercise of the OH&S right of entry before or during its exercise (see Hogan v Riley [2010] FCAFC 30 at [22]).
The same scheme in relation to State and Territory OH&S rights of entry currently operates under Div.3 of Pt.3-4 of the Fair Work Act 2009 (Cth).
Under the Workplace Relations Act 1996 (Cth) as applicable in June 2009, any unlawful interference by a person with the exercise of a State right of OH&S entry, was made a Commonwealth civil offence under several provisions of Division 7 of Part 14. In the present case, only s.767(3) and (4) are now relevant:
767 Hindering, obstruction etc. in relation to this Part
…….
(3)A person must not refuse or unduly delay entry to premises by a permit holder who is entitled to enter the premises:
(a)under section 747, subsection 748(8) or (10) or section 760; or
(b)under an OHS law in accordance with section 756.
(4)Subsection (3) is a civil remedy provision.
……..
In relation to corporations, s.826 is applicable:
826 Conduct by officers, directors, employees or agents
(1)Where it is necessary to establish, for the purposes of this Act or the BCII Act, the state of mind of a body corporate in relation to particular conduct, it is sufficient to show:
(a)that the conduct was engaged in by an officer, director, employee or agent of the body corporate within the scope of his or her actual or apparent authority; and
(b)that the officer, director, employee or agent had the state of mind.
(2)Any conduct engaged in on behalf of a body corporate by:
(a)an officer, director, employee or agent of the body corporate within the scope of his or her actual or apparent authority; or
(b)any other person at the direction or with the consent or agreement (whether express or implied) of an officer, director, employee or agent of the body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the officer, director, employee or agent;
shall be taken, for the purposes of this Act or the BCII Act (as the case requires), to have been engaged in also by the body corporate.
(3)A reference in this section to the state of mind of a person includes a reference to the knowledge, intent, opinion, belief or purpose of the person and the person’s reasons for the intent, opinion, belief or purpose.
This Court is given jurisdiction to respond to a breach of s.767(3), under s.769:
769 Penalties etc. for contravention of civil remedy provisions
(1)The Court, on application by an eligible person, may make one or more of the following orders in relation to a person (the defendant) who has contravened a civil remedy provision of this Part:
(a)an order imposing a pecuniary penalty on the defendant;
(b)an order requiring the defendant to pay a specified amount to another person as compensation for damage suffered by the other person as a result of the contravention;
(c)any other order that the Court considers appropriate.
(2)The maximum pecuniary penalty under paragraph (1)(a) is 300 penalty units if the defendant is a body corporate and otherwise 60 penalty units.
(3)The orders that may be made under paragraph (1)(c) include:
(a)injunctions; and
(b)any other orders that the Court considers necessary to stop the conduct or remedy its effects.
(4)Each of the following is an eligible person for the purposes of this section:
(a)a workplace inspector;
(b)a person affected by the contravention;
(c)a person prescribed by the regulations for the purposes of this paragraph.
(5)A regulation prescribing persons for the purposes of paragraph (4)(c) may provide that a person is prescribed only in relation to circumstances specified in the regulation.
The proposed penalty
Under the agreed statement of facts, Merhis Constructions has admitted that it is liable for the conduct of Khalil Merhi, which is described in the agreed facts. It has admitted that this conduct constituted a ‘refusal’ of entry to premises by union officers having an OH&S right of entry. Although Mr Merhi found the officers already in the site office when he arrived, his peremptory demand that they leave was complied with, and in effect Mr Merhi refused their right to re-enter to continue their OH&S investigations. Mr Merhi had not been present when they entered the site, and, implicitly, he made insufficient inquiries as to their presence before demanding that they leave. He also responded in an inappropriately emotional and abusive manner. He did not engage in rational conversation with the officials whom he met, in particular as to their right to enter and remain on the site, and as to any safety concerns which they had identified. His conduct is now admitted to have involved a breach of an important requirement of industrial law. Merhis Constructions has admitted that it is liable for his conduct on that occasion.
It is agreed that Mr Merhi acted ‘under a misapprehension’ as to the legal conditions attaching to the officials’ right of entry, presumably, in relation to the aspects which I have emphasised above. That is, that the union officials held State and Commonwealth authorisations which allowed them to enter the site without prior notice, and without being required to explain and justify their entry. The admission of liability to penalty, implies that his misapprehension occurred in circumstances which did not allow him a defence of honest and reasonable mistake, assuming its applicability (see Dalzell v Ferguson (supra) at 402-407, Australian Federation of Air Pilots v Australian Airlines Ltd (1991) 28 FCR 360 at 374-376, Tran v The Commonwealth [2009] FCA 474 at [37], and Dimella Constructions Pty Ltd v Stocker and Stocker (1976) 14 SASR 215).
The agreed facts suggest that a construction manager responsible for two building sites was inadequately educated as to OH&S rights of entry. This is a real concern, suggesting that special deterrence in relation to Khalil Merhi and the company which is responsible for his actions, as well as general deterrence in the building industry, are important considerations when considering penalty. In relation to general deterrence, it is of great public importance that construction company managers, whether off site or on site, should have accurate knowledge of the legal conditions attaching to the OH&S right of entry by authorised union officials, and should have acquired that knowledge before – not during or after – an attempt by an official to exercise that right. There will be circumstances where lives may be put at risk if site managers fail to appreciate and recognise the very substantial limitations on their powers to refuse or delay immediate entry.
In mitigation of Mr Merhi’s conduct, I accept that the agreed statement of facts excludes the existence of circumstances showing that he consciously or deliberately flouted the requirements of law, and exclude the existence of a general policy to that effect being followed by his company. The agreed facts do not identify any particular detriment to workers’ safety which resulted from his actions. They do not suggest that there was repetition of the conduct, nor that his conduct resulted in any safety concern being insufficiently investigated at a later time.
Although the antecedents of Merhis Constructions are not referred to in the agreed facts, I should accept that it otherwise has a record in relation to compliance with industrial legislation which is unblemished by previous penalties being imposed under either civil or criminal laws with relevance to the present matter, whether in relation to the conduct of Khalil Merhi or any other employee.
Although Merhis Constructions contested the application until the commencement of the trial, its admission has saved some expenses to the applicant and the public purse, and this also deserves to be taken into account in mitigation.
I also accept the oral submissions of counsel for Merhis Constructions expressing its regret for the breach of legislation, and I accept that an element of contrition should be taken into account in mitigation.
I accept counsel’s submission that there might have been some confusion in the industry, and within Merhis Constructions in particular, as to the effects of Commonwealth legislation on union rights of OH&S entry under State legislation. However, for reasons I have explained above, this submission cannot completely excuse the admitted breach, and a strong message of special and general deterrence needs to be reflected in the appropriate penalty, to encourage the industry to become fully and accurately informed.
Counsel for the CFMEU referred me to well known authorities on the Court’s discretion to determine a penalty appropriate to the circumstances of a contravention, and I generally accept his summary of principles and citations in the extract from his written submissions which I extract as a schedule to this judgment.
Taking into account all the above matters and the authorities cited by counsel, I have concluded that the penalty agreed between the parties for the contravention admitted by Merhis Constructions is ‘within the permissible range’ of penalties, and should be imposed by the Court.
I consider it appropriate to include in the Court’s orders a formal declaration of liability, which is in terms agreed by both counsel.
I accept the parties’ submission that it is appropriate to order under s.841(b) of the Workplace Relations Act that the penalty be paid to the applicant.
The proceedings are subject to s.824 of the Act, which generally precludes the award of costs. No costs are sought by either party under the exceptions in s.824(1) or (2).
I certify that the preceding thirty eight (38) paragraphs are a true copy of the reasons for judgment of Smith FM
Associate:
Date: 29 October 2010
SCHEDULE
Extract from written submissions of the applicant
The Court has a broad discretion not fettered by a checklist of mandatory criteria (Australian Ophthalmic Supplies v McAlary-Smith (2008) 165 FCR 560; 246 ALR 35 at [12], [86], [87] and [91]). Penalties are not a matter of precedent. The choice of penalty must be dictated by the individual circumstances of a case, not by a line by line comparison with another case (Australian Ophthalmic Supplies v McAlary-Smith (2008) 165 FCR 560 at [12]). Courts should also be wary of attempting to clothe what is often an intuitive process with the trappings of science (see generally Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 (7 May 2008) at [60] – [63]).
The Applicant submits that the starting point for an understanding on penalties under the Workplace Relations Act is the judgment of Branson J in CFMEU v Coal & Allied Operations (No. 2) (1999) 94 IR 231 at 232. In that case her Honour was dealing with freedom of association breaches although the same principles apply to other parts of the Act (see generally commentary to Workplace Relations Act [s407.85], [717.0.50], [s807.70]-[s807.77], Butterworths; Enforcement of the Workplace Relations Act: The use of civil penalties, Employment Law Bulletin, July, 2004). In that case her Honour said:
The Act gives no explicit guidance as to the circumstances in which an order imposing a penalty …. will be appropriate or as to the circumstances in which a penalty of or near the maximum, or alternatively of a lesser amount, may be called for. The Court is simply directed to consider what is appropriate in all the circumstances of the case.
The following matters, which are not intended to comprise an exhaustive list, seem to me to be considerations to which the Court may appropriately have regard in determining whether particular conduct calls for the imposition of a penalty, and assuming that it does, the amount of the penalty:
(a)The circumstances in which the relevant conduct took place (including whether the conduct was undertaken in deliberate defiance or disregard of the Act).
(b)Whether the respondent has previously been found to have engaged in conduct in contravention of Pt XA of the Act.
(c)Where more than one contravention of Pt XA is involved, whether the various contraventions are properly seen as distinct or whether they arise out of the one course of conduct.
(d)The consequences of the conduct found to be in contravention of Pt XA of the Act.
(e)The need, in the circumstances, for the protection of industrial freedom of association.
(f)The need, in the circumstances, for deterrence.
In an analysis of the principles as to penalty, his Honour Finkelstein J has observed that the object of imposing pecuniary penalties may be either to punish, to deter, to rehabilitate or some combination of the three (CPSU v Telstra Corp (2001) 108 IR 228 at 230; see also Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65 (14 May 2007) at [93]-[94]; 158 FCR 543; 162 IR 444). Merkel J has pointed to a number of criteria including the cost of the contravention, deterrence, the flagrancy and deliberateness of the breach, the offender’s past record of behaviour and any contrition displayed by the offender (Seven Network Operations Pty Ltd v CEPU [2001] FCA 672; 110 IR 372 at 374).
General deterrence is the most important factor in relation to penalty. Seeking to achieve any end by unlawful means should be deterred. That is particularly so when the end itself is unlawful. The changing rules of industrial regulation can be set at naught if the Court does not act strongly (Finance Sector Union v Commonwealth Bank of Australia (2005) 147 IR 462 at [60]; 224 ALR 467).
Recent increases in penalty by the legislature means that any light handed approach that might have been taken in the past to serious wilful and ongoing breaches of industrial laws should no longer be applicable (Finance Sector Union v Commonwealth Bank of Australia (2005) 147 IR 462 at [72]).
In circumstances in which legislation gives the Court a discretion to impose, or alternatively not to impose, a penalty, the Court must be satisfied that it is appropriate in all of the circumstances to impose a penalty before it makes such an order (Alfred v Walter Construction Group Limited [2005] FCA 497 at [7]). Conduct that is innocent or inadvertent may lead to the Court not imposing a penalty (Rojas v Esselte Australia Pty Ltd (No.2) [2008] FCA 1585 at [64]).
The applicant submits that it is a sentencing principle that the maximum penalty is reserved for the worst (or towards the worst) category of case (Veen v R (No. 2) (1988) 164 CLR 465 at 478; 77 ALR 385).
It is clear that both specific and general deterrence are important criteria to be taken into account in setting pecuniary penalties (CPSU, The Community & Public Sector Union v Telstra Corporation Limited [2001] FCA 1364 at [9]; 108 IR 228, Finance Sector Union v Commonwealth Bank of Australia [2005] FCA 1847 at [60]; 224 ALR 467; 147 IR 462). Acknowledgment of breach may be grounds for mitigation of penalty as may be an apology to the persons concerned (Jordan v Mornington Inn Pty Ltd (2007) 166 IR 33 at [114]). In such cases, the timing of the acknowledgment will be important (Alfred v Walter Construction Group Limited [2005] FCA 497 at [15]).
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