Director, Fair Work Building Industry Inspectorate v Bolton

Director, Fair Work Building Industry Inspectorate v Bolton - [2016] FCA 817 - FCA 2016 case summary — Zoe

[18]

REASONS FOR JUDGMENT

INTRODUCTION [1] SAD 59 OF 2015 [5] SAD 60 OF 2015 [6] SAD 61 OF 2015 [7]
ISSUE ARISING AT THE HEARING [10]
SUBMISSIONS OF THE PARTIES [14] Submissions of the Director [15] Submissions of the respondents [16] General [16] Additional submissions of the respondents specific to SAD 59 of 2015 [18] Additional submissions of the respondents specific to SAD 60 of 2015 [19] Additional submissions of the respondents specific to SAD 61 of 2015 [20] Submissions as to penalty [21] SAD 59 OF 2015 [21] SAD 60 OF 2015 [23] SAD 61 OF 2015 [25]
CONSIDERATION [27]
1. Nature of the conduct [30]
2. Circumstances in which the relevant conduct took place [34]
3. Nature and extent of any loss or damage sustained as a result of the breaches [40]
4. Similar previous conduct by the respondents [41]
5. Whether the breaches were properly distinct or arose out of the one course of conduct [43]
6. Size of the business enterprise involved [44]
7. Whether or not the breaches were deliberate [45]
8. Whether senior management was involved in the breaches [47]
9. Whether the party committing the breach had exhibited contrition [48]
10. Whether the party committing the breach had taken corrective action [49]
11. Whether the party committing the breach had cooperated with the enforcement authorities [50]
12. Deterrence [51]
CONCLUSION [55]

[19]

INTRODUCTION 1 Before the Court are three separate proceedings - SAD 59 of 2015, SAD 60 of 2015 and SAD 61 of 2015 - in which the Director of the Fair Work Building Industry Inspectorate (the Director) seeks declarations that provisions of the Fair Work Act 2009 (Cth) (the FW Act) have been breached, and pecuniary penalties. There is significant commonality in the three proceedings, in that: in each matter, the Director alleged contraventions of the FW Act wherein individual officials of the Construction, Forestry, Mining and Energy Union (CFMEU) allegedly acted in an improper manner while exercising, or seeking to exercise, rights in accordance with Pt 3-4 of the FW Act; in particular, in each matter the Director alleged entry by the relevant officials onto premises in South Australia, and refusal by the officials to leave when requested; Mr David Bolton is a respondent in both SAD 59 of 2015 and SAD 60 of 2015; the CFMEU is a respondent in all three matters; the same lawyer represented the applicant in all three matters, and the same Counsel represented all respondents in all three matters; a statement of agreed facts was signed in all three cases, and in those statements the respondents admitted contraventions of the FW Act but could not agree as to penalties. 2 Materially: the respondents in SAD 59 of 2015 are Mr David Bolton, Mr Michael Huddy, Mr Brendan Pitt and the CFMEU; the respondents in SAD 60 of 2015 are Mr Aaron Cartledge, Mr David Bolton, and the CFMEU; and the respondents in SAD 61 of 2015 are Mr Michael McDermott and the CFMEU. 3 All three matters were heard together as to penalty. Common submissions as to the legal principles referable to penalties under the FW Act were made by both parties, with further specific submissions made in respect of each matter. The legal representatives submitted that it was appropriate that all three matters be considered together in one judgment. Accordingly, this judgment deals with all three matters. 4 It is useful to set out the background to all three matters and the facts agreed before turning to the submissions of the parties.

[20]

SAD 59 OF 2015 5 The parties filed a Statement of Agreed Facts on 5 August 2015 in which the parties agreed, in summary and materially, as follows: At relevant times Lend Lease Building Contractors Pty Ltd (Lend Lease) was the head contractor on a construction project known as the Southern Expressway Duplication (the SED Project) which was taking place at a site at 3 Majors Road, O'Halloran Hill, South Australia (the Majors Road Site). The Site constituted "premises" for the purposes of Pt 3-4 of the FW Act. Lend Lease was a "building industry participant" within the meaning of s 4(1) of the Fair Work (Building Industry) Act 2012 (Cth) (the FWBI Act). The individual respondents were CFMEU officials. Lend Lease employed employees and engaged subcontractors to perform work at the Majors Road Site (Project Workers). On Tuesday 29 April 2014 at about 6.50 am the individual respondents attended the Majors Road Site. At the time of their attendance project work had ceased at the Majors Road Site because of rain, and workers were in crib sheds. Approximately 150-200 employees and contractors were in the crib shed area for a tool box meeting scheduled to commence at 6.55 am. While on the Majors Road Site, and between 6.50 am and approximately 7.50 am, the individual respondents had discussions with the employees for the purposes of s 484 of the FW Act. Between 6.50 am and 7.00 am at the end of the tool box meeting conducted by Lend Lease employee and Safety Manager Mr Gavin Wright, Mr Bolton stated to several Project Workers words to the following effect: "Is everyone aware that Lend Lease got the improvement notice for evacuations, it says you have to have an evacuation drill" and "Have you had a drill" and "The union action that lead to the improvement notice being issued was justified and it had worked" Until Mr Bolton spoke to the Project Workers, Lend Lease was not aware that the individual respondents were on the Majors Road Site. Discussions were held by the individual respondents with the Project Managers during a break in work caused by rain, being an "other break" for the purposes of s 490(2) of the FW Act. The individual respondents were given directions to leave the Majors Road Site by persons authorised to give those directions. Specifically, Lend Lease employee and Operation Manager Mr Danny Parkinson told each of the individual respondents to leave the Majors Road Site. Mr Parkinson told both Mr Bolton and Mr Huddy that they did not have a proper right of entry. Notwithstanding Mr Parkinson's directions, the individual respondents did not leave the site. The police attended the Majors Road Site, and in the presence of the police Mr Parkinson asked the individual respondents to leave the Majors Road Site. The individual respondents then left. The individual respondents were seeking to exercise rights in accordance with s 484 of the FW Act. At the time of the entry, the individual respondents had not provided Lend Lease with an entry notice in respect of their entry to the Majors Road Site on 29 April 2014 for the purposes of s 487 of the FW Act. The Fair Work Commission had not issued an exemption certificate for the entry. The CFMEU is taken by the operation of s 793 of the FW Act to have engaged in the conduct of the individual respondents. By reason of these matters, the individual respondents, as permit holders exercising or seeking to exercise rights in accordance with s 484 of the FW Act, acted in an improper manner in contravention of s 500 of the FW Act. The CFMEU contravened s 500 of the FW Act.

[21]

SAD 60 OF 2015 6 The parties filed a Statement of Agreed Facts on 5 August 2015 in which the parties agreed, in summary and materially, as follows: At relevant times Lend Lease was the head contractor on a construction project known as the Tonsley Redevelopment Project (the TR Project) which was taking place at a site at Alawoona Avenue, Mitchell Park, South Australia (the Flinders University Site). Lend Lease was a "building industry participant" within the meaning of s 4(1) of the FWBI Act. The individual respondents were CFMEU officials. Mr Cartledge was the Secretary of the CFMEU Construction and General Division, South Australian Divisional Branch. At all relevant times the Flinders University Site constituted "premises" for the purposes of Pt 3-4 of the FW Act, and Lend Lease was the occupier of those premises for the purposes of the FW Act. On 22 May 2014 at around 10.30 am Mr Bolton and Mr Cartledge attended the Flinders University site to speak about enterprise bargaining with employees of a subcontractor "GMR" who were on the site. Mr Bolton and Mr Cartledge were directed to leave by Mr Brenton Crabb, the site manager, who told them that they were not permitted on site without a right of entry notice or permits. Mr Cartledge told Mr Crabb words to the effect that he and Mr Bolton were there to speak to the GMR employees about the enterprise bargaining agreement and would do so doing their break. Mr Bolton and Mr Cartledge proceeded to the lunch sheds and spoke to Project Workers at about 10.30 am during a smoko break being a break in work for the purposes of s 490(2) of the FW Act. Mr Bolton and Mr Cartledge did not leave the Flinders University Site until about 11.30 am. Mr Bolton and Mr Cartledge were seeking to exercise rights in accordance with s 484 of the FW Act. As at the time of the entry Mr Bolton and Mr Cartledge had not provided Lend Lease with an entry notice for the purposes of s 487 of the FW Act within the requisite period or at all. The Fair Work Commission had not issued an exemption certificate for the entry. The CFMEU is taken by the operation of s 793 of the FW Act to have engaged in the conduct of the individual respondents. By reason of these matters, the individual respondents, as permit holders exercising or seeking to exercise rights in accordance with s 484 of the FW Act, acted in an improper manner in contravention of s 500 of the FW Act. The CFMEU contravened s 500 of the FW Act.

[22]

SAD 61 OF 2015 7 The parties filed a Statement of Agreed Facts on 22 June 2015 in which they agreed, in summary and materially, as follows: At relevant times Mossop Group Pty Ltd (Mossop) was the head contractor on a construction project known as St Mark's College (the St Mark's Project) which was taking place at a site situated at Kermode Street, North Adelaide (the Kermode Street Site). The Kermode Street Site constituted "premises" for the purposes of Pt 3-4 of the FW Act. At all relevant times Mr McDermott was an officer and agent, and therefore an official of the CFMEU for the purposes of s 793 of the FW Act, and acting within the scope of his actual or apparent authority. Mr McDermott held an entry permit for the purposes of s 512 of the FW Act. Mossop employed employees and engaged subcontractors to perform work at the Kermode Street Site, which workers were eligible to be members of the CFMEU. Mossop was the occupier of the premises for the purposes of Pt 3-4 of the FW Act. On 4 June 2014 at about 6.50 am, Mr McDermott attended the Kermode Street Site. Site opening hours were 7.00 am through to 4.00 pm, and work was due to commence at 7.00 am. On arrival Mr McDermott had a conversation with Mr Peter Bruns, an employee and the Safety Supervisor at Mossop, to the following effect: McDermott: "who is on site today" Bruns: "concreters and steel fixers" McDermott: "what companies are they from" Bruns: "you already know who they are" McDermott: "I want to have a chat to the boys" Bruns: "no you can't do that without your documentation" McDermott: "you know I'm not going to do that" Bruns: "well you can't come on site" Mr McDermott proceeded on to the Kermode Street Site. Mr McDermott drew to Mr Bruns' attention the adequacy of pre-dawn lighting. Between 6.50 am and 7.10 am Mr McDermott held or attempted to hold discussions with employees for the purposes of s 484 of the FW Act outside a lunch shed located at the site. Discussions were held with workers for between 10 and 20 minutes. At between 6.50 am and 6.59 am Mr Bruns engaged in a discussion to the following effect: Bruns: "you cannot enter the site without the correct right of entry notice" McDermott did not respond. Bruns: "you are not allowed to enter the site without right of entry, if you continue to stay on site I will call the police". McDermott: "are you going to be one of those dickheads are you? Call them then, they are only going to escort me off if I'm still here". Bruns: "dealing with fuckwits like you yes I am". Mr Bruns telephone the police at 6.59 am, reported the unauthorised entry and requested that they attend the site to have Mr McDermott ejected. Mr McDermott entered the site, and remained there until approximately (or no later than) 7.10 am. Mr McDermott asked workers how many were union members, and, in the presence of Mr Bruns, spoke with the workers about union membership and benefits. During this time Mr McDermott twice requested Mr Bruns to stand somewhere else while he spoke with the workers. Mr Bruns refused. Mr McDermott turned to the workers and stated words to the effect "this is what we are fighting against". Mr McDermott was given directions not to enter the site and to leave the site by a person with authority to give those directions, namely Mr Bruns. the CFMEU was taken by operation of s 793 of the FW Act to have engaged in the conduct of Mr McDermott. Mr McDermott was a permit holder exercising, or seeking to exercise, rights in accordance with s 484 of the FW Act, and acted in an improper manner in contravention of s 500 of the FW Act. the CFMEU contravened s 500 of the FW Act. 8 It is common ground that s 500 of the FW Act is a civil penalty provision, and the maximum penalty available for a contravention is 300 penalty units for a body corporate and 60 penalty units for an individual. At the time of the relevant conduct the value of a penalty unit was $170, meaning that the maximum penalty for a contravention of s 500 of the FW Act is $51,000 for the CFMEU and $10,200 for each of the individual respondents. 9 All three matters were heard on 25 November 2015 in respect of penalties, prior to the delivery by the High Court of its judgment in Commonwealth of Australia v Director, Fair Work Building Industry Inspector [2015] HCA 46. The parties subsequently filed submissions as to penalty range.

[23]

ISSUE ARISING AT THE HEARING 10 At the hearing the lawyer for the Director informed the Court of two recently delivered decisions of the Court which he submitted were relevant, namely Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 1287 (in which Mr Cartledge was also a respondent) and Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 1293. 11 Further, as I noted earlier the Director made additional submissions (not previously raised in written submissions) in respect of the nature of the admitted improper conduct. The specific point of distinction concerned whether that improper conduct included the initial entry on to the premises without giving the requisite prior notice. 12 In summary, the respondents submitted that: the identification of this issue at the hearing as a point of contention between the parties was the first they had heard of it as an issue in dispute; and the only improper conduct of the respondents was the failure of the individual respondents to leave when requested to do so. As established by Plenty v Dillon [1991] HCA 5; (1991) 171 CLR 635 there is a common law right to enter on to property for the purposes of advising of one's presence and seeking entry. 13 The Director disagreed, submitting that: the respondents' approach was contrary to the statement of agreed facts in each case; the improper conduct of the respondents included the initial entry on to the premises without providing the requisite prior notice required by the FW Act; the contraventions arose from the individual respondents seeking to exercise rights in accordance with s 484 without giving the requisite notice; that the respondents' contraventions included the initial entry was a matter which went to the level of contravention; the Court should take into account the totality of the respondents' conduct, including the nature of their entry on to the premises to exercise statutory rights without giving requisite notice.

[25]

Submissions of the Director 15 In summary, the Director claimed as follows: The individual respondents have different degrees of culpability. No quantifiable economic loss or damage appears to have been suffered as a result of the conduct of the respondents, Lend Lease employees had time taken up to monitor the unauthorised entry of the individual respondents. All individual respondents have previously contravened industrial legislation. Two previous decisions of the Court concerning Mr Bolton are Director, Fair Work Building Industry Inspectorate v Cartledge [2014] FCA 1047 (where Mr Bolton was penalised $4,000) and Director, Fair Work Building Industry Inspectorate v Stephenson [2014] FCA 1432 (where Mr Bolton was penalised $2,000 and $1,800). Mr Cartledge had contravened industrial legislation on one previous occasion and was penalised $3,000: Director, Fair Work Building Industry Inspectorate v Cartledge. Mr McDermott had contravened industrial legislation on two previous occasion: in Director, Fair Work Building Industry Inspectorate v Stephenson he was penalised $4,000 and in Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2014] FCA 160 he was penalised $1,320. Mr Huddy had contravened industrial legislation on one previous occasion and was penalised $800: Director, Fair Work Building Industry Inspectorate v Stephenson. Mr Pitt had contravened industrial legislation on three previous occasions: in Director, Fair Work Building Industry Inspectorate v Cartledge he was penalised $3,000 and $6,000, in Director of the Fair Work Building Inspectorate v CFMEU [2013] FCA 515 he was penalised $3,000 and in Director of the Fair work Building Industry Inspectorate v Stephenson he was penalised $3,500. Prior contraventions by a number of the respondents had deprived them of any mitigation which would be available if they had not previously contravened the FW Act, and such contraventions demonstrated a history of engagement in prior conduct. The CFMEU has a significant record of non-compliance with the provisions of industrial legislation. The individual respondents have admitted acting in an improper manner. The contraventions were deliberate and indifferent. The respondents are entitled to credit for admission of facts. At the time of the relevant conduct the individual respondents were the holders of entry permits, which entitlement conferred obligations on them. Although they no longer held entry permits, concepts of general and individual deterrence remain relevant factors in assessing penalty, and it would be an inadequate deterrent to others if it could be said that no longer holding an entry permit after the event made a material difference to any penalty otherwise applicable. In Director of the Fair Work Building Industry Inspectorate v Bragdon (No 2) [2015] FCA 998 a Judge of this Court took the view that penalties were not providing any real deterrent, and pursuant to s 545 of the FW Act imposed an order to the effect that the penalties should be paid by the individuals themselves, with no reimbursement by the union or anyone else. The Court in this case should impose similar orders. Any penalties ordered should be paid to the Commonwealth.

[33]

CONSIDERATION 27 Principles relevant to a consideration of appropriate civil penalties for contraventions of the FW Act were discussed by Barker J in Australian Building & Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977. Generally, his Honour observed: 6. The purpose to be served by the imposition of penalties is at least threefold: (1) Punishment, which must be proportionate to the offence and in accordance with prevailing standards; (2) Deterrence, both personal (assessing the risk of re-offending) and general (a deterrent to others who might be likely to offend); and (3) Rehabilitation. See Ponzio v BP Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543 (Ponzio), Lander J at [93]-[94]. 7. The task which a sentencing judge is faced with is one of "instinctive synthesis": Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560 (Australian Ophthalmic Supplies), Gray J at [27] and Graham J [55]. Such a process requires that a court take into account all relevant factors and to arrive at a single result which takes due account of them all: see Wong v The Queen [2001] HCA 64; (2001) 207 CLR 584 at [74]-[76]; Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 (Markarian), Gleeson CJ, Gummow, Hayne and Callinan JJ at [37]-[39]. The penalty must not be so great as to crush the person upon whom the penalty is imposed or reveal the person as a scapegoat: Ponzio at [93] (Lander J); McDonald v R [1994] FCA 956; (1994) 48 FCR 555 at 563. The maximum penalty is reserved for only the most serious of contraventions: Markarian at [31]. Proportionality and consistency commonly operate as a final check on the penalty assessed: Australian Ophthalmic Supplies at [53]. 28 More specific principles were identified at [15]: (1) The nature and extent of the conduct which led to the breaches; (2) The circumstances in which that relevant conduct took place; (3) The nature and extent of any loss or damage sustained as a result of the breaches; (4) Whether there had been similar previous conduct by the respondent; (5) Whether the breaches were properly distinct or arose out of the one course of conduct; (6) The size of the business enterprise involved; (7) Whether or not the breaches were deliberate; (8) Whether senior management was involved in the breaches; (9) Whether the party committing the breach had exhibited contrition; (10) Whether the party committing the breach had taken corrective action; (11) Whether the party committing the breach had cooperated with the enforcement authorities; and (12) The need for specific and general deterrence. 29 These issues are relevant to the proceedings before me, and can be applied in all three proceedings in the following respects.

[35]

Circumstances in which the relevant conduct took place 34 It is common ground that, at material times, the individual respondents were all officials of the CFMEU for the purposes of s 793 of the FW Act, and in relation to their conduct were acting within the scope of their actual or apparent authority as officials of the CFMEU. 35 All individual respondents were, at that time, holders of entry permits under the FW Act. 36 In SAD 59 of 2015, it is accepted that until Mr Bolton spoke to workers on the site, Lend Lease was not aware that Mr Bolton, Mr Huddy or Mr Pitt were on the site. Further, the presence of Mr Bolton, Mr Huddy and Mr Pitt on the site for approximately one hour interrupted a tool box meeting being conducted by Lend Lease employee and Safety Manager Gavin Wright in the presence of workers on the site. 37 The respondents point out that, at the time of the visit of Mr Bolton, Mr Huddy and Mr Pitt, the workers were not engaged in work because of rain. In my view this is a happy coincidence rather than a factor which should be taken into account in mitigation of the circumstances surrounding the contraventions. 38 In SAD 60 of 2015, it is accepted that after they arrived, Mr Bolton and Mr Cartledge ignored a direction by Mr Brenton Crabb of Lend Lease to leave the site, and that they proceeded to lunch sheds to have discussions with workers. It appears that they arrived at about 10.30 am and remained for approximately one hour. That their arrival appeared to coincide with a smoko break is, in my view, another happy coincidence - that their visit lasted for one hour was an unacceptable interruption of the work day of the workers at the site. 39 In SAD 61 of 2015, it is accepted that although Mr McDermott arrived at the site before the commencement of the work day, he ignored a direction that he not enter the site, and that he remained on the site for approximately 20 minutes. While this is not a particularly lengthy period of time, it was nonetheless a disruption to the beginning of the work day.

[45]

Deterrence 51 While I am satisfied that the contraventions are at the lower end of the range of seriousness, I also note that: the CFMEU is a "repeat offender" which generally appears indifferent to imposition of penalties for contraventions of the FW Act; each of the individual respondents had contravened the FW Act at least once prior to the contraventions in this case. 52 Further, I am not persuaded that the loss of entry permits by the individual respondents was an adequate deterrent in these circumstances. Similarly, I find the respondents' submission that there is no role for specific deterrence because none of the respondents continues to hold an entry permit to be both cynical and specious, and I reject it. 53 At the hearing the Director sought orders in accordance with those made by a Judge of this Court in Director of the Fair Work Building Industry Inspectorate v Bragdon (No 2) [2015] FCA 998. I note that an appeal against this decision was allowed by the Full Court in Bragdon v Director of the Fair Work Building Industry Inspectorate [2016] FCAFC 64. In that judgment the Full Court observed, inter alia, that there was some impracticality associated with an order prohibiting reimbursement of a union official by the union when there was no real ability to ensure compliance with the order. Their Honours also observed: 91. … [T]he 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. 54 In my view these principles are relevant in the proceedings before me. Accordingly, I am not prepared to make orders similar to those made by the primary Judge in Bragdon, as submitted by the Director.

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