Brookfield Multiplex FSH Contractor Pty Limited v McDonald [2014] FCA 359 | Case summary

REASONS FOR JUDGMENT 1 These reasons address the amount of the civil penalties which should be imposed on the respondents for contraventions of the Fair Work Act 2009 (Cth) (the Fair Work Act) arising from strike action on 15 and 16 September 2013. 2 The first applicant, Brookfield Multiplex FSH Contractor Pty Limited, was the builder of a public hospital project known as the Fiona Stanley Hospital Project located at Murdoch Drive, Murdoch, Western Australia. The second applicant, Brookfield Multiplex Constructions Pty Ltd, was the builder of the St John of God Murdoch Hospital Project located at Murdoch Drive, Murdoch, Western Australia and also the Western Australian Institute of Medical Research Project located on the same site. The third applicant, Brookfield Multiplex Australasia Pty Ltd, was an employer of employees engaged at the Fiona Stanley Hospital Project site and the St John of God Murdoch Hospital Project site. 3 The first respondent, Joseph McDonald, was an Assistant Secretary of the Construction and General Division, Western Australian Divisional Branch of the third respondent, the Construction, Forestry, Mining and Energy Union (the CFMEU). The second respondent, Graham Pallot, was also an Assistant Secretary of the CFMEU. The third respondent, the CFMEU, is an organisation of employees registered under the Fair Work (Registered Organisation) Act 2009 (Cth). The CFMEU is party to a number of enterprise agreements applicable to employees at the three construction sites. The nominal expiry date of those agreements has not yet passed. 4 The applicants filed an application against the respondents alleging contraventions of ss 348 and 417 of the Fair Work Act arising from the strikes. 5 Section 348 provides: A person must not organise or take, or threaten to organise or take, any action against another person with intent to coerce the other person, or a third person, to engage in industrial activity. 6 Section 417 provides: (1) A person referred to in subsection (2) must not organise or engage in industrial action from the day on which: (a) an enterprise agreement is approved by the FWC until its nominal expiry date has passed; or (b) a workplace determination comes into operation until its nominal expiry date has passed; whether or not the industrial action relates to a matter dealt with in the agreement or determination. (2) The persons are: (a) an employer, employee, or employee organisation, who is covered by the agreement or determination; or (b) an officer of an employee organisation that is covered by the agreement or determination, acting in that capacity. Injunctions and other orders (3) If a person contravenes subsection (1), the Federal Court or Federal Circuit Court may do either or both of the following: (a) grant an injunction under this subsection; (b) make any other order under subsection 545(1); that the court considers necessary to stop, or remedy the effects of, the contravention. (4) The court may grant an injunction under subsection (3) only on application by a person referred to in column 2 of item 14 of the table in subsection 539(2). (5) Despite subsection 545(4), the court may make any other order under subsection 545(1) only on application by a person referred to in column 2 of item 14 of the table in subsection 539(2). 7 The applicants sought declarations of contravention, compensation, an injunction against the first respondent, and civil penalties for contraventions of ss 348 and 417 against the respondents. The parties have reached an agreement in relation to the issues raised by the litigation. They have filed a statement of agreed facts and admissions. On the basis of those agreed facts, the Court has made orders by consent relating to all the matters save the amount of the civil penalties to be paid. For the purpose of finalising the amount of the penalties it is necessary to recount some of the agreed facts which explain the circumstances of the strike action. 8 On 15 February 2013, a meeting was organised by the first and second respondents at the Fiona Stanley Hospital Project site. The first respondent addressed the meeting, which was attended by 400 workers. The result of the meeting was that the workforce did not attend work at the sites on 15 and 16 February 2013. 9 It is an agreed fact that the first respondent intended by what he said at the meeting that the strike action would coerce the applicants to resolve an issue which had arisen between a subcontractor and the CFMEU in relation to an employee of the subcontractor working on another site. The employee was in a coma as a result of a bicycle accident. 10 It also an accepted fact that the actions of the first and second respondent resulted in two days of strike action and amounted to contraventions of ss 348 and 417 of the Fair Work Act. 11 The agreement includes payment of compensation of $250,000 by the respondents to the applicants, and the grant of an injunction against the first respondent preventing him from visiting sites at which work is undertaken by the applicants until 31 December 2016. The parties have also agreed on the range of the amounts of the civil penalty which each respondent should pay. 12 The remaining issue for the Court to determine is the appropriate amount of the penalty to be paid by each respondent. 13 The narrow issue left to be determined by the Court must be viewed against the complex agreement made between the parties which involved various issues raised by the litigation. For example, the resolution of the compensation issue involved agreement between the parties about the cost of delay of each of the projects. The documents filed to substantiate the compensation claim were voluminous and consisted of approximately 13 lever arch folders. 14 Mr Neil SC, who appeared with Mr Kelleher for the applicants, rightly emphasised the importance of the Court taking into account the balance in the agreement reached by the parties. This is an important consideration in the determination of the remaining matters before the Court. 15 The maximum penalty available for each contravention is 300 penalty units for a body corporate and 60 penalty units for an individual: see s 546 of the Fair Work Act. After 28 December 2012, a penalty unit has the value of $170: see s 4AA(1) of the Crimes Act 1914 (Cth). Thus, the maximum penalty for each contravention by the first and second respondent would be $10,200, and for each contravention by the third respondent, $51,000. 16 The range agreed between the parties in relation to the first respondent is $9,000 to $10,500. In relation to the second respondent, the agreed range is $3,000 to $4,500. In relation to the third respondent, the agreed range is $45,000 to $52,500. 17 Although the parties have reached an agreement, it is nonetheless the responsibility of the Court to determine the appropriate penalty. 18 The parties agreed on the general approach to the determination of penalties. The process to be undertaken by the Court involves consideration of all the circumstances. There is a public interest in the resolution of litigation by agreement, particularly in cases such as the present in which the trial would likely have taken several weeks. In such circumstances, the Court does not determine the appropriate penalty by asking what figure it would arrive at absent the agreement. Rather, the Court will determine whether the figures proposed are within a range which is, in the Court's view, appropriate to the circumstances. 19 The penalties must be fixed by reference, and in proportion to, the gravity of the contravention. The accepted purposes to be served by the imposition of the penalties are punishment, deterrence, both personal and general, and rehabilitation. 20 Just as in the exercise of sentencing in criminal cases, so in the fixing of the amount of civil penalties the process undertaken by the Court requires, in the end, an instinctive synthesis of all the relevant factors. And, at the end of the process the Court must have regard to the totality principle to ensure that the final figure properly reflects the entire circumstances of the contravention. Thus, the approach taken by the parties in this case was to view the conduct in totality without disaggregating each of the contraventions. 21 The applicants pointed to a number of factors which should be taken into account when fixing the penalties. 22 The CFMEU is a large, established and sophisticated industrial association, while the first and second respondents occupied senior positions within the organisation. The contraventions were conscious and deliberate. Both the first and second respondents entered the construction site without authority or the consent of the applicants. The strikes had an adverse effect on the construction of three significant public and private hospitals and medical research facilities, which are important to the people of Western Australia. The strikes affected a substantial number of subcontractors and employees of the subcontractors. They occurred over two days and they caused significant loss and damage. 23 The applicants pointed to the discreditable records of non-compliance with the requirements of industrial laws of both the first and third respondents. In their written submissions, the applicants provided a table of industrial cases in which the first and third respondents were involved. Although no analysis was made of previous occasions on which the first and third respondents have been involved in contraventions of the industrial laws, the list of cases covers a substantial period dating back to 2006 and involves 11 different cases. That list gives perhaps an overly broad picture. The number of contraventions seems to have been less in later than in earlier times. Nonetheless, the first and third respondents do not cavil with the applicants' contention that the past contraventions present a picture of unlawful conduct by the first and third respondents for a significant period and on a number of occasions. 24 The applicants accept that the respondents are entitled to the benefit of the totality principle. The parties took a broad view of the contraventions. Rather than treating each of the contraventions individually, the parties accepted that all of the contraventions relate to the strike action over two days; that is to say, they relate to one set of circumstances. 25 The applicants also contend that there has been no contrition or corrective conduct by the respondents. But the applicants accept that the respondents are entitled to some credit for their admissions, which narrowed the issues and meant that the hearing occupied less than one day. On the other hand, the applicants were required to prepare for trial. The agreement came late in the proceedings and did not save the applicants from a great amount of preparation, including obtaining evidence of loss. This required an analysis of the expense of running the construction sites for the two days of the strike, as well as engaging experts to give evidence about the calculation of delay. 26 The applicants also accept that it is relevant to take into the account the fact that the first respondent is subject to an agreed injunction against entering sites conducted by the applicants or related corporations until 31 December 2016. 27 There is one aspect of the applicants' approach which was controversial. The applicants accepted that the first and second respondents' reasons for taking and encouraging the strike action were to support an injured worker. Mr Neil SC argued in his oral submissions that this element should not be taken into account because s 19 of the Fair Work Act exempts from the definition of industrial action, action which is concerned with imminent safety threats. Safety issues are dealt with by the Act. If the nature of the safety concerns do not exempt the conduct from the definition of industrial action, then, so it was argued, the safety issues cannot be relevant to the fixing of penalties for unlawful action. 28 This does not follow. In fixing the penalties the Court is concerned with unlawful action. The question which the Court must ask itself is where on the scale of unlawfulness the particular action falls. It is an agreed fact that the purpose of the strike action was an attempt to benefit a worker, albeit a worker employed by a subcontractor employed on a different site. This fact is relevant to the decision the Court must ultimately make and to the severity of the civil penalty imposed, and should be taken into account. It demonstrates that the contravention is of a lower magnitude of wrong-doing than a contravention in which the motivation for the industrial action was for some entirely self-interested purpose. 29 The penalties must be fixed at a level which acts as a specific deterrent to the respondents from engaging in similar action in the future, as well as a general deterrent to the rest of the community to indicate that conduct in contravention of the Fair Work Act would be visited by appropriate penalties. 30 It is agreed that the penalties imposed should be paid to the applicants. 31 In the end, there are two factors which point in this case to the penalty being fixed at the lower rather than the higher end of the range proposed. 32 First, that the motivation for the industrial action was to support an injured worker on another site. Second, the degree of cooperation by the respondents in the resolution of the matter. 33 Consequently, the penalty against Mr McDonald is fixed at $9,500. The penalty against Mr Pallot is fixed at $3,500. The penalty against the CFMEU is fixed at $48,000. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North.

Brookfield Multiplex FSH Contractor Pty Limited v McDonald

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