Supreme Court of WA|2006-11-03|Before: Miere J

LEIGHTON CONTRACTORS PTY LTD -v- CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION [No 4] [2006] WASC 317 (3 November 2006)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : LEIGHTON CONTRACTORS PTY LTD & ANOR -v- CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION & ORS [2006] WASC 317

BETWEEN : LEIGHTON CONTRACTORS PTY LTD (ABN 98 000 893 667)

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION OF WORKERS

Remedies - Declaratory relief - Whether Court can make a declaration of a contravention of an act by consent of parties - Whether court satisfied on evidence that action amounted to a contravention

Industrial law - Industrial action - Building and Construction Industry Improvement Act 2005 (Cth) - Whether industrial action by members of a union constitutes unlawful industrial action by the union or union officer - Whether defendants "involved in" unlawful industrial action

Building and Construction Industry Improvement Act 2005 (Cth) - Penalties - Pecuniary penalties - Nature and circumstances of contraventions - Whether contraventions part of a course of conduct - Proportionality of penalties overall - Principle of deterrence

Building and Construction Industry (Consequential and Transitional) Act 2005 (Cth), s 2, Sch 1

First and second defendants declared to have contravened s 38 of the Building and Construction Industry Improvement Act 2005 (Cth)

Pecuniary penalties imposed upon defendants pursuant to s 49(1)(a) of the Act

First Plaintiff : Mr G C Martin & Mr K J Mony de Kerloy

Second Plaintiff : Mr G C Martin & Mr K J Mony de Kerloy

First Defendant : Mr H Borenstein SC & Mr T J Dixon

Second Defendant : Mr H Borenstein SC & Mr T J Dixon

Third Defendant : Mr H Borenstein SC & Mr T J Dixon

Intervener : Australian Building and Construction Commissioner Mr R L Hooker

Intervener : Australian Building and Construction Commissioner Lavan Legal

1 LE MIERE J: The plaintiffs claim that on various dates between 8 July 2004 and March 2006 the defendants engaged in unlawful industrial action in contravention of s 38 of the Building and Construction Industry Improvement Act 2005 (Cth) ("the Act") and committed the torts of inducing breaches of contract and unlawful interference in the plaintiffs' business.

2 On 20 April 2006 the Court ordered that four issues in the action be tried as preliminary issues. Essentially the issues which the Court is required to determine on the trial of the preliminary issues are:

(1) Whether, in the period from 9 March 2005 to 8 March 2006 the defendants engaged in unlawful industrial action or were involved in unlawful industrial action by employees of the plaintiffs and of the plaintiffs' sub-contractors in contravention of s 38 of the Act.

(2) Whether there should be a permanent injunction against the defendants.

(3) Whether pecuniary penalties should be imposed on the defendants.

3 The plaintiffs' action arises from unlawful industrial action allegedly engaged in by the defendants or employees of the plaintiffs and of the plaintiffs' subcontractors engaged in the building and maintenance of a portion of the Metro CityRail Project known as the New Metrorail City Project ("the Project").

4 At the commencement of the trial of the preliminary issues counsel for the plaintiffs and counsel for the defendants informed the Court that the parties had reached an agreement on the disposition of the preliminary issues and applied for orders to be made by consent to give effect to the agreement. The orders proposed by the parties are to the following effect:

By the conduct of each of the defendants identified in pars 27 - 50A of the re-amended statement of claim, but excluding the conduct identified in statement of claim pars 35, 38, 47A and 50 ("the Excluded Paragraphs"), each of the defendants has contravened s 38 of the Act.
There be imposed on the first defendant a pecuniary penalty of $90,000.
There be imposed on the second defendant a pecuniary penalty of $30,000.
There be imposed on the third defendant a pecuniary penalty of $30,000.
An injunction be granted restraining each of the defendants from disrupting the performance of the work on the Project and from interfering with the performance of a number of specified contracts by any of a number of specified means.
All issues relating to the conduct of the defendants identified in the Excluded Paragraphs be dealt with and tried together with the remaining issues in the action.
The defendants pay the plaintiffs costs of the preliminary issues but excluding any of the plaintiffs' costs relating to the defendants' conduct identified in the Excluded Paragraphs.

5 The jurisdiction with respect to declaratory relief has developed with an awareness of the traditional attitude that the object of the judicial process is the final determination of the rights of the parties to an action: Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 at 356 per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ.

6 As a general principle the Court will not make a declaration of contravention of s 38 of the Act, being a declaration on a matter relating to public or analogous rights, by consent of the parties unless the court has a basis for being satisfied by evidence, including agreed facts, that the defendants have contravened s 38 of the Act: see in general Australian Securities and Investments Commission v Elm Financial Services Pty Ltd [2005] NSWSC 1020; (2005) 55 ACSR 411, Australian Securities and Investments Commission v Rich [2004] NSWSC 836; (2004) 50 ACSR 500.

7 Senior counsel for the defendants submitted, in effect, that if the Court was not disposed to make the orders proposed by the parties then the parties should be given the opportunity to withdraw consent to the proposed orders and for the matter to proceed as a contested hearing. Senior counsel for the plaintiffs requested that the Court give to the parties an early indication whether it was disposed to make the orders proposed by the parties so that if the Court was not disposed to make those orders then the trial of the preliminary issues might proceed.

8 Having regard to the need for an early decision I have determined to deliver brief reasons for decision without further reserving my decision.

9 The plaintiffs tendered into evidence a statement of facts agreed by the plaintiffs and the defendants. The statement of facts, in essence, establishes each of the allegations pleaded in pars 27 to 50A of the statement of claim excluding the Excluded Paragraphs and other facts necessary to found the relief agreed by the parties. The plaintiffs also tendered a number of other documents including answers to interrogatories.

Unlawful industrial action prohibited by s 38

10 To establish that a person has engaged in unlawful industrial action in contravention of s 38 of the Act it must be established that the person has engaged in building industrial action that is industrially-motivated, is constitutionally-connected action and is not excluded action.

11 "Building industrial action" is defined in s 36(1) of the Act. I will return to the definition later in determining whether the defendants engaged in building industrial action.

12 "Industrially-motivated" is defined in s 36(1) to mean motivated by one or more of the purposes defined, or by purposes that include one or more of the defined purposes. The defined purposes include supporting or advancing claims against an employer in respect of employees of that employer or disrupting the performance of work. The agreed facts establish that the actions of the defendants pleaded in each of pars 27 to 50A excluding the Excluded Paragraphs, which they claim constituted building industrial action, were motivated by purposes which included one or other of those purposes.

13 "Constitutionally-connected action" is defined in s 36(1) to mean building industrial action that satisfies at least one of the specified conditions. The conditions include that the action is taken by an organisation or that the action adversely affects a constitutional corporation in its capacity as a building industry participant or that the action relates to work that is regulated by an award or certified agreement. The defendants' admissions and the agreed facts establish each of those conditions.

14 It is not pleaded and there is no suggestion that the allegedly unlawful industrial action is excluded action.

15 The parties rely on the evidence, including the agreed facts, and the defendants' admissions to establish that the defendants engaged in building industrial action as pleaded in pars 27 to 50A of the statement of claim excluding the Excluded Paragraphs.

16 It is not necessary to refer to the detailed content of the agreed statement of facts and the exhibits. It is sufficient to say that the agreed facts and exhibits show to the requisite degree that the first defendant contravened s 38 of the Act on 18 occasions, the second defendant contravened s 38 on five occasions and the third defendant contravened s 38 on 16 occasions as pleaded in pars 27 to 50A of the statement of claim excluding the Excluded Paragraphs subject to one qualification. The qualification is that there is a question whether or not the conduct of the defendants established by the agreed facts constitutes building industrial action as defined in s 36(1) of the Act.

17 The unlawful industrial actions pleaded in the statement of claim may conveniently be considered to fall into two groups. The first group relates to unauthorised meetings. For example the unlawful industrial action pleaded in par 27 of the statement of claim relates to an unauthorised meeting. The second group relates to strikes or work bans of more than two hours. For example, the unlawful industrial action pleaded in par 28 of the statement of claim relates to a strike.

18 Each of the relevant paragraphs of the statement of claim and the corresponding agreed facts establish that members of the first and second defendants engaged in building industrial action and the defendants engaged in conduct in relation to that action. The question is whether or not the conduct of the defendants constitutes building industrial action. To address that issue it is sufficient to consider the plaintiffs' case pleaded in pars 27 and 28 of the statement of claim and the facts established by the agreed statement of facts in relation to those pleadings.

19 Par 18 of the agreed facts relates to statement of claim par 27. It says:

"27 Monday 4 April 2005: Unauthorised meeting

(a) On 4 April 2005 the third defendant convened and during working hours, between approximately 6.30 am and 7.30 am, held and conducted a meeting of the plaintiffs' steel fixer employees on the Esplanade, Perth;

(b) The plaintiffs' steel fixer employees attended that meeting;

(c) The meeting was convened and held and conducted without the plaintiffs' authority or consent;

(d) The actions of the first and third defendants caused work on the Project to be disrupted in that steel fixing was not undertaken during the period of the meeting;

(e) The actions of the defendants and of those employees were motivated by purposes which included the purpose of supporting and advancing claims against an employer in respect of the employment of employees of that employer."

20 The facts established by the agreed statement of facts establish that the plaintiffs' employees engaged in unlawful industrial action in contravention of s 38 of the Act. The question is whether the first and third defendants engaged in unlawful industrial action.

21 Section 48 of the Act provides that a person who is involved in a contravention of a civil penalty provision, which s 38 is, is treated as having contravened that provision and a person is involved in a contravention of a civil penalty provision if the person, amongst other things, has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention.

22 Section 69 of the Act provides:

"69 Building association responsible for conduct of members etc.

(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:

(a) conduct of the committee of management of the association;

(b) conduct of an officer or agent of the association acting in that capacity;

(c) conduct of a member, or group of members, of the association where the conduct is authorised by:

(i) the rules of the association; or

(ii) the committee of management of the association; or

(iii) an officer or agent of the association acting in that capacity;

(d) conduct of a member of the association, who performs the function of dealing with an employer on behalf of the member and other members of the association, acting in that capacity.

(a) a committee of management of the building association; or

(b) a person authorised by the committee; or

(c) an officer of the industrial association;

has taken reasonable steps to prevent the action.

'officer', in relation to a building association, includes:

(a) a delegate or other representative of the association; and

(b) an employee of the association."

23 Section 48 and s 69 of the Act did not commence until 12 September 2005. The plaintiffs submit that s 48 and s 69 apply to conduct engaged in by persons after s 38 commenced, that is on 9 March 2005 but before s 48 and s 69 commenced on 12 September 2005.

24 Section 48 and s 69 do not apply to conduct engaged in prior to 12 September 2005. Section 2 of the Act says that the provisions of Ch 7 and Ch 8, which includes s 48 and s 69, commence, or are taken to have commenced, on the day on which the Act receives the Royal Assent, that is 12 September 2005. The Parliament has expressly stated that s 48 and s 69 are to commence on the date on which the Act receives the Royal Assent. They can have no application to conduct occurring prior to that date.

25 The plaintiffs submit that the third defendant engaged in unlawful industrial action by engaging in the conduct in par 18 of the statement of agreed facts. That conduct is convening and conducting a meeting of employees, without the plaintiffs' authority or consent, during the employees' working hours causing the project to be disrupted. It is necessary to consider whether that conduct by the third defendant is building industrial action as defined in s 36(1) and hence may be unlawful industrial action under s 38.

26 The plaintiffs first pointed to par (d) of the definition of building industrial action, that is 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. That action can only be engaged in by the persons who fail or refuse to attend for building work or fail or refuse to perform any work. The third defendant, who was not an employee and did not fail or refuse to attend for building work is not capable of engaging in building industrial action within that paragraph of the definition.

27 The plaintiffs rely primarily on par (b) of the definition of building industrial action, that is relevantly, "a ban, limitation or restriction on the performance of building work ... in accordance with the terms and conditions prescribed by an industrial instrument or by an order of an industrial body". It is established that the building work on which the plaintiffs' employees were employed was regulated by an industrial instrument. The issue is whether the third defendant engaged in a ban, limitation or restriction on the performance of building work by convening and conducting the meeting.

28 In Communications Electrical Energy Information Postal Plumbing and Allied Services Union of Australia v Commissioner Laing of the Australian Industrial Relations Commission [1998] FCA 1410; (1998) 89 FCR 17 French J considered the meaning of par (b) of the definition of "industrial action" in the Workplace Relations Act (Cth). French J said at 30 - 31:

"While par (a) of the definition relates to the 'performance of work', par (b) is more broadly expressed. It refers to 'a ban, limitation or restriction on the performance of work, or on the acceptance of or offering for work'. The central meaning of the term 'ban' in the industrial, as in its ordinary useage, is to 'prohibit or interdict': the Macquarie Dictionary. Communication between persons or an organisation and persons is essential to a 'ban'. And while the notion of 'limitation' or 'restriction' may have a meaning related to manner of actual performance of work, that meaning is picked up in par (a) of the definition. Under par (b) it extends to the communication of a limitation or restriction. Communication picked up under pars (b) and (c) must no doubt purport to be at least hortatory, if not authoritative and binding, upon the person or persons to whom they are directed.

In the ordinary course such communication will be verbal whether oral, written or in electronic form. Being intended to affect or affecting the performance of work, it is industrial action because of its instrumental character. Notwithstanding that it is communication it falls within the terms of the definition."

29 French J went on to consider whether picketing might constitute industrial action if it amounts to a "ban, limitation or restriction on the performance of work". His Honour said at 32:

"So a picket line whose purpose is to prevent or deter or discourage employees from attending on their employer's premises and from carrying out their work could constitute a ban for the purposes of s 127. There are therefore circumstances in which picketing may be the subject of an order as industrial action under s 127."

30 In my opinion, convening and conducting a meeting of workers during working hours might, but will not necessarily, constitute a ban, limitation or restriction on the performance of building work and hence be building industrial action. Such conduct is capable of constituting a "ban, limitation or restriction on the performance of building work" if its purpose is to prevent or deter or discourage employees from performing building work and it purports to be at least hortatory, if not authoritative and binding, upon the person or persons to whom it is directed.

31 The conduct of the third defendant pleaded in statement of claim par 27 and established by the agreed facts is capable of constituting a ban, limitation or restriction on the performance of building work. It is pleaded that the third defendant convened and conducted a meeting of employees during working hours and disrupted the work. The defendants admit that their conduct constituted a ban, limitation or restriction on the performance of building work and hence was building industrial action. In those circumstances I am satisfied that the third defendant's conduct involved deterring or discouraging employees from attending work and was a ban, limitation or restriction on the performance of building work and hence was building industrial action.

32 The other elements of s 38 are established by the evidence and hence it is established that the third defendant by his conduct pleaded in statement of claim par 27 and established by the agreed facts contravened s 38 of the Act.

33 The next question is whether the first defendant contravened s 38 of the Act in the manner pleaded in par 27 of the statement of claim. The first defendant is a corporate body. The common law recognises that an industrial organisation, like a corporation is liable for the conduct of a natural person purporting to act on its behalf if it can be demonstrated that the person had the requisite status and authority to engage in the conduct on the organisation's behalf: see Hanley v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2000] FCA 1188.

34 It is admitted on the pleadings that the third defendant was an employed official of the first defendant being a Divisional Branch Assistant State Secretary of the first defendant. Statement of claim par 27(c) pleads and the agreed facts establish, in effect, that the third defendant's conduct in convening and conducting the meeting was the action of the first defendant. The first defendant in substance admits par 27 of the statement of claim and admits that the facts there pleaded constitute a contravention of s 38 of the Act by the first defendant. In effect, the first defendant admits that the third defendant had the requisite status and authority to engage in the relevant conduct on the first defendant's behalf. Accordingly, I am satisfied that the first defendant's admissions are sufficient to establish a contravention of s 38 of the Act by the first defendant.

35 For those reasons it is appropriate to declare that each of the first and third defendants by their conduct pleaded in statement of claim par 27 contravened s 38 of the Act.

36 In substance the facts pleaded in par 28 of the statement of claim are established by par 21 of the statement of agreed facts which says:

"21 Thursday 30 June 2005: Rally in protest against proposed industrial relations reforms

(a) On 30 June 2005, the first and second defendants arranged a rally by its members to protest against the Howard Government's proposed industrial reforms and officers, employees and delegates of the first and second defendants encouraged and thereby authorised, the Project Employees to withdraw their labour from 10 am on that day for the rest of the day and to attend the rally;

(b) Pursuant thereto, the Project Employees withdrew their labour from 10 am on that day for the rest of the day;

(c) The actions of the first and second defendants caused work on the Project to be disrupted in that no work on the Project was undertaken after 10 am for the rest of that day;

(d) The actions of the first and second defendants and of those employees were motivated by purposes which included the purpose of supporting and advancing the first and second defendants' industrial objectives."

37 The employees attended the meeting and withdrew their labour. The third defendant held and conducted the meeting and encouraged and authorised the employees to withdraw their labour. The actions of the third defendant constituted a ban limitation or restriction on the performance of building work as defined in s 36(1)(b) of the Act.

38 Having regard to the status and authority of the third defendant, he was relevantly the directing mind and will of the first defendant. Alternatively, the first defendant is vicariously liable for the actions of the third defendant.

39 I am satisfied that the first and third defendants each contravened s 38 of the Act in the manner pleaded in statement of claim par 28.

40 The contraventions of s 38 of the Act alleged in pars 28 to 50A of the statement of claim, excluding the Excluded Paragraphs, raise the same or similar issues to those I have considered in relation to pars 27 and 28.

41 It is sufficient to say that the evidence including the agreed facts and the defendants' admissions establish that the defendants contravened s 38 of the Act on the occasions and in the manner pleaded in pars 27 to 50A of the statement of claim excluding the Excluded Paragraphs, other than pars 39, 41 and 47. I will consider those paragraphs separately.

42 Paragraph 39 pleads that on 28 August 2005 Buchan instructed, directed or authorised or alternatively counselled, persuaded or encouraged or alternatively caused or procured the Project Employees not to carry out their duties during the day shift rostered for that day in breach of their contracts of employment. It is further pleaded that the employees did not carry out their duties, that the actions of the first and second defendants by Buchan caused work on the project to be disrupted in that no building work on the day shift on 28 August occurred and that the actions of the first and second defendants were motivated by purposes which included the purpose of disrupting performance of the Project work.

43 Paragraph 39 of the statement of claim and the corresponding agreed facts do not establish that the third defendant contravened s 38 of the Act. Whether the first and second defendants contravened s 38 of the Act depends on whether the conduct of Buchan is conduct of the defendants.

44 I am satisfied by the pleadings, the agreed facts, the answers to interrogatories tendered in evidence and the defendants' admissions that Buchan's status and authority was such that his conduct was conduct of the first defendant.

45 Paragraphs 41 and 47 of the statement of claim plead conduct by the first and second defendants but not the third defendant. I am satisfied that the agreed facts and other evidence together with the defendants' admissions establish that the first and second defendants contravened s 38 of the Act as pleaded in pars 41 and 47 of the statement of claim respectively but not that the third defendant did so.

46 The Building and Construction Industry Improvement (Consequential and Transitional) Act 2005 ("the Transitional Act") by s 2 and Sch 1 provides that s 349(2) of the Workplace Relations Act ("WR Act") was amended by inserting after "this Act" the words "or the BCII Act" and that that amendment was to commence or to be taken to have commenced from 9 March 2005. The effect of that provision is that the conduct of the third defendant is taken to be the conduct of the first or second defendant, as relevant, for the purposes of the Act as from 9 March 2005. However, that provision does not have the effect of making the conduct of employees of the plaintiffs or their subcontractors the conduct of any of the defendants.

47 Paragraphs 41 to 50A plead conduct by the defendants and officers and members of the first and second defendants, subsequent to 12 September 2005, that is the date on which s 48 and s 69 of the Act came into force. In relation to that conduct as established by the pleadings and the evidence, s 48 and s 69 of the Act render the first and second defendants liable for the unlawful industrial action engaged in by the plaintiffs' employees and employees of the plaintiffs' contractors.

48 Section 49(1) and (3) of the Act empower the Court to make injunctions in relation to a person who has contravened a civil penalty provision. The parties have jointly submitted that the Court should make injunctions in the following terms:

"The defendants and each of them, whether by themselves, their officers, officials, shop stewards, delegates, employees, agents or otherwise howsoever be perpetually restrained from:

(a) disrupting the performance of the work on the New Metrorail City Project, being the project identified in paragraph 8 of the re-amended statement of claim dated 1 September 2006 (Project); and

(b) interfering, directly or indirectly, with the due performance of any of the following contracts:

(1) the contract between the first plaintiff and the Public Transport Authority of Western Australia dated 14 February 2004 in relation to the Project;

(2) the contract between first plaintiff of the one part and joint venture comprised of the first plaintiff and the second plaintiff of the other part (Joint Venture) pursuant to which the Joint Venture has contracted to perform all of the works on the Project;

(3) the sub-contracts between the plaintiffs and each of the parties identified in the attached Schedule; and

(4) the contracts of employment between the Subcontractors and the Subcontractors' employees employed to work on the Project.

(A) imposing, maintaining or aiding, abetting, encouraging, directing, procuring, inducing, advising or authorising any bans, limitations, restrictions or delays on the performance of work or the acceptance of work by the Joint Venture's employees to be performed under their terms of employment or in a manner which work is customarily performed with the Joint Venture;

(B) imposing, maintaining or aiding, abetting, encouraging, directing, procuring, inducing, advising or authorising the taking of days off by the Joint Venture's employees otherwise than in accordance with rosters specified by the industrial instruments and employment contracts regulating their employment with the Joint Venture; and

(C) inducing, aiding, abetting, encouraging, directing, procuring, authorising or advising any person not to perform their employment with any sub-contractors, without limitation, the sub-contractors identified in the attached Schedule, or to perform their employment otherwise than in accordance with the terms of their employment or in a manner which their work is customarily performed."

49 I am satisfied that each of the defendants has contravened a civil penalty provision, that is s 38 of the Act.

50 I am satisfied that it is appropriate to make the injunctions proposed by the parties.

51 Section 49(1)(a) of the Act provides that the Court may in relation to a person who has contravened a civil penalty provision, make an order imposing a pecuniary penalty on that person.

52 I am satisfied that each of the defendants has contravened s 38 of the Act on the occasions I have detailed. I am satisfied, on the basis of the admissions made by each of the defendants, that the plaintiffs have suffered damage as a result of those contraventions. That is a natural inference from the fact that work on the Project was not carried on during the unauthorised meetings and as a result of the bans and strikes. It is appropriate that a pecuniary penalty be imposed on each of the defendants. The parties have proposed that penalties of $90,000, $30,000 and $30,000 be imposed on each of the first, second and third defendants respectively. That is a total of $150,000. The Commissioner submits that the proposed penalties are so low as to be outside the range properly reflecting the nature and seriousness of the contravening conduct. The Commissioner submits that the appropriate range for the total penalties is $250,000 to $500,000.

53 In Minister for Industry Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 the Full Federal Court set out principles to be applied by a court in considering what penalties to impose where the parties proposed an agreed amount to be imposed as a penalty pursuant to s 13 of the Petroleum Retail Marketing Sites Act 1980 (Cth). In my view, those principles apply to this case. The relevant principles enunciated by the Court at par 53 include the following propositions the Court considered emerged from NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission[1996] FCA 1134; (1996) 71 FCR 285:

"(i) It is the responsibility of the court to determine the appropriate penalty to be imposed under [the Act] in respect of a contravention of the [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 contravener 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 ... 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."

54 The Full Federal Court then went on to make further points including the following:

"55. First, the rationale for giving weight to a joint submission on penalty is said by the court to be the savings in resources for the regulator and the court, as well as the likelihood that a negotiated resolution will include measures designed to promote competition. As Jeremy Thorpe points out, a related advantage is that the savings in resources can be used by the regulator to increase the likelihood that other contraveners will be detected and brought before the courts. This has the effect of increasing deterrence which is one of the principal justifications, if not the only justification for imposing civil penalties under the TP Act or the Sites Act ... Of course the argument in favour of negotiated settlements have to take account of the fact that it is the court that bears the ultimate responsibility for determining the appropriate penalty.

...

Thirdly, as has been noted, the appellant in N W Frozen Foods admitted contravening the TP Act and had reached agreement with ACCC upon the facts to be put before the Court. There was no suggestion that the admissions or statement had been tailored or modified to reflect the difficulties faced by the ACCC in proving its case. The Full Court therefore acted on the basis of clear admissions and a detailed statement of agreed facts setting out how the contraventions had occurred ...
Fourthly, as the Full Court in Australian Competition and Consumer Commission v Ithaca Ice Works Pty Ltd [2001] FCA 1716; [2002] ATPR 41-851, has pointed out, the regulator should always explain to the Court the process of reasoning that justifies a discounted penalty ....
... It follows that a court considering an 'agreed' penalty is entitled to expect the regulator to explain the basis on which a discount from the otherwise appropriate penalty has been calculated having regard to the contravenor's co-operation and, for that matter, other relevant factors."

55 This case differs from North West Frozen Foods and Mobil Oil in that the regulator is not a party to the action or to the negotiated settlement.

56 If the orders proposed by the parties are not made by the Court then the defendants wish to withdraw their consent from the proposed orders and proceed to trial. This places the plaintiffs in a difficult position. The resolution of the preliminary issues by the making of the proposed orders is of considerable benefit to the plaintiffs. They will obtain the benefit of the certainty of the declarations that the defendants have contravened the Act and the benefit of injunctions to restrain a repetition of the conduct during the lifetime of the Project. If the Court does not approve the agreed orders then the plaintiffs will be required to either prosecute a lengthy and expensive trial against their wishes or to forego the benefits of the declarations and injunctions that they are entitled to. In a case such as this where the plaintiffs are non-government corporations, as distinct from public authorities such as the Australian Competition and Consumer Commission ("ACCC") or other regulators, particular weight should be given to the opinions of the parties as to an appropriate penalty. The plaintiffs are the parties directly affected by the contravening conduct and know better than anyone the subtleties, nuances and circumstances of the contraventions. Their views of the appropriate penalties should be given considerable weight.

57 The first and second defendants have each admitted, and the evidence establishes that they committed 18 and five contraventions of s 38 of the Act respectively during the period from 9 March 2005 to February 2006. The agreed facts establish that the third defendant committed 16 contraventions of s 38 of the Act. The contraventions have involved:

meetings of project employees during working hours which have not been sanctioned by the plaintiffs;
the imposition of bans by project employees on overtime work; and
strikes.

58 Contraventions of the Act, whether by individuals or organisations, are always to be treated as a serious matter. The main object of the Act is 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.

59 The Project is an important public infrastructure project. Work on the project has been interrupted because of the contraventions. The plaintiffs contend that the interruptions have caused the Project to be delayed and are pursuing the defendants for very significant compensation and damages. The defendants will remain liable to pay compensation for damage suffered by the plaintiffs as a result of the defendants' contraventions of the Act. The plaintiffs are also pursuing the defendants for substantial common law damages.

60 The maximum penalty for each contravention of the Act is $110,000 for each of the first and second defendants and $22,000 for the third defendant.

61 As I have said, the Commissioner submits that the proposed penalties are outside the range of appropriate penalties. However, the Commissioner's view is based in part on some facts and matters that are not established. First, the Commissioner submits that it is open to the Court to conclude that at the very least the pecuniary loss that has been caused by the contravening conduct may be significant and potentially extensive. The Commissioner submits that it is open to the Court to infer from the admitted facts that a series of industrial actions of this character is of considerable detriment to the building and construction industry generally, and the interests of the public, with the undertaking affected is part of a railway line being built to service the southern part of metropolitan Perth. However, there is no evidence before the Court as to the effect of the contraventions, other than the duration of stoppages constituting or involved in each contravention. There is no evidence of the magnitude of any delay caused to the Project.

62 The Commissioner submits that at no material time was there any attempt by the defendants to comply with applicable dispute resolution procedures. It is common ground that the relevant industrial instruments contained dispute resolution procedures. However, there is no evidence whether or not the defendants attempted to comply with the applicable dispute resolution procedures.

63 The Commissioner submitted that the contraventions pleaded in pars 40 to 50A of the re-amended statement of claim were in breach of the orders made on 6 December 2005 by Commissioner Gregor of the Australian Industrial Relations Commission pursuant to s 127 of the WR Act. There is no evidence that any prosecutions were brought for breach of the s 127 orders. There is no evidence whether or not there were any proceedings in the Australian Industrial Relations Commission relevant to the conduct in question. It would not be safe or appropriate in those circumstances to proceed on the basis that the conduct of the defendants was in breach of the s 127 order. In any event, only a small number of the contraventions occurred after the s 127 order.

64 The Commissioner submitted that the contraventions in this case were industrially culpable and lack any industrial justification. It is difficult to consider the contraventions as being all of the same character. Some of the contraventions were relatively minor consisting of relatively short stoppages for meetings. It is difficult to find that the contraventions in relation to the State-wide stoppages were of an industrial culpable character. The action was in relation to State-wide stoppages in which many, if not most, union organisations joined. Indeed, I take judicial notice of the supportive attitude of the State Government to workers attending the State-wide stoppages.

65 The Commissioner submitted that part of the contraventions involved the conduct of the second most senior managerial representative of the first and second defendants in Western Australia, that is the third defendant. It was submitted that it may be inferred that the contraventions occurred with the indorsement of the highest level of senior management. There is no evidence from which it might be inferred that any officer more senior than the third defendant was involved in any of the contraventions. The third defendant is the Divisional Branch Assistant Secretary of the Western Australian Divisional Branch of the Construction and General Division of the first defendant. There is no evidence that any Federal official indorsed or knew of the contraventions. It cannot be inferred that the contraventions occurred with the indorsement of the highest level of senior management of the first defendant. The third defendant is a senior officer of the second defendant but the second defendant's culpability is much less than that of the first defendant, a conclusion agreed by the Commissioner.

66 The Commissioner tendered a schedule of the "relevant prior records of the first and third defendants" and submitted that they are serious and substantial.

67 In relation to the first defendant, the schedule refers to eight proceedings against the first defendant between 2000 and 2006. The contraventions established in those proceedings are of a different nature than the contraventions now being considered and did not involve contraventions of the Act. In Construction, Forestry, Mining & Energy Union v Coal & Allied Operations Pty Ltd (No 2) [1999] FCA 1714; (1999) 94 IR 231 at 232 Branson J listed a number of matters that are relevant to penalty in relation to contraventions under Pt XA of the WR Act. One matter her Honour considered was whether the respondent had previously been found to have engaged in conduct in contravention of Pt XA of that Act. In my view, that is the correct approach. It is not appropriate to consider all contraventions of any industrial legislation by any Branch of the first defendant anywhere in Australia. The first defendant is a very large organisation that operates throughout Australia. Branches, Divisions, officers and representatives of the first defendant are involved in dealings with employers in relation to industrial matters every day. It is inappropriate to take account of conduct of the first defendant through various Branches, Divisions and officers or representatives that is of a different character than the contravening conduct in question and are contraventions of different legislation. In those circumstances and having regard to the difference in nature between the contraventions in this case and the matters giving rise to the proceedings referred to by the Commissioner, those other offences should not be given the weight given to them by the Commissioner.

68 The Act gives no explicit guidance as to the matters relevant to the determination of an appropriate penalty. Matters to which the Court should have regard include the nature and circumstances of the particular contraventions committed by the defendants. There are a large number of contraventions but some of the contraventions were relatively minor. The contraventions referred to in pars 27, 29, 32, 36, 37, 41, 42, 44, 48 and 49 of the statement of claim consist of unauthorised meetings. They are of relatively short duration and in some cases involve relatively few employees. The contraventions pleaded in pars 28, 30, 31, 33, 34, 39, 40, 43, 46, 47 and 50A of the statement of claim involve strikes or bans, only three of which extended beyond one working day and of those three, two extended over two days and the third over four days.

69 The Commissioner submitted that some assistance can be provided by the approach taken by Merkel J in Pine v Multiplex Constructions (Vic) Pty Ltd [2005] FCA 1428. His Honour there observed at [9], in the context of S 187AA of the pre-reform WR Act, that the prohibition enacted by that provision, ought by the time of the relevant conduct in that case, be well known and that contraveners of s 187AA should not assume that the leniency of the past would continue. This case is very different. Fourteen of the total of 21 contraventions occurred before the Act received the Royal Assent on 12 September 2005. That is, those contraventions occurred at a time when it was not unlawful to engage in that conduct. The Parliament has given retrospective effect to s 38 and provided that after 12 September 2005 persons may be prosecuted for breaches of s 38 notwithstanding that their conduct was lawful at the time it was engaged in. Nevertheless, that is a reason for treating the contraventions as being on the lower rather than higher end of the scale of seriousness.

70 The parties agree and submit that some of the contraventions may be regarded as part of a course of conduct. In such a case it is appropriate to impose a smaller penalty in relation to each contravention than would have been imposed if the contravention did not form part of a course of conduct and penalties were not being imposed for the other contraventions. Section 36(3)(b) provides that a course of conduct consisting of a series of building industrial actions may be building industrial action. If the plaintiffs had prosecuted that course of conduct as one act of unlawful industrial action then the maximum penalty for that contravention would have been $110,000 in the case of the first defendant and $22,000 in the case of the third defendant.

71 The defendants have admitted the contraventions, albeit only shortly before the trial of the preliminary issues was to commence. That has saved the plaintiffs the cost and inconvenience of a lengthy and complex trial and has served the public interest by freeing the resources of the Court that would otherwise have been devoted to the trial. For that reason the defendants are entitled to a discount on the penalties they would have received on being found to have committed the contraventions after a defended trial.

72 Where penalties are being imposed for a number of related contraventions it is necessary to ensure that the penalties in aggregate are just and appropriate. The total penalties imposed should be proportionate to the defendant's offending in its totality.

73 Penalties in the agreed amounts are proportionate to the culpability and seriousness of the defendant's contravening conduct and are sufficiently large to mark the seriousness of the offending conduct.

74 The penalties should be sufficiently high to deter repetition by the contravener and by others who might be tempted to engage in contravening conduct. Deterrence is a primary objective of penalties.

75 The penalties proposed are large for an industrial organisation. A penalty of $90,000 will have sufficient deterrent effect on the first defendant and on other industrial organisations involved in the building industry. A penalty of $30,000 on the third defendant is a very large penalty on a union official and is a sufficient deterrent against repeat contraventions. The second defendant is less culpable than the first defendant and a penalty of $30,000 is a sufficient penalty.

76 Taking all matters into consideration I am satisfied that the agreed penalties are appropriate in the circumstances of the case.

77 Subsection 49(5) of the Act provides that a pecuniary penalty is payable to the Commonwealth, or to some other person if the Court so directs. The parties have agreed that the penalties payable by the defendants should be paid to the plaintiffs. I consider that to be appropriate. The penalties are imposed for conduct which is all directed to, and has caused damage to, the plaintiffs. The plaintiffs, not the Commissioner have prosecuted these proceedings. The plaintiffs have been put to the expense and inconvenience of doing so. The plaintiffs have risked both their own legal costs and paying the defendants' legal costs by bringing the proceedings.

78 The objects of the Act will be advanced by parties affected by unlawful industrial action bringing proceedings against the offenders. Affected parties will be encouraged to do so if there is a likelihood that the costs, inconvenience and risks associated with doing so will be offset by the receipt of the penalties paid by the offenders.

79 The parties propose that all issues relating to the acts and conduct identified in the Excluded Paragraphs be dealt with and tried together with the remaining issues in the action. That is appropriate.

80 The costs orders proposed by the parties are appropriate.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : LEIGHTON CONTRACTORS PTY LTD -v- CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION [No 4] [2006] WASC 317 (S)

HEARD : 30 OCTOBER, 2 & 3 NOVEMBER 2006, 4 SEPTEMBER 2007

BETWEEN : LEIGHTON CONTRACTORS PTY LTD (ABN 98 000 893 667)

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION OF WORKERS

Civil practice and procedure - Costs - Application for special costs - Turns on own facts

1 LE MIERE J: The plaintiffs apply for special costs orders pursuant to s 215 of the Legal Practice Act 2003 (WA) (the Act).

2 The plaintiffs' action arises from unlawful industrial action engaged in by the defendants or employees of the plaintiffs and of the plaintiffs' sub-contractors engaged in the building and maintenance of a portion of the New Metro Rail City Project, which is part of the Perth to Mandurah railway extension.

3 The plaintiffs claimed that on various dates between July 2004 and March 2006 the defendants engaged in unlawful industrial action in contravention of s 38 of the Building and Construction Industry Improvement Act 2005 (Cth) (the BCII Act) and committed the torts of inducing breaches of contract and unlawful interference in the plaintiffs' business.

4 The action was commenced by writ of summons issued on 13 February 2006. On 24 February 2006 I made orders on the application of the plaintiff including an injunction restraining the defendants from interfering directly or indirectly with the due performance of certain specified contracts which are contracts pursuant to which the plaintiffs carry out work on the New Metro Rail City Project. That injunction was subsequently extended until judgment on the preliminary issues to which I will now refer.

5 On 20 April 2006 the court ordered that certain issues in the action be tried as preliminary issues. Essentially the issues which the court was required to determine on the trial of preliminary issues were:

Whether, in the period from 9 March 2005 to 8 March 2006 the defendants engaged in unlawful industrial action or were involved in unlawful industrial action by employees of the plaintiffs and of the plaintiffs' sub-contractors in contravention of s 38 of the BCII Act.
Whether there should be a permanent injunction against the defendants.
Whether pecuniary penalties should be imposed on the defendants.

6 At the commencement of the trial of the preliminary issues on 30 October 2006 counsel for the plaintiffs and counsel for the defendants informed the court that the parties had reached an agreement on the disposition of the preliminary issues and applied for orders to be made by consent to give effect to the agreement.

7 The plaintiffs tendered into evidence a statement of agreed facts. The statement of facts, in essence, established each of the allegations pleaded in [27] - [50A] of the statement of claim excluding the conduct identified in [35], [38], [47A] and [50] and other facts necessary to found the relief agreed by the parties. The plaintiffs also tendered a number of other documents including answers to interrogatories.

8 After hearing submissions from counsel for each of the parties, the court made declarations that each of the defendants had, by specified conduct, contravened s 38 of the BCII Act which is a civil penalty provision of that Act. The court further ordered the first defendant, second defendant and third defendant to pay pecuniary penalties of $90,000, $30,000 and $30,000 respectively to the plaintiffs. The court further made orders by way of injunction restraining the defendants from disrupting the performance of the work on the New Metro Rail City Project and from interfering with the due performance of certain specified contracts by specified means. The court ordered that all issues relating to the acts and conduct identified in [35], [38], [47A], [50] and [51] of the re-amended statement of claim be dealt with and tried together with the remaining issues in the action. The court ordered the defendants to pay the plaintiffs costs of the action up to the date of judgment relating to the issues which were ordered to be tried as preliminary issues including all reserved costs relating to the interim and interlocutory injunctions but excluding any of the plaintiffs' costs relating to the defendants acts and conduct identified in [35], [38], [47A], [50] and [51] of the re-amended statement of claim, to be taxed if not agreed. The court ordered that the taxing officer make a reasonable allowance for the fees of senior counsel.

9 The plaintiffs apply for the following orders in relation to the costs of the preliminary issues:

A direction to the taxing officer that the plaintiff's bill be taxed in accordance with item 21 of the relevant Determination of the Legal Costs Committee and in so doing, the taxing officer not be bound to apply by analogy any other items in the relevant Determination of the Legal Costs Committee;
Alternatively, a direction to the taxing officer that the plaintiffs' costs be taxed as if all relevant scale items were increased by special order with the intent that none of the prescribed limits apply, or in the alternative, a direction to the taxing officer that the plaintiffs' costs be taxed without regard to the limits prescribed in the relevant scales in relation to the following items:

(a) item 1(a) - Writ of Summons;

(b) item 1(b) - Statement of Claim;

(c) item 6 - Requesting particulars of pleadings and giving particulars of pleadings;

(d) item 7 - Discovery;

(e) item 9 - Interrogatories;

(f) item 10 - Chambers;

(g) item 16 - Getting up the plaintiffs' case for trial;

(h) item 19(a) - Fee on brief;

(i) item 19(b) - Fee on brief for Senior counsel;

(j) item 19(c) - Counsel fee for the second and each successive day of hearing;

(k) item 19(d) - Counsel fee for Senior Counsel for the second and each successive day of hearing;

(l) item 19(e) - Solicitor attending trial;

(m) item 19(f) - Clerk attending trial; and

(n) item 24 - Settling and extracting orders

A direction that the taxing officer make a reasonable allowance for the fees of senior counsel without regard to limits in the relevant Determination of the Legal Costs Committee;
A direction that that the taxing officer make a reasonable allowance for research claims without regard to limits in the relevant Determination of the Legal Costs Committee;
A direction that that the taxing officer make a reasonable allowance for the preparation and attendance of Counsel and an instructing solicitor at the taxation of the plaintiffs' costs without regard to limits in the relevant Determination of the Legal Costs Committee;
The plaintiffs' costs be taxed and paid forthwith by the defendants jointly and severally.

10 Subject to exceptions that are not presently relevant, the taxation of bills of costs of legal practitioners as between party and party and any aspect of the remuneration of legal practitioners the subject of a legal costs determination in force under s 210 of the Act is regulated by that determination. However, s 215(2) of the Act makes provision for special costs order. Section 215(2) is in the following terms:

(2) Despite subsection (1), if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a legal costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following -

(a) order the payment of costs above those fixed by the determination;

(b) fix higher limits of costs than those fixed in the determination;

(c) remove limits on costs fixed in the determination;

(d) make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or taxed.

11 Section 215(2) of the Act empowers the court to do all or any of the things specified in (a) - (d) if it is of the opinion that the amount of costs allowable in respect of a matter under a legal costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter. The word 'unusual' qualifies 'difficulty' but not 'complexity': SDS Corporation Ltd v Pasdonnay Pty Ltd [2004] WASC 26 (S2) [106] (Roberts-Smith J); Green v Wilden Pty Ltd [2005] WASC 83 (S) [182] (Hasluck J); Hodgkinson v Doepel & Associates Architects Pty Ltd [2006] WASC 237 (S) [33] (Simmonds J). Thus, the court may make an order under s 215(2) of the Act, if it is of the opinion that the amount of costs allowable in respect of a matter under a legal costs determination is inadequate because of:

12 I will first consider whether the case was one of unusual difficulty. I find that it was. The matter concerned contraventions of the BCII Act. The BCII Act was enacted in 2005 and there was little authority to guide the parties in relation to the construction and application of the provisions of the BCII Act. The agreed facts established that the plaintiffs' employees engaged in unlawful industrial action in contravention of s 38 of the BCII Act. There were issues concerning the interpretation and application of various sections of the BCII Act, accessorial liability and the transitional provisions.

13 In considering and determining this application I am entitled to, and required to, draw on my experience, to act on impressions gained during the litigation, and to take into account the issues which have been involved: see Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [43] (Pullin J). Having regard to the issues raised in the matter and my impressions gained during the litigation I find that the matter was one of unusual difficulty.

14 I find that the matter was complex. It was factually complex, involving as it did multiple actions by a large number of people over a 12 month period. The plaintiffs faced a significant challenge in identifying, marshalling and presenting the evidence. The matter was also legally complex. It involved considering, interpreting and applying numerous provisions of relatively new and untested legislation.

15 I find that the matter was one of importance. The plaintiffs are large construction contractors. The first defendant is the largest trade union representing construction workers in Australia. The second defendant is its State counterpart and the third defendant was an employed official of each union. The industrial action which gave rise to the action occurred in the course of one of the State's largest infrastructure projects. Work on the project was interrupted by the actions of the defendants which constituted contraventions of the BCII Act. The Australian Building and Construction Commissioner intervened in the proceedings. The orders made on 3 November 2006 include declarations that the first defendant contravened s 38 of the BCII Act on 18 specified occasions, that the second defendant did so on five specified occasions and the third defendant did so on 16 specified occasions. There were also orders granting injunctions restraining the defendants from disrupting the performance of work on the project. Penalties of $90,000, $30,000 and $30,000 were imposed on each of the defendants respectively. Damages are yet to be assessed. The relief granted is a reflection of the importance of the matter.

16 The court may only make an order under s 215(2) of the Act if it is of the opinion that the amount of costs allowable in respect of the matter under a legal costs determination is inadequate.

17 The plaintiffs did not press for an order in terms of [1] of their application, that is a direction to the taxing officer that the plaintiffs' bill be taxed in accordance with item 21 of the relevant determination of the Legal Costs Committee and in so doing, the taxing officer not be bound to apply by analogy any other items in the relevant determination of the Legal Costs Committee.

18 The plaintiffs seek a direction that their costs be taxed as if all relevant scale items were increased by special order with the intent that none of the prescribed limits apply or alternatively a direction that their costs be taxed without regard to the limits prescribed at the relevant scales in relation to the items specified in the order sought. Both parties accepted that, if a special costs order should be made, then the latter form is the appropriate form of order. Accordingly, I will consider, in relation to each item, whether the amount of costs allowable in respect of that item under the relevant legal costs determination is inadequate and is inadequate because of the unusual difficulty, complexity or importance of the matter.

19 The defendants accepted that, in relation to the items in respect of which the plaintiffs seek a special order, the amount allowable under the relevant legal costs determination is inadequate for the work that necessarily was done, except in relation to items specifically identified by the defendants. I will consider those items separately but before doing so I will address whether the relevant scale limits should be removed or increased.

20 The defendants submitted that the court should not make an order that the plaintiffs' costs be taxed without regard to the limits prescribed in the legal costs determination in relation to the relevant items. The defendants submitted that the court should lift the limit prescribed in the legal costs determination in relation to the relevant items and set a new and appropriate limit in relation to each item. I do not accept that submission for the following reasons.

21 Section 215(2) of the Act empowers the court to make orders, amongst other things, lifting the limits on costs allowable under items in the legal costs determination. However, determining the amount that should be allowed as reasonable charges for work necessarily or reasonably done is a matter for the taxing officer, not for the judge. In Jewel Walk Pty Ltd v Kondinin Group Inc [2001] WASC 197 Roberts-Smith J said:

It is apposite at this point to say that I accept Mr Garnsworthy's submission that the effect of my making the special costs order sought - should I do so - would not impede the discretion of the taxing officer. If made, the order would merely allow that officer to consider the charges made beyond the scale limit. It would remain entirely for the exercise of the taxing officer's discretion to determine whether or not they should be allowed as being reasonable charges for work necessarily or reasonably done [31].

22 To fix a higher limit I would have to engage in some process akin to a preliminary taxation of the bill of costs. It is not appropriate that I do that. If I remove the limits then it is within the discretion of the taxing officer what amount should be allowed in relation to each item. The taxing officer might decide that he or she should allow no more than the amount allowed for by the scale notwithstanding that the court has made an order empowering the taxing officer to make an allowance greater than the amount set out in the scale. By removing the limits the court does not limit the discretion of the taxing officer. Rather, the court allows the taxing officer to allow such costs in relation to each item as the taxing officer determines to be necessary or proper. In some cases it will be appropriate for the judge to determine and fix a higher limit but in this case it is not appropriate to fix a higher limit because to do that the court would have to engage in either a taxation or some sort of preliminary taxation.

23 The Legal Practitioners (Supreme Court) (Contentious Business) Determination 2006 (WA) (the 2006 Costs Determination) is set out in a schedule to the report of the Legal Costs Committee published in Western Australia, Government Gazette, Gazette No 105 (26 June 2006) and entitled Legal Practitioners (Supreme Court) (Contentious Business) Report and Determination 2006 (the Report). In s 4 of the Report the Committee stated that it continued to adopt the hourly and daily rates charged by practitioners as the basis for the rates used in the 2006 Costs Determination. Clause 8 of the 2006 Costs Determination states that the hourly and daily rates set out in the Table to the clause are the maximum hourly and daily rates, inclusive of GST, which the Legal Costs Committee determines shall be used to calculate the dollar amounts in the scale of costs set out in the Table to cl 9 and each item in the scale of costs specifies a dollar amount with reference to the fee earner. The Table includes the following maximum allowable hourly and daily rates:

24 The Legal Practitioners (Supreme Court) (Contentious Business) Determination 2004 (WA) (the 2004 Costs Determination) is in similar terms but the hourly and daily rates are lower.

25 The plaintiffs have entered into a costs agreement with their solicitors. The hourly rates in the agreement are higher than in the scale. The plaintiffs have not sought an order that the costs in relation to any item be taxed at an hourly rate in excess of the hourly rates in the scale. In Flotilla Nominees Pullin J said:

... The whole point of the existing scale is that the rates are struck by reference to what is being charged within the profession. It is true that the hourly rates can only be an average or mean of the upper rates determined in the survey, and there will be some cases where the unusual complexity or importance of the case warrants the special expertise of the practitioner involved and warrants an increase in the hourly rate. In some cases not involving unusual complexity or importance, the higher rates paid will not be recoverable. A party is always entitled to the luxury of retaining the highest paid practitioners in the conduct of their case, but they cannot always expect to recover these costs from the other party [22].

26 In this case, the plaintiffs have submitted that the amount of costs allowable in respect of the relevant items under the relevant costs determinations is inadequate in that the number of hours work reasonably and necessarily done to carry out those matters exceeds the number of hours by which the maximum amount allowed under the scale item is calculated. The plaintiffs have not established, and have not sought to establish, that the hourly rates on which the scale items are calculated are inadequate and should be raised.

Allowable amounts conceded to be inadequate

27 The defendants accepted that the amounts allowable under the relevant costs determination are inadequate for the work that necessarily was done by the plaintiffs in relation to the following items: writ of summons, statement of claim, requesting and giving particulars of pleadings, discovery and getting up.

28 The plaintiffs sought to demonstrate the inadequacy of the amount allowable under the relevant items of the legal costs determination by providing a draft bill of costs.

29 I have considered the plaintiffs' draft bill of costs and the matters relating to each of those items deposed to by Andrew McGregor Kennedy, a solicitor who had the day-to-day conduct of the action for the plaintiffs. I find that in respect of each of the items writ of summons, statement of claim, requesting and giving particulars of pleadings, discovery and getting up the amount of costs allowable under the relevant costs determinations is inadequate and is inadequate because of the unusual difficulty, the complexity and the importance of the matter.

30 The plaintiffs' draft bill of costs claims $8,329.28 for 21.12 hours drawing and settling interrogatories. The amount allowed under the scale item is $1,705, being five hours at the rate of a senior practitioner. The plaintiffs claim $10,184.46 for 32.67 hours drawing and settling answers to interrogatories. The amount allowable under the 2006 Costs Determination and the 2004 Costs Determination is $3,630 and $3,410 respectively. In each case, the item allows for 10 hours work by a senior practitioner.

31 The defendants submit that the interrogatories delivered by the plaintiffs were brief and formulaic and say that there is nothing about the work apparently performed which indicates, on its face, why a special costs order is justified.

32 Counsel for the plaintiffs conceded that neither the interrogatories delivered by the plaintiffs for the examination of the defendants nor the plaintiffs' answers to interrogatories delivered by the defendants were very extensive but submitted that a lot of care and attention had been given to them. Counsel conceded that 'one might argue that the scale is just about sufficient' (ts 578).

33 I have examined the interrogatories delivered by the plaintiffs for the examination of the defendants and the plaintiffs' answers to interrogatories delivered by the defendants. I am not persuaded that the allowances in the costs determinations are inadequate having regard to the tasks that were undertaken and the work reflected in the documents drafted and settled.

34 The plaintiffs' draft bill of costs claims costs in relation to 14 separate proceedings or applications in chambers. The amounts claimed in respect of each of the applications, except for the plaintiffs' chamber summonses of 13 February 2006 and 24 February 2006 and the defendants' chamber summons of 18 September 2006, are for amounts less than the amount allowed under the relevant costs determination. Accordingly, it is only necessary to consider those three applications.

35 The plaintiffs' summons of 13 February 2006 applied for an interlocutory injunction. The application was supported by four affidavits, two of which were extensive. There was a hearing on 16 February and again on 16 March 2006. I find that the amount of work necessarily and reasonably done was such that the amount allowable under the scale is inadequate and is inadequate by reason of the difficulty and complexity and importance of the matter.

36 The plaintiffs' chamber summons of 24 February 2006 applied for an interim injunction. The application was supported by an affidavit. There was a hearing on 24 February 2006 and a further hearing of less than an hour on 20 April 2006. The scale allows $8,679, being two days preparation and one day of hearing at the rate for counsel. There is an additional allowance for attending on the reserve judgment in chambers. The amount allowable for the plaintiffs' chamber summons for interim injunction heard 24 February 2006 is inadequate. Counsel for the defendant did not argue to the contrary.

37 The defendants' chamber summons of 18 September 2006 sought a stay of proceedings. There was a hearing before me which lasted approximately 2.5 hours. The scale allowance is $9,306 based upon two days preparation and one day hearing at the rate for counsel. I am not persuaded that the amount allowable under the scale is inadequate.

38 The orders initially sought by the plaintiffs included special costs orders for fee on brief for junior counsel and fee on brief for senior counsel. At the hearing of the application counsel for the plaintiffs did not press these items. It was common ground that [47] of the orders of 3 November 2006 that 'the taxing officer make a reasonable allowance for the fees of senior counsel' made a special costs order in relation to the fee on brief for senior counsel unnecessary. Counsel for the plaintiffs did not press for a special costs order in relation to the fee on brief for junior counsel 'because we don't claim a junior counsel fee on brief' (ts 583).

39 The plaintiffs initially claimed a special costs order in relation to counsel fee for the second and each successive day of the hearing and for a counsel fee for senior counsel for the second and each successive day on hearing. On the hearing of the application counsel for the plaintiffs did not press for a special costs order in relation to either item. Again, it was common ground that the order made on 3 November 2006 that 'the taxing officer make a reasonable allowance for the fees of senior counsel' made any special costs order in relation to the fees of senior counsel unnecessary. The plaintiff did not press for any special costs order in relation to counsel fees for junior counsel.

40 Counsel for the plaintiffs did not press for special costs orders in relation to these items because the amount allowable under the scale items is adequate.

41 Counsel for the plaintiffs did not press for a special order in relation to settling and extracting orders because counsel accepted that the amount allowable under the scale is adequate.

42 The plaintiffs seek a direction that the taxing officer make a reasonable allowance for research without regard to limits in the relevant costs determination. In the course of his submissions counsel for the plaintiffs did not claim costs for research as an item separate from getting up. Counsel for the plaintiffs submitted that the plaintiffs press for a direction to that effect because there is a debate amongst practitioners whether research is or may be work that may be compensated for under the item getting up.

43 Counsel for the defendants did not concede that any specific order should be made about research but submitted that if an order was to be made then it should not be one that, in effect, directs the taxing officer to make a reasonable allowance for research but rather should be one that permits the taxing officer to make an allowance for research as part of getting up to the extent that the taxing officer considers it to be reasonable and proper.

44 Research is capable of being work done as part of getting up the case for trial. In this case, it was necessary for the plaintiffs' solicitors to identify what the plaintiffs would have to prove to establish a contravention of s 38 of the BCII Act. That involves a consideration of the terms of the legislation and its interpretation. The legislation is relatively new and a practitioner should not be expected to know the terms of the legislation, and what must be proved to establish a contravention of s 38 of the BCII Act, without undertaking some research. The plaintiffs are entitled to claim the costs of such research. It is for the taxing officer to determine what research was undertaken and the amount that should reasonably be allowed for such work. Such work is to form part of the getting up case for trial. There should be an order to the effect that in determining the amount allowed to the plaintiffs for getting up the taxing officer should make a reasonable allowance for research undertaken by the plaintiffs to the extent that the taxing officer considers such research was reasonably necessary for the plaintiffs to conduct the action.

45 The plaintiffs seek a direction that the taxing officer make a reasonable allowance for the preparation and attendance of counsel and an instructing solicitor at the taxation of the plaintiff's costs without regard to limits in the relevant determination of the Legal Costs Committee.

46 The scale item for taxation includes drawing bill of costs, copies and service and taxation of costs, including the time spent in preparation for the taxation. The amounts allowable are 'such amounts as are reasonable in the circumstances'.

47 In the course of argument counsel for the plaintiffs submitted that the plaintiffs seek an order that it should be open to the taxing officer to make an order or to make an allowance for counsel and instructing solicitor if the taxing officer considers that was necessary and proper at the taxation. There should be an order to that effect.

48 In their application the plaintiffs sought an order that their costs be taxed and paid forthwith by the defendants jointly and severally. That was not pressed at the hearing.

49 I am of the opinion that the amount of costs allowable under the relevant legal costs determination in respect of certain items is inadequate because of the unusual difficulty, complexity and importance of the matter. Those items are:

item 1(a) - writ of summons;
item 1(b) - statement of claim;

item 6 - requesting particulars of pleadings and giving particulars of pleadings;

item 7 - discovery;
item 10 - chambers in relation to the plaintiffs' application for interlocutory injunction of 13 February 2006 and the plaintiffs' chamber summons for interim injunction of 24 February 2006;
item 16 - getting up case for trial.

50 Having regard to all of the circumstances it is an appropriate exercise of my discretion to remove the limits on the costs fixed in the determination in relation to each of those items.

51 It is also appropriate to make further orders as follows. First, in determining the amount to be allowed for getting up case for trial, the taxing officer should make a reasonable allowance for research undertaken by the plaintiffs' solicitors to the extent that the research was reasonably necessary for the proper conduct of the action. There should be a further direction that the taxing officer may make an allowance for the preparation and attendance of counsel and an instructing solicitor at the taxation of the plaintiffs' costs to the extent that the taxing officer considers to be reasonably necessary.

52 The amount allowable in respect of each item will be a matter for the taxing officer. The special costs orders that I make empower, but do not require, the taxing officer to allow costs in excess of the amounts fixed in the legal costs determination in respect of each item in the scale.

Construction Industry Improvement Act 2005

Construction Industry (Consequential and Transitional) Act 2005

Construction Industry Improvement (Consequential and Transitional) Act 2005

Retail Marketing Sites Act 1980

LEIGHTON CONTRACTORS PTY LTD -v- CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION [No 4] [2006] WASC 317 (3 November 2006)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (195 paragraphs)

LEIGHTON CONTRACTORS PTY LTD -v- CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION [No 4] [2006] WASC 317 (3 November 2006)

Legislation Cited (6)

Cases Cited (5)