REASONS FOR JUDGMENT
1 These proceedings were commenced by an Application filed 5 March 2008. The proceedings were brought by the applicant, John Holland Pty Limited, ACN 004 282 268, against the Maritime Union of Australia as the first respondent, Warren Smith as the second respondent, and a series of other natural persons as the third to sixteenth respondents inclusive. In the Further Amended Statement of Claim, filed 18 December 2009, it was contended that the second respondent was the Sydney Branch Secretary of the first respondent and that fact is not in issue. The third to sixteenth respondents were at all material times employees of Construction Diving Services Pty Limited ('Construction Diving Services').
2 A Notice of Motion was filed by the applicant on 17 December 2008, which sought an order striking out paragraph 5 of the first to fifteenth respondents' Defence. That motion was heard on 23 March 2009 and the subject of a judgment delivered on 5 May 2009. An order was made that certain words be struck out of paragraph 5 of the first to fifteenth respondents' Defence filed 25 July 2008.
3 Subsequent to 5 May 2009 the matter came back before the court for directions on 12 October 2009, 27 October 2009 and 7 December 2009. On 7 December 2009 the Court was informed that the parties proposed to file an Agreed Statement of Facts and to submit to the Court that an agreed penalty of $15,000 should be imposed for a single breach of s 38 of the Building and Construction Industry Improvement Act 2005 (Cth) ('the Act').
4 On 7 December 2009 a direction was given for the filing and service of a Further Amended Application and a Further Amended Statement of Claim, on or before 18 December 2009, to accommodate the agreement which had been announced on 7 December 2009. A direction was also given for the parties to file an Agreed Statement of Facts on or before 18 December 2009. The relevant Further Amended Application and Further Amended Statement of Claim and the required Agreed Statement of Facts were all duly filed on 18 December 2009.
5 The Australian Building and Construction Commissioner has intervened in the proceedings, so that as presently constituted the parties are the applicant, the first to sixteenth respondents and the intervener.
6 At the commencement of the hearing today it was indicated that no relief was sought against the sixteenth respondent, who did not appear. The court was invited to make an order dismissing the proceedings against the sixteenth respondent.
7 It became apparent from a consideration of the Further Amended Statement of Claim filed 18 December 2009 that no relief was sought, in the light of the agreement between the parties, against the second to fifteenth respondents either.
8 In the circumstances, at the commencement of the hearing an order was made by consent that the proceedings brought by the applicant against each of the second to sixteenth respondents inclusive be dismissed.
9 On the hearing of the proceedings as between the applicant and the first respondent an Agreed Statement of Facts dated 18 December 2009 bearing the signatures of the solicitors for the applicant, the first to fifteenth respondents inclusive and the intervener, was tendered and became Exhibit A.
By consent, an order was made that the Further Amended Statement of Claim filed 18 December 2009 be amended by adding at the end of paragraph 25 a sentence reading:
'The said industrial action was industrial action of the first respondent in that it was authorised by the second respondent.'
10 Counsel for the first respondent conceded that the first respondent had contravened s 38 of the Act at the time and in the manner alleged in paragraph 25 of the amended Further Amended Statement of Claim. In relation to the timing of the contravention it was conceded that the contravention occurred between some particular time on 3 March 2008 and some particular time on 6 March 2008. It is apparent that the first respondent was aggrieved by the fact that the third to sixteenth respondents inclusive and other employees of Construction Diving Services were bound by a workplace agreement under the Workplace Relations Act 1996 (Cth) (the 'Workplace Relations Act') that was an employee collective agreement rather than a union collective agreement.
11 Division 2 of Part 8 of the Workplace Relations Act made provision for various types of workplace agreements. These included employee collective agreements and union collective agreements. Section 327 of the Workplace Relations Act provided:
'327 An employer may make an agreement (an employee collective agreement) in writing with persons employed at the time in a single business (or part of a single business) of the employer whose employment will, or would but for the operation of an ITEA [individual transitional employment agreement] that has passed its nominal expiry date, be subject to the agreement.'
Section 328 of the Workplace Relations Act provided for the making of union collective agreements as follows:
'328 An employer may make an agreement (a union collective agreement) in writing with one or more organisations of employees if, when the agreement is made, each organisation:
(a) has at least one member whose employment in a single business (or part of a single business) of the employer will be subject to the agreement; and
(b) is entitled to represent the industrial interests of the member in relation to work that will be subject to the agreement.'
The expression 'single business' was defined in s 322 of the Workplace Relations Act.
12 As I observed in my reasons for judgment of 5 May 2009, in relation to the applicant's notice of motion filed on 17 December 2008 (see John Holland Pty Ltd v The Maritime Union of Australia [2009] FCA 437 at [41]), it seemed clear that proceedings C2008/2281 were before Commissioner Redmond in the Australian Industrial Relations Commission, in an application under s 496(1) of the Workplace Relations Act between Dempsey Australia Pty Ltd and the first respondent in these proceedings, for an order against industrial action on 3 March 2008, 5 March 2008 and 6 March 2008.
As indicated earlier, the unlawful industrial action in which the first respondent engaged was confined to the period 3 - 6 March 2008.
13 The relief which is now sought is the imposition of a pecuniary penalty on the first respondent. It has been proposed by the parties, including the Australian Building and Construction Commissioner, that an appropriate penalty to be imposed on the first respondent would be a pecuniary penalty in the sum of $15,000 in respect of the conduct of the first respondent in breach of s 38 of the Act.
It is further proposed that declaratory relief be ordered in respect of the first respondent's conduct, and an order made for the payment of the proposed penalty to the applicant, as permitted by s 49(5) of the Act.
14 Under s 37 of the Act building industrial action is unlawful industrial action if:
'37 …
(a) the action is industrially-motivated; and
(b) the action is constitutionally-connected action; and
(c) the action is not excluded action.'
15 Section 38 of the Act provides:
'38 A person must not engage in unlawful industrial action.'
16 The expression 'building industrial action' was defined in s 36 of the Act. Relevantly, it provided:
'36(1) In this Chapter, unless the contrary intention appears:
building industrial action means:
…
(d) a failure or refusal by persons to attend for building work or a failure or refusal to perform any work at all by persons who attend for building work;
…'
17 Building work was itself defined in section 5 of the Act, relevantly as follows:
'5(1) Subject to subsections (2),(3) and (4), building work means any of the following activities:
(a) the construction, alteration, extension, restoration, repair, demolition or dismantling of buildings, structures or works that form, or are to form, part of land, whether or not the buildings, structures or works are permanent;
…
(c) the installation in any building structure or works of fittings forming, or to form, part of land, including heading, lighting, air-conditioning, ventilation, power-supply, drainage, sanitation, water supply, fire protection, security and communications systems;
…'
Section 5(5) provided that in s 5 'land' included land beneath water.
18 It is common ground that the applicant is an eligible person for the purposes of bringing the proceedings in respect of the alleged contravention of s 38 of the Act.
19 Under s 49(1)(a) of the Act it is open to the Court to make an order imposing a pecuniary penalty on the first respondent.
20 It is common ground that the maximum pecuniary penalty that may be imposed is 1000 penalty units if the relevant defendant/respondent is a body corporate and otherwise 200 penalty units (see s 49(2)(a)). Under s 4AA of the Crimes Act 1914 (Cth) a penalty unit is defined to mean $110. It is common ground that the first respondent is a 'body corporate' within the meaning of s 49(2)(a) of the Act.
21 Section 69 of the Act relevantly provided:
69(1) For the purposes of this Act, the following conduct in relation to a building association is taken to be conduct of the building association:
…
(c) conduct of a member, or group of members, of the association where the conduct is authorised by:
…
(iii) an officer or agent of the association acting in that capacity;
…'
As previously observed, the first respondent accepts that the second respondent was an officer of the first respondent, being the Sydney Branch Secretary of the first respondent. It is also accepted that at all material times the third to sixteenth respondents inclusive were members of the first respondent.
22 The relevant unlawful industrial action in which the first respondent engaged in this case was pleaded in the Further Amended Statement of Claim as follows:
'25. On or about the 3 March 2008 to 6 March 2008 the Third to Sixteenth Respondents refused to perform any work for CDS [a reference to Construction Diving Services] at the Bluewater Project. Such refusal constituted building industrial action for the purposes of the … Act. The said industrial action was industrial action of the first respondent in that it was authorised by the second respondent.'
23 It would appear that a joint venture was constituted between the applicant and Veolia Water Australia Pty Ltd by an agreement styled, 'Sydney Desalination Project Joint Venture Agreement'. That joint venture agreement contemplated the participation of the applicant and Veolia Water Australia Pty Limited in the design, construction and commissioning of a reverse osmosis seawater desalination plant and associated infrastructure, including seawater intake and outlet structures, connecting pipelines and tunnels, a seawater pumping station, screening facility, and drinking water storage tanks, which became known as the Bluewater Project.
24 A contract for the execution by the joint venturers of the Bluewater Project was entered into between the joint venturers and Sydney Desalination Plant Pty Limited. The construction work under the Bluewater Project was principally the responsibility of the applicant. The applicant entered into a contract with Dempsey Australia Pty Limited for the provision of specialist diving services for the purpose of constructing off-shore inlet and outlet tunnels necessary for the operation of the desalination plant. Dempsey Australia Pty Limited was a related company of Construction Diving Services.
25 It would appear that in 2007 Construction Diving Services entered into an employee collective agreement within the meaning of the Workplace Relations Act known as 'Construction Diving Services Pty Ltd (Bluewater) Employee Collective Agreement 2007'. That agreement was registered under the Workplace Relations Act. Each of the third to sixteenth respondents was employed by Construction Diving Services under the employee collective agreement. To enable Dempsey Australia Pty Limited to discharge its obligations under its contract with the applicant, it utilised the services of divers who were employed by Construction Diving Services under the employee collective agreement.
26 Between 3 and 6 March 2008, the third to sixteenth respondents refused to perform any work for Construction Diving Services at the Bluewater Project. The relevant building industrial action ceased on 6 March 2008. The Agreed Statement of Facts included the following:
'21. Between approximately 6.50am and 10.00am on 3 March 2008 the First Respondent organised a picket at the Botany Site which was participated in by some of the Respondents.
22. The First Respondent published a leaflet which was distributed by some of the Respondents between approximately 6.50am and 10.00am on 3 March 2008 which stated, in part 'A union collective agreement is all we want. Our employer says NO!!! So we have said NO as well. No work until we get a FAIR GO. The Australian people voted against WorkChoices and now Construction Diving Services wants to use those anti-worker laws against us.'.
23. The building industrial action resulted in delay and cost to the Bluewater Project.'
27 It seems to me that in determining an appropriate pecuniary penalty for the contravention which has been admitted the Court should have regard to:
· the nature and extent of the conduct which led to the breach;
· the circumstances in which that conduct took place;
· the nature and extent of any loss or damage sustained as a result of the breach;
· whether there had been similar previous conduct by the first respondent;
· whether the breaches were properly distinct or arose out of the one course of conduct;
· the size of the business enterprise involved;
· whether or not the breach was deliberate;
· whether senior management was involved in the breach;
· whether the party committing the breach had exhibited contrition;
· whether the party committing the breach had taken corrective action;
· whether the party committing the breach had cooperated with the enforcement authorities;
· the need to ensure compliance with minimum standards by the provision of an effective means for investigation and enforcement of employee entitlements; and
· the need for specific and general deterrence
(see per Tracey J in Stuart-Mahoney v Construction, Forestry, Mining and Energy Union (2008) 177 IR 61).
28 Where parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at the same precise figure in the absence of agreement. The question will be whether the figure is, in the Court's view, appropriate in the circumstances of the case. However, it is the responsibility of the Court to determine the appropriate penalty. The view of the regulator, in this case the Australian Building and Construction Commissioner, is a relevant but not a determinative consideration on the question of penalty. In determining whether the proposed penalty is appropriate the Court should examine 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 (see generally NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285.)
29 Favourably to the first respondent, it needs to be noted that the first respondent has not committed any previous breaches of the Act. Furthermore, the first respondent's conduct has not been called into question in relation to action that may constitute unlawful industrial action under the Act since 6 March 2008. Orders that were made by the Australian Industrial Relations Commission on 5 March 2008 are said to have been fully complied with by the first respondent on 6 March. Furthermore, it is said that the admission by the first respondent that it engaged in unlawful industrial action in the period 3-6 March 2008, as described above, demonstrates contrition on the first respondent's part.
30 Against these factors, which militate in favour of a pecuniary penalty at the lower end of the range, it needs to be borne in mind that there was a three-day strike which it is acknowledged resulted in delay and cost to the Bluewater Project. Furthermore, it is clear that the contravention was pre-planned and wilful.
31 The maximum penalty of 1000 penalty units equates to $110,000. One of the means whereby the Act attempts to achieve its main object of ensuring 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 is the promotion of respect for the rule of law, and ensuring respect for the rights of building industry participants. Another means is ensuring that building industry participants are accountable for their unlawful conduct.
32 It seems clear to me that the first respondent had no right to seek the substitution of a union collective agreement for the employee collective agreement, upon which the employees of Construction Diving Services had agreed. I am satisfied that having regard to the considerations which have been advanced, both favourably to the first respondent and adversely to it, that a pecuniary penalty measured in penalty units of 140 penalty units would be appropriate in the circumstances of this case in the light of the agreement, not only of the applicant and the first respondent but also of the Australian Building and Construction Commissioner. One hundred and forty penalty units translates into a pecuniary penalty in dollar terms of $15,400.
33 I am satisfied that it is appropriate to order that the pecuniary penalty be payable to the applicant, in accordance with s 49(5) of the Act. In the circumstances, I propose to make orders in accordance with the short minutes of order which were handed up by senior counsel for the applicant and which recorded the proposed orders to which the applicant, the first respondent and the Australian Building and Construction Commissioner had agreed, subject to the insertion of the word 'amended' before 'Further Amended Statement of Claim' in order 1 and the substitution of the following words for the monetary amount of '$15,000', namely, '$15,400 being 140 penalty units'. Subject to those two alterations, I make orders in accordance with paragraphs 1, 2 and 3 of the Short Minutes of Order initialled by me, dated this day and placed with the papers.
I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.