Cruse v Construction, Forestry, Mining and Energy Union - [2009] FMCA 236

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CRUSE v CFMEU & ANOR

[2009] FMCA 236

INDUSTRIAL LAW – Stoppage of work during working hours – employees would lose 4 hours pay – therefore they walked off the site – organiser knew this was likely to happen – breach of BCII Act deliberate or likely – intended to cause maximum disruption.

PENALTIES – Assessment – discount for early admissions – no financial loss or delay in project detailed – discount as not “most serious” breach.

PENALTY – Organiser – breach of BCII Act deliberate or likely – suspension of penalty.

Building and Construction Industry Improvement Act 2005, ss.39, 69
Workplace Relations Act 1996, s.719
Commonwealth Crimes Act 1914, s.4AA

Australian Ophthalmic Supplies Ltd v McAlary-Smith [2008] FCAFC 8
Kelly v Fitzpatrick [2007] FCA 1080
Stuart Mahoney v CFMEU [2008] FCA 1426
Australian Building and Construction Commission [2007] AIRC 717
Temple v Powell [2008] FCA 714
Alfred v Walter Construction Group Limited [2005] FCA 497
Cruse v Multiplex Limited [2008] FCAFC 179
Veen v The Queen (1987) 164 CLR 465
Ponzio v B & P Caelli Constructions Pty Ltd[2007] FCAFC 65
Stuart v L.U. Simon Builders Pty Ltd [2009] FCA 107
AIG v AFMEPKIU & Ors [2001] FCA 774

Applicant:

WARREN CRUSE

First Respondent:

CONSTRUCTION FORESTRY MINING AND ENERGY UNION

Second Respondent:

ADRIAN MCLOUGHLIN

File Number:

MLG 479 of 2008

Judgment of:

Turner FM

Hearing date:

13 February 2009

Date of Last Submission:

13 February 2009

Delivered at:

Melbourne

Delivered on:

9 April 2009

REPRESENTATION

Counsel for the Applicant:

Mr O’Grady

Solicitors for the Applicant:

Lander & Rogers

Counsel for the Respondents:

Mr Dowling

Solicitors for the Respondents:

CFMEU

ORDERS

The first respondent, the CFMEU is to pay the amount of $27,500 into the Consolidated Revenue Fund on or before 30 April 2009.
The second respondent, Adrian McLoughlin is to pay $11,000.

The Court will suspend the payment of half that penalty in the amount of $5,500 until 1 May 2011. The second respondent, is not obliged to pay the suspended amount of $5,500 if, between the date of this judgment and 1 May 2011 (both exclusive), he is not adjudged to have breached a provision of the Building and Construction Industry Improvement Act 2005. The second respondent is to pay the non suspended amount of $5,500 into Consolidated Revenue Fund on or before 30 April 2009.
In default of payment by either respondent, the District Registrar must apply to this Court for directions covering the enforcement of the order.
The Court declares that the second respondent, Adrian McLoughlin contravened s.38 of the Building and Construction Industry Improvement Act 2005 by engaging in unlawful industrial action constituted by attendance at an unauthorised site meeting, and subsequent failure or refusal by the employees to return to work, by employees engaged to perform work at the Yarra Arts Site, Southbank Boulevard, Melbourne on 25 September 2006.
The Court declares that the second respondent, Adrian McLoughlin contravened each of the relevant disputes clauses in that:
(a)he did not follow the steps detailed in the disputes clauses; and
(b)work did not continue as normal, or without interruption, while the disputed clauses were followed.
The Court declares that the first respondent, the CFMEU contravened s.38 of the Building and Construction Industry Improvement Act 2005 by engaging in unlawful industrial action constituted by attendance at an unauthorised site meeting, and subsequent failure or refusal by the employees to return to work, by employees engaged to perform work at the Yarra Arts Site, Southbank Boulevard, Melbourne on 25 September 2006.
The Court declares that the first respondent, the CFMEU contravened each of the relevant dispute clauses in that:
(a)it did not follow the steps detailed in the clauses; and
(b)work did not continue as normal, or without interruption, while the dispute clauses were followed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 479 of 2008

WARREN CRUSE

Applicant

And

CONSTRUCTION FORESTRY MINING AND ENERGY UNION

First Respondent

ADRIAN MCLOUGHLIN

Second Respondent

REASONS FOR JUDGMENT

The applicant is an Australian Building and Construction Inspector appointed under the Building and Construction Industry Improvement Act 2005 (the “BCII Act”).
The Court referred the matter to mediation. The parties then signed a Statement of Agreed Facts (“SAF”). By order dated 15 October 2008, the matter was listed for trial on the issue of penalty only.
The applicant alleges that the CFMEU, and one of its organisers and officers Adrian McLoughlin (“McLoughlin”) contravened s.38 of the BCII Act which provides:
“A person must not engage in unlawful industrial action.

Note: Grade A civil penalty”
A claim that the respondents breached s.719 of the Workplace Relations Act 1996 was not pressed at the hearing (Court Transcript page 2, line 44).
In the SAF the parties agreed as follows:
·That the CFMEU was a party to a certified agreement called the “Bovis Lend Lease / CFMEU Joint Development Agreement Mark 6 (2005)” (the “Bovis Agreement”). The Bovis Agreement regulated the employment of the members of the CFMEU while employees of Bovis Lend Lease Pty Ltd (“Bovis”) at the Yarra Arts Complex on the Yarra Arts Site.
·That the CFMEU was a party to a certified agreement called the “Diso Agreement” that applied to members of the CFMEU while employees of Diso Constructions Pty Ltd (“Diso”) at the Yarra Arts Complex / Site.
·That the CFMEU was a party to a certified agreement called the “Sergi Agreement” that regulated the employment of members of the CFMEU while employees of Sergi Constructions Pty Ltd (“Sergi”) at the Yarra Arts Complex / Site.
·That the CFMEU was a party to a certified agreement called the “W & M Excavations Agreement” that regulated the employment of members of the CFMEU while the employees of W & M Excavations Pty Ltd (“W & M”) at the Yarra Arts Complex / Site.
·That the work performed by employees of Bovis, Diso, Sergi and W & M was “building work” for the purposes of BCII Act.
·
At 10.30 am on 25 September 2006 the second respondent (“McLoughlin”) attended the Yarra Arts Complex / Site and spoke with the Bovis site manager. McLoughlin then entered Yarra Arts Complex / Site without permission and said to the site manager “We’re having an industrial meeting, and that the parties were in dispute over a number of issues in their Enterprise Bargaining Agreement” (the “EBA”). The site manager refused the request from McLoughlin to conduct a site meeting with the Yarra Arts Complex / Site employees during working hours. The site manager told McLoughlin that he would have to deduct the Bovis employees 4 hours pay if they had the site meeting.

McLoughlin then called the employees to the sheds for a site meeting, which lasted from 11.00 am to 11.30 am. The site meeting was attended by 25 Diso employees, 9 W & M employees, 4 Bovis employees and 3 Sergi employees. Following the meeting the majority of the employees who attended the meeting (other than Sergi and Bovis employees) failed or refused to return to work and left the Yarra Arts Complex / Site for the remainder of the day. The site meeting was a failure or refusal to attend for building work, and a ban, limitation or restriction on the performances of building work in accordance with the terms of the certified agreements and therefore “building industrial action” for the purposes of the BCII Act. The action was “constitutionally connected”.
·The site meeting and failure or refusal to return to work adversely affected Bovis, Sergi, Diso and W & M. The industrial action was industrially motivated for the purposes of the BCII Act and was “unlawful industrial action” engaged in, in contravention of s.38 of the BCII Act. The conduct of the Yarra Arts Site employees was conduct of a group of members of the CFMEU that was authorised by McLoughlin who was an authorised officer of the CFMEU acting in his capacity as an organiser, and as a result was conduct of the CFMEU (s.69 BCII Act). Consequently the CFMEU contravened s.38 of the BCII Act. McLoughlin was involved in the industrial action as he called the meeting notwithstanding that it was inconsistent with the disputes procedure in Bovis Agreement, and he advised the employees that they would be docked 4 hours pay for attending the meeting.
·He was aware that a walk-out was likely as the employees were to be docked 4 hours pay when only 5½ hours of working time remained that day. It was open to McLoughlin to conduct a meeting during the lunch break at 12.30 pm. As a result McLoughlin engaged in, and was involved in unlawful industrial action in contravention of s.38 of the BCII Act.
·
It is agreed that the respondents admitted the contraventions at the earliest available opportunity upon the commencement of the proceedings, and that the CFMEU had 103,850 members at the relevant time and made a profit to 31 December 2007 of $15,537.00, and had cash funds of $661,190.00.

The Construction and General Division made a loss for that year of $653,258.00 and had accumulated funds of $8,239,524.00 and cash funds of $529,354.00.

Suspension of permit to enter

The relevant events were considered by the Senior Deputy President Watson of the Australian Industrial Relations Commission. As a result, McLoughlin’s permit to enter and inspect the premises was suspended for two months, with renewal conditions on McLoughlin attending training about the responsibility of permit holders. McLoughlin undertook that training.
There is no agreement as to how much time was lost as a result of unlawful industrial action; the applicant says 4 hours, the respondents say 3 hours. In the scale of things the precise figure is of little significance. The result of not returning to work must have been that the employees were not available for work, although the employers say that their timetable was not adversely affected. No figure of monetary loss was put to the Court.
By order dated 15 October 2008 the matter was listed for trial on the issue of penalty only.

Submissions for the applicant (by Mr O’Grady)

The maximum Grade A civil penalty is 1000 penalty units if the defendant is a body corporate and otherwise 200 penalty units. Therefore the maximum for the CFMEU is $110,000 and $22,000 for McLoughlin (s.4AA Commonwealth Crimes Act 1914).

Principles governing the assessment of penalties

Australian Ophthalmic Supplies Ltd v McAlary-Smith [2008] FCAFC 8 per Justice Graham at para 53, 54 and 56
“53 In v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543 (‘Ponzio’) at [93]-[94] Lander J summarised the purpose of imposing penalties for breaches of the Act as follows:
‘93 There are three purposes at least for imposing a penalty: punishment; deterrence; and rehabilitation. The punishment must be proportionate to the offence and in accordance with the prevailing standards of punishment: R v Hunter (1984) 36 SASR 101 at 103. Therefore the circumstances of the offence or contravention are especially important. The penalty must recognise the need for deterrence, both personal and general. In regard to personal deterrence, an assessment must be made of the risk of re-offending. In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217. In some cases, although hardly in this type of contravention, rehabilitation is an important factor.
94 The individual or personal circumstances of the contravenor must be taken into account as also any relevant matter in mitigation. For a contravention of these sections the minimum penalty which addresses punishment and deterrence, both personal and general, will be appropriate. Where one act may involve a number of contraventions, as in this case, it would be generally inappropriate to impose separate penalties because almost inevitably that would offend against the totality principle as known to the criminal law. ...’
54 The ultimate control on the judicial sentencing discretion is the requirement that the sentence be proportionate to the gravity of the offence committed. In pursuit of other sentencing purposes, a judge may not impose a sentence that is greater than is warranted by the objective circumstances of the crime. Both proportionality and consistency commonly operate as final checks on a sentence proposed by a judge (per McHugh J in Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 (‘Markarian v The Queen’) at [83]; see also Veen v The Queen (No. 2) [1988] HCA 14; (1988) 164 CLR 465 at 472).
…
56 …Another form of comparison is not appropriate. The facts of the instant case should not be compared with a particular reported case in order to derive therefrom the amount of the penalty to be fixed. Cases are authorities for matters of principle; but the penalty found to be appropriate, as a matter of fact, in the circumstances of one case cannot dictate the appropriate penalty in the different circumstances of another case. The point was well made by Spender J in Trade Practices Commission v Annand and Thompson Pty Ltd [(1987) ATPR |P40-472] (at 48,394) when he said:
"Each case must, of course, be viewed on its own facts and facts may be infinite in their variety.”
It follows, as his Honour also said, that "[t]he quantum of penalties imposed in other cases can seldom be of very much direct assistance.”
At [60] of Australian Ophthalmic (supra) Justice Graham refers to the following passage by Justice Tracey in Kelly v Fitzpatrick [2007] FCA 1080 that identified at [14] various considerations that were potentially relevant as follows:
“The nature and extent of the conduct which led to the breaches.
• The circumstances in which that conduct took place.
• The nature and extent of any loss or damage sustained as a result of the breaches.
• Whether there had been similar previous conduct by the respondent.
• Whether the breaches were properly distinct or arose out of the one course of conduct.
• The size of the business enterprise involved.
• Whether or not the breaches were deliberate.
• Whether senior management was involved in the breaches.
• Whether the party committing the breach had exhibited contrition.
• Whether the party committing the breach had taken corrective action.
• Whether the party committing the breach had cooperated with the enforcement authorities.
• The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and
• The need for specific and general deterrence.”
In Stuart Mahoney v CFMEU [2008] FCA 1426 at [39] and [40] Justice Tracey set out the potentially relevant considerations for determining the appropriate penalty for a contravention of the BCII Act.

Those paras provide:
“39 In Kelly v Fitzpatrick (2007) 166 IR 14 I set out a non-exhaustive range of considerations to which regard may be had in determining whether conduct calls for a penalty, and if so, the amount of such penalty. These considerations were derived from a number of decisions of this Court including Trade Practices Commission v CSR Ltd [1991] HCA 7; [1991] ATPR 52,135 (41-076) (which concerned contraventions of the Trade Practices Act 1974 (Cth)) and Construction, Forestry, Mining and Energy Union v Coal and Allied Operations Pty Ltd (No 2) (1999) 94 IR 231 (which concerned contraventions of Part XA of the WR Act).
40 In my view, potentially relevant and applicable considerations for determining the appropriate penalty for a contravention of the BCII Act include:
• The nature and extent of the conduct which led to the breaches.
• The circumstances in which that relevant conduct took place.
• The nature and extent of any loss or damage sustained as a result of the breaches.
• Whether there had been similar previous conduct by the respondent.
• Whether the breaches were properly distinct or arose out of the one course of conduct.
• The size of the business enterprise involved.
• Whether or not the breaches were deliberate.
• Whether senior management was involved in the breaches.
• Whether the party committing the breach had exhibited contrition.
• Whether the party committing the breach had taken corrective action.
• Whether the party committing the breach had cooperated with the enforcement authorities.
• The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements.
• The need for specific and general deterrence.
cf Hadgkiss v Aldin [2007] FCA 2068; (2007) 164 FCR 394 at [61]; Furlong v Australian Workers Union (2007) 162 IR 171 at [7] – [10]; Carr v Communications, Electrical, Electronic, Engineering, Information, Postal, Plumbing and Allied Services Union of Australia [2007] FMCA 1526 at [7]; and Cruse v Construction Forestry Mining and Energy Union [2007] FCA 1873 at [71].”
Ibid at paras 56-59:
“56 … The principal object of the BCII Act is "to provide an improved workplace relations framework for building work to ensure that building work is carried out fairly, efficiently and productively for the benefit of all building industry participants and for the benefit of the Australian economy as a whole" (s 3(1)). The BCII Act aims to achieve this object through various means, including, relevantly, for present purposes:
• promoting respect for the rule of law (s 3(2)(b));
• ensuring respect for the rights of building industry participants (s 3(2)(c)); and
• ensuring that building industry participants are accountable for their unlawful conduct (s 3(2)(d)).
57 The imposition of pecuniary penalties for contraventions of civil penalty provisions gives effect to the statutory purposes of the BCII Act.
Deterrence
58 In my view, in light of the statutory purposes of the BCII Act, the need for general deterrence for contraventions of the BCII Act is particularly strong. Penalties must be imposed at a meaningful level if they are to serve as a general deterrent to others who may be disposed to engaged in proscribed conduct see: for example, Australian Competition and Consumer Commission v IPM Operation and Maintenance Loy Yang Pty Ltd (No 2) [2007] FCA 11 at [66]; Finance Sector Union of Australia v Commonwealth Bank of Australia (2005) 147 IR 462 at [41]; Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd [2001] FCA 383; [2001] ATPR 41-815 at [13].
59 I accept the applicant’s submissions that there is also a need for the penalty to have a specific deterrent effect on the CFMEU and Parker. There is no evidence of any regret contrition or remorse on the part of the CFMEU or Parker. The contraventions were substantial contraventions of the prohibition on coercion in relation to the engagement of building employees and the prohibition on unlawful industrial action. The respondent’s position is that no pecuniary penalty should be imposed against the CFMEU or Parker. Were the Court to accept this submission and act on it no meaningful penalty would be imposed and nothing would be done to dissuade the CFMEU and Parker from again contravening s 38 or s 43 of the BCII Act.”

In the matter now before the Court the respondents submit that no penalty should be imposed on McLoughlin. That submission is rejected. Were the Court to accept that submission and impose no penalty on McLoughlin, nothing would be done to dissuade McLoughlin from again contravening s.38 of the BCII Act, or to deter others, in particular officers and/or organisers of organisations, from breaching s.38.
The applicant provided a list of various cases where penalties have been imposed on organisations and individuals for various forms of industrial actions in contravention of s.38, that the range of penalties imposed (applicant’s Outline of Submissions on Penalty, para 11).
The applicant submits that the relevant considerations are:
·The suspension of the permit to enter by Senior Deputy President Watson (Australian Building and Construction Commission [2007] AIRC 717) was not the imposition of a penalty for an abuse of rights conferred by Part 15 of the Workplace Relations Act Ibid [215], and was not imposed for the purposes of punishment, but to protect others from the misuse of the entry permit. It is submitted that the suspension is not any sort of “prior dealing” with the contravention of s.38.
·McLoughlin ignored the opportunity to conduct the meeting during lunch time and thereby not disrupt work.
·It is submitted that the Court should not accept that McLoughlin mistakenly relied on the disputes procedure, as there is nothing before the Court to support that assertion.
·It is submitted that the contravention of s.38 was deliberate because McLoughlin was aware that once the employees attended the meeting, they would be docked 4 hours pay and would therefore leave the site.
·The industrial action had an adverse impact on each of the employers (SAF [29]).
·There are no prior contraventions alleged against McLoughlin. The CFMEU has already been punished for its prior contravention which disentitles it from securing any discount for “having a clean slate”.
·Prior contraventions of the same or similar legislation are relevant in assessing penalty. Temple v Powell [2008] FCA 714 per Dowsett J at [64]:
“64 The respondents submitted that "... prior contraventions of industrial legislation per se should not be taken into account when assessing prior conduct. What should be relevant is prior breaches of provisions which contain the same elements in the case under consideration." I do not accept that proposition. On the criminal side, it has never been suggested that only previous convictions for offences similar to that charged are relevant to sentence. Rather, a sentencing court looks to the general record of conduct of the relevant offender, his or her attitude to the law as disclosed by such conduct, apparent attempts at rehabilitation and similar considerations. Repeated conduct of a particular kind may lead to an identified need to provide some particularly persuasive form of deterrent against similar future misconduct.”
·The BCII Act sets penalties in the full awareness that contraveners will not be not-for-profit organisations.
·The financial information (SAF [40] and [41]) shows sufficient resources from which a penalty can be paid.
·There has been no expression of contrition by either respondent.
·Both respondents admitted the contraventions at the earliest opportunity (applicant’s Outline of Submissions on Penalty at [20]).

Submissions for the respondent (by Mr Dowling)

Principles governing assessment on penalties

Relevant considerations:
a)the nature of the conduct;
b)the period of the conduct;
c)the effect of the conduct;
d)whether the respondents have previously been found to have engaged in conduct in contravention of the relevant part of the Act;
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)whether the breach was deliberate;
g)the conduct of the senior officers of the first respondent;
h)the financial position and nature of the respondents;
i)whether there has been corrective action and contrition;
j)the cooperation of the respondents;
k)the need, in the circumstances, for deterrence.
Mr Dowling submits that although relevant, they are not mandatory considerations. The Court accepts that submission. Australian Ophthalmic Ibid [91].
Under the heading of the “nature, period and effect of the conduct” it is contended that McLoughlin mistakenly held the view that he was able to call the meeting under clause 21 of the Bovis Agreement.

The applicant states correctly that there is nothing in the material, including the SAF to support that contention. There is nothing before the Court on which to base an acceptance of that contention. It is contended that McLoughlin did not engage in conduct for his own personal gain. The Court accepts that contention. However it is far outweighed by the fact that McLoughlin decided not to hold the meeting at lunchtime. He thereby put in train a course of events with the probable result that the employees would walk-off the site for the remainder of the day (SAF [36(f)]) (Court Transcript page 23, line 10). Even though he did not direct them to walk-off (SAF [36(f)]) he at least took the risk that they would. He was aware what the likely result would be (SAF [36(f)]) (Court Transcript page 23, line 31). (Bold added by the Court).
The Court accepts the contention that the conduct was not engaged in by any other officers or officials of the CFMEU. The Court rejects the contention that the conduct was not engaged in by any other members of the CFMEU (SAF [34)].
It is contended that it is not a case of “…positive acts in support of industrial action”. However, at the very least McLoughlin knew what the likely result of the stop work meeting would be and refused to take the alternative course to avoid it. By doing so he took a positive step towards causing the walk-off.
It is contended that as the walk was for 3.5 hours (allowing for the Ÿ5 hour unpaid lunch break), and there is no evidence of financial loss or resultant delay, the penalties should be low, compared with those imposed for stoppages of longer duration (1 day stoppage – $11,000 and $8,000. 2 day stoppage $40,000 and $4,000. 2.5 days stoppage – $35,000 and $7,000. 2 day strike by 400 employees – $12,000 and $2,500).
It is contended that prior contraventions may justify a heavier penalty than may otherwise be imposed but they cannot lead to a penalty that is disproportionate to the gravity of the instant offence. The Court agrees.
It is contended that prior contraventions by another branch or division of the CFMEU, or for which a penalty was not imposed before

25 September 2006
(being the date of the instant industrial action), should not be taken into account. Mr O’Grady refers to the decision of Justice Branson Alfred v Walter Construction Group Limited [2005] FCA 497 at [13]:
“13 The third respondent has previously been found to have engaged in conduct in contravention of s 170NC of the Act. That contravention occurred on 15 October 2002. However, the relevant judgment of the District Court of New South Wales was published after the date of the conduct with which this proceeding is concerned. For this reason I do not consider it appropriate to fix the amount of the penalty to be imposed on the basis that the third respondent engaged in the contravening conduct after having been found to have earlier contravened s 170NC. However, nor do I consider it appropriate to mitigate the penalty otherwise appropriate on the basis that the contravening course of conduct on the Site was an isolated instance of contravening conduct entirely uncharacteristic of the third respondent.”
It is disclosed that McLoughlin has a gross annual income of $60,000.
It is submitted that McLoughlin has showed contrition by attending training on right of entry obligations. Senior Deputy President Watson imposed a requirement that McLoughlin attend such training.

McLoughlin wished to regain his permit and was directed to attend the training. Attendance at the course does not show contrition.
It is submitted that McLoughlin has been punished in respect if the conduct on 25 September 2006 by the revocation of his permit to enter. As decided above, the revocation of his permit was not punishment of McLoughlin, but action to protect others.
It is submitted that both respondents have shown contrition by their admissions and cooperation [SAF 39] and the “detailed training” undertaken by McLoughlin. As decided above the training is not regarded as contrition. Nor are the admissions or cooperation.

They do not show contrition, they show that they admitted contravening the law. They are however, factors in their favour.
It is contended that the suspension of McLoughlin’s permit to enter is sufficient specific and general deterrence. The Court rejects that contention.
It is contended that there is no utility in making the declarations sought as to do so would do nothing more than “record the result of the case”. Cruse v Multiplex Limited [2008] FCAFC 179. In para 50 Goldberg and Jessup JJ state:
“50 It is, in our view, as well to recall that there are at least five different situations in which the court might, for various reasons, express a reluctance to make orders of a particular kind – specifically, in the present context, declarations. They are:
1. Where the dispute said to underlie the proceeding as a whole is entirely hypothetical, thereby not properly attracting the exercise of the judicial power of the Commonwealth.
2. Where, in a proceeding conventionally commenced and properly attracting the judicial power of the Commonwealth, the underlying dispute has been settled, and it is part of the settlement that the court should be asked to make particular orders by consent.
3. As in situation 2, but where the parties are not agreed on the remedial orders which should be made (albeit that the facts and law are agreed or not controversial).
4. Where the terms of the declaration sought record the result of the case, but do not establish the content of the parties’ ongoing rights or obligations.
5. Where the declarations sought are in the form of what Gummow, Hayne and Heydon JJ described as "a bad precedent" in Rural Press Limited v Australian Competition and Consumer Commission [2003] HCA 75; (2003) 216 CLR 53, 91 [90].”
At first instance in Cruse supra the trial Judge exercised his discretion to refuse declaratory relief because the “contraventions to which the declarations would have related were established by the agreement of the parties, not by the adjudication of the Court.” Cruse Ibid [49].
Their Honours stated at [51]:
“51 The reason given by the trial Judge in the present case for declining to make a declaration corresponded with what we have described as the third situation in the previous paragraph. With respect to his Honour, we do not consider that the judgment of Gray J in Carr v Higgins Coating (2005) 148 IR 201 was, in relevant respects, precedent for regarding the mere fact that the matters in contention in the proceeding had been settled, and that the facts and law were thereafter agreed or uncontroversial, as a sufficient basis for declining to make a declaration, where otherwise one would have been appropriate.”
It is contended that any penalty “should be at the lower end if the maximum” provided for by s.38 of the BCII Act. See Veen v The Queen (1987) 164 CLR 465 at 478 per Mason CJ, Brennan and Toohey JJ
“The second subsidiary principle material to this case is that the maximum penalty prescribed for an offence is intended for cases falling within the worst category of cases for which that penalty is prescribed: Ibbs v The Queen [36] . That does not mean that a lesser penalty must be imposed if it be possible to envisage a worse case; ingenuity can always conjure up a case of greater heinousness. A sentence which imposes the maximum penalty offends this principle only if the case is recognizably outside the worst category.”
Although that decision relates to the criminal law, the Court accepts that the statement applies to the assessment of penalties in this matter.
The respondents submit that the appropriate level of penalty for the CFMEU is $5,000 - $7,000, and nil for McLoughlin who is said to have “already been punished for the relevant conduct.”
Mr Dowling acknowledges that all matters in the table in para 11 of the applicant’s written Outline of Submissions relate to contraventions of s.38 of the BCCII Act (Court Transcript page 28, line 42), but states that only contraventions for which penalties were imposed before

25 September 2006 are relevant. On this basis, the respondents submit that none of the matters in the table are prior contraventions (Court Transcript page 31, line 5). That submission is accepted.
Mr Dowling submits that the suspension of McLoughlin’s permit to enter should be regarded as specific deterrence of McLoughlin.
Relying on the decision in Ponzio v B & P Caelli Constructions Pty Ltd[2007] FCAFC 65 Mr Dowling submits that if the Court imposes a penalty on McLoughlin it should be suspended for 6 to 12 months, so that he is only obliged to pay the penalty if there is a contravention (Court Transcript page 41, line 6).

Assessment of penalty

The parties agree that there was one breach only of s.38 by each respondent (Court Transcript page 3, line 8).
The applicant has not quantified the penalties sought. The respondents submit that the range of penalty for the CFMEU is $5,000 to $7,000, and nil for McLoughlin.
“The nature and extent of the conduct that led to the breaches”.

The conduct was a stoppage during working hours that led employees to leave the site for 3.5 to 4 hours. The employers do not quantify the financial loss and say that their work schedule was not delayed.

Obviously the employers were deprived of the availability for work of the 34 employees who walked off the site, out of a total of 41 employees on the site (Court Transcript page 25, line 38).
The nature of the conduct of McLoughlin is that, in circumstances where he could have held the meeting at lunchtime and avoided the walk–out, he held it during working hours knowing that the employees would be docked for 4 hours pay, and therefore would be likely to walk-off the site for remainder of the day. The nature of the conduct is serious and designed to cause the employers harm. Both McLoughlin and the CFMEU are responsible for the conduct. The extent of the conduct is that 83% of the employees on the site walked off after the meeting.
The circumstances in which the conduct took place have been considered above.
“The period and effect of the conduct, and the nature and extent of the loss or damage sustained as a result?” The conduct lasted between 3.5 and 4 hours and the employers have not provided detail of the loss or damage suffered. As stated above, one of the effects of the conduct is that 83% of the employees on site walked off. Even if no loss or damage is quantified, it is obvious that it must have occurred unless those employees had no work to perform on that afternoon.
“Whether there has been similar conduct or prior contraventions by the respondents?” No priors are alleged against McLoughlin. Priors are alleged against the CFMEU but the Court accepts that as penalties were not imposed in those matters before the conduct in this matter took place, they are not to be considered as prior contraventions.

However the Court adopts the statement by Justice Branson in Alfred v Walter Construction supra that it is “not appropriate to mitigate the penalty otherwise on the basis that the contravening course of conduct on the site was an isolated instance of contravening conduct entirely uncharacteristic of the third respondent”. The cases referred to by the applicant in the table in para 11 of its written Outline of Submission show that it is not uncharacteristic for the CFMEU to breach s.38 of the BCII Act. It will not receive a discount for not having priors.
“Whether the breach arose out of the one course of conduct”.

The parties have agreed that there was one breach only by each respondent.
“The size of the business enterprises involved?” The Court does not have information relevant to this issue.
“Whether or not the breaches were deliberate?” McLoughlin was aware that when he decided not to hold the meeting at lunchtime and called the meeting during working hours, the employees would be docked 4 hours pay and would therefore be likely to walk-off the site for the remainder of the day. The Court accepts that McLoughlin chose to conduct the meeting during work hours so as to cause maximum disruption. The breach by him was deliberate. The CFMEU is responsible also for the deliberate action carried out on its behalf.
“Whether senior management was involved in the breaches?” It is not suggested that senior officials of the CFMEU were involved,
“The financial position of the respondents”. The CFMEU has cash reserves sufficient to pay any penalty imposed within the limits set out above. The Construction and General Division had accumulated funds for the year ending 31 December 2007 of $8,239,524.00 and cash funds of $529,354.00 (SAF para 40). The CFMEU had accumulated funds of $382,393.00 and cash funds of $661,190.00 for the same period. McLoughlin has an annual income of $60,000.00. They are each in a financial position to pay appropriate penalties.
“Whether there has been corrective action or contrition?”

The Court does not accept that McLoughlin attending a course on right of entry shows contrition. He was required to do that in order to regain his permit to enter (Order of Senior Deputy President Watson

29 August 2007) – (Annexure “AMI” to the Statement of McLoughlin – Exhibit R3 herein). His completion of the courses does not show that corrective action has been taken by him and the CFMEU. Events compelled McLoughlin to undertake the course
Both respondents have cooperated with the applicant, since the allegations of contravention were made against them. The SAF shows the extent of the cooperation.
“The need for general and specific deterrence ”. Specific deterrence is needed to prevent McLoughlin, the CFMEU, its officers and organisers from disrupting the building industry with unlawful industrial action. General deterrence is needed to prevent organisations, corporations and individuals from contravening the BCII Act. The need for general deterrence for contraventions of BCII Act is particularly strong, per Justice Tracey in Stuart Mahoney supra at [58]:
“58 In my view, in light of the statutory purposes of the BCII Act, the need for general deterrence for contraventions of the BCII Act is particularly strong. Penalties must be imposed at a meaningful level if they are to serve as a general deterrent to others who may be disposed to engaged in proscribed conduct see: for example, Australian Competition and Consumer Commission v IPM Operation and Maintenance Loy Yang Pty Ltd (No 2) [2007] FCA 11 at [66]; Finance Sector Union of Australia v Commonwealth Bank of Australia (2005) 147 IR 462 at [41]; Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd [2001] FCA 383; [2001] ATPR 41-815 at [13].” (Bold added by the Court to paras 39, 42-49 and 51 )

The CFMEU

The contravention is not the most serious that may occur. However it resulted in 83% of the employees on site, walking off for between 3.5 and 4 hours. The respondents admitted the contraventions at an early opportunity. No dollar cost or delay to work is detailed. The Court will apply a discount of 50% for these factors. There are no relevant priors alleged. The Court will not apply a further discount for this factor (Branson J in Alfred v Walter supra). The CFMEU has shown contrition by agreeing to the facts alleged. The Court will apply a further discount of 25%. The maximum penalty for the CFMEU is $110,000. Applying a discount of 75%, the appropriate penalty is $27,500. The CFMEU is to pay that amount into the Consolidated Revenue Fund on or before 30 April 2009.

McLoughlin

Similar considerations apply to McLoughlin, providing an initial discount of 75%. However he conducted the meeting when he did, knowing that the likely result was that employees would walk–off. Even if causing the walk-off was not deliberate, the Court would impose the same penalty for disregarding of the likely consequences. 25% will be added back for this factor. There is a risk that he will reoffend. The maximum penalty is $22,000. Applying a discount of 50%, the appropriate penalty is $11,000. The Court will suspend the payment of half that penalty until 1 May 2011. McLoughlin is not obliged to pay the suspended amount of $5,500 if, between the date of this judgment and 1 May 2011 (both exclusive), he is not adjudged to have breached a provision of the BCII Act (see Ponzio v B & P Caelli Constructions Pty Ltd[2007] FCAFC 65) and Justice Marshall in Stuart v L.U. Simon Builders Pty Ltd [2009] FCA 107. McLoughlin is to pay the non suspended amount of $5,500 into the Consolidated Revenue Fund on or before 30 April 2009.
In default of payment by either respondent, the District Registrar must apply to this Court for directions recovering the enforcement of the order (AIG v AFMEPKIU & Ors [2001] FCA 774 at [17]).

Declarations

The applicant seeks declarations relating to both respondents.
The declarations do more than record the result of the case.
They specify what the contraventions involved and may be of use to the applicant for that purpose. In any event the Court refers to the judgment of Goldberg and Jessup JJ in Cruse v Multiplex Limited supra at [53]:
“53 As Gray J noted in Carr, the joint judgment in Rural Press has at least implicitly given approval to declarations of the kind referred to in the fourth situation mentioned above; provided always, of course, that the form of such declarations avoids the "bad precedent" referred to in the fifth situation. There can, therefore, be no objection in principle to the making of a declaration where the purpose and utility thereof is formally to record the basis upon which the proceeding in question has been resolved (whether by adjudication or otherwise). We agree with the way the matter was put by Lee J in Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd [2004] FCA 693; (2004) 207 ALR 329, 333 [21]:
‘However, on the other hand it may be said that there is some utility in declaring contraventions of the Act to have occurred in order to define and publicise the type of conduct that constitutes a contravention of the Act and to set out clearly the foundation on which the consequential orders by way of injunction and pecuniary penalty, including those based on accessorial liability, are grounded’…”
The applicant is entitled to the declarations sought and the Court makes them.

I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of Turner FM

Associate: Kirra Vickerman

Date: 9 April 2009