Australian Building and Construction Commissioner v Construction, Forestry,... [2021] FCA 105 | Case summary

The appropriate penalties 13 The Commissioner seeks the imposition of pecuniary penalties upon each of the respondents. The Commissioner submits that, in light of the Union's prior contravening conduct, specific deterrence assumes particular importance. The Commissioner submits that, taking into account the seriousness of the contravening conduct, there should be two penalties imposed upon the Union, "at the highest end of the range permitted by the legislation", and that Mr Harradine's contraventions should attract, "mid to high penalties". 14 The Commissioner recognises that there is an overlap between the conduct of Mr Harradine and the Union that resulted in the contraventions of s 46 and s 54 of the BCI Act and that, pursuant to s 83(2), they cannot be penalised for contraventions of both provisions. The Commissioner submits that they should be sentenced only in respect of the contraventions of s 54, presumably on the basis that conduct taken with intent to coerce should be regarded more seriously. 15 The Commissioner has not made submissions about the appropriate quantum of the penalties to be imposed upon the Employees. 16 The respondents submit that the contraventions committed by the respondents on 11 and 12 March 2019 arose in a single course of conduct, and that only a single penalty should be imposed upon them. The respondents submit that it is necessary to ensure that the penalties are proportionate to the seriousness of the conduct, and submit that the contravening conduct was at the less serious end of the scale. They submit that it is relevant that the Employees were casual employees who had no obligation to accept work in the first place and a right to cease work on short notice. The respondents also submit that the unlawfulness is less serious because it stems merely from the Union's failure to obtain a protected action ballot under Pt 3-3 of the Fair Work Act 2009 (Cth) (FW Act) and give the required notice. 17 Section 81 of the BCI Act provides: 81 Penalty etc. for contravention of civil remedy provision (1) A relevant court, on application by an authorised applicant, may make one or more of the following orders relating to a person (the defendant) who has contravened a civil remedy provision: (a) an order imposing a pecuniary penalty on the defendant; (b) an order requiring the defendant to pay a specified amount to another person as compensation for damage suffered by the other person as a result of the contravention; (c) any other order that the court considers appropriate. … Maximum penalty for civil remedy provisions (2) The maximum pecuniary penalty is: (a) for a Grade A civil remedy provision - 1,000 penalty units if the defendant is a body corporate and otherwise 200 penalty units; and (b) for a Grade B civil remedy provision - 100 penalty units if the defendant is a body corporate and otherwise 20 penalty units. Injunctions (3) The orders that may be made under paragraph (1)(c) include: (a) injunctions (including interim injunctions); and (b) any other orders that the court considers necessary to stop the conduct or remedy its effects, including orders for the sequestration of assets. … Pecuniary penalties (5) A pecuniary penalty under paragraph (1)(a) is payable to the Commonwealth, or to some other person if the court so directs. It may be recovered as a debt. (6) In determining a pecuniary penalty under paragraph (1)(a), the court must take into account all relevant matters, including: (a) the nature and extent of the contravention; and (b) the nature and extent of any loss or damage suffered because of the contravention; and (c) the circumstances in which the contravention took place; and (d) whether the person has previously been found by a court (including a court in a foreign country) to have engaged in any similar conduct. (7) The Consolidated Revenue Fund is appropriated for the purposes of a debt due to a person other than the Commonwealth in relation to a penalty under paragraph (1)(a). 18 Section 83 provides: 83 Conduct contravening more than one civil remedy provision (1) If conduct constitutes a contravention of 2 or more civil remedy provisions, proceedings may be instituted under this Part against a person in relation to the contravention of any one or more of those provisions. (2) However, the person is not liable to more than one pecuniary penalty under this Part in relation to the same conduct. 19 Section 84 provides: 84 Multiple contraventions (1) A relevant court may make a single civil penalty order against a person for multiple contraventions of a civil remedy provision if proceedings for the contraventions are founded on the same facts, or if the contraventions form, or are part of, a series of contraventions of the same or a similar character. (2) However, any pecuniary penalty imposed must not exceed the sum of the maximum penalties that could be ordered if a separate pecuniary penalty were ordered for each of the contraventions. 20 Sections 46 and 54 of the BCI Act are each a, "Grade A civil penalty provision", attracting a maximum penalty of 1000 penalty units for a body corporate and 200 penalty units for an individual. At the time of the contravening conduct, the value of a penalty unit was $210. Accordingly, the maximum penalty that may be imposed for each contravention is $210,000 for the Union and $42,000 for the individual respondents. 21 Section 81(6) of the BCI Act requires the Court to take into account, "all relevant matters", including those specifically set out in that provision. Other factors that may be relevant have been described in a number of cases. In Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68, the Full Court at [102] categorised such factors based on, "whether they relate to the objective nature and seriousness of the offending conduct, or concern the particular circumstances of the defendant in question", and continued: [103] The factors relating to the objective seriousness of the contravention include: the extent to which the contravention was the result of deliberate, covert or reckless conduct, as opposed to negligence or carelessness; whether the contravention comprised isolated conduct, or was systematic or occurred over a period of time; if the defendant is a corporation, the seniority of the officers responsible for the contravention; the existence, within the corporation, of compliance systems and whether there was a culture of compliance at the corporation; the impact or consequences of the contravention on the market or innocent third parties; and the extent of any profit or benefit derived as a result of the contravention. [104] The factors that concern the particular circumstances of the defendant, particularly where the defendant is a corporation, generally include: the size and financial position of the contravening company; whether the company has been found to have engaged in similar conduct in the past; whether the company has improved or modified its compliance systems since the contravention; whether the company (through its senior officers) has demonstrated contrition and remorse; whether the company had disgorged any profit or benefit received as a result of the contravention, or made reparation; whether the company has cooperated with and assisted the relevant regulatory authority in the investigation and prosecution of the contravention; and whether the company has suffered any extra-curial punishment or detriment arising from the finding that it had contravened the law. 22 While such "checklists" of factors may be useful, they must not become a, "rigid catalogue of matters for attention": Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [91]. Rather, the task of the Court when assessing penalty is one of "instinctive synthesis", involving the "identification and balancing of all the considerations relevant to the contravention and the circumstances of the respondent": Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union ("Cardigan St Case") [2018] FCA 957 at [51]. 23 The principal object of an order to pay a pecuniary penalty was described in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 (ABCC v CFMEU) at [116] as, "deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners". 24 In Pattinson v Australian Building and Construction Commissioner (2020) 384 ALR 75; [2020] FCAFC 177 (Pattinson), the Full Court considered s 546(1) of the FW Act, which provides that a person may be ordered to pay a pecuniary penalty that the Court, "considers is appropriate". The plurality observed at [98]: The court's task is to determine and impose a penalty that it considers "appropriate" if it is satisfied that a person upon whom the penalty is to be imposed has contravened a civil remedy provision. That task is to be undertaken in the light of the object or purpose of the imposition: the promotion of the public interest in compliance with the provision of the statute in question, by deterrence, specific and general. It is clear that the object of deterrence is directed to the subject contravention. That is, it is the deterring of contraventions of the kind before the court to which regard must be had in fixing the penalty that is considered appropriate, by reference to the frame of reference or yardstick provided by the maximum penalty as set by Parliament. Thus, it will always be important to understand the nature, character and full context of the contravening. 25 In Pattinson, the plurality stated at [104]: …[O]ne sees a notion of proportionality within the task set out in s 546. That task, of course, is the imposing of an "appropriate" penalty for the instant contravention to serve the object of deterrence from repetition of like contravening in the future. Proportionality and appropriateness are thus intimately related. Proportionality is not a free-standing principle separate from the requirement of what is "appropriate", rather it is part of that assessment which will necessarily involve examining the nature of the contravention, and all factors that rationally bear on the assessment of the need for deterrence in all the circumstances. 26 The plurality observed at [109]: …The process is whole and discretionary, and evaluative in character, to which objective aspects of the contravention and what might be called the subjective characteristics of the contravenor, indeed all considerations that rationally touch on or inform deterrence, are relevant. 27 The plurality then considered the relevance of a history of contraventions to the assessment of the appropriate penalty: [194] …A demonstrated unwillingness to obey a law of Parliament can be seen to bear upon the seriousness of conduct that is a contravention of that law. How one approaches, properly and fairly, the proof of such a present state of disobedience relevant to the instant contravention was not explored in argument. The relevant question may be seen to be the demonstrated or inferred attitude or state of mind of the contravenor to the law in question. That will be assessed and taken into account along with, and not ignoring, all the other features of the contravening. The danger of just referring to prior contraventions without a proper evaluation and taking account of the circumstances of the instant contravening (that is what actually happened) can be seen in Auimatagi, where past contraventions had little, if anything, to do with the events of the day in question that led to the stoppage of work. [195] The error of the primary judge here, being the error of the majority in Broadway on Ann, was that in the name of utilising a notion of recidivism of the union it was seen as in accordance with principle to impose a penalty at the highest level because of the number of prior contraventions, in what was said to be the demonstrated intention of promoting a no-ticket no-start policy, but without any real evaluation of, or weight being given to, the objective characteristics of what occurred as part of the assessment of what was the subject contravention of the penalty to be imposed. Thus, the penalty for the instant contravention became subsumed by a proposition that the time had come, once the perceived threshold level of prior contravening was reached, that henceforth all contraventions would be treated as of the worst category or warranting the maximum penalty, irrespective of the nature and the character of the human conduct that constituted the contravention in question…The past has been used beyond the point of characterising the nature of the contravening (which is the subject of the imposition of the penalty) and has become the reason for the maximum penalty irrespective of the nature and seriousness of the instant contravening. To ask the rhetorical question in the last sentence of [72] of the primary judge's reasons as a supporting proposition is to raise the object of the imposition of the penalty to a justification for ignoring the nature of the contravening, and so to impose the penalty because of, and framed by, only the past. This is not to use, but to jettison, a notion of proportionality by setting to one side the nature of the conduct that comprised the contravention. The penalty becomes imposed not for the instant contravention but, to some degree, for the past, again. This approach elevated past offending to be the defining consideration of the character or gravity of the contravening, irrespective of the actual reality of what constituted the contravention. It was not an assessment of the gravity of the circumstances, including (but not limited to or defined by) what could be drawn legitimately and contextually as to the instant contravention from past contraventions; rather, it was to draw from the past a conclusion that, regardless of how objectively serious or not the conduct in question was otherwise, the maximum penalty should henceforth be imposed. 28 The plurality continued: [201] The assessment of what is an appropriate penalty is informed by a reasonable appreciation of all the circumstances that rationally go to an assessment of the gravity and seriousness of the contravention before the court, including (but not limited to) what can be drawn from past conduct as to the instant contravention, and that rationally go to an assessment of what is reasonably necessary, and thus appropriate, to deter such or like contravention in the future by the contravenor or by others. If a grave contravention and a much less serious contravention (thus analysed in the same context) are both said to require the imposition of the maximum penalty, it is difficult to conclude otherwise than that in respect of the latter contravention, the less serious, the penalty is being imposed for both the present contravention and for the past contraventions... 29 The effect of Pattinson is that the Union's recidivism is a factor to be taken into account in assessing the level of penalty that is reasonably necessary to deter similar offending, but does not of itself require assessment of a penalty at the highest level. It is necessary to take into account all the circumstances that bear upon the character and seriousness of the contravention before the Court. 30 The Commissioner has applied to the High Court of Australia for special leave to appeal against the judgment in Pattinson. The Commissioner made a formal submission in this case that Pattinson was wrongly decided. The Commissioner accepts that s 84 of the BCI Act is not relevantly distinguishable from s 546 of the FW Act, considered in Pattinson, including that the task of the Court under both provisions is to impose an appropriate penalty for each contravention. I am bound to follow Pattinson. 31 The contraventions must be regarded as very serious. Mr Harradine and the Union organised the bans imposed by the Employees in order to coerce PJ Walsh Constructions into entering a building enterprise agreement with the Union. It has been recognised that, "coercion is a particularly serious form of industrial conduct": Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 249 FCR 458 at [97], Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The Quest Apartments Case) (No 2) (2018) 358 ALR 725; [2018] FCA 163 at [33]. 32 The bans themselves involved most of PJ Walsh Constructions' building employees at the NQS site. PJ Walsh Constructions was only able to carry out limited work at the NQS site on 11 March 2019, and none on 12, 13 and 14 March 2019. 33 The Commissioner submits that the fact that the NQS project was the largest building project ever undertaken in North Queensland makes the conduct more serious. I do not accept that the mere size of the project affects the seriousness of the conduct. What is relevant is the nature and extent of the relevant conduct and its effects, including disruption of the project. The work affected was described by the Commissioner as, "critical path work", and the respondents have not demurred from that description. 34 There is no specific evidence that PJ Walsh Constructions was caused economic loss. However, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 249 FCR 458 at [80], the Full Court observed that where work cannot be performed at a major building site because of industrial disruption, economic loss is an inevitable consequence. I infer that some loss of unknown magnitude was caused to PJ Walsh Constructions. 35 The respondents submit that, "the fact that there was a respectable basis for the contention that the [E]mployees were entitled to stop work counts against the suggestion that [Mr Harradine's] conduct was objectively serious". This submission appears related, in part, to the submission that the Employees, being casuals, were under no obligation to accept offers of work from PJ Walsh Constructions, so that the contraventions arose merely because the refusal to work was undertaken collectively, rather than individually. The point seems to be that because the Employees might lawfully have refused to work, their unlawful conduct on the relevant days should be regarded as less serious. 36 I do not accept these submissions. There is no evidence that the Employees would have refused work for legitimate reasons if the ban had not been imposed. I am satisfied that the reason the Employees did not perform work on the relevant dates was that they had imposed bans upon the performance of work. The seriousness of the conduct must be assessed on the basis of what the Employees, Mr Harradine and the Union did, not on the basis of what they might have been able to do lawfully in other circumstances. 37 The respondents also submit that the conduct is less serious because they had an arguable case that the conduct was not unlawful. There is no evidence from Mr Harradine or the Employees that their conduct was undertaken under a mistaken belief that it was lawful. I do not accept the submission. 38 The respondents submit that the unlawfulness of the conduct stems merely from the Union's failure to obtain a protected industrial action ballot and give appropriate notice, and if those steps had been taken, the action would have been lawful. The conduct was unlawful. The respondents must be sentenced on the basis of what they did, not what they might have been able to do. 39 Although the conduct of Mr Harradine and the Union was very serious, the contraventions cannot be regarded as being in the most serious category of contraventions. The contraventions would have been more serious if, for example, they had extended over a lengthier time, or caused substantial demonstrated loss, or involved all the building employees at the NQS site. 40 The Commissioner has provided a schedule setting out the Union's previous contraventions of industrial legislation. The respondents accept the schedule to be accurate. The schedule demonstrates that the Union has contravened industrial legislation in more than 170 cases since around the year 2000. 41 The Union's record of contraventions has been described in other cases as "disgraceful and shameful", "deplorable" and "dismal": see Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Broadway on Ann Case) (2018) 265 FCR 208 at [65], Cozadinos v Construction, Forestry, Mining and Energy Union [2013] FCA 1243 at [43], Director of Fair Work Building Industry Inspectorate v Stephenson (2014) 146 ALD 75; [2014] FCA 1432 at [76]. I agree with those descriptions. 42 In Pattinson at [180], [230] and [231], the Full Court held that prior contraventions, even so many and serious as those of the Union, cannot lead to a penalty disproportionate to the gravity of the contravention. However, the history is relevant to an assessment of the level of penalty reasonably necessary for deterrence of similar conduct in the future. 43 The respondents contested the proceeding and cannot be penalised for doing so. However, that means there is a lack of evidence of contrition. 44 The Commissioner submits that the Union's history of prior contraventions demonstrates that the conduct in the present case was condoned by the senior leadership of the Union. I do not accept that evidence led in other cases can be used to establish the facts and circumstances of the present case. The Commissioner has only pleaded and proved that Mr Harradine organised the bans, not that they were organised or condoned by the senior leadership. It has not been suggested that Mr Harradine held a position of seniority within the Union. 45 There was substantial argument about whether the common law course of conduct principle ought to be applied to the contraventions. However, in light of s 84(1) of the BCI Act, it is unnecessary to consider whether the common law course of conduct principle has any application and, if it does, whether it should be applied in the circumstances. 46 Under s 84(1) of the BCI Act, a Court may make a single civil penalty order against a person for multiple contraventions of a civil remedy provision, "if proceedings for the contraventions are founded on the same facts, or if the contraventions form, or are part of, a series of contraventions of the same or a similar character". The conduct of Mr Harradine consisted of organising the unlawful industrial action taken by some of the Employees on 11 March 2019 and some on 12 March 2019. The conduct was engaged in against the same entity, PJ Walsh Constructions, with the single object of coercing that entity into entering an enterprise agreement with the Union. The nature of the unlawful industrial action that was organised was the same. In these circumstances, I am satisfied that the two contraventions of s 54 committed by Mr Harradine form a series of contraventions of a similar character. 47 The third, fourth, sixth, ninth to thirteenth, seventeenth and eighteenth respondents committed two contraventions of s 46 of the BCI Act by imposing bans on 11 and 12 March 2019. I am also satisfied that their contraventions form a series of contraventions of a similar character. 48 Section 84(1) of the BCI Act provides that a court "may" make a single civil penalty order against a person for multiple contraventions of a civil remedy provision if the relevant conditions are satisfied. The Court is not required to impose a single civil penalty. The overriding requirement under s 81(1) is to impose an appropriate penalty for each contravention of a civil remedy provision. 49 Section 84(2) requires that if a single pecuniary penalty is imposed for multiple contraventions, the penalty must not exceed the sum of the maximum penalties that could be ordered if a separate pecuniary penalty were imposed for each contravention. The maximum penalty that may be imposed for the two contraventions by each of the individual respondents is $84,000 and for the contraventions by the Union is $420,000. 50 The Commissioner submits that two penalties of close to $210,000 should be imposed upon the Union. In my opinion, to accede to that submission would be to introduce an element of double punishment for what is very similar conduct constituting the two contraventions. 51 Taking into account all the circumstances, it is appropriate to impose a single penalty of $190,000 upon the Union. 52 There is no evidence that Mr Harradine has previously contravened any industrial legislation. It is appropriate to impose a single penalty of $20,000 upon Mr Harradine. 53 In a number of cases in recent years, the Court has imposed civil penalties upon individual employees who have taken unlawful industrial action in contravention of s 46 of the BCI Act or s 417 of the FW Act. Those cases are Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union [2020] FCA 1662, Australian Building and Construction Commissioner v Adams [2018] FCA 1520, Australian Building Construction Commissioner v Huddy (No 2) [2017] FCA 1088, Australian Building and Construction Commissioner v McCullough (No 2) [2017] FCA 295, Australian Building and Construction Commissioner v Mamudi [2017] FCA 134, Director of the Fair Work Building Industry Inspectorate v Ellen (The Longford Gas Plant Case) [2016] FCA 1395, Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2016] FCA 798 and Director of the Fair Work Building Industry Inspectorate v Merkx [2015] FCA 316. Each case involved the withdrawal of labour for a single day. The penalties imposed upon the employees ranged from $1,000 to $4,000. 54 The conduct of the Employees in the present case is more serious. The third, fourth, sixth, ninth to fourteenth, seventeenth and eighteenth respondents withdrew their labour for a period of three-and-a-half days, while the remainder withdrew their labour for three days. 55 The assessment of penalties on the Employees takes place on the basis that they contravened s 46 of the BCI Act, whereas the penalties for Mr Harradine are assessed on the basis that he contravened s 54. There is no evidence that the Employees would have taken the unlawful industrial action if not for Mr Harradine's organisation of it. The conduct of the Employees should be regarded as less serious than the conduct of Mr Harradine. 56 I have held that only a single penalty should be imposed on the third, fourth, sixth, ninth to thirteenth, seventeenth and eighteenth respondents for their contraventions of s 46 of the BCI Act. These respondents did not work for three-and-a-half days. The fourteenth respondent engaged in only one contravention of s 46, but he did not perform work for the same length of time and should be subject to the same penalty. 57 The fifth, seventh, eighth, fifteenth and sixteenth respondents contravened s 46 only on 12 March 2019. The effects of their conduct were felt over three days. 58 It is appropriate to impose a penalty of $5,000 on each of the third, fourth, sixth, ninth to fourteenth, seventeenth and eighteenth respondents, and a penalty of $4,500 on each of the fifth, seventh, eighth, fifteenth and sixteenth respondents.

Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union

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