Construction, Forestry, Maritime, Mining and Energy Union v BGC POS Pty Ltd and Anor (No.2)
[2020] FCCA 833
•15 April 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CONSTRUCTION, FORESTRY, MARITIME, MINING & ENERGY UNION v BGC POS PTY LTD & ANOR (No.2) | [2020] FCCA 833 |
| Catchwords: INDUSTRIAL LAW – Contravention of s.502 of the Fair Work Act 2009 (Cth) – appropriate penalty – factors for consideration – penalty in lower range imposed. |
| Legislation: Crimes Act 1914 (Cth), s.4AA Fair Work Act 2009 (Cth), pt.3-4, ss.12, 480, 490, 492, 500, 501, 502, 539, 546, 793 |
| Cases cited: Australian Building & Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977 CFMEU v BGC POS Pty Ltd and Anor [2018] FCCA 1270 Construction, Forestry, Maritime, Mining and Energy Union v Milin Builders Pty Ltd [2019] FCA 1070 |
| Applicant: | CONSTRUCTION, FORESTRY, MARITIME, MINING AND ENERGY UNION |
| First Respondent: | BGC POS PTY LTD |
| Second Respondent: | BRIAN CARLTON |
| File Number: | PEG 15 of 2016 |
| Judgment of: | Judge Kendall |
| Hearing date: | 26 March 2020 |
| Date of Last Submission: | 26 March 2020 |
| Delivered at: | Perth |
| Delivered on: | 15 April 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr P Boncardo |
| Solicitors for the Applicant: | Construction, Forestry, Maritime, Mining and Energy Union |
| Counsel for the Respondents: | Ms H Millar |
| Solicitors for the Respondents: | Kingston Reid |
ORDERS
The first respondent pay to the applicant pecuniary penalties fixed in the sum of $10,800 within 28 days of the date of these orders.
The second respondent pay to the applicant pecuniary penalties fixed in the sum of $2,160 within 28 days of the date of these orders.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 15 of 2016
| CONSTRUCTION, FORESTRY, MARITIME, MINING & ENERGY UNION |
Applicant
And
| BGC POS PTY LTD |
First Respondent
| BRIAN CARLTON |
Second Respondent
REASONS FOR JUDGMENT
Introduction
On 23 May 2018, this Court delivered judgment in relation to an application filed by the applicant (the Construction, Forestry, Maritime, Mining And Energy Union (the “CFMMEU”)) claiming contraventions of the Fair Work Act 2009 (Cth) (the “FW Act”) by the respondents (BGS POS Pty Ltd and Brian Carlton): CFMEU v BGC POS Pty Ltd and Anor [2018] FCCA 1270 (the “Primary Judgment”).
In the Primary Judgment, this Court found for the applicant and made the following declarations:
1. The second respondent, Mr Brian Carlton, contravened s.502 of the Fair Work Act 2009 (Cth) (the “Act”) on 22 October 2015 by intentionally hindering or obstructing Mr Douglas Heath and Mr Peter Joshua in exercising rights under Part 3-4 of the Act.
2. The first respondent, BGC POS Pty Ltd, contravened s.502 of the Act on 22 October 2015 by the conduct of its employee, Mr Brian Carlton, identified in declaration 1.
The respondents appealed the Primary Judgment to the Federal Court. On 8 February 2019, Justice Colvin dismissed that appeal: BGC POS Pty Ltd v Construction, Forestry, Maritime, Mining & Energy Union [2019] FCA 74 (the “Appeal Judgment”).
Following the delivery of the Appeal Judgment, orders were made programming the matter for a penalty hearing. Both parties filed affidavit evidence and an outline of submissions. The parties also made oral submissions to the Court matter on 26 March 2020. In light of health advice at the time of that hearing, it was determined that the hearing should be conducted by telephone. The Court thanks the parties for their cooperation in this regard.
Background
The Primary Judgment (at [5]-[14]) sets out the factual background relevant to this matter. The Appeal Judgment (at [1]) succinctly summarises the background facts as follows:
On the morning of 22 October 2015, Mr Douglas Heath and Mr Peter Joshua arrived at the site office for the construction of a building in Perth. They were officials of the Construction, Forestry, Maritime, Mining and Energy Union (Union). Some of the subcontractors on the site employed workers who were members of the Union or were workers who were eligible to become members. Two days beforehand, Mr Heath and Mr Joshua had given notice of their intention to enter the site for the purposes of holding discussions with those workers. At the site they were met by Mr Carlton, an employee of the construction company BGC POS Pty Ltd. Mr Carlton took them to a meeting room which he said had been allocated for their discussions with workers. Mr Heath and Mr Joshua inspected the room and determined it was unsuitable. They informed Mr Carlton of their position. They said that they had a right to hold discussions in the crib room. They were taken back to the foyer by Mr Carlton and required to wait for 20 minutes before being allowed to use the crib room to hold discussions. During that period Mr Carlton sought advice on what to do from other BGC personnel.
In the Primary Judgment, the Court found that Mr Carlton’s actions (which, by virtue of s.793 of the FW Act, were taken to be the actions of BGC) amounted to a contravention of s.502 of the FW Act. To the extent that specific findings are relevant to this judgment on penalty, the Court will reference them in the consideration that follows.
Relevantly, the Primary Judgment (at [130]-[132]) summarises the Court’s findings as follows:
130. The Permit Holders and Mr Carlton could not agree in relation to the use of the Meeting Room, even though the Permit Holders legitimately attempted to do so. They ultimately could not agree because Mr Carlton refused to do so. Because the parties could not agree, the Permit Holders were entitled to use the crib pursuant to ss.492(2) and (3) of the Act.
131.Mr Carlton’s positive acts made the Permit Holders’ exercise of their rights more difficult and appreciably interfered with the exercise of those rights. By not letting the Permit Holders use the crib room for a period of approximately 20 minutes (between 9:32am and 9:52am) on 22 October 2015, Mr Carlton prevented the Permit Holders from exercising their statutorily guaranteed rights under Part 3-4 of the Act.
132. By doing so, Mr Carlton contravened s.502 of the Act.
The approach to penalty
Section 502 of the FW Act is a civil remedy provision. Having been satisfied that a contravention of a civil remedy provision has taken place, the Court may order the respondents to pay a pecuniary penalty: s.546(1) of the FW Act.
The Court is “guided” by a number of considerations when determining the appropriate penalty to be ordered.
One such consideration relates to the maximum penalty that can be awarded for a contravention of this sort.
Sections 539(2) and 546(2) of the FW Act outline the maximum penalty that can be awarded. It follows that the “maximum penalty” should be reserved for the most serious cases and the Court should use the maximum penalty as a “yardstick” with which to determine the appropriate penalty in this case: Mornington Inn v Jordan [2008] FCAFC 70 at [41]-[46].
The parties agree that at the time of the contravention (being 22 October 2015) the relevant penalty unit, as defined by s.12 of the FW Act and s.4AA of the Crimes Act 1914 (Cth), was $180.
Reading ss.539(2) and 546(2) with the relevant penalty unit, the maximum penalty which can be imposed upon:
a)BGC (as a body corporate) is 300 penalty units. This amounts to $54,000; and
b)Mr Carlton (as an individual) is 60 penalty units. This amounts to $10,800.
Another matter which guides the Court in proceedings of this sort relates to the purpose and function of imposing a penalty for a contravention of the FW Act.
Both parties made submissions that the imposition of a penalty is a protective function. The Court agrees and references Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [98], which provides:
Whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty is primarily, if not wholly, protective in promoting the public interest in compliance: Trade Practices Commission v CSR Ltd [1990] FCA 521; (1991) ATPR 41-076 at 52,152 [42]; Commonwealth v Director, FWBII at [55] (per French CJ, Kiefel, Bell, Nettle and Gordon JJ). The principal object of a pecuniary penalty 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; both specific and general deterrence are important: Chemeq at [90]; Ponzio at [93]. A pecuniary penalty for a contravention of the law must be fixed with a view to ensuring that the penalty is not to be regarded by the offender or others as an acceptable cost of doing business: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at 659 [66]; Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 at 265 [62]-[63]. In relation to general deterrence, it is important to send a message that contraventions of the sort under consideration are serious and not acceptable: Australian Securities and Investments Commission v Southcorp Ltd (No 2) (2003) 130 FCR 406 at 418 [32].
Finally, there are a number of other “factors” which have been identified by the Courts as relevant to determining an appropriate penalty: Kelly v Fitzpatrick [2007] FCA 1080 at [14]. There is no exhaustive list and the factors are not fixed. Importantly, the Court must not engage in a “checklist approach”: Australian Building & Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977 at [10]. Rather, the Court must consider those factors that are relevant to the circumstances of the particular case before it and then determine what constitutes a proportionate and appropriate penalty.
In this case, the parties made submissions on the following factors, which they believe are relevant to the determination of the penalty to be imposed in this case:
a)the nature and extent of the contravention and the loss/consequences that arose as a result (including whether the contraventions were deliberate and whether compliance systems were in place);
b)size and financial position and the involvement of senior management;
c)contrition, corrective action and cooperation;
d)specific and general deterrence (including whether the respondents are repeat offenders); and
e)penalties imposed by the courts in relation to similar contraventions.
The Court will consider these matters, determine if they are relevant and, if they are, assess what weight should be given to them. The Court will then determine what penalty should be imposed.
CFMMEU’s Case
The CFMMEU read the affidavit of Kivraj Singh affirmed 11 July 2019. Mr Singh’s Affidavit indicates that inquiries and searches have revealed that Mr Carlton is still employed by BGC in the same position he held at the time of the contravention. Mr Singh also attaches company extracts from the Australian Securities and Investments Commission for both BGC and BGC (Australia) Pty Ltd (which, relevantly, holds the beneficial share interest in BGC).
The CFMMEU’s position is that the respondents should be ordered to pay between 35-50 per cent of the maximum penalty. This equates to a penalty of:
a)between $18,900-$27,000 for BGC; and
b)between $3,780-5,400 for Mr Carlton.
In written submissions, the CFMMEU states:
a)contraventions of s.502(1) are, by their very nature, serious. They interfere with rights of union officials that are expressly provided for by the FW Act;
b)there can be no doubt that the conduct constituting the contravention was deliberate and intentional. There was nothing negligent or careless that occurred. Mr Carlton’s attitude during the episode the subject of the contravention was obstructive and intransigent;
c)Mr Carlton had seniority in BGC and was responsible for managing right of entry. His seniority and position are matters that operate to enhance the objective seriousness of BGC’s contravening conduct. BGC had two days’ notice of the Permit Holders desire to attend the premises to hold discussions. That BGC put someone who was allegedly ignorant of the rights of permit holders in charge of policing entry reflects adversely on BGC and its attitude to compliance with its obligations under Part 3-4 of the FW Act;
d)the fact that BGC put someone who was allegedly ignorant of entry rights in charge of managing them implies that BGC, at the time of the contraventions, did not have appropriate or adequate compliance systems in place. It also reflects poorly on BGC’s culture of compliance (in that they put someone in charge of policing entry who knew little about entry rights or alternatively put someone in charge with instructions that would mean that if the Permit Holders chose not hold discussions in the assigned room, they would be hindered or obstructed);
e)the Court should reject any suggestion that Mr Carlton was blissfully ignorant that his conduct would and did impact the ability of Permit Holders to have discussions with workers in the crib room. It was an inevitable consequence of what he did and it would have been obvious to Mr Carlton that his actions had an impact;
f)the Court should not find Mr Carlton was acting bona fide in purporting to seek advice about whether the Permit Holders could hold discussions with workers in the crib room. To the extent the Court finds that Mr Carlton was somewhat ignorant of the rights of the Permit Holders, this does not diminish the gravity of the contravening conduct, at least so far as BGC is concerned;
g)the contraventions had a tangible impact on the Permit Holders’ exercise of entry rights. The Permit Holders were precluded from speaking with employees, as was their right, for a period of 20 minutes. The impact was significant given the limited time provided for discussions by s.490(2) of the FW Act;
h)even the maximum penalty would not, to any notable degree, impact BGC’s financial position. Therefore, BGC’s financial position means that the penalty that should be imposed on it to achieve specific deterrence needs to be higher than the penalty that would be imposed on a small and financially insignificant contravener. There is no evidence in relation to Mr Carlton’s financial position. Given that Mr Carlton remains an employee of BGC, BGC has not expressed any remorse for its contravening conduct and there is no indication that Mr Carlton has been counselled or disciplined for his conduct, it is a reasonable inference that BGC will pay any penalty levied against Mr Carlton;
i)there has been no indication that BGC or Mr Carlton have taken or sought to take remedial action to address the contravention. While the CFMMEU is not aware of any prior contravention of industrial laws by BGC or Mr Carlton, there is also no indication that Mr Carlton has been disciplined or counselled for his role in the contravening conduct. Nor is there any indication that appropriate training for Mr Carlton or other BGC managers has occurred to ensure that there is no repetition of the contravening conduct. Further, there has been no expression of regret by any senior officer of BGC or Mr Carlton;
j)whilst entitled to contest the proceedings, the respondents put the CFMMEU to proof on all arguments legally available and are therefore not entitled to any leniency by reason of their conduct of the proceedings;
k)in relation to general deterrence, it must be made clear to employers, occupiers and managers in Mr Carlton’s position that they are not entitled to act in a manner that impedes or obstructs union officials exercising lawful rights of entry. A clear message should be sent to employers, occupiers and managers that union rights of entry, including for discussions, must be facilitated rather than frustrated, and that contraventions relating to Part 3-4 of the FW Act are serious and unacceptable; and
l)in the absence of any remorse or acceptance of responsibility by BGC or Mr Carlton, specific deterrence must loom large in the penalising exercise. BGC remains an active and substantial building industry participant. Mr Carlton retains the position he had at the time of the contravening conduct. In the absence of any contrition or indications of corrective action, specific deterrence is a particularly important matter in the context of the present case.
At hearing, Mr Boncardo of Counsel, submitted as follows:
a)the objective seriousness of what occurred must be seen in the context of the importance of the rights which s.502 of the FW Act protects;
b)it would not had been the least bit surprising to Mr Carlton or to any reasonable person that there was a distinct possibility that the Permit Holders would not have deemed the room acceptable. The Permit Holders specifically advised Mr Carlton that he was hindering and obstructing them and Mr Carlton made no attempt to negotiate. Mr Carlton chose not to engage and simply led the Permit Holders away. This is significant in relation to the deliberateness of the conduct;
c)in the Primary Judgment the Court was very sceptical that the situation that occurred would have been foreign to Mr Carlton and that Mr Carlton would not have known precisely the effect of what he was doing when he refused to engage with the Permit Holders;
d)at [129], the Court a makes a clear finding that this was a deliberate contravention and that Mr Carlton was not blissfully ignorant of the effect and the impact of what he was doing and the rights that he was hindering and obstructing;
e)the contravention is at least at the middle of the range of objective seriousness for contraventions of this nature when taking into account the importance of the rights that were interfered with by the respondents;
f)given the nature of the rights that were interfered with in this matter, and that the rights were not economic in nature, the fact there was no economic loss is neither here nor there;
g)the contravention was one, when regard is had to both its effects and also the state of mind of Mr Carlton which accompanied the contravention, that it is in the middle of the range and not at the lower end of the spectrum;
h)there is nothing from the controlling minds of BGC expressing or demonstrating any contrition or remorse. Mr Palfrey’s affidavit does no more than express disappointment. Disappointment is a long way from contrition;
i)there is no evidence about any steps being taken to educate employees about s.492 of the FW Act. The respondents argued at the primary hearing that Mr Carlton misunderstood s.492, yet he does not state that he now has any appreciation of the terms and effect of s.492, just s.502. The fact that Mr Carlton now says he knows he cannot hinder or obstruct a union official (which is a reference to s.502) is quite astonishing;
j)while BGC is winding down its operations, there is nothing before the Court to indicate that the resources of BGC are modest or it has minimal financial capacity. The Court can infer from the amount of share capital of BGC that any penalty imposed upon it would have a minimal financial effect upon it;
k)the Court is much better guided by the facts and circumstances of the present matter and the facts and circumstances of the particular respondents as opposed to engaging in a comparative analysis; and
l)a penalty of the kind that the respondents propose would manifestly not achieve the protective purpose of the penalising exercise under s.546 of the FW Act.
Respondent’s Submissions
The respondents read two affidavits: the affidavit of Brian Carlton affirmed 2 August 2019 and the affidavit of Shane David Palfrey sworn 2 August 2019.
Mr Carlton’s Affidavit states that he is no longer employed by BGC. Rather, he is now employed by Eastern Guruma Pty Ltd. He states that in his current role he no longer has any responsibility for industrial relations matters. Further, he says that, as a result of these proceedings, he now understands that his actions were a breach of the FW Act. He says he did not intend to breach the FW Act and has now obtained a much better understanding of the right of entry provisions under the FW Act. Mr Carlton concludes by stating that, if faced with the same circumstances that occurred on 22 October 2015, he will do things differently and will seek to ensure that he does not breach the FW Act again.
Mr Palfrey is employed as a Construction Manager by BGC Construction Pty Ltd. Previously (from September 2017), Mr Palfrey was the General Manager of BGC.
Mr Palfrey states:
a)BGC is a wholly owned subsidiary of BGC Australia Pty Ltd which was established specifically for the project being completed at 480 Hay Street Perth. No other project has been undertaken by BGC and it is unlikely any other projects or work will be completed by BGC;
b)it is unlikely that BGC will continue to exist after April 2020;
c)while BGC was well-resourced, it is no longer undertaking new work and employs only three people;
d)policies and procedures were in place at BGC during 2015. As a result of proceedings in the Fair Work Commission, orders were made stipulating the room in which the CFMMEU could meet with workers. BGC was never found to have contravened those FWC orders, nor any other industrial laws; and
e)BGC takes its need to comply with the FW Act seriously and Mr Palfrey is disappointed that a contravention occurred. BGC did not ever want to be in a situation where it was found to have contravened the FW Act and will be careful to ensure compliance in all aspects in the future.
The respondents’ position is that penalties should be awarded at no higher than 15 per cent of the maximum penalty. That is:
a)BGC should pay no more than $8,100; and
b)Mr Carlton should pay no more than $1,620.
In written submissions, the respondents submit that:
a)the Primary Judgment did not find that Mr Carlton’s actions in hindering or obstructing the union officials were motivated by any mala fide intent. There was no finding that Mr Carlton acted maliciously in his hindrance of the Permit Holders. Rather, the Court found that Mr Carlton’s motives and intentions at the time of the contravention were irrelevant. The Court did not find that the respondents acted deceptively, maliciously or with a view to intentionally defeating the discharge of the Permit Holders’ duties. Accordingly, there is no evidence or finding that would elevate this case above an ordinary case involving a brief hindrance which tends in favour of a lower penalty;
b)the respondents accept that Mr Carlton’s senior position does not tend towards a lower penalty being ordered;
c)given Mr Carlton and BGC did not act to deliberately frustrate the discharge of the Permit Holders duties, this factor tends in favour of a lower penalty;
d)there is no evidence of economic loss or damage resulting from the respondents’ contraventions. The Court did not make a finding that any workers were unable to meet with the Permit Holders on 22 October 2015 by reason of the respondents’ contravention. The union officials did ultimately discharge their function by meeting with workers in the crib room;
e)in the Appeal Judgment, it was stated that the consequences of the contravention were accordingly ‘relatively minor’. Given the relatively minor consequences of the contravention, this factor tends in favour of a lower penalty;
f)the fact that the respondents are first time offenders supports penalties on the lower end of the range being ordered by the Court. The contravention was not a part of a pattern of unlawful behaviour and is not indicative of a broader failure by Mr Carlton or BGC to adhere to industrial laws. It was a single breach. These factors support penalties on the lower end of the range being ordered by the Court;
g)Mr Carlton’s Affidavit and Mr Palfrey’s Affidavit indicate an improved understanding and indicate that care will be taken to ensure no future contraventions will occur. There was no need for BGC to amend its right of entry policies and procedures as the orders of the Fair Work Commission did this;
h)the taking of corrective action was less appropriate in the circumstances of this case as the time in which the matter took to progress through the Court meant that judgment was not delivered until two months after BGC’s project was complete and all substantive work on it had finished. The lack of any particular corrective action is not an aggravating factor and is not a basis for the imposition of a penalty that is higher than that which is appropriate in the circumstances of the matter;
i)putting a party to proof of the matters alleged does not by reason of that fact expose the respondent in those proceedings to higher penalties. Accordingly, the Court should not penalise the respondents for having done so;
j)specific and general deterrence should be given limited weight in this instance as the respondents are both first time contraveners, neither respondent operates in an environment which involves the right of entry regime or industrial laws anymore and it is highly unlikely that BGC will continue to exist after April 2020;
k)although comparison to other pecuniary penalties can be difficult given contraventions of the FW Act are rarely identical and the value of a penalty unit changes over time, some guidance can nonetheless be gleaned from considering past cases where pecuniary penalties have been ordered for contraventions of the FW Act;
l)in the published decisions relating to penalties imposed for a breach of s.502, the Courts have generally ordered penalties between 10 per cent to 25 percent of the maximum penalty. In respect of comparable contraventions of s.501, the Courts have generally ordered penalties between 20 per cent to 30 per cent of the maximum penalty available; and
m)in this case the contraventions, while serious, did not entirely frustrate the discharge of the Permit Holders’ duties and the delay suffered by the Permit Holders was relatively brief.
At hearing, Ms Millar of Counsel submitted:
a)the rights in pt.3-4 of the FW Act are inherently serious and the Court should approach them seriously. However, the objective seriousness of the contravention is something distinct from this. It cannot be that all breaches of pt.3-4 are serious because the rights that they protect are serious;
b)serious, wilful and ongoing breaches of industrial law ought not be dealt with any other way than by a serious and potentially heavy-handed approach. However, cases that are not serious, wilful or ongoing must be recognised at a different level of objective seriousness. The nature of the contravention in this case is not one that could be described as serious or ongoing and therefore ought not to attract a heavy-handed approach;
c)as a consequence of the respondents’ contravention of the FW Act, the Permit Holders did not meet a number of workers who they might otherwise have been able to meet. However, the Permit Holders did not (when they could have) attend later in the day when they might have been able to meet those workers during their lunch break. The consequences of the contravention were relatively minor. The evidence before the Court is that the consequence was that there was an opportunity missed. As the CFMMEU did not move to quickly try and remedy the missed opportunity by coming back later and speaking to those people that it could not, it is suggested that the CFMMEU did not regard the consequence of loss as “significant”;
d)the evidence does indicate regret and remorse for the contraventions. The CFMMEU did not test the evidence in cross-examination and the Court should therefore treat the evidence at its highest;
e)to criticise the lack of corrective action (in terms of changes to policy or changes to procedure in terms of the internal procedures) is not fair in circumstances where there were specific Fair Work Commission orders in place by which the right of entry obligation were specified. There is no evidence that there was any further issues after the incident in question. There was action taken by the respondents after the incident that corrected the issues and demonstrated a willingness to comply going forward;
f)it is not fair to criticise Mr Carlton who, on the evidence, was compliant with his employer’s lawful directives. While it may be that they are now no longer deemed lawful, Mr Carlton was nonetheless compliant with the directions given by his employer. It also is not fair to expect that BGC would discipline an employee who had done what he was asked to do and then in the absence of that disciplining say that BGC should be held to further accounts for not carrying out some sort of disciplinary process; and
g)it is crucial to the rule of law that parties know where they stand when they go before the Courts and will be given a broadly consistent treatment. A civil penalty determination process is similar to that which is undertaken when criminal sanctions are determined, thus there should be consistency. For this reason, it can be helpful to look to similar cases.
Consideration
The nature and extent of the contravention and the loss/consequences that arose from it
Although written within the context of a breach of s.500 of the FW Act, the following statement from Justice Mortimer in Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (Geelong Grammar School Case) (No 2) [2019] FCA 1498 at [20] is of assistance:
The gravamen of the prohibition in s 500 concerns conduct of a particular nature by a permit holder, in relation to particular premises over which a right of entry exists. Both limbs of s 500 (“intentionally hinder or obstruct” …) direct attention to the nature and consequences of the conduct of the permit holder. There will be examples of hindrances or obstructions which are severe, in terms of their duration, the level of interference with activities on the worksite, and the nature and range of the effects of any hindrances or obstructions...
As the respondents note, the Court made no finding in the Primary Judgment about Mr Carlton’s motives for acting the way he did. There was no finding that his conduct was malicious or undertaken for the specific purpose of frustrating the rights of the Permit Holders. The Court found that Mr Carlton’s motives were irrelevant when determining whether a contravention of s.502 of the FW Act occurred.
The respondents refer to the case of Independent Education Union of Australia v Australian International Academy of Education Inc [2016] FCA 686 at [29]-[30], wherein the Federal Court found:
29. The Academy’s conduct was intentional not only in the immediate instrumental sense, but also in the sense that what the Academy set out to do, and successfully did, was to frustrate the achievement of the very purposes for which these provisions were enacted. The Academy’s conduct bespeaks a determination to ensure that the permit holders did not secure access to documentary information of the kind that the community has said, through its legislation, must be accessible.
30. But the situation revealed by the findings made on 25 February 2016 is more serious yet. At base, the Academy’s conduct involved a calculated deception…
At [110] of the Primary Judgment, this Court states:
Rather than discuss the issue with the Permit Holders (in an attempt to come to some sort of resolution), Mr Carlton instead insisted he needed to get advice. He then led the Permit Holders to the foyer. They were then required to wait for approximately 20 minutes – a not insignificant amount of time given the need for the Permit Holders to meet with workers who had designated break periods. Mr Carlton could, quite easily, have invited the Permit Holders into his office to engage in conversations (in an attempt to at least reach an agreement) with those he says he was attempting to contact by telephone. He did not. In fact, on Mr Carlton’s own evidence he never intended to enter into discussions with the Permit Holders (paragraphs 52 and 53 above). He simply relied on his claimed ignorance of the legal rights and obligations evident in situations like this (situations that are not uncommon and which the Court does not accept would have been foreign to him) to walk away from the Permit Holders and waste valuable contact time with workers the Permit Holders were entitled to meet with.
As seen from the above, the Court did not accept that Mr Carlton was ignorant. Nonetheless, the Court is of the view that his actions were not “calculated”. Mr Carlton did not deliberately set out to breach the FW Act. However, when the circumstances arose as they did, Mr Carlton consciously chose to be difficult and resisted the requests made of him from the Permit Holders. This is best evidenced by his refusal to engage in discussions with them or negotiate with them.
The Court is satisfied that Mr Carlton was aware that his actions hindered or impeded the ability of the Permit Holders to talk to workers who may have been in the crib room during the relevant 20 minute period. Mr Carlton’s own evidence was that morning breaks commenced at approximately 9.00am and would last for approximately 10-15 minutes: Primary Judgment at [46]-[47]. It is evident that Mr Carlton’s actions hindered and obstructed the Permit Holders ability to talk to some workers and he was, or ought to have been, conscious of this.
As for BGC, it is troubling that BGC placed someone in charge of policing entry whose job description and responsibilities did not include the need for knowledge relating to union officials or industrial law.
Also troubling is the evidence of Mr Carlton that there were no “formal procedures to follow”: Mr Carlton’s Affidavit affirmed 21 February 2018 at [29]. There was a “Compliance Form” used by BGC at the time. However, this was specific to recording compliance of the union officials or permit holders with the legislation – not BGC. Mr Palfrey’s Affidavit, however, says that “policies and procedures” (however informal) were in place at the time. In the Court’s view, this demonstrates a careless, almost nonchalant, approach in relation to ensuring that BGC and its employees were appropriately aware of their obligations under the FW Act (relating to rights of entry) and were adequately equipped to manage any situation that arose.
It cannot be said that BGC set out to frustrate the ability of the Permit Holders to exercise their rights or did so with malicious intent. However, BGC was indifferent to its very clear obligations. BGC’s action, while not ongoing, are nevertheless significant and of the sort the legislation aims to address.
Here, the nature of the conduct (bearing in mind the Court’s views about unsatisfactory compliance processes in place) warrant a penalty in the mid-range.
Turning to the nature and extent of any loss, this should not be confined to an analysis of loss on the part of the CFMMEU. As submitted by the CFMMEU to this Court, the statutory context is important. In the case of Part 3-4, the beneficial nature of the provisions and the need to balance competing but vital rights is critical. Hence, in any case where a contravention is found, there is damage to the utility and effectiveness of the relevant statutory objective (here found under s.480 of the FW Act): Secretary, Department of Health and Ageing v Pagasa Australia Pty Ltd [2008] FCA 1545. This will be considered in greater detail below when addressing deterrence.
In terms of the loss experienced by the CFMMEU, in the Appeal Judgment, Justice Colvin (at [69]-[70]) noted:
69. It was said that there was no special significance that attached to the day when the permit holders sought to hold discussions at the site. Also, it was said that they could have held discussions during the lunch break later in the day. Further, it was said that the permit holders did have access to the crib room during part of the tea break. However, there was evidence that different trades took their tea breaks at different times and some of the workers with whom the permit holders wished to have discussions had completed their break.
70. The evidence showed that the conduct of Mr Carlton delayed the permit holders. There were consequences from the delay. They were relatively minor. They could be redressed fairly readily by the permit holders going through the process again or perhaps returning later in the day. However, the consequences were not trivial. They were appreciable. It is not a case where the permit holders were able to proceed to hold their planned discussions despite the delay. The result was that the permit holders would have to return to the site in order to have discussions with all those they planned to speak to if they wished to complete those discussions.
Here, the length of the delay (20 minutes), while not “severe”, cannot be seen to be “insignificant”. A delay in excess of 15 minutes resulted in the potential loss of the opportunity to meet with workers. As Justice Colvin averted to, the effect of the contravention could be remedied by returning to the site at a later date (which the respondents submitted it was open to the Permit Holders to do yet they did not). Nonetheless, the hindrance and obstruction had the effect of frustrating the entry (to some extent) for that particular day. The fact that Permit Holders could return is less significant when seen in context. Here, the fact remains that the overall consequence of the respondents’ actions was that the Permit Holders lost the opportunity to meet with workers at the time they intended to do so and this, in turn, had a flow on effect.
The CFMMEU has not provided any evidence that indicates how many workers it was unable to speak to during the relevant 20 minute period. The evidence does suggest, however, that the Permit Holders missed the opportunity to speak to the “form workers”.
Overall, the Court finds that the level of interference was low.
The effect of the contravention has not been reduced to a dollar value relating to any potential loss of membership. This does not immediately entitle a penalty of the lower range. Indeed, as recently stated in Construction, Forestry, Maritime, Mining and Energy Union v Milin Builders Pty Ltd [2019] FCA 1070 at [68] (“Milin”), given the nature of the contraventions, a lack of evidence of loss or damage is hardly surprising.
In light of the “minor” consequences that flowed from the contravention, the Court considers this warrants a penalty in the lower range.
Size, financial position and involvement of senior management
The evidence indicates that BGC is still operational. BGC does, however, operate at a reduced capacity and is likely to cease operations in the coming month. BGC is part of a network of related building companies. There is, however, no evidence as to BGC’s current financial position.
At the time of the contravention, BGC employed approximately 30 employees and was undertaking construction on a large scale building project. Mr Singh’s affidavit indicates that BGC has a large share capital. The Court is prepared to infer from the evidence that BGC is well resourced.
There is also an absence of evidence as to Mr Carlton’s financial capacity. The Court is not prepared to infer that BGC will pay any penalty imposed on Mr Carlton on his behalf. What is apparent, however, is that Mr Carlton is employed and he has remained employed since he ceased working for BGC.
The Court also notes that the Primary Judgment reflects the first time the respondents were found to have contravened the FW Act. They were “first time contraveners”. The Court attaches some weight to this fact. While it is accepted that being a first time contravener does not, as a matter of principle or practice, require a substantial discount in penalty (see Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301 at [177]), here, as the Court notes above, the harm or consequences suffered were not substantial.
Further, the respondents accept that Mr Carlton was a member of senior management of BGC at the time of the contravention.
In these circumstances, the size and financial position of the respondents is not a significant mitigating factor. In the Court’s view, the fact that Mr Carlton’s role was specifically responsible for policing entry permits is of some significance. It demonstrates that Mr Carlton, and BGC, were flippant in relation to their need to be appropriately aware of what was legally required of them. Nonetheless, both were first time contraveners and this merits some reduction in the penalty to be awarded.
Collectively, these factors warrant a penalty in the low-mid range.
Contrition, corrective action and cooperation
It is clear from Mr Carlton’s Affidavit and Mr Palfrey’s Affidavit that they are aware of their wrongdoing and have learned from the proceedings. However, neither goes so far as to offer an express apology.
Mr Carlton says that he did not deliberately set out contravene (or even know he was in contravention of) the FW Act. He understands (because of these proceedings) that he has contravened the FW Act and says that he will do things differently if he is faced with the same situation again.
Mr Palfrey, who the Court notes does not appear to have been employed in the position of General Manager of BGC at the time of the contraventions, has expressed disappointment with the fact that the contraventions occurred and says that BGC never wants to breach the FW Act again. Notably, Mr Palfrey is not one of the directors of BGC and there is no indication that the directors have expressed any concern or awareness in relation to what has occurred.
While the respondents have not shown contrition per se for the contravention, the above statements do indicate that they accept the findings that have been made. Both refer to the fact that the Court (or the “proceedings”) have found that they breached the FW Act.
Mr Carlton has acknowledged that he would now do things differently and Mr Palfrey states that care will be taken going forward to ensure compliance. Some weight should be attached to these statements when assessing penalty.
In relation to corrective action, the respondents submit that the ability and need to take corrective action was, in effect, rendered unnecessary in the circumstances of this case.
Mr Carlton, it was said, was acting under instruction of BGC. Therefore, it would be unfair for BGC to discipline Mr Carlton when he was simply undertaking what he thought was a lawful task. The Court wishes to emphasise, however, that corrective action is not limited to disciplinary action. BGC could have provided training programs. If it had done so it is arguable that none of this would have happened.
Nevertheless, the Court accepts the submission that the particular circumstances of this case meant that by the time it was determined that a contravention had occurred, the need to take corrective action was of little utility. Of significance is the fact that at the time the Court delivered judgment, construction on the work site had ceased.
Further, shortly after these proceedings commenced (in 2016), the Fair Work Commission issued orders (by consent) which had the effect of identifying the rooms which the CFMMEU would use. The CFMMEU submits that there is no evidence that BGC has complied with those orders or that there were no issues with permit holders entry onto the site after the events the subject of this proceeding. This is true. However, there is also no evidence that they have not. The Court is prepared to accept BGC’s version of events in this regard.
Overall, the lack of any corrective action taken was not as a result of any defiance on the part by BGC.
In relation to “cooperation”, the Court draws no adverse inference from the fact that the respondents defended these proceedings. The fact that they did so should not result in any increased penalty beyond what would otherwise be appropriate: Australian Competition and Consumer Commission v ACM Group Limited (No 3) [2018] FCA 2059 at [104].
While the lack of any outright contrition per se is less than desirable (and to be discouraged), collectively, the evidence outlined above favours a penalty in the low-mid range.
Specific and general deterrence
Deterrence is a central objective when imposing a penalty. Any contravention will damage the utility and effectiveness of the relevant statutory objectives and must be discouraged.
In relation to general deterrence, the CFMMEU made reference to In Construction, Forestry, Mining and Energy Union v Safety Glass Pty Ltd [2010] FCA 989 at [18] to highlight the importance of abiding by the rights in Part 3-4 of the FW Act. In that case, the Federal Court found:
The Act provides a detailed scheme to regulate the exercise, by union officials, of their right to enter an employer’s premises. Various restrictions are placed on the right of entry to minimise inconvenience to the employer or disruption to productive work. Provided, however, that the right of entry is exercised in accordance with the provisions of the Act, union officials are entitled to unimpeded access to business premises for prescribed purposes. This is an important right which enables unions to recruit members and protect the industrial interests of their members.
The penalty the Court imposes must be sufficient to deter similar contraventions. Accepting the importance of the statutory provisions in Part 3-4 of the FW Act, the Court considers that a penalty in the low-mid range will achieve the necessary general deterrence.
As for specific deterrence, the Court accepts the respondents’ submissions (supported by the affidavits of Mr Carlton and Mr Palfrey) that in circumstances where:
a)BGC currently have no projects and therefore no sites in which entry notices and permits would be issued;
b)BGC has no projects anticipated and it is most likely that BGC will cease operations in April 2020;
c)Mr Carlton has moved to new employment in which he has no responsibility for any matters relating to industrial relations (including rights of entry); and
d)this was the first and only contravention of the FW Act by either respondent,
the weight given to the need for specific deterrence is not significant.
However, there is no evidence that BGC will definitively cease any further operation after April 2020. The evidence only expressed “a likelihood”.
As for Mr Carlton, there is nothing to suggest that he cannot or will not engage in employment regulated by the FW Act in the future.
Overall, specific deterrence is not wholly irrelevant: Australian Building and Construction Commissioner v Gava [2018] FCA 1480 at [57]-[59] (“Gava”).
In light of the above, this factor warrants a penalty on the lower range.
Penalties imposed by the courts in relation to similar contraventions
The parties expressed differing views as to whether it is appropriate for the Court to take into account the penalties imposed by other courts in relation to similar contraventions of the FW Act (more specifically, contraventions under ss.501 and 502).
The CFMMEU referred the Court to Gava at [73]-[74] wherein Justice White states:
73. Counsel for the Respondents submitted that the Court should have regard to recent decisions involving the imposition of penalties on the CFMMEU and its officials. These were ABCC v Huddy; Australian Building and Construction Commissioner v Ingham (No 2) (the Enoggera Barracks Case) [2018] FCA 263; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 3) [2017] FCA 10; and ABCC v McDermott. Counsel submitted that, in fixing the penalties in the present case, the Court should “strive for reasonable consistency” with the penalties imposed in these cases.
74. In my opinion, comparison of the present case with other decisions of the Court is of limited utility. It is rare for two cases to be identical. Whatever points of similarity may be identified between two cases, there will always be points of difference. The parity principle (the principle that, all other things being equal, similar contraventions should incur similar penalties) is applicable only when the Court is imposing penalties on co‑contraveners. In this respect, I venture to repeat my observations in Australian Competition and Consumer Commission v AGL South Australia Pty Ltd [2015] FCA 399 at [63]‑[68]. Furthermore, the approach for which the Respondents contend has the potential to distract the Court from the fixing of penalties which are proportionate to the case before it by the required process of instinctive synthesis.
While the CFMMEU’s primary submission was that the Court should not engage in a comparative analysis, the CFMMEU submitted that if the Court was to consider a similar case, it should have regard to Milin in which the Court ordered a penalty of 15 per cent. It was stressed that the circumstances relevant in Milin are similar to those seen here.
The respondents submitted that the Court should have regard to other like or similar cases. The respondents submitted that, like in criminal matters involving sentencing, there is a need for consistency in the imposition of civil penalties. The Court need not undertake a “comparative analysis” but should nonetheless look at other cases in order to promote consistency across the Courts.
The respondents referred the Court to a number of cases which demonstrate that the range of penalties in cases involving s.502 of the FW Act was between 10 per cent and 25 percent of the maximum penalty. For contraventions of s.501, the penalties imposed by the Courts ranged between 20 percent and 30 percent.
The respondents referred in particular to the recent case of United Voice v Paisley Park Early Learning Centres (SA) Pty Limited & Anor [2020] FCCA 578 which imposed a penalty of 5 per cent (and which, the respondents say is similar to what is seen in these proceedings).
In Registered Organisations Commissioner v Communications, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2020] FCA 96 at [84]-[85], the Federal Court stated:
84. Although these cases reflect the quantum of penalty that the Courts there considered appropriate, it must necessarily be recognised that the quantum of penalty in any given case must depend upon the particular facts and circumstances there prevailing. As Gray J has observed, “[p]enalties are not a matter of precedent”: Australian Ophthalmic Supplies [2008] FCAFC 8 at [12], (2008) 165 FCR 560 at 564. A “hallmark of justice” nevertheless remains “equality before the law” and Courts should attempt to be “even handed”: NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 295 per Burchett and Kiefel JJ.
85. Although it thus remains useful to use the quantum of penalties imposed in other cases as one of the means to attempt to achieve a degree of comparability in penalties, the facts and circumstances of an individual case must remain the yardstick against which penalties are assessed and imposed.
Having assessed the cases relied on by both parties, the Court is very much of the view that each case is fact specific and comparisons of the sort advocated are not particularly helpful. The cases that the Court has been asked to review are, of course, helpful in so far as they reveal how the courts come to the conclusions they come to – what factors are assessed etc. However, as in Gava, the Court concludes that any comparison of the present case with other decisions is of limited utility. Two cases are rarely identical and the individual facts and circumstances of the case at hand must always be the central consideration.
The appropriate penalty
Cumulatively, the factors the Court has considered warrant a penalty in the low-mid range.
As His Honour Justice Colvin recognised, the contravention here was “minor” but “not trivial”: Appeal Judgment at [70]. His Honour also noted that it was questionable that the actions warranted the commencement of legal proceedings: Appeal Judgment at [67].
The Court is of the view that a penalty in the range of 35 per cent to 50 per cent (as requested by the CFMMEU) is not appropriate. This is, after all, a “relatively minor” contravention.
On the other hand, the Court is also of the view that a penalty no higher than 15 per cent is inadequate. The contravention was not, after all, “trivial” and the FW Act exists for a reason.
BGC knew that it was required to ensure that rights were not infringed (noting the Compliance Assessment). However, it was complacent in this regard. All parties need to respect the statutory regime in place. Without a commitment from both parties in this regard any desired balance between the interests of operators and those with entry permits cannot be ensured.
Noting that the contraventions here were not trivial, BGC has not obtained any benefit, the CFMMEU has not demonstrated any tangible loss and there has been some recognition from the respondents that the actions of Mr Carlton on 22 October 2015 were unacceptable, the Court finds that:
a)a penalty of $10,800 should be imposed on BGC (being 20% of the maximum penalty); and
b)a penalty of $2,160 should be imposed upon Mr Carlton (being 20% of the maximum penalty).
These penalties reflect the seriousness of the conduct and the importance of the legislative provisions that govern conduct of this sort. The penalty imposed is sufficient to deter repetition and demonstrates that even a “minor” or “brief” obstruction or hindrance attracts a not insignificant penalty.
Conclusion
The respondents made no submissions in relation to whether the Court should depart from the usual order that the penalties be paid to the applicant. On that basis, the Court will order that penalties be paid to the CFMMEU within 28 days from the date of the orders.
In light of the above, the Court orders that:
a)the first respondent pay the applicant $10,800; and
b)the second respondent pay the applicant $2,160.
To the extent that costs are sought (and noting s.570 of the FW Act) an application in a case with a supporting affidavit should be filed.
I certify that the preceding ninety-one (91) paragraphs are a true copy of the reasons for judgment of Judge Kendall
Associate:
Date: 15 April 2020
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