Cozadinos v Construction, Forestry, Mining and Energy Union

PENALTY 17 The parties jointly proposed that the Court should impose a monetary penalty of $20,000 on the CFMEU in respect of its admitted contravention of s 44 of the BCII Act.

The Court's approach 18 The approach of the Court to proposals of this kind is now well established. It was propounded by the Full Court in Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 and was summarised by Kenny J in White v Construction, Forestry, Mining and Energy Union [2011] FCA 192 at [5] as follows: "(a) it is the responsibility of the Court to determine the appropriate penalty; (b) determining the amount of penalty is not an exact science; (c) within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another; (d) there is public interest in promoting settlement of litigation, particularly where it is likely to be lengthy; (e) the view of the regulator, as a specialist body, is a relevant, but not determinative, consideration; (f) in determining whether the proposed penalty is appropriate, the Court examines all of the circumstances of the case; and (g) where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure, in the Court's view, is appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if it is within the permissible range." 19 The relevance of these principles was recently endorsed by two single judges of this Court. The occasion for doing so was the decision of the Victorian Court of Appeal in ASIC v Ingleby (2013) 93 ACSR 274 in which the opinion had been expressed that the Full Court's approach in Mobil Oil was incorrect. The gist of the Court of Appeal's concern was a perception that these principles fettered the power of the Court to determine an appropriate penalty. 20 In Australian Competition and Consumer Commission v AGL Sales Pty Ltd [2013] FCA 1030 Middleton J examined the Court of Appeal's reasoning and concluded that he did not consider that the principles had this effect. His Honour observed (at [42]) that: "No one suggests a court at first instance in determining a penalty is to undertake an 'appellate function' upon being given a range or agreed figure. I accept that there is a danger this may occur if the court becomes blinkered by approaching the determination by reference to an agreed position or agreed penalty. However, provided the Court has, as it should, an overall view of the considerations relevant to the making of appropriate orders, being given any indication of an agreed position on penalty can be of assistance. This assistance could be given preferably by the providing of an 'agreed range', or by separate submission of the parties. In asking whether an agreed figure falls within the range of penalties reasonably available does not mean the court does not need to consider independently the appropriate penalty. It must do so in order to determine whether the range is in fact appropriate. As no one precise penalty figure is necessarily the only appropriate figure, the court will often consider the matter in terms of a permissible range in arriving at a final penalty. Of course, no agreed position, whether it be to a range or agreed figure, can be binding on the court." 21 In Australian Competition and Consumer Commission v Luv-a-Duck Pty Ltd [2013] FCA 1136 at [13] Davies J agreed with Middleton J's observations and went on: "In this Court the principles are clear. The agreed penalty will be appropriate if that penalty is, in the Court's view, within the permissible range, and there is a clear statement of the matters that [are] relevant for the Court's consideration." 22 I respectfully agree with their Honours' observations. 23 A penalty will be within the permissible range if it is neither manifestly inadequate nor manifestly excessive: see Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [129] (per Jessup J). 24 In Kelly v Fitzpatrick (2007) 166 IR 14 I identified a non-exhaustive range of considerations which are of potential relevance in determining a penalty for contraventions of civil penalty provisions of Chapters 5 and 6 of the BCII Act. These considerations were derived from a number of decisions of the Court under other legislation. They have been found to be relevant to the fixing of penalties under the BCII Act: see Stuart v Construction, Forestry, Mining and Energy Union (2010) 185 FCR 308 at 331-2 (per Besanko and Gordon JJ). These considerations are not, of course, to be applied rigidly regardless of the circumstances of a particular case. They may, however, provide helpful guidance. In the end, however, it is the responsibility of the Court "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": Construction, Forestry, Mining and Energy Union v Williams (2009) 262 ALR 417 at [29], citing with approval Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [91] (per Buchanan J). 25 The following factors, in my view, have relevance in the circumstances of the present proceeding: The nature and extent of the conduct which led to the breaches. Whether or not the breaches were deliberate. The circumstances in which that relevant conduct took place. The nature and extent of any loss or damage sustained as a result of the breaches. Whether there had been similar previous conduct by the respondent. The size of the respondent. Whether the respondent had exhibited contrition. Whether the respondent had taken corrective action. Whether the respondent had co-operated with the enforcement authority. The need for specific and general deterrence.

The nature and extent of the conduct 26 The relevant conduct was Mr Bell's threat, in the course of a short telephone conversation with Mr Sawyer, that, unless his demands were met, he would take steps to prevent Bendigo Scaffolding working on the site. The threat was made deliberately. It was made by Mr Bell in his capacity as an organiser employed by the CFMEU while acting within the scope of his authority as an employee and officer of that union.

Circumstances in which the conduct took place 27 There had been earlier dealings between Mr Sawyer and the CFMEU. At material times the CFMEU harboured concerns that companies with which Mr Sawyer had been involved had underpaid their workers. 28 Bendigo Scaffolding was not prepared to accede to Mr Bell's demands. Rather than force the issue it chose to withdraw its quotation and not perform the contracted work. As a result it was unnecessary for the CFMEU to take action in an attempt to give effect to its threat.

The nature and extent of loss or damage 29 Bendigo Scaffolding lost the opportunity to do work on the site in accordance with the contract it had entered into with Becon. It may be assumed that Bendigo Scaffolding hoped to make a profit under the contract. There was no direct evidence before the Court to establish the quantum of any anticipated profit or to establish that a reasonable basis existed for Bendigo Scaffolding's expectation. The contract price was about $100,000 including GST. It may, therefore, be inferred that the profit margin would have been calculated in thousands rather than tens of thousands of dollars.

Similar previous conduct 30 The applicant submitted that the CFMEU had engaged in similar misconduct on many occasions. It fixed on examples where the respondent had been found to have contravened provisions of the former Workplace Relations Act 1996 (Cth) ("the WR Act") and the BCII Act which proscribed coercive conduct. 31 In an attachment to her written submissions the applicant provided a table which contained 28 cases in which the CFMEU has been found to have contravened such provisions prior to the date of the conduct which is presently under consideration. In most of the cases cited curial findings of contravention occurred after June 2008. Only one of the cases, decided before this date, had involved a contravention of the BCII Act. 32 While the table supported the applicant's general proposition that the CFMEU had engaged in proscribed coercive conduct on a number of occasions before June 2008, the material suffers from the limitations to which I have just adverted and they limit the weight which is to be accorded to this consideration. 33 The conduct of the CFMEU, acting through Mr Bell, is, nonetheless, another example of the willingness of the Victorian Branch of the Construction and General Division of the CFMEU to act in contravention of the BCII Act when it perceives it to be in its interests to do so. The fact that the union was prepared to persist with conduct which it was aware, as a result of earlier findings that it had contravened the WR Act and the BCII Act and the imposition of penalties for so doing, is a matter of concern to which I will return when dealing with specific deterrence. 34 The CFMEU submitted, faintly, that it was entitled to rely on the fact that Mr Bell had not previously been found to have contravened relevant industrial legislation. Such reliance must be regarded as tenuous given that he was acting on behalf of the CFMEU and the Court is required to determine an appropriate penalty for its conduct.

The size of the CFMEU 35 The CFMEU did not seek to rely on its size or its financial position by way of mitigation.

Contrition 36 There was no material before the Court to suggest that the CFMEU was in any way contrite for having engaged in the contravening conduct. 37 The absence of contrition cannot, as the CFMEU submitted, be treated as an aggravating circumstance: see Cahill v Construction, Forestry, Mining and Energy Union (No 4) (2009) 189 IR 304 at [87].

Corrective action 38 There was no evidence to suggest that the CFMEU has taken any corrective action in relation to the conduct of Mr Bell on this occasion or, more generally, to ensure that similar conduct is not, in future, engaged in by other organisers.

Co-operation with enforcement authorities 39 The CFMEU, as it was entitled to do, defended itself at trial and resisted the director's appeal. 40 The first co-operative action taken by the CFMEU came on the eve of the present hearing when it participated in the preparation of an agreed statement of facts and adopted that statement and it consented to proposed orders.

Deterrence 41 The principal object of the BCII Act was "to provide an improved workplace relations framework for building work to ensure that building work is carried out fairly, efficiently and productively for the benefit of all building industry participants and for the benefit of the Australian economy as a whole": see s 3(1). The BCII Act aimed to achieve this object through various means, including, relevantly: Promoting respect for the rule of law (s 3(2)(b)); Ensuring respect for the rights of building industry participants (s 3(2)(c)); and Ensuring that building industry participants are accountable for their unlawful conduct (s 3(2)(d)). 42 In order to secure these objectives it is necessary that contraventions of the BCII Act should be visited with penalties which will serve to deter others from similar misconduct. Penalties must be imposed at a meaningful level if they are to serve as a general deterrent to others who may be disposed to engage in proscribed conduct: see, for example, Australian Competition and Consumer Commission v IPM Operation and Maintenance Loy Yang Pty Ltd (No 2) [2007] FCA 11 at [66]; Finance Sector Union of Australia v Commonwealth Bank of Australia (2005) 147 IR 462 at [41]. 43 There is also a need for any penalty to have a specific deterrent effect on the CFMEU. It has, as I have already outlined, a deplorable record of contraventions of the BCII Act and similar legislation. The union has not displayed any contrition or remorse for its conduct. The contravention is serious. It involved a successful attempt, on the part of the CFMEU, using threats, to prevent a company, which was otherwise able and willing to do so, to perform work without first entering into an enterprise bargaining agreement with it and unless all of the company's employees were members of the union. Substantial penalties for misconduct, prior to that presently under consideration, have not caused the CFMEU to desist from similar unlawful conduct. As a result this consideration must weigh heavily when determining an appropriate penalty.

CONCLUSION 44 The principal relief sought by the applicant is the imposition of a monetary penalty. The parties jointly propose that that penalty be fixed at $20,000. The CFMEU has also agreed to an order that it pay the applicant's costs in the sum of $42,500. They have proceeded on the basis of a comprehensive statement of facts on which I am prepared to act. Had I been called on to determine a penalty for the misconduct which has given rise to the present application, I may well, having regard to the foregoing considerations, have been disposed to impose a more substantial penalty. The question is, however, whether the proposed figure falls within the permissible range. I am satisfied that it does, albeit, at the bottom end of that range. I am unable to discern any reason, consistently with the guiding principles which have recently been re-endorsed in this Court, not to give effect to the parties' agreement. A penalty of $20,000 will be imposed. 45 The other orders sought by the parties are not controversial and they too should be made. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tracey.