Hogan v Jarvis & Ors [2012] FMCA 189

1. In this application the applicant seeks declarations and penalties in accordance with its application and draft orders which are particularised in Exhibit 1. It should be noted that the application has been amended insofar as it now only seeks orders in respect of contraventions of the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act), which are paragraphs 1 and 2 of the application. It no longer seeks declarations and orders in respect of alleged contraventions of the Fair Work Act 2009 (Cth) (FW Act) contained in paragraphs 3, 4, 5 and 6 of the application. It should be noted that the applicant also abandons a claim for relief against the second respondent, Wayne Carter.
2. The parties in this instance have agreed upon the essential facts which in broad terms are contained in Exhibit 2 and now proceed by way of a penalty hearing for orders against the first, third and fourth respondents. At the outset, it should be observed that the formal matters agreed are these: that the allegations relate to contraventions of s.38 of the BCII Act. Insofar as the contravention is concerned, the applicant is and was at all material times an ABC Inspector and he is entitled to bring these proceedings and to make application for relief. The fourth respondent, the CFMEU, is an industrial association and body corporate, as well as a building association and a building industry participant within the meaning of the BCII Act.
3. The first respondent, Jarvis, who is perhaps the most significant of the two personal respondents, and the third respondent, who was the least significant of the two personal respondents, were both employees and organisers of the CFMEU and were working within a divisional branch of that body. Jarvis worked for the Queensland Builders Labourers Divisional Branch of the CFMEU and Temoho worked within the Queensland Construction Workers Divisional Branch of the CFMEU. They were both officers and agents of the CFMEU and acting in that capacity within the meaning of s.69 of the BCII Act.
4. At the time of these events in November 2009, there was underway a project known as the Gold Coast University Hospital Project. It had a project value of $1.76 billion and at various times employed at least 108 separate subcontractors with up to 1500 workers engaged on the site at any one time. Bovis Lend Lease was the principal contractor and had in respect of many of the workers on the site a union collective agreement with the CFMEU entitled the "Joint Development Agreement Mark 7 2009," which was in place at the time and was expressed to apply to all construction work carried out by Bovis employees on its projects in, among other places, Queensland. There was also extant at that time a "Heinrich Constructions Pty Ltd Union Collective Agreement" which was binding upon Heinrich and the CFMEU. Heinrich was also a subcontractor engaged in the works.
5. The Heinrich Agreement was also expressed to apply to Heinrich employees in respect of building and construction work undertaken by Heinrich in Queensland. Bovis was engaged as the managing contractor for the construction work of the Hospital Project, which was itself building work as defined in the BCII Act. At all times Bovis, the CFMEU and each of the employees of Bovis engaged in construction work on the project (for which classifications were contained in the Bovis Agreement) were building industry participants as defined in that Act. At all material times Heinrich was engaged by Bovis as a contractor to install and erect formwork on the project and it was thereby engaged in building work also as provided for by the BCII Act. Additionally, Heinrich, the CFMEU and each of the employees of Heinrich employed to perform construction work on the project were building industry participants as defined.
6. So far as the relevant events leading up to the dispute are concerned it is agreed that on 26 November 2009 Jarvis and Temoho each entered the project site. The entry by Jarvis and Temoho was made without either of them giving any entry notice in accordance with s.487 of the FW Act to Bovis as the occupier of the site. Following entry, Jarvis and Temoho each spoke with workers on the project site while they were working. Some of the workers stopped working and some of the workers walked to an area outside the lunch rooms where they were gathered together. Those workers included employees of both Bovis and Heinrich. This occurred at a time when the workers were scheduled to perform building work on the project site.
7. Jarvis subsequently spoke with Mark Plummer who was a senior construction manager for Bovis on the project and Peter Kyte who was the senior site manager for Bovis on the project. Plummer asked Jarvis about what was going on. In response, Jarvis said words to the effect that he was at the site to hold a meeting of employees_._ It seems from the submissions made by the first respondent that the purpose of the meeting organised by the respondents was to inform workers about the Wideform dispute. Wideform was another contractor whose presence was not material to the works being undertaken on the site at that time.
8. Subsequently a meeting was held between persons that included Jarvis, Temoho and the workers earlier referred to. This was at the instigation of and organised by Jarvis and Temoho and, as I have said, was convened for the purposes of talking to the workers then present. As a result no work was performed during the meeting. Jarvis and Temoho told the workers present at the meeting words to the effect that Bovis had gone back on a deal to pay the entitlements to Wideform's employees. The workers subsequently voted at that meeting to strike until 30 November 2009 when there would be a report back to them.
9. Later in the morning of 26 November 2009, some of the members of the CFMEU who were employees of Bovis and Heinrich or other employees of Bovis or Heinrich left the project site without the permission of their respective employers and did not return to work that day. Some employees of Bovis and Heinrich and other workers employed to perform work on the project failed to attend or perform work on the following day, 27 November 2009, without obtaining the leave or permission of their respective employers. The workers were scheduled to perform work on this site on 26 and 27 November. Wideform was a subcontractor engaged by Bovis on other projects in Queensland and New South Wales, but that was immaterial to the project then being undertaken.
10. It was in the course of that industrial action on 26 and 27 November that approximately 200 workers withdrew their labour from the site. The conduct was unauthorised and constituted a breach of the BCII Act in that the action amounted to a failure by members of the CFMEU who were employees of Bovis and Heinrich, and other employees of Bovis or Heinrich, to attend for and perform building work within the meaning of the BCII Act. It also represented a failure or refusal to perform any work at all by the persons who had attended the building work within the meaning of the BCII Act. The action of the employees was motivated for varying purposes. One of these was the advancement of the industrial objectives of the CFMEU, more specifically to claim against Bovis for the payment of certain alleged entitlements owed by Wideform to employees of Wideform. Wideform was a former contractor of Bovis, and pressure was applied through the disruption of work to induce Bovis to pay these entitlements.
11. The action adversely affected Bovis and Heinrich as constitutional corporations in their capacities as building industry participants in that scheduled work could not be performed on the project on the dates referred to. The employees of Bovis and Heinrich who were engaged in that action contravened s.38 of the BCII Act by engaging in unlawful industrial action. Jarvis and Temoho each aided or abetted, counselled or procured, members of the CFMEU and other employees employed on that project to fail to attend for or perform work at the project until Monday, 30 November 2009. They induced members of the CFMEU and other employees employed on the project to engage in unlawful industrial action. They were directly or indirectly knowingly concerned in or party to members of the CFMEU and other employees employed on the project engaging in unlawful industrial action.
12. Both Jarvis and Temoho were persons involved in the contraventions for the purposes of s.48(2) of the BCII Act and, accordingly, both have contravened s.38 of the BCII Act. Pursuant to s.69(1)(b) of the Act, the CFMEU, by the actions of Jarvis and/or Temoho is taken to have engaged in unlawful industrial action, and it follows that both Jarvis and Temoho and the CFMEU have contravened s.38 of the BCII Act. A penalty may therefore be imposed upon each of them.
13. In this instance, the parties have agreed to penalties which each submit constitute appropriate penalties in the circumstances. The appropriate approach to the imposition of penalties is well settled and largely agreed by the parties in their written submissions. Broadly, the overriding principle is to ensure that the sentence is in proportion to the gravity of the conduct. The purpose to be served by the imposition of penalties is threefold: punishment, deterrence and rehabilitation. The task with which the court is faced is one of instinctive synthesis, which requires the court to take into account all relevant factors and to arrive at a single result which takes due account of all of them.
14. But 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, with the maximum penalty being reserved for the most serious contraventions. Ultimately, proportionality and consistency commonly operate as a final check on the assessment process. I am conscious of the need to avoid the use of checklists, particularly because of the prospect that such a device may fetter the exercise of the court's discretion. I am also conscious of the need to avoid engaging in a process of comparison between penalties imposed by previous courts with the circumstances facing the court in this instance. However, I am mindful that the penalties imposed by previous courts do assist at least in ensuring to some extent that an even handed and consistent approach to the penalty process is applied.
15. So far as penalties in this area are concerned, it is well accepted that the courts now regard far more seriously any contravention of the industrial laws than has generally been the case in the past. As it was noted by Merkel J in Finance Sector Union of Australia v Commonwealth Bank of Australia:[1]
    • "[72]... It may be that breaches by unions and employers of industrial legislation from time to time have been accepted as part of the give and take of industrial disputation. However, in recent years industrial legislation has increasingly codified and prescribed what is acceptable, and what is unacceptable, industrial conduct. The legislature has, over time, also moved to increase the penalties that may be imposed in respect of unlawful industrial conduct. In my view, any light handed approach that might have been taken in the past to serious, wilful and ongoing breaches of the industrial laws should no longer be applicable. As is apparent from the penalties that I have imposed, I have not accepted that such an approach, which was urged by CBA (which contended that either no penalty or only a nominal penalty was appropriate), is applicable in the present case."
16. I note that those comments were endorsed by the Full Court in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union.[2] That is a case where there was an agreement between the parties as to an appropriate quantum of penalty. I am also mindful of the observations of the Full Court in Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd,[3] where it was observed:
    • "[51] ...
      • (i) It is the responsibility of the Court to determine the appropriate penalty to be imposed under s.76 of the [Trade Practices Act 1976 (Cth)] in respect of a contravention of the [Trade Practices] Act.
      • (ii) Determining the quantum of a penalty is not an exact science. Within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another.
      • (iii) There is a public interest in promoting settlement of litigation, particularly where it is likely to be lengthy. Accordingly, when the regulator and contravenor have reached agreement, they may present to the Court a statement of facts and opinions as to the effect of those facts, together with joint submissions as to the appropriate penalty to be imposed.
      • (iv) The view of the regulator, as a specialist body, is a relevant, but not determinative consideration on the question of penalty. In particular, the views of the regulator on matters within its expertise (such as the ACCC's views as to the deterrent effect of a proposed penalty in a given market) will usually be given greater weight than its views on more "subjective" matters.
      • (v) In determining whether the proposed penalty is appropriate, the Court examines all the circumstances of the case. Where the parties have put forward an agreed statement of facts, the Court may act on that statement if it is appropriate to do so.
      • (vi) 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 is, in the Court's view, 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 within the permissible range."
17. So far as the relevant considerations in this case are concerned, I first take into account the nature and importance of the project generally. It is the biggest hospital development project ever undertaken in Queensland with a value of $1.76 billion. It constitutes a large piece of health infrastructure in a quickly growing part of south-east Queensland. There were 108 separate subcontractors involved in the works, with up to 1500 workers being engaged on any one day of construction. When complete it will provide significant hospital and medical services to that region of Queensland.
18. So far as the nature and extent of the relevant conduct is concerned, I take into account the prominent role of the CFMEU as a significant industrial association in the building and construction industry; the importance of the project to the people of Queensland; the deliberate nature of the conduct on the occasion in question; the period of disruption (two days); and the complaint that the disruption by removing 200 unskilled and skilled employees from the worksite occasioned delay to the critical path of the hospital project. Although nobody from Bovis was able to quantify any loss or damage, it stands to reason that disruption to that critical path would have occasioned damage to some contractor or another.
19. So far as the nature and extent of any loss or damage suffered is concerned, in addition to my earlier observations I simply say that I accept the submission made by the applicant that, given the size and complexity of the project, the fact that 200 workers were involved would have led to loss and damage that was not trivial or insubstantial, notwithstanding any immediate inability to quantify that damage. In saying that, I am conscious of the evidentiary difficulties associated with demonstrating damages in a prolongation claim or loss suffered to building projects due to critical path problems in project management.
20. Concerning similar previous conduct, I have had referred to me, particularly in Schedule A to the submissions prepared by the applicant, material which identifies at least 38 occasions where the fourth respondent has been adversely noted as a party to proceedings seeking imposition of penalties. It is fair to infer from that Schedule that, as was submitted, the fourth respondent does have a history of engaging in conduct that brings it adversely to the attention of the courts and, notwithstanding the imposition of significant or at least not insignificant penalties, it does not appear that the penalties imposed have, to date at least, been sufficient to deter it from re-engaging in that conduct. As I have noted in the course of debate with counsel, perhaps the union needs to review its enterprise risk management processes in order to do more to bring attention to this form of behaviour to those who manage the union.
21. However, in making the observations about other penalties, I am mindful that the fourth respondent is not on this instance being punished again for its prior conduct. Nevertheless, the fact that it has been the respondent to so many similar proceedings indicates that there appears to be a failing within the union's own organisation concerning the risk to which the union is put by reason of the conduct of some of its employees and the general deterrent effects of penalties. Concerning the size of the contravening union itself, I am conscious that it is a large national union and that, by reason of that matter and of course by reason of the fact that it has agreed to the penalty proposed in this instance, it has the financial capacity to meet the penalty and that such a penalty will not cause it undue hardship.
22. Likewise, in respect of the two personal respondents, although I am not provided any specific information concerning their personal circumstances, I also infer from the fact that they agreed with the penalties proposed that the penalties are not so large as to be oppressive to them in the circumstances. I note the submission by the applicant that the breaches involved deliberate acts. I think so much can be readily inferred from the facts which have been agreed between the parties. Insofar as their involvement in the breaches is concerned, it is plain from the agreed facts that the breaches involved direct intervention by paid officials of the CFMEU who arrived unannounced and who commenced to instigate meetings during work time.
23. I further accept that the involvement of the paid employees of the CFMEU is an aggravating factor to be taken into account and permits the court to infer that such actions were not isolated wildcat actions but were planned and deliberate. So far as the post contravention conduct is concerned, I note the submissions that there has at least been cooperation exhibited by the respondents by agreeing on facts and on penalty, although I note that there has been no direct evidence of any contrition or remorse, as might be inferred for instance by a letter of apology. In terms of general and specific deterrence, I am conscious of the need for there to be both a general and specific deterrent in terms of any objective of the overall penalty imposed.
24. It follows, having considered each of those matters, that while I am certainly happy to indicate that I would have considered a higher penalty myself if the matter had been left to me to resolve, I am conscious that the penalty which is agreed between the parties is one which is within an appropriate range of penalties in the circumstances. Accordingly, I ought accept the submission made by the parties that orders be made in terms of the declarations and orders and the penalties included in those proposed declarations and orders contained in Exhibit 1.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of Burnett FM.

[1] [2005] FCA 1847

[2] [2008] FCAFC 170

[3] [2004] FCAFC 72