Construction, Forestry and Maritime Employees Union v Canberra Contractors
[2024] FedCFamC2G 166
•28 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Construction, Forestry and Maritime Employees Union v Canberra Contractors [2024] FedCFamC2G 166
File number(s): CAG 43 of 2021 Judgment of: JUDGE W J NEVILLE Date of judgment: 28 February 2024 Catchwords: INDUSTRIAL LAW – contraventions established – limited utility in evidence on behalf of Respondents at penalty hearing except for the history of contravening conduct by the First Respondent Company – Other Respondents employees of Company but who had little idea or appreciation of the Court’s adverse findings against them in relation to their conduct that gave rise to the contraventions – the evidence at trial was strongly adverse to the Respondents but they still ran the trial – in the Court’s view the matter should have resolved including in relation to penalties – Applicant made clear and beneficial offer to settle the matter which was rejected – penalties fixed generally at lower range – award of costs against the Respondents consequent upon and from the date of the settlement offer. Legislation: Fair Work Act 2009 (Cth) s.501, 502, 546, 570, 793 Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157
Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450
Australian Ophthalmic Supplies Limited v McAlary-Smith (2008) 165 FCR 560
The Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
Construction, Forestry and Maritime Employees Union v Canberra Contractors [2023] FedCFamC2G 754
Darlaston v Parker (2010) 189 FCR 1
Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union (The Kiama Aged Care Centre Appeal) (2023) 297 FCR 338
Kelly v Fitzpatrick (2007) 166 IR 14
Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221
Trade Practices Commission v CSR Ltd [1991] ATPR 41-076
Division: Division 2 General Federal Law Number of paragraphs: 90 Date of last submission/s: 1 November 2023 Date of hearing: 7 December 2023 Place: Canberra Counsel for the Applicant Mr O. Fagir Solicitor for the Applicant Construction, Forestry and Maritime Employees Union Counsel for the Respondents Ms P. Bindon Solicitor for the Respondents MBA Legal Table of Corrections 29 February 2024 On the cover page, “Master Builders’ Association” has been replaced with “MBA Legal”. ORDERS
CAG 43 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: CONSTRUCTION, FORESTRY AND MARITIME EMPLOYEES UNION
Applicant
AND: CANBERRA CONTRACTORS
First Respondent
ANGELO CERULLO
Second Respondent
JOHN GRAHAM
Third Respondent
ORDER MADE BY:
JUDGE W J NEVILLE
DATE OF ORDER:
28 FEBRUARY 2024
ON A FINAL BASIS, THE COURT ORDERS THAT:
1.The First Respondent is to pay a total penalty, pursuant to s.793 of the Fair Work Act 2009 (Cth), for the contraventions of ss.502(1) and 503(1) of the Fair Work Act 2009 (Cth) in the sum of $45,000.
2.The Second Respondent is to pay a penalty for the contravention of s.502(1) of the Fair Work Act 2009 (Cth) in the sum of $4,600.
3.The Second Respondent is to pay a total penalty for the two contraventions of s503(1) of the Fair Work Act 2009 (Cth) in the sum of $6,200.
4.The Third Respondent is to pay a penalty for the contravention of s.502(1) of the Fair Work Act 2009 (Cth) in the sum of $3,500.
5.The Third Respondent is to pay a penalty for the contravention of s.503(1) of the Fair Work Act 2009 (Cth) in the sum of $2,500.
6.The penalties ordered in Orders 1 – 5 hereof be paid to the Applicant within 60 days of this Order.
7.Within 60 days, being by 28 April 2024, the Respondents are to pay the costs of the Applicant fixed in the sum of $15,060.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE W J NEVILLE
Introduction & Overview
The principal judgment in this matter relating to liability (“the liability judgment”) was delivered on 24th August 2023.[1] The Court determined that the breaches alleged by the Applicant had been clearly made out, which led to the making of declarations in accordance with the Court’s findings.
[1] Construction, Forestry and Maritime Employees Union v Canberra Contractors & Ors [2023] FedCFamC2G 754.
Even in the Court’s long (if not excessive), 30 paragraph introduction and overview in the liability judgment of the contraventions pleaded and the alarmingly poor evidence of the Respondents, there were regular laments about how and why the matter had not resolved, and conversely, how much time and other resources were being expended in the conduct of a matter that was almost doomed, in the light of the Respondent’s impoverished evidence, to fail. The parties were repeatedly urged to resolve the matter, including in relation to penalties, which these reasons must now address. Again, it remains something of a mystery how and why the parties have not been able to resolve the issue now of penalties in the light of the Court’s clear findings regarding liability. The facts were relatively straight-forward. Likewise, the statutory provisions and case law relevant to the matters in issue were neither arcane nor abstruse.
Further still, in the light of the Court’s quite direct and rather adverse assessment of the Respondents’ witnesses at the liability trial, the prudence and utility of the same persons giving evidence at the penalties hearing posed many more questions than those answered. In my view, only Mr Macor’s evidence assisted the Court (he gave no evidence at the first trial). The evidence from Mr Cerullo and Mr Graham (the latter also did not give evidence at the first trial for very curious and concerning reasons explained in the liability judgment) at the penalties hearing was rather unfortunate and unnecessary. It did not assist the Court, and potentially made matters somewhat worse. Neither had read let alone understood the long liability judgment. This was not, necessarily, their fault. They are not lawyers. Their understanding of the issues in this matter was extremely limited. As in the liability hearing, and noted in the liability judgment, it was quite clear that neither of them had been properly prepared for their limited evidence. One might have reasonably assumed that their lawyers had ensured that the witnesses understood much better than they did what the Court’s findings against them were and what that could mean, either for them and or for the Company.
All of this said, the somewhat aggressive cross examination of them by Counsel for the Applicant (not the same Counsel at the liability trial) served no purpose. Flailing, nervous and uncomprehending witnesses do not need to be on the verge of humiliation, even if (or especially if) they are quite unaware of their unfortunate plight in the witness box. While their oral evidence is canvassed below, neither of these witnesses really or materially assisted the Court at all in relation to the determination of penalties.
In its original submissions, filed 11th October 2023, the Applicant noted that (a) it had attempted to settle the matter with the Respondents (par.6), but such overtures failed which may, as noted below, have consequences in relation to costs, and (b) had also sought agreement with the Respondents regarding relevant range of penalties, also to no avail (par.4). While not formally “tested”, putting such matters in writing by Counsel for the Applicant must be accepted by the Court. Such intransigence, by the Respondents, as outlined, is, at least, very unfortunate and showed significant lack of insight.
In all of the circumstances, and notably the Court’s findings in the liability judgment, and having regard to the relatively modest nature of the contraventions, subject to what is said below in the light of relevant principle, the penalties generally proposed by the Respondent are appropriate, albeit with some tweaking.
Applicant's Oral Evidence
Oral Evidence of Mr John Alexander Graham
Mr Graham confirmed his occupation as Assistant Director in Quality Assurance at ACT Property Group. In this role he said he drafts, implements and maintains certification ISO 9001:2015 Quality Management Systems, which involves overseeing the documents, procedures, registers and protocols for the quality management of the processes undertaken by ACT Property Group. He confirmed that the ACT Property Group carries out maintenance works as well.[2]
[2] T 9 – 10
Mr Graham confirmed that there was nothing included in his Affidavit which is not important for the Court to bear in mind when considering the decision on penalties. He confirmed that one of the matters that he thinks the Court should take into consideration is the stress that these proceedings have caused him. He confirmed that, in his view, the CFMEU and its organisers had mistreated him, and had annexed an image from the CCTV footage to show this. He said the CFMEU official close to him had swung his arm so close that the hairs on his arm brushed with Mr Cerullo’s face while another official had recorded it. Mr Cerullo said that this was intimidation and harassment, and that he had watched this incident on the CCTV footage and took a screenshot. He said he had included this in his Affidavit as it was a point during the meeting in which he had felt very uncomfortable.[3] Simply as an observation here: the incident complained of by Mr Graham was dealt with in the liability judgment. In the Court’s view, the incident was not as described by Mr Graham. I do not doubt his subjective view, but viewed from the video footage available to the Court, Mr Graham’s assessment was rather awry.
[3] T 10 – 12
Mr Graham said that he had not read the Court’s judgment in this case thoroughly, but had perused it. He said due to his psychological injury it had caused him too much distress to read it in full. He said he could still acknowledge the Court’s findings as he gathered that the Court had found him at fault on the particular day in question, and said that he accepts this finding.[4] Accepting a finding by a Court and being either apologetic or contrite about the conduct that led to the finding, are different things. The distinction was not appreciated by Mr Graham, or by Mr Cerullo. Those advising the Respondents should have ensured that such matters as contrition, and what the Court’s findings actually meant (and why they were made) were properly understood, including the reasons why the Court made the findings that it did. Plainly and unfortunately none of this occurred.
[4] T 12
Mr Graham was not sure of any findings made by the court about the conduct of Messrs Maher and Poskus on 11th August 2021. It was suggested to Mr Graham that the CCTV footage showed that Mr Maher was of quiet demeanour on the day in question. Mr Graham disagreed with this proposition, as he had asked Mr Maher to move back and take his phone away from his face. He disagreed with the proposition that the CCTV footage had shown no evidence of any bullying, harassment or intimidation.[5] Again, he should have been taken through the Court’s findings in the light of the evidence by his lawyers.
[5] T 13
Mr Graham said that his lawyers had asked him to prepare an Affidavit. He said they had given him guidance as to what an Affidavit entailed, and he had then written it himself. He specified that the detail of Items 7 and 8 was provided to him, but that Items 3, 4, 5, 6, 9, 10, 11, 12, 13, 14 and 15 were his. He confirmed that he had sat down at his computer and typed out those paragraphs himself, although said there might have been some guidance notes.
Mr Graham said his daily job is very precise with wording, and confirmed that the words used in his Affidavit were his. He disagreed with the suggestion that paragraphs 3 and 4 were not his words or were suggested to him by someone else. He said he did not have any interaction with Mr Cerullo about the contents of his Affidavit. When asked why paragraphs 3 and 4 of both his and Mr Cerullo’s Affidavits were identical, Mr Graham said he was unaware of what was being alluded to. There was no “allusion”; the words in both Affidavits were identical. He said he had spoken to his lawyers throughout the process. Mr Graham disagreed with the proposition that paragraphs 3 and 4 of his Affidavit were ingenuous (or even not genuine) expressions of his own views or feelings, and that they were someone else’s words that he had simply signed off on.[6]
[6] T 12 – 14
Mr Graham further disagreed with the suggestion that he did not accept the Court’s findings, and that he maintained his original view about the events of 11th August 2021. He disagreed that his evidence given during this Penalty Hearing about the preparations of paragraphs 3 and 4 of his Affidavit was untrue.
Mr Graham firmly holds his views about the Applicant, and about what happened on the fateful day in question. The video footage played to the Court at trial, and the Court’s findings in the light of it, were and remain significantly different to Mr Graham’s anguished views. As stated earlier in these reasons, Mr Graham’s evidence did not assist the Court in any relevant respect. In my view, if anything, if it were possible, he made the Respondents’ case regarding penalty even more difficult, notably because he plainly had no real or genuine idea about the Court’s findings in the liability judgment. Such “view” as he had about his actions, and those of Mr Cerullo in 2021, on the building site in question was and remains so coloured by his jaundiced view of the Applicant and its delegates that his evidence was, at least, very poor and quite highly “coloured.” Indeed, in the light of the evidence of Mr Cerullo and Mr Graham and their very limited understanding of the Court’s findings in the proceeding, it rather begs the question of how either of them could accept the Court’s findings if neither of them fully, or properly, understood them. Likewise, there could be no expression of contrition (for which there really was little evidence) if there was very limited understanding of what the Court decided. At best, in such circumstances, any expression of accepting the Court’s findings could only be a form of “lip-service”. Again to state the obvious: how can one accept something if that something is not properly or fully understood?
Oral Evidence of Mr Angelo Cerullo
Mr Cerullo confirmed that he was an Operations Manager at Canberra Contractors. He said he had prepared his Affidavit signed 25th October 2023 with his lawyers. He confirmed that he had included items that he had thought the Court should bear in mind while making a decision on penalties.[7]
[7] T 16
Mr Cerullo recalled giving some evidence at the Final Hearing about his understanding of Right of Entry laws. He said he had “perused” the judgement in this matter. He said he had since undertaken training to better understand the issues outlined. He added that he personally did not read the section(s) of the judgement which outlined the Court’s findings of the events of 11th August 2021, but that his legal team advised him of those findings.[8] Regrettably, just as the Court found in the liability judgment, so too here that Mr Cerullo really had little idea about what was in the liability judgment, and his preparation for his evidence at the penalty hearing was really quite poor. For all of his genuine politeness and courtesy, his understanding of important elements in the liability judgment regarding his conduct on the day in question, and the rights and responsibilities of those (e.g. Union officials) entitled to enter and inspect premises based on reasonably held suspicions, and who had proper documentation to do so, was very poor, especially so for someone in a senior position in the First Respondent Company. The Court notes that, as some sort of remedial or protective step, Mr Cerullo is not now in a position where he will engage directly with visitors on site, or at least, certainly not Union officials.
[8] T 17 – 19
Mr Cerullo was taken to paragraph 14 of his Affidavit, in which he had said that he has suffered psychological trauma including a diagnosis of adjustment disorder including anxiety due to the interactions which occurred on 11th August 2021. He confirmed that at paragraph 8 of his Affidavit he deposed that he suffered from anxiety due to his interactions with the CFMEU Officials. He confirmed that he had meant Messrs Maher and Poskus. He said it remained his view that Messrs Maher and Poskus were continually attempting to intimidate and harass him on 11th August 2021. He confirmed that consequently he had suffered from psychological trauma.[9]
[9] T 20
Mr Cerullo said he had not read the parts of the Court’s judgement which include findings as to the conduct of Messrs Poskus and Maher. It was asked which findings Mr Cerullo was referring to in his Affidavit when he had said that he accepted the Court’s findings. Mr Cerullo said he accepted the findings that he had done the wrong thing. He said he had since reflected on the events of 11th August 2021. He said he no longer held the same views about what had happened, and that the training that he had done clarified a lot for him.[10] His recollection and attention to detail of these matters was seriously lacking. Generalised comments about accepting the findings of the Court, but not having read the judgment (or, apparently, been taken through it by his lawyers) do not, without much more, constitute or establish that someone genuinely understood their actions and the Court’s assessment of them.
[10] T 20 – 21
Mr Cerullo said that to prepare his Affidavit, he had sat down with his lawyers. He said paragraphs 4 and 5 were conveyed by him to his legal team, and that they had put the words together. He denied that his lawyers had prepared the Affidavit and that he had just signed off on it. He said that his lawyers had taken his layman English and put the Affidavit together.[11]
[11] T 21 – 23
It was put to Mr Cerullo that paragraphs 4 and 5 in his Affidavit appear in identical terms in Mr Graham’s Affidavit. Mr Cerullo said he was not aware of this as he had not seen Mr Graham’s Affidavit. He said he could give no explanation for this. He denied that his lawyers had given him the wording of paragraphs 4 and 5 of his Affidavit for him to sign off on. He denied that he did not know what the Court’s findings were. He said the Court’s findings were that he did the wrong thing by not giving the Union Officials Right of Entry when he thought that they did not have the correct paperwork. He could not be more precise.[12] I simply note that the identical paragraphs identified to both Mr Graham and Mr Cerullo in each of their Affidavits, were patently crafted by the same person. I do not accept the evidence of either Respondent in relation to these identical paragraphs. Nothing, however, turns on such a finding.
[12] T 23 – 24
Oral Evidence of Mr Paulo Luigi Macor
Mr Macor confirmed he was the Managing Director of Canberra Contractors.[13]
[13] T 26
In examination in chief, Mr Macor confirmed that he gave some evidence in paragraph 28 of his Affidavit as to the difficulty that the company experienced over the last 2 years, with a reference to Annexure G setting out the Canberra Contractors profit and loss statement in relation to the financial year 2021/2022. Mr Macor said that the profit before income tax figure of the current financial year that had just ended was $20,000 less than 2022. He confirmed this would make it somewhere in the region of $200,000. He said that the records showing this had some confidential matters within it, and hence had not been shown in his Affidavit. He agreed to provide a redacted version to the Court.[14]
[14] T 26 – 27
Mr Macor said that as a result of contraventions that the company had previously admitted in 2018 and 2020 proceedings, the Registrar had imposed 20 points for each contravention on Canberra Contractors. He said that these penalties remain for a period of two years, and that currently the company has zero demerit points.[15] It was at least implicit in Mr Macor’s evidence that he was concerned about the risk to the Company earning some further demerit points as a result of the current litigation.
[15] T 28
In cross-examination, Mr Macor was asked about the confidential items in the financial statements. He said that Canberra Contractors has assets outside of the construction industry, and that they have investments in an apartment complex in Maroochydore. He had not wanted the Union to know this. He denied that he had not given a true picture of the financial position of Canberra Contractors in his Affidavit.[16]
[16] T 30
Mr Macor said he prepared his Affidavit with the assistance of his lawyers, but that he had told them what should go in it. He said there was nothing irrelevant in his Affidavit to the decision that the Court should make about penalties.[17]
[17] T 30
Mr Macor confirmed that Canberra Contractors is renowned in the civil construction sector, and that it had completed many jobs for both private clients and government. He said it currently held multiple contracts with the ACT Government and others, the combination of which runs to the tens of millions of dollars. He confirmed that this Court had found Canberra Contractors to have breached the Fair Work Act twice, and said that the company takes this very seriously and accepted the findings. He said that he had read the judgement when it came out in this matter. He confirmed that the company had contravened the Act in 2018 and 2019, and that fines were imposed, and declarations were made, by the Court in March 2020, with a second declaration with no fine in 2019. He confirmed that at the time, the declarations and the fines were just a product of a commercial decision made by the business. He denied that he had decided to ‘cop’ the fine because it was cheaper than ‘going through the process.’ He was taken to paragraph 26 of his Affidavit in which he had said that ‘this was a commercial decision made by the organisation to settle the proceedings.’ Mr Macor clarified and said this was the company view at that time. He said this did not take away from the seriousness of the declarations.[18]
[18] T 30 – 31
Written submissions on behalf of the Applicant
Written submissions were filed on behalf of the Applicant prior to the Penalty Hearing on 11th October 2023. They were as follows (emphasis in original; footnotes omitted):
A.Introduction and overview
1.On 24 August 2023, this Court held in CFMMEU v Canberra Contractors [2023] FedCFamC2G 745 (LJ) that on 11 August 2021:
a. Angelo Cerullo, a director and ‘Director of Operations’ of Canberra Contractors Pty Ltd, contravened s 502(1) of the Fair Work Act 2009 (Cth) (FW Act) by intentionally hindering and obstructing Luke Poskus and Seamus Maher exercising rights in accordance with Part 3-4 of the FW Act;
b. Cerullo contravened s 503(1) of the FW Act twice;
c. John Graham, Canberra Contractors’ ‘Safety Manager’, contravened s 502(1) by intentionally hindering and obstructing Poskus and Maher exercising rights in accordance with Part 3-4 of the FW Act; and
d. Graham contravened s 503(1) of the FW Act.
2.Canberra Contractors, by operation of the attributive provisions of s 793 of the FW Act, was held to have contravened ss 502(1) and 503(1) in the same manner as Cerullo and Graham and thus committed 5 contraventions of the FW Act.
3.It now remains for the Court to determine the question of penalty, with declarations of contravention having been made on 25 September 2023.
4.Unfortunately, the applicant was unable to obtain the agreement of the respondents on the question of appropriate penalties or penalty ranges, or in relation to the facts as found by the Court in the LJ.
5.For the reasons that follow, the respondents’ contraventions were deliberate and contumacious. They were objectively serious, involving senior officers of Canberra Contractors who professed to have a sound understanding of the rights of entry permit holders. Significantly, Canberra Contractors has a history of contravening right of entry provisions. This Court had imposed two penalties on it and made declarations of three separate right of entry contraventions by it prior to the contraventions found by the Court to have occurred on 11 August 2021. It has ongoing and seemingly significant works in the Canberra and surrounding regions and is clearly a company of substance. The requirements of specific and general deterrence impel that substantial penalties be imposed on it. Those principles also require that similar substantial penalties be imposed on its human agents who, as senior managers, consciously contravened the proscriptions under ss 502(1) and 503(1) of the FW Act on 11 August 2021.
6.The applicant’s case on liability was overwhelming. This should have been reasonably apparent to the respondents from the commencement of the litigation (see LJ [7]) or, at the very least, after they were served with the applicant’s evidence and submissions. Their conduct of their defence of the proceedings was muddled and misguided. The applicant made an offer to resolve the proceedings on 29 July 2022 on a basis more advantageous to the respondents than the adverse findings ultimately made by the Court. The respondents’ continued defence of the proceedings following the expiration of that offer was unreasonable and caused the applicant to incur costs. The respondents should pay the applicant’s costs of the proceedings on liability from that date in a lump sum.
7.These submissions first deal with principles germane to the imposition of penalty as pronounced by the plurality of the High Court in ABCC v Pattinson. The contravening conduct in respect to each of the contraventions found is next considered. Appropriate penalties for the contraventions are then detailed. Finally, the submissions explain why the power to award costs under s 570(2) of the FW Act is enlivened and why it is appropriate that costs be awarded.
B.Civil penalties and breaches of right of entry provisions
‘Appropriate’ civil penalties under s 546(1) of the FW Act
8.The principal and likely only object of the imposition of a civil penalty is deterrence of future contraventions by the contravenor and others. Whilst called a ‘civil penalty’, the object of the imposition of a civil penalty is not to punish or penalise the contravenor. Rather, it is to be protective of the public interest in securing compliance by the contravenor and others with the FW Act. Determination of an ‘appropriate’ penalty focuses on ensuring that the penalty is not such as to be regarded by the contravenor and others as an acceptable cost of doing business. In setting an ‘appropriate’ penalty, the Court is charged with fixing an amount which operates as a financial disincentive to encourage compliance with the law by making non-compliance an economically irrational choice.
9.Pattinson held that the limiting principle of proportionality derived from the criminal law, which requires that there be some proportionate relationship between the objective circumstances of the contravening and the ultimate penalty imposed, had no part to play in the imposition of civil penalties. The plurality held that the objective circumstances of the contravening were salient to the determination of an appropriate penalty only to the extent they bore on the need for deterrence in the instant case. Hence, a large penalty may be appropriate for a relatively anodyne or minor contravention if this were reasonably necessary to deter the contravenor and others. Consequently, the maximum penalty prescribed for a particular contravention is not reserved for the objectively gravest contravening.
10.Whilst Pattinson jettisoned the principle of proportionality, the plurality detailed that the penalising discretion remained attended by the need for there to be some reasonable relationship between the penalty ultimately imposed and the theoretical maximum. A penalty that was ‘oppressively severe’ if it were greater than necessary to achieve the object of deterrence would be unreasonable and could not be imposed.
11.Factors bearing on assessment of an appropriate deterrent penalty may include: the deliberateness of the contravening; whether senior management were involved in the contravention where the contravenor is a corporation; whether the contravenor has a history of contravening; whether the contravenor (if a corporation) has systems of compliance; contrition by the contravenor; cooperation by the contravenor with the applicant; and the size and financial resources of the contravenor.
12.The seriousness of the contravening evinced, for instance, by its deliberateness or the fact it was carried out by members of senior management will invariably suggest that a higher penalty is necessary to achieve specific and general deterrence. Further, the size and resources of a contravenor are pertinent in assessing an appropriate deterrent penalty. Logically, the larger the contravenor and the greater its financial resources, the greater the penalty required to effect deterrence.
Penalties for right of entry contraventions
13.In CFMMEU v Richard Crookes Constructions Pty Limited, Wigney J observed that the statutory right of permit holders to enter premises and exercise powers to investigate contraventions of health and safety obligations was an axiomatically important tool for union officers to utilise to secure safe workplaces. The right was, his Honour explained, one that was required to be respected by occupiers of all worksites, particularly those where high-risk construction was undertaken. The importance of that right is reflected in the protective proscriptions contained in ss 501-503 of the FW Act (cf LJ [137]). Similar sentiments were expressed by Tracey J in CFMEU v Decmil Engineering Pty Ltd (No 2)
14.Contravention of those proscriptions is self-evidently serious and apt to undermine the health and safety of workers and workplaces. Wigney J explained in Richard Crookes, in the context of ss 501-502 of the FW Act, that:
Contraventions of ss 501 and 502 of the Fair Work Act by an employer are, by their very nature, objectively serious, particularly where entry to the premises was sought to investigate suspected contraventions relating to the safety of workers and the workplace in question. As a general proposition, higher penalties are likely to be appropriate to secure effective deterrence, particularly general deterrence, in circumstances where the mischief to which the civil penalty provision in question is directed is serious. In the case of ss 501 and 502 of the Fair Work Act, it “must be made clear to employers that they are not entitled to deny access to their premises to union officials who are exercising lawful rights of entry under the [Fair Work] Act”…
15.Those remarks are also apposite to contraventions of s 503(1) by occupiers in circumstances where entry is sought to investigate suspected health and safety contraventions.
D.Canberra Contractors’ history of right of entry contraventions
16.Before considering the contraventions found in the LJ, it is important to recite Canberra Contractors’ antecedent breaches of right of entry provisions. That history shows that the present contraventions were not isolated or uncharacteristic aberrations but were committed in circumstances where Canberra Contractors had previously breached ss 501 and 502(1) of the FW Act and had, in fact, been the subject of curial sanction for contraventions of these provisions. Not insignificantly, both Mr Graham and Mr Cerullo were involved in those previous proceedings as respondents.
17.In December 2018, the applicant sued Canberra Contractors and a number of respondents, including Cerullo and Graham, for contraventions of ss 501 and 502(1) of the FW Act. Canberra Contractors admitted it had contravened s 502(1) on 11 January 2018 and s 501 on 15 January 2018. Graham was principal actor in both contraventions.24 On 10 March 2020, the Court imposed two penalties of $6,500 on Canberra Contractors $6,500 for these contraventions.
18.On 26 May 2020, the applicant commenced further proceedings against Canberra Contractors and a number of individuals, including Graham, for contraventions of ss 501 and 502(1) of the FW Act. Canberra Contractors admitted contravening s 502(1) of the FW Act on 26 August 2019 and the Court made, by consent, a declaration to this effect on 8 February 2021.
19.These antecedent contraventions and litigious history underscore the need for specific deterrence against all the respondents and, in particular, Canberra Contractors. The history reflects particularly poorly on Canberra Contractors’ systems of compliance and illustrates that no, or no effective, remedial action was taken to ensure compliance with Part 3-4 of the FW Act after Canberra Contractors had been dealt with twice for breaching right of entry provisions. Importantly, they underscore that significant penalties are required to incentivise Canberra Contractors, as well as Cerullo and Graham, to comply with the right of entry provisions of the FW Act.
D.The contraventions and appropriate penalties
Cerullo and Canberra Contractor’s s 502(1) contravention
20.This contravention involved Cerullo refusing to permit Poskus and Maher to investigate the suspected barrier contravention after they had lawfully sought to invoke the right under s 118(5) of the Work Health and Safety Act 2011 (ACT) (WHS Act) (2FASOC [24]-[37] and [52]-[57]). Cerullo’s refusal occurred in circumstances where Poskus had clearly identified that Maher and himself sought to exercise the right under s 118(5) to investigate this suspected contravention and were entitled to do so without issuing a further notice under s 119 of the WHS Act. Poskus encouraged Cerullo to check the law in this regard. He refused to do so, professing that he wished to seek clarification from Graham.
21.Cerullo’s refusal occurred in circumstances where his evidence at trial was that he well knew at the time of the contravening that a permit holder could investigate a further suspected contravention of the WHS Act without having to issue another notice or leave site. There was, on his own evidence, no need for him to seek clarification from Graham. The Court can and should find that this was a ruse and obfuscation to hinder and obstruct Poskus and Maher.
22.The contravention was deliberate and contemptuous of the right under s 118(5) of the WHS Act.
23.Cerullo was also a director of Canberra Contractors and thus one of its senior officers. He was also someone it had allocated responsibility for to determine whether or not permit holders could exercise entry rights.
24.A penalty at or close to the maximum is required to be imposed on both Canberra Contractors and Cerullo for their respective s 502(1) contraventions.
Cerullo and Canberra Contractor’s two s 503(1) contraventions
25.Cerullo’s first s 503(1) contravention (2FASOC [26]-[29]) involved him misrepresenting that a permit holder exercising rights under s 118(5) of the WHS Act was required to identify the contraventions on a s 119 WHS Act notice. Cerullo knew this was untrue when he made the representation. The representation was directed to frustrating the exercise of rights by Poskus and Maher.
26.The contravention was flagrant and deliberate. A significant penalty is required to be imposed on Canberra Contractors and its Director of Operations achieve deterrence and send a clear message that statements of untruth directed to frustrating entry rights are not dealt with by the Court on a ‘light touch’ basis.
27.Cerullo’s second s 503(1) contravention (2FASOC [37]-[39]) involved him misrepresenting that an occupier of premises like Canberra Contractors could delay or otherwise not permit the exercise of rights under s 118(5) unless the suspected contraventions had been particularised in a s 119 notice. This was, on Cerullo’s own evidence under cross-examination, deliberately untrue. He well knew that this was not the case.
28.Like his first s 503(1) contravention, this falsehood was directed to frustrating Poskus and Maher’s exercise of rights and founding a basis for their unlawful eviction from site.
29.The misrepresentation was made knowing it was untrue and constituted a brazen s 503(1) breach. A substantial penalty is required to achieve deterrence against both Cerullo and Canberra Contractors.
Graham and Canberra Contractor’s s 503(1) contravention
30.This contravention occurred after Cerullo called Graham to intervene in Poskus and Maher’s attempt to exercise rights under s 118(5) in relation to the suspected barrier contravention (2FASOC [30]-[35], [40]-[41],[52]- [53] and [70]-[73]). Graham represented to Poskus and Maher that Canberra Contractors, as occupier, could delay their exercise of rights or not permit them to exercise rights until it had obtained ‘clarification’. That was untrue. The Court should find that Graham, given his position and knowledge of entry rights, knew it was untrue and intended to give the false impression that Canberra Contractors could interfere with the exercise of rights as asserted.
31.Graham’s deliberate misrepresentations combined with Cerullo’s actions to result in Poskus and Maher not being permitted to exercise rights under s 118(5).
32.The contravention was flagrant and involved Graham telling a deliberate falsehood. Given his status as a senior manager allocated responsibility by Canberra Contractors for managing right of entry, a substantial penalty is required to be imposed on both Cerullo and Canberra Contractors to effect deterrence.
Graham and Canberra Contractors’ s 502(1) contravention
33.The Court found this contravention, (pleaded at 2FASOC [47]-[48], [52]-[53] and [82]-[84]), established at LJ [152] having accepted, without relevant qualification, the evidence of Poskus and Maher.
34.The contravention was deliberate and contumacious. The Court can and should find (consistent with Graham’s evidence and his assertions in his affidavit: LJ [88]) that Graham well knew the officials had a right to enter premises to investigate the suspected contravention forthwith and that he had no right to direct them to wait whilst he sought ‘clarification’ from WorkSafe. Graham’s conduct was aptly described by Poskus as involving the playing of ‘silly games’. The conduct had an appreciable adverse effect on the lawful exercise of important rights by Poskus and Maher.
35.The contravention occurred in circumstances where Graham and Canberra Contractors had formerly been before the Court in relation to interferences with entry rights. The contravention was conscious, recalcitrant and inexcusable. The precepts of general and personal deterrence impel the imposition of a significant deterrent penalty.
Overall penalties
36.Cerullo’s three contraventions occurred in the same course of conduct. The course of conduct principle is, as explained in Pattinson, an analytical tool rather than a limiting principle. It (like the totality principle) assists in formulating an appropriate deterrent penalty. It does not operate operate as a limiting principle nor, in the circumstances of the flagrant and deliberate contraventions here, to moderate appropriate penalties for each contravention.
37.There is no contrition by respondents who are unrepentant contravenors who maintained throughout the case that they had not breached the FW Act or done anything wrong. Their history of contravening and, at least in the case of Canberra Contractors and Cerullo, continued operations in the construction industry and high corporate office, necessitate the imposition of substantial penalties. The following penalty ranges are appropriate:
Contravenor Maximum Penalty range Cerullo s 502(1) Cerullo—$13,320
Canberra Contractors—$66,600Cerullo—$5,328-8,658
Canberra Contractors—$36,630-53,280Cerullo s 503(1) Cerullo—$13,320
Canberra Contractors—$66,600Cerullo—$4,662-7,326
Canberra Contractors—$29,970-43,290Cerullo s 503(1) Cerullo—$13,320
Canberra Contractors—$66,600Cerullo—$4,662-7,326
Canberra Contractors—$29,970-43,290Graham s 503(1) Graham—$13,320
Canberra Contractors—$66,600Graham—$2,664-5,994
Canberra Contractors—$23,310-29,970Graham s 502(1) Graham—$13,320
Canberra Contractors—$66,600Graham—$5,328-8,658
Canberra Contractors—$36,630-49,950D.Costs
38.Section 570(1) of the FW Act provides, relevantly, that the Court can order a party to pay costs in relation to a matter arising under the FW Act in accordance with s 570(2). Section 570(2) confers a discretionary power to award costs if the Court is satisfied the party’s unreasonable act or omission caused the other party to incur costs. Whether conduct is unreasonable requires the context and circumstances of the party’s conduct to be evaluated. There needs to be a nexus between the unreasonable conduct and the incurring of costs.
39.The power under s 570(2) is generally to be exercised cautiously, with cases of its exercise needing to be clear. The policy reason for caution so far as respondents are concerned, is to ensure they are free to pursue arguable legal and factual responses to claims.
40.It is well-settled that refusal of a refusal of a reasonable settlement offer can constitute unreasonable conduct that will trigger the costs power under s 570(2)(b).
41.In the present matter, at the time the offer was made, the respondents were in possession of all the applicant’s evidence, as well as the CCTV footage which they had served in their own case. They also had the benefit of the applicant’s submissions, which should have made plain to them the untenability of their defence of the case. It was, in those circumstances, unreasonable for them to have rejected the settlement offer. Had that offer been accepted, they would now not be exposed to penalties for 6 additional contraventions.
42.Indemnity costs may be ordered where, amongst other things, a party has unreasonably failed to accept a settlement offer. It is appropriate that costs be awarded on the indemnity basis here and that a lump sum order be made in the amount set out in Ms Read’s affidavit. A lump sum order will avoid the expense, delay and aggravation of taxation and the burden of incurring additional costs in applying for taxation.
Written submissions on behalf of the Respondents
Written submissions were filed on behalf of the Respondents prior to the Penalty Hearing on 26th October 2023. They were as follows (emphasis in original; footnotes omitted):
Introduction and overview
1.For the reasons set out below, the Respondents submit that the penalties which should be awarded against them should be towards the lower end of the range of 25 to 40% of the maximum penalty. Those reasons include:
a. The First Respondent has demonstrated genuine contrition by updating its relevant policies and procedures, and initiating further and ongoing training for all its members.
b. The Second and Third Respondents are first “offenders” who have not been subject to civil penalties before.
c. The Third Respondent has ceased working in the construction industry entirely.
d. The First Respondent has removed the Second Respondent from any position of responsibility for addressing rights of access.
e. The contraventions of the Second Respondent, and related contraventions for which the First Respondent is responsible, constitute a single course of conduct,1 for which a single penalty should be imposed.
f. The principle of totality ought be applied to reduce the total penalty imposed to no more than that which is reasonably necessary for deterrence.
g. The Third Respondent has suffered adverse mental health consequences as the result of his perception of his engagement with the unions.
h. The First Respondent may suffer additional and serious commercial consequences as the result of the findings of contravention made against it.
2.The Respondents each acknowledge the findings of contravention made against them on 24 August 2023. The Second and Third Respondents each give evidence that there was no malice in their actions and that they were acting honestly based on their understanding of the Work Health and Safety Act 2009 (ACT). Each of the Second and Third Respondents have also accepted that their actions did, in fact, contravene the relevant sections of the Fair Work Act 2009 (Cth) on the basis of Judge Neville’s findings.
The evidence
3.The Respondents submits that the Applicant’s assertion that they are unrepentant contravenors with a history of history of contravening is incorrect. This is likely because that assertion was made without the benefit of the Respondents’ evidence.
First Respondent’s evidence
4.There is significant evidence of contrition on the part of the First Respondent. The First Respondent has undertaken a number of improvements to its work processes and systems, both since the date of the contraventions but more particularly since the date of the decision, to ensure compliance with all relevant legislation including the Work Health and Safety Act 2011 (ACT) and the Fair Work Act 2009 (Cth). Compliance with this legislation is critical to the ongoing success of the First Respondent. These improvements include, but are not limited to the following:
a. Review and update of the Canberra Contractors Pty Ltd Integrated Management System (IMS);
b. Preparation and implementation of a new Project Risk Management Plan;
c. Review of Right of Entry procedure in line with the relevant legislation;
d. Attendance by senior management to Right of Entry essentials training and other relevant training due to changes in legislation, with such trainings taking place already with further training scheduled for early November 2023; and
e. Review and update to the Project Risk Register.
5.The documentation produced by the First Respondent, through its director Mr Macor, demonstrates an acceptance of the seriousness of the findings made, the need to avoid situations which could lead to contraventions in the future, and the desire to do as much as is possible to ensure the events of the date of the contraventions are not repeated. In short, in real business terms, the actions of the First Respondent demonstrate real, meaningful contrition put into action.
6.This contrition is necessary to attempt to preserve the operation of the First Respondent’s business. The First Respondent is a civil contractor. It is a Code Certified Entity under the Government Procurement (Secure Local Jobs) Code 2020. This code requires certified entities to comply with certain legislation, including the legislation in issue in this case.
7.A failure to comply with such legislation can result in the imposition of demerit points by the Secure Local Jobs Code Registrar. These demerit points adversely impact the assessment of tenders submitted by code certified entities. While no such demerit points have been imposed yet, the risk that those points could be imposed represents a risk of extra-curial punishment arising from the circumstances which should be taken into account.
8.The risk of demerit points is also a further factor of deterrence, independent of any penalty, which indicates that a lower penalty is warranted in the circumstances.
9.The First Respondent also provides more history of the contraventions which have previously been found against it. Those contraventions relate to events in 2018 and 2020; the only findings made in the course of those proceedings were against the First Respondent. Further, the decision to agree to those contraventions were made on a commercial basis.
10.No findings were made against either the Second or Third Respondent in any previous proceeding, nor were any declarations made or penalties issued. It is not correct to describe the Second and Third Respondents as repeat contravenors for this reason, contrary to the Applicant’s assertion. The mere fact that the Second and Third Respondents may have been respondents to previous proceedings is not sufficient to support the Applicant’s assertion.
11.There have been no further exercise of rights of entry or interactions with representatives of the Applicant in relation to such rights since the date of the contraventions. This indicates compliance by the First Respondent with relevant WHS standards such that no further complaints like those which led to the exercise of the rights of entry on the date of the contravention have arisen.
12.Finally, the First Respondent has significantly mitigated the risk of any relevant re-contravention by the Second Respondent by removing him from any position dealing with rights of entry to work sites. Thus, the need to deter the Second Respondent from contravening rights of entry in the future is lessened given that he will no longer be in such a role with the First Respondent’s business.
Second Respondent’s Evidence
13.The Second Respondent will not be dealing with union officials exercising rights of entry in the future, and will be attending a right of entry training on 2 November 2023. These factors lessen the need for any need for specific deterrence against the Third Respondent.
Third Respondent’s Evidence
14.The Third Respondent ceased work with the First Respondent in July 2022. He no longer works in the construction industry, although the decision to do so was made against his wishes as a result of his current mental health condition. He will not work in the industry again.
15.The Third Respondent now works with ACT Property Group, an arm of the ACT Government. His duties involve drafting, implementing and maintaining Quality Management Systems for ACT Property Group. This role does not require any involvement with the Applicant, he does not control access to any work sites, nor does he even attend any work sites where rights of entry could be exercised.
16.The Third Respondent also suffers from a psychological condition related to his perception of his interactions with the Applicant and its predecessor the CFMEU. He has been advised by his doctor not to participate in any court case involving the union or having any contact with the union going forward.
17.On this basis, the need for specific deterrence for the Third Respondent is non-existent.
18.The Third Respondent’s psychological condition also amounts to extra-curial punishment which militates against the imposition of a significant penalty.
Relevant legal principles
19.he relevant principles regarding penalty were discussed by Katzmann J in Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (Kiama Aged Care Centre Case) (No 2) [2022] FCA 19. Those principles include whether a number of contraventions result from a single course of conduct, the totality principle, the objective severity of the contraventions, and whether the respondent has suffered any extra-curial punishment.
20.The Respondents submit that the principles of course of conduct and totality should be taken into account. When this is done, the application of those principles indicates that a lower overall penalty is appropriate.
21.Jackman J provides a recent summary of these two principles in ACCC v Dell Australia Pty Ltd (No 2) [2023] FCA 983 at [12]-[13]:
The course of conduct principle is commonly referred to as recognising that where there is an interrelationship of legal and factual elements of multiple contraventions, care must be taken to ensure that the contravenor is not punished twice for what is essentially the same wrong: Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2017] FCAFC 159; (2017) 258 FCR 312 at [421]-[428] (Middleton, Beach and Moshinsky JJ); Yazaki at [234]. In applying the course of conduct principle, it is not appropriate or permissible to treat multiple contraventions as just one contravention, nor does the principle constrain or reduce the theoretical maximum penalty: Yazaki at [229]-[232]. The Court is also “not obliged to apply the principle if the resulting penalty fails to reflect the seriousness of the contraventions”: Yazaki at [235]. Rather, it may be used as a tool of analysis, particularly when the number of contraventions is large: Coles at [82]-[85].
The totality principle is that the total penalty for related contraventions should not exceed what is proper for the entire contravening conduct involved: Australian Competition and Consumer Commission v Energy Australia Pty Ltd [2014] FCA 336; (2014) 234 FCR 343 at [102] (Middleton J). This can be used by the Court as a tool of analysis to ensure that the penalty is no more than reasonably necessary for deterrence: Pattinson at [45]. The exercise of the totality adjustment “is directed to the overall impact of the accumulated effect of otherwise acceptable penalties to ensure that the whole is not greater than the sum of the parts”: Australian Competition and Consumer Commission v GlaxoSmithKline Consumer Healthcare Australia Pty Ltd (No 2) [2020] FCA 724 (Glaxo) at [61] (Bromwich J). It is typically used as a “final check”: Glaxo at [62].
22.Each of these principles are analytical tools to assist the Court to determine the penalty appropriate in any case. The fundamental exercise for the Court is to determine the level of penalty necessary which appropriately reflects the severity of the conduct in question to deter both the Respondents and members of the public from committing similar contraventions in the future.
23.Pattison itself serves as a useful example. In that case, the primary judge, Snaden J, determined that the CFMMEU should be given the maximum penalty for each of two contraventions but determined, upon application of the course of conduct principle, to reduce each penalty by 50% to reflect the fact that both contraventions arose out of substantially the same course of conduct. This determination was overturned by the Full Court of the Federal Court but reinstated by the High Court. As an analytical tool, it provides a useful example which received at least tacit endorsement from the High Court.
24.Applying these principles to the present case results, in the Respondents’ submission, in the following:
a. In relation to Second Respondent’s contraventions, it is common ground between the parties that the three contraventions arose from the same course of conduct. As a result, consistent with the analysis of Snaden J in Pattison at first instance, the total penalties awarded against both the Second Respondent and the First Respondent should add up to no more than the Court would have awarded for one contravention.
b. The Court should apply the totality principle when awarding penalties against the Third Respondent, especially in light of the lack of any need for any specific deterrence against him given his departure from the construction industry. The total penalty awarded against the Third Respondent should be no more than is necessary to indicate the Court’s censure for that conduct to the general public.
c. The contraventions were not of such a nature that any particular severity of punishment is warranted.
i. There were no threats of violence or physical intimidation.
ii.The delay occasioned by the Third Respondent’s 502 contravention was short, less than four minutes.
iii.The Applicant’s representatives were not actually misled by anything the Second or Third Respondent said, as those representatives knew the true nature of rights of entry and were unaffected by any misleading statement as a result.
iv.Most importantly, there is no suggestion that any worker was harmed or placed at greater risk of injury because of anything done or not done by the Respondents. In this respect the Respondents note the evidence at trial which demonstrates the placement of improved barriers shortly after the attendance of the Applicant’s representatives on site. The contraventions notwithstanding, the purpose of the attendance of the Applicant’s representatives was not ultimately frustrated by the Respondents’ actions.
d. Finally, the Court should apply the totality principle when awarding penalties against the First Respondent to ensure that the sum of each penalty awarded against it is not more than is necessary to deter the First Respondent and the public from any future contraventions.
Conclusion on penalty
25.For the reasons set out above:
a. There should be penalties imposed against the Second Respondent which add up to no more than the Court would have awarded for a single contravention. In light of the removal of the Second Respondent from interaction with the Applicant in rights of entry situations, such total penalty for those three contraventions should be in the range of $3,300 to $5,328.
b. The penalties imposed against the Third Respondent should be at the lower range for each contravention, given the lack of any need for specific deterrence and the lower-end severity of his conduct. A penalty in the order of $1,500 to $2,000 for each contravention is appropriate, which should be reduced to reflect the total appropriate penalty of approximately $3,000.
c. The First Respondent has shown significant contrition in the steps it has taken since the date of the contraventions and the decision of 24 August 2023. There is a risk that it will suffer significant extra-curial punishment as a result of the decision. A total penalty in the order of $20,000 to $35,000, reflecting all of the above factors, is more than appropriate to reflect the Court’s opprobrium for the conduct while also factoring in the mitigating effect of the other matters discussed above.
Costs
26.The Respondents submit that it was not unreasonable for them to refuse the Applicant’s offer of compromise. It is necessary for such refusal to be unreasonable to enliven the Court’s jurisdiction to award costs — see section 570(2)(b) and the Melbourne Stadiums case cited by the Applicant at [167].
27.Such refusal was not unreasonable because any finding of contravention against the First Respondent placed it in commercial jeopardy under the Secure Local Jobs Code. The First Respondent had a real commercial need to avoid any finding of contravention, and, based upon its understanding of the Applicant’s pleaded claim, the Applicant’s evidence and its own CCTV footage, was of the view that it had an arguable basis for defeating the claims against it.
28.That this viewpoint was ultimately incorrect does not mean that it was unreasonable at the time the decision not to accept the Applicant’s offer was taken.
29.For these reasons the Respondents submit that the costs order sought by the Applicant should not be made.
Written submissions in reply on behalf of the Applicant
Written submissions in reply were filed on behalf of the Applicant on 1st November 2023, and were as follows (emphasis in original; footnotes omitted):
1.The following submissions reply to the respondents’ material filed on 26 October 2023.
2.First, the respondents have filed and rely upon three affidavits and a written submission (RS). Notable by its absence from the material is any apology or any statement of contrition or regret, even in the form of a submission. Although each respondent has filed an affidavit, the affidavits do no more than state that the deponent acknowledges the fact of the Court’s findings of contravention. The only reasonably available conclusion in those circumstances is that the respondents do not regret their conduct.
3.Second, a large part of the respondent’s evidence is devoted to criticism of the applicant and descriptions of the psychological distress allegedly suffered by the second and third respondents in the course of the right of entry disputation and the subsequent proceeding. This evidence contributes to the strong impression that the respondents do not in truth accept any culpability, but rather continue to regard themselves as victims of perceived misconduct by the applicant. It also suggests that the respondents do not in truth accept the Court’s findings, including findings that the applicants’ officials acted appropriately.
4.Third, the respondents assert that “the First Respondent has demonstrated genuine contrition by updating its relevant policies and procedures, and initiating further ongoing training for all its members” which is said to demonstrate “real, meaningful contrition put into action”: RS [1], [5]. This submission finds little support in the evidence. The affidavit of the first respondent’s managing director is to the effect that the first respondent’s managers will attend a right of entry training session on 2 November 2023, and that it updated its right of entry procedure on 5 September 2023: Macor [10], Ann A. The nature of the procedural update is not explained, but the exercise was apparently completed in two hours: Macor Ann A. The affidavit of the second respondent indicates that the first respondent has “reviewed and made improvements to its IMS and right of entry procedures to ensure the health and safety of its employees”; Cerullo [17]. That evidence does not describe the “improvements” but does make clear that the changes were motivated not by a concern to promote compliance, but to avoid further distress to the first respondent’s employees.
5.In short, the sum total of the remedial action taken by the first respondent is that it has arranged one right of entry training session. That step, while welcome, represents the literal minimum in remedial action.
6.Fourth, and similarly, the respondents submit that “the first respondent has removed the second respondent from any position of responsibility for addressing rights of access”: RS 1(d). The evidence is that the reason for this change is that the second respondent has suffered anxiety from his interactions with the applicant’s officials: Macor [34]; Cerullo [8]. That is to say, again, the evidence indicates that the change was not motivated by any concern to avoid further contraventions.
7.Fifth, the respondents have answered the applicant’s evidence and submissions to the effect that it is a large and well resourced company by producing a single page of a profit and loss statement: Macor Ann G. That evidence provides no useful insight into the financial position and resources of the first respondent. The Court would infer that more detailed financial evidence would not have assisted the first respondent.
8.The respondents’ material ultimately supports the following findings relevant to penalty:
(a)There is no evidence of any contrition or regret on the part of the first, second or third respondents. To the contrary, the respondents continue to regard themselves as victims of the applicant’s misconduct.
(b)Previous declarations of contravention and penalties had no impact on the first respondent’s attitude to compliance with right of entry laws.
(c)The Court’s findings of contraventions in this proceeding have similarly failed to motivate the first respondent to make any material change.
(d)Given the absence of evidence of contrition or regret—whether through explicit expressions of regret, or through evidence of meaningful action to avoid repetition—there is a real risk of further contraventions by the first respondent.
9.These matters, taken together with the respondents’ history of contraventions, their vigorous defence of these proceedings and the first respondent’s size and means, indicate that a substantial penalty is required to deter further contraventions by the respondents.
Oral submissions on behalf of the Applicant
The Applicant’s oral submissions highlighted two aspects of the principles set out in its written submissions. First, following the decision of the High Court in ABCC v Pattinson, the purpose of the exercise in setting penalties is focused only on the deterrence of future contraventions, whether by the contravenor themselves or others. The Court’s task is to fix an amount which operates as a financial disincentive so as to encourage compliance with the law by making non-compliance economically irrational. It was then submitted that the fact that a contravention was not in the worst category, or a particularly serious category, does not mean that a large penalty may not be warranted.[19]
[19] T 35
It was also submitted that when it comes to safety inspections, the need for deterrence is particularly pronounced in respect of contraventions of the kind in this matter. It was argued that the contraventions by each Respondent were serious, and the most serious in the case of the company due to it being a third time contravenor. The same analysis was said to operate in terms of assessing the objective seriousness by reference to the nature of the contravention, which is most pronounced in the case of the business as it continues to operate and make decisions dealing with Right of Entry and safety issues in a high-risk industry.[20]
[20] T 36
Submissions were then made regarding the Respondents’ evidence. It was contended that the evidence, particularly on penalty, is very unusual in the context of the First Respondent as a third time contravenor. According to the Applicant, this was for the following reasons.
First, there was no expression of regret. Secondly, it was submitted that the company had made no real effort in its evidence to assist the Court by disclosing its financial or commercial position. It was submitted that the short questioning of Mr Macor identified an example of this, being the investments of the company which the Applicant argued were indetectable by reference to the single page of the Profit and Loss statement provided. It was submitted that the Court would have benefited from more expansive evidence as to the company’s financial position. Thirdly, it was submitted that the evidence filed on penalty by the Second and Third Respondents was devoted in large part to criticisms of the Applicant and its two organisers in circumstances where the Court has found that the organisers did nothing wrong. Fourthly, the evidence of Mr Macor in relation to the two earlier declarations was on the basis that each was a commercial decision to settle was characterised by the Applicant’s Counsel as a dismissal of the seriousness of these contraventions. It was contended that this should weigh heavily on the Court’s assessment of the company’s attitude towards compliance, its contrition and its insight into its wrongdoing, which are all relevant to its propensity to reoffend.[21]
[21] T 37
It was then submitted that the above provides the basis for each of the following findings. Firstly, there is no basis in the evidence for any concern that any penalty within the available range would have a material impact on the First Respondent due to it being a large and well-resourced company. [22]
[22] T 37 – 38
Secondly, the First Respondent is a three-time contravenor of the Right of Entry Rules. The Applicant’s Counsel referred to the Statement of Agreed Facts in relation to the first contravention, wherein a named person and Mr Graham told the Union Officials that they could not enter other areas of the site as they had not provided 24 hours’ notice. On a different day, Mr Graham told two officials they could not enter other areas of the site because one or other of their permits were not originals. It was argued that these earlier contraventions were of a similar nature to those which occurred on 11th August 2021 described by Mr Poskus as “silly games”. It was submitted that these earlier contraventions in 2018 and 2019, and the imposition of penalties in March 2020 and February 2021 are recent, only months prior to the contraventions in the current matter.[23]
[23] T 38
Thirdly, the Applicant invited the Court to find that the First Respondent has taken the ‘bare minimum corrective action’ via the entry training sessions undertaken by Mr Cerullo and some others at Master Builders. The Applicant argued that the removal of Mr Cerullo from a position with the responsibility of managing Right of Entry Notices was to protect Mr Cerullo’s mental health rather than to put in place someone more attentive to the law.[24]
[24] T 38
Fourthly, the Applicant’s Counsel invited the Court to find that the facts of the earlier declarations and penalties have had no impact at all on the Respondent’s attitude to compliance.[25]
[25] T 38
Fifthly, a finding that none of the Respondents have any contrition or regret and that they continue to regard themselves as victims of the Applicant’s misconduct was advocated for.[26]
[26] T 38
Finally, the Applicant sought a finding that this absence of contrition, regret, insight and almost complete absence of remedial action in this context suggests nothing but a significant penalty is likely to alter the attitude of any of the Respondents, particularly the First Respondent. It was submitted that a significant penalty would be required to signal to other potential contravenors that the price of non-contravention is such that a contravention is economically irrational.[27]
[27] T 39
It was accepted by the Applicant that the Second and Third Respondents had not previously been found to have contravened the Act, although it was noted that Mr Graham was involved in a previous contravention, but no findings were made in relation to him personally. Mr Graham’s lack of involvement currently with managing Right of Entry was also confirmed to be a matter relevant to the need to deter him from future contraventions. Regardless, it was submitted that there remains a powerful need to signal to the First Respondent and community at large that their actions in this matter were unacceptable. It was submitted that the temptation for companies to obfuscate, delay or waste time in the hope that the Union organisers will just ‘go away’, or if proceedings are commenced, that companies can just send their employees off to Right of Entry training courses a few days prior to the Penalty Hearing and argue for a limited penalty, has a real and practical impact on the efficacy of the statutory scheme authorising Union organisers to enter premises to investigate suspected contraventions.[28]
[28] T 39
Finally, it was confirmed that the offer to settle set out in the letter from Ms Reid to the Respondents’ lawyers impacts upon the penalty, as well as costs. It was argued that this was another manifestation of an attitude manifested (a) in the fact that the proceedings were defended when it should never have run and it should have been clear that the defence was hopeless, and (b) in the fact that the Applicant and the public were put to the expense of going through the Hearing. It was submitted that these were both demonstrations of a lack of insight on the part of the Respondents as to the seriousness of the conduct. It was acknowledged that these events may have simply demonstrated poor judgement on the part of the Respondents, however, the ignorance of the law and failure to understand the illegality of the conduct is relevant due to the organising having recently had contraventions of a similar nature, and hence a lack of judgement is no defence.[29]
[29][29] T 40
In relation to costs, it was submitted that at paragraph 7 of the liability judgement it was confirmed that, in the Court’s view, it should not have run. Consequently, it was submitted that this was sufficient to overcome the hurdle of section 570, particularly in circumstances where an offer was put, and it ought to have been clear that it was an eminently reasonable offer, to the extent that the refusal to accept it was an unreasonable act or omission.[30]
[30] T 41 – 42
Oral submissions on behalf of the Respondent
The issue of costs was the first matter addressed.[31] Six reasons were provided as to why the Union’s Application for Costs should be rejected, noting that the only reason that the Applicant pointed to in support of their Application was that an offer was made by them on 29th July 2022 which was rejected. Summarised, those reasons were as follows.[32]
[31] As with the Applicant’s Counsel at the penalty hearing, Counsel for the Respondents was different to the Counsel for them at the liability hearing.
[32] T 42
Firstly, the case that the Applicant was going to run in July 2022 was different from the case it actually ran at trial. In July 2022, the Application was alleging s.501 breaches and completely different s.502 breaches against Mr Graham, as well as a section 503 breach. Following the offer being made, the Applicant removed its s.501 allegations, and further, on the morning of the trial, the Applicant made an Application to amend the Statement of Claim to again change the allegations against Mr Graham. It was submitted that it was hence unreasonable for the Respondents to have accepted an offer based on a case including s.501 allegations when the Applicant subsequently recognised that such allegations could not be established.[33]
[33] T 43
Secondly, the Applicant was not entirely successful at trial. The Court’s findings were that Mr Cerullo was guilty of the three contraventions alleged by the Applicant, but that Mr Graham was only guilty of two of the three alleged. Accordingly, it was worth the Respondents pressing their defence.[34]
[34] T 43 – 44
Thirdly, it was a live issue about s.502 as to whether three minutes or thereabouts would amount to an appreciable hindrance according to Darlaston v Parker.[35] None of the authorities that the Applicant relied upon had facts exacting to a period of similar duration. It was submitted that it could not, therefore, be said that it was unreasonable for the Respondents to test the proposition.[36]
[35] (2010) 189 FCR 1
[36] T 44
Fourthly, the Respondents’ evidence ‘collapsed’ as Mr Graham was unable to go through giving evidence, and there was not adequate medical evidence to establish that he was not available. It was contended that in July 2022, there was no reason for the company to think that Mr Graham would not be able to go through with his evidence.[37]
[37] T 44
Fifthly, the Respondents rejected the Applicant’s position that they should have accepted the offer due to the existence of CCTV footage as the dispute was whether as a matter of law the three-minute period amounted to a delay. The CCTV footage could not answer this question. It was further submitted that in this part of the footage, Mr Poskus is speaking over Mr Graham. Perhaps if such interruptions were not had, it was contended that the phone call to WorkSafe to gain some clarification may have only taken 30 seconds. Further, there was no CCTV footage to show the section 503 contraventions alleged against Mr Cerullo.[38]
[38] T 45
Finally, the Respondents made no submissions against the Applicant’s submissions that the penalties should be awarded to it. It was argued that to the extent that the Applicant is out of pocket running proceedings, they will be adequately recompensed by the award of pecuniary penalties.[39]
[39] T 45
On the point of principle, the Respondents conceded they were in agreement with the Applicant. Hence paragraphs 8 to 13 of the Applicant’s submissions were accepted by the Respondents as an accurate summary of the principles to be applied, subject to two qualifications to paragraph 12. The first was that, based on the decisions in Richard Crookes and Pattinson, it is not an invariable requirement that when senior management is involved, a more serious penalty is required. Secondly, the statement that ‘the larger the contravenor, the greater its financial resources, the greater the penalty required to effect deterrence’ is inaccurate. It was submitted that this was not the correct interpretation of the principle in Pattinson about contravening being an economically irrational choice. The authorities relied upon by the Applicant to establish this point referred to matters in which companies gained significantly from the contraventions, which is distinguished from this matter.[40]
[40] T 45 – 47
Further, it was submitted that the ignorance on the part of the Second and Third Respondents is not excusable, but it demonstrates that it was not deliberate, which does not warrant a higher penalty as submitted by the Applicant.[41]
[41] T 49
Next, submissions were made on the question of antecedent breaches in matters CAG90/2018 and CAG25/2020. These were addressed in Ms Reid’s Affidavit on behalf of the Applicant, however, in this Affidavit there was an erroneous reference to Mr Cerullo being a named Respondent in the 2018 proceeding, nor was he involved in the 2020 proceedings or contraventions that amounted to them. Further, it was submitted that the Court dismissed CAG90/2018 against all of the individual Respondents in October 2019, hence the fines ordered in March 2020 did not apply to them. Additionally, it was argued that no inference could be made that Mr Graham was involved in the relevant contravention of section 502 about which the declaration was made in the CAG25/2020 matter. Thus, there was no contravention against the individual Respondents and no antecedent history which could be taken against them, and the Applicant had no authority for the proposition that it would be appropriate for the Court to take this into account against them.[42]
[42] T 50 – 51
In relation to the penalty to be imposed against Mr Cerullo, the Respondent had five brief points. Firstly, his actions were not deliberate nor contemptuous, but a misunderstanding of the changes to the law in the ACT. Secondly, he has no previous contraventions and the Applicant’s submissions around the relevance of previous company contraventions should not be accepted. Thirdly, specific deterrence for Mr Cerullo is lowered as he is no longer in a Union-facing role. His evidence as to his mental health should not be taken as blaming the Applicant. Fourthly, the submission that there has been zero contrition by Mr Cerullo should not be accepted as he has cooperated in recognising his mistake, accepted the Court’s findings and engaged in additional training. Fifthly, Mr Cerullo’s three contraventions were part of a single course of conduct, which should have bearing on how the penalty should be determined. It was submitted that these breaches were at the low end of the scale, no harm resulted to the Union or anyone else, no benefit was accrued to the company or to Mr Cerullo, and he is no longer in a Union-facing role. It was submitted that a single fine in the region of $3,300 would be appropriate, or if treated as separate contraventions, at 10% of the maximum for each contravention, the fine should total $3,996.[43]
[43] T 51 – 54
In relation to Mr Graham, only two points were raised. The first was that the Applicant’s submission that he engaged in a deliberate falsehood is an inaccurate reflection of the evidence of the findings. His representation was incorrect to the extent that it implied he was able to make the Union members wait, however, there was no deliberate and contumacious or conscious recalcitrant and inexcusable breach by Mr Graham. Secondly, Mr Graham is at no risk of ‘reoffending’ due to him having left the company. It was submitted that the evidence about both Messrs Graham and Cerullo’s psychological conditions was not to attribute blame to the Union, but to show that they will now self-regulate due to a condition that they suffer from. It was submitted that a penalty of $1500 for each of Mr Graham’s contraventions, which is 11.3% of the maximum, to give a total of $3000 would be an appropriate reflection of the degree of seriousness.[44]
[44] T 55
With respect to the company, six points were raised. Firstly, as said earlier, the Respondent submitted that the size of the company did not necessarily indicate the need for a larger fine. Mr Macor gave evidence that in the most recent financial year, the profit of the company was around $200,000. Hence, the Applicant seeking a penalty between $156,510 and $219,780 would effectively take out the entire profit of the company before income tax for that year. It was submitted that this would be oppressive and punitive, and not necessary for the company’s deterrence. It was submitted that the Applicant could have used the processes of the Court to obtain data on the company’s financial capacity, especially when making a submission that the company’s means supports a fine of $219,000. Secondly, all prior contraventions were admitted by the First Respondent, with a small fine being imposed on the company for the first and no fine for the second. It was submitted that it must be inferred that the Applicant and the Court accepted that no fine was necessary to deter that contravention. Thirdly, the objective seriousness of the contravention cannot be higher for the company than it was for the individual. It was submitted that it remains at the low end of the spectrum. Fourthly, it is incorrect that there was an absence of remedial action by the company. Evidence was given by Mr Macor about the training organised in consequence, and that he separately attended training in August 2022. Fifthly, the company has received no benefit from this contravention, and on the contrary, it is likely that it will suffer detriment separate from the Court’s penalty and declaration via demerit points.[45]
[45] T 55 – 57
Finally, Counsel referred to the recent Kiama Aged Care case, in which a penalty was awarded by the Court of $170,000 for five contraventions by the union, found to be a ‘notorious repeat offender,’ with 118 contraventions of s.500 and seven contraventions of s.503. The decision was appealed and, subsequent to and in the light of the High Court decision in Pattinson (discussed below), the penalty was increased to $250,000, noting that between 2018 and the subsequent re-penalty remittal, a further 20 cases of contravention by the union had occurred.[46] It was submitted that the level of objective seriousness in that case was far worse, yet the Applicant in this matter is asking for a range equivalent to an entity that has a prior record of approximately 118 contraventions on the same section. It was further submitted that accordingly, the penalty range sought by the Applicant is wholly oppressive and not required for deterrence, nor could it be a genuine attempt to engage with the principles raised by the High Court in Pattinson. It was submitted that a penalty range imposed on the company of between $20,000 and $35,000 would be more than adequate to deter the First Respondent.[47]
[46] See generally, Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union (The Kiama Aged Care Centre Appeal) (2023) 297 FCR 338.
[47] T 57 – 59
Oral submissions on behalf of the Applicant in reply
In reply, it was submitted that the conduct of the Respondent company throughout this matter is manifest in its conduct of the trial, the fact that it was defended at all, its rejection of an eminently sensible offer, the evidence of the two individual Respondents which criticise the Union and its organisers who were found to do nothing wrong, and in the submissions that were put by the Respondents today that the penalties be in the range of between 10 and 11 per cent. It was submitted that a penalty of $13,000 on the last occasion was utterly ineffective to produce any change. It is the obligation of the heads of operation and safety to know the law when the law changes, which the Second and Third Respondents said they knew. On the spectrum of contrition, it was submitted that none of the Respondents said anything more than that they accepted the Court’s findings, which could not be given any weight. It was submitted that the evidence should not weigh at all, as it is not a genuine expression of the attitudes of Messrs Cerullo and Graham.[48]
[48] T 60 – 61
With respect to costs, it was submitted that the Court had found that the Respondents’ defence was unsupported by the basic tenets of construction and application of the facts as set out.[49]
[49] T 61
Supplementary written submissions on behalf of the Applicant
During the course of the Penalty Hearing, the Respondent was directed to provide its legal representatives with a copy of its financial records over the last two financial years, including annual reports, and immediately upon receipt, such records were to be provided to the Applicant and the Court. The Applicant was subsequently ordered to file a brief, single page, outline of submissions regarding the two matters canvassed with Mr Macor in cross-examination, being (1) company financial information, and (2) demerit points incurred by the company. Those submissions were as follows (emphasis in original; footnotes omitted):
1.The CFMEU led evidence which indicated that the respondent is a substantial business. That evidence created, at least, an evidentiary onus on the respondent. The respondent did not contradict the evidence but instead proffered general statements that it had “suffered a significant loss of profit” in 2021/2022, because of COVID, and produced one page of a P&L statement. Macor frankly admitted that limited evidence was provided so as to prevent the CFMEU from understanding the company’s true position. The evidence was admitted over objection, as was further evidence in chief indicating that the company’s “profit” in 2022/23 was similar to the previous year. The evidence provided the putative foundation for a submission that the penalties sought were oppressive (in a Pattinson sense) because they would exceed the company’s “profit”.
2.The suggestion that the material produced by the respondent was sufficient basis for any assessment of its financial position was prima facie tenuous. The respondent is a private business operating in the construction industry. A snapshot of its position at a moment in time says little about its underlying commercial and financial health; and in any case, the “profit” shown on a P&L statement provides limited insight into its position, even at a moment in time. That “profit” figure might vary by reference to any number of factors, including timing of receipts, decisions in relation to reinvestment, dividends, director’s fees, shareholder wages, inter-company and shareholder loans, depreciation of intangible assets and many other factors.
3.In any case, the financial documents now produced (even absent balance sheets) put the lie to the company’s contentions. The documents (excluding draft 2023 reports) show the following. In the FY20 to FY22 the company’s revenue was $30m, $59m, and $33m ($26m in 2023), cash at bank $7.8m, $11m and $9.8m, retained profits $17.6m, $20.4m and $18.4 and total equity $17.6m, $20.4m and $19.18m. Its performance appears to be stable, with the reduction in profit highlighted by the respondent seemingly a reversion to the mean after an extraordinary year in FY21 (in which revenue doubled from the year before). Macor’s evidence that the respondent holds large property investments, and currently holds contracts worth tens of millions, would also be recalled. In the two financial years ending 2021 and 2022, described by Macor as “extremely tough”, the respondent paid out $3.6m in dividends ($2.4m and $1.4m) and $400,000 in director fees.
4.In short, the respondent is substantial, successful and profitable with large reserves and apparently stable performance (within the context of typical fluctuations in a construction business). A penalty of$150,000 would represent 1.5% of its cash at bank and 3% of the dividends paid to shareholders in the last three years. A penalty at the top of the CFMEU’s proposed range would not materially impact its financial position. Any penalty below the range proposed by the CFMEU will be financially imperceptible and deliver no sting at all: the penalty proposed by the company, for example, is equal to roughly one-third its FY2022 phone bill.
Outline of Principle
In addition to the earlier decisions in the Agreed Penalties Case in 2015, and the Non-indemnification Case in 2018, the principal point of reference for the determination of penalty is the High Court’s recent, detailed decision in Australian Building and Construction Commissioner v Pattinson (“Pattinson”).[50] This was highlighted and relevant points summarised (at pars.8 – 14) by the Applicant in its primary submissions, filed 11th October 2023 (albeit that the citation for Pattinson is incorrect – see footnote 4, which has the CLR reference as “272”, when it is volume 274). As noted above, that summary was properly and helpfully accepted by Counsel for the Respondents at the penalty hearing. I note the following from Pattinson.
[50] The Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at [55] and [57]; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at [116]; Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450.
At [9] and [10], the plurality said (internal citations omitted; emphasis added):
[9] ... Under the civil penalty regime provided by the Act, the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the Act by the deterrence of further contraventions of the Act. In that context, the penalties fixed by the primary judge were appropriate because they were no more than might be considered to be reasonably necessary to deter further contraventions of a like kind by Mr Pattinson, the CFMMEU or others. They represented a reasonable assessment of what was necessary to make the continuation of the CFMMEU's non‑compliance with the law, amply demonstrated by the history of its contraventions, too expensive to maintain.
[10] The Full Court's critical error was that it was distracted by a concern, drawn from the criminal law, that a penalty must be proportionate to the seriousness of the conduct that constituted the contravention. The power conferred by s.546 of the Act is not subject to constraints drawn from the criminal law and there is no place for a "notion of proportionality", in the sense in which the Full Court used that term, in a civil penalty regime. Further, and relatedly, their Honours were misled by the view that the Act required that the maximum penalty be reserved for only the most serious examples of the offending comprehended by s.349(1), and that this principle could prevent the court from imposing the maximum penalty even though a penalty in that amount might reasonably be considered to be necessary to deter future contraventions of a like kind. Nothing in the text, contextor purpose of s.546 requires that the maximum penalty be reserved for the most serious examples of misconduct within s.349(1). What is required is that there be "some reasonable relationship between the theoretical maximum and the final penalty imposed". That relationship is established where the maximum penalty does not exceed what is reasonably necessary to achieve the purpose of s.546 the deterrence of future contraventions of a like kind by the contravenor and by others.
Then at [15] – [16], the plurality said (internal citations omitted):
[15] Most importantly, it has long been recognised that, unlike criminal sentences, civil penalties are imposed primarily, if not solely, for the purpose of deterrence. The plurality in the Agreed Penalties Case said:
"[W]hereas criminal penalties import notions of retribution[19] 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 contravenor and by others who might be tempted to contravene the Act.'"
[16] In a similar vein, in Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner, the Full Court of the Federal Court cited the decision of French J in Trade Practices Commission v CSR Ltd and the reasons of the plurality in the Agreed Penalties Case as establishing that deterrence is the "principal and indeed only object" of the imposition of a civil penalty: "[r]etribution, denunciation and rehabilitation have no part to play".
[17] In explaining the deterrent object of civil penalty regimes such as that found in the Act, the majority of this Court in Australian Competition and Consumer Commission v TPG Internet Pty Ltd approved the statement by the Full Court of the Federal Court in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission that a civil penalty:
"must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business".
At [18], the High Court set out a range of considerations taken from an earlier decision of French J when his Honour was on the Federal Court, and commented on these factors at [19] (again, internal citations omitted):[51]
[51] The decision of French J is Trade Practices Commission v CSR Ltd [1991] ATPR 41-076.
In CSR, French J listed several factors which informed the assessment under the Trade Practices Act (Cth) of a penalty of appropriate deterrent value:
1. The nature and extent of the contravening conduct.
2. The amount of loss or damage caused.
3. The circumstances in which the conduct took place.
4. The size of the contravening company.
5. The degree of power it has, as evidenced by its market share and ease of entry into the market.
6. The deliberateness of the contravention and the period over which it extended.
7. Whether the contravention arose out of the conduct of senior management or at a lower level.
8. Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention.
9. Whether the company has shown a disposition to co‑operate with the authorities responsible for the enforcement of the Act in relation to the contravention."
[19] It may readily be seen that this list of factors includes matters pertaining both to the character of the contravening conduct (such as factors 1 to 3) and to the character of the contravenor (such as factors 4, 5, 8 and 9). It is important, however, not to regard the list of possible relevant considerations as a "rigid catalogue of matters for attention" as if it were a legal checklist. The court's task remains to determine what is an "appropriate" penalty in the circumstances of the particular case.
Not dissimilar considerations were highlighted by Tracey J in a case that was once regularly cited, Kelly v Fitzpatrick, a decision which was approved by the Full Court in Australian Ophthalmic Supplies Limited v McAlary-Smith, the latter being regularly cited by the High Court in multiple decisions, including in Pattinson, at [19] and [40].[52] In Kelly v Fitzpatrick, Tracey J said, at [14], which was repeated and approved by Buchanan J in McAlary-Smith at [89], confirming that such a list was neither a check-list or exhaustive:
[52] Kelly v Fitzpatrick (2007) 166 IR 14; Australian Ophthalmic Supplies Limited v McAlary-Smith (2008) 165 FCR 560.
a) The nature and extent of the conduct which led to the breaches.
b) The circumstances in which that conduct took place.
c) The nature and extent of any loss or damage sustained as a result of the breaches.
d) Whether there had been similar previous conduct by the respondent.
e) Whether the breaches were properly distinct or arose out of the one course of conduct.
f) The size of the business enterprise involved.
g) Whether or not the breaches were deliberate.
h) Whether senior management was involved in the breaches.
i) Whether the party committing the breach had exhibited contrition.
j) Whether the party committing the breach had taken corrective action.
k) Whether the party committing the breach had cooperated with the enforcement authorities.
l) The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and
m) The need for specific and general deterrence.
Finally, for current purposes, the High Court said in Pattinson, at [38], then at [40] – [41] (internal citations omitted):
[38] The "notion of proportionality" derived by the Full Court from Veen [No 2] is so closely connected to the central role of retribution in criminal sentencing that it cannot be translated coherently into the civil penalty context of the Act.
…
[40] … The discretion conferred by s.546 is, like any discretionary power conferred by statute on a court, to be exercised judicially, that is, fairly and reasonably having regard to the subject matter, scope and purpose of the legislation. In a civil penalty context, Burchett and Kiefel JJ in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission said:
"[I]nsistence upon the deterrent quality of a penalty should be balanced by insistence that it 'not be so high as to be oppressive'. Plainly, if deterrence is the object, the penalty should not be greater than is necessary to achieve this object; severity beyond that would be oppression."
[41] It may therefore be accepted that s.546 requires the court to ensure that the penalty it imposes is "proportionate", where that term is understood to refer to a penalty that strikes a reasonable balance between deterrence and oppressive severity…
The plurality concluded their judgment by repeating, at [46], the central issue:
… It is important to recall that an "appropriate" penalty is one that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case…
Because of the number of times I have mentioned it in this matter (as well as in others), it is as well to remind parties and practitioners of the High Court’s comments, if not discreet encouragement regarding resolution of matters of penalty by consent, in the Agreed Penalties Case, where the High Court said, at [57] and [59]:
… in civil proceedings there is generally very considerable scope for the parties to agree on the facts and upon consequences. There is also very considerable scope for them to agree upon the appropriate remedy and for the court to be persuaded that it is an appropriate remedy. Accordingly, settlements of civil proceedings are commonplace and orders by consent for the payment of damages and other relief are unremarkable. So are court-approved compromises of proceedings on behalf of infants and persons otherwise lacking capacity, court-approved custody and property settlements, court-approved compromises in group proceedings and court-approved schemes of arrangement. More generally, it is entirely consistent with the nature of civil proceedings for a court to make orders by consent and to approve a compromise of proceedings on terms proposed by the parties, provided the court is persuaded that what is proposed is appropriate.
…
Once it is understood that civil penalties are not retributive, but like most other civil remedies essentially deterrent or compensatory and therefore protective, there is nothing odd or exceptionable about a court approving an agreed settlement of a civil proceeding which involves the public interest; provided of course that the court is persuaded that the settlement is appropriate.
Consideration & disposition
At the outset, I remind myself of two things. First, as the High Court stated repeatedly in Pattinson (noted above), it is the Court’s task to ensure that
… It is important to recall that an "appropriate" penalty is one that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case…
Secondly, without diminishing (among other things), for the sake of public and worker safety, the centrality and importance of Union officials (and the like) having unfettered access to building sites where there is a reasonably held suspicion and relevant Notices and the like are in order, as indicated in the liability judgment, the contraventions pleaded and accepted by the Court here were (and are) not at the severe end of the spectrum. Put another way, the contraventions are relatively modest. As such, subject to what follows in the light of principle set out above, the penalties should reflect the balance highlighted by the High Court between oppressive severity and the need for deterrence in the circumstances of this particular matter.
I also remind myself, in general terms having regard to the modest factual compass of the matters here, of the High Court’s endorsement in Pattinson at [18], of the [non-exhaustive] considerations outlined by French J in CSR. The first three of those matters are particularly relevant here for the purposes of assessing appropriate penalty for the individual contravenors, Mr Graham and Mr Cerullo, namely, the nature and extent of the contravening conduct, the amount of loss or damage involved (here, that issue was relatively moot), and the circumstances in which the conduct took place.
Three contraventions were found to have been established against Mr Cerullo, and two against Mr Graham. They were, at the time, senior and long-experienced personnel in the building industry. They claimed, particularly in the case of Mr Graham, to know well the rights and responsibilities of those seeking to exercise rights of entry to building sites to inspect suspected health and safety issues. The understanding by both men was found by the Court to be seriously awry. The factual matrix as found in the liability judgment was relatively straight-forward. It should not have involved the delay and obfuscation that ensued.
The maximum penalties were set out in the Applicant’s submissions, filed 11th October 2023, at par.37. The Applicant also set out its proposed penalty range for the individual and corporate contravenors. The Respondent provided no such table, which I take to be acceptance at least of the maximum penalties for the contraventions established under the sections referred to.
The Applicant proposes that the penalty range for the contraventions of ss.502(1) and 503(1) of the FW Act by Mr Cerullo are, in the first instance, $5328-$8,658, and in relation to the second and third contraventions, the penalty range for each is $4,662-$7,326. I should say that I have some reservation regarding the degree of contrition of both men, even accepting that they say that they acknowledge the Court’s findings. For the reasons given earlier, I do not fully accept that they reasonably or properly comprehend the Court’s findings, and the reasons for them, in the liability judgment. I accept that Mr Graham is now, in large measure, rather out of the building industry, at least in terms of his regular inter-face with Union officials; so too, for other reasons, is Mr Cerullo. These matters do not, however, alleviate the Court’s concerns about their understanding of rights and obligations on a building site.
Having regard to the findings in the liability judgment, and to what the High Court has stipulated in Pattinson (which, somewhat concerningly, is barely or only fleetingly mentioned in the Respondent’s written submissions, at par.23, filed 26th October 2023), in my view, the appropriate penalties for Mr Cerullo are as follows (accepting too that they all arose out of the same course of conduct):
(a) Breach of s.502(1) FW Act: $4,600.00
(b) Breach of s.503(1) FW Act (2 breaches): total penalty of $6,200.00
In relation to Mr Graham, the penalty range for the breach of s.503(1) was stated by the Applicant to be $2,664-$5,994; and in relation to the breach of s.502(1) it was said to be $5,328-$8,658.
On the same bases set out in [74] above of the Court having regard to the findings in the liability judgment, and the High Court’s instruction in Pattinson, the appropriate penalties for Mr Graham are as follows (accepting that these, too, arose out of the same course of conduct):
(a) Breach of s.502(1) FW Act: $3,500.00
(b) Breach of s.503(1) FW Act: $2,500.00
Two matters remain: (a) the penalty for the Third Respondent Company; and (b) the issue of costs.
Again, the considerations in relation to penalty concerning the Third Respondent company were set out by the High Court in Pattinson, and notably the matters their Honours recorded from CSR in the judgment of French J. For ease of reference, I recall the most relevant of those considerations, thus:
4. The size of the contravening company.
5. The degree of power it has, as evidenced by its market share and ease of entry into the market.
6. The deliberateness of the contravention and the period over which it extended.
7. Whether the contravention arose out of the conduct of senior management or at a lower level.
8. Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention.
9. Whether the company has shown a disposition to co‑operate with the authorities responsible for the enforcement of the Act in relation to the contravention."
[19] It may readily be seen that this list of factors includes matters pertaining both to the character of the contravening conduct (such as factors 1 to 3) and to the character of the contravenor (such as factors 4, 5, 8 and 9). It is important, however, not to regard the list of possible relevant considerations as a "rigid catalogue of matters for attention" as if it were a legal checklist. The court's task remains to determine what is an "appropriate" penalty in the circumstances of the particular case.
Here, it is accepted that there is a modest history of contravening by the Company, having accepted two earlier admissions of contraventions in 2020 and 2021. It is also not disputed that the Company incurred certain penalty points, which have since been erased by the passage of time, for those earlier contraventions. The Company is understandably concerned about a further contravention potentially having some commercial impact upon its business.
It cannot be disputed that the contraventions here, pursuant to the operation of s.793 FW Act, arose out of conduct, not by senior management, but at a lower level in the Company hierarchy. While Mr Macor’s evidence was relatively straight-forward, I accept the Applicant’s comments about it and the Company’s response to the contraventions of Mr Graham and Mr Cerullo. By this I mean that having regard to a certain inability (or almost refusal in Mr Graham’s case) to comprehend the Court’s determinations regarding their conduct on site, and that these were quite senior operational personnel of the Company on site, I share the view of the Applicant that the Response of the Company, for example, in its re-education of employees, was hardly (or barely) sufficient.
The “size” of the Company takes on a slightly different hue in the light of the post-hearing information provided. Put another way, the further information provided indicates that, to speak somewhat generally, the Company is of a relatively larger financial size than first indicated.
As always, the issue, however, having regard to all of the circumstances, is for the Court to determine the appropriate penalty in accordance with the High Court’s instruction in Pattinson. The maximum penalties for the Company are not insignificant, being $66,000. The range proposed by the Applicant is also not insignificant, namely (in general terms) between $29,970 up to $53,280. Just as the Applicant accepted that the contraventions involving Mr Graham and Mr Cerullo arose out of the same course of conduct, the same must also be the case for the Company.
The Respondent’s submissions (at par.25) propose a total penalty in the range of $20,000 – $35,000. In my view, such a range is quite low and does not relevantly meet the High Court’s instruction regarding deterrence and compliance. Having regard to there being 5 contraventions involved, a total penalty for all of those contraventions should be fixed in the sum of $45,000. That is to be paid to the Applicant within 60 days.
I turn then to the issue of costs. At the outset, I should remark on the herculean efforts of Counsel for the Respondents at the penalty hearing, especially in relation to costs. Given the very strong findings in the liability judgment against the Respondents, and the dismal evidence and conduct of the matter at trial (for which, I note again, she bore no responsibility), Counsel faced a daunting task. Despite her valiant efforts, there must be an award for costs in the Applicant’s favour from the date of the offer of settlement in July 2022. Had that offer been accepted, the liability trial would have been unnecessary, and the penalty hearing also would have been unnecessary, as well as everything in between – and since. Even to press on with a penalty hearing in the face of the lamentable findings of the Court in the liability judgment, in my view, showed alarming lack of judgment.
Further still, the costs sought by the Applicant since the date of the offer of settlement (all details of which are set out in Ms Read’s Affidavit, filed 11th October 2023), are, relatively and comparatively speaking, really very modest.
And added to all this, there is Full Court authority (a distinguished Bench of five Justices) in Melbourne Stadiums Ltd v Sautner, which stated, at [166], that:[53]
It is well established that a failure to accept a reasonable offer of compromise may constitute an unreasonable act for the purposes of s.570(2) and its predecessors …
[53] Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221.
Having regard to all of the circumstances here, notably the Court’s findings in the liability judgment, and the clear and reasonable offer of settlement by the Applicant a significant time ago, the refusal to resolve the matter on the terms noted then (accepting that there was some adjustment of pleadings along the way and after the offer was put), the evidence was, in my view, so clear that it was astonishing that the Respondents continued to run the matter at all, including the unfortunate way that it was conducted at trial. All such matters and concerns are set out in detail in the liability judgment. Accordingly, the terms of s.570(2)(b) of the FW Act are readily met.
In all of the circumstances, the costs sought by the Applicant, in the sum of $15,060.00, should be paid by the Respondents, also within 60 days.
In addition to these reasons, I also accept and adopt the submissions of the Applicant, both in relation to penalties and costs.
One final comment, albeit that it is otiose and repetitious because it has been stated a number of times, including in the liability judgment. In my view, this case (a) should never have run, and accordingly, (b) should have resolved at the earliest point in time. A proper consideration and assessment of (i) the video evidence, and (ii) the Respondents’ witnesses, especially in the light of the video evidence, should have immediately led to the settlement of the matter by the Respondents. For reasons given in the liability judgment, such basic assessment and preparation of the Respondents’ witnesses and evidence more generally clearly never took place, or never took place appropriately or with sufficient diligence and attention. In the result, vast amounts of resources of all parties were expended, in my view, needlessly.
I certify that the preceding ninety (90) numbered paragraphs are a true copy of the Reasons for Judgment of Judge W J Neville. Associate:
Dated: 28 February 2024
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