Personal payment
83 There is one feature of the penalty orders made by the primary judge which should be separately mentioned. The primary judge made the following two orders:
4. The First Respondent personally must pay the pecuniary penalty the subject of Order 1, and is not to seek or receive reimbursement (in whole or in part) of any monies from the Third or Fourth or Fifth Respondents (or any related entity), or to cause or occasion such penalty to be paid, either directly or indirectly, by the Third or Fourth or Fifth Respondents (or any related entity).
5. The Second Respondent personally must pay the pecuniary penalty the subject of Order 2, and is not to seek or receive reimbursement (in whole or in part) of any monies from the Third or Fourth or Fifth Respondents (or any related entity), or to cause or occasion such penalty to be paid, either directly or indirectly, by the Third or Fourth or Fifth Respondents (or any related entity).
(Italics in original.)
84 His Honour's reasoning included:
25 It is concluded that the power to impose a penalty on an "individual" includes a power to ensure that the penalty is in fact paid personally by the "individual" and that he is not reimbursed - either directly or indirectly - by any union of which he is a member or by any associated entity. That conclusion is founded upon the natural and ordinary meaning of the relevant statutory provisions, the object and purpose sought to be achieved by the Legislature in providing for the imposition of penalties on "individuals" and by reference to prior judicial considerations of the principles to be applied.
26 Any other conclusion, it is respectfully concluded, would be to embrace the proposition that the Court lacks power to ensure that any penalty imposed upon an "individual" can truly act as a deterrent to that "individual". A penalty, if it were to be paid or reimbursed by an employing union, would cease to act as a deterrent to the contravening "individual". An "individual" so reimbursed could act with impunity in full knowledge that his employing union conferred what could be seen as a licence for him to continue his past transgressions. The legislative power to revoke or suspend (for example) an entry permit should not be seen as a constraint upon the power conferred by ss 545 and 546 to ensure that a penalty imposed upon an "individual" acts truly as a deterrent.
(Italics in original).
85 The primary judge rejected submissions that the Court lacked power to make such orders.
86 In Australian Building Construction Employees' and Builders Labourers' Federation v Minister of State for Industrial Relations (1982) 43 ALR 189, a Full Court approved an order to similar effect against a union (at 214). The purpose of the order was apparently to address statements of open defiance of the Court's authority, to the effect that stoppages of work would effectively compel someone other than the union to make, or appear to make, payments of the fine. The case was a special one in that respect and, despite the apparent encouragement of the Full Court that the approach was a "model", the practice has not become established.
87 In Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 1173, Jessup J was asked to make orders similar to those made by the primary judge, but declined to do so. His Honour said:
35 The applicant submitted that I should make an order in terms corresponding to those made by Flick J in Director of the Fair Work Building Industry Inspectorate v Bragdon (No 2) [2015] FCA 998:
The [individual] Respondent personally must pay the pecuniary penalty the subject of Order 1, and is not to seek or receive reimbursement (in whole or in part) of any monies from the [union] Respondents (or any related entity), or to cause or occasion such penalty to be paid, either directly or indirectly, by the [union] Respondents (or any related entity).
Counsel for the respondents submitted that the court did not have power to make such an order, at the same time informing me that an appeal had been lodged from the judgment in Bragdon. He invited me, alternatively to departing from the view as to power taken by Flick J, to adjourn further consideration of this aspect of the applicant's case pending the hearing and determination of that appeal.
36 Under the circumstances, it would be wrong for me, sitting as a single Judge, to depart from the view taken in Bragdon as to the availability of an order of the kind made by Flick J in an appropriate case. Neither, however, do I propose to adjourn consideration of this aspect of the applicant's case.
37 During the hearing of the case, it became apparent that little or no thought had been given, on behalf of the applicant, to the practicalities of the enforcement of an order in the terms proposed. Specifically, it was made quite clear that the applicant had no intention of monitoring the doings of Mr Myles and the Union over the next month, year or decade, for example, to ensure that any request by Mr Myles for reimbursement, or any payment to him by the Union which could be characterised as a reimbursement, was brought to light and made the subject of an enforcement proceeding. In the conventional case, at least one of the parties to litigation will have it in his or her interests to ensure that court orders are complied with by the other party; and, furthermore, by being affected, will know when they have not been. In the case contemplated by the order sought by the applicant, it would be in the interests of neither of the parties presumptively involved in a contravention of the order to draw that circumstance to the attention of the court, much less to take enforcement proceedings. While I assume, of course, that all court orders will be observed, practical considerations of the kind referred to must be regarded as relevant in a situation in which the court is being asked, in its discretion, to step outside the bounds of conventional process.
38 Responsively to concerns of these kinds, counsel for the applicant indicated that his client would be content with a modified form of Bragdon order, one which specifically required Mr Myles to pay any penalty personally, ie rather than have someone else pay it on his behalf. This would avoid the problem of reimbursement, but, ultimately, I have come to the view that practical issues of the kind referred to would remain. As I understand the applicant's position, the order he seeks should be such that payment from any source other than a fund to which Mr Myles is solely beneficially entitled would be prohibited. The potential for such an order to open up a previously undisturbed can of worms, as it were, is all too obvious. Anyone may act by an agent. Where Mr Myles would source the funds to meet any penal obligation imposed on him is not, in my view, a matter with which the court should concern itself.
39 While these reasons should not be understood as casting any doubt upon the existence of a power to make an order of the kind sought by the applicant, in my view the exercise of such a power would be problematic in the absence of some greater legislative definition of the procedures and protocols that would provide the necessary support for the effectiveness of such an order.
88 We see considerable force in the reservations also expressed by Jessup J about the practical exercise of such a power, assuming it to exist, to which we would add the following further observations.
89 In Lamb v Cotogno (1987) 164 CLR 1, the High Court rejected an argument that exemplary damages (one object of which is deterrence) should not be awarded against a person insured against that contingency, saying (at p 10):
So far as the object of deterrence is concerned, not only does it extend beyond the defendant himself to other like-minded persons, but it also extends generally to conduct of the same reprehensible kind. Whilst an award of exemplary damages against a compulsorily insured motorist may have a limited deterrent effect upon him or upon other motorists also compulsorily insured, the deterrent effect is undiminished for those minded to engage in conduct of a similar nature which does not involve the use of a motor vehicle. Moreover, whilst the smart or sting will obviously not be the same if the defendant does not have to pay an award of exemplary damages, it does serve to mark the court's condemnation of the defendant's behaviour and its effect is not entirely to be discounted by the existence of compulsory insurance.
90 Leave to re-open the question was refused in Gray v Motor Accident Commission (1998) 196 CLR 1 at [32]-[37].
91 For similar reasons, the deterrent aspect of industrial penalties is not removed (even if it might be eroded) by the prospect that the penalty will ultimately be paid, or reimbursed, by a union. The individual wrongdoer is the person liable in law for the payment of a penalty, and to the consequences for non-payment.
92 There may also be a wider context to take into account. An unpaid fine becomes recoverable as a debt (FW Act, s 546(4)). As a debt, it might normally be satisfied by a third party if debt recovery proceedings were commenced, or if a judgment debt set the matter on a course towards bankruptcy. The orders involved no express prohibition on third parties, even the other appellants, making payments of the penalty. We doubt that the Commonwealth could refuse a tender of payment from a third party with respect to either the penalty or a debt. If the penalty was paid, or a claimed debt was satisfied, the Commonwealth would be in no position to claim, or even accept, personal payment again under the orders.
93 Beyond expressing those additional reservations, it is not necessary to deal further with this issue, given that in our view the proceedings should have been dismissed.
94 We uphold the appeal, set aside the declarations and other orders made by the primary judge and order instead that the proceedings be dismissed.
I certify that the preceding ninety-four (94) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Buchanan, Reeves and Bromberg.