KATZMANN J:
1 Section 417 of the Fair Work Act 2009 (Cth) (FW Act) relevantly prohibits the organising of, or engagement in, industrial action until after the nominal expiry date of an enterprise agreement approved by the Commission.
2 In an action commenced in April 2020, Patrick Stevedores Holdings Pty Ltd (Patrick) claimed that the Construction, Forestry, Maritime, Mining and Energy Union (Union) and one of its officers contravened s 417 by organising industrial action on 18 and 19 March 2020 and sought various forms of relief, including declarations, pecuniary penalties, and "damages and compensation".
3 About a month before the trial was due to begin, the Union admitted to one contravention of s 417 on 19 March 2020 and the Court granted Patrick leave to discontinue the proceeding against the Union's officer. Patrick does not press its claim with respect to the alleged contravention said to have taken place on 18 March 2020. The facts have been agreed. The parties have also agreed to the terms of the declaratory relief, the penalty that should be imposed, and the making of an order that the penalty be paid to Patrick, and that no order be made as to costs. The Court has been invited to make orders in accordance with the agreement. By consent, the application was determined on the papers.
4 For the reasons that follow I am satisfied that the declaration that is sought should be made and that the penalty is an appropriate one.
5 The agreed facts and a further statement of agreed facts are annexed to these reasons (as Annexure A and B respectively). It is sufficient to note at this point the following summary, drawn from Patrick's submissions.
6 Patrick employs people to work at its Fremantle Terminal (Terminal), including employees within Grades 1 to 6 of the Stevedoring Industry Award 1999, who at all relevant times were covered by the Patrick Terminals Enterprise Agreement 2016 (Agreement). The nominal expiry date of the Agreement was 30 June 2020. The Agreement covers both Patrick and the Union.
7 At about 3.00 pm on 18 March 2020, some of Patrick's employees began work at the Terminal on the evening shift. During the evening some of Patrick's employees stopped work and proceeded to the employee car park. At about 8.50 pm, in the presence of Daniel Falcone, an officer and employee of the Union, Patrick advised the employees congregated in the car park that they had left the Terminal when they were not authorised to do so, they were engaging in unprotected industrial action and so Patrick would be required to deduct four hours' pay, and that they were required to work. About half an hour later Mr Falcone addressed the employees in the car park outside the Terminal. Shortly thereafter the employees left the Terminal and did not return for the balance of their rostered shifts. Consequently they performed no work for some five hours between 6.00 pm and 11.00 pm.
8 On the evening shift on 19 March 2020, employees who were due to start work on the evening shift at 3.00 pm went instead to the terminal car park to meet with Mr Falcone and did not start work until about 4.21 pm, despite the fact that Patrick had twice informed Mr Falcone that it required the employees to start work.
9 The Union organised the employees' refusal to work. Its conduct was unlawful.
10 In substance, the agreed terms of the declaration are that the Union contravened s 417(1) by organising industrial action taken by Patrick's employees in the form of a refusal to perform work during the evening shift on 19 March 2020, before the nominal expiry date of the Agreement.
11 The Court has power in any civil proceeding to make a binding declaration of right: Federal Court of Australia Act 1976 (Cth), s 21. The proceeding raised a real, rather than a hypothetical question, Patrick had a real issue in raising it, and there was a proper contradictor: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-2 (Mason CJ, Dawson, Toohey, Gaudron JJ), 596 (Brennan J). The declaration the parties seek is appropriate to record the Court's finding, vindicate Patrick's claim, inform others of the Union's conduct, and make it clear to other would-be contraveners that conduct of this kind is not lawful: see, for example, Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd (No 2) [2021] FCA 453 at [10] (Wheelahan J).
12 The Court's power to impose pecuniary penalties is found in s 546 of the FW Act. The Union is a body corporate and the maximum penalty for a body corporate at the time of the contravention was $63,000: see FW Act, ss 539(2) item 14, 546(2)(b); Crimes Act 1914 (Cth), s 4AA(1).
13 Although the parties agreed on the facts and the orders and, despite the Court's order that they file joint submissions and without seeking a variation of that order, the parties filed separate submissions on penalty. When the non-compliance with the order was drawn to the parties' attention, the Union purported to file a joint submission which merely inserted parts of its submissions into Patrick's submissions without Patrick's consent. I therefore pay no attention to the so-called joint submission. Rather, I have had regard to the separate submissions to the extent that they are supported by the evidence. While the course the parties took is unsatisfactory, the differences in the two submissions are immaterial in the scheme of things.
14 The relevant principles are well-established.
15 Where penalties are agreed, the principles set out in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 and Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72; ATPR ¶41-993 apply: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 (Agreed Penalties Case). These principles were recently summarised by the Full Court in Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission [2021] FCAFC 49 (VW) at [125]-[129] (Wigney, Beach and O'Bryan JJ). They are as follows.
16 Despite the parties' agreement, the Court must be persuaded that the penalty proposed is appropriate. Subject to the Court being "sufficiently persuaded of the accuracy of the parties' agreement as to facts and consequences" and that the proposed penalty is "an appropriate remedy in the circumstances" (emphasis in original), it is both consistent with principle and "highly desirable" for the Court to accept the parties' proposal: Agreed Penalties Case at [58]. The desirability of accepting the parties' proposal principally derives from the public policy interest in promoting the predictability of outcome in civil penalty proceedings which encourages contraveners to acknowledge their wrongdoing and thereby avoid a lengthy trial: Agreed Penalties Case at [46]. Determining penalty is not an exact science. There is "no single appropriate penalty" but "a permissible range of penalties": VW at [127]. An agreed and jointly proposed penalty may be considered an appropriate penalty if it falls within the permissible range. That said, however, "it does not follow that the Court's task can be said to amount to no more than determining whether the proposed penalty falls within the permissible range…. Nor can it be said that the Court is bound to start with the proposed penalty and to then limit itself to considering whether that penalty is within the permissible range …": VW at [128]. Finally, the Court should generally recognise that the agreed penalty is most likely the result of compromise and pragmatism, including the regulator's consideration of the penalty necessary to achieve deterrence and the risks and expense of the litigation had the matter not been settled: VW at [129], Agreed Penalties Case at [109]. The Court must be "wary of the possibility that the agreed penalty may be the product of excessive pragmatism on the part of the regulator": VW at [129].
17 The principles to be applied in the assessment of penalties in a civil case are also uncontroversial. Deterrence, both general and specific, is recognised as the principal, if not sole, object. Thus, the penalty must be fixed at a level sufficient to deter both the contravener and others with a view to ensuring that the penalty is not regarded as an acceptable cost of doing business: Agreed Penalties Case at [55] (French CJ, Kiefel, Bell, Nettle and Gordon JJ), [110] (Keane J). But the penalty must be proportionate to the nature and gravity of the contravening conduct: Pattinson v Australian Building and Construction Commissioner [2020] FCAFC 177; 384 ALR 75; 299 IR 404 at [98], [197], [201] (Allsop CJ, White and Wigney JJ); [226]-[231] (Besanko and Bromwich JJ). The Court should have regard to the nature and extent of the conduct giving rise to the contraventions, whether the conduct in question was deliberate; the circumstances in which the conduct occurred; whether senior management was involved; the nature and extent of any loss or damage that ensured; any similar previous conduct; the size of the Union; and the extent of any mitigating factors such as contrition or corrective action, or cooperation with the prosecutor.
18 The Union has a notoriously extensive record of contravening industrial laws. Yet the evidence does not disclose its true extent because the parties apparently considered that most of it was irrelevant since the conduct in question in this case is that of the Union's Maritime Union Division.
19 Maritime Union Division was formed after the amalgamation of the Maritime Union of Australia (deregistered) with the Construction, Forestry, Mining and Energy Union (CFMEU), which occurred two years before the contravention in the present case. For this reason, the parties submitted that the conduct of the Union which preceded the amalgamation is not relevant to the question of specific deterrence and for this reason, too, no doubt, the further statement of agreed facts in Annexure B makes no mention of the Union's antecedent conduct.
20 They relied on Chevron Australia Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union (No 3) [2020] FCA 451; 295 IR 197 at [102]-[103] in which an agreement to this effect was accepted by the Court. Reliance on Chevron, however, was misplaced.
21 In Chevron at [102] Banks-Smith J apparently relied on Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union [2018] FCA 934; 280 IR 173 (Hutchison Ports Case) at [9] (Jagot J). In the latter case the proceeding was pending at the time of the amalgamation. Jagot J pointed out at [6] that s 79 of the Fair Work (Registered Organisations) Act 2009 (Cth) deals with the amalgamation of organisations while proceedings are pending. In such a case, s 79 provides that the pending proceeding is to continue as if the amalgamated organisation were, and always had been, the de-registered organisation. In the Hutchison Ports Case, Jagot J rejected the submission of the Ombudsman that amalgamation meant that the prior conduct of the CFMEU was relevant to the question of specific deterrence. In the passage at [9] cited in Chevron at [102], her Honour explained why:
Section 79(b) requires that the CFMMEU (that is, the amalgamated organisation) be treated "as if it were, and always had been" the MUA (that is, the de‑registered organisation) for the purpose of all pending proceedings. Given this statutory construct, I do not consider the conduct of the CFMEU or the fact that it is part of the CFMMEU can be relevant to specific deterrence in this case. To take into account the CFMEU's conduct or the fact that it is part of the CFMMEU as relevant to specific deterrence, in my view, would involve an error of law because s 79(b) creates a statutory fiction under which the proceeding is to continue, the fiction being that the amalgamated organisation, the CFMMEU, is and always has been the deregistered organisation, the MUA. It follows that it is the MUA alone, under this statutory fiction, which is to be the subject of any specific deterrence consideration …
22 The present proceeding, however, was commenced in 2020, two years after the amalgamation. In these circumstances, the statutory fiction to which Jagot J referred in the Hutchison Ports Case has no application. Be that as it may, it is difficult to see why conduct of the CFMEU before the amalgamation with the MUA would be relevant in any event. In a case concerned with the conduct of the Construction Division of the Union, Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) (2018) 264 FCR 155, the Full Court (Allsop CJ, White and O'Callaghan JJ) disregarded the conduct of the MUA before the amalgamation on the basis that at that time it was "a separate and distinct organisation" (at [23]).
23 It was, however, common ground that the post-amalgamation conduct of the Union through its other divisions was relevant.
24 The evidence discloses that, before the amalgamation, the MUA was penalised four times for contraventions of the FW Act and three times after the amalgamation and that all except for one of these cases involved contraventions of s 417. Of the three cases determined after the amalgamation only one, Patrick Stevedores Holdings Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union [2019] FCA 1647, related to conduct that took place after the amalgamation. Some of the cases involved multiple contraventions.
25 Despite the position taken by both parties about the relevance of contravening conduct of the Union outside its Maritime Division, the agreed facts merely state that, since the amalgamation the Union has been subject to multiple civil penalties, including for organising unlawful industrial action, arising from the conduct of other divisions. In submissions Patrick referred to two cases. One was Australian Building and Construction Commission v Construction, Forestry, Maritime, Mining and Energy Union [2020] FCA 1662; 302 IR 139 in which the Colvin J imposed a penalty of $125,000 for three contraventions of s 46 of the Building and Construction Industry (Improving Productivity) Act 2016 (Cth) (BCIIP Act) as a result of three officials organising unlawful industrial action in Western Australia. The other was Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (The North Queensland Stadium Case) (No 2) [2021] FCA 105 in which Rangiah J imposed a penalty of $190,000 on the Union for contraventions of s 54 of the BCIIP Act, having earlier found that the Union had organised industrial action against a construction company in contravention of s 46 of the BCIIP Act and had taken the action with intent to coerce the construction company to make an enterprise agreement in contravention of s 54 of that Act (see Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (The North Queensland Stadium Case) [2020] FCA 947). The contravening conduct in the former case took place on 10 December 2018 and in the latter on 11 and 12 March 2019.
26 In coming to the conclusion that the penalty proposed by the parties is appropriate, I have taken into account the following matters.
27 First, the contravening conduct was certainly deliberate and committed in circumstances in which it can be inferred that the Union was aware that it was acting unlawfully.
28 Second, the Union has exhibited no contrition.
29 Third, the Union is a large industrial organisation which has engaged in similar conduct on numerous occasions.
30 Fourth, there is plainly a need for both specific and general deterrence.
31 On the other hand, the industrial action constituting the contravention occurred at the start of a single shift and was limited in duration. There is no indication on the agreed facts, which is the only evidence upon which I am asked to determine the penalty, to suggest that any senior officers of the Union were involved. And while the withdrawal of labour might well be expected to have had some financial consequences for Patrick, there is no evidence about the number of employees who took part in the action and no evidence to indicate that Patrick did in fact suffer any loss or damage.
32 In a similar case, Jagot J considered that the relatively short duration of the unlawful industrial action and the lack of evidence about the number of employees involved or the particular disruption that was caused justified a penalty at the lower end of the scale: Alfred v Wakelin (No 1) [2008] FCA 1455 at [41].
33 Furthermore, although the Union exhibited no contrition, it did cooperate with Patrick to reach agreement, sparing the costs and inconvenience of a trial. The admission of liability amounts to an acceptance of wrongdoing and, I would infer, a willingness to facilitate the course of justice: see Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at [76] (Stone and Buchanan JJ).
34 The figure upon which the parties agreed amounts to a little over two-thirds of the maximum penalty. Anything significantly higher than that would be likely to offend against the principle of proportionality. Anything significantly lower would not operate as a sufficient deterrent.
35 I accept Patrick's submission that there is no reason to depart from the "usual order" that penalties should be paid to the party who brought the proceeding: see Sayed v Construction, Forestry, Mining and Energy Union (2016) 239 FCR 336 (FC).
36 Finally, having regard to the limits on the Court's power to award costs (see FW Act, s 570), there should be no order as to costs.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Katzmann.