Lend Lease Project Management & Construction (Australia) Pty Ltd v Construction, Forestry, Mining and Energy Union

Background 12 I take the background primarily from the Statement of Agreed Facts and Contentions filed by the parties. 13 As I have already noted, Lend Lease was, at all material times, principal contractor in respect of the Law Courts Project and the GCUH Project. In summary, the respondents to QUD 79 of 2011 and QUD 110 of 2011 were unions representing workers engaged in those projects. The respondents to QUD 126 of 2011 were those unions as well as: employees, officials or organisers of the CFMEU and/or CFMEU (Qld) (Messrs Pearson, Vink, O'Doherty, Hanna, Jarvis and Olsen); and an employee, official or organiser of the CEPU (Mr Malone). 14 At all material times the Director (or its predecessor, the ABCC) was entitled to bring proceedings and make application for relief sought by operation of s 49 and s 73 of the BCII Act. 15 Lend Lease engaged, at all material times, up to 86 subcontractors to perform building work on the GCUH Project and up to 28 subcontractors to perform building work on the Law Courts Project. Lend Lease also employed workers on both projects who were members of the CFMEU and the CEPU. 16 In 2011, the CFMEU conducted a campaign called "Stop the Sham" which was intended to prevent a practice known as "sham contracting" in the construction industry. An allegation of "sham contracting" contemplates a sub-contractor purporting to engage workers as independent contractors when in reality they are employees of the sub-contractor, with those workers receiving lower wages and fewer entitlements than employees. 17 On 18, 19, 20, 21, 23, 24, 25 and 26 May 2011 employees of Lend Lease at the GCUH site took industrial action. 18 On 24, 25, 26 and 27 May 2011 employees of Lend Lease at the Law Courts site took industrial action. 19 The parties have agreed that this industrial action was variously engaged in and organised by the CFMEU, the CFMEU (Qld) and/or the CEPU, and Messrs Vink, Hanna, Jarvis and Olsen, and was unlawful industrial action in breach of ss 36(1), 37 and 38 of the BCII Act. In particular: On 18 May 2011 at the GCUH site - unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Messrs Vink, Hanna, Jarvis and Olsen involved (inter alia) the following elements: o protests, a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; o a meeting convened and addressed by Messrs Hanna, Olsen, Jarvis and Vink, as well as Mr Michael Ravbar, the State Secretary of the Queensland Construction and General Divisional Branch of the CFMEU; and o a meeting between Messrs Hanna and Ravbar and Lend Lease senior management. On 19 May 2011 at the GCUH site - unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Messrs Hanna and Jarvis involved (inter alia): o a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and o meetings between employees and senior CFMEU officials including Messrs Hanna and Jarvis. On 20 May 2011 at the GCUH site - unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Mr Hanna involved (inter alia): o a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and o a meeting convened and addressed by senior officials of the CFMEU, namely Mr Jamie McQueen and Mr Hanna. On 21 May 2011 at the GCUH site - unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Messrs Jarvis and Olsen involved (inter alia): o a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and o attendance at the GCUH site by delegates and officials from the CFMEU and/or CFMEU (Qld), including Messrs Jarvis and Olsen, and indication by those delegates to the workers that they should leave the site. On 23 May 2011 at the GCUH site - unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Mr Hanna involved (inter alia): o a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; o a meeting convened and addressed by delegates and senior officials from the CFMEU and/or CFMEU (Qld), including Messrs Hanna and Ravbar; and o an address by Mr Hanna to workers, including an invitation to sign a petition in relation to the industrial action. On 24 May 2011 at the GCUH site, unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Mr Hanna involved (inter alia): o a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and o an address by Mr Hanna to workers, including an invitation to participate in a convoy that day during work hours that involved driving vehicles from the GCUH site to Brisbane (which occurred). Similarly on 24 May 2011 at the Law Courts site, unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Messrs Pearson and O'Doherty involved (inter alia): o a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and o a meeting convened and addressed by officials from the CFMEU and/or CFMEU (Qld) and/or CEPU. On 25 May 2011 at the GCUH site, unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Messrs Hanna and Vink involved (inter alia): o a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and o a meeting convened and addressed by Messrs Hanna, Ravbar and Vink. Similarly on 25 May 2011 at the Law Courts site, unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Mr Pearson involved (inter alia): o a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and o organisers for the CFMEU and/or CFMEU (Qld) and Mr Pearson informing workers that there was a strike and they should not be working. On 26 May 2011 at the GCUH site, unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Messrs Malone and Jarvis involved (inter alia): o a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; o a meeting convened and addressed by organisers and senior officials from the CFMEU and the CEPU including Messrs Malone, Jarvis and McQueen; and o Mr Malone making comments concerning "crossing the picket line", and Mr Jarvis making comments concerning "the commitment as the union to man this gate…". Similarly on 26 May 2011 at the Law Courts site, unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Messrs Pearson and O'Doherty involved (inter alia): o a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and o organisers and delegates for the CFMEU and/or CFMEU (Qld), including Messrs Pearson and O'Doherty and Mr Pat Maher, telling workers who attended for work not to enter the Law Courts site but to attend a meeting at the Roma Street Parklands. On 27 May 2011 at the Law Courts site, unlawful industrial action engaged in and organised by the CFMEU and/or CFMEU (Qld) and Mr Pearson involved (inter alia): o a meeting of workers (including members of the CFMEU, CFMEU (Qld) and CEPU), departure of those workers from the site and failure of workers to perform work on that day; and o organisers for the CFMEU and/or CFMEU (Qld), including Mr Pearson, telling workers who attended for work not to enter the Law Courts site but to attend a meeting at the Roma Street Parklands. 20 As a result of this combined activity, the CFMEU, CFMEU (Qld), CEPU and Messrs Pearson, Vink, O'Doherty, Hanna, Jarvis, Olsen and Malone each admit: 1. to engaging in unlawful industrial action within the meaning of s 36 and s 37 of the BCII Act on each of the dates I have listed, thereby separately contravening s 38 of the BCII Act on each of those dates. 2. that they were "involved in" a contravention of a civil penalty provision within the meaning of s 48(2) of the BCII Act, and are thereby to be treated to have contravened s 38 of the BCII Act by aiding, abetting, counselling and procuring the unlawful industrial action on each of those dates. 3. that by s 69 of the BCII Act: the CFMEU and the CFMEU (Qld) are liable for the conduct and contraventions of Messrs Pearson, Vink, O'Doherty, Hanna, Jarvis and Olsen; and the CEPU is liable for the conduct and contraventions of Mr Malone. 21 It is not in dispute that the unlawful industrial action had a significant effect on both the GCUH Project and the Law Courts Project because no work was undertaken on any of the days in question on either project. The respondents admit that this unlawful industrial action caused a delay to the critical path of each project of: 8 days in respect of the GCUH Project; and 5 days in respect of the Law Courts Project. 22 Lend Lease has estimated that the daily cost of operating the respective projects on the delayed days was: on the GCUH Project - $115,722 per day; and on the Law Courts Project - $56,998.93 per day. 23 It is not in dispute that the unlawful industrial action on these days caused Lend Lease to suffer significant loss and damage.

Consideration of penalties 30 The respondents concede breaches of s 38 of the BCII Act, which provides that a person must not engage in unlawful industrial action. Building industry action is unlawful industrial action if: (a) the action is industrially-motivated; and (b) the action is constitutionally-connected action; and (c) the action is not excluded action. (s 37 BCII Act) 31 In this case although the parties have reached agreement in respect of both culpability of the respondents and appropriate sanctions, it is ultimately for the Court to determine both the nature and quantum of any penalties to be imposed on the respondents. It is also clear, however, that the Court should give weight to any agreement reached by the parties as to penalties, and should generally give effect to the agreed penalty provided it falls within the appropriate range: NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 291 and 298; Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [129]; White v Construction, Forestry, Mining and Energy Union [2011] FCA 192 at [5]. This is particularly so in light of the support given by the Director to the agreed penalty: cf Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993 at [51] and Hardwick v Australian Manufacturing Workers' Union (2010) FCA 818 at [13] and [19]. 32 In Australian Building & Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977 Barker J summarised general principles relevant to imposition of civil penalties in the following terms: [4] Sentencing (which the imposition of a civil penalty is an instance of) is one of the most, if not the most difficult tasks that judicial officers perform: CFMEU v Williams [2009] FCAFC 171; (2009) 262 ALR 417 (Williams) at [28]. [5] The overriding principle is to ensure that the sentence is proportionate to the gravity of the contravening conduct: Attorney-General (SA) v Tichy (1982) SASR 84 at 92-93. [6] The purpose to be served by the imposition of penalties is at least threefold: (1) Punishment, which must be proportionate to the offence and in accordance with prevailing standards; (2) Deterrence, both personal (assessing the risk of re-offending) and general (a deterrent to others who might be likely to offend); and (3) Rehabilitation. See Ponzio v BP Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543 (Ponzio), Lander J at [93]-[94]. [7] The task which a sentencing judge is faced with is one of "instinctive synthesis": Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560 (Australian Ophthalmic Supplies), Gray J at [27] and Graham J [55]. Such a process requires that a court take into account all relevant factors and to arrive at a single result which takes due account of them all: see Wong v The Queen [2001] HCA 64; [2001] HCA 64; (2001) 207 CLR 584 at [74]-[76]; Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 (Markarian), Gleeson CJ, Gummow, Hayne and Callinan JJ at [37]-[39]. The penalty must not be so great as to crush the person upon whom the penalty is imposed or reveal the person as a scapegoat: Ponzio at [93] (Lander J); McDonald v R (1994) 48 FCR 555 at 563. The maximum penalty is reserved for only the most serious of contraventions: Markarian at [31]. Proportionality and consistency commonly operate as a final check on the penalty assessed: Australian Ophthalmic Supplies at [53]. 33 I respectfully adopt his Honour's summary as providing an overall guide to the approach of the Court in relation to the imposition of civil penalties. 34 Further, and more recently, Tracey J in Alfred v Construction, Forestry, Mining and Energy Union [2011] FCA 556 summarised factors which, in his Honour's view, were relevant to consideration of the penalty upon which the parties in that particular case had agreed. Those factors were as follows (at [70]): • The nature and extent of the conduct which led to the breaches. • The circumstances in which that relevant conduct took place. • The nature and extent of any loss or damage sustained as a result of the breaches. • Whether there had been similar previous conduct by the respondent. • Whether or not the breaches were deliberate. • Whether the respondent had exhibited contrition. • Whether the respondent had taken corrective action. • Whether the respondent had co-operated with the enforcement authority. • The need for specific and general deterrence. 35 In my view this list is a helpful guide to the exercise of the discretion of the Court in the current circumstances in determining an appropriate penalty. With reference to these factors, I now make the following observations concerning appropriate penalties in this case. 36 First, it is not in dispute that both the Law Courts Project and the GCUH Project are major projects in south-east Queensland, with projected values of approximately $570 million in relation to the Law Courts Project and $1.76 billion in relation to the GCUH Project. Further, the unlawful industrial action was protracted, conspicuously public, and co-ordinated across the two project sites. Hundreds of workers on both sites ceased work on the days I listed earlier in this judgment, causing delays to the critical path of each project (5 days in respect of the Law Courts Project and 8 days in respect of the GCUH Project). 37 Second, the unlawful industrial action was not taken by the respondents in relation to specific concerns relevant to the particular sites, but rather was taken as part of an industry-wide campaign relating to union claims of sham contracting. 38 Third, and importantly, the unlawful industrial action was taken despite orders from Fair Work Australia that it should not occur. 39 Fourth, it is clear that the unlawful industrial action of the respondents caused serious disruption to Lend Lease. It is not in dispute that, as a result, Lend Lease suffered estimated loss and damage totalling $1,210,770.65. 40 Fifth, it is not in dispute that the contravening conduct of the respondents was deliberate, in pursuit of general and (in the final result in these proceedings) unsubstantiated claims by the unions of sham contracting, and in contravention of orders of Fair Work Australia. This is not a case where, for example, the contravention was inadvertent. 41 Sixth, it is questionable whether the respondents have demonstrated contrition in respect of the contraventions of the legislation. Rather, in their written submissions they vaguely referred to a "willingness to facilitate justice". Nonetheless, the respondents have conceded that contraventions of the legislation occurred, and have reached agreement with the applicants - including the Director - in relation to appropriate penalties and injunctive relief. I note that the proceedings were set down for hearing for a combined period of several weeks. The agreement of the parties obviated the need for trials, and the associated expenditure which would have been incurred by all parties. 42 Seventh, to the extent that the respondents agreed to facts, penalties and other remedial orders, the respondents have demonstrated co-operation with the regulatory authorities in these proceedings. 43 Eighth, as observed by Lander J in Ponzio at [93] the penalty must recognise the need for deterrence, both personal and general. As his Honour further explained: In regard to personal deterrence, an assessment must be made of the risk of re-offending. In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217. 44 As at the date of hearing it appeared that the respondents had an ongoing involvement, not only in the construction industry, but in activity at the sites of both projects. To that extent, specific deterrence in relation to unlawful industrial activity is of particular significance. The continuing involvement of the unions and the individual respondents (being officials of those unions) in the building and construction industry in Australia emphasises the importance of general deterrence in preventing similar contraventions of the legislation. 45 In this case penalties at different levels are submitted as appropriate for the unions - which are large and well-funded organisations - and the individual respondents. In my view this is a proper approach. I also note that, in reaching agreement, the parties clearly do not consider that the penalties proposed are such as, in the words of Lander J in Ponzio, "to crush the person upon whom the penalty is imposed or … to make that person a scapegoat".

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