Director of Fair Work Building Industry Inspectorate v CFMEU, CFMEUW and McDonald
[2013] FCCA 1255
•4 September 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE v CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION & ORS (NO.2) | [2013] FCCA 1255 |
| Catchwords: INDUSTRIAL LAW – Contravention of Workplace Relations Act 1996 (Cth) – penalty – factors to be considered. |
| Legislation: Building and Construction Industry Improvement Act 2005 (Cth), s.38 |
| Cases cited: Alfred v Wakelin (No. 1) [2008] FCA 1455 Australian Building and Construction Commissioner v Construction, Forestry, Mining & Energy Union [2011] FCA 810 Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; [2008] FCAFC 8 Construction, Forestry, Mining and Energy UnionvAustral Bricks (Qld) Pty Ltd (2009) 178 IR 470; [2009] FMCA 143 Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Stuart-Mahoney vConstruction, Forestry, Mining and Energy Union (2008) 177 IR 61; [2008] FCA 1426 Veen v The Queen (No. 2) (1988) 164 CLR 465 |
| Applicant: | DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE |
| First Respondent: | CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION |
| Second Respondent: | CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION OF WORKERS |
| Third Respondent: | JOSEPH MCDONALD |
| File Number: | PEG 167 of 2009 |
| Judgment of: | Judge Lucev |
| Hearing date: | 5 August 2013 |
| Date of Last Submission: | 5 August 2013 |
| Delivered at: | Perth |
| Delivered on: | 4 September 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr R L Hooker |
| Solicitors for the Applicant: | Corrs Chambers Westgarth |
| Counsel for the First, Second and Third Respondents: | Mr J Nicholas |
| Solicitors for the First and Second Respondents: | Construction, Forestry, Mining and Energy Union |
| Solicitors for the Third Respondent: | MacLean Legal |
ORDERS
The First Respondent pay a penalty of $3300.
The Second Respondent pay a penalty of $3300.
The Third Respondent pay a penalty of $660.
Each of the penalties referred to in Orders 1, 2 and 3 be paid to the Commonwealth Consolidated Revenue Fund by 2 October 2013.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 167 of 2009
| DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE |
Applicant
And
| CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION |
First Respondent
| CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION OF WORKERS |
Second Respondent
| JOSEPH MCDONALD |
Third Respondent
REASONS FOR JUDGMENT
Introduction
In Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union & Ors[1] the first respondent, the Construction, Forestry, Mining and Energy Union,[2] a federally registered union, and the second respondent, the Construction, Forestry, Mining and Energy Union of Workers,[3] a union registered in Western Australia, and the third respondent, Joseph McDonald,[4] who was an assistant secretary of the CFMEU and the CFMEUW, were found liable for a contravention of s.494(1) of the Workplace Relations Act 1996 (Cth)[5] which provides that an employee or industrial association must not organise or engage in industrial action before the nominal expiry date of a collective agreement.
[1] (2012) 271 FLR 7; [2012] FMCA 946 (“Fair Work Building Industry Inspectorate”).
[2] “CFMEU”.
[3] “CFMEUW”.
[4] “Mr McDonald”.
[5] “WR Act”; Fair Work Building Industry Inspectorate FLR at 36 per Lucev FM; FMCA at paras.121-122 per Lucev FM.
Appeal
Fair Work Building Industry Inspectorate was appealed, and the appeal was heard by a Full Court of the Federal Court of Australia.[6] The appeal was dismissed,[7] but in so doing the Full Court of the Federal Court observed as follows:
… It would be appropriate, however, to note that in the circumstances of the conclusions reached by his Honour, the employees’ concern in being notified that their wages would be docked for four hours was justified as there was no proper basis for their pay to be docked. Given that the action to which they responded was not lawfully authorised, their response is perhaps understandable. In those circumstances the consequence as far as the appellants are concerned is somewhat unfortunate. These considerations, however, are not relevant so much to liability as to considerations of penalty, if any. In the peculiar circumstances of this case, the infractions would appear to be relatively minor.[8]
Findings at first instance in Fair Work Building Industry Inspectorate
[6] Construction, Forestry, Mining and Energy Union v Director of Fair Work Building Industry Inspectorate [2013] FCAFC 53 (“Fair Work Building Industry Inspectorate Appeal”).
[7] Fair Work Building Industry Inspectorate Appeal at para.20 per Marshall, Siopis and McKerracher JJ.
[8] Fair Work Building Industry Inspectorate Appeal at para.20 per Marshall, Siopis and McKerracher JJ.
At first instance in Fair Work Building Industry Inspectorate the following findings in relation to the contravention of s.494(1) of the WR Act by each of the respondents were made:
a)on 12 September 2008, Mr McDonald addressed a meeting of workers at “The Peninsula” construction site in Burswood, Western Australia,[9] managed by Mirvac Constructions (WA) Pty Ltd,[10] and at which Mr McDonald called for a show of hands in support of a resolution to stop work for the rest of the day, which was passed;
[9] “Site”.
[10] “Mirvac”.
b)the meeting was a toolbox meeting attended by workers at the Site;
c)the toolbox meeting did not constitute unlawful industrial action;
d)following an enquiry from a person at the toolbox meeting, it was adjourned while Mr McDonald enquired of Mirvac management whether the workers would have their pay docked for attending the toolbox meeting;
e)after being told that workers would have their pay docked, the toolbox meeting was reconvened and Mr McDonald engaged in the conduct, that is asking for a show of hands on the resolution, which followed a visceral reaction by the workers to news that their wages were to be docked for the first four hours of 12 September 2008 as a result of their attendance at the toolbox meeting;
f)the stoppage was motivated by the docking of employees’ wages for the first four hours of 12 September 2008;
g)the overwhelming majority of those workers subsequently left the Site for the remainder of the day, but the claim under s.494(1) of the WR Act was limited to employees of Mirvac;
h)only four of Mirvac’s 22 direct-hire employees performed any work at the Site on 12 September 2008;
i)the stoppage was a stoppage of work for four hours after 1pm on 12 September 2008, which constituted industrial action because it was a failure by employees to attend for work at a time when they were contracted to attend for work;
j)Mr McDonald’s conduct was in his capacity as assistant secretary of the CFMEU and the CFMEUW. Further, such actions were sufficient to establish that Mr McDonald was, for all practical purposes, the directing mind and will of the CFMEU and the CFMEUW at the meeting; and
k)the CFMEU and CFMEUW were directly and vicariously liable for Mr McDonald’s conduct.[11]
[11] Fair Work Building Inspectorate, FCR at 28-35 per Lucev FM; FMCA at paras.86-114 per Lucev FM.
General principles for determining penalties for a civil contravention
The courts have regard to general principles which have been developed in relation to the imposition of penalties, including the following:
a)fundamentally, the penalty must be proportionate to the gravity of the contravening conduct;[12]
[12] Attorney-General (SA) v Tichy (1982) 30 SASR 84 at 92 per Wells J; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2011] FCA 810 at para.25 per Gilmour J (“ABCC”).
b)penalties are imposed for the following purposes:
i)punishment, proportionate to the offence and according to prevailing standards;
ii)personal or specific deterrence, assessing the risk of reoffending, and general deterrence, as a deterrent to others who might be likely to offend; and
iii)rehabilitation;[13]
c)the sentencing task is one of instinctive synthesis in which account is taken of all relevant factors and a single result arrived at taking due account of all of those relevant factors;[14]
d)proportionality and consistency are a final check on the penalty assessed;[15]
e)courts may identify a range of factors appropriate to the assessment of penalty, but ought to be wary of the use of check lists which “give rise to the risk of transforming the process of instinctive synthesis into the application of a rigid catalogue of matters for attention”;[16] and
f)courts ought also be wary of comparing penalties from other cases when assessing the amount of penalty to be fixed.[17]
[13] Ponzio v B & P Caelli Constructions Pty Ltd and Ors (2007) 158 FCR 543 at 559-560 per Lander J; [2007] FCAFC 65 at para.93 per Lander J (“Caelli Constructions”); ABCC at para.26 per Gilmour J.
[14] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at 567-568 per Gray J and 572 per Graham J; [2008] FCAFC 8 at para.27 per Gray J and para.55 per Graham J (“Australian Ophthalmic Supplies”); ABCC at para.27 per Gilmour J.
[15] Australian Ophthalmic Supplies FCR at 572 per Graham J; FCAFC at para.54 per Graham J; ABCC at para.28 per Gilmour J.
[16] ABCC at para.30 per Gilmour J. See also Australian Ophthalmic Supplies FCR at 579-580 per Buchanan J; FCAFC at paras.89-91 per Buchanan J.
[17] NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 295 per Burchett and Kiefel JJ (“Frozen Foods”); ABCC at para.31 per Gilmour J.
General considerations relevant to assessment of penalty
Considerations that may be taken into account in the assessment of penalty are well established and have been consistently applied by this Court,[18] but are not fixed and immutable.[19] Broadly, those considerations can be listed as follows:
[18] See, for example, Mason v Harrington Corporation Pty Ltd [2007] FMCA 7; Fair Work Ombudsman v MMP Management Services Pty Ltd (2012) 219 IR 397; [2012] FMCA 207 (“MMP Management Services”); Fair Work Ombudsman v Industrial Roadpavers (WA) Pty Ltd (2010) 194 IR 436; [2010] FMCA 204.
[19] Australian Ophthalmic Supplies FCR at 580 per Buchanan J; FCAFC at para.91 per Buchanan J; MMP Management Services IR at 407 per Lucev FM; FMCA at para.7 per Lucev FM.
a)the nature and extent of the conduct which led to the contraventions;
b)the circumstances of the conduct (including deliberate defiance or disregard of Commonwealth workplace relations legislation);
c)the consequences of the contravening conduct;
d)the objects of Commonwealth workplace relations legislation;
e)whether the contraventions are distinct or arise from a single course of conduct;
f)deterrence, both general and specific;
g)relevant record of civil penalty contraventions;
h)the size and financial resources of the contravener;
i)co-operation with regulatory authorities (if any);
j)the contravener's contrition (if any);
k)the size of, and any recent increases to, the prescribed penalty; and
l)the totality principle.
A number of the factors are relevant to the present case and are therefore considered below.
Nature and extent of the conduct and circumstances in which it occurred
Applicant’s submissions
The applicant’s submissions were as follows:
a)the nature and extent of the contravening conduct and the circumstances in which it took place are an important consideration because the central element of the penalty assessment process requires the Court to ensure that the penalty is appropriate to the gravity of the contravention;
b)the nature and extent of the contravention under s.494(1) of the WR Act and the circumstances in which it occurred are set out at paragraph 3 above;
c)the Court also found that in the past Mr McDonald had been permitted on Site by Mirvac. Further, while not consistently managed by Mirvac, toolbox meetings, initially intended to be safety meetings, had evolved into meetings containing a union component and often extending for periods of 40 minutes or more;
d)notwithstanding the findings concerning the approach taken by Mirvac in relation to Mr McDonald’s access to the Site and the conduct of toolbox meetings, on 12 September 2008, Mr McDonald took advantage of Mirvac’s tolerant approach for his own and union purposes and ultimately contravened the WR Act;
e)the industrial action disrupted the progress of work. In addition to Mirvac’s own employees, employees of other contractors also left the Site, with approximately 125 workers withdrawing their labour for the day with the Court finding that the final four hours of the day for which labour was withdrawn was industrial action;
f)engaging in industrial action rather than pursuing internal dispute resolution mechanisms undermines employment relationships and increases costs in the building industry;
g)the appropriate remedy, open to Mr McDonald was to either progress the matter under applicable dispute resolution mechanisms or, if necessary, to address any allegedly unlawful conduct in the appropriate court;
h)two of the express objects of the WR Act were:
i)supporting harmonious and productive workplace relations by providing flexible mechanisms for the voluntary settlement of disputes; and
ii)ensuring compliance with minimum standards, industrial instruments and bargaining processes by providing effective means for the investigation and enforcement of employee entitlements and the rights and obligations of employer, employees and their organisations;
i)agreements made under the WR Act were required to include procedures for settling disputes about matters arising under the agreement between the employer and the employees whose employment is subject to the agreement.[20] Such procedures were included in the applicable industrial agreement, including ultimate recourse to the industrial tribunal;[21]
j)penalties must reflect the damage done by industrial associations encouraging their members to effectively take the law into their own hands and stop work when:
i)that is inconsistent with the object of the WR Act; and
ii)other legal avenues are open for resolution of a dispute;
k)promoting respect for the rule of law requires the Court to mark its condemnation of any resort to unlawful and illegitimate methods to achieve industrial ends, even where the industrial end may be genuinely and reasonably held. The end does not justify the means;[22]
l)penalties should act as a deterrent to others who might be likely to engage in similar contraventions; and
m)regard must be had to the senior role of Mr McDonald in the industrial organisations he represents. These are organisations which enjoy a prominent and influential role in the building and construction industry. Mr McDonald and the CFMEU and CFMEUW would be well aware of the appropriate legal avenues available to workers who feel that they have been subjected to unfair or unlawful treatment.
[20] WR Act, s.353 and its predecessor s.170LT(8), in similar terms, prior to the “Work Choices” amendments to the WR Act.
[21] Exhibit A2, cl.10.
[22] Draffin v Construction, Forestry, Mining and Energy Union (2009) 189 IR 145; [2009] FCA 120 (“Draffin”).
Respondents’ submissions
The respondents submit that:
a)the respondents agree with the applicant’s submissions at paragraph 7(a) and (c) above;
b)the nature and extent of the conduct can be summarised as being involved in the 18 Mirvac workers’ decision to stop work for the rest of the day rather than only the four hours for which they were to be docked their wages. That conduct is properly viewed at the very low end of the scale of seriousness;
c)rather than taking advantage of Mirvac’s authorisation of a union component of toolbox meetings for his own and the unions’ purposes, Mr McDonald was reacting to events, that were of Mirvac’s making, as they unfolded, that is, reporting back Mirvac’s unlawful decision to dock four hours wages and then dealing with the workers’ understandable negative reaction;
d)the relevant industrial action was engaged in by 18 of Mirvac’s employees after the end of the period for which they were to be docked, that is, 1pm. To that extent the contravention sits at the lower end of the scale of seriousness;
e)while noting that Mirvac’s actions do not absolve Mr McDonald or the CFMEU and CFMEUW of responsibility for the contravention, it is appropriate to take into account that the industrial action occurred in immediate response by the workers to Mirvac’s decision to dock four hours wages. It is also appropriate to note that Mirvac’s attitude and response to Mr McDonald’s enquiries did not allow Mr McDonald to follow a dispute resolution process. As the Court found:
There was no point in protest from the Unions’ officers and delegate: they were not given the chance, and were “shut down” and told to “get out” by Wakeling.[23]
and as the Full Court of the Federal Court found on appeal:
The employer (Mirvac) it seems was under the mistaken impression that it was obliged to dock the pay as the latter part of the meeting convened by Mr McDonald constituted ‘industrial action’. Mr McDonald reported Mirvac’s intentions to the workers who were both angry and astounded. They voted to walk off the site for the day. Most of them did so. Better mutual communication on the day may have saved a lot of time and costs in this litigation. This was not to be.[24]
f)the respondents accept that the Court will take into account Mr McDonald’s position with the CFMEUW and the CFMEU.
[23] Fair Work Building Industry Inspectorate FLR at 28-29 per Lucev FM; FMCA at para.89 per Lucev FM; Transcript, p.76.
[24] Fair Work Building Industry Inspectorate Appeal at para.1 per Marshall, Siopis and McKerracher JJ. The respondents’ submissions go on to set out the passage from Fair Work Building Industry InspectorateAppeal set out at para.2 above.
Consideration of nature and extent of the conduct and circumstances in which it occurred
The circumstances in which the contravention took place were indeed, as the Full Court of the Federal Court observed, “somewhat unfortunate”.[25] Mirvac’s actions in docking the employees’ pay was “not lawfully authorised”.[26] The conduct of Mirvac’s officers did nothing to prevent what occurred, but rather, had an inflammatory effect on the situation. In those circumstances, to criticise Mr McDonald for taking “advantage” of Mirvac’s “tolerant approach” in relation to toolbox meetings, as the applicant’s submissions do, is at odds with a proper assessment of the circumstances. Nevertheless, and albeit in the above context, it is a relevant circumstance and a legitimate basis for criticism that an experienced union official like Mr McDonald did not invoke the provisions of clause 10 of the Mirvac Constructions (WA) Pty Ltd and the CFMEU Building and Construction Industry Enterprise Agreement 2005-2008[27] which provided as follows:
[25] Fair Work Building Industry Inspectorate Appeal at para.20 per Marshall, Siopis and McKerracher JJ.
[26] Fair Work Building Industry Inspectorate Appeal at para.20 per Marshall, Siopis and McKerracher JJ.
[27] “Enterprise Agreement”.
10.DISPUTES RESOLUTION PROCEDURE
10.1A major objective of this Agreement is to eliminate lost time and/or production arising out of disputes or grievances. Disputes over any work related or industrial matter or any matters arising out of the operation of the Agreement or incidental to the operation of the Agreement should be dealt with as close to its source as possible. Disputes over matters arising from this Agreement (or any other disputes related to the employment relationship) shall be dealt with according to the following procedure.
10.2In the event of any work related grievance arising between the Employer and an employee or employees, the matter shall be dealt with in the following manner:
a)The matter shall be first submitted by the employee/s or his/her employee representative or other representative to the site foreperson, supervisor or the other appropriate site representative of the Employer, and if not settled, to a more senior Employer representative.
b)Alternatively, the Employer may submit an issue to the employee/s who may seek the assistance and involvement of the employee representative or other representative.
c)Work shall continue without interruption from industrial stoppages, bans and/or limitations while these procedures are being followed. The pre-dispute status quo shall prevail while the matter is being dealt with in accordance with this procedure.
d)If still not resolved, there may be discussions between the relevant Union official, or other representative of the employee, and senior Employer representative.
e)The relevant Union official commits to make himself/herself available to be involved at any stage of the procedure as required, or in respect of any potential dispute.
f)Should the matter remain unresolved either of the parties or their representative may refer the matter to the Australian Industrial Relations Commission (AIRC) for review. The AIRC may exercise its conciliation and/or arbitration powers in such review.
10.03This procedure shall be followed in good faith without unreasonable delay.
10.04If any party fails or refuses to follow any step of this procedure the non breaching party will not be obligated to continue through the remaining steps of the procedure, and may immediately seek relief by application to the AIRC.
An immediate approach to the then Australian Industrial Relations Commission[28] was the proper course of action in the circumstances, and a course of action consistent with both the rule of law and common sense industrial relations practice, which might have prevented altogether this litigation. It remains, of course, given the “sudden, and seemingly visceral, reaction”[29] of the workers on site to being docked for four hours wages, that the industrial action may have occurred in any event, and irrespective of any conduct of Mr McDonald or the Unions.
[28] “AIRC”.
[29] Fair Work Building Industry Inspectorate FLR at 35 per Lucev FM; FMCA at para.12 per Lucev FM.
The Court is nevertheless not persuaded by the respondents’ submissions that Mirvac’s actions did not allow Mr McDonald or the Unions to follow the dispute resolution procedure in the Enterprise Agreement. There was a process to be followed, but all of the participants fell at the first hurdle or step of that process. In those circumstances it is clear from the terms of the dispute resolution procedure clause that there was nothing to prevent the Unions or Mr McDonald from “immediately seek[ing] relief by application to the AIRC.”[30] Likewise, there was nothing to prevent Mirvac from so doing also.
[30] Enterprise Agreement, cl.10.4.
In the circumstances the nature and extent of the conduct of Mr McDonald and the Unions occurred in a context which puts that conduct at the low end of the scale of seriousness. As the Full Court of the Federal Court has observed, “the infractions would appear to be relatively minor.”[31]
Nature and extent of loss or damage
[31] Fair Work Building Industry Inspectorate Appeal at para.20 per Marshall, Siopis and McKerracher JJ.
Applicant’s submissions
The applicant submits that:
a)the nature and extent of the loss or damage arising out of the contravention under s.494(1) of the WR Act would include the disruption to work on the Site for four hours on 12 September 2008. This was the subject of evidence, although not quantified in the way it would have been if compensation were sought by the employer or other persons affected;[32] and
b)for the purposes of penalty, the Court can at least infer that for one of the busiest construction sites in Perth at the time, involving hundreds of workers, the commercial damage associated with the industrial action would not have been insignificant.
[32] Transcript, pp.28 and 77.
Respondents’ submissions
The respondents submit that:
a)the relevant loss or damage is that which can be attributed to the industrial action by Mirvac’s employees, rather than any stoppage by other employees on the site;
b)the disruption to the site prior to 1pm should not be attributed to the respondents; and
c)only the most minimal financial loss can be inferred, given that even in relation to the disruption for the whole day by all workers on the project, Mirvac:
i)considered that loss of production was not a major concern, that there were no pressing deadlines and that they were ahead on the project;[33] and
ii)rather than proceeding with regular overtime on the following Saturday to make up for any lost production, chose instead to cancel that overtime as a penalty to the workers.[34]
[33] Transcript, pp.86 and 87
[34] Transcript, pp.44-45, 56-57, 86, 88.
Consideration of nature and extent of loss or damage
The industrial action resulted in the loss of four hours work on a Friday afternoon. No witness was able to quantify what, if any, actual monetary loss was incurred by Mirvac (or by any contractor on Site). Witnesses agreed that there was a loss of “production”,[35] but the detail was vague.
[35] Transcript, pp.28, 56, 77 and 86.
The Court was asked to infer, in the absence of quantification, that there was not insignificant commercial damage to those affected by the industrial action. The Court is not prepared to draw such an inference in circumstances where:
a)the applicant made no significant or serious attempt to quantify the actual loss or damage suffered by those affected by the industrial action; and
b)the day after the industrial action was a Saturday, and Mirvac closed the Site even though it was normal practice on the Site to work Saturdays,[36] and did so in circumstances where the evidence:
i)was that the Saturday closure was intended to penalise the workers who were ordinarily paid overtime for the Saturday work;[37] and
ii)of Mr Wakeling, Mirvac’s construction manager, who said that loss of production was “[n]ot really” a concern at that stage,[38] that there were no pressing deadlines, and that the Site was ahead of schedule.[39]
[36] Transcript, pp.45 and 87.
[37] Transcript, pp.45, 57 and 86.
[38] Transcript, p.86.
[39] Transcript, pp.86-87.
In the circumstances the evidence does not establish loss and damage beyond a level which might otherwise be described as minimal.
Whether the contraventions were distinct or arose out of the one course of conduct
Applicant’s submissions
The applicant submits that the contravention involved a single instance of conduct for this Site, and in the circumstances that is not unusual, because where there has been unlawful industrial action, it is common for it to be the result of a single command or encouragement from a person organising the industrial action. Therefore, the applicant submits that the fact that only one contravention has been found should not be given any undue weight in determining penalty.
Respondents’ submissions
The respondents agree that the contravention involves a single instance of conduct, and further submit that:
a)the evidence does not support the applicant’s contention that the industrial action was simply a result of a single command or encouragement from Mr McDonald organising the industrial action; and
b)the applicant’s contention that the fact that only one contravention has been found “should not be given any undue weight” misunderstands the task to be undertaken by the Court. The fact that the contravention involved a single instance of conduct by Mr McDonald, should be taken into account in relation to the nature and extent of the conduct and circumstances in which it occurred.
Consideration of whether the contraventions were distinct or arose out of the one course of conduct
This contravention involved a single instance of conduct by Mr McDonald (and hence the Unions) on the Site. That single instance of conduct gave rise to one contravention. It did so in circumstances, as described above, which involved the unlawful docking of wages by Mirvac and a visceral response by the workers in Site, and it is in that context that this factor is to be weighed when assessing penalty.
Involvement of senior management
Applicant’s submissions
The applicant submits that:
a)Mr McDonald is, and was at all material times, the assistant secretary of the CFMEU’s Construction and General Division, Western Australian Divisional Branch and also the CFMEUW;
b)there was no evidence that Mr McDonald’s presence on the Site was as a result of a statutory right to enter the Site under the WR Act; and
c)Mr McDonald’s seniority, and his status on the Site as, at least, an invitee, are factors which should have dictated a higher standard of conduct.
Respondents’ submissions
The respondents submit that:
a)there is no dispute as to Mr McDonald’s positions in the Unions;
b)the fact that there was no evidence that Mr McDonald was present at the Site under a statutory right of entry is not an aggravating factor. The Court was unable to find whether Mr McDonald’s presence on site was authorised or not;[40]
c)while Mr McDonald’s positions within the CFMEU and CFMEUW are relevant to penalty in relation to the Unions, there is no evidence to suggest that he acted other than on his own and without the involvement of any other member of the senior management of the Unions; and
d)it is not appropriate to infer that some higher standard of behaviour applied to Mr McDonald as a consequence of his being an invitee. This is particularly so given that Mr McDonald’s status as an invitee is inconsistent with the case the applicant ran at trial and inconsistent with what the Court found.[41]
[40] Fair Work Building Industry Inspectorate FLR at 14-15 per Lucev FM; FMCA at para.23 per Lucev FM.
[41] Fair Work Building Industry Inspectorate FLR at 14-15 per Lucev FM; FMCA at para.23 per Lucev FM.
Consideration of involvement of senior management
Mr McDonald is a senior official with the Unions, and there was no real dispute that that seniority was a proper factor to be considered in assessing penalty for the Unions. Mr McDonald was able to, and did, act as he did as an officer of the Unions. That said, the Unions did not set out on the day of the industrial action with any plan to incite industrial action, or seemingly any notion that industrial action might occur, at the Site. In a purely practical sense the responsibility for the conduct constituting the contravention rests with Mr McDonald as no other senior official of the Unions had any involvement in the matter. In that sense, it might be arguable that the relevant penalty to be imposed on Mr McDonald ought perhaps be slightly higher than that imposed on the Unions.
In this case the Court was unable to determine on what basis Mr McDonald entered the Site, whether by statutory right or as an invitee. In those circumstances, to suggest, as the applicant has done, that a higher standard ought be imposed because Mr McDonald was, at least, an invitee, is illogical. It would be equally possible to argue, but just as illogical on the facts found by the Court, that if Mr McDonald were an entrant by statutory right he ought be judged by some lesser standard of conduct. It would be wrong, given the Court’s neutral factual finding on the entry question, for it to judge Mr McDonald by one or other standard for the purposes of penalty.
Capacity to pay
There is no dispute that both the CFMEU and the CFMEUW are large well-known industrial organisations, neither of which has led any evidence of impecuniosity. There is no evidence as to Mr McDonald’s financial position. In the circumstances, on the evidence, no issue of capacity to pay arises.[42]
Contrition, corrective action and cooperation with enforcement authorities
[42] As to capacity to pay generally in penalty cases, see MMP Management Services IR at 421-423 per Lucev FM; FMCA at para.39-51 per Lucev FM.
Applicant’s submissions
The applicant submits that:
a)there is no evidence from any of the respondents containing any expression of contrition or any corrective action being taken by any respondent; and
b)no admissions were made and liability was determined after a lengthy and expensive trial process taking six days.
Respondents’ submissions
The respondents agree that there is no evidence of contrition or corrective action by any of them, but submit that:
a)liability for all of the respondents turned on the conduct of Mr McDonald;
b)the Court found that:
McDonald gave his evidence in a robust, sometimes colourful, but straightforward manner. He did not dissemble, and was prepared to make admissions against his interests, including his evidence:
a) as to whether or not he recalled phoning or leaving a message for Wakeling prior to the Meeting; and
b) that he put the resolution from the floor to go home to the vote by using the words “those for and those against”.
McDonald’s evidence also reads as being entirely logical and possible, and it appears to the Court that it is entirely consistent with the manner in which a meeting of construction workers might develop. McDonald’s evidence did not appear to the Court to be an attempt to avoid the truth, or to avoid any liability on his part, or the part of the Unions.[43]
c)they were successful at trial in defending the alleged contravention of s.38 of the Building and Construction Industry Improvement Act 2005 (Cth);[44]
d)they were successful at trial in limiting the contravention of s.494(1) of the WR Act to the workers’ failure to attend only after the period for which their wages were otherwise being docked;
e)numerous admissions were made by them in both the pleadings and responses to notices to admit facts; and
f)the fact they did not admit liability is understandable given they:
i)had not breached s.38 of the BCII Act as alleged, and
ii)were successful in relation to many of the factual matters alleged against them by the applicant at trial.
[43] Fair Work Building Industry Inspectorate FLR at 19 per Lucev FM; FMCA at para.49 per Lucev FM.
[44] “BCII Act”.
Consideration of contrition, corrective action and cooperation with enforcement authorities
The respondents have failed to exhibit any contrition.
The respondents have also failed to exhibit that any corrective action has been taken whether by way of instruction, education, discipline or some other form of corrective action.
The failure to exhibit contrition and corrective action must tend to an increase in penalty within the range of any appropriate penalty.
With respect to cooperation with the applicant the respondents’ contentions concerning the level of their success in the proceedings are broadly correct, in that a contravention alleged under the BCCI Act was not proven, and the facts proven in relation to the contravention of s.494(1) of the WR Act were sufficient to establish what the Full Court of the Federal Court correctly described as minor infractions. In those circumstances, the lack of cooperation with the applicant as the enforcement authority does not carry significant weight in the assessment of penalty in this case.
Prior relevant conduct
Applicant’s submissions
The applicant submits that:
a)similar prior relevant conduct may be taken into account in assessing penalty, but it cannot be given such weight as to lead to the imposition of a penalty that is disproportionate to the gravity of the contravention;[45]
[45] Veen v The Queen (No. 2) (1988) 164 CLR 465 at 477 per Mason CJ, Brennan, Dawson and Toohey JJ (“Veen (No. 2)”).
b)similar previous conduct may demonstrate that:
i)a respondent has a history of engaging in the particular conduct in question;
ii)the penalties previously imposed were insufficient to deter a respondent from re-engaging in that conduct; and
iii)a respondent has failed to take adequate steps to prevent further contraventions;[46]
c)a respondent is not to be punished again for the prior conduct. Prior conduct may diminish or abrogate any leniency by reason of good character, having an upward effect on penalty, albeit within the proper limits indicated by the circumstances of the immediately contravening conduct;[47]
d)the effect of prior contravening conduct is more cogent if it has been the subject of conviction. If not, the prior conduct is still relevant but perhaps of less weight;[48]
e)whether previous misconduct is relevant to fixing penalty is a question of logic;[49]
f)conduct of a different character does not assist;[50]
g)the quality of the conduct and its relevance to the industrial behaviour which the WR Act seeks to address is determinative, not whether the prior conduct arose under different legislation or different provisions of the WR Act;[51]
h)Mr McDonald, the CFMEU and CFMEUW have engaged in a significant number of prior contraventions of similar legislation and these are relevant to the assessment of penalty;[52]
i)the conduct in this case occurred against a background of a large number of “prior convictions”.[53] In the circumstances, specific deterrence looms large as a relevant consideration;[54] and
j)the extent of the relevant prior conduct is such as to give rise to a need for the Court to provide a particularly persuasive form of deterrence against similar future misconduct on the part of the CFMEU.[55] Similarly, the Court should have regard to the need for rehabilitation in circumstances where penalties imposed in the past have seemingly failed to achieve rehabilitation.
[46] Veen (No. 2) at 477 per Mason CJ, Brennan, Dawson and Toohey JJ; Stuart-Mahoney vConstruction, Forestry, Mining and Energy Union (2008) 177 IR 61 at 70 per Tracey J; [2008] FCA 1426 at para.44 per Tracey J (“Stuart-Mahoney”); Temple v Powell (2008) 169 FCR 169 at 188 per Dowsett J; [2008] FCA 714 at para.64 per Dowsett J (“Temple”); Draffin IR at 158 per Goldberg, Jacobson and Tracey JJ; FCAFC at para.92 per Goldberg, Jacobson and Tracey JJ.
[47] The Queen v McInerney (1986) 42 SASR 111 at 113 per King CJ (“McInerney”).
[48] McInerney at 113 per King CJ and 124 per Cox J; Williams v Construction, Forestry, Mining and Energy Union (No. 2) (2009) 182 IR 327 at 338-340 per Jessup J; [2009] FCA 548 at paras.26-28 per Jessup J (“Williams (No. 2)”).
[49] Temple FCR at 188 per Dowsett J; FCA at para.63 per Dowsett J.
[50] Leighton Contractors Pty Ltd vConstruction, Forestry, Mining and Energy Union (2006) 164 IR 375 at 389-390 per LeMiere J; [2006] WASC 317 at para.67 per LeMiere J; Stuart-Mahoney IR at 70 per Tracey J; FCA at para.44 per Tracey J.
[51] Stuart-Mahoney IR 71 per Tracey J; FCA at para.46 per Tracey J; Williams (No. 2) IR at 335-336 per Jessup J; FCA at paras.16-17 per Jessup J.
[52] See, for example, Williams (No. 2) IR at 333-334 per Jessup J; FCA at para.13 per Jessup J. The fact that some contraventions may have been by different branches of the CFMEU does not detract from their relevance. See Williams (No. 2) IR at 336-338 per Jessup J; FCA at paras.18-25 per Jessup J and Draffin IR at 154-155 per Goldberg, Jacobson and Tracey JJ; FCAFC at para.72 per Goldberg, Jacobson and Tracey JJ.
[53] A table setting out 13 alleged prior penalties and declarations against the respondents was annexed to the applicant’s submissions.
[54] McInerney at 113 per King CJ; Williams (No. 2) IR at 340 per Jessup J; FCA at para.29 per Jessup J (issue not dealt with on appeal: see Construction, Forestry, Mining and Energy Union v Williams (2009) 191 IR 445 at 458 per Moore, Middleton and Gordon JJ; [2009] FCAFC 171 at para.32 per Moore, Middleton and Gordon JJ).
[55] Temple FCR at 188 per Dowsett J; FCA at para.64 per Dowsett J; Stuart-Mahoney IR at 70 per Tracey J; FCA at para.44 per Tracey J.
Respondents’ submissions
The respondents submit that:
a)the respondents generally agree with sub-paragraphs (a)-(g) of the applicant’s submissions on prior relevant conduct set out above; and
b)as to the remainder of the applicant’s submissions, the respondents submit that:
i)they do not accept the applicant’s table of prior penalties contain an accurate summary of their relevant prior similar conduct;
ii)while contraventions of other legislative provisions involving similar conduct might be relevant, conduct which is of a different character is not directly relevant to the assessment of penalty;[56]
iii)the fourth item in the table of prior penalties appears to refer to the present matter and should not be considered a prior contravention for the purposes of assessing penalty;
iv)the fifth, sixth, seventh, eighth, ninth, tenth and eleventh items in the applicant’s table of prior penalties refers to conduct that occurred after the contravening conduct in this matter. Only conduct preceding that in question is taken into account in fixing penalties;[57]
v)the third, fifth, sixth, seventh, eighth, ninth, tenth, eleventh and twelfth items in the Applicant’s table of prior penalties do not involve contraventions by the CFMEUW;
vi)the twelfth and thirteenth items in the Applicant’s table of prior penalties refer to conduct that is not sufficiently similar to the present matter to be relevant; and
vii)they accept that specific deterrence will be a factor relevant to determination of penalty, but submit that past conduct cannot operate so as to increase the penalty beyond that which would be appropriate to the conduct in question.[58] Given the particular circumstances of this case, specific deterrence does not “loom large” for the purposes of penalty.
[56] Stuart-Mahoney IR at 70 per Tracey J; FCA at para.44 per Tracey J.
[57] Temple FCR at 187-188 per Dowsett J; FCA at para.62 per Dowsett J.
[58] Temple FCR at 188 per Dowsett J; FCA at para.63 per Dowsett J.
Consideration of prior relevant conduct
In relation to prior conduct the Federal Court has summarised the principles that it has adopted as follows:
61 Barker J in Australian Building & Construction Commissioner v Construction Forestry Mining & Energy Union (No 2) (City Square) (2010) 199 IR 373 summarised at [47] the agreed applicable principles in that case. These are discussed as follows:
(a) Similar prior contraventions may be taken into account in assessing penalty, but cannot be given such weight as to lead to the imposition of a penalty that is disproportionate to the gravity of the instant contravention. To do so would be to impose a fresh penalty for past contraventions: Veen v The Queen (No 2) (1988) 164 CLR 465 at 477.
(b) However, similar previous contraventions may demonstrate that a respondent has a history of engaging in the particular conduct in question, that the penalties previously imposed were insufficient to deter the respondent from re-engaging in that conduct and that the respondent has failed to take adequate steps to prevent further contraventions. Previous contraventions may demonstrate that the respondent has manifested in the commission of the latest contravention a continuing attitude of disobedience of the law. In such a case, "retribution, deterrence and protection of society may all indicate that a more severe penalty is warranted": Veen (No 2) at 477.
(c) A sentencing court looks to the general record of conduct of the offender, his 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 conduct: Temple v Powell (2008) 169 FCR 169 at [64].
(d) A respondent is not to be punished again for the prior conduct. Prior conduct may diminish leniency by reason of good character, having an upward effect on penalty, albeit within the proper limits indicated by the circumstances of the immediately contravening conduct: R v McInerney (1986) 42 SASR 111 at 113.
(e) The effect of prior contravening conduct is more cogent if it has been the subject of conviction. If not, the prior conduct is still relevant but perhaps of less weight: McInerney at 113.
(f) Whether previous misconduct by branches in other states of a national organisation is relevant to fixing a penalty is a question of logic. In some cases, a pattern of conduct across the country may suggest a national culture of misconduct: Temple v Powell at [63].
(g) The quality of the conduct and its relevance to the industrial behaviour which the instant legislation seeks to address is determinative, not whether the prior conduct arose under different legislation or different provisions of the instant legislation: Stuart-Mahoney v CFMEU at [44] to [46].
(h) Prior relevant conduct includes that of officials from other branches of the union: Williams v Construction, Forestry, Mining and Energy Union (No 2) (2009) 182 IR 327 at [19]-[25]. However, Barker J in City Square at [48] accepted that contraventions in other branches of the CFMEU, while relevant, are to be given less weight than contraventions within the branch in question.[59]
[59] ABCC at para.61 per Gilmour J.
In relation to the respondents the Court observes that there were prior contraventions relating to industrial action under both the BCII Act and the WR Act which preceded in time the date of the contravention found in this case. Pausing to observe that it is relevant that the respondents have a record of prior conduct in relation to similar contraventions, the Court further observes that the circumstances of this matter, for reasons already set out, put it at the low end of the scale of seriousness, and in the circumstances, limit the impact of prior relevant conduct and specific deterrence for this matter. Those circumstances include the fact that the conduct arose against a backdrop of Mirvac’s unlawful docking of wages, and the unhelpful and antagonistic conduct of Mirvac’s construction manager toward Mr McDonald and the on-Site Union officials, together with the failure of all parties to comply with the disputes settlement procedures set out in the Enterprise Agreement. In the circumstances of this case, the prior relevant conduct referred to does not establish a pattern of conduct by the respondents, and it is appropriate that the Court have greater regard to general deterrence than specific deterrence.
Consideration of appropriate monetary penalty
Maximum penalties and proposed penalties
Under s.494(6) of the WR Act, the maximum penalties available for a contravention of s.494(1) of the WR Act are:
a)for a body corporate $33,000 (300 penalty units); and
b)for an individual $6,600 (60 penalty units).[60]
[60] Section 4 of the WR Act provides that a “penalty unit” has the same meaning as s.4AA of the Crimes Act 1914 (Cth) (“Crimes Act”). Section 4AA of the Crimes Act defines a “penalty unit” to be $110.00.
Applicant’s submissions
The penalty which the applicant submits ought to be paid by the CFMEU and CFMEUW for contravening s.494(1) of the WR Act is $8,250 in respect of each the CFMEU and CFMEUW and $1,650 to be paid by Mr McDonald for contravening s.494(1) of the WR Act.
The applicant further submits with respect to the appropriate monetary penalty that:
a)the applicant has considered the penalty in Fair Work Ombudsman v Transport Workers’ Union of Australia[61] concerning a baggage handler’s strike, involving a contravention of s.494 of the WR Act. In TWU-Federal Court, the contravention involved a nationwide baggage handler’s strike at a busy period of the aviation year. The unions received a penalty which was roughly 50% of the maximum. In contrast, this case concerns a one-site walk off. The applicant considers a penalty in the range imposed in TWU-Federal Court would be high in all the circumstances;
b)the applicant has also considered the penalty in Fair Work Ombudsman v Transport Workers Union of Australia,[62] involving a contravention of s.494 of the WR Act. In TWU-FM Court, a stop work meeting in protest at the termination of a colleague’s employment was organised, followed by a refusal to work for the rest of the day. The union was fined $9,900 and the organiser was fined $1,320;
c)the circumstances of this case are not dissimilar to the circumstances in cases which have involved contraventions of s.38 of the Building and Construction Industry Improvement Act 2005:[63]
i)Alfred v Wakelin (No. 1),[64] where a penalty of $8,000 was imposed on the CFMEU in relation to the industrially motivated action of employees by their failure or refusal to attend for work; and
ii)Gregor v Construction, Forestry, Mining and Energy Union,[65] where workers attended an on-site meeting then left site and did not perform work for the rest of the day. In that case the organiser was fined $1,000 and the CFMEU was fined $7,500; and
d)having regard to all the circumstances, including the matters referred to above, it is submitted that the proposed penalties are within the permissible range and are appropriate to be made.
[61] (2010) 202 IR 411; [2010] FCA 768 (“TWU-Federal Court”).
[62] (2010) 205 IR 346; [2010] FMCA 826 (“TWU-FM Court”).
[63] “BCII Act”.
[64] [2008] FCA 1455.
[65] [2009] FMCA 1266.
Respondents’ submissions
The respondents note that the penalties proposed by the applicant for each of the respondents amounts to 25% of the maximum penalties for contravening s.494(1) of the WR Act. The respondents submit that when proper regard is had to the principles for determining penalties for a civil contravention, the appropriate penalty to be imposed is in the range of 0-10% of the maximum. On that basis the appropriate range of penalty for each of the CFMEU and CFMEUW is $0 to $3,300 and for Mr McDonald is $0-$660.
The respondents further submit that:
a)while penalty decisions in other cases can be of value in demonstrating a range of penalties generally considered appropriate to a particular type of case, the individual circumstances of the case at hand must then be examined, in order to determine at what point in the appropriate range the penalty should be set;[66]
b)the range of appropriate range of penalties cannot be ascertained by references to the dollar value of penalties imposed for contraventions of provisions that have different maxima;[67]
c)the cases referred to the applicant’s submissions involving contraventions of s.38 of the BCII Act occurred in circumstances where the maximum penalty was $110,000 for a corporation and $22,000 for an individual. The penalties imposed in those matters ranged between 4.5% and 7.3% of the maximum; and
d)the penalties proposed by the applicant are excessive in all the circumstances of this case.
[66] Australian Ophthalmic Supplies FCR at 564 per Gray J; FCAFC at para.13 per Gray J.
[67] Australian Ophthalmic Supplies FCR at 564 per Gray J; FCAFC at para.14 per Gray J.
Consideration of monetary penalty
The contravention of s.494(1) of the WR Act arose in this case in unusual circumstances, such that the correct characterisation of the contravention is that it was a minor infraction,[68] and therefore at the lower end of the level of seriousness of contraventions. That is reinforced by the very limited loss or damage suffered, and the fact that the contravention arose from a single course of conduct. This is not, however, a no penalty case, for the involvement of a senior official of the Unions, Mr McDonald, the failure to follow the Enterprise Agreement disputes resolution procedure, the prior record of the respondents, a lack of contrition and corrective action, and the need for general deterrence, and perhaps to a very limited extent, specific deterrence, mean that it is appropriate to impose some monetary penalty.
[68] Fair Work Building Industry Inspectorate Appeal at para.20 per Marshall, Siopis and McKerracher JJ.
The Court has not been particularly assisted by the comparisons drawn with other cases involving contraventions of s.38 of the BCII Act, or other contravention cases generally. In any event, the Court must be wary of drawing too particular a comparison between penalties imposed in different cases.[69]
[69] Frozen Foods FCR at 295 per Burchett and Kiefel JJ; ABCC at para.31 per Gilmour J.
The Court has considered whether it is appropriate to impose a different level of penalty on Mr McDonald and the Unions, but has determined that to the extent that Mr McDonald as a senior official of the Unions acted without the involvement of other senior officials of the Unions, which might warrant a different and higher penalty, that is balanced by the failure of the Unions to take any corrective action in respect of Mr McDonald’s conduct. Had the Unions done so the case for imposing a lower penalty upon them would have been stronger.
Having considered all of the factors and circumstances set out above, the Court finds that the appropriate penalty for the contravention is at the lower end of the range, say between 0% and 20%, and that in this case a penalty of 10% of the maximum penalty is appropriate for each of the respondents. It follows that each of the Unions will have a penalty of $3,300 imposed, and Mr McDonald will have a penalty of $660 imposed.
Conclusion and orders
The Court has concluded that:
a)the CFMEU is to pay a penalty of $3,300;
b)the CFMEUW is to pay a penalty of $3,300; and
c)Mr McDonald is to pay a penalty of $660,
with the penalties to be payable to the Commonwealth Consolidated Revenue Fund by 2 October 2013. There will be orders accordingly.
The Court will hear the parties as to costs.
I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of Judge Lucev
Associate:
Date: 4 September 2013
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