Appeal ground 16 (on penalty) - asserted error in fixing penalty for CFMEU NSW by reference only to prior contraventions
321 The appellants characterise these four grounds of appeal as all dealing with the objective seriousness of the contraventions, affecting all of the appellants. Those grounds in the amended notice of appeal are as follows:
(1) Ground 11, concerning the use made of prior contraventions, states:
The primary judge erred in the exercise of his discretion at [33] of Parker (No 2) as to the ordering of the maximum penalties against the CFMEU.
Particulars
(i) The ordering of the maximum penalty was dependent upon a finding at [32] of Parker (No 2) that [it] is not possible to envisage worse union behaviour. This is not the test for the determination of penalty.
(ii) The primary judge was required to ensure that the penalty was not determined by the past history of the contravenor in a way that made the penalty disproportionate to the gravity of the contravention;
(iii) The primary judge was required to determine whether the ordering of the maximum penalty was appropriate as to each individual contravention.
(2) Ground 12, asserting manifest excess for all of the penalties, states:
The penalties were manifestly excessive. The penalties are set out at [8], [33], [36], [39], and [46] of Parker (No 2).
(3) Ground 13, as to the use made of recidivism, states:
The primary judge conflated recidivism at [31] of Parker (No 2) with a finding as to the conduct in this particular case at [32] of Parker (No 2) when the primary judge should have determined the objective seriousness of the matter separately to a consideration of past conduct.
(4) Ground 16, as to CFMEU NSW, states:
The primary judge erred at [35]-[36] of Parker (No 2) in determining the penalty for the CFMEU NSW by reference only to its prior contraventions.
322 These grounds must be taken to be addressing issues other than totality, for which the four principal individual appellants have failed, and the two Unions have succeeded.
323 The appellants' complaints arising from these grounds largely turn on an asserted failure by the primary judge to address objective seriousness and, especially for the CFMEU, the application of very high penalties by reason of past conduct as a finding of character, which, unless projected into the future in the manner contemplated by the High Court in Veen v The Queen (No 2) (1988) 164 CLR 465 (Veen (No 2)) (at 477-8), was irrelevant. The appellants submit that:
(1) the character of a contravener does not determine the objective seriousness of the contravention being considered;
(2) as such, the maximum penalties should have been reserved for contraventions found to be so grave as to warrant the maximum penalty, even if worse conduct could be envisaged;
(3) his Honour erred in applying the maximum penalty to all contraventions by the CFMEU when they were not grave enough to warrant that, and were different as between each; and
(4) the penalties were manifestly excessive so as to be clearly outside the available range, being:
(a) wholly cumulative;
(b) at the maximum of the range for the CFMEU;
(c) beyond the range of any penalties previously applied to appellants with similar records of contravention; and
(d) higher than contended for by the parties (and, most relevantly, higher than contended for by the Commissioner as the regulator).
324 The Commissioner relies heavily on the substantial burden on an appellant in seeking to disturb the exercise of a sentencing-like discretion by way of the imposition of a civil penalty, requiring it to be wholly outside the range of penalty-imposition options available, such that no reasonable judge could have imposed the penalty on the given contravener in all the circumstances, citing Cahill at [51] and the Perth Airport case at [52]-[53]. The Commissioner points out that while maximum penalties are intended for cases falling within the worst category of cases, that does not mean that a lesser penalty must be imposed if it is possible to envisage a worse case: Veen (No 2) at 478.
325 The Commissioner submits that, in determining the penalty for the Unions, the primary judge had to rely on his Honour's assessment of the objective seriousness of the conduct by the individual appellants as Union officials, employees and agents, because the Unions acted through them and because their conduct is deemed to be that of the Unions by s 793 of the Act. His Honour duly assessed the objective seriousness of the individual appellants in the penalty judgment at [24]-[27] and [37]-[53]. At [24], his Honour indicated that it was because of the seriousness of the conduct of Messrs Parker, Kera, Reeves and Collier that he was obliged to consider maximum penalties for all of them and for the Unions. His Honour knew he was required to pay "careful attention" to the maximum penalties as a yardstick, citing Markarian v The Queen [2005] HCA 25; 228 CLR 357 at [31]. Messrs Parker and Kera, as the most serious of the individual contraveners, had 90% and 80% of the maximum individual penalties imposed on them respectively.
326 The Commissioner submits that when the primary judge came to consider the position of the Unions, and especially that of the CFMEU, the primary judge correctly took into account whether they had engaged in similar previous conduct as a relevant factor that his Honour had noted at the outset of the penalty reasons at [6]. This consideration, whilst not determinative of penalty, is built on the assessment of the objective seriousness of the officials' conduct, and the obligation on the primary judge to deter serial recidivists, consistently with the Perth Airport case at [90]-[91]. The Commissioner notes that the CFMEU's status as a serial recidivist is not challenged by the appellants. His Honour accepted the Commissioner's submissions, which made lengthy reference to the previous findings of the Court against the CFMEU for contraventions of the Act and related legislation, as summarised in a table to which the primary judge referred at [29] of the penalty judgment, and as to which "further illumination" was to be found in a number of prior decisions of this Court dealing with the CFMEU's history of contraventions: see Construction, Forestry, Mining and Energy Union v Australian Building and Construction Commissioner [2016] FCAFC 184; 247 FCR 339 at [90]-[95]; the Perth Airport case at [83]-[86], and The Australian Paper Case at [31].
327 The Commissioner submits that, in giving consideration to the CFMEU's past history of contraventions, the primary judge clearly had deterrence in mind, for example, stating at [32] that the contraventions in the present case indicated a willingness to continue to show contempt for the law and that prior penalties had failed to act as a deterrent. This indicated to his Honour that, in deciding to deliberately breach the law once again, the CFMEU's conduct involved a case that fell into the worst category and warranted the maximum penalties, with the penalty clearly reflecting his Honour's disapproval of the flagrant conduct in this case. The Commissioner submits that it is not an error to express such disapproval in the imposition of a severe penalty and, in this case, that was legitimately available. The Commissioner draws on longstanding authority that "[r]epeated conduct of a particular kind may lead to an identified need to provide some particularly persuasive form of deterrent against similar future misconduct", quoting Temple v Powell [2008] FCA 714; 169 FCR 169 at [64].
328 The Commissioner points out that the primary judge found defiance of the s 418 orders by the Fair Work Commission, and took into account at [58]-[63] the significant sums available to the CFMEU, which it was accepted would be used to pay the penalties of the individual appellants. The Commissioner also notes the primary judge's concern that the behaviour of the CFMEU indicated that it regarded penalties as the cost of doing business, a matter considered to be of importance in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113; 254 FCR 68 (Queensland Children's Hospital case) at [98], [105] and [156]. The Commissioner cautions that the flexibility to be afforded to a judge considering the sanctions to be imposed in a civil penalty case should not be judged through the prism of the application of sentencing principles in the criminal law, where the liberty of persons is at stake: Civil Penalties case at [93], [101].
329 The Commissioner submits that the penalties imposed on the individual appellants were supported by due consideration of their individual conduct and circumstances. He submits that the penalties were varied appropriately according to the degree of the individual appellants' involvement and the seriousness of their conduct. Viewed in that way, the Commissioner submits that those penalties were not so unreasonable, disproportionate or unjust as to suggest an error in the sentencing process. His Honour had in mind and took account of the adverse findings he made against Messrs Parker, Kera, Collier, Reeves and Sloane, and the significance for them of those findings with regard to penalty, referring to the liability judgment at [70]-[74] and [284] and the penalty judgment at [90]-[96].
330 The Commissioner notes that the appellants' submissions do not point to any mitigating factors that the primary judge failed to take into account.
331 The Commissioner submits that bare comparison with the quantum of penalties imposed in other cases is not a useful guide, citing Director of Consumer Affairs Victoria v Alpha Flight Services Pty Ltd [2015] FCAFC 118 at [74]-[76].
332 Finally, in relation to ground 15, the Commissioner submits that it is an unwarranted reading of the primary judge's reasons to assert that [35]-[36] of the penalty judgment were the only matters his Honour considered relevant to imposing a penalty on the CFMEU NSW. As that Union acted through the individual appellants, all of whom were its officials, employees, members or agents, all of the consideration given to their penalties necessarily applied to the CFMEU NSW. The Commissioner submits that it was therefore appropriate for the primary judge to take into account that Union's lesser record of prior contraventions when considering how that affected the imposition of penalty for deterrence. However, while its record of prior contraventions was less substantial, it was still relevant that the individual appellants, through whom the CFMEU NSW acted, were the same persons who had displayed the attitude that the law could be flouted as a cost of doing business that had been of concern to his Honour. The Commissioner thus submits that, in all of the circumstances, the penalty of 75% of the maximum imposed on the CFMEU NSW was not shown to be unreasonable or unjust so as to indicate error.
333 In reply, the appellants reiterate that the key issue was not merely an assertion of excessive penalties, but, rather, an asserted and, in effect, causal failure to assess the objective seriousness of each contravention by each appellant, reserving the maximum penalty for the worst category. The appellants submit that the CFMEU should not be penalised at the maximum level when some of the individual appellants from which its liability arose did not have the maximum penalty imposed. The appellants reiterate the limited role that past contraventions can have in determining penalty.
334 The detailed submissions summarised above can be distilled into three key considerations for determination on appeal:
(1) whether the primary judge paid insufficient attention to the objective seriousness of the contraventions, most especially as to conduct attributed to the two Unions;
(2) whether, as a result or independently, the past contraventions were misused by his Honour so as to sanction past contraventions afresh, rather than being properly confined to the instant contraventions;
(3) whether, additionally to, or independently of, the question of overt error being established, the penalties imposed were, taken holistically, manifestly excessive in all the circumstances.
335 Turning first to the primary judge's consideration of objective seriousness, a fundamental problem with the appellants' case is that it treats the penalty judgment as though it was the single output of a penalty hearing that flowed from a case in which liability was not contested. When those are the circumstances, the sole judgment must necessarily reflect the totality of the judge's reasoning, or at least all the factors that contributed in a material way to the result, prior to the application of totality reasoning. That is not this case. His Honour presided over a 10-day trial that took place in July, August and December 2016. That was followed by a very detailed 174-page liability judgment, canvassing what transpired over the two key days, plus the lead up to those days. That judgment did not go all one way. While the Commissioner substantially succeeded, he also suffered significant setbacks.
336 The primary judge considered the facts and circumstances carefully, closely and in considerable detail in the liability judgment. There was then a separate penalty hearing, preceded by detailed written submissions. The penalty judgment expressly and contextually refers to the liability judgment, both at the outset and in numerous places throughout. The two judgments are to be read together when assessing the penalties imposed, noting that the liability judgment describes the conduct and the conclusions his Honour reached as to the conduct in considerable detail.
337 A careful reading of the penalty judgment reveals that his Honour was frequently referring in a summary way to the conclusions earlier reached in the liability judgment, albeit mainly when addressing the conduct of the individual appellants. His Honour went so far as to make certain corrections to the findings made in the liability judgment, reinforcing how prominent that was in the penalty assessment process.
338 When all of the foregoing is considered, it was not necessary for the primary judge to refer overtly to the objective seriousness of the contravening conduct, although the absence of such overt findings makes the consideration of manifest excess in the absence of overt error a more open question. None-the-less, an overt and free-standing statement of objective seriousness may be no more than a convenient general description of the content of what must be considered, and is not a label the absence of which can, without more, indicate that this was not considered. The appellants' submission to the effect that the objective seriousness of the contravening conduct was overlooked, or otherwise not evaluated, cannot be accepted when due regard is had to the totality of the trial process, and the liability and penalty judgments as a whole. Whether the end result properly reflects the objective seriousness of what took place therefore falls for assessment under the third consideration of manifest excess in the absence of overt error. The live issue then is not whether objective seriousness was not taken into account, but whether the view taken of it overwhelmed the exercise of the discretion.
339 As to the second consideration, being the use that was put by the primary judge to prior contraventions, especially in respect of the CFMEU, a court imposing a civil penalty is entitled to have regard to such prior contraventions in the exercise of the discretion, but that does not permit such a history to be given such weight as to lead to the imposition of a penalty that is disproportionate to the gravity of the contravention that is being considered: Veen (No 2) at 477. That is because a court should impose a penalty that is proportionate to the gravity of the contravention being sanctioned, and no more. This is also supported by s 546(1) of the Act, which expressly provides for what would otherwise likely be implicit, namely, for the Court to fix an "appropriate" penalty for a contravention. A civil penalty that is not proportionate cannot be regarded as appropriate, and therefore cannot meet that statutory requirement.
340 The Full Court in Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (Non-Indemnification Personal Payment Case) [2018] FCAFC 97 observed (at [22]):
The overwhelming importance of deterrence as the protective purpose of the penalty does not exclude the need to determine a penalty which is proportionate to the contravening conduct. The history of contravention is to be taken into account in fixing the proper level of penalty for the proportionate response to the contravention in question. Proportionality has within it the need to characterise the seriousness of the contravention. Proportionality of penal response to a contravention assessed by reference to its seriousness and gravity is an essential characteristic of the application of the statute. The penal response is for that contravention, not earlier contraventions: Veen v The Queen [No 2] [1988] HCA 14; 164 CLR 465 at 477-478. Prior contraventions may reveal an apparent disregard for the Act and the need for deterrence by a penalty at a level appropriate to achieve that objective. It is to be borne in mind, however, that it is for the conduct in question that the penalty is imposed, not for prior conduct.
341 Thus, the role of any past contraventions is to be no more than a prism through which to view the instant contravention. This enables a court to assess whether, for example, the instant contravention is an "uncharacteristic aberration", or whether the contravener has, by the instant conduct, manifested "a continuing attitude of disobedience of the law". If the latter, as is clearly available to be concluded in this case, the heightened need for deterrence may indicate that a more severe penalty is warranted for the instant contravention. Nonetheless, that penalty must still fall within the applicable range that is otherwise considered appropriate for that contravention. If that is not carefully observed, the contravener may suffer the fate of being sanctioned anew for past contraventions, as the above quote from Veen (No 2) makes clear is not permitted.
342 Veen (No 2) also provides valuable guidance as to the role of the maximum penalty. The High Court's observations at 478 make it clear that the maximum penalty is reserved for contraventions falling within the worst category of cases for which that penalty is prescribed. This does not require characterisation as the worst possible case. However, a case is not in the worst category merely by reason that the contravener has a history of prior contraventions, although that history may assist in the proper characterisation of the instant contravention. Considerable caution may be required to avoid blurring this distinction. This is especially so when, as in this case, past contraventions are many in number, extend over a protracted period of time and the legislature has not seen fit to provide greater penalties for second and subsequent contraventions.
343 Applying the foregoing, several aspects of the primary judge's comments about prior contraventions by the CFMEU require careful consideration. His Honour carefully and extensively considered the conduct of the nine individual appellants, and especially that of the four principal individual appellants, Messrs Parker, Kera, Reeves and Collier, whose conduct gave rise to the attribution of liability on the part of both Unions, making extensive findings of fact and findings of contravention in the liability judgment in relation to each of the individual appellants. The penalties imposed on the nine individual appellants for the s 417 contraventions had quite a wide range of differentiation, ranging from $3,000 to $9,000 out of a maximum of $10,200. The penalties imposed on the four individual appellants for the coercion contraventions (ss 348 and 355) had a lesser degree of differentiation, ranging from $7,000 to $9,200. The primary judge, as a result of his Honour's factual findings on liability, plainly considered that some contraventions were more serious than others. His Honour varied the penalties imposed on the individual appellants accordingly.
344 When it came to attribution, with the exception of the s 50 contravention where the CFMEU but not the CFMEU NSW was liable, the attributed conduct giving rise to liability, and thus penalty, was exactly the same. The starting point for the imposition of penalties upon the two Unions was therefore that the basis for attribution (apart from s 50) was the same in the hands of each Union; but the conduct being attributed to each Union in fact differed according to the differential conduct of the individual appellants. These points of difference were important; if they were not to carry through to the penalties imposed for each contravention by each Union, that needed to be explained. Yet, as will be seen, the only identified basis for differentiation that was applied was the difference in the past contravening history of each Union.
345 Given that the Unions had no capacity to act except through such natural persons, their contravening conduct necessarily did not receive separate consideration at the liability stage beyond the findings made as to the capacity in which the individual appellants were acting. Rather, his Honour, at [537] of the liability judgment made findings of contravention against the CFMEU in relation to the s 50 contravention; and at [540] of the liability judgment made attributed findings of contravention against both the CFMEU and CFMEU NSW. When it came to the evaluation of the conduct of the two Unions for the purpose of imposing penalties upon them, his Honour's comments as relevant to the conduct of those Unions were either cast at a level as to what had taken place overall, such as the impact of the strike on loss or damage, or were of an evaluative kind. As to that evaluative exercise, his Honour said (in the penalty judgment at [29]-[36]) the following (emphasis added):
In very summary form, the CFMEU has been found in the present proceeding to have contravened ss 50, 348, 355 and 417 of the Fair Work Act. A separate Table prepared by the Commission in respect to contraventions by the Respondents of the Fair Work Act, the Building and Construction Industry Improvement Act 2005 (Cth) and/or the Workplace Relations Act 1996 (Cth) (the "Workplace Relations Act") record over 100 occasions upon which contraventions have been found and/or penalties have been imposed on the CFMEU.
Founded upon this chronology, it is concluded that the CFMEU has long demonstrated by its conduct that it pays but little regard to compliance with the law and indeed has repeatedly sought to place itself above the law.
The CFMEU is to be regarded as a "recidivist" offender: cf. Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 226 at [63] per Tracey J. Its conduct has only gone down-hill since his Honour made those observations. It is difficult, if not impossible, to envisage any worse conduct than that pursued by the CFMEU. The CFMEU assumes a prominent role in the industrial affairs of this country and has consistently exhibited a contempt for compliance with the law. The conduct of its officers and employees has consistently shown a total contempt for the rights of occupiers and a total contempt for the constraints imposed by the law. It is difficult to perceive how such conduct can be regarded as in the best interests of the bulk of its members and the workers it supposedly represents. Such conduct may promote the CFMEU as a "militant" union. But the constraints imposed by the law apply to all - including the CFMEU.
It is, with respect, not possible to envisage worse union behaviour. The prior imposition of penalties - some nearing the maximum - against the CFMEU has not deterred it from engaging in clearly unlawful industrial action. Indeed, the conduct for which the CFMEU assumes liability in the present proceeding shows a further and serious contempt for the law. The CFMEU's conduct exposes a cavalier disregard for the prior penalties imposed by this Court and exposes the fact that such prior impositions of penalties have failed to act as a deterrent against further unlawful industrial action.
The maximum penalty should thus be imposed upon the CFMEU. In the absence of legislative action, it may (regrettably) be expected that even penalties imposed at the maximum now permitted will not act as a deterrent.
The conduct of the CFMEU NSW calls for different considerations. As correctly submitted on behalf of the Respondents, "the contraventions of the federal union should not be visited upon the state union or the personal respondents" as they "all have separate identities".
A table helpfully included in the Supplemental Submissions in Reply filed by the Respondents on 14 August 2017 identifies 9 occasions upon which the CFMEU NSW has been exposed to penalties, over a period from 2004 to 2011. Its conduct in the past has, accordingly, not attracted findings as to contraventions or resulted in penalties imposed to anywhere near the same extent as the CFMEU. Its conduct nevertheless remains far from satisfactory. But such conduct calls for less than the maximum penalty.
In the circumstances, it is considered that a penalty in the amount of 75% of the maximum should be imposed on the CFMEU NSW.
346 As already noted above, in order to impose the maximum penalty for a civil penalty contravention, it is not necessary that it be more than in the worst category. Yet his Honour went further and said in relation to the conduct attributed to the CFMEU that it was "difficult, if not impossible, to envisage any worse conduct" and that "it was not possible to envisage worse union behaviour", for which the maximum penalty should apply for each attributed contravention. This was despite the attributed conduct being of differential seriousness as reflected in the different penalties imposed on the individual appellants. Except for the s 50 contravention which only applied to the CFMEU, his Honour described exactly the same attributed conduct in the hands of the CFMEU NSW as being conduct that deserved the lesser characterisation of being "far from satisfactory", and called for "less than the maximum penalty", being 75% of the maximum. This was again despite each attributed contravention being of differential seriousness as reflected in the different penalties imposed on the individual appellants.
347 This approach of no differential between the attributed conduct despite there being differential seriousness in the hands of the individual appellants, and a substantial differential as between the two Unions despite the attribution as between them being the same, the only material difference between them being their past contravening history, entails:
(1) treating attributed conduct on the part of the individual appellants, which was at least to some degree different, as though it was the same; and
(2) treating attributed conduct in the hands of the two Unions, which was by precisely the same process of attribution and therefore was relevantly the same, as though it was different in a manner that went over and above a proper regard to different contravening histories.
348 As the above discussion of Veen No. 2 demonstrates, while the role of past conduct informs the need for deterrence, that cannot be used to change the character of the instant contravention. Without an explanation as to how it was possible to treat attributed contraventions that were the same in the hands of the Unions differently, and attributed contraventions that were different as to their source in the same way, it is impossible to avoid the conclusion that past contraventions have been inadvertently used by his Honour in a way that goes beyond a prism through which to view the instant contraventions. Thus in this way, which is hard to quantify, the principles in Veen (No 2) have been breached. That error in approach means that the exercise of the discretion by imposing uniform maximum penalties against the CFMEU has miscarried as a matter of process, rather than necessarily the result. Thus ground 11 should succeed, and upon that basis, as for totality, the penalties imposed on the two Unions should be set aside and the penalty imposition exercise for each carried out afresh.
349 The result of manifest excess beyond the totality findings already made out is not established. Ground 12 does not succeed.
350 Nor was there any separate error in finding that past contraventions were reflective of recidivism in the hands of the CFMEU. No other rational conclusion can be reached in light of that Union's contravening history, at least in the construction industry. However that only heightens the need for caution in the application of Veen (No 2). No such finding of recidivism was made in respect of the CFMEU NSW. Ground 13 must fail.
351 The penalty imposed on the CFMEU NSW was not fixed by reference only to prior contraventions. It was fixed by the attribution of responsibility for the conduct of the individual appellants who were themselves found to have contravened. Ground 16 must fail.