Penalty
56 The CFMEU sought the imposition of a pecuniary penalty on the Director pursuant to s 546 of the FW Act. The maximum penalty which the Court could impose on the Director for the contravention of s 503(1) of the FW Act is 60 penalty units (Column 4 of item 25 of s 539(2) of the FW Act). As I have decided that the contravention of s 503(1) was the action taken on 19 December 2013, the value of the penalty unit is that at the time of the conduct: Murrihy v Betezy.com.au Pty Ltd and Another (No 2) [2013] FCA 1146; (2013) 221 FCR 118 at [6]-[28]; Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union (The Kane Constructions Case) (No 2) [2017] FCA 368 at [9]. The penalty unit on 19 December 2013 was $170 as per the amendment to the s 4AA of the Crimes Act 1914 (Cth) in item 7, Sch 3 of the Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Act 2012 (Cth). The maximum penalty the Court could impose in this case is therefore $10,200.
57 The CFMEU has further urged the Court to impose a penalty on the Director at the highest end of the scale. Conversely, the Director has submitted that the imposition of a pecuniary penalty will serve no purpose, and that this is an appropriate case for making no more than a declaration of contravention.
58 Recently the Full Court of this Court reviewed principles and authorities pertinent to the imposition of pecuniary penalties. In Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, Dowsett, Greenwood and Wigney JJ said:
98 Whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty is primarily, if not wholly, protective in promoting the public interest in compliance: Trade Practices Commission v CSR Ltd [1990] FCA 521; (1991) ATPR 41-076 at 52,152 [42]; Commonwealth v Director, FWBII at [55] (per French CJ, Kiefel, Bell, Nettle and Gordon JJ). The principal object of a pecuniary penalty 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; both specific and general deterrence are important: Chemeq at [90]; Ponzio at [93]. A pecuniary penalty for a contravention of the law must be fixed with a view to ensuring that the penalty is not to be regarded by the offender or others as an acceptable cost of doing business: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at 659 [66]; Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 at 265 [62]-[63]. In relation to general deterrence, it is important to send a message that contraventions of the sort under consideration are serious and not acceptable: Australian Securities and Investments Commission v Southcorp Ltd (No 2) (2003) 130 FCR 406 at 418 [32].
99 The question whether a pecuniary penalty involves an element of punishment remains somewhat controversial: see the discussion in Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2016] FCA 453; 242 FCR 389 at [76]; ACCC v ANZ at [78]-[83]; Construction, Forestry, Mining and Energy Union v Australian Building and Construction Commissioner [2016] FCAFC 184; 341 ALR 383 at [8], referring to NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 296-7; Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 75 FCR 238 at 241; Trade Practices Commission v Stihl Chainsaws (Aust) Pty Ltd (1978) ATPR 40-091 at 17,896; Australian Competition and Consumer Commission v Ithaca Ice Works Pty Ltd [2001] FCA 1716; (2002) ATPR 41-851 at 44,543 [50]. To a certain extent, that debate appears to be more semantic or philosophical than real. It is sufficient to say that, accepting that the primary purpose of imposing a pecuniary penalty is to protect and deter, that purpose is achieved by imposing a punishment in the form of a pecuniary penalty: ACCC v ANZ at [83].
(Emphasis omitted.)
59 Their Honours noted that the fixing of a pecuniary penalty may be likened to the "instinctive synthesis" involved in criminal sentencing. This entails the identification and balancing of all factors relevant to the contravention and the circumstances of the defendant, and making a value judgment as to what the appropriate penalty is in light of the protective and deterrent purpose of a pecuniary penalty (at [100]). Importantly, the Court then turned to relevant considerations in respect of evaluation of penalty:
101 In fixing the amount of a civil penalty, reference is frequently made to the lists of factors or considerations identified by Santow J in Australian Securities and Investments Commission v Adler (No 5) [2002] NSWSC 483; (2002) 42 ACSR 80 at 114-115 [126] and French J in Chemeq at 534 [99]. Those lists of relevant considerations, which have been approved and elaborated on by many subsequent decisions of this Court, were not, and plainly were not intended to be, exhaustive. Nor was it suggested that each of the factors referred to in the respective lists was necessarily relevant or important in every case. These lists of factors should not be treated as a rigid catalogue or checklist of matters to be applied in each case; the overriding principle is that the Court should weigh all relevant circumstances: Australian Securities and Investments Commission v GE Capital Finance Australia [2014] FCA 701 at [72].
102 In general terms, the factors that may be relevant when fixing a pecuniary penalty may conveniently be categorised according to whether they relate to the objective nature and seriousness of the offending conduct, or concern the particular circumstances of the defendant in question.
103 The factors relating to the objective seriousness of the contravention include: the extent to which the contravention was the result of deliberate, covert or reckless conduct, as opposed to negligence or carelessness; whether the contravention comprised isolated conduct, or was systematic or occurred over a period of time; if the defendant is a corporation, the seniority of the officers responsible for the contravention; the existence, within the corporation, of compliance systems and whether there was a culture of compliance at the corporation; the impact or consequences of the contravention on the market or innocent third parties; and the extent of any profit or benefit derived as a result of the contravention.
104 The factors that concern the particular circumstances of the defendant, particularly where the defendant is a corporation, generally include: the size and financial position of the contravening company; whether the company has been found to have engaged in similar conduct in the past; whether the company has improved or modified its compliance systems since the contravention; whether the company (through its senior officers) has demonstrated contrition and remorse; whether the company had disgorged any profit or benefit received as a result of the contravention, or made reparation; whether the company has cooperated with and assisted the relevant regulatory authority in the investigation and prosecution of the contravention; and whether the company has suffered any extra-curial punishment or detriment arising from the finding that it had contravened the law.
105 ...
106 Careful attention must also be given to the maximum penalty for the contravention. That is so for at least three reasons: first, because the legislature has legislated for the maximum penalty and it is therefore an expression of the legislature's policy concerning the seriousness of the prescribed conduct; second, because it permits comparison between the worst possible case and the case that the Court is being asked to address; and third, because the maximum penalty provides a "yardstick" which should be taken and balanced with all the other relevant factors: Markarian at 372 [31] (per Gleeson CJ, Gummow, Hayne and Callinan JJ).
60 These principles are apposite to the circumstance of the present case.
61 Whether there is utility to imposing a penalty on the Director in this case is a question which properly arises in the context of considering the issue of deterrence. In many ways this is a seminal question, given that a primary purpose of the imposition of civil penalties is deterrence, both general and specific: Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482 at [55], [59].
62 The Director relied on a number of authorities in relation to this point to support his contention that a pecuniary penalty was not warranted, in particular Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corporation Ltd [2007] FCA 1607; Pine v Seelite Windows & Doors Pty Ltd [2005] FCA 500; Ponzio v Firebase Sprinkler Systems Pty Ltd [2005] FCA 733; Ponzio v D and E Air Conditioning Pty Ltd [2005] FCA 964; Pine v Expoconti Pty Ltd [2005] FCA 1434; Pine v Casello Constructions Pty Ltd [2005] FCA 1854; and Carr v Higgins Coatings Pty Ltd [2005] FCA 1809.
63 In CEPU v Telstra Corporation Ltd [2007] FCA 1607, Gordon J noted at [13] that there is no principle that a Court must impose a penalty in all cases of proven breach. In that case her Honour considered that there was no purpose to be served by the imposition of a penalty where:
the unlawful conduct arose out of an arguable but erroneous construction of a relevant term of an enterprise agreement,
the subsequent breach could not be characterised as demonstrating a flagrant or wilful disregard for the relevant enterprise agreement, and
the complainant had been fully compensated for the loss suffered as a result of the breach.
64 The other authorities on which the Director relied all concerned circumstances where an employer had paid employees wages while the employees were engaged in industrial stoppages in contravention of the Workplace Relations Act 1996 (Cth), and where the Court found that there was no utility in imposing a pecuniary penalty on the employer.
65 So:
In Pine v Seelite Windows & Doors Pty Ltd [2005] FCA 500 the relevant application concerned the imposition of a pecuniary penalty under s 187AD(1) of the Workplace Relations Act 1996 (Cth). The respondent had contravened s 187AA of that Act in respect of the payment of two days wages totalling $656.72 to four employees during a period when the employees were engaged in industrial action. Finkelstein J noted that the managing director of the employer had not been informed that the relevant employees had not worked on the particular days, but on learning of the days not worked had taken steps including communicating with the employees and informing them that they would not be paid for any lost time arising out of industrial action other than in circumstances where they were exposed to an immediate safety risk. In relation to the issue of imposition of penalty on the company his Honour continued:
9 In these circumstances this action is much ado about nothing. True it is that the laws of the land must be obeyed. It is also true that the Building Industry Taskforce is entitled to take all reasonable steps to ensure that the laws, for which it has some responsibility in enforcing, are complied with. As I have said, not every contravention of every law needs to be punished. Often a caution will suffice. But, as it has been decided that there should be an action, I must deal with it.
10 Should I impose a penalty on the respondents? No harm has been done to anyone. The contravention was inadvertent. It is unlikely to occur again. The amount of wages involved is insignificant. In these circumstances it would be quite wrong to punish the respondents. Nothing would be achieved by the imposition of a pecuniary penalty. There is no need for a specific deterrent: it is simply not necessary. And if any penalty were imposed it would be so low that it could not act as a general deterrent.
In Ponzio v Firebase Sprinkler Systems Pty Ltd [2005] FCA 733, Merkel J declined to impose a penalty, emphasising that it was most unlikely the respondent would reoffend, and the respondent did not make the relevant payments recklessly or indifferently. His Honour observed, however, that the circumstances of the case were exceptional (at [10]).
In Ponzio v D and E Air Conditioning Pty Ltd [2005] FCA 964, an application for imposition of penalty was again sought against an employer for paying employees in respect of periods when those employees were engaged in industrial action as defined in the legislation. After examining relevant authorities and the facts, North J concluded:
30. Given the nature of the breaches, the record of the respondent, its subsequent conduct and the amount of disadvantage already suffered, I do not regard the imposition of a penalty as serving the purpose of either particular deterrence or general deterrence.
In Pine v Expoconti Pty Ltd [2005] FCA 1434, in similar circumstances Kenny J said:
15 The present case involves payments to 28 employees at two sites in respect of periods of industrial action over two days by a subcontractor. The payments totalled a little less than $3,500. At the time they were made, the respondent believed there was a safety issue preventing its employees from working. It believed that its employees were ready and willing to work but that the alimaks and lifts had been shut down because of a safety audit, thereby preventing them from working. There was an absence of harm as a result of the stoppages. The respondent has no prior contraventions of Pt VIII of the Act and has since changed its policy to prevent a recurrence of this conduct. The respondent has admitted the contraventions at the earliest opportunity and co-operated with the applicant in dealing with the matter efficiently. There appears little likelihood that the respondent will repeat the contravening conduct. Further, the respondent has plainly incurred significant costs in defending these proceedings; and the applicant accepted that they were not insignificant.
16. I accept that this is not an appropriate case for particular weight to be given to the matter of general deterrence; and, in any event, this interest has been served by the bringing of this proceeding and the time and cost that the respondent has as a consequence been required to spend in relation to the proceeding, although I note the comments of Merkel J in Multiplex at [9]. I do not consider that this case is materially different from Firebase or D and E Air Conditioning; and, in this particular case, which arises out of the same factual background, interests of parity should prevail. I note too that the contraventions arise out of essentially the same course of conduct. Accordingly, although I regard the course as suited only to the exceptional case, I would make declarations concerning the respondent's contravening conduct but not impose a penalty in this case.
In Pine v Casello Constructions Pty Ltd [2005] FCA 1854, again involving payment of workers during industrial stoppages in contravention of the Workplace Relations Act, North J observed at [8]-[9] that:
The relevant conduct occurred on two days and the issue was different on each day;
In the circumstances where the respondent had been require to incur costs in its defence of $8,000, in respect of a payment to its workers of $2,000, it was unlikely it (or any other employer) would be inclined to make similar payments to employees. General deterrence did not require the imposition of a monetary penalty;
Given the record of the respondent, its co-operation with the applicant, acknowledgment of the alleged contravention early on and the amount of disadvantage already suffered, it was unlikely the respondent will be involved in any further contraventions of the Act
In Carr v Higgins Coatings Pty Ltd [2005] FCA 1809, Gray J noted that the respondent had had no prior contravention of the relevant legislation, had co-operated, was "essentially innocent" of wrongdoing, and the applicant conceded that there would be no utility in the imposition of a pecuniary penalty.
66 So far as concerns specific deterrence, the Director has resigned from his statutory appointment and there is no present risk of any recurrence or prospect of him contravening the FW Act again. The Director submits that his resignation is itself an adverse consequence of his contravention.
67 I accept the submission of the Director so far as concerns the need for specific deterrence in this case. It is fair to say that the Director has had a long and distinguished career in public service, and that his resignation from office was a direct result of his admission of contravention in this case. In that respect, I do not consider that any pecuniary penalty the Court could impose referable to specific deterrence would meaningfully add to the price the Director has already paid for his contravention of s 503(1) of the FW Act.
68 A different issue arises however insofar as concerns principles of general deterrence in this context. In this case, the Director submitted that there was no case for general deterrence, in circumstances where there is only one Australian Building and Construction Commissioner, and to his knowledge there has never been a recorded contravention of s 503(1) of the FW Act by any person within any of the organisations established under or in relation to the FW Act. The Director further submitted that, unlike industrial protagonists or participants, there is no need for broader deterrence because the FWBC is not selling anything, has no interests to pursue or preserve, and has no profit to make or anything to gain from the conduct of its affairs.
69 In cases of contravention of civil penalty provisions, the Court has a duty to consider whether a penalty should be imposed as a factor preventing the commission of similar contraventions by those who may otherwise be tempted by the prospect that only light punishment will be imposed (see R v Harrison (1997) 93 A Crim R 314 at 320-321, Comcare v Post Logistics Australasia Pty Limited [2012] FCAFC 168 at [46]). In this context I note apt comments of Finkelstein J in Community and Public Sector Union v Telstra Corporation Ltd [2001] FCA 1364 at [9] where his Honour observed:
On the other hand, the basic objective of punishment should be to enhance social welfare by minimising the net social cost of wrongdoing. This is achieved by deterrence. Here I speak not only of specific deterrence but also general deterrence. In a case such as the present, that may be of some importance. The reason is that Telstra submits that there is no need to impose any penalty because it will not offend again. That may be true. But even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law's disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct: R v Thompson (1975) 11 SASR 217.
(Emphasis added.)
70 The authorities to which the Director referred as supporting his submission that no pecuniary penalty should be imposed in this case are of little assistance in considering whether the principles of general deterrence are relevant. This is because:
Unlike in the circumstances of the present case, none of the cases to which the Director referred involved a contravenor who was the industry regulator, whose role it was to ensure that accurate information be promulgated to industry participants as well as the broader public;
Unlike in the present circumstances where the conduct occurred at the Director's specific direction, in a number of the cases the conduct resulting in the contravention occurred without the knowledge of the contravenor (for example Carr [2005] FCA 1809 and Pine v Seelite Windows & Doors Pty Ltd [2005] FCA 500);
The present circumstances can be contrasted with CEPU v Telstra [2007] FCA 1607 where the contravention arose from an arguable interpretation of an enterprise agreement. In the current proceedings there was no ambiguity concerning the status of the relevant law - rather in making the direction the Director appeared to take a calculated risk that the Federal government would eventually get the numbers to pass its legislation and in the interim the FWBC should not amend the information either on its website or in its published materials;
Most of the relevant cases involved payments of relatively small amounts of wages in specific companies, and involved conduct confined to a few days. In the current proceedings, the Director's action resulted in a misrepresentation concerning the state of the law being perpetuated by the FWBC over several years;
In Carr [2005] FCA 1809, the applicant conceded that there would be no utility in the imposition of a pecuniary penalty. That is clearly not the case here.
71 Further, while the Director is correct in submitting that the FWBC does not, and could not, profit from the misrepresentation to which he admits, this in itself is not a standard against which the need for deterrence should be judged in this case. The conduct in question exhibited on the Director's part a degree of carelessness and, indeed, somewhat arrogant ignorance, in respect of the truth of information concerning the right of entry of industry participants in an often charged industrial environment. His careless conduct resulted in incorrect information remaining on the FWBC website for several years, in apparent disregard of the reputational risk to the FWBC, and in circumstances where the Director promoted the supposed accuracy of that information in communications with industry and the general public. Whether the CFMEU was misled by the misrepresentation on the FWBC website resulting from the Director's conduct is not the test. There is utility in ensuring that any successor to the Director, other staff of the FWBC, and staff of other regulators are adequately warned against engaging in similar conduct.
72 The Director did not intend to contravene s 503(1) of the FW Act. I note the contrition expressed by the Director, his remorse for his actions, the fact that he has no record of previous contravention of the FW Act, and that fact that he has paid a high personal price in the loss of his position as a result of his contravention.
73 The Director referred to his co-operation with the CFMEU in enabling appropriate discovery orders to be made unopposed, and his admission of the contravention of s 503(1) of the FW Act in the statement of agreed facts. I accord little weight to the Director refraining from opposing discovery orders. I give more weight to the fact that the Director reached a position of agreement with the CFMEU on key facts, and admitted the contravention, thus obviating the need for a five day trial with associated costs on the parties and Court time. In saying so, I give less weight to this concession than I would have accorded had the Director's admission occurred before the first listed day for hearing, rather than after (as was the case here).
74 Taking into consideration the factors I have mentioned, I consider that there is utility in a pecuniary penalty order. I consider that the conduct of the Director is at the higher end of the scale of seriousness so far as concerns breach of s 503(1) of the FW Act. The penalty should reflect that fact. The penalty should, however, also reflect the circumstances of remorse, extra-curial consequences to the Director, his co-operation and his record.
75 It is appropriate that the Director be ordered to pay a penalty in the amount of $8,500.
76 The CFMEU has sought an order that the Director pay the pecuniary penalty to the CFMEU pursuant to s 546(3) of the FW Act, on the basis that it is "the usual position". That an order in such terms is usual is clear from principles explained by the Full Court in Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4; (2016) 239 FCR 336 at [72] et seq and [117]-[118]. The Director did not oppose an order in such terms, were the Court minded to order payment of a pecuniary penalty. I will order that the pecuniary penalty of $8,500 be paid to the CFMEU within 30 days of the date of this order.
I certify that the preceding seventy-six (76) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.