Australian Building and Construction Commissioner v O'Connor

Introduction 1 The applicant in this proceeding is the Australian Building and Construction Commissioner and the respondents are Mr Jim O'Connor, Mr Jack Merkx and the Construction, Forestry, Mining and Energy Union (CFMEU). At all material times, Mr O'Connor was an officer, employee and/or agent of the CFMEU for the purposes of the Fair Work Act 2009 (Cth) (the FW Act) and a permit holder within the meaning of that term in ss 12 and 500 of the FW Act. At all material times, Mr Merkx was an officer and/or agent of the CFMEU for the purposes of ss 363 and 793 of the FW Act and an employee of Hansen Yuncken Pty Ltd. In the proceeding, the applicant sought declarations against the respondents and orders for the payment of pecuniary penalties under s 546 of the FW Act against the second and third respondents. On 6 February 2018, I delivered reasons after a hearing in which I said the following (at [161]): In my opinion, Mr O'Connor is responsible for one contravention of s 348, two contraventions of s 355 and one contravention of s 500 of the FW Act. Mr Merkx is responsible for one contravention of s 348 and two contraventions of s 355 of the FW Act. The CFMEU is responsible for one contravention of s 348, two contraventions of s 355 and one contravention of s 500 of the FW Act. In due course the parties will make submissions about how sentencing should proceed in light of my findings. (Australian Building and Construction Commissioner v O'Connor (No 3) [2018] FCA 43 (the earlier reasons)). 2 These reasons address the issues of the appropriate declarations to be made against the respondents and the appropriate pecuniary penalties to be imposed on the second and third respondents. In my earlier reasons, I explained the reasons why the applicant does not seek pecuniary penalties against Mr O'Connor (at [28]-[35]).

The Relevant Findings in the Earlier Reasons 3 Having regard to the arguments advanced on the issue of pecuniary penalties, the relevant findings in the earlier reasons are as follows: 111 In the period of approximately four to six weeks before 13 May 2014, Mr Bleasdale was approached by Mr Merkx and asked about the union's financial status of employees of BNC. Mr Bleasdale told Mr Merkx that it was none of his business to know whether or not employees of BNC were union members or not. He also told Mr Merkx that if he wanted to speak to the men, then he was more than welcome. 112 In or about early May 2014, Mr Bleasdale received a couple of telephone calls on his mobile telephone from Mr O'Connor. He also had some discussions with Mr O'Connor in passing on the Site at around this time. In these discussions, Mr O'Connor asked Mr Bleasdale to help find a man, who he identified as a Jason Clark, a job with BNC on the Project. Mr O'Connor told Mr Bleasdale that Mr Clark was on the CFMEU executive and he had a job on the Project with TLT, but that the job did not start for a few weeks so Mr Clark was looking for some work prior to commencing with TLT. These discussions between Mr Bleasdale and Mr O'Connor were not threatening in any way. Mr Bleasdale told Mr O'Connor to have Mr Clark fill out an application form of BNC which Mr Clark ultimately did. 113 At about the same time, Mr Merkx approached Mr Bleasdale on the Site on at least three occasions and demanded that he terminate the employment of Mr Dan Hylands because he would not join the CFMEU. Mr Bleasdale could not recall the exact words Mr Merkx used in making these demands. In May 2014, Mr Hylands was an employee of BNC who worked as a labourer on the Project. 114 On 13 May 2014, Mr Bleasdale was in his office on the Site. At approximately 11.30 am, Mr Merkx entered his office and stated that he wanted to talk to him. Mr O'Connor was standing behind Mr Merkx. Mr Merkx did not expand on what he wanted to talk to Mr Bleasdale about. At the time, Mr Bleasdale was processing the payroll of the business and he told Mr Merkx to come back later. I have already set out Mr Nunweek's version of this event which I accept. 115 At approximately 12.15 pm, Mr Merkx and Mr O'Connor came back into Mr Bleasdale's office. Mr Merkx said to Mr Bleasdale words to the effect of the following: Why haven't you sacked that muppet Dan Hylands? All of your workers receive all the benefits. Why haven't you found Jason a job? He could be doing what Dan's doing. 116 Mr Bleasdale interpreted "Jason" to mean Jason Clark, and "Dan" to mean Mr Hylands, and that the workers benefits were in relation to those entitlements in the Leighton's enterprise agreement with the CFMEU. Mr Bleasdale said that he was aware that both Hansen Yuncken and Leightons have enterprise agreements with the CFMEU which apply to the Site on which the Project is carried out. 117 Mr Bleasdale then said words to the effect of the following: You can't be serious. Mr Merkx then said words to the effect of the following: Why are you laughing at us? Mr Bleasdale said to Mr Merkx words to the effect of the following: I'm not going to sack Dan, but if you want to talk to Dan about his union membership that's up to you. Mr Merkx then said words to the effect of the following: Why don't you pay the money for your boys and just take it off them? Mr Bleasdale interpreted that comment to be a demand that he, on behalf of BNC, pay union dues for all of the business' employees and then recoup the membership fees from their pay. Mr Merkx then went on to use words to the effect of the following: If your guys don't want to join the union, you should sack them and the union will find workers for BNC to hire. Mr Bleasdale said to Mr Merkx words to the effect of the following: I'm not going to do payroll deductions for any employee. Mr O'Connor then said words to the effect of the following: If you don't find him a job, we'll go to war with you. You know how it works, Nicko. Mr Bleasdale said that Mr O'Connor's tone when he used these words was "firmly flat and non-descriptive". He understood Mr O'Connor's reference to "going to war" to mean that there would be industrial action. 118 Mr Bleasdale then told Mr O'Connor that he needed to speak to Mr Brad Sugar who was the HYLC senior manager at the site. Mr O'Connor then used words to the effect of the following: Let me know how you go. 119 The discussion lasted 15 minutes. After Messrs O'Connor and Merkx had left his office, Mr Bleasdale went to see Mr Sugar in his office. Mr Sugar told him to speak further with Mr Con Kerpiniotis and HYLC's industrial relations manager, Mr Johns. Later that evening at around 7.30 pm, he made notes of his meeting and discussions with Messrs O'Connor and Merkx from earlier in the day. He produced those notes to Inspectors Mathers and Temple. The following morning at 7 am, Mr Bleasdale spoke with Mr Kerpiniotis and the latter advised him to speak to Mr Johns about the incident. 120 On the following day, Mr Bleasdale saw Mr O'Connor on the Site as he was swiping his security pass to exit the Site. Mr O'Connor said words to the effect of the following: How did you go about fixing up that issue? Mr Bleasdale used words to the effect of the following: Aren't we at war? Mr O'Connor did not reply and kept walking. … 133 The threat of going to war was a threat of unlawful, illegitimate, unconscionable action, that is, to take a form of industrial action and would be reasonably understood as such. I adopt the same approach as that adopted by Mansfield J in the Contempt Proceedings (see [34] above). The respondents submitted that the war comment may have meant no more than that the CFMEU would commence proceedings for all infractions of industrial laws concerning its members which related to BNC, no matter how minor. In my opinion, that ignores the context in which the war comment was made which is all important. I refer to the findings which I have made. There were a number of conversations in the weeks and days before 13 May 2014 when the employment of Mr Clark and the termination of Mr Hylands' employment was raised. Before the war comment was made, Mr Bleasdale made it clear to Mr O'Connor and Mr Merkx that he was not going to accede to their demands. I infer an intent to coerce on the part of Mr O'Connor, particularly as Mr Bleasdale had made it clear that he was not going to accede to the demands made. The conduct fell within the terms of s 348 (and s 347(b)(iv)). 134 Mr O'Connor's threat also fell within the terms of s 355 of the FW Act. As I understand it, the applicant alleges that there were two contraventions of s 355, one in relation to the threat seeking the employment of Mr Clark, and the other in relation to the threat seeking the termination of Mr Hylands' employment. 135 In my opinion, the applicant's submission is correct. The subject-matter of the conversation was the employment of Mr Clark and the termination of Mr Hylands' employment and the suggestion was even made that Mr Clark replace Mr Hylands. Even though the war comment was preceded by the words, "If you don't find him a job", the context indicates that the threat related to the employment of Mr Clark and the termination of Mr Hylands' employment. … 143 On the face of it, the CFMEU is responsible for Mr Merkx's conduct in the same way it is responsible for Mr O'Connor's conduct. However, a question arises as to whether the CFMEU is responsible for two contraventions of s 348 and four contraventions of s 355, or one contravention of s 348 and two contraventions of s 355. Unlike the facts in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 3) [2017] FCA 10, in this case there was only one threat. In my opinion, the latter is the correct position in those circumstances.

The Declarations 4 The applicant seeks the following declarations: Section 348 contraventions 1. The First Respondent (Mr O'Connor) contravened s 348 of the Fair Work Act 2009 (Cth) (FW Act) by threatening to take industrial action against Bleasdale National Personnel SA Pty Ltd trading as Bleasdale National Contractors (BNC) on 13 May 2014 at the site of the project for the construction of the new Royal Adelaide Hospital (Project) with intent to coerce BNC to comply with a lawful request made by the Third Respondent (CFMEU) for BNC to employ Jason Clark. 2. The Second Respondent (Mr Merkx) contravened s 348 of the FW Act by threatening to take industrial action against BNC on 13 May 2014 at the Project with intent to coerce BNC to comply with a lawful request made by the CFMEU for BNC to employ Jason Clark. 3. By the operation of ss 363 and 793 of the FW Act, the CFMEU contravened s 348 of the FW Act by reason of the contravention of Mr O'Connor referred to in Declaration 1 above. Section 355 contraventions 4. Mr O'Connor contravened s 355 of the FW Act by threatening to take industrial action against BNC on 13 May 2014 at the Project with intent to coerce BNC to employ Jason Clark. 5. Mr O'Connor contravened s 355 of the FW Act by threatening to take industrial action against BNC on 13 May 2014 at the Project with intent to coerce BNC to terminate the employment of Daniel Hylands. 6. Mr Merkx contravened s 355 of the FW Act by threatening to take industrial action against BNC on 13 May 2014 at the Project with intent to coerce BNC to employ Jason Clark. 7. Mr Merkx contravened s 355 of the FW Act by threatening to take industrial action against BNC on 13 May 2014 at the Project with intent to coerce BNC to terminate the employment of Daniel Hylands. 8. By the operation of ss 363 and 793 of the FW Act, the CFMEU contravened s 355 of the FW Act by reason of the contravention of Mr O'Connor referred to in Declaration 4 above. 9. By the operation of ss 363 and 793 of the FW Act, the CFMEU contravened s 355 of the FW Act by reason of the contravention of Mr O'Connor referred to in Declaration 5 above. Section 500 contraventions 10. Mr O'Connor contravened s 500 of the FW Act by reason of having acted in an improper manner by making the threat referred to in Declarations 1, 4 and 5 while exercising entry rights at the Project on 13 May 2014. 11. The CFMEU contravened s 500 of the FW Act on 13 May 2014 by reason of being involved in the contravention referred to in Declaration 10 above for the purposes of s 550 of the FW Act. 5 The respondents advanced a different form of declaration which closely approximated the conclusion in my earlier reasons at [161]. 6 Having regard to the observations of Gummow, Hayne and Heydon JJ in Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75; (2003) 216 CLR 53 at [89]-[90], I consider that the applicant's proposed declarations are the declarations which should be made, in that they separate each contravention and identify the conduct in relation to each contravention, rather than simply identify, in a general way, conduct, and then state the contraventions that arise from the conduct. I will make declarations in terms of the applicant's proposed declarations.

The Approach to Pecuniary Penalties 7 The applicant submits that the Court should impose two pecuniary penalties on Mr Merkx for his two contraventions of s 355 of the FW Act. In his case, the maximum penalty is $10,200 for each contravention. The applicant submits that the Court should impose two pecuniary penalties on the CFMEU for its two contraventions of s 355 of the FW Act. In its case, the maximum penalty is $51,000 for each contravention. The applicant said in his written outline of submissions on penalty that he did not address the availability of separate penalties for contraventions of s 500 by secondary participants engaged in acts that are different from the acts engaged in by the primary contravener. 8 The second and third respondents submit that the contraventions all involve the same conduct and, because of s 556 of the FW Act or, in the alternative, in the exercise of the Court's discretion, one pecuniary penalty should be imposed on Mr Merkx and one pecuniary penalty should be imposed on the CFMEU for their respective contraventions of s 348, and no other penalty should be imposed. In the further alternative, the second and third respondents submit that, should the Court decide to impose multiple penalties, the Court should "begin from the premise that the maximum penalty is for one contravention". As I understand their submission, it is that the same conduct is involved in the contraventions and, by virtue of s 556, which is a civil double jeopardy provision, a pecuniary penalty cannot be imposed for a contravention of s 348 and a contravention of s 355, or for two contraventions of s 355. 9 Section 546(1) of the FW Act gives the Court the power to impose a pecuniary penalty on a person if it is satisfied that a person has contravened a civil remedy provision. 10 Section 556 provides that if a person is ordered to pay a pecuniary penalty in relation to particular conduct, the person is not liable to be ordered to pay a pecuniary penalty under some other provision of a law of the Commonwealth in relation to that conduct. 11 Section 557(1) provides that, with respect to the civil remedy provisions identified in subsection (2), two or more contraventions of such a provision are taken to constitute a single contravention if the contraventions are committed by the same person and the contraventions arose out of a course of conduct by the person. Sections 348 and 355 are not identified in subsection (2) as relevant civil remedy provisions. 12 In Australian Building and Construction Commissioner v Huddy (No 2) [2017] FCA 1088 (Huddy (No 2)), White J considered the operation of s 556 of the FW Act (at [54]-[63]). His Honour held that s 556 applies to contraventions of multiple provisions in the FW Act itself following the decision of the Full Court of this Court in Esso Australia Pty Ltd v Australian Workers' Union [2016] FCAFC 72; (2016) 245 FCR 39 at [210] (per Buchanan J, with whom Siopis J agreed). However, his Honour went on to say that s 556 does not have any operation in relation to multiple contraventions of the same provision in the FW Act. To the extent that multiple contraventions of the same provision in the FW Act is addressed in the Act, it is addressed in s 557. I agree with that analysis. 13 The applicant submits, correctly in my view, that s 556 does not preclude the imposition of pecuniary penalties for each of the respondents' direct contraventions of s 355. 14 In Huddy (No 2), White J said that s 557 impliedly excluded the possibility of a single penalty being imposed for multiple contraventions in other circumstances. His Honour said (at [71]): Section 557 of the FW Act seems particularly pertinent in the present context. That section indicates that the legislature has considered the circumstances in which multiple contraventions may be taken to constitute a single contravention and, therefore, a single penalty imposed. The terms of s 557 impliedly exclude the possibility of a single penalty being imposed for multiple contraventions in other circumstances. In particular, a finding that two or more contraventions occurred in a single course of conduct does not of itself authorise the imposition of a single penalty for those contraventions. 15 The applicant submits that the effect of these observations is that for multiple contraventions of s 355, the Court must impose separate penalties for the distinct contraventions and there is no discretion to do otherwise. 16 As I have said, the second and third respondents submit that I should proceed to impose pecuniary penalties for the contraventions of s 348. I reject that submission because, as I explain below, the contravention of s 348 only encompasses the offending conduct to the extent that it involves the employment of Mr Clark and, therefore, proceeding in that way would not fully reflect the offending conduct which includes the conduct with respect to the termination of Mr Hylands' employment. I will proceed by reference to s 355 and there is nothing in the FW Act which means that the two contraventions of s 355 which I have found, are to be treated as one contravention. None of this is to say that, if the circumstances warrant it, the course of conduct principle could not be applied, not for the purpose of holding that there was only one contravention of s 355, but for the purpose of approaching the sentencing task in relation to two contraventions by reference to one maximum penalty (Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 3) [2017] FCA 10 at [26]-[28]). The question is whether the circumstances in this case call for such an approach. 17 I do not think it appropriate to apply the course of conduct principle because, although there was one threat, the conduct involved two contraventions and had two quite different aspects. One related to the employment of Mr Jason Clark (ss 348 and 355), and the other related to the termination of Mr Daniel Hylands' employment because he was not a member of the CFMEU (s 355). The fact that the threat had this dual aspect is made clear, not only by the context in which the threat was made, but also by the circumstances leading up to the threat. I refer to my findings in the earlier reasons which are set out above (at [3] of these reasons) and, in particular, the findings in [111]-[113].

The Nature and Extent of the Contravening Conduct 18 The nature and extent of the contravening conduct is one incident with the surrounding circumstances. I identified the circumstances leading up to the incident in the earlier reasons (at [111]-[120], [133]-[135] and [143]). On the one hand, the second and third respondents emphasised that there was one threat which occupied only a short period of time and that is, no doubt, a factor to be taken into account. On the other hand, the conduct involved coercion which is a serious form of industrial conduct. As Dowsett and Rares JJ said in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 53; (2017) 249 FCR 458 at [9], coercion is a particularly serious form of industrial misconduct. 19 I also take into account, as the second and third respondents contended, that Mr Nicholas Bleasdale could not remember the threat at trial.

The Loss and Damage Caused by the Contravening Conduct 20 There is no evidence that the threat caused any loss or damage to Mr Bleasdale or any other person.

Whether the Conduct Constituting the Contravening Conduct was Deliberate 21 The contravening conduct was deliberate.

The Extent of any Benefit or Profit derived from the Contravening Conduct 22 There is no evidence of any benefit or profit derived from the contravening conduct.

The Extent of Co-operation with the Applicant and of any Contrition shown for the Contravening Conduct 23 There is no evidence of co-operation with the applicant. There is no evidence of contrition and, in fact, the respondents sought to downplay the seriousness of the threat (at [133]).

The Financial Circumstances of the Second and Third Respondents 24 There is no evidence of the second respondent's financial circumstances and his ability to pay any pecuniary penalties which he may be ordered to pay. The same applies to the third respondent, save that the applicant submitted, and I accept, that the third respondent is a large, prominent and influential national union.

Any Corrective Action taken by the Respondents 25 There is no evidence of any corrective action, whether by way of direction, instruction or training, taken or to be taken by the third respondent.

Prior Contraventions 26 The second respondent has one prior contravention. He was found to have contravened s 417(1) of the FW Act on 25 July 2013 by failing and refusing to attend work at a Project. A pecuniary penalty of $1,000 was imposed on him (Director of the Fair Work Building Industry Inspectorate v Merkx [2015] FCA 316). The applicant said that it did not submit that this prior contravention had any "substantial significance" to the penalty/penalties to be imposed on the second respondent in this case. I will proceed on that basis. 27 The third respondent stands in quite a different position. It has a very substantial record of prior contravening conduct of provisions of the FW Act, the Building and Construction Industry Improvement Act 2005 (Cth), and the Workplace Relations Act 1996 (Cth), including contraventions of ss 348, 355 and 500 of the FW Act. The schedule of prior contraventions of industrial legislation put forward by the applicant shows a regular and repeated pattern of contravening conduct over many years. The contravening conduct includes a number of contraventions involving an intention to coerce. 28 The third respondent's prior substantial record is a significant factor in the assessment of penalty and, in particular, in a consideration of what is required by way of specific deterrence. Of course, the third respondent's prior record is to be deployed in that way and not as a means in this proceeding of increasing or supplementing penalties for past contravening conduct (Director of the Fair Work Building Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2015] FCA 1462 at [8] per Jessup J).

General and Specific Deterrence 29 The primary purpose of the pecuniary penalties in a case such as the present is deterrence. In Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482, French CJ, Kiefel J (as her Honour then was), Bell, Nettle and Gordon JJ said (at [55]): No less importantly, whereas criminal penalties import notions of retribution (106) and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance (107): 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. 30 The second respondent ceased to be an officer or agent of the third respondent in March 2017.

Totality 31 I do not think that the pecuniary penalties that I propose to impose are crushing or disproportionate, having regard to the contravening conduct (R v Walkuski [2010] SASC 146 at [6] per Doyle CJ).

Conclusion 32 With respect to the second respondent, and having regard to the above matters, I impose a pecuniary penalty of $5,100 with respect to the contravention identified in the sixth declaration, and the same penalty with respect to the contravention identified in the seventh declaration above. 33 With respect to the third respondent, and having regard to the above matters, I impose a pecuniary penalty of $35,700 with respect to the contravention identified in the eighth declaration and I impose the same penalty with respect to the contravention identified in the ninth declaration above.

Orders 34 I will make the declarations sought by the applicant and set out above at [4] of these reasons. 35 I impose the following pecuniary penalties: (1) The second respondent pay a penalty of $5,100 in respect of his contravention of s 355 of the FW Act as set out in Declaration 6 hereof. (2) The second respondent pay a penalty of $5,100 in respect of his contravention of s 355 of the FW Act as set out in Declaration 7 hereof. (3) The third respondent pay a penalty of $35,700 in respect of its contravention of s 355 of the FW Act by reason of ss 363 and 793 of the FW Act as set out in Declaration 8 hereof. (4) The third respondent pay a penalty of $35,700 in respect of its contravention of s 355 of the FW Act by reason of ss 363 and 793 of the FW Act as set out in Declaration 9 hereof. 36 I will order pursuant to s 546(3) of the FW Act, that each of the pecuniary penalties be paid to the Commonwealth of Australia. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.