REASONS FOR JUDGMENT
1 On 23 October 2015, I gave judgment in The Red & Blue Case [2015] FCA 1125. The questions which remain for determination relate to the penalties proper to imposed upon the respondents for the contraventions of ss 355 and 346 of the Fair Work Act 2009 (Cth) ("the FW Act") there referred to, to whether the second respondent, Ralph Edwards, should be obliged to pay any penalty imposed upon him personally, without reimbursement, and to pre-judgment interest on the compensation then awarded.
2 Mr Edwards' threat on 14 June 2013 was a serious one, in terms both of the thing which he required Red & Blue to do and of the consequences which he threatened if that thing were not done. That a person should not be required, under threat of coercion, to employ a particular person is the core policy objective of s 355. Mr Edwards' conduct could not have been a clearer instance of a contravention of this provision. Likewise, the action which he threatened to take - effectively, to put Red & Blue out of business - was as prejudicial an outcome as any that might be suffered by a trading entity.
3 It is often said that a consideration available to be taken into account when a statutory penalty is to be imposed on a corporation is whether the conduct by which the corporation contravened the provision in question was done by, or at the instigation of, senior management of the corporation. In this instance, it clearly was. The threat of 14 June 2013 was no mere transgression by a subordinate functionary, but a wilful, conscious, act taken by the president of the relevant branch of the Union, and could only have been intended to have an impact of the kind prohibited by the section.
4 It has been repeatedly said that an important - probably the main - function of a regime of civil penalties is to secure observance of the law by placing a price upon conduct which contravenes the law. That is to say, the objective is deterrence, both specific and general. Regrettably, in the circumstances of the Union, specific deterrence has become a major consideration in an exercise of the kind with which I am presently concerned. In written submissions filed on his behalf, the applicant summarised a number of the things that have recently been said by judges of this court on the subject of the Union's preparedness to ignore the statutory prohibitions to which it is subject. Counsel for the respondents did not engage with the point being made in these submissions: indeed, he recognised that the Union's record of contravention was a serious one. This was a concession fairly and appropriately made, albeit that, as will appear, I consider that reference to the Union's record as "serious" understates the situation to a significant degree.
5 The passage in the applicant's written submissions to which I have referred was as follows:
The CFMEU's repeated contravening conduct has been the subject of sustained judicial criticism over a long period of time. For example:
(a) On 9 May 2002, Justice Cooper made the following observation:
If an industrial organisation turns a blind eye, or does not concern itself as to the manner and methods employed by officers, servants or agents of the industrial organisation to achieve what they see as the organisation's ends, the organisation is at risk of being heavily penalised where the means adopted are prohibited and exhibit the worst features of the proscribed conduct.
In the present case, the first and second respondents have chosen to give no evidence as to what those in authority knew of the conduct of the third and fourth respondents at and prior to the matters complained of. Nor is there any evidence as to what, if any, action was taken by the organisation to counsel, or moderate the behaviour of, the officers for the future. [Hamberger v Construction, Forestry, Mining and Energy Union [2002] FCA 585 [20]-[21]]
(b) On 11 April 2008, Justice Gyles made the following observation:
A number of findings involving unlawful behaviour by officials related to the CFMEU have been made in recent years ... [His Honour then cited 12 cases] ... ... These various cases illustrate that the federal body has not been effective in ensuring that officials act in accordance with the law. I note that there is no evidence of offending officials... suffering any serious disciplinary penalties.
In my opinion, notwithstanding the purely vicarious nature of the liability of the CFMEU, the penalty in this case, when compared with the maximum penalty, should adequately reflect the systematic nature of the failure of the CFMEU to deter or prevent actions of the kind involved in this case and act as a spur towards effective action by the CFMEU and the State entities connected with it. [A & L Silvestri Pty Limited v Construction, Forestry, Mining and Energy Union [2008] FCA 466 [13]-[14]]
(c) On 29 May 2009, Justice Jessup said:
... the history tends to suggest that the Union has, with respect to anticoercion and similar provisions of industrial laws, what the High Court in Veen described as 'a continuing attitude of disobedience of the law'... [Williams v Construction, Forestry, Mining and Energy Union and Mates (No 2) (2009) 182 IR 327 [29]]
(d) On 10 September 2009 Justices Goldberg, Jacobson and Tracey of the Full Court of the Federal Court referred to:
the litany of contraventions … [and] the many prior contraventions of relevant statutory proscriptions by the Union ... indicating a propensity, on the part of the Union, to engage in proscribed conduct. [Draffin v CFMEU & Ors (2009) 189 IR 145 [70], [79] and [92]]
(e) On 21 November 2013, Justice Tracey said:
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... 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. [Cozadinos v Construction, Forestry, Mining and Energy Union [2013] FCA 1243 [43]]
(f) On 23 December 2014, Justice White observed:
The Director provided a schedule of the occasions on which the CFMEU has been dealt with by Courts for contraventions of industrial legislation. It is fair to describe the CFMEU record as dismal. Since 1999, the CFMEU has had penalties imposed on it by a Court on numerous occasions. ...The record indicates an attitude of indifference by the CFMEU to compliance with the requirements of the legislation ... It also indicates that deterrence must be a prominent consideration in the fixing of penalties in the present cases. [Director of the Fair Work Building Industry Inspectorate v Stephenson (2014) 146 ALD 75 [76]-[77]]
(g) On 20 April 2015, Justice Tracey observed:
The present conduct of one of its officials adds to this depressing litany of misbehaviour. It evidences an ongoing disregard for the rule of law and highlights the need for the imposition of meaningful penalties within the limits imposed by the Act. [Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 353 [96]-[97]]
(h) On 1 May 2015, Justice Tracey observed:
Underlying the various contraventions some consistent themes are apparent. In seeking to achieve its desired outcomes the CFMEU had available to it lawful processes which it could have pursued. It chose, instead, to prosecute its objectives by means which it must have known or, at least, should have known, were unlawful. Not for the first time the CFMEU sought to impose its will by means of threats and coercion against employers. Its approach was one of entitlement: it was free, despite legal constraint, to deploy its considerable resources in order to achieve its industrial objectives. The concept of the rule of law was anathema to it. [Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2015] FCA 407 [103]]
(i) On 12 June 2015, Justice Logan observed in reference to the CFMEU:
An industrial organisation, be it an employer organisation or an employee organisation, which persistently abuses the privilege by engaging in unlawful conduct cannot expect to remain registered. [Director, Fair Work Building Industry Inspectorate v Cradden [2015] FCA 614 [9]
His Honour later described the CFMEU as having an "outrageous disregard" for "Australian industrial norms". [[2015] FCA 614 [49]]
Second reference in (i) at end of second para- [[2015] FCA 614 [49]]
(j) On 3 July 2015, Justice Gilmour observed:
The CFMEU's long history of its officials conducting themselves unlawfully ... calls for a significant component of specific deterrence. [Director of the Fair Work Building Industry Inspectorate v Upton [2015] FCA 672 [61]]
(k) On 14 August 2015, Justice Mansfield observed:
There is clearly, as other judges have recorded, a strong record of noncompliance on the part of the Union through its officers with provisions of industrial relations legislation, although that does not mean that a disproportionate penalty can or should be imposed. I note that significant past penalties have not caused the Union to alter its apparent attitude to compliance with the entry provisions and restrictions under the FW Act.
There is clearly an ongoing need for an order to be made for a pecuniary penalty which has a deterrent effect upon the Union and signals to others who may consider engaging in such conduct or like conduct that it is inappropriate to do so. [Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 3) [2015] FCA 845 [24]-[25]]
(l) On 10 September 2015, Justice Flick observed:
But for the past history of contraventions on the part of the CFMEU, a penalty would have been imposed of $175, 000; when that past history is taken into account it is considered that the penalty should be $225, 000. Approached in this manner, the reasoning at least has the advantage of transparency. The penalty of $225,000 is proportionate to the contraventions that have been found to have occurred. Rather than the penalty of $225,000 being seen as an increase in the penalty "because of prior convictions", it is more correctly characterised as a penalty that may better serve the objective of deterrence. [Director of the Fair Work Building Industry Inspectorate v Bragdon (No 2) [2015] FCA 998 [21]]
(m) On 4 November 2015, Justice Jessup observed:
As has become customary in cases such as this, the applicant has placed before the court a schedule of the Union's previous contraventions of civil penalty provisions in the FW Act, and of corresponding provisions in the Building and Construction Industry Improvement Act 2005 (Cth). The pattern of contravention which emerges from material such as this has been the subject of comment by the court on a number of occasions. The schedule paints, one would have to say, a depressing picture. But it is more than that. I am bound to say that the conduct referred to in the schedule bespeaks an organisational culture in which contraventions of the law have become normalised. [Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (The Mitcham Rail Case) [2015] FCA 1173
6 To the observations set out above should now be added the following, from the judgment of Tracey J in Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 1213 at [62]-[63]:
The circumstances of these cases were not identical to those in the present case. They, nonetheless, bespeak a deplorable attitude, on the part of the CFMEU, to its legal obligations and the statutory processes which govern relations between unions and employers in this country. This ongoing willingness to engage in contravening conduct must weigh heavily when the need for both specific and general deterrence is brought to account.
Neither the CFMEU nor any individual respondent is to be punished again for earlier misconduct. They are, however, to be punished more severely than they would have been had they had no adverse record or been responsible for only a few isolated incidents over a period of many years. Their continued willingness to engage in contravening conduct supports the view that earlier penalties, some of them severe, had not had a deterrent effect: cf Veen v R (No 2) (1988) 164 CLR 465 at 477-8. The longer such recidivism continues the more likely it is that this consideration will carry greater weight than the principle that the maximum available penalty must be reserved for the worst possible offending.
7 An attachment to the applicant's submissions demonstrated that the Union has been found to have contravened industrial legislation on more than 100 occasions since about 2003. Over a similar period, the contraventions for which the branch of which Mr Edwards is the president was responsible numbered more than 20. This record, and the judicial observations to which I have referred, suggests that the penalties heretofore imposed upon the Union have been inadequate to provide the specific deterrence which is so conspicuously required in this area of the law. Counsel for the respondents submitted that, however bad may be the Union's prior record of contravention, it would be wrong for the court to impose a penalty which was disproportionate to the gravity of the particular contravention under consideration. I accept that a principle in these terms has found expression in the past, but never, so far as I am aware, in a situation in which the previous record is as egregious as that of the Union in the circumstances presently facing the court.
8 In giving weight to the Union's record of contravention, as I shall do, the court is not using the present occasion to supplement the penalties imposed for different conduct on previous occasions. Rather, the court is giving appropriate recognition to what is, on any view, an important purpose of the regime of penalties for which the legislation provides: deterrence. Of all purposes, that is the most strongly linked to the public interest in compliance with the law. If contravention of a law is visited with penal outcomes which are demonstrably inadequate to achieve the purpose of the law, it might as well not be a law at all. It is in this sense, in my view, that the principle of proportionality is amply reflected in the imposition of a penalty which takes due account of the importance of specific deterrence.
9 The size of the contravenor is relevant to the achievement of the deterrence object: Australian Competition and Consumer Commission v BAJV Pty Ltd [2014] FCAFC 52 at [40]-[41]. The accounts of the Union, placed into evidence on behalf of the applicant, disclose that, in the year to 31 December 2014, the branch of which Mr Edwards is president recorded an operational surplus of $2,982,143, and had assets in the way of cash, and cash equivalents, in the sum of $14,353,117. Counsel for the respondents did not submit that the imposition of any penalty within the range open to the court would constitute a financial burden for the Union. But the authorities disclose that the discretionary consideration of size goes beyond the matter of burden: the size of a contravenor can, and should normally, be taken into account in the court's assessment of the deterrent effect of any penalty which it imposes.
10 The case is devoid of any mitigating circumstances. The Union has shown no contrition, and has not cooperated with the regulator. I accept the submission made on behalf of the respondents that neither of these circumstances should be regarded as an aggravating one. On the other hand, on the facts of the case, and on the way it has been conducted, there is no circumstance to which counsel could point as tending to exert a moderating influence upon the level of the penalty which the court would otherwise impose.
11 The maximum penalty that might be imposed upon the Union for each of the contraventions with which this case is concerned is $51,000.
12 Giving due weight to each of the matters to which I have referred, I consider that a penalty of $45,000 would be appropriate in respect of the Union's contravention of s 355 of the FW Act on 14 June 2013.
13 Turning to the circumstances of Mr Edwards, because of the position which he holds in the relevant branch of the Union, much of what I have said above, particularly on the matter of specific deterrence, applies to him also. He has himself, on a number of occasions, been found to have contravened industrial laws analogous to those relied upon by the applicant in the present case. Most recently, a number of very serious findings were made against him by Tracey J in the proceeding referred to in para 6 above. His direct and wilful initiation of the conduct for which the Union has been found responsible in this case does, of course, stand front and centre in any consideration of the penalty that would be appropriate for imposition upon him.
14 In Mr Edwards' case, the maximum permissible penalty is $10,200.
15 I take the view that a penalty of $7,500 would be appropriate in respect of Mr Edwards' contravention of s 355 of the FW Act on 14 June 2013.
16 Before moving to the other contraventions the subject of my reasons of 23 October 2015, I shall consider a submission made on behalf of the respondents that the contraventions on all three occasions - 14 and 22 June and 17 July 2013 - should be regarded as a single contravention only by each of the Union and Mr Edwards. There was in each case, it was submitted, a "course of conduct" constituted by the factual and contextual linkages between them. I cannot accept that submission. The instances of conduct were separate in point of time, and each self-evidently required a conscious determination on the part of Mr Edwards to carry it out. To take the two occasions which were closest in point of time, between the threat which Mr Edwards uttered on 14 June and the time when that threat was put into effect, Mr Edwards had, as they say, eight sleeps. On no view was the respondents' conduct at the La Scala site on 22 June merely a continuation of the conduct which commenced on 14 June. In relation to the conduct on the two latter dates - 22 June and 17 July - the separation is more marked. Indeed, as pointed out in my earlier reasons, some tolerance towards Red & Blue continuing in business appeared to have been shown by the respondents once Mr Notarfrancesco agreed to interview Mr Cannon. It was only after that interview ended unproductively that the screws were again tightened on Red & Blue by the respondents.
17 With respect to the Union's contraventions of s 355 of the FW Act on 22 June 2013, for reasons which will already be clear, I consider that a penalty of $45,000 would be appropriate. Likewise, with respect to Mr Edwards' like contravention on that occasion, I consider that a penalty of $7,500 would be appropriate.
18 As mentioned in my reasons of 23 October 2015, the respondents' conduct on 22 June 2013 also constituted contraventions of s 346 of the FW Act. Subject to what I say in para 21 below, I can see no reason to view those contraventions differently from the contraventions of s 355. I consider, therefore, that a penalty of $45,000 would be appropriate for the Union, and, that a penalty of $7,500 would be appropriate for Mr Edwards, in respect of its, and his, contravention of s 346.
19 The considerations which bear upon the determination of penalties in respect of the respondents' conduct on 17 July 2013 are indistinguishable from those which I have applied to the determination of penalties in respect of 22 June 2013. The same penalties would be appropriate here, under both s 355 and s 346.
20 Although I have determined what would be the appropriate penalty, for each of the respondents, for Mr Edwards' conduct in respect of the La Scala site on 22 June 2013 and the Yarra Street site on 17 July 2013 under each of ss 355 and 346, it was not suggested on behalf the applicant that the respondents should be obliged to pay penalties twice for no better reason than that that conduct could be characterised as contrary to two provisions of the legislation. But there are important distinctions between ss 355 and 346 which should not, in my view, be airbrushed out of the record for no better reason than the commonality of much of the conduct which led to findings of contraventions of each. In these circumstances, the approach which I propose to take is analogous to that which I recently took in General Manager of the Fair Work Commission v Thomson (No 4) [2015] FCA 1433 at [8]-[11].
21 Finally, counsel for the applicant submitted that I should make an order of the kind made by Flick J in Director of the Fair Work Building Industry Inspectorate v Bragdon (No 2) [2015] FCA 998 expressly requiring Mr Edwards to pay the penalties imposed upon him personally, and prohibiting both him and the Union from entering into any arrangement for reimbursement by the Union. For reasons which I gave in The Mitcham Rail Case [2015] FCA 1173 at [36]-[40]], I am not disposed to follow that course.
22 Turning finally to the totality principle, I approach the matter on the assumption that the Union and Mr Edwards will each pay one penalty in respect of each occasion upon which one or more contraventions by it or him occurred. Effectively, under my reasons to date, the Union would pay a total of $135,000 and Mr Edwards would pay $22,500. Even taking account of the poor record of compliance which each has, I consider that these totals are higher than is reasonably proportionate to the total of the culpability of the respondents as found on the facts of this case. To reflect the totality principle, I shall adjust each of the total penalties to be paid by the Union to $42,000 and by Mr Edwards to $7,000.
23 According to the applicant's calculations, the prejudgment interest attracted by the compensatory order which I made on 23 October 2015 is $2,675.67. The respondents offered no resistance to the correctness of this calculation; nor to the further submission made by counsel for the applicant that the compensation sum, together with interest, be paid to the applicant's solicitors for transmission to Red & Blue. I shall proceed in accordance with the applicant's submission.
I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup.