CFMEU v Austral Bricks [2009] FMCA 143 | Case summary

The breach is limited to the events outlined and did not persist beyond 22 August 2008.
Counsel who appeared for each party advised the Court that this was the first occasion of which they were aware where a penalty was to be imposed pursuant to s.448(4) of the Act. The maximum penalty of 300 penalty units for the respondent corporation (s.448(5)) equates to $33,000.
There have been many cases in which the principles applicable to the determination of the appropriate penalty have been discussed. Both counsel made reference to the judgment of Branson J in CFMEU v Coal & Allied Operations (No 2) [1999] FCA 1714; (1999) 94 IR 231 at 232. Her Honour said:
- "The Act gives no explicit guidance as to the circumstances in which an order imposing a penalty . . . will be appropriate or as to the circumstances in which a penalty of or near the maximum, or alternatively of a lesser amount, may be called for. The Court is simply directed to consider what is appropriate in all the circumstances of the case.
- The following matters, which are not intended to comprise an exhaustive list, seem to me to be considerations as to which the Court may appropriately have regard in determining whether particular conduct calls for the imposition of a penalty, and assuming that it does, the amount of the penalty:
  - (a) the circumstances in which the relevant conduct took place (including whether the conduct was undertaken in deliberate defiance or disregard of the Act);
  - (b) whether the respondent has previously been found to have engaged in contravention of . . . the Act;
  - (c) where more than one contravention of [the Act] is involved, whether the various contraventions are properly seen as distinct or whether they arise out of the one course of conduct;
  - (d) the consequences of the conduct found to be in contravention of . . . the Act;
  - (e) the need, in the circumstances, for the protection of industrial freedom of association; and
  - (f) the need, in the circumstances, for deterrence.
In Kelly v Fitzpatrick (2007) 166 IR 14 Tracey J set out his own 'non-exhaustive range of considerations'.
In Rojas v Esselte Australia Pty Ltd (No 2) [2008] FCA 1585 Moore J said at [65]:
- "Although "check lists" of the above kind are a useful starting point in determining whether a penalty ought to be imposed, and if so the level of such penalty, at the end of the day the task of the Court is to fix a penalty that pays appropriate regard to the contraventions that have occurred: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560 at [91]. Moreover, as the Full Court noted in Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union [2008] FCAFC 170 at [60], while general guidance as to the appropriate penalty may be obtained through an analysis of comparable cases, it remains necessary for the Court to give careful consideration to the circumstances of the case before it (see also Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith . . . at [12] per Gray J."
Although it was primarily concerned with the application of the totality principle in determining civil penalties, the decision of the Full Federal Court in McAlary-Smith is instructive. At [12] Gray J deprecated the use of "comparator" cases. His Honour said:
- "This was a fundamentally wrong approach. Penalties are not a matter of precedent. The choice of penalty must be dictated by the individual circumstances of a case, not by a line by line comparison with another case. . . "
At [13] his Honour said:
- "Penalty decisions in other cases can be of value in demonstrating that there is a range of penalties generally considered appropriate to a particular type of case. The individual circumstances of the case at hand must then be examined, in order to determine at what point in the appropriate range the penalty should be set. This does not involve a comparison with the facts of other cases."
Graham J at [53] - [56] referred to other relevant decisions of the Full Court and of the High Court, and at [60] adopted the checklist of Tracey J in Kelly v Fitzpatrick:
- "53. In Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543 at [93]- [94] (Ponzio) Lander J summarised the purpose of imposing penalties for breaches of the Act as follows:
  - 93 There are three purposes at least for imposing a penalty: punishment; deterrence; and rehabilitation. The punishment must be proportionate to the offence and in accordance with the prevailing standards of punishment: R v Hunter (1984) 36 SASR 101 at 103. Therefore the circumstances of the offence or contravention are especially important. The penalty must recognise the need for deterrence, both personal and general. In regard to personal deterrence, an assessment must be made of the risk of re-offending. In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrence to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty therefore should be a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217. In some cases, although hardly in this type of contravention, rehabilitation is an important factor.
  - 94 The individual or personal circumstances of the contravenor must be taken into account as also any relevant matter in mitigation. For a contravention of these sections the minimum penalty which addresses punishment and deterrence, both personal and general, will be appropriate. Where one act may involve a number of contraventions, as in this case, it would be generally inappropriate to impose separate penalties because almost inevitably that would offend against the totality principle as known to the criminal law. ...
Buchanan J, after referring to the checklist in Kelly v Fitzpatrick said, at [91]:
- "Checklists of this kind can be useful providing they do not become transformed into a rigid catalogue of matters for attention. At the end of the day the task of the Court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations. There is no suggestion in the present case that the learned magistrate made any relevant error in her identification of the matters which she should consider in fixing penalties."
As can be seen from the statement of agreed facts, the breach of the Act was a narrow one in the sense that it occurred in respect of arguably three employees, on one occasion, and had very limited consequences.
Counsel for the applicant submitted that the breach by the respondent goes to the heart of the industrial relations regime presently in place in this country. He points out that protected industrial action can now only occur in limited circumstances. Where such action takes place, employees have the benefit of provisions such as s.448(1) of the Act. To deprive the employees of that benefit, it is submitted, should be treated seriously. Counsel for the applicant helpfully referred to the history of the provision as discussed in Australian Meat Industry Employees' Union v Belandra Pty Ltd [2003] FCA 910.
It is, in my view, extremely difficult if not impossible for the Court to determine a 'hierarchy' of provisions in the Act that provide for the imposition of a civil penalty. Nor is it appropriate to do so. The parliament has set what it regards as appropriate maximum civil penalties for breaches of the various provisions of the Act. If the parliament regards a particular civil breach as deserving of a potentially more serious punishment, it can expressly say so by providing for a higher maximum penalty. In the absence of such guidance, I do not accede to the submission that a breach of s.448(1) of the Act should be treated any differently to a breach of any other provision of the Act. The seriousness of the breach, and the various other factors referred to in the authorities that I have extracted give guidance to the court in fixing the penalty for a breach of s.448(1), as for a breach of any other provision of the Act.
There is no evidence that the respondent has previously contravened the same (or indeed any other) provisions of the Act. There is no direct evidence of the financial resources of the respondent. It was tacitly accepted by both parties in their submissions to the Court, that the respondent could withstand, without difficulty, even the maximum penalty that could be imposed.
There was but one occasion on which a breach occurred, notwithstanding that it related to more than one employee. In that regard, the position of Reid should be distinguished from that of Pollock and Hodges. Although the respondent breached the Act in respect of Reid, by not offering him overtime because of his participation in protected industrial action, Reid would not have accepted the offer had it been made. He has suffered no loss.
In the case of Pollock and Reid, it was accepted in submissions that the loss to each of the employees was in the order of a few hundred dollars.
It cannot be said that the actions of Rudman, in not offering overtime to each of the three named employees, was other than deliberate. There was a link between the lack of an offer of overtime and the participation in the protected action. The breach was not accidental or inadvertent.
However, there is no evidence that senior management of the respondent were involved in the breach. Indeed, once the matter was brought to the attention of the respondent's general manager, Rudman was directed to offer overtime to the three named employees.
The respondent attempted, albeit unsuccessfully, to take corrective action. It did so by convening a meeting between Rudman and Pollock in which the offer of overtime was to be made. However the offer was never made because Pollock terminated the meeting. The respondent did not directly offer the overtime to Reid and Hodges. There is no evidence that it was impractical for it to do so.
The respondent has, since 23 August 2008, continued to offer overtime to employees, notwithstanding their participation in the protected action on 21 August 2008.
One of the substantial grounds of disagreement between the parties at the hearing is whether the respondent has displayed any contrition or remorse for what occurred, and whether the respondent's admission of a breach should attract a 'discount' to the penalty that might otherwise be imposed.
In my view, the respondent has not expressed contrition. It has not apologised (so far as the statement of agreed facts stipulates the relevant facts) to any of the affected employees. Despite senior management of the respondent being in court on the day of the hearing (as I was advised by counsel for the respondent), no evidence was led of any remorse, nor was any sworn statement of apology put to the Court.
The respondent's conduct reflects a lack of contrition. At paragraph 15 of the respondent's submissions it was said that the conduct of the union official Pollock was in part responsible for the respondent's inability to take corrective action. That is, the respondent has not accepted full responsibility for what occurred, and has attempted to deflect partial responsibility to the employee's union representative.
Nor do I consider that any discount for an early admission of liability is called for in this case. An admission was not made at the earliest opportunity. The respondent initially filed a response expressly denying a contravention of the Act. The applicant was required to file affidavit evidence. The respondent itself filed affidavit evidence. The statement of agreed facts was finalised quite close to the hearing of the matter, although I accept that some time would have been spent negotiating its precise language.
In Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 at [76] it was said:
- "As Branson J has pointed out (see Alfred v Walter Construction Group Limited [2005] FCA 497) the rationale for providing a discount for an early plea of guilty in a criminal case does not apply neatly to a case, such as the present, where a civil penalty is sought and the case proceeds on pleadings. Nevertheless, in our view, it should be accepted, for the same reasons as given in Cameron, that a discount should not be available simply because a respondent has spared the community the cost of a contested trial. Rather, the benefit of such a discount should be reserved for cases where it can be fairly said that an admission of liability: (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice.
In my view, neither of the factors warranting a discount has been demonstrated in this case.
There is then the matter of deterrence, both general and specific.
As Lucev FM said in Carr v CEPU & Anor [2007] FMCA 1526 at [29]:
- "General and specific deterrence are significant considerations given that deterrence is a primary objective of imposing penalties. It is necessary for deterrence to be both specific and general. Specific deterrence relates to the need to deter a contravener from further contravention of the [Act] whilst general deterrence refers to the need to deter others from contravening the [Act] by showing the seriousness with which the Court considers the contraventions. The penalties must be meaningful and consistent with other considerations to be taken into account in determining an appropriate penalty. In light of legislative changes in recent years, a "light handed approach" is no longer applicable to the imposition of civil penalties for breaches of industrial law . . ."
The last sentence from the passage just extracted is derived from the judgments in Finance Sector Union v Commonwealth Bank of Australia [2005] FCA 1847; (2005) 224 ALR 467, for example Merkel J at 487; and [2007] FCAFC 18; (2007) 157 FCR 329 at [192] per Branson J.
In CPSU v Telstra Corporation Ltd [2001] FCA 1364; (2001) 108 IR 228 at 231 Finkelstein J said that a penalty must be imposed at a 'meaningful' level.
I have taken these observations into account in determining the appropriate penalty, which as a number of judicial officers have observed is not an exact science.
In my view, the conduct in this case warrants the imposition of a civil penalty, but one towards the lower end of the range. The penalty that I propose to apply is a factor many times the loss said to have been caused to the named employees. On the other hand, the penalty must reflect the comparative seriousness of the breach against the sort of matters to which s.448(1) is directed, and which may conceivably occur in workplaces. It must also reflect the isolated nature of the breach in this case, and the fact that it did not involve systemic or senior management conduct. I consider that the penalty I propose will effect deterrence both general and specific. For what may be perceived as a minor infraction of the legislation, on an isolated occasion, the quantum of the penalty is not insignificant.
During the course of argument I asked counsel for each of the applicant and the respondent to state what their clients submitted was an appropriate range for the penalty. Counsel for the applicant, with some reluctance, urged a range of $10,000 - $15,000. He emphasises the aspect of deterrence, particularly having regard to the financial resources of the respondent, about which, as I have said, there was no direct evidence.
Counsel for the respondent urged a range of $5,000 - $10,000; however in his oral submissions made statements that seemed incongruous with the penalty range advanced, and supported the imposition of a lesser penalty. The range submitted is also apparently inconsistent with paragraph 23 of the respondent's written submissions.
The court is not bound by the parties' submissions, just as it would not be bound by any agreement reached by the parties as to penalty. I have formed my own view based on the facts as presented to the Court, taken in the context of the relative seriousness of the breach as against the maximum penalty prescribed by the legislation.
I will impose a civil penalty against the respondent of $3,300.
There was considerable debate as to whom the penalty should be paid. The applicant sought an order that the penalty be paid to it. The respondent sought an order that the penalty be paid to the consolidated revenue.
The Act does not assist in resolving this dispute.
Both counsel referred to the decision in Rojas v Esselte Australia Pty Ltd (No. 2) [2008] FCA 1585. There, Moore J said, at [68] - [69]:
- "68 The question that then arises is whether the penalty should be paid to the NUW, as the applicant submited it should. The respondent submitted that it opposed that course (and any penalty should be paid to the applicant and the balance (if any) to the Commonwealth), although the only submission made as to why this was so was to the effect that a penalty should not be imposed or ordered to be paid to an organisation bringing penalty proceedings or supporting an individual who has brought them as a means of wholly or partly reimbursing the organisation for its legal costs. There is Full Court authority, Victoria University of Technology v Australian Education Union [1999] FCA 1065; (1999) 91 IR 96 where it was said that it would be wrong to be influenced by a concern to reimburse an applicant organisation for costs incurred in prosecuting an application when determining whether a penalty should be imposed and if so, in what amount. Doubtless this is correct. However, once a decision has been made to impose a penalty and the amount of the penalty determined by application of accepted principles, I see no reason why it cannot be ordered to be paid to an organisation who has brought or supported the proceedings even if there is a real prospect it will be used to defray in whole or in part the legal costs of the organisation. It is true that the WR Act effectively prohibits the ordering of costs, or put slightly differently, substantially curtails the power to order costs in proceedings brought under that Act. Equally, however, the WR Act confers an express power to order that a penalty be paid to someone other than the Commonwealth, a power which the Act does not expressly qualify or constrain.
- 69 I have earlier expressed the view that this may well be a power conferred to encourage individuals who, in an earlier times might have been described as common informers, to sue for breach of statutes: Shanka v Employment National (Administration) Pty Ltd (No 2) [2001] FCA 1623; (2001) 114 FCR 379 and also see the discussion of Finkelstein J in CPSU v Telstra Corporation Ltd [2001] FCA 1364; (2001) 108 IR 228 at 232. It is a distinct power and, in my view, it is strongly arguable that it should be viewed as a power which should not be treated as impliedly constrained by the limitations imposed on a power to award costs: see generally Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom ; If a person or organisation successfully brings penalty proceedings, then I see no reason why an order cannot be made that the penalty be paid to that person or organisation without regard to whether the penalty might be used to defray legal costs. The use to which the penalty is put would be a matter for that person or organisation. But it is unnecessary for me to consider this question further as I do not propose to order that the penalty be paid to the NUW who, it is conceded by the respondent, has met the costs of these proceedings. I propose to order that the penalty be paid to the Commonwealth Consolidated Revenue Fund."
The present case is plainly distinguishable on the facts from Rojas. However, the statement of principle made by Moore J, particularly at [68] seems to apply to this case.
Here, no order for costs is sought by the applicant, notwithstanding its success in the proceedings. It has undertaken to reimburse to the affected workers any financial loss suffered by them from any penalty ordered to be paid. There seems no good reason why the penalty should not be paid to the applicant.
Many cases in which penalties are ordered to be paid to the consolidated revenue involve government officials (for example workplace inspectors) bringing the proceedings on behalf of aggrieved employees. Here the Commonwealth government is not involved in the proceedings. This is a proceeding brought by a recognised industrial union against an employer on behalf of its members, and not only those directly affected by the employer's action; but for the wider benefit of deterring potentially like-minded employers from acting in breach of the legislation that may effect other members of the applicant.
The penalty should be paid to the applicant.

CFMEU v Austral Bricks

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Cases Cited (16)