Fair Work Ombudsman v Roach (The Melbourne Quarter Case)

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FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v Roach (The Melbourne Quarter Case) [2023] FCA 781  

File number(s): VID 23 of 2021
Judgment of: WHEELAHAN J
Date of judgment: 11 July 2023
Catchwords: INDUSTRIAL LAW – civil penalty provision – contraventions of s 348 and subs 349(1) Fair Work Act 2009 (Cth) by a natural person – contraventions of s 348 and subs 349(1) of the Act by an industrial association by way of the operation of s 363(1)(b) and s 363(3) of the Act – determination of the appropriate penalties to be ordered, respectively, to both the natural person and the industrial association in light of the deterrent purpose of the civil penalty regime of the Act in light of all of the relevant circumstances.
Legislation:

 Fair Work Act 2009 (Cth), s 348, subs 349(1), s 363, s 546, s 556, s 570, subs 793(1), and Part 3-1

Occupational Health and Safety Act 2004 (Vic)

Cases cited:

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (Quest Apartments Case) (No 2) [2018] FCA 163; 358 ALR 725

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (Syme Library Case) (No 2) [2019] FCA 1555

Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 399 ALR 599

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (Werribee Shopping Centre Case) [2017] FCA 1235

Construction, Forestry, Maritime, Mining and Energy Union v Melbourne Precast Concrete Nominees Pty Ltd (No 3) [2020] FCA 1309

Fair Work Ombudsman v Construction, Forestry, Mining, Fair Work Ombudsman v Roach (The Melbourne Quarter Case) [2023] FCA 156

Manufacturing and Energy Union (Kiama Aged Care Centre Appeal) [2023] FCAFC 63

Nangus v Charles Donovan Pty Ltd (in liq) [1989] VR 184

Trade Practices Commission v CSR Ltd (1991) ATPR 41-076

Report of Chris Maxwell QC, Occupational Health and Safety Review, March 2004

Division: Fair Work Division
Registry: Victoria
National Practice Area: Employment and Industrial Relations
Number of paragraphs: 26
Date of hearing: 11 July 2023
Counsel for the Applicant Mr M Follett
Solicitor for the Applicant Lander & Rogers
Counsel for the Respondents Mr P Boncardo
Solicitor for the Respondents CFMEU – Legal Branch

ORDERS

VID 23 of 2021
BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:

JASON ROACH

First Respondent

CONSTRUCTION, FORESTRY, MARITIME, MINING AND ENERGY UNION

Second Respondent

ORDER MADE BY:

WHEELAHAN J

DATE OF ORDER:

11 JULY 2023

THE COURT DECLARES THAT:

1.The first respondent, an officer of the second respondent for the purposes of subs 363(1)(b) of the Fair Work Act 2009 (Cth), contravened s 348 of the Act when, on 20 April 2020, he threatened to prevent, and in so doing did prevent, Brendan Watterston from performing work on the Melbourne Quarter – Commercial Tower 2MQ Project, located at 697 Collins Street, Docklands, that day, with the intention of coercing Mr Watterston to pay membership subscriptions, levies and/or dues to the second respondent.

2.The first respondent, an officer of the second…

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Details
Case
[2023] FCA 781
Decision Date

CaseChat Overview and Summary

In the Federal Court, the Fair Work Ombudsman filed a case against Roach and another respondent, an industrial association, concerning contraventions of sections 348 and 349(1) of the Fair Work Act 2009. The dispute centred on the determination of civil penalties for these contraventions, with the primary focus being on the appropriate deterrence and compliance with the Act's objectives.

The court was tasked with determining the appropriate penalties under the civil penalty regime of the Act, considering the deterrent purpose and the specific circumstances of the case. Key issues included whether the maximum penalties should be applied and if any reductions were warranted based on factors such as remorse or training. The court examined the Union's financial strength, its history of contraventions, and the effectiveness of any compliance measures implemented.

The Federal Court concluded that a penalty towards the maximum was necessary to achieve the deterrent effect and ensure compliance with the Act. The court considered the Union's strong financial position and its history of non-compliance, ruling that it was not entitled to leniency. A penalty of $55,000 was deemed appropriate for the Union, reflecting the need for deterrence and the absence of widespread compliance initiatives. The court also acknowledged the Union's efforts in training Mr Roach, but this did not significantly reduce the penalty due to the lack of broader compliance measures. The court's decision balanced the need for deterrence with the principles of proportionality and fairness, ultimately aiming to uphold the integrity of the Act's civil penalty provisions.

Orders

Orders of the court

1. The first respondent pay a pecuniary penalty of $5,040 in respect of his contravention of s 348 of the Act as declared in declaration 1 above.

2. The second respondent pay a pecuniary penalty of $55,000 in respect of its contravention of s 348 of the Act as declared in declaration 3 above.

3. The pecuniary penalties referred to in paragraphs 1 to 2 above, be paid to the Consolidated Revenue of the Commonwealth of Australia within 28 days.

4. There be no order as to costs.

Date that entry is stamped: 11 July 2023.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

The applicant now seeks declarations as to contravention and orders for the payment of civil penalties pursuant to s 346 of the FW Act. The issues in dispute are the appropriate terms of the declarations, and the appropriate sums for which orders for the payment of penalties should be made.Further evidence Mr Roach swore an affidavit dated 11 May 2023. Mr Roach is currently 50 years old, and lives at home with his wife and two children, aged 17 and five years old. He completed school in 1989 to Year 10. After leaving school he commenced a boilermaking apprenticeship, which he undertook for two-and-a-half years but did not complete. He then worked for about seven years installing neon signs. He commenced work in the construction industry in or around 1998 as a labourer, and since then has worked in the construction industry in a variety of jobs. Mr Roach has a Certificate IV in Occupational Health and Safety and a number of tickets in construction skills such as dogging, forklift operations, boom lift operations, and non-slew crane operations. Mr Roach is currently employed as a labourer, and has held his current position since around June 2022. In July 2022, he was elected the health and safety representative for his workgroup in his current job, having been elected to such positions for workgroups for about 20 years. Mr Roach has been a member of the Union since 5 June 2000, and was first elected as a Union delegate about 20 years ago. Mr Roach estimated that he has inducted tens of thousands of workers onto construction sites and projects, and estimated that at the Two Melbourne Quarter Project alone, he had inducted approximately 4,000 to 4,500 workers. Mr Roach stated that he has never breached industrial law before and that he prided himself on always complying with his obligations. Mr Roach stated that he had read and considered my decision on liability. He stated that although he was disappointed by the findings, he understood the conclusions, and was embarrassed by them. Following publication of the liability judgment, Mr Roach underwent formal and structured training provided by an experienced industrial and employment barrister, Brian Lacy AO, who is a former Presidential Member of the Australian Industrial Relations Commission. Mr Lacy was retained by the Union to explain to Mr Roach the reasons why his conduct on 20 April 2020 was found to have contravened s 348 and s 349 of the FW Act, and otherwise to provide training to Mr Roach that focussed on the contraventions that were found. Mr Lacy swore an affidavit annexing a report that he wrote in relation to the training. The training occurred in person over the course of one hour on 3 May 2023. It included a PowerPoint presentation that was specifically tailored to the training of Mr Roach. The presentation included slides about why there are laws, the content of the rule of law, and references to freedom of association. In his report Mr Lacy recorded the responses of Mr Roach in relation to his understanding of relevant concepts, which included the following –...Asked what he understood by the meaning of freedom of association, Roach said “you can’t make someone join the union if they don’t want to”....He said he understands that the practice of “no ticket no start” is not permitted under the FW Act and that it is a contravention to try to impose union membership on someone....In articulating his understanding of s 348 he said “you can’t coerce – you can’t make a person [...] do something by threatening to stop them working or to take away their choice not to do it.” ...Responding to my question about the meaning and application of s 349 of the FW Act, Roach said “you can’t make false statements about work or membership of the union.”...

Decision

Reasons for decision

Having regard to the Union’s strong financial position, and its history of contraventions, a penalty towards the maximum is appropriate to give effect to the object of deterrence and to induce compliance. Counsel for the respondents accepted that the Union’s history of contravening conduct has the consequence that it is not entitled to any lenience on penalty. The penalty that I consider appropriate is to order that the Union pay $55,000. This is intended to have a high deterrent value so as to induce compliance with the FW Act by the Union through all its officials, officers, employees and agents. It is less than the maximum penalty because inducing compliance with the law is not achieved through penalties alone, but may also be achieved through training, awareness, and the adoption by the Union of different practices and policies. The Court acknowledges the formal training that the Union arranged for Mr Roach by a reduction in what I would otherwise have fixed as an appropriate penalty. The reduction, however, is modest. That is because there was no evidence of any widespread training of Union delegates and officials, or of any compliance programs which are often features of responses to applications for civil penalties under other statutory regimes. Strikingly, there was no affidavit evidence from any officer of the Union that addressed any proposals to encourage compliance with the law by its officials, officers, employees, and agents. Particularly, there was no evidence that the Union’s Code of Conduct for Delegates has been revised so as to direct delegates’ attention to the need to comply with industrial laws, including clear and practical guidance so as to avoid conduct by delegates amounting to “no ticket, no start” practices which trample upon rights of freedom of association.Conclusions I will make orders in accordance with these reasons. There will be no orders as to costs: FW Act, s 570.

Ratio Decidendi

Legal Principle Established

As to the Union’s financial position, its audited accounts for the year ending 31 March 2022 showed total income of over $37 million, but a deficit for the year of over $1.4 million, compared with a surplus for the year to 31 March 2021 of over $2.4 million. As to the asset position, the Union has total net assets of over $86 million. It is noteworthy that current assets include cash and cash equivalents of over $33 million, and that net current assets can be calculated at over $21 million.ConsiderationDeclarations There was no issue between the parties that it was appropriate for the Court to make declarations. There is ample appellate authority that declarations by the Court may be appropriate in cases such as the present involving contravention of a civil penalty provision so as to record the basis on which the proceeding resolved. That is particularly so where, as here, by operation of s 556 of the FW Act not all contraventions that have been found can be the subject of a penalty, and it is appropriate therefore to record all the contraventions by making declarations: see, Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (Syme Library Case) (No 2) [2019] FCA 1555 at [78]. In relation to the form of the declaration, I accept the submissions of counsel for the respondents that the declaration proposed by the respondents better reflects the findings that the Court made.Penalties The maximum penalties for each contravention that may be imposed on the respondents are: (1) $12,600 for Mr Roach; and (2) $63,000 for the Union. The principles that guide the imposition of civil penalties for contravention of the FW Act are uncontroversial. It is not necessary in the present case to go beyond the key principles essayed in the joint judgment of Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 399 ALR 599 (Pattinson). In summary, those principles are –(1)The purpose of the civil penalty regime under the FW Act is primarily, if not solely, the promotion of the public interest in compliance with provisions of the Act by the deterrence of further contraventions of the Act.(2)Reflecting the text of s 546 of the FW Act, the Court’s task is to determine what it considers to be an “appropriate” penalty in a particular case. A penalty should not be greater than is necessary to achieve the object of deterrence, and severity beyond that would be oppression. An appropriate penalty is one that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case. (3)The assessment of an appropriate penalty may be informed by the factors listed by French J in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 at 52,152-3 to the extent that those factors relate to deterrence. However, that list is not a rigid catalogue of matters for attention as if it were a legal checklist. Account of the factors listed by French J in CSR, such as an expression of genuine remorse, may moderate the penalty that is appropriate to protect the public interest by deterring future contraventions of the FW Act.(4)Some concepts familiar from criminal sentencing, such as totality, parity, and course of conduct may assist in the assessment of what may be considered reasonably necessary to deter further contraventions of the FW Act.(5)The maximum penalties provided for by the FW Act are not reserved for the worst cases. Rather, what is required is that there be some reasonable relationship between the theoretical maximum and the final penalty imposed viewed through the lens of achieving the deterrence which is the purpose of the FW Act civil penalty regime.(6)In some cases, the circumstances of the contravener may be more significant to the assessment of an appropriate penalty than the circumstances of contravention, because, all other things being equal, a greater financial incentive will be necessary to persuade a well-resourced contravener to abide by the law rather than to adhere to its preferred policy than will be necessary to persuade a poorly resourced contravener that its unlawful policy preference is not sustainable.