Cozadinos v CFMEU & Ors
[2011] FMCA 284
•7 April 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| COZADINOS & CFMEU & ORS | [2011] FMCA 284 |
| INDUSTRIAL LAW – Penalty hearing – contraventions of s.38 of the Building and Construction Industry Improvement Act 2005 (Cth) by respondents – contraventions admitted – agreed penalties – whether agreed penalties within permissible range. |
| Building and Construction Industry Improvement Act 2005, ss.36, 38, 49, 57 |
| A & L Silvestri Pty Ltd v Construction, Forestry, Mining and Energy Union [2008] FCA 466 Michelle White v Construction Forestry Mining and Energy Union [2011] FCA 192 Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 |
| Applicant: | MICHELLE COZADINOS |
| Respondent: | CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION |
| Second Respondent: | MICHAEL POWELL |
| Third Respondent: | ALEX TADIC |
| File Number: | MLG 84 of 2010 |
| Judgment of: | Riethmuller FM |
| Hearing date: | 7 April 2011 |
| Date of Last Submission: | 7 April 2011 |
| Delivered at: | Melbourne |
| Delivered on: | 7 April 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr Dalton of Counsel |
| Solicitors for the Applicant: | DLA Phillips Fox |
| Counsel for the Respondent: | Mr Sayers |
| Solicitors for the Respondent: | Slater & Gordon |
ORDERS
A penalty of $30,000 be imposed on the First Respondent for contravening section 38 of the Building and Construction Industry Improvement Act 2005 by its conduct in counselling or encouraging stoppages of building work at the Springvale section of the Eastlink Freeway Project on 31 January and 1 February 2008.
A penalty of $5,000 be imposed on the Second Respondent for contravening section 38 of the Building and Construction Industry Improvement Act 2005 by his conduct in counselling or encouraging stoppages of building work at the Springvale section of the Eastlink Freeway Project on 31 January and 1 February 2008.
A penalty of $2,500 be imposed on the Third Respondent for contravening section 38 of the Building and Construction Industry Improvement Act 2005 by his conduct in counselling or encouraging stoppages of building work at the Springvale section of the Eastlink Freeway Project on 31 January and 1 February 2008.
The penalties imposed on the Respondents under Orders 1, 2 and 3 are to be paid into the Consolidated Revenue Fund within 28 days of the date of this Order.
There be no order as to costs.
Proceedings otherwise be dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 84 of 2010
| MICHELLE COZADINOS |
Applicant
And
| CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION |
First Respondent
| MICHAEL POWELL |
Second Respondent
| ALEX TADIC |
Third Respondent
REASONS FOR JUDGMENT
(revised from transcript)
These proceedings were issued on 22 January 2010 seeking orders imposing pecuniary penalties on the first respondent, the Construction, Forestry, Mining and Energy Union (‘CFMEU’), and the second and third respondents who are employees of the CFMEU for contravention of s.38 of the Building and Construction Industry Improvement Act 2005 (‘the BCII Act’). The proceedings also pursued other bases which are no longer pursued before me today.
The applicant is the Australian Building and Construction Inspector appointed under s.57 of the BCII Act and is a person eligible to bring the proceedings for contravention of the civil penalty provisions.
The facts are that the second and third respondents breached s.36 of the Act on 31 January and 1 February at the EastLink Freeway construction project. At that time an issue had arisen between workers and the employer with respect to the state of the amenities available to the workers at the building site. The precise details of this have not been set out at length before me. Suffice it to say that it seems there was a dispute about the quality and cleanliness of amenities such as toilets and sheds or locations to have breaks and meals together with the walkways and access arrangements to those at a large road works building site. The importance of these issues should not be under-estimated for those who are working on such large building sites and the conditions that necessarily follow from the type of work that is involved.
The matter first came before me last year, early in the year, where it was directed to mediation. It did not settle at mediation and was set for trial. Ultimately, the parties were able to resolve various differences which included a statement of agreed facts and an agreement about the penalties the parties believed would be appropriate in the circumstances. The statement of agreed facts sets out, relevantly, as follows:
[17] The Respondents admit that by the conduct of the Second and Third Respondents on 31 January and 1 February 2008 in encouraging the stoppages on those days, by operation of s.48(2) of the BCII Act the Second and Third Respondents were persons involved in building industrial action within the meaning of section 37 of the BCII Act. It therefore follows that the Second and Third Respondents each contravened section 38 of the BCII Act.
[18] The Applicant and the Respondents agree that the conduct of the Second and Third Respondents on 31 January and 1 February 2008 was a course of conduct that properly ought to be treated as a single contravention of section 38 of the BCII Act.
[19] The First Respondent admits that by the operation of section 69 of the BCII Act, the admitted conduct of the Second and Third Respondents is the conduct of the First Respondent and accordingly, the First Respondent admits that it has contravened section 38 of the BCII Act.
The minute of proposed orders provides for a penalty of $30,000 for the first respondent, $5,000 for the second respondent and $2,500 for the third respondent for their role in counselling or encouraging the workers on the site to effect stoppages of the building work.
The appropriate approach in these matters is to have regard to all of the relevant circumstances. There are certain areas which one would commonly turn to to identify relevant matters to take into account. In Michelle White v Construction Forestry Mining and Energy Union [2011] FCA 192 Kenny J summarised the approach when looking at a case where there is agreement as to penalty saying as follows:
(a) it is the responsibility of the Court to determine the appropriate penalty;
(b) determining the amount of penalty is not an exact science;
(c) within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another;
(d) there is public interest in promoting settlement of litigation, particularly where it is likely to be lengthy;
(e) the view of the regulator, as a specialist body, is a relevant, but not determinative, consideration;
(f) in determining whether the proposed penalty is appropriate, the Court examines all of the circumstances of the case; and
(g) where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure, in the Court’s view, is appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if it is within the permissible range.
Of course, adopting an approach that simply applies a checklist can be confusing in some cases or overtake the primary task, which is to look at the whole of the circumstances in the context of the legislative instrument and strike an appropriate penalty for the particular conduct in this particular case involving these particular parties. To some extent, this was discussed in A & L Silvestri Pty Ltd v Construction, Forestry, Mining and Energy Union [2008] FCA 466 and Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560.
I note the list that the respondent has set out in the outline, from the cases, which provides a good guidance for areas in which to look in order to attempt to cover most of the major facts and circumstances that are relevant in exercising the discretion. In this regard, the respondent says:
4. The Respondents submit that the following considerations are the relevant considerations for the assessment of penalty:
(a) the nature and extent of the conduct;
(b) the period of the conduct;
(c) the effect of the conduct, including the nature and extent of any loss or damage sustained as a result of the breaches;
(d) whether the respondents have previously been found to have engaged in conduct in contravention of the relevant part of the Act or a relevantly similar nature;
(e) where more than one contravention is involved, whether the various contraventions are properly seen as distinct or whether they arise out of the one course of conduct;
(f) the conduct of the senior officers of the first respondent;
(g) the financial position and nature of the Respondents;
(h) whether there has been contrition and/or an apology;
(i) the cooperation of the Respondents;
(j) the need, in the circumstances, for deterrence;
see: CFMEU v Coal & Allied Operation Pty Ltd (No. 2) (1999) 94 IR 231 at [7]-[8]; TPC v CSR Ltd (1991) ATPR 52, 135 at 52, 132-52, 153; Commonwealth Bank of Australia v Finance Sector Union [2007] FCAFC 18 at [181] per Branson J; Furlong v Australian Workers’ Union & Ors [2007] FMCA 443 at [7]-[10]; Carr v CEPU [2007] FMCA 1526 at [7]; Cruse v CFMEU & Anor [2007] FMCA 1873 at [71]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] 165 FCR 560 at [89]; Stewart-Mahoney v CFMEU [2008] FCA 1426.
5. The Respondents acknowledge, however, that these factors are not mandatory considerations: see Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (supra) per Buchanan J at [91].
Turning then to the nature of the contravening conduct, the circumstances in which it took place and how long it went on for, in the statement of agreed facts and circumstances the parties says:
[4] …Thiess Pty Ltd (Thiess) and John Holland Pty Ltd (John Holland) participated in a joint venture known as Thiess John Holland (TJH) to design and construct 45 kilometres of freeway linking the Eastern Freeway to the Frankston Freeway (the Eastlink Project).
[5]At all material times Thiess and John Holland, through TJH, were:
[5.1]…
[5.2] the head contractor on the Eastlink Project;
[5.3] the employer of various persons on the Eastlink Project (TJH Employees); and
[5.4] bound by the Thiess John Holland Mitcham Frankston Project Construction (CFMEU) Certified Agreement (AG839275 PR956658) (‘the Agreement’) in respect of the TJH Employees.
…
[7] At all relevant times, the TJH employees were required to perform building work at the Eastlink Project in accordance with the terms and conditions prescribed in:
[7.1] the certified agreement;
[7.2] the National Building and Construction Industry Award 2000 (‘the Award’)…
…
[9] On 31 January 2008, at approximately 11.00am, the Second and Third Respondents entered the Eastlink Project site at the Springvale Depot area. They came to the site because they were aware that some of their members working at the site held concerns about some aspects of the working conditions on the site…
[10] Once on the site, the Second and Third Respondents held a meeting with a number of TJH Employees and the employees of TJH subcontractors. In that meeting the Second and Third Respondents encouraged the TJH Employees and employees of TJH subcontractors to stop building work on the Eastlink Project.
[11] At around 11.15am that day, immediately following the meeting, approximately 23 of the TJH Employees and employees of TJH subcontractors who were required to perform building work that day on the Springvale section of the Eastlink Project ceased to perform any building work on the Eastlink Project for the balance of the working day.
[12] On 1 February 2008, at approximately 6.20pm, the Second and Third Respondents again entered the Eastlink Project site at the Springvale depot area. …they believed the concerns raised had not been dealt with by management. They held meetings with the TJH Employees and the employees of the TJH subcontractors from approximately 6.30am until 7.30am and encouraged them to stop building work on the Eastlink Project.
[13] At around 7.30am that day, immediately following the meetings, approximately 23 of the TJH Employees and employees of the subcontractors…ceased to perform any building work on the Eastlink Project for the balance of the working day.
Work resumed after the two days at the freeway and there were various agreements reached between the union representatives and the employer, including a timetable being put in place to rectify amenities, the acknowledgment that it could not be done overnight but would take some time, some changes in arrangements about having a deputy occupational health and safety representative for the particular team of workers, reference of the matter to more senior management and an acknowledgment by the employer that some of these issues should have been rectified earlier.
The result of the conduct was that work stopped in that section for two days. It is also submitted that there were alternative processes clearly available as contemplated in the award and the workplace agreement which realistically could have been brought to bear and resulted in, potentially, arbitration decisions or other Tribunal decisions within a couple of days in any event.
Turning then to the relevant prior conduct, a schedule of prior cases involving the union has been provided to me. It lists 43 cases. Not all of those cases are this particular union and it is important to recognise that. Twelve of them involved other industrial organisations. Of the remaining 31 cases some 10 of those involved conduct that occurred after the conduct involved in this case and some seven of those that involved conduct before the conduct in this case involve interstate or other semi-autonomous units within the union.
However, it is the one union and I have regard to the comments made by Jessup J in Williams v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union & Ors [2010] FCA 75 and Gyles J in A & L Silvestri Pty Ltd v Construction, Forestry, Mining and Energy Union [2008] FCA 466. Whilst the fact that many of the previous decisions may have involved other branches within the union might have been given more weight in early days, at this point (given the number of previous cases), it seems to be of no significant moment that many of the cases involve other branches of one overall union. Clearly, the union must be aware that there is a significant problem with compliance with the Act throughout its branches.
There were also a number of decisions involving penalties that had been imposed on the second respondent and with respect to the third respondent. The respondents’ lawyers makes a point in their submissions that is relevant:
[18] At paragraph 32 of the [Applicant’s outline of argument], the Applicant asserts “that this is not the first time ([the second and third respondents]) have breached the BCII Act”. It should be noted, however, that, at the time of the offending conduct in this matter, neither had been found to have breached the BCII Act. Subsequent contravention findings against each relate to conduct which occurred after the conduct at issue in this case.
The next matter that I turn my mind to is whether the contraventions were distinct or arose out of one course of conduct and there is only one penalty sought to be imposed. It seems clear that this was just one course of conduct about one relatively narrow dispute involving a small number – or relatively small number – of workers. Whilst it went over two days it was the same conduct and the same dispute and the same issues. It seems to me to be appropriate to view it as one event in substance. The conduct was clearly deliberate. The contravener, being the union, is a significant body. However, it is not a case where it is suggested that there was involvement of any of the senior management members of the union.
The applicant submits that the cooperation and agreement reached with the respondents’ warrants a modest reduction in the otherwise appropriate penalty. It appears to me that there should be some regard to the fact that there has been, ultimately, admissions and that a trial did not need to take place and that whilst the agreement was finalised somewhat late in the piece it does seem to have reduced the costs of the matter considerably and certainly avoided having all of the relevant witnesses here on a morning for trial and then the matter reaching agreement at that very late point. It does not seem, however, that there is contrition or remorse that is put forward in this case.
Deterrence is an important factor. This is also acknowledged by the respondent. The respondent says:
[20] In any event, there is significant deterrence in the bringing of the proceeding which has cost the Respondents time and money: see Ponzio v B&P Caelli Constructions Pty Ltd & Ors (2007) FCA 1221 at [25], [31], [34] and [35]; Ponzio v B&P Caelli Constructions Pty Ltd & Ors (2007) 158 FCR 543 at [138] and [164] per Jessup J but see F Lander J at [102]; Pine v Expoconti Pty Ltd [2005] FCA 1434 Kenny J at [15]-[16]; Pine v Casello Constructions Pty Ltd (2005) FCA North J at [9]; Ponzio v D&E Airconditioning Pty Ltd (2005) FCA 964 North J at [20], [29] and [30]; Furlong v Maxim Electrical Services (Aust) Pty Ltd (No. 3) (2006) FCA 1705 Marshall J at [20].
…
[22] Further, the achievement of a negotiated outcome at an early stage in this case, is an advantage to the regulator, the Australian Building Construction Commission. It has the effect of releasing resources that may have otherwise have been devoted to this matter and allowing those resources to be used in pursuit of other suspected contraveners which, in turn, increases deterrence. (see Mobil at [55].)
Deterrence is clearly an important factor in this case as the applicant submits because the union is a repeat offender and, indeed, it seems it has quite an unenviable history of breaches as set out in the various cases.
Turning to the extent of loss and damage sustained as a result of the conduct it seems that the likelihood that those who lost most from this conduct were the actual workers who would have lost their pay for the two days that the dispute ran for. It is not put that there were direct financial losses to the head contractors in that it was a major project and it was expected that time would probably be made up over the course of the project. There may have been a loss to subcontractors, however, no details were available.
I also have regard to the importance of maintaining the integrity of the agreements that are reached in the award and the workplace agreements and the system generally of providing for appropriate mechanisms to resolve these disputes without resulting in the stoppage of work. This is particularly important in major projects where a stoppage of work can, in one aspect, have a ripple effect through a large amount of the work, cause enormous expenses and cause a lot of loss for subcontractors and contractors. In cases where it involves large projects for public benefits such as freeways and road works ultimately result in significant additional cost for the community generally in putting in place important infrastructure.
When considering the matter as a whole I also have regard to the maximum penalties provided for in s.49 which is 1000 penalty units for the first respondent and 200 penalty units for the second and third respondents and a penalty unit is presently around $110 per unit.
In the scheme of things it seems to me to be significant that this was a relatively minor stoppage. It occurred over a short period of time and involved a relatively small number of workers. I have regard to the submissions that the third respondent was, effectively, the right-hand man for the second respondent and that also warrants a differential in the penalty to be imposed. The prior histories of the two respondents for breaches under the Act are also different and significantly less than the prior history for the union as a whole.
Whilst the particular losses caused by the conduct imposed greater losses, it seems, on the members than anyone else it was nonetheless a breach in circumstances where there were real alternatives available and where the union has an unenviable history of past breaches.
In the circumstances, I am persuaded that the agreed penalty of $30,000 to be imposed on the first respondent is an appropriate penalty well within the reasonable range.
With respect to the second and third respondents I have regard to the much lesser maximum penalty that may be imposed and their respective roles in the particular case and the very different histories that they in comparison to the first respondent. Looking at the matter as a whole, I am persuaded that the penalties agreed are, likewise, well within the reasonable range and are appropriate penalties to be imposed in this case. I therefore impose penalties of $5,000 and $2,500, respectively, with respect to the second and third respondents.
It is appropriate the penalties be paid to consolidated revenue within 28 days. It is agreed between the parties that there be no order as to costs.
I therefore make orders in terms of the draft proposed orders with the alteration of the deletion of the words, “directing or procuring,” and replacing them with, “counselling or encouraging.”
I otherwise dismiss the proceedings.
I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Riethmuller FM
Date: 27 April 2011
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