Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union - [2022] FCA 760 - FCA 2022 case summary — Zoe

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

[2022] FCA 760

Federal Court of Australia|2022-07-01|Before: O'Sullivan J

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Court

Federal Court of Australia

Decision date

2022-07-01

Before

O'Sullivan J

Source

Original judgment source is linked above.

Judgment (45 paragraphs)

[1]

INTRODUCTION 1 On 12 October 2021, the Australian Building and Construction Commissioner (Commissioner) filed an amended originating application in which it seeks declarations and the imposition of pecuniary penalties against the first respondent - the Construction, Forestry, Maritime, Mining and Energy Union (Union); the second respondent - Mr Andrew Sutherland (Mr Sutherland); the sixth respondent - Mr Andrew James Sneath (Mr Sneath); and the eighth respondent - Core-Form Pty Ltd (Core-Form), (together the respondents). 2 On 12 October 2021, the Court was informed that the parties had reached agreement as to liability and wished to proceed to a penalty hearing. As a consequence of that agreement, the Commissioner was granted leave to file and serve an amended originating application and a further amended statement of claim. Leave was also granted to discontinue the proceedings against a number of the other respondents with the remaining respondents being granted leave to file and serve amended defences admitting all paragraphs of the further amended statement of claim that were applicable to them. 3 The remaining respondents to which I refer above are the respondents.

[2]

Factual findings 4 A further amended statement of claim was filed on 12 October 2021. The allegations are admitted by the respondents in the amended defences, save for those pleas where a particular respondent does not plead to an allegation on the basis the pleading in question pleads a question of law, or alternatively, the pleading is not directed to that particular respondent. 5 I make the following factual findings based on the allegations admitted by the respondents and paragraphs 5, 10, 11 and annexures JS-3 and JS-4 to the affidavit of Joseph Anthony Sommariva (Mr Sommariva), affirmed on 29 September 2020 and filed on 23 March 2022 (Sommariva affidavit).

[5]

Background and the contravening conduct 13 On 22 November 2017, Mr Sommariva entered into a contract with Core-Form to supply and construct formwork at the Site. 14 In or about August 2018, a dispute arose between Core-Form and Mr Sommariva in which Core-Form alleged it was due approximately $180,000 for work done on the Site. Mr Sommariva alleged the works were incomplete and therefore payment was not due. As a result of not being paid, Core-Form had been forced to lay off workers. 15 In August 2018, Core-Form's workers stopped attending the Site. On 20 September 2018, Mr Sommariva gave written notice to Core-Form terminating its contract with Core-Form. 16 Under a covering letter dated 30 April 2019, Mr Rudi Totzenberger, a Director of Core-Form, sent Mr Sommariva an invoice which was a summary of outstanding invoices for work done on the Site by Core-Form for Mr Sommariva (Core-Form claim). 17 The covering letter contained a statement that the invoice accompanying the letter was "… a Payment Claim made under the Building and Construction Industry Security of Payment Act 2009 (SA)". 18 By letter dated 9 May 2019, Mr Sommariva rejected the Core-Form claim and denied it was a proper payment claim within the meaning of the Building and Construction Industry Security of Payment Act 2009 (SA) (SOP Act). 19 On 1 October 2019, Mr Sneath and a Union official (not Mr Sutherland) attended at the front entrance to the Site (the 1 October 2019 meeting) during which a conversation in the following terms occurred: Mr Sneath said words to the effect of, "where is my tools and container?" The Union official said words to the effect of, "where is Andrew's [Mr Sneath's] tools and the container, and you owe him money." Mr Sommariva said words to the effect, "this has got nothing to do with you … it's none of your business." Mr Sneath said words to the effect of, "you owe us money." 20 On 16 October 2019, at approximately 9.50am, some 20 to 30 people (protesters) gathered at the entrance to the Site on East Terrace, in front of the entry gates (Protest). The protesters included: (a) Mr Sutherland, who was wearing Union branded clothing and was in possession of a red Union flag; (b) Other persons wearing Union branded clothing, some of whom were holding Union flags with others holding signs with the words "PAY UR BILLS"; (c) Mr Sneath, who held the sign "JOB DONE WHERE'S THE MONEY"; and (d) Four persons who were employees of Core-Form. 21 During the Protest: (a) Some of the protesters held signs with the following phrases: "PAY UR BILLS"; "MR SOMMARIVA RIPS OFF WORKERS"; "STOP RIPPING OFF SUBBIES"; and "JOB DONE WHERE'S THE MONEY". (b) Some of the protesters used a megaphone to lead other protesters in various chants including: "Pay your bills. Pay your bills! Pay your bills! Pay your bills, Joe!"; "Sell your Porsche"; "Sell the car"; "What do we want? Bills paid! When do we want it? Now!" (c) Some of the protesters also shouted "grub" and "grubby-grub-grub." 22 Ms Talia Sommariva was employed by Mr Sommariva as a Trades Assistant to work at the Site. Some of the protesters said to her, "where's your boots?"; "where's your hard hat?", "get off site"; and "where are your safety boots"; over about a five second period as well as chanting "pay your bills"; "joe's a grub, grubby, grub, grub" over about a 15 second period. 23 Ms Lori Kambitsis was a legal practitioner whose firm was engaged to act on behalf of Mr Sommariva. Some of the protesters chanted in respect of her "sell the Porsche" and "pay your bills". 24 Some of the protesters were directing the chants set out in paragraph 22 above at Mr Sommariva. 25 Mr Travis Adams (Mr Adams) was a painter with Scope. During the Protest, some of the protesters prevented a vehicle driven by Mr Adams from entering the Site by obstructing access to it. Mr Adams parked his vehicle and walked to the Site. As a consequence, he was prevented for approximately 19 minutes from using his vehicle to bring painting supplies onto the Site for the purpose of Scope performing its contract with Mr Sommariva. 26 The Protest disbanded at approximately 10.52am. 27 By reason of Mr Adams being prevented from driving his vehicle onto the Site, for a period of 19 minutes, the Protest was an unlawful picket insofar as it was action that: (1) Directly restricted Mr Adams from accessing the Site, in the sense that he was unable to park his vehicle on the Site; (2) Was motivated for the purpose of: (a) Supporting or advocating claims against Mr Sommariva by Core-Form in relation to the employment of employees or the engagement of it as a contractor in that: (i) The claims by the respondents were that if Mr Sommariva paid money allegedly owed to Core-Form it would allow Core-Form to pay its employees, stop it from laying off its employees, and cause it to re-employ its former employees; and (ii) Core-Form should be paid the money it was allegedly owed for work it had done for Mr Sommariva on the Site: (s 47(2)(b)(i) of the BCIIP Act); and (b) Advancing the industrial objectives of the Union which were: (i) To ensure that money be paid by Mr Sommariva to Core-Form so it could retain its employees, not have to lay off more of its employees, and re-employ former employees that had been laid off; (ii) To ensure greater employment security for the employees of Core-Form; and (iii) By reason of the matters at (b)(i) and (b)(ii) above, assisting members or persons eligible to be members of the Union: (s 47(2)(b)(ii) of the BCIIP Act). 28 In these reasons, I refer to the approximately 19 minute unlawful picket as the "contravening conduct".

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Principles 33 Section 546 of the Fair Work Act 2009 (Cth) (FWA) provides that amongst other courts, this Court may order a person to pay a pecuniary penalty "that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision." 34 In Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076, 52,152-52,153 French J (as his Honour then was) identified factors which were relevant to an assessment of a penalty of appropriate deterrent value under the Trade Practices Act 1974 (Cth). His Honour identified those factors as: 1. The nature and extent of the contravening conduct. 2. The amount of loss or damage caused. 3. The circumstances in which the conduct took place. 4. The size of the contravening company. 5. The degree of power it has, as evidenced by its market share and ease of entry into the market. 6. The deliberateness of the contravention and the period over which it extended. 7. Whether the contravention arose out of the conduct of senior management or at a lower level. 8. Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention. 9. Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention. 35 In Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 (13 April 2022) (ABCC v Pattinson) the High Court considered the approach to the imposition of pecuniary penalties under s 546 of the FWA, and as part of that consideration, the circumstances in which a court might impose the maximum pecuniary penalty. 36 The following principles may be extracted from the judgment of the plurality (Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ): (1) Under the civil penalty regime provided by the FWA, the primary, if not sole purpose of a civil penalty is "… the promotion of the public interest in compliance with the provisions of the Act by the deterrence of further contraventions of the Act: at [9]. (2) Nothing in the text, context or purpose of s 546 of the FWA requires that the maximum penalty be reserved for only the most serious examples of the offending in question: at [10]. (3) "The theory of s 546 of the FWA is that the financial disincentive involved in the imposition of a pecuniary penalty will encourage compliance with the law by ensuring that contraventions are viewed by the contravenor and others as an economically irrational choice." "The Court's function is to give effect to the intention of the FWA. In this regard, the Court must do what it can to deter non-compliance with the FWA": at [66]. (4) "Where it is evident that a contravention has occurred as a matter of industrial strategy pursued without regard for the law, it is open to a court acting under s 546 reasonably to conclude that no penalty short of the maximum would be appropriate.": at [67]. (5) What is required is that there be some "reasonable relationship between the theoretical maximum and the final penalty imposed" (referring with approval to Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; (2016) 340 ALR 25, 63 at [156]): at [10]; (6) Although courts may adapt principles which govern criminal sentencing to civil penalty regimes, nonetheless there are limits to the transplantation of principles from criminal prosecutions to civil penalty proceedings. Unlike criminal sentences, civil penalties are imposed primarily, if not solely, for the purpose of deterrence and that "[r]etribution, denunciation and rehabilitation have no part to play" (referring with approval to Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) [2018] FCAFC 97; (2018) 264 FCR 155, 167 at [19]); Trade Practices Commission v CSR Ltd [1991] ATPR 41-076; and citing The Commonwealth v Director, Fair Work Building Industry Inspectorate ("The Agreed Penalties Case") [2015] HCA 46; (2015) 258 CLR 482, 495 at [24]: at [14]-[16]. (7) Nothing in the text, context or purpose of s 546 requires that when fixing an "appropriate" penalty the "notion of proportionality" has a role to play. Rather, the discretion to be exercised under s 546 is to be exercised judicially, that is to say fairly and reasonably having regard to the subject matter, scope and purpose of the legislation (Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [22], Comcare v Banerji [2019] HCA 23; (2019) 267 CLR 373, 403 at [40]; Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164, 172-173 at [24]). To the extent s 546 requires a "proportionate" penalty to be imposed, that refers "to a penalty that strikes a reasonable balance between deterrence and oppressive severity". This recognises that "… proportionality of penalty is measured in the wider context of the demands of effective deterrence and encouraging the corresponding virtue of voluntary compliance." (referring with approval to Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd at [152]): at [40], [41]. (8) Although in CSR Ltd French J (as his Honour then was) identified a number of factors to which regard may be had in assessing a penalty of appropriate deterrent value, (CSR Ltd at 52,152-52,153) the list of relevant considerations is not a "rigid catalogue of matters for attention" as if it were a legal checklist (referring with approval to Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560, 580 at [91]). The ultimate task of the Court is to determine an "appropriate" penalty in the circumstances of the particular case: at [18], [19]. (9) An "appropriate" penalty strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case. A court "… empowered by s 546 to impose an "appropriate" penalty must act fairly and reasonably for the purpose of protecting the public interest by deterring future contraventions of the Act": at [47], [48]. (10) In determining whether the maximum level of deterrence is called for, both the circumstances of the contravenor and the circumstances of the contravention may be relevant, however they are not exclusive considerations: at [58]-[59]: 58 … Once it is accepted, as it must be, that the maximum penalty is intended by the Act to be imposed in respect of a contravention warranting the strongest deterrence within the prescribed cap, there is no warrant for the court to ascertain the extent of the necessity for deterrence by reference exclusively to the circumstances of the contravention. The categories of circumstances may overlap, in that matters may bear upon both the seriousness of the contravention and the intransigence of the contravenor. Further, circumstances which can be said to relate exclusively to the contravenor may bear strongly on what level of deterrence will be 'appropriate'. 59 … It is not necessary that the task of setting a penalty that is 'appropriate' to deter further contraventions should proceed by considering characteristics of the contravenor only to the extent that they can be said to bear upon the seriousness of the contravening conduct. (11) A civil penalty "must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business" (citing Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640, 659 at [66]; referring with approval to Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249, 265 at [62]: at [17].

[12]

Nature and extent of the contravening conduct 46 First, it submits the contravening conduct was intentional, as is evident from the fact that Mr Sneath and a Union official attended on Mr Sommariva at the Site approximately two weeks prior to the Protest to demand money said to be owed to Core-Form. 47 The Commissioner submits further that the unlawful picket was objectively serious; comprising a gathering of 20 to 30 people; extending over 19 minutes during which three people were harassed; Mr Adams was denied access to the Site; and the language used by those involved in the unlawful picket was offensive and derogatory. In particular, it refers to the use of the term "grub". The Commissioner submits it is likely that the conduct of the respondents aroused some fear or discomfort in the individuals towards whom the chants and comments were directed: CS at [34]. 48 However, in its submissions, the Union and Mr Sutherland refer to the Commissioner's submission about fear and/or discomfort likely to have been felt by individuals and submit that the Commissioner seeks, incorrectly, to expand the conduct the subject of sanction and have the Court infer "fear, or at least discomfort" in "employees and others that attended the Site that day." The Union and Mr Sutherland submit such inferences are not open: First and Second respondents' submissions (R1, R2 S) at [24(b)]. 49 In its reply submissions, the Commissioner accepts the point and withdraws the submission that the respondents' conduct aroused fear and discomfort in the individuals to whom the chants and comments were directed: Commissioner's Reply Submissions (CRS) at [4]. Accordingly, I do not give the Commissioner's submissions on any fear and/or discomfort that may have been suffered by individuals any weight. 50 Although accepting there is no evidence of economic loss, the Commissioner submits there was delay occasioned by the unlawful picket, as well as inconvenience in the sense that Mr Adams had to bring his materials to the Site on foot. It submits this type of unlawful conduct is inconsistent with the objects set out in s 3(1) of the BCIIP Act which are to: "... provide an improved workplace relations framework for building work to ensure that building work is carried out fairly, efficiently and productively, ... and for the benefit of all building industry participants, and for the benefit of the Australian economy as a whole."

[20]

SOP Act 62 In its supplementary submissions in relation to the SOP Act, the Commissioner seeks leave to read and rely upon paragraphs 5 and 10, and annexure JS-3 to the Sommariva affidavit. 63 I am informed by the Commissioner in its written submissions that the Sommariva affidavit was served on the respondents on 4 February 2021, but had not been filed. The affidavit was filed subsequently on 23 March 2022. 64 The respondents oppose the Commissioner's application to read and rely upon the identified paragraphs and annexure JS-3 to the Sommariva affidavit on the grounds of relevance. Importantly, none of the respondents assert that they have not seen the affidavit nor do they assert prejudice or surprise. Core-Form and Mr Sneath submit that if the Court grants leave to the Commissioner to read and rely upon paragraphs 5 and 10 of the Sommariva affidavit, and annexure JS-3 to that affidavit, the Court should also read paragraph 11 and annexure JS-4 of the Sommariva affidavit which responds to Core-Form's letter of demand dated 30 April 2019. 65 For reasons I give later, paragraphs 5, 10, 11 and annexures JS-3 and JS-4 to the Sommariva affidavit are relevant to both the objective seriousness of the contravening conduct and specific deterrence. I grant leave to the Commissioner and to the sixth and eighth respondents to read and rely on paragraphs 5, 10 and 11 and annexures JS-3 and JS-4 to the Sommariva affidavit. 66 The Commissioner refers to the objects in s 3 of the SOP Act which are: 3 - Object of Act (1) The object of this Act is to ensure that a person who undertakes to carry out construction work (or who undertakes to supply related goods and services) under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work and the supplying of those goods and services. (2) The means by which this Act ensures that a person is entitled to receive a progress payment is by granting a statutory entitlement to such a payment regardless of whether the relevant construction contract makes provision for progress payments. (3) The means by which this Act ensures that a person is able to recover a progress payment is by establishing a procedure that involves - (a) the making of a payment claim by the person claiming payment; and (b) the provision of a payment schedule by the person by whom the payment is payable; and (c) the referral of any disputed claim to an adjudicator for determination; and (d) the payment of the progress payment so determined. (4) It is intended that this Act does not limit - (a) any other entitlement that a claimant may have under a construction contract; or (b) any other remedy that a claimant may have for recovering any such other entitlement. 67 It relies upon the observations of Finkelstein J in Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248 at [7] where his Honour said, in relation to the payment claim regime under the Victorian security of payment legislation, (which is substantially the same as the South Australian regulation): The Payment Act places the claimant in a privileged position in the sense that he acquires rights that go beyond his contractual rights. The premise that underlies the legislation is that cash flow is the lifeblood of the construction industry and that the principal under a construction contract should pay now and argue later. (Citations omitted). 68 The Commissioner submits that in what was none other than a commercial dispute between Core-Form and Mr Sommariva, Core-Form could have exercised its rights under the SOP Act to recover progress payments in relation to the work it had carried out for Mr Sommariva. It submits that the legislative scheme in the SOP Act is a matter the Court may take into account when considering the objective seriousness of the respondents' contravening conduct. It refers to s 81(6)(c) of the BCIIP Act and submits the SOP Act is relevant to the circumstances in which the contravention took place: CS at [10].

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Past contraventions 83 In their initial submissions, the Union and Mr Sutherland identified five principles taken from the Full Court's decision in Pattinson and other authorities which they submit reflects the proper approach to the imposition of an appropriate civil penalty under s 546 of the FWA. 84 Those five principles are: (1) The principle of proportionality: R1, R2 S at [32]; (2) The appropriate penalty is imposed in light of the objective deterrence in relation to that particular contravention such that the penalty imposed is appropriate to deter a future contravention by the client of the type before the Court: R1, R2 S at [33]; (3) The power to impose a pecuniary penalty that the Court considers appropriate in s 546(1) of the FWA must be exercised reasonably: R1, R2 S at [34]; (4) In determining the appropriate penalty, all the circumstances of the case are to be considered, including personal circumstances of the contravenor. Prior contraventions may bear upon: (1) the seriousness of the contravention under consideration; and (2) the degree of deterrence required to deter a repetition of the contravention under consideration. Attention to the nature and context of circumstances of the contravention under consideration is required: R1, R2 S at [35], [36]; and (5) Recidivism does not permit the imposition of a penalty at or near the maximum. An evaluation of the objective characteristics of the contravention is required: R1 R2 S at [37]. 85 In its supplementary written submissions (R1, R2 SS) filed following the High Court's decision in ABCC v Pattinson, the first and second respondents accept that the first of its five principles, proportionality, in the sense used in the criminal law, has no part to play in the fixing of a civil penalty: R1, R2 SS at [4]. 86 The Commissioner, the Union, and Mr Sutherland differ on the second principle identified by the first and second respondents. The Union and Mr Sutherland submit that an appropriate penalty falls to be determined by reference to the particular contravention under consideration. I do not accept that submission. To do so is to ignore the High Court's clear statement of principle as to proportionality as that term is understood in the criminal law, and it having no role to play in fixing a civil penalty. 87 The third principle, which is that the power to impose an appropriate penalty must be exercised reasonably, is uncontroversial. The power in s 546 to impose a pecuniary penalty that a court considers "appropriate" must be exercised such that any penalty that is imposed "… strikes a reasonable balance between deterrence and oppressive severity": ABCC v Pattinson at [41] (Kiefel CJ et al). 88 The fourth and fifth principles concern recidivism. The fifth principle that recidivism does not permit the imposition of a penalty at or near the maximum cannot be accepted as an accurate statement of principle in light of the High Court decision in ABCC v Pattinson. 89 Insofar as the fourth principle is directed at consideration being given to all the circumstances of the case, including personal circumstances of the contravenor, the extent and weight to be given to those personal circumstances of the contravenor will vary with the case. The circumstances of the contravention of s 47 of the BCIIP Act, which prohibits a person organising or engaging in an unlawful picket, is relevant to the objective seriousness of the contravening conduct and must be seen against the main object of that Act, which includes ensuring that building work is carried out fairly, efficiently and productively: s 3 of the BCIIP Act.

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SOP Act 94 Although in this section of the reasons I am dealing with the first and second respondents' submissions, it is convenient to deal with the further written submissions filed by all respondents dealing with the relevance of the SOP Act. 95 The respondents submit that the SOP Act is not relevant to these proceedings. Apart from relevance, the submissions filed by the sixth and eighth respondents refer to the operation of the SOP Act. I deal with the operation of the SOP Act later in these reasons. 96 The Union and Mr Sutherland submit that there are three reasons why the SOP Act is not relevant. First, they submit that the factual basis for the determination of the appropriate pecuniary penalty is found in the further amended statement of claim (FASoC) and the admissions made by the first and second respondents in the amended defence (R1, R2 AD). Consequently, they submit that the factual basis does not permit any conclusion to be drawn adverse to the first and second respondents with respect to the engagement of the SOP Act. 97 I do not accept that the factual basis does not permit an adverse conclusion to be drawn against the first and second respondents with respect to the engagement of the SOP Act. That is because the First and Second Respondents admit: (1) A dispute arose between Core-Form and Mr Sommariva in relation to payment for work done on the Site by Core-Form: FASoC at [16]; R1, R2 AD at [16]; (2) Mr Sneath and a Union official attended the front entrance of the Site on 1 October 2019 and met with Mr Sommariva during which, amongst other things, a Union official said to Mr Sommariva words to the effect, "where is Andrew's [Mr Sneath's] tools and the container, and you owe him money". Mr Sneath said words to the effect of, "you owe us money": FASoC at [21]; R1, R2 AD at [21]; (3) During the Protest, persons wearing Union branded clothing held signs saying, "PAY UR BILLS": FASoC at [24]; R1, R2 AD at [24]; (4) Mr Sneath held a sign saying, "JOB DONE WHERE'S THE MONEY": FASoC at [24]; R1, R2 AD at [24], sixth and eighth respondents' amended defence (R6, R8 AD) at [24]; (5) During the Protest some of the protesters held signs displaying the following phrases: FASoC at [25]; R1, R2 AD at [25]: (a) "PAY UR BILLS"; (b) "SOMMARIVA RIPS OFF WORKERS"; (c) "STOP RIPPING OFF SUBBIES"; and (d) "JOB DONE WHERE'S THE MONEY"; (6) Some of the protesters used a megaphone to lead the protesters in various chants calling on Mr Sommariva to pay his bills: FASoC at [26], [28]; R1, R2 AD at [26], [28]; and (7) The claims supported or advocated by the first and second respondents also involved a claim that Core-Form should be paid the money it was allegedly owed for the work done for Mr Sommariva on the Site: FASoC at [35]; R1, R2 AD at [35]. 98 Further, the Union and Mr Sutherland submit that the conduct emerged from a protest that drew attention to a legitimate grievance between a developer and contractor: R1, R2 S at [21]. That grievance was a commercial dispute over non-payment of invoices said to be due to Core-Form from Mr Sommariva, a subject which is at the heart of the SOP Act. 99 The first and second respondents submit further in relation to this first reason, that there are no facts before the Court that show what the first and second respondents knew about the process of making a claim by Core-Form and what Mr Sommariva did in response to that claim. They submit that no logical inference arises that the first and second respondents knew anything about these matters or formed any view about them at the time. 100 I do not accept that submission. The Union and Mr Sutherland admit that they organised the unlawful picket. The content of what occurred during that Protest and during the unlawful picket makes it clear that the Union and Mr Sutherland chose to involve themselves in what was, to their knowledge, a commercial dispute between Core-Form and Mr Sommariva. The ignorance of both the Union and Mr Sutherland (if that be the case) of the procedure under the SOP Act is not to the point. 101 The second reason advanced by the first and second respondents is that there is a difficulty in being satisfied that Core-Form had a course available to it under the SOP Act and should have pursued it. They submit that it is not open for the Commissioner to choose selectively from the Sommariva affidavit as against Mr Sneath and Core-Form, isolated from responsive information in the same affidavit. I do not accept the second reason advanced by the Union and Mr Sutherland. I have granted leave to the Commissioner, Mr Sneath and Core-Form to read and rely upon those parts of the Sommariva affidavit as they wish. 102 Associated with the second reason that the Sommariva affidavit should not be received or considered, is the submission by the Union and Mr Sutherland that if any further material is to be admissible, the proper course was to take a further affidavit dealing with discrete issues that it proposes to address. I do not accept that submission either. The Court regularly considers discrete parts of documents as required, giving no weight to those matters not read or relied upon or otherwise the subject of a successful objection. 103 The third reason advanced is that the making of a claim under the SOP Act does not bear logically on the objective seriousness of the conduct of the Union and Mr Sutherland. The Union and Mr Sutherland submit that the pursuit of such a course under the SOP Act was never a course available to them such as to make their conduct more serious. Whereas I accept that neither the Union or Mr Sutherland were able to pursue a course under the SOP Act, nonetheless I do not accept that the availability of such a claim under that Act does not bear logically on the objective seriousness of their conduct. Neither the Union nor Mr Sutherland have submitted that they were unaware of the provisions of the SOP Act. 104 However, notwithstanding the Union through Mr Sutherland chose to interfere in a commercial dispute between Core-Form and Mr Sommariva, and in so doing engaged in the contravening conduct, I accept that at the time it did so, other than the claimed Payment Claim in annexure JS-3 to the Sommariva affidavit, Core-Form had not pursued its rights under legislation, notwithstanding the SOP Act's object of protecting the cash flow of contractors and suppliers. 105 Accordingly, I accept that the existence of the SOP Act procedure is not, in this case, a matter going to the objective seriousness of the contravening conduct of the Union and Mr Sutherland. 106 In their submissions on the SOP Act, Mr Sneath and Core-Form refer to the judgment of Doyle J in The Trustee for Allway Unit Trust (t/as Westside Mechanical Contracting Pty Ltd) v R & D Air-conditioning Pty Ltd and Ors [2018] SASC 46, at [36]-[51] where his Honour observed it is well-settled that judicial review of an adjudicator's determination under the SOP Act is confined to review for jurisdictional error. 107 Based on that statement, Mr Sneath and Core-Form submit that what might constitute jurisdictional error may include: (a) The absence of a valid reference date to support a payment claim which is submitted to adjudication; (b) A failure to comply with the time limit specified by the legislation; and (c) A denial of procedural fairness by the adjudicator. 108 They submit further that in limited circumstances a stay of adjudication may be ordered, citing Romaldi Constructions Pty Ltd v Adelaide Interior Linings Pty Ltd (No 2) [2013] SASCFC 124 at [76]-[80] (Blue J). 109 It is not clear what Mr Sneath and Core-Form seek to make of these submissions. Presumably it is that even if Core-Form did utilise the procedure under the SOP Act, an adjudicator's decision in its favour could still be challenged. 110 Mr Sneath and Core-Form submit further that the Court does not know why Core-Form did not pursue its legal rights under the SOP Act or what the outcome would have been. 111 With respect, that submission misses the point which is that there existed at the relevant time, and still exists, legislation which has as its object to ensure that a person who undertakes to carry out construction work (or who undertakes to supply related goods and services under a construction contract) is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work and the supplying of those goods and services.

[31]

The objective seriousness of the contravening conduct 114 The contravening conduct of the Union and Mr Sutherland for which I am determining an appropriate pecuniary penalty is for organising the unlawful picket, but that cannot be seen in isolation. The surrounding circumstances provide context to the unlawful picket. 115 In Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union & Another [2017] FCAFC 113; (2017) 254 FCR 68, at [103], (the Queensland Infrastructure Case), the Full Court (Dowsett, Greenwood and Wigney JJ) observed: 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. 116 The Union and Mr Sutherland submit that an inference that the contravening conduct was premeditated is not open. I do not accept that submission. 117 The contravening conduct occurred in the context of a protest consequent upon a commercial dispute between Core-Form and Mr Sommariva. Mr Sutherland was present at the Protest and he admitted to organising the unlawful picket. I consider it would have been very easy to ensure that those wearing Union insignia, or holding signs or placards identifying the holder with the Union, did not engage in an unlawful picket. It seems to me that an instruction from Mr Sutherland to those taking part in the Protest, prior to the Protest, not to engage in the contravening conduct was both necessary and prudent. 118 Under those circumstances, I infer that the unlawful picket was pre-meditated, in the sense that it was planned prior to the Protest. 119 I do not accept the submissions of the Union and Mr Sutherland that the contravening conduct is at the lower end of seriousness and a "brief inconvenience". The contravening conduct involved the prevention of access to a working site. Although it may be that there was no quantifiable economic loss suffered in this case, that is not to the point. Interruptions to work on a construction site always come at a cost even though the cost may not be objectively quantifiable. I accept the Commissioner's submission that the contravening conduct was inconsistent with the objects set out in s 3(1) of the BCIIP Act. 120 I find the contravening conduct was objectively serious.

[32]

Co-operation and contrition 121 In the Queensland Infrastructure Case at [163]-[164] the Full Court said: 163 … [the Union] co-operated with the Commissioner in relation to these proceedings by admitting the contraventions and reaching agreement in relation to the facts. Importantly, the admissions and agreed facts were also not withdrawn after the initial agreement in relation to the penalty amounts was withdrawn by the Commissioner. There is no doubt that the CFMEU should receive credit for this cooperation. From a public policy perspective, it is important to encourage such cooperation by reflecting it in the penalties imposed. It also shows willingness on the part of the CFMEU to accept responsibility for its actions and to facilitate the course of justice. The fact that the proceedings were not defended saved the community the expense of a potentially lengthy contested hearing. [164] It is, however, doubtful in all the circumstances that the CFMEU's cooperation with the regulator could really be said to demonstrate contrition or remorse. In some respects the cooperation reflects nothing more than an acceptance of the inevitable. The CFMEU did not adduce any evidence of contrition or remorse. Indeed, there was not even an expression of contrition or remorse in its submissions. There was no evidence from which it could be inferred that the CFMEU intended to change its ways. There was certainly no suggestion, let alone evidence, to the effect that the CFMEU intended to set up any systems, processes, procedures or education to ensure that its officers did not encourage unlawful industrial action in the future. 122 As was the case in the Queensland Infrastructure Case, in this matter there was no expression of contrition by the Union or Mr Sutherland. So too, there was no evidence that the Union intends to change its ways or set up any systems, processes, procedures or education to ensure that its officers did not encourage unlawful industrial action in the future. 123 In Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (the WGC Cranes Case) [2021] FCA 622 at [145], Katzmann J referred to the observations of Bromberg J in Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (Cardigan St Case) [2018] FCA 957 at [86] and Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (The Laverton North and Cheltenham Premises Case) (No 2) [2019] FCA 973 at [77], in which his Honour observed: 77 In relation to specific deterrence I also take into account that, despite the admissions made by the respondents in relation to the instant contraventions, there is no evidence before me of the CFMMEU taking any compliance action to counsel, educate or inform MacDonald or Long in order to prevent the reoccurrence of contravening conduct by them in the future. Nor is there any evidence before me of any compliance regime ever put in place by the CFMMEU to address its long history of prior contraventions. As I said in the Cardigan Street Case at [85] "[t]he absence of any evidence of compliance systems within the CFMMEU is particularly alarming given the heavily critical comments of the CFMMEU made by this Court in many cases over recent years". As I also there said at [86] "[a]n organisation faced with a litany of contraventions over an extended period of time, which repeatedly incurs not only significant financial penalties but also pointed judicial criticism, would necessarily put in place measures to change the cultural or normative conduct of the contravening behaviours of its officers and employees" unless such behaviour was condoned by the senior leadership of the organisation. That inference, made in the Cardigan Street Case, is equally available here. All of that is demonstrative of a compelling need for specific deterrence. 124 Bromberg J's observations are equally applicable to this matter. The absence of any suggestion, far less evidence of action taken by the Union to ensure unlawful industrial action does not occur in the future, is indicative that the Union has not taken heed of repeated penalties and judicial criticism. As Bromberg J observed, there is a compelling need for specific deterrence. 125 I give credit for the co-operation demonstrated by both the Union and Mr Sutherland and the consequent benefits identified by the Full Court in the Queensland Infrastructure Case at [163].

[38]

SOP Act 137 The security of payment legislation is uniform in New South Wales, Queensland, South Australia, Victoria, Tasmania and the Australian Capital Territory, with the latter States and the Australian Capital Territory adopting the New South Wales Act. There are differences in the equivalent legislation in Western Australia and the Northern Territory, however, notwithstanding any legislative differences, the policy behind security of payment legislation is the same. 138 In Amflo Constructions Pty Limited v Anthony Jeffries [2003] NSWSC 856 at [25] Campbell J (as his Honour then was) summarised the operation of the New South Wales legislation in these terms: A fundamental feature of the legislation is that, apart from the fact that parties to a construction contract cannot contract out of the rights given by the legislation (section 34) nothing in Part 3 of the Act (section 13-32 inclusive) affects any of the rights that parties to a construction contract have (section 32(1)). The concern of the Act is with maintaining the cash flow of claimants, by enabling them to recover quickly amounts which the adjudication process says they are entitled to. It is possible for the person who pays the amount of money which an adjudication has found due to seek to reclaim that money, in court proceedings which decide what the ultimate legal rights of the parties are. An evident purpose of the Act is that, if there is to be such litigation, it will start from a position where the claimant has been paid the amount which the adjudication process has decided should be paid. 139 McDougall J in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190; (2010) 78 NSWLR 393 at [207]-[209] described the operation of the SOP Act (NSW): 207 The Security of Payment Act operates to alter, in a fundamental way, the incidence of the risk of insolvency during the life of a construction contract. As Keane JA said, of the not dissimilar Queensland statute, the Building and Construction Industry Payment Act 2004 (Qld), in RJ Neller Building P/L v Ainsworth [2008] QCA 397 at [40], the statute "seeks to preserve the cash flow to a builder notwithstanding the risk that the builder might ultimately be required to refund the cash in circumstances where the builder's... inability to repay could be expected to eventuate". It followed, his Honour said, that the risk of inability to repay, in the event of successful action by the other party, must be regarded as one that the legislature has assigned to that other party. The same is true of the regime established by the Security of Payment Act. 208 Further, the Security of Payment Act operates in a way that has been described as "rough and ready" or, less kindly, as "Draconian". It imposes a mandatory regime regardless of the parties' contract: s 34. It provides extremely abbreviated time frames for the exchange of payment claims, payment schedules, adjudication applications and adjudication responses. It provides a very limited time for adjudicators to make their decisions on what, experience shows, are often extremely complex claims involving very substantial volumes of documents (see, for example, my decision in Laing O'Rourke Australia Construction v H&M Engineering and Construction [2010] NSWSC 818 at [8]). 209 The Security of Payment Act gives very valuable, and commercially important, advantages to builders and subcontractors. At each stage of the regime for enforcement of the statutory right to progress payments, the Security of Payment Act lays down clear specifications of time and other requirements to be observed. It is not difficult to understand that the availability of those rights should depend on strict observance of the statutory requirements that are involved in their creation. 140 As to the submission by Mr Sneath and Core-Form about the decision in Romaldi Constructions and the passages cited, the observations of Blue J are hypothetical. Nevertheless, I accept that as a general principle it may be possible to obtain a stay of enforcement proceedings brought consequent upon an adjudicator's decision made under the SOP Act, however that will be entirely dependent upon the particular circumstances. In circumstances where the contravening conduct occurred in the context of a commercial dispute over non-payment of invoices, I do not consider that the mere possibility of a stay of enforcement proceedings brought consequent upon an adjudicator's decision has the result that the legislative scheme under the SOP Act is an irrelevant consideration when determining a civil penalty. 141 The SOP Act recognises the importance of cash flow to contractors and sub-contractors in the construction industry. Such is the effect of the legislative scheme that it has been described as "draconian": Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd at [208] (McDougall J). 142 That the existence of the SOP Act was known to Core-Form is evident from the statement in annexure JS-3 to the Sommariva affidavit. 143 Core-Form responded to the Commissioner reading and relying upon paragraphs 5, 10 and annexure JS-3 to the Sommariva affidavit by referring to paragraph 11 and annexure JS-4 to that affidavit. That paragraph and that annexure demonstrate that Mr Sommariva considered that Core-Form's payment claim was not a proper claim under the SOP Act. Whether or not that is correct, it does not justify, or in any way ameliorate, a contravention of s 47 of the BCIIP Act. 144 The failure by Core-Form to pursue the recovery under the SOP Act, whether because it chose not to or for other reasons, does not mean that the existence of the legislative scheme provided by the SOP Act is a matter that is irrelevant in the context of the contravening conduct in this matter. 145 The SOP Act gave Core-Form the opportunity to obtain an adjudicator's decision on its payment claims. Mr Sneath is a Director of Core-Form. The failure by Core-Form to pursue its rights under the SOP Act, but instead engage in the contravening conduct, is a matter I take into account as going to the objective seriousness of the contravening conduct of both Core-Form and Mr Sneath. 146 In all the circumstances, I find the contravening conduct by Mr Sneath and by Core-Form was objectively serious. 147 Given the object of the SOP Act, the failure by Core-Form and Mr Sneath to utilise the SOP Act procedure and instead resort to engaging in an unlawful picket is demonstrative of a need for both specific and general deterrence.

[42]

Declarations 153 I accept the Commissioner's submission that making declarations will serve a practical purpose for the reasons identified by Nicholson J in Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union at [6]. 154 The declarations sought by the Commissioner are as follows: (a) On 16 October 2019, Mr Sutherland committed one contravention of s 47(1) of the Building and Construction Industry (Improving Productivity) Act 2016 (Cth) (BCIIP Act) by organising an unlawful picket at 250 East Terrace Adelaide in South Australia (the unlawful picket). (b) On 16 October 2019, Mr Sneath committed one contravention of s 47(1) of the BCIIP Act by engaging in the unlawful picket. (c) On 16 October 2019, the Union committed one contravention of s 47(1) of the BCIIP Act by organising the unlawful picket. (d) On 16 October 2019, Core-Form committed one contravention of s 47(1) of the BCIIP Act by engaging in the unlawful picket. 155 In the WGC Cranes Case, Katzman J at [80], observed that ss 94 and 95 of the BCIIP Act attribute to an association the conduct and state of mind of its officers, agents and members. Under those circumstances, I do not consider the form of the declarations sought as against the Union and Core-Form are appropriate. Accordingly there will be declarations in the following terms: (1) On 16 October 2019, Andrew Sutherland committed one contravention of s 47(1) of the BCIIP Act by organising an unlawful picket at 250 East Terrace, Adelaide, South Australia. (2) By reason of ss 94 and 95 of the BCIIP Act, Andrew Sutherland's conduct in organising an unlawful picket is taken to have been engaged in by the Construction, Forestry, Maritime, Mining and Energy Union (Union) so that the Union committed one contravention of s 47(1) of the BCIIP Act by organising an unlawful picket at 250 East Terrace, Adelaide, South Australia. (3) On 16 October 2019, Andrew James Sneath committed one contravention of s 47(1) of the BCIIP Act by engaging in an unlawful picket at 250 East Terrace, Adelaide, South Australia. (4) By reason of s 94 of the BCIIP Act, Andrew James Sneath's conduct in engaging in an unlawful picket is taken to have been engaged in by Core-Form Pty Ltd (Core-Form) so that Core-Form committed one contravention of s 47(1) of the BCIIP Act by engaging an unlawful picket at 250 East Terrace, Adelaide, South Australia.

Parties

Applicant/Plaintiff:

Australian Building and Construction Commissioner

Respondent/Defendant:

Construction, Forestry, Maritime, Mining and Energy Union

Legislation Cited (10)

Building and Construction Industry (Improving Productivity) Act 2016(Cth)

Crimes Amendment (Penalty Unit) Act 2017(Cth)

Fair Work (Registered Organisations) Act 2016(Cth)

Trade Practices Act 1974(Cth)

FWA, the BCIIP Act, the Building and Construction Industry Improvement Act 2005(Cth)

Workplace Relations Act 1990(Cth)

Building and Construction Industry Payment Act 2004(Qld)

Fair Work Act 2009(Cth)

Federal Court of Australia Act 1976(Cth)

Building and Construction Industry Security of Payment Act 2009(SA)

Cases Cited (37)

010] NSWCA 190; (2010) 78 NSWLR 393 Comcare v Banerji [2019] HCA 23; (2019) 267 CLR 373 Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) [2018] FCAFC 97; (2018) 264 FCR 155 Director of the Fair Work Building Industry Inspectorate v Stephenson [2014] FCA 1432 Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Pattinson v Australian Building and Construction Commissioner [2020] FCAFC 177; (2020) 282 FCR 580 Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248 Romaldi Constructions Pty Ltd v Adelaide Interior Linings Pty Ltd (No 2) [2013] SASCFC 124 Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 The Commonwealth v Director, Fair Work Building Industry Inspectorate ("The Agreed Penalties Case") [2015] HCA 46; (2015) 258 CLR 482 The Trustee for Allway Unit Trust (t/as Westside Mechanical Contracting Pty Ltd) v R & D Air-conditioning Pty Ltd and Ors [2018] SASC 46 Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076

[2013] SASCFC 124

[2018] SASC 46

[1990] FCA 762

[2018] FCA 957

Cited By (1)

Construction, Forestry, Maritime, Mining and Energy Union v Fair Work Ombudsman