Draffin v Construction, Forestry, Mining and Energy Union

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FEDERAL COURT OF AUSTRALIA

Draffin v Construction, Forestry, Mining and Energy Union [2009] FCAFC 120

INDUSTRIAL LAW – Penalties – Errors of principle when imposing penalties – Parity of penalties – Whether a single course of conduct which breaches multiple legislative provisions should be subject to multiple penalties –- Relevance of prior contravening conduct when imposing penalties

Building and Construction Industry Improvement Act 2005 (Cth), ss 4, 38, 43, 45, 57, 69
Fair Work Act 2009 (Cth)
Federal Court of Australia Act 1976 (Cth), s 27
Workplace Relations Act 1996 (Cth), ss 4, 84, 298B, 298K, 298L, 298P

Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560, applied
Bovis Lend Lease Pty Ltd v Construction, Forestry, Mining and Energy Union (No 2) [2009] FCA 650, cited
Council of the City of Greater Wollongong v Cowan (1955) 93 CLR 435, followed
Draffin v Construction, Forestry, Mining and Energy Union [2007] FCA 2011, referred to
Draffin v Construction, Forestry, Mining and Energy Union [2009] FCA 243
House v The King (1936) 55 CLR 499, referred to
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383, referred to
NW Frozen Foods Pty Limited v Australian Competition and Consumer Commission (1996) 71 FCR 285, applied
Orr v Holmes (1948) 76 CLR 632, followed
Ponzio v B & P Caelli Constructions Pty Ltd and Others [2007] FCAFC 65, cited
R v McInerney (1986) 42 SASR 111, referred to
Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia and Others (2001) 109 FCR 378, cited
Stuart-Mahoneyv Construction, Forestry, Mining and Energy Union (2008) 177 IR 61; [2008] FCA 1426, cited

JOHN WILLIAM DRAFFIN v CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION, STEVE ALLEN, GERARD BENSTEAD and BILL OLIVER

VID 223 of 2009

GOLDBERG, JACOBSON & TRACEY JJ
10 SEPTEMBER 2009
MELBOURNE


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 223 of 2009

FAIR WORK DIVISION
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:

JOHN WILLIAM DRAFFIN
Appellant
AND:

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION
First Respondent

STEVE ALLEN
Second Respondent

GERARD BENSTEAD
Third Respondent

BILL OLIVER
Fourth Respondent

JUDGES:

GOLDBERG, JACOBSON & TRACEY JJ

DATE OF ORDER:

10 SEPTEMBER 2009

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.The appeal be allowed in part. 

2.Order 1 of the orders made by the trial judge be varied by deleting “$18,000” and inserting in lieu “$50,000”.

3.Order 4 of the orders made by the trial judge be set aside and in lieu thereof it be ordered that:

·4 A penalty of $8,000 is imposed on each of the Second, Third and Fourth Respondents for breach of s 43 of the Building and Construction Industry Improvement Act 2005 (Cth).

·4A A penalty of $1,250 is imposed on each of the Second, Third and Fourth Respondents for breach of s 45 of the Building and Construction Industry Improvement Act 2005

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Details
Case
[2009] FCAFC 120
Decision Date

CaseChat Overview and Summary

The case of Draffin v Construction, Forestry, Mining and Energy Union involved a dispute between Mr Draffin, an Australian Building and Construction Inspector, and the Construction, Forestry, Mining and Energy Union, along with several of its officers. The primary issue was the contravention of certain sections of the Building and Construction Industry Improvement Act 2005 (Cth) and the Workplace Relations Act 1996 (Cth) by the Union and its officers. Specifically, the Union and its officers were accused of advising, encouraging, or inciting an employer to take actions that would prejudice an independent contractor's position, in breach of the statutes. The case reached the court following admissions by the Union and its officers of the contraventions and a Statement of Agreed Facts dated 5 March 2009.

The court was required to determine the appropriate penalties for the contraventions committed by the Union and its officers. In particular, the court had to consider whether the penalties imposed by the trial judge were appropriate, taking into account factors such as deterrence and the nature of the contraventions. The court found that the trial judge had erred in assuming that the individual respondents had attended a seminar in May 2006, which would have provided them with relevant instructions. There was no evidence to support this assumption. Consequently, the determinations by the trial judge concerning the penalties were set aside, and the court took it upon itself to determine the appropriate penalties. The court emphasised the importance of both specific and general deterrence in fixing penalties for contraventions of legislative provisions. The court also noted the Union's propensity for engaging in proscribed conduct, as evidenced by prior instances of similar conduct, albeit with penalties imposed post-November 2005.

The court concluded that the conduct of the Union was more reprehensible than that of the employer, Walton, which had also been penalised. The court varied the penalties imposed by the trial judge, setting aside certain orders and imposing new penalties on the Union and its officers. The new penalties were set at $50,000 for the Union, and $8,000, $1,250, and $750 for each of the individual officers for the breaches of specific sections of the Acts. The court also ordered that if the respondents did not breach any relevant provisions within 12 months, they would not be required to pay half of the penalties. Finally, the court ordered that the penalties be paid into the Consolidated Revenue Fund within 30 days.

Orders

Orders of the court

1. The appeal be allowed in part.

2. Order 1 of the orders made by the trial judge be varied by deleting “$18,000” and inserting in lieu “$50,000”.

3. Order 4 of the orders made by the trial judge be set aside and in lieu thereof it be ordered that:

· 4 A penalty of $8,000 is imposed on each of the Second, Third and Fourth Respondents for breach of s 43 of the Building and Construction Industry Improvement Act 2005 (Cth).

· 4A A penalty of $1,250 is imposed on each of the Second, Third and Fourth Respondents for breach of s 45 of the Building and Construction Industry Improvement Act 2005 (Cth).

· 4B A penalty of $750 is imposed on each of the Second, Third and Fourth Respondents for breach of s 298P of the Workplace Relations Act 1996 (Cth).

· 4C Each of the Second, Third and Fourth Respondents is not obliged to pay one half of the said penalties if he has not been adjudged to have breached, within 12 months of the date of this order, any provisions of the Building and Construction Industry Improvement Act 2005 (Cth) or any freedom of association provision of the Fair Work Act 2009 (Cth).

4. Order 5 of the orders made by the trial judge be set aside and in lieu thereof it be ordered that, subject to paragraph 4C, the penalties imposed in paragraphs 1, 2, 3, 4, 4A and 4B be paid into the Consolidated Revenue Fund within 30 days.

Note:

Background

Background to the litigation

In November 2005, section 298P(3)(a) of the WR Act provided:“An industrial association, or an officer or member of an industrial association, must not:(a)advise, encourage or incite an employer; or…to take action in relation to a person that would, if taken, contravene s 298K.”When read with s 298L, 298K relevantly constrained a person from altering the position of an independent contractor to its prejudice by reason of the fact that it was entitled to the benefit of an industrial instrument such as an AWA.STATEMENT OF AGREED FACTS The Statement of Agreed Facts between the applicant and the first, second, third and fourth respondents was dated 5 March 2009. It commenced with admissions by each of the Union, Mr Allen, Mr Benstead and Mr Oliver of contraventions of the provisions of s 43(1)(c) and s 45(1) of the BCII Act and s 298P(3)(a) of the WR Act. It included a description of the parties to which we will refer. Mr Draffin is an Australian Building and Construction Inspector appointed under s 57 of the BCII Act. He is also an inspector appointed under s 84 of the WR Act. The Union is an organisation of employees registered under the WR Act and an “organisation” for the purposes of s 4 of the WR Act and ss 4 and 45(4)(b) of the BCII Act. It is also an “industrial association” for the purposes of s 298B of the WR Act and s 4 of the BCII Act. Mr Allen was a Union shop steward and an “officer” of the Union for the purposes of the relevant provisions of the BCII Act and the WR Act. He was, at the relevant time, employed by Walton at a site known as the Brunswick Police Station site (“the Site”), and the Occupational Health & Safety representative at the Site. Mr Benstead was employed by the Union and was an organiser in the Union’s Construction and General Division. He was an officer of the Union for the purposes of the relevant provisions of the BCII Act and the WR Act. Mr Oliver was the Joint Divisional Vice-President of the Union’s Construction and General Division and Assistant Secretary of the Victorian Building Union’s Divisional Branch of the Union’s Construction and General Division. He was also an “officer” of the Union for the purposes of the relevant legislation. Walton was engaged by or on behalf of the Victoria Police to carry out refurbishment work to the police station at the Site. Prior to 11 November 2005, Walton engaged a company, described in the Agreed Facts as Monjon (“Monjon”), to perform security services at the Site. On 11 November 2005 and 12 November 2005 Walton engaged Monjon to perform traffic management services on the Site, replacing another company that had previously provided those services under contract to Walton. Monjon provided its traffic management services to Walton at the Site without apparent interruption on 11 November and 12 November 2005. Some time before 16 November 2005, Mr Allen became aware that Monjon’s employees were employed by it under AWAs. Also, prior to 16 November 2005, Mr Allen spoke to Monjon employees about the AWAs and told Mr Benstead that the Monjon employees were employed on that basis.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

When considering the appropriate penalties to be imposed on the individual respondents his Honour fell into further error by assuming that each of them had subsequently had the benefit of the May 2006 seminar. There was no evidence before him or any agreed fact that would have allowed him to find that any of the three individual respondents had attended the May 2006 seminar or otherwise had the benefit of the instruction given at it.CONCLUSION In the circumstances, the determinations by the trial judge concerning the imposition of penalties (or in the case of Mr Allen, the failure to do so) should be set aside. It falls to this Court to determine appropriate penalties. As the trial judge recognised, both specific and general deterrence are significant considerations when fixing penalties for contraventions of legislative provisions such as those under consideration. Penalties will serve as a deterrent only if they are fixed at a meaningful level. Relevantly, the purpose of s 43 of the BCII and s 298P of the WR Act was to prevent coercive conduct intended to prejudice employees and employers who elected to have their relationship regulated by industrial instruments of their choosing. The Union sought to prevent employees engaged under AWAs from working on a site on which some of its members were employed. It was not prepared to countenance such a possibility and was prepared to, and did, resort to unlawful coercive conduct to prevent it. This was but another example of what Lander J described in Ponzio at [110] as “a calculated indifference” on the part of the Union and its officials to statutory provisions which were introduced to curb such conduct. As already noted, the appellant, at trial, relied on eighteen prior instances of relevant conduct by the Union which had led to the imposition of civil penalties. The common feature of these earlier cases was that they involved unlawful industrial action with a view to pressuring employers and workers to take action or make concessions demanded by the Union. Although, in each of the cases, the impugned conduct had occurred wholly, or in substantial part, prior to the presently relevant events, the penalty hearings in most of them post-dated November 2005. We cannot therefore, and do not, proceed on the basis that, when the Union committed the present contraventions, it did so in the knowledge that Courts had considered all similar earlier conduct by it to have contravened industrial legislation. That prior similar conduct, however, does have relevance to our present task as indicating a propensity, on the part of the Union, to engage in proscribed conduct. The weight to be attached to this consideration will not be as great where the prior similar conduct had not led to the imposition of a penalty before November 2005: cf R v McInerney (1986) 42 SASR 111 at 113 and 124. The principle of parity of sentencing requires us to have regard to the penalties imposed on Walton by Ryan J. His Honour imposed a penalty of $40,000 for Walton’s contravention of s 45 of the BCII Act and $10,000 for its contravention of s 298K of the WR Act. The penalties were agreed on between the parties. Nonetheless, Ryan J was not bound by the agreement and would have been free to impose a different penalty had he regarded the agreed sum as being unduly lenient or severe: see NW Frozen Foods at 295. For the reasons which we have already given, we consider that the conduct of the Union was more reprehensible than that of Walton.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.