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

The respondents' submissions 69 The respondents argued that the Commissioner had failed to identify any error within the principles in House v The King (1936) 55 CLR 499 at 504-505 to justify interference with his Honour's discretionary judgment in fixing penalties. They contended that his Honour had appropriately had regard to the prior records of the CFMEU and of Messrs McDonald, Molina, Buchan and Harris. The respondents submitted that his Honour correctly held that there was one course of conduct. They argued that the primary judge had not erred in failing expressly to consider whether the respondents could have pursued alternative, but lawful, means of securing the payment of any unpaid entitlements owed to employees of Concealed Interiors. They noted that his Honour had sought and received written submissions on that very question and that he should be credited with having taken them into account even though he had not referred to those submissions in his reasons. 70 The respondents contended that his Honour's characterisation of the "lawful request" as an important mitigating factor in the assessment of penalties had no relevant role in that assessment. The respondents argued that the Commissioner's assertion that the penalties were manifestly inadequate was an attempt to have the Full Court engage in merits review of penalties that were within the range apposite for the contraventions.

Consideration 71 In House 55 CLR at 505, Dixon, Evatt and McTiernan JJ said: If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred. (emphasis added) 72 We are of opinion that his Honour erred in treating what he said was the "rationale" of the respondents' participation in and organisation of the blockade as a, let alone an important, mitigating factor in assessing the seriousness of their contraventions. That factor could not be taken into account in mitigation, as his Honour did, because s 347(b)(ii), (iii), (iv), (c), (d) and (e) included within the meaning of a person who "engages in industrial activity", the situations in which the person does, or does not, "organise or promote a lawful [or unlawful] activity for, or on behalf of, an industrial association", "encourage, or participate in, a lawful [or unlawful] activity organised or promoted by an industrial association" and "comply with a lawful [or unlawful] request made by, or requirement of, an industrial association". Thus each of s 347(b)(ii), (iii) and (iv), when read with s 347(c), (d) and (e) (which each used the word "unlawful" as appears in the square brackets in the preceding sentence), made the lawfulness or unlawfulness of the character of the particular activity irrelevant to the prohibition against coercion imposed by s 348. 73 The legislative prohibition in s 348 is designed to proscribe the use of industrial action to coerce someone else into, among other things, complying with a request whether it is lawful or not. The purpose of s 348 is to make the act of coercion itself unlawful, regardless of its motivation. The lawfulness of a request, the fulfilment of which the person seeks to achieve by taking coercive action, is an element of a contravention of s 348 and cannot be treated as, in any way, mitigating the seriousness of that contravention. 74 Thus, the respondents' motivation for organising and participating in the blockade could not be a mitigating factor and should have been treated as irrelevant to the primary judge's consideration of the appropriate penalties. However, in arriving at his decision that the penalties should be at the lower end of the range, his Honour expressly took into account the "lawfulness" of the "request" that he characterised as the respondent's motive for organising and participating in the coercive blockade. 75 His Honour also took into account that "there was no evidence of any quantifiable economic loss being suffered by the parties concerned by reason of the blockade". In our opinion, his Honour's reliance on the absence of evidence of "quantifiable economic loss" ignored the undisputed facts of actual substantive loss. The following facts demonstrated that the respondents' coercive action achieved what they intended it to achieve: that was the indiscriminate infliction of substantive economic loss not only on the "believed" wrongdoer, Concealed Interiors, but also on 21 other businesses working at the site and between 145 and 160 employees of those businesses, to say nothing of the impact of the blockade on a fine sunny day (as appeared in the television footage in evidence) on the timely completion of the overall construction work. 76 The agreed facts before his Honour and the Full Court included a copy of the television station's video recording of events that depicted a deal of the verbal and physical conduct complained of. The agreed facts must be considered in their context, including the contents of the video, any previous history of contraventions by the CFMEU and, where relevant, each individual respondent, and the objective circumstances. 77 First, Mr Buchan explained the respondents' "rationale" for the blockade by saying to the television reporter: Reporter: Who is it that has to pay who is not paying them, is it the ceilings company? Mick Buchan: Well I suppose that's something that we'll get to the bottom of at the end of the day, I think that everyone ducks for cover whether it's the principal contractor or the subcontractor[. A]t the end of the day what we care most about is that we don't care where it comes from whether it's from the client whether the principal whether the subcontractor the workers [sic] given up his work and put his blood to the stone and built the project and needs to be paid properly. Reporter: So these guys here are they subcontractors or… Mick Buchan: The guys involved here are the employees of the ceiling and wall contractor on the project. … Reporter: What's the name of the company? … Mick Buchan: The principal contractor is Broad Reporter: Wall and ceiling company. Is that what it's called? Mick Buchan: Concealed Interiors. (emphasis added) 78 In other words, the CFMEU and at least Mr Buchan, but we would infer all of the respondents, intended the blockade to affect, and so to injure, a wide range of persons quite apart from Concealed Interiors. As Mr Buchan said, "we don't care where it comes from". That statement reflected the reality of the blockade as industrial bullying. It indiscriminately targeted all persons and businesses associated with the construction work at the site, regardless of their possible responsibility for what was only a "reasonable belief" of the respondents that Concealed Interiors was in default of paying its, or some of its, employees their entitlements. Similarly, in the agreed facts (at [23] that North J has quoted in [15] of his reasons), Mr Joshua approached Broad's site supervisor, David Lewis, and said words to the effect: You guys need to sort out your CA's as Concealed are a shower of shit. They need to make it happen and pull the pin on them [sic]. We are doing exactly the same thing as we did with them six months ago. (emphasis added) 79 Secondly, it was unnecessary to have evidence of any particular or quantified loss in those circumstances, when the agreed facts accepted that all but 10 to 15 of the 160 workers employed by the 22 subcontractors working on the site on 22 October 2013 were prevented or dissuaded from entering the site "and consequently refused or failed to perform work at the Site between 6.30am and 10.00am". As a result, those 145 to 150 workers either were not paid for that time, or perhaps longer, or if they were, their employers paid them and incurred the overheads of running their businesses for no productive result. Moreover, at least three and a half hours of work, on a fine day, were lost and there were likely to be disputes among the various parties as to who bore the contractual liability for the loss of productivity and time caused by the blockade. 80 Where a major building site is blockaded so that work cannot be performed, substantive economic loss to someone is an inevitable consequence. Indeed the infliction of that type of loss was the respondents' purpose. They intended that their coercion would produce the result that someone would pay Concealed Interiors' employees in circumstances where, as Mr Buchan said, "we don't care where it comes from". 81 Thirdly, the coercion was reinforced by Mr McDonald's threat at about 10.00am on 22 October 2013 that the respondents would return to the site the next morning, again with 100 people. Nothing could be clearer than that as evidence that the respondents knew that the blockade had caused, and would, if repeated, cause, substantive economic loss to any workers at the site who were not paid and to the businesses there. 82 Fourthly, there was no evidence that the respondents had done anything, prior to instituting the blockade, to enquire about the correctness of their "belief" that some employees of Concealed Interiors had not been paid or to seek to pursue obtaining payment for them through negotiations or an application to the Fair Work Commission or a Court. On the facts before his Honour, the first indication of the respondents' involvement in pursuing the cause of Concealed Interiors' employees was the blockade itself. 83 Fifthly, as Jessup J, with the agreement of Allsop CJ and North J, said in Construction, Forestry, Mining and Energy Union v Australian Building and Construction Commissioner [2016] FCAFC 184 at [94], the CFMEU had a "deplorable record of contraventions" that had been the subject of many Court judgments. The Commissioner provided tables to the primary judge and us, that summarised about 150 cases of contraventions of industrial legislation involving the CFMEU. Some cases also involved one or more of the other respondents, except for Messrs McCullough and Joshua, each of whom had no prior history. His Honour recorded that the individual respondents with a prior record of contraventions were Mr McDonald (53), Mr Molina (9), Mr Buchan (6) and Mr Harris (3). The primary judge also said that the CFMEU had a very extensive record of non-compliance with industrial law. In CFMEU [2016] FCAFC 184 at [90]-[95] Jessup J considered the CFMEU's ground of appeal against a finding of Mortimer J, whom he quoted at [90] as follows: While recognising there are more serious examples of coercion contrary to s 348 that can be imagined, the very conscious and deliberate nature of these contraventions, borne out of the respondents' attitude that the end justifies the means, makes the contraventions very serious because of the respondents' deliberate disregard for the law. There was a planned strategy, executed knowing it would be unlawful, and not caring about that fact. Industrial power was used to attempt to secure a desired outcome. A further repeated strategy was used of eventually capitulating when the time was right and submitting to penalty. That conduct in itself has an aspect of the respondents thumbing their noses at the system, including at the courts. (emphasis added) 84 The CFMEU had argued that Mortimer J made her findings about the strategies that her Honour had identified without affording it procedural fairness. Jessup J, with the agreement of Allsop CJ at [18] and North J at [29], found that her Honour had been entitled to draw the inference that the CFMEU had a deliberate strategy to contravene s 348 on the basis of the ends justifying the means. Jessup J said (at [94]-[95]): No attempt was made, on behalf of the appellants, to demonstrate the falsity of the pattern of conduct which her Honour perceived in the judgments to which she had been referred. So far as appears, that pattern involved the CFMEU initially defending the indefensible, and then, late in the day, admitting to incriminating facts and conclusions in place of participating in contested proceedings. This perverse approach to penal litigation had become so ubiquitous, in these judgments, that it could scarcely have been accidental. Presumably, it was not the result of the incompetence of the CFMEU's legal advisers. To describe it as a "strategy" may not have been to employ the metaphor that everyone would have chosen, but the underlying inference, of which complaint is now made, was readily available to the primary Judge. That leaves the question of procedural fairness ... Here, the facts were again on the table before the primary Judge, but no suggestion had previously been made that those facts might be viewed as bespeaking a strategy of the kind to which her Honour referred. That case was not, and the present case is not, an instance of the denial of procedural fairness. In the present case, I would add that, having, by its own conduct, built up such a substantial and conspicuous record of prior instances, the CFMEU is in no position to complain that it was not warned that those instances might be recognised for what they were. (emphasis added) 85 The evidence in these proceedings before the primary judge, which he took into account in fixing the penalties, included the agreed fact that the respondents had cooperated with the Commissioner (or rather his predecessor) at an early stage of the proceedings (that had commenced in September 2014). That finding of early cooperation could distinguish the respondents' conduct in this instance to a limited degree from the pattern of conduct to which Mortimer J and Jessup J referred. But, the salient features are present. The respondents deliberately and flagrantly contravened s 348 on 22 October 2013. Much of their conduct on that day appeared in the television station's footage. The facts establishing the admitted contraventions were overwhelming and easily proved. The respondents' cooperation, while having utility and being relevant to the determination of the penalties, can be seen to fit into the pattern of its past conduct to which Mortimer J and Jessup J referred. 86 The respondents' conduct complained of, that occurred on 22 October 2013, is a clear instance of them taking the law into their own hands and flouting the protection from coercion that s 348 is intended to provide. On the agreed facts, the respondents deliberately engaged in coercion, knowing that their conduct was unlawful. They intended to bully each of the 22 businesses working at the site until their demands were met, as exemplified by the attitude of Mr Buchan when he said, "we don't care where it comes from". The conduct was premeditated and orchestrated, as is plain from the organisation required to ensure that 100 people were present to conduct the blockade. The respondents, by that conduct, effectively prevented access to a large worksite for about three and half hours. 87 The primary judge considered that the CFMEU (in respect of the contraventions of Messrs Buchan, Molina and Joshua) and Mr McDonald (in respect of his two contraventions) had engaged in a single course of conduct. His Honour did not address s 557 of the Act. That provided that for the purposes of Pt 4-1 (in which the power in s 546 to impose a pecuniary penalty appears), two or more contraventions by the same person of a civil remedy provision referred to in s 557(2) are deemed, subject to s 557(3), to constitute a single course of conduct and must be taken to be a single contravention. Importantly, s 348 was not included in s 557(2), so the automatic deeming effected by s 557(1) did not apply to any contravention of s 348. That was unlike, for example, the position under s 557 in respect of multiple contraventions of either s 417(1), which dealt with industrial action before the normal expiry date of an enterprise agreement, or s 434, which dealt with contraventions of Ministerial directions in relation to industrial action (see s 557(2)(j) and (l)). Moreover, s 557(3) provided that the deeming in s 557(1) of a single course of conduct did not apply to the contravention of any civil remedy provision (including ss 417(1) and 434) that was committed by a person after a court had imposed a pecuniary penalty on the person for an earlier contravention of the provision. 88 In our opinion, s 557 did not cover the field and did not exclude the common law principle of taking into account, when imposing a penalty, whether the conduct complained of constituted a single course of conduct. However, s 557 provided a legislative indication that certain forms of concerted industrial action, such as multiple contraventions of ss 417(1) and 434, would be deemed, only in the case of a first contravention by the person, to be a single contravention. That contrasted with the legislative purpose of treating one contravention of s 348 differently from ones to which s 557 applied. The Parliament appears to have intended that multiple contraventions of s 348, in what, in other circumstances (such as those covered by s 557), might be treated as a course of conduct, would not necessarily attract any sentencing leniency. 89 Here, of course, all but two of the respondents, Mr Joshua and Mr McCullough, had prior records. Although they had histories of prior contraventions of industrial laws, the parties did not identify any proceedings in which Messrs Buchan or Harris had contravened s 348. The record of the CFMEU in evidence included 10 proceedings in which it had been found liable for breach of s 348, sometimes for multiple contraventions (e.g. Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 225). In Brookfield Multiplex Engineering and Infrastructure Pty Ltd v McDonald [2014] FCA 389 and Brookfield Multiplex FSH Contractor Pty Limited v McDonald [2014] FCA 359, North J found respectively contraventions of s 348 against the CFMEU (3) and (1), Mr McDonald (3) and (1) and Mr Molina (3). In Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2014] FCA 126, Gilmour J found three contraventions of s 348 by each of the CFMEU and Mr McDonald. 90 The primary purpose of imposing a civil penalty is to deter the contravener and others from repeating conduct of the kind complained of. As French CJ, Kiefel, Bell, Nettle and Gordon JJ explained in Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 326 ALR 476 at 490 [54]-[55]: … a criminal prosecution is aimed at securing, and may result in, a criminal conviction. By contrast, a civil penalty proceeding is precisely calculated to avoid the notion of criminality as such. No less importantly, whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd [(1991) ATPR 41-076 at 52,152], is primarily if not wholly protective in promoting the public interest in compliance: "Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. … The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act." (footnotes omitted; emphasis added) 91 In our opinion, the primary judge failed to have regard to the need to deter serial recidivists, like the CFMEU and Mr McDonald, and their immediate co-contraveners on 22 October 2013, being the other respondents, from contravening s 348 of the Act again. Instead, his Honour wrongly characterised their deliberate coercion as at the lower end of the scale, in part because of his finding that the conduct had the purpose of enforcing a "lawful" request. For the reasons we have explained, the "request" was based only on a belief and there was no evidence that the respondents had raised any concerns with, let alone sought to negotiate with or otherwise pursue lawful remedies against, Concealed Interiors in a way that would have avoided any industrial action. Indeed, his Honour in the latter part of his reasons at [72] and [76] (that North J has set out at [30] of his reasons) described the respondents' conduct as "supporting workers who were the victims of the failure by their employer to pay them their outstanding wages" and "the request made by the CFMEU for the payment of outstanding wages due to Concealed Interiors' employees". That description appears to have treated differently the agreed fact that the primary judge had noted earlier in his reasons (at [40]) that "the CFMEU had [a] reasonable belief" that Concealed Interiors' employees had not been paid. The penalties that the primary judge imposed, by reference to the importance to his Honour of the mitigating factor of the lawfulness of the request, were not calculated to, or fixed at a level that would, achieve the purpose of deterrence of future contravening conduct by the respondents or others. 92 Because his Honour erred in the exercise of his discretion for the reasons above, it is necessary to set aside all the penalties that he imposed and reassess the appropriate penalty for each respondent. 93 In the circumstances, although it is not necessary to decide this ground, we are of opinion, for the same reasons, that the penalties imposed by his Honour on each of the respondents were also unreasonable and manifestly inadequate: Markarian v The Queen (2005) 228 CLR 357 at 370-371 [25] per Gleeson CJ, Gummow, Hayne and Callinan JJ. 94 The prior history of multiple contraventions of s 348 by each of Messrs McDonald and Molina required that they be punished more severely than the other individual respondents. Mr Buchan had a record of six prior contraventions, although none for breaching s 348. However, he was active in promoting the blockade on 22 October 2013. Mr Harris also had a record of unlawful industrial conduct. Both Mr Joshua and Mr McCullough had no record, but the parties agreed that Mr Joshua's role was more significant than Mr McCullough's. 95 Mr McDonald's conduct involved two separate contraventions of s 348. The first was his role in organising and participating in the blockade on 22 October 2013. That conduct came to an end, on the agreed facts, at about 10.00am, when the second contravention occurred as Mr McDonald made his threat that the respondents and others would return the next day. There was no evidence or explanation about how that threat was part of the original coercion, other than to add a greater sting to it. Mr McDonald had an extensive history of flouting the law, including seven prior instances of contravention of s 348. His conduct in making the threat, although arising in a broad way out of the same events, was separate and discrete from the earlier events. It was a new, deliberate act of unlawful coercion and must be penalised appropriately as a separate contravention. 96 The CFMEU's five contraventions arose by reason that the conduct of Messrs McDonald (on both occasions), Buchan, Molina and Joshua, were its conduct, as the agreed facts acknowledged. The success of the blockade depended on the activities of those two officials and two organisers in organising it so that about 100 people were present and made it effective. The coercion was the more forceful because it had more people involved. 97 The Parliament did not enlist s 557(2) to deem that a course of conduct involving multiple contraventions of s 348 would be punishable as a single contravention for a first offender. It is important to recognise that coercion is a particularly serious form of industrial (mis)conduct. If more principal actors are involved in unlawful coercion, there is a potentially greater impact on the target. Of course, all will depend on the facts. Here, the CFMEU acted through four agents to organise and execute the blockade. Its enlistment of each agent and his conduct was a separate contravention of s 348 and each made the overall impact and effectiveness of the blockade greater. There was some overlap between the conduct of each of Messrs Buchan, McDonald, Molina and Joshua, whose acts created each contravention by the CFMEU. However, the CFMEU knew that the conduct of each of its officials or organisers, whom it deployed in effecting its coercion, would render it liable for a separate contravention of s 348.

Conclusion 98 Trade unions are recognised by statute and have privileges and responsibilities associated with such recognition. Generally, trade unions and their members abide by the law. Indeed, as history has shown, trade unions can play a significant role in exposing and reforming inadequate or inappropriate terms and conditions of employees in not only a particular employer's workforce but in an industry. Ordinarily, trade unions have achieved such results by acting within, and respecting, the law that regulates the conduct of all participants involved in the employer-employee relationship. 99 The conduct of the CFMEU seen in this case brings the trade union movement into disrepute and cannot be tolerated. 100 In a liberal democracy, it is assumed that citizens, corporations and other organisations will comply with the law. Such compliance is not a matter of choice. The community does not accept that a citizen, corporation or other organisation may choose to break the law and simply pay the penalty. The courts certainly do not accept that proposition. Such acceptance would pose a serious threat to the rule of law upon which our society is based. It would undermine the authority of Parliament and could lead to the public perception that the judiciary is involved in a process which is pointless, if not ridiculous. 101 The Parliament's purpose in legislating to provide that particular proscribed conduct will attract a civil penalty was to deter persons, including but not limited to trade unions or corporations, from engaging or continuing to engage in such conduct. A civil penalty would lose its utility if the person on whom it was imposed simply treated it as a cost of continuing to carry on with the very conduct that had just been penalised. 102 The CFMEU can be seen to have chosen to pay penalties in preference to obeying the law. It is not entitled to any leniency in the circumstances of the conduct complained of. The legislative purpose in the Act, of creating separate contraventions and imposing pecuniary penalties on organisations, such as the CFMEU, for conduct engaged in on the one occasion by their agents, will not be served by equating multiple contraventions by a recidivist as a wholly single course of conduct. Each separate contravention by the CFMEU's officials and organisers on 22 October 2013 had a distinct effect and impact in making the blockade of a very large site effective. The Act contemplates that the Court can fix a high price, by way of aggregated penalties, on an organisation in circumstances such as the present to deter future repetition.

Conclusion as to penalties 103 Having regard to all of the material in evidence, we would allow the appeal, set aside the penalties fixed by the primary judge and in their place impose the following penalties: (a) $17,500 on Mr McDonald consisting of $9,500 for his first contravention and $8,000 for his second (being the threat he made at about 10.00am); (b) $9,000 each on Mr Buchan and Mr Molina; (c) $5,000 on Mr Joshua; (d) $4,000 on Mr Harris; (e) $2,500 on Mr McCullough; and (f) $195,000 on the CFMEU consisting of four penalties of $40,000 and a fifth, in respect of Mr McDonald's threat, of $35,000. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Dowsett and Rares.

SCHEDULE OF PARTIES WAD 268 of 2016 Respondents Fourth Respondent: WALTER (VINNIE) MOLINA Fifth Respondent: PETER JOSHUA Sixth Respondent: CAMPBELL MCCULLOUGH Seventh Respondent: TAWA HARRIS