REASONS FOR JUDGMENT
LANDER J:
12 This is an appeal from an order of a judge of this Court dismissing an application which sought declarations that the respondents had breached provisions of the Workplace Relations Act 1996 (Cth) ('the Act') and seeking the imposition of penalties under s 187AD of the Act.
13 The appellant is an inspector duly appointed under s 84 of the Act and thereby entitled to bring a proceeding seeking orders under s 187AD of the Act, pursuant to s 187AC(2) of the Act and the regulations made under the Act.
14 The first respondent ('Caelli') was, at the relevant time, an employer for the purposes of s 187AA of the Act. It was also a constitutional corporation for the purposes of s 4(1) of the Act and was a party to and bound by a certified agreement (being the Caelli Constructions (Vic) Pty Ltd and CFMEU Building and Construction Industry Collective Bargaining Agreement 2002-2005 ('the Certified Agreement')) and an award (being the National Building and Construction Industry Award 2000 ('the Award')). The second respondent ('the Union') is an organisation of employees registered under the Act. It also was a party to and bound by the Certified Agreement and by the Award. The third respondent was, at the relevant time, a member of the Union and a shop steward or job delegate recognised as an accredited representative of the Union, pursuant to the Union rules. The fourth respondent was employed by the Union as an organiser. The third and fourth respondents were bound by the Certified Agreement.
15 The application which was before the primary judge sought a declaration that Caelli had contravened s 187AA(1) of the Act and further sought a penalty against it under s 187AD of the Act. The application sought a declaration that the Union and the third and fourth respondents had contravened s 187AB of the Act and sought penalties against each of them.
16 In his Statement of Claim the appellant claims to be entitled to those declarations and penalties in respect of work which was being carried out by Caelli pursuant to an engagement with Multiplex Ltd ('Multiplex') at the Concept Blue Apartments project at 336 Russell Street, Melbourne ('the Concept Blue Site').
17 The facts which follow are taken from a Statement of Agreed Facts between the appellant and Caelli, and a further Statement of Agreed Facts between the appellant and the Union and the third and fourth respondents. The primary judge found that the separately agreed facts were not inconsistent and I agree. The Statement of Agreed Facts refers to other sites apart from the Concept Blue Site and other industrial action at those sites. No declarations or penalties were sought in respect of those other sites. The agreed facts were put forward to show that there had been other contraventions at those other sites by Caelli.
18 On Friday, 1 August 2003 a Union member died whilst performing his work at Shepparton in the State of Victoria. There was no connection between the work which he was performing and the work being performed by Caelli at the Concept Blue Site other than that the work could be said to be 'building and construction work'.
19 As at 1 August 2003 the Union had a policy, which it had adopted on 25 June 2002, in relation to on-site fatalities. The policy was in writing. The policy stated:
'When the Victorian Construction Unions (VTHC BIG) have a confirmed death of a unionised construction worker arising out of an industrial accident on site, the following steps will be taken:
(i) The immediate needs of the affected family will be the first priority.
(ii) The site where the death occurs will immediately stop work and other sites of the same principal contractor will also stop.
(iii) Mass meeting on site will be called in the industry and following day (sic.) to hear a report on the incident. Then the following will occur:
(a) All productive work will stop and a full, thorough safety audit will be conducted by all available safety committee members from the basement to the roof and any OHS problems immediately rectified. Clean up works arising from the audit will be undertaken (as per VBIA) with areas progressively opened to production once listed items have been addressed.
(b) In addition the site meetings will take up an agreed minimum amount per worker to be collected by the relevant Shop Stewards. This will be donated immediately to the deceased worker's family via the appropriate union office where a receipt will be issued and shall be displayed on site noticeboards.
(c) Any other actions required can be voted on at the site mass meeting.
(iv) Industry-wide stopwork action may occur with the mutual agreement of BIG Secretaries, taking into account the nature and circumstances of the incident leading to the death of the worker.'
20 The policy was known to Caelli.
21 There was no interruption to work at the Concept Blue Site on 1 August 2003 and on the following day, Saturday, 2 August 2003. No work was carried out on Sunday, 3 August 2003 or on Monday, 4 August 2003, which was a rostered day off.
22 On 5 and 6 August 2003 each of the employees of Caelli was required, pursuant to the Certified Agreement which controlled the relationship between Caelli and its employees, to work an 8-hour day commencing at 7.00am.
23 At approximately 8.30am on 5 August 2003 Caelli's employees ceased work on the Concept Blue Site whilst a site safety audit was conducted in accordance with the Union's onsite fatalities policy. The site audit completed at 1.00pm. No work was undertaken by Caelli's employees on the Concept Blue Site (except by the site foreman) from 8.30am until the end of the scheduled day at 3.30pm. During that period, the employees remained on site but sat in the sheds and failed or refused to perform any work.
24 On 6 August 2003 the employees attended work at 7.00am and sat in the sheds. At approximately 7.30am the employees attended a mass meeting of workers at the Concept Blue Site which was conducted by Union representatives. They did not return to work until 10.00am.
25 Caelli initially refused to pay the employees for 5 August 2003 or for the further period between 7.00am and 10.00am on 6 August 2003.
26 As at 5 and 6 August 2003, Caelli had a procedure in place to prevent payments being made to its employees in respect to any period of industrial action. The procedure was:
'77. The Respondent has a procedure in place to prevent payments being made to its employees with respect to periods of industrial action which is as follows:
77.1 the Respondent's site foreman will prepare an Industrial Report when any industrial stoppages take place on site, and this Report indicates the nature of the industrial action;
77.2 the Respondent's site foreman completed daily time sheets for each of the employees on site which records the period of time worked. These time sheets are forwarded on to the Respondent's pay officer;
77.3 when completing the timesheets the Respondent's site foreman will investigate whether any period of lost time refers to a work stoppage for Occupational Health and Safety reasons; and
77.4 if periods of lost time relate to anything other than occupational health and safety reasons, the Respondent's site foreman will finalise the time sheets to indicate that no payment is to be made for the period of the work stoppage.'
27 On 25 August 2003 Caelli was engaged in work at the I.D. Apartments Site at Port Melbourne. At 12.30pm on that day the third respondent told a Mr Mitchell, an employee of Caelli, that the Union had placed bans on the use of forklifts on the I.D. Apartments Site. Those bans were lifted at about 2.00pm on the same day when the Union imposed new bans on access to balconies where Caelli handrails existed.
28 At about 7.00am on the next day, the third respondent notified Mr Mitchell that the Union had imposed bans against the use of forklifts on the I.D. Apartments Site.
29 At about 10.15am on the same day, Mr Watson, another employee of Caelli and Mr Mitchell, met with the third and fourth respondents. During that meeting, the third and fourth respondents threatened that action would be taken because Caelli had not paid employees for the time which they had not worked on 5 and 6 August 2003.
30 The fourth respondent said that the third and fourth respondents would bring in WorkCover to go over the site. Mr Watson advised the third and fourth respondents that the site safety committee had never identified any of the issues raised as safety problems. The third respondent said 'as Caelli Constructions were not going to pay its employees for the lost time issue he was going to try to find any reason to bring WorkCover out to the site'.
31 A dispute arose between the third and fourth respondents and Caelli about whether Caelli would pay the employees for the time which they had lost on 5 and 6 August 2003.
32 The fourth respondent asked Mr Watson to identify his position with Caelli. Mr Watson said that he was the occupational health and safety manager and site administrator. The third respondent told Mr Mitchell to get Mr Caelli to attend the I.D. Apartments Site to discuss the non-payment issue or 'he would ring WorkCover and have them come out to the site'.
33 Later that day, there was a meeting at which Mr Caelli, Mr Watson and Mr Mitchell were present together with Mr Jim Moss, who was the director of a contractor on the site, and the third and fourth respondents.
34 At that meeting, the third and fourth respondents told Mr Caelli that unless Caelli paid its employees for the time which they did not work on 5 and 6 August 2003 further industrial action would follow. They told Mr Caelli that Caelli was the only employer within the industry which had not paid its employees for the stoppage on 5 and 6 August 2003, and that the Union was not going to let it go.
35 Mr Caelli told the third and fourth respondents that he had decided that Caelli would pay its employees for the time which they engaged in industrial action on those days but only because of the persistent threats of ongoing industrial action made by officials and members of the Union.
36 The third and fourth respondents then agreed to lift the balconies bans and the forklift bans that had been imposed at the I.D. Apartments Site. Mr Watson was told at 12.00 noon on 26 August 2003 that the forklift bans had been lifted.
37 The number of Concept Blue Site employees who did not work on 5 August 2003 was 54, 50 of whom were paid a total sum of $7,601.23 for the period of industrial action. The number of Concept Blue Site employees who did not work between the hours mentioned on 6 August 2003 was 51. Caelli paid those 51 employees a total sum of $3,187.80 for the period of industrial action.
38 Section 187AA provides:
'(1) An employer must not make a payment to an employee in relation to a period during which the employee engaged, or engages, in industrial action if:
(a) the employer or employee was or is a member of an organisation during that period; or
(b) the employer was or is a constitutional corporation bound by an award, a certified agreement or an AWA during that period; or
(c) the industrial action was taken, or is being taken, in connection with work regulated by an award, a certified agreement or an AWA; or
(d) the industrial action was taken, or is being taken, in relation to an industrial dispute; or
(e) the industrial action was or is of a kind referred to in paragraph (a), (b) or (c) of the definition of industrial action in subsection 4(1); or
(f) the industrial action was taken, or is being taken, in a Territory.
Note: For constitutional corporation, see subsection 4(1).
(2) An employee must not accept a payment from an employer if the employer would contravene subsection (1) by making the payment.
(3) A contravention of subsection (1) or (2) is not an offence.'
39 Caelli admitted, for the purpose of the proceedings, that it had contravened s 187AA of the Act. It admitted that it had made payments to employees who were employed at the Concept Blue Site in relation to the stoppages on 5 and 6 August 2003 in respect of the period of industrial action.
40 It admitted that it had paid the sum of $30,954.86 (not including allowances) to a total of approximately 350 Caelli employees in relation to periods of industrial action on the Concept Blue Site and other sites at which the company was engaged.
41 Caelli admitted all of the elements of s 187AA(1) and a contravention of that section.
42 Caelli agreed:
'1. Subject to order 2, a penalty of $6,000 be imposed on [Caelli] in respect of the contraventions of section 187AA of the Workplace Relations Act 1996 (Cth), such penalty to be paid into the Consolidated Revenue Fund on or before (date).
2. Notwithstanding order 1, (Caelli) is not obliged to pay the said penalty if between the day of this order and (date, 12 months later), it has not been adjudged to have breached any provision of the Workplace Relations Act 1996 (Cth).'
43 Section 187AB(1) provides:
'(1) An organisation, or an officer, member or employee of an organisation, must not:
(a) make a claim for an employer to make a payment to an employee in relation to a period during which the employee engaged, or engages, in industrial action; or
(b) organise or engage in, or threaten to organise or engage in, industrial action against an employer with intent to coerce the employer to make such a payment.'
44 The Union and the third and fourth respondents admitted a contravention of s 187AB(1)(a), but not a contravention of s 187AB(1)(b). No penalty was agreed by the Union and the third and fourth respondents in respect of the contravention of s 187AB(1)(a).
45 The primary judge found that the Union and the third and fourth respondents had contravened s 187AB(1)(b). He inferred from the circumstances in which the bans were imposed and the discussions accompanying those events, that the Union and the third and fourth respondents 'intended to press the first respondent into making payments'.
46 I think it may be taken from that finding that his Honour was satisfied that the Union and the third and fourth respondents had engaged in, or threatened to engage in, industrial action against Caelli with intent to coerce Caelli to make the payments which were made. Certainly, the appeal proceeded upon the basis that the primary judge had found that the appellant had established a contravention of s 187AB(1)(b). The Union and the third and fourth respondents did not contend on the appeal that that finding should not have been made.
47 Section 187AD(1)(a) provides:
'(1) In respect of contraventions of section 187AA or 187AB, the Court may, if the Court considers it appropriate in all the circumstances of the case, make one or more of the following orders:
(a) an order imposing on a person who contravened or is contravening that section a penalty of not more than $10,000.'
48 The remaining paragraphs of s 187AD(1) are not relevant. Nor is s 187AD(2).
49 Notwithstanding the appellant and Caelli had agreed upon the penalty to be imposed upon Caelli, the primary judge dismissed the application against Caelli without penalty. He also dismissed the application against the Union and the third and fourth respondents without penalty.
50 There is no complaint about not imposing a penalty on the third and fourth respondents because it was conceded at the hearing before the primary judge that if a penalty were to be imposed in respect of the Union and the third and fourth respondents' contraventions of s 187AB(1)(a) and s 187(1)(b), the penalty should be imposed on the Union. The appellant limited himself to seeking declarations in respect of the third and fourth respondents' contraventions.
51 There was other evidence before the primary judge apart from the agreed facts. The appellant read an affidavit of Ms Lisette Pine, who was originally the applicant in these proceedings and an inspector appointed under s 84 of the Act. She was a member of the Building Industry Taskforce. She deposed to the circumstances in which the Taskforce was established as a consequence of the first report of the Royal Commission into the building and construction industry published on 5 August 2002. Commissioner Cole found that there was a 'culture of widespread unlawful activity including threatening and violent behaviour, illegal industrial action and paying, claiming and receiving strike pay'. In his second report, published on 24 February 2003, Commissioner Cole identified 'widespread disrespect for, disregard of and breach of the law in the building and construction industry'.
52 She deposed to the role of the Taskforce and said:
'6. After 35 months of operation, the Taskforce shares the same conclusions reached by Commissioner Cole in the Final Report. In its report "Upholding the Law - One Year on: Findings of the Interim Building Industry Taskforce" dated 25 March 2004, the Taskforce said that it had found considerable evidence of widespread disregard for the provisions of the WR Act such as the contravention of freedom of association provisions, widespread making of, and receipt of, inappropriate payments and unlawful strikes and threats of unlawful strikes. The Taskforce is committed to taking legal proceedings, fearlessly and without favour or partiality, against those in the industry who contravene the law, irrespective of whether they are employers, employees or unions.
7. The level of industrial disputation in the building and construction industry is substantial. According to the Australian Bureau of Statistics, Australian Labour Market Statistics, Cat No. 6105.0 dated January 2005, in 2003-04 the construction industry employed 8% of the Australian workforce. According to the Australian Bureau of Statistics, Industrial Disputes, Cat No. 6321.0.55.001, for the same period, these workers accounted for over 21% of working days lost.'
53 She also deposed that the Taskforce had commenced 18 proceedings against multiple respondents, including Multiplex, the Union and other industrial organisations, subcontractors, shop stewards, delegates, and union organisers arising out of the events which occurred on building sites in Melbourne on 5 and 6 August 2003 in relation to the worker's death at Shepparton. Her evidence was not challenged.
54 The Union and the third and fourth respondents read an affidavit of Martin Kingham, the State Secretary of the Union, who deposed to the circumstances in which the policy to which I have referred came about. During 1999, 15 construction workers died whilst employed in the industry. He said that was an issue of major concern for the Union and the Union decided that on each occasion that a death occurred in the industry there would be a 24 hour stoppage of work across the industry. Payment was not sought for those stoppages. The reason for the practice was first to show respect for the deceased and, secondly, to try and highlight the issue to the Victorian State Government. Mr Kingham said that the policy which obtained after 1999 was successful in that more Worksafe inspectors were appointed and there was a decrease in the number of deaths in the industry.
55 He said that employers argued that the practice of a 24 hour stoppage punished employers who were not involved in the site upon which the worker had died. As a result, the Union agreed to amend its policy and a new practice was agreed upon. Mr Kingham described that practice:
'12. As a consequence of those discussions a new practice was agreed to. The new practice would be that a site safety audit would be conducted while the members did not perform any productive work. During the conduct of the site safety audit any necessary safety rectification work would be undertaken. When areas of a site were deemed to safe them (sic) normal productive work would recommence. Also there would be a report back meeting to the members engaged on each project to inform them of the nature of the death and what assistance that the union would be taking or seeking on behalf of the deceased member. For instance, if there is a young family who is involved then usually there would be a levy or donations of the workers on the site to help out the family of the deceased worker.'
That was the policy which was in place as at 1 August 2003.
56 He then deposed to the particular death on 1 August 2003 and the prosecutions arising out of stoppages on the Concept Blue Site on 5 and 6 August 2003. He said that, as a result, the policy had been amended such that, in future, where a death in the industry occurred the site safety audit would take place whilst normal productive work continued. He said that the practice of informing workers about the circumstances giving rise to the worker's death and the practice of seeking donations and levies would continue. He concluded that as a result of the change in policy 'there should not be any future prosecutions arising out of any future death in the industry'. Mr Kingham's evidence was not challenged.
57 The primary judge first addressed the case against Caelli. His Honour said that, notwithstanding the agreement between the appellant and Caelli about the penalty to be imposed, the Court had a responsibility for determining itself whether the penalty was appropriate and in that regard he followed the decision of this Court in Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at [51] where the Court said:
'(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.'
58 The appellant accepted the correctness of his Honour's approach in this regard both before the primary judge and on appeal.
59 In considering the appropriate penalty, his Honour said that the general background outlined by Ms Pine 'does not assist much in this task because the affidavit does not address the specific issue of responses to fatalities in the building industry'. He said at [22] of his reasons:
'22 The concern of workers in the industry in ensuring safe workplaces can be readily understood. It is easy to accept that a fatality on a site in the industry, even if not on the site on which a particular worker is engaged, raises immediate feelings of insecurity and threat. No doubt these responses explain the establishment of the union policy which required that mass meetings be called on all sites in the industry in Victoria to explain any such incident, and a stoppage of work for the period necessary to undertake a safety audit on sites. It is reasonable to expect that employers would fund the taking of steps necessary to assure their workforces of the safety of the workplaces in view of the shock engendered by the death of a fellow worker in the industry. However, the strict terms of s 187AA do not permit employers to pay workers for the period during which the safety audit is conducted if work is stopped. It may be that such a harsh result was not contemplated by Parliament when the section was enacted. It is probable that Parliament had in mind that the law would stop payments made for stoppages which were designed to put undue pressure on employers in support of industrial claims for increased pay or improved conditions. In those circumstances, it generally would not be reasonable to expect employers to fund the industrial action taken against them. Even though the text of the section covers the present circumstances where payments were made in respect of stoppages undertaken to ensure safety on building sites in response to a fatality in the industry, the making of payments in those circumstances is at the lower end of the spectrum of seriousness of the conduct intended to be addressed by s 187AA.'
60 He also said that the Court had to be careful in fixing the penalties so as not to bring the law into disrepute. He said:
'If penalties are imposed on employers who pay workers for stoppages which reasonable people would see as understandable and justified in all the circumstances, the law itself will be seen to be out of stop with reasonable community expectations.'
61 He then discussed a number of cases where, in some, no penalty had been imposed, and in others penalties were imposed.
62 He had noted earlier in his reasons that there were six factors put by way of mitigation: (1) Caelli did not resist the application and cooperated from an early stage; (2) Caelli has not previously contravened Part VIIIA of the Act; (3) Caelli has reviewed its strike pay procedure; (4) although the payments were made knowingly in contravention of the Act, they were made under significant pressure from the other respondents; (5) since August 2003, Caelli has resisted making payments in contravention of s 187AA of the Act in relation to a number of other instances of industrial action; and (6) the conduct of the legal proceedings had been expensive.
63 He later elaborated on some of those matters. He found that it was unlikely that Caelli would contravene again. He said that the circumstances of the contravention were 'at the lower end of seriousness'. He said '... [Caelli] has been punished by the costs, time and trouble involved with defending the proceeding'.
64 He therefore concluded that a penalty of $6,000 was outside the permissible range even though the penalty would not be payable if there were no further contraventions in the 12 months after the penalty was imposed. He said that he would have to proceed on the basis that Caelli would be called upon to pay the penalty.
65 He concluded:
'33 There are several factors which militate in favour of imposing a pecuniary penalty in this case. The scale of contravention is high in that a large number of payments were made. The payments were made deliberately. Further, it is important that the law be obeyed.
34 On the other hand, all the payments were made in respect of stoppages on two days. Further, they were made in response to significant pressure from the second, third and fourth respondents. The payments were made for stoppages arising from a death in the industry. As explained earlier in these reasons, such circumstances place the contravention at the lower end of seriousness. In addition, the first respondent has not contravened s 187AA before. It has been cooperative and not resisted the application. Importantly, it has suffered a degree of punishment from the cost, time and trouble involved in defending the proceedings. In my view, this constitutes a reasonable punishment for the contraventions. It is also likely to be sufficient to deter the first respondent from further contraventions. That assessment is supported by the fact that the first respondent has resisted further contraventions since August 2003.
35 The question of general deterrence is a little harder to resolve. It would be an undesirable outcome of this proceeding if others in the building and construction industry concluded from this case that no real consequences flow from a breach of s 187AA. However, the fact that proceedings were taken against the first respondent for contravention with the attendant expense, time and trouble will be a deterrent to others in the industry. In my view, this level of deterrence is proportionate to the seriousness of the contraventions. Indeed, as earlier explained, there is a danger that a greater penalty may generate disdain for the law. This would be counter-productive. Instead of the enforcement proceeding generating a greater respect for the law, the opposite result might be produced. In all the circumstances, the Court should dismiss the application against the first respondent without penalty.'
66 He then turned his attention to the Union and the third and fourth respondents. As I have already noted, he found a contravention in respect to s 187AB(1)(b). He noted that the appellant proposed a global penalty of $30,000.
67 He recorded the appellant's argument that the conduct of the Union and the third and fourth respondents was serious because they deliberately applied pressure to force Caelli to make payments which it had properly, to that point, refused to do. He said, however, that there were a number of matters which favoured mitigation. First, although the Union had committed contraventions of other sections of the Act it had not committed any prior contraventions of s 187AB. The third and fourth respondents had not committed any prior contraventions of the Act. Secondly, the stoppages occurred in response to a fatality in the building and construction industry which 'differentiates the stoppages from those taken in support of better wages or conditions, and thereby render the payments less culpable than payments for stoppages arising out of material self interest alone'. Thirdly, he referred to Mr Kingham's affidavit at length and noted that, in consequence of the threat of prosecution, the Union had amended its policy so that in future safety audits would take place while normal productive work continued.
68 He concluded:
'49 Having regard to all these factors, and in particular to the circumstances of the contravention, including the history of the union policy, the absence of prior contraventions of s 187AB and the probability that the union will not commit contraventions of s 187AB in the future, there should be no penalty imposed on the second respondent.
50 For the same reasons, together with the additional facts that the third and fourth respondents were acting as shop steward and organiser respectively of the second respondent as its servants or agents to give effect to the policy concerning fatalities on building sites, no penalty should be imposed on the third or fourth respondent.
51 As the contraventions of s 187AB (1)(a) were admitted, and these reasons contain findings of contraventions of s 187AB(1)(b), there is no purpose in making declarations that the second, third and fourth respondents have contravened that section. The application against them should also be dismissed.'
69 The appellant articulated the issues on the appeal:
'1. The issues in this appeal are as follows:
(a) whether the learned trial Judge erred in law by acting upon wrong principle in the exercise of his discretion to refuse to grant the relief sought in the Application as against the First Respondent in that:
(i) his Honour concluded that the penalty agreed between the Appellant and the First Respondent was outside the permissible range; and
(ii) in exercising his discretion afresh:
a. his Honour took into account extraneous or irrelevant matters to guide or affect the exercise of the discretion; and
b. his Honour failed to take into account material considerations; and
(a)(sic)whether the learned trial Judge erred in law by acting upon wrong principle in the exercise of his discretion to refuse the grant of relief sought in the Application as against the Second to Fourth Respondents in that:
(i) his Honour took into account extraneous or irrelevant matters to guide or affect the exercise of the discretion; and
(ii) his Honour failed to take into account material considerations.'
70 The appellant accepted that he had the burden of persuading this Court that the discretion in relation to the imposition of a penalty which rested in the primary judge had miscarried. It was accepted that he would have to persuade this Court that the primary judge either acted under a wrong principle or failed to have regard to a relevant matter or had regard to an irrelevant matter or misunderstood the facts such that the exercise of discretion should be reviewed: House v The King (1936) 55 CLR 499 at 504-505.
71 The appellant contended that there were two relevant periods of industrial action; first, between 8.30am and 1.00pm on 5 August 2003 when the safety audit was conducted; and secondly, between 1.00pm and 3.30pm on 5 August 2003 and between 7.00am and 10.00am on 6 August 2003. I will refer to a third period of industrial action later.
72 The appellant accepted that the first period of industrial action was relevant to the Union's policy in respect to a death on a construction site and, in those circumstances, the respondent's actions, collectively, were less culpable in respect of that period.
73 I think, with respect, that a better approach is to determine the construction of the respective sections which provide for the contraventions and first determine what period it is that the two sections address. The section does not address industrial action day by day. If there is a continuous period during which employees engage in industrial action then, in my opinion, the sections address that period. In my opinion, for the purposes of those sections, the period of industrial action commenced at 8.30am on 5 August and completed at 10.00am on 6 August 2003. It is artificial to attempt to compartmentalise the periods in the way contended for by the appellant and, indeed, by the Union and the third and fourth respondents.
74 For those reasons, I think the period of industrial action for the purposes of s 187AA and s 187AB, on the facts of this case, was between 8.30am on 5 August 2003 and 10.00am on 6 August 2003.
75 Next, it is necessary to determine whether s 187AA and s 187AB provide for separate contraventions for each payment to each employee or whether there is but one contravention for the payment made to the employees. In other words, should the word 'employee' in s 187AA be construed to include the plural 'employees' by reference to the Acts Interpretation Act 1901 (Cth). So also should 'employee' in s 187AB(1)(a) be construed as including the plural, as should 'payment' in s 187AB(1)(b) be construed as including the plural.
76 Clearly enough, the word 'employee' in s 187AA(2) does not include the plural. Section 187AA(2) applies to every employee of an employer who accepts a payment which would cause the employer to contravene subsection (1) by making the payment. I think consistency demands that 'employee' in s 187AA(1) does not include the plural and therefore that each payment to each employee of the employer during which the employee engaged in industrial action gives rise to a separate contravention of that section.
77 I think the same must be the case in relation to 'employee' in s 187AB(1)(a). It is entirely possible that that subsection could be breached in relation to some employees who engaged in industrial action and not all employees. I think, consistently with s 187AA, 'employee' there does not include the plural.
78 Therefore, an organisation, officer, member or employee of an organisation contravenes s 187AB(1)(a) in relation to each claim made in relation to each employee who has engaged in industrial action. It would follow, therefore, that the payment referred to in s 187AB(1)(b) is the payment to each employee and that there is a contravention of s 187AB(1)(b) where an organisation, officer, member or employee of an organisation has engaged in industrial action against an employer with intent to cause the employer to make a payment to each employee.
79 Such a construction is consistent with the construction given a similar section (s 298K(1)(c)) by the Full Court in BHP Iron Ore Pty Ltd v Australian Workers' Union and Others (2000) 97 IR 266 and by Nicholson J in Maritime Union of Australia and Others v Geraldton Port Authority and Others (No 2) (2000) 94 IR 404 at 413 and (s 298M and s 298R) by Marshall J in Automotive Food Engineering Printing and Kindred Industries Union v DMG Industries Pty Ltd (2000) 102 IR 175. That means, of course, that Caelli has contravened s 187AA(1) on 101 occasions and the Union and the third and fourth respondents have contravened each of s 187AB(1)(a) and s 187(1)(b) on 101 occasions.
80 That is not to say, however, that it would be appropriate in determining whether a penalty should be imposed and the amount of that penalty to simply have regard to the number of contraventions. In the case of Caelli, whilst there were 101 contraventions they occurred in relation to the one act. In the case of the Union and the third and fourth respondents, although there were 202 contraventions they occurred in relation to two acts. In their case, the first act was making the claim: s 187AB(1)(a) of the Act; the second act was to engage in industrial action with intent to coerce the employer to make such a payment: s 187AB(1)(b) of the Act.
81 There was, of course, a further period of industrial action on 25 August 2003 by the Union and the third and fourth respondents but that industrial action is only relevant to the circumstances surrounding the contravention in relation to s 187AB(1)(b).
82 The appellant contended that the primary judge failed to give effect to the policy of the Act and gave the Act a policy which was never intended.
83 The policy of the Act is to discourage industrial action as it is defined in s 4 of the Act. The purpose of Part VIIIA of the Act, in which these provisions are contained, is to prevent an employer making a payment to the employer's employee in relation to any period during which the employee engages in industrial action. It is the intention of the Act to discourage employers and employees agreeing to the employer paying employees for that period of industrial action engaged in by the employee. To that end, s 187AA makes it a contravention for an employer to make a payment to an employee who has in relation to a period during which the employee engaged or engages in industrial action and at the same time makes it a contravention for the employee to accept a payment from an employer if by doing so the employer will contravene subsection (1) by making that payment. The policy of the Act is that if an employee engages in industrial action then it must be at the employee's own expense. The purpose of s 187AB is to discourage unions and their officers from making claims for a payment or engaging in or threatening to engage in or organising industrial action for the purpose of coercing the employer to make a payment to an employee during a period of industrial action. That section has as its added purpose a protection to the employer in the event that a union or its members engage in that further industrial action.
84 Industrial action is discouraged by putting the cost of that industrial action upon the employee rather than the employer. No doubt it is thought that an employee will be less likely to take industrial action if the employee knows that it is a contravention for both the employer and the employee if the employer makes a payment for the period of industrial action.
85 The appellant particularly complained of that part of the primary judge's reasons contained in [22] of his judgment, which is set out in [48] above. It was said that his Honour gave a benign construction to s 187AA by taking into account irrelevant matters of the kind to which his Honour referred in that paragraph.
86 In my opinion, his Honour's construction of s 187AA is, with respect, not correct. It may be accepted that as his Honour said that workers in this industry or, indeed, any other industry are concerned to ensure that their workplace is safe. However, it does not follow that the Union policy, which has now been abandoned for the reasons given by Mr Kingham, was thereby an appropriate policy to deal with workplace safety. An appropriate Union policy in relation to deaths on construction sites needed to incorporate a practice which was not prohibited by the Act. In particular, it needed to recognise the policy and purposes of the provisions in Part VIIIA of the Act.
87 Clearly, a policy which required employers from time to time, and perhaps in particular after a death on a construction site, to carry out a site safety audit could not be considered inappropriate. It does not follow, however, that the employees should not work whilst the audit is being carried out, particularly where the audit is being carried out on a site where the death did not occur. Indeed, that is now recognised by the Union which has changed the policy to that effect. Moreover, to limit a consideration to the period over which the safety site audit was carried out is to ignore, with respect, the industrial action which was in fact taken. The site safety audit completed at 1.00pm on 5 August 2003. On any understanding, there could be no reason why the employees did not leave the sheds at 1.00pm and attend for work on 6 August 2003.
88 His Honour said that the strict terms of s 187AA do not allow for employers to pay workers for the period during which the safety audit is conducted. Whilst that is right, that is to understate the effect of s 187AA. Section 187AA prohibits any payment to any employee who has engaged in any industrial action at all. Industrial action is defined in s 4 of the Act and by force of that definition industrial action does not include:
'(g) action by an employee if:
(i) the action was based on a reasonable concern by the employee about an imminent risk to his or her health or safety; and
(ii) the employee did not unreasonably fail to comply with a direction of his or her employer to perform other available work, whether at the same or another workplace, that was safe and appropriate for the employee to perform.'
It is clear that the Act recognises that an employee may need to stop work or take action which is not designated industrial action where the employee has a reasonable concern about an imminent risk to the employee's health or safety.
89 Section 187AA also provides that an employee must not accept a payment from an employer if the employer would contravene subsection (1) by making the payment. There is no reason to think that Parliament had in mind that s 187AA should not apply in its rigors to industrial action taken as a result of a death on a construction site where work could continue during the carrying out of a site safety audit.
90 In my opinion, the reason for the industrial action is irrelevant from the employer's point of view. An employer is no less culpable in respect of the contravention of s 187AA because the stoppage was as a result of a union policy which has been erected as a reaction to a death on a construction site. That was recognised by this employer. The employer understood that it was not permitted to make any payment to any employee in respect of any period of industrial action, whatever the reason for that industrial action. Mr Caelli authorised Caelli to make the payments, not because the Union policy was in his view appropriate or even understandable, but because Caelli was the subject of further industrial action, and it was threatened that there would be even more industrial action if it did not pay.
91 Insofar as the employer was concerned, therefore, in my opinion, the matters to which his Honour referred in [22] of his reasons are not relevant.
92 It follows, therefore, that the appellant has succeeded in establishing that the primary judge had regard to matters which were not relevant and failed to have regard to relevant matters such that the discretion which he enjoyed miscarried. In my opinion, it is for this Court then to consider whether the penalty which the appellant and Caelli agreed was appropriate in the circumstances of the case.
93 There are three purposes at least for imposing a penalty: punishment; deterrence; and rehabilitation. The punishment must be proportionate to the offence and in accordance with the prevailing standards of punishment: R v Hunter (1984) 36 SASR 101 at 103. Therefore the circumstances of the offence or contravention are especially important. The penalty must recognise the need for deterrence, both personal and general. 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. In some cases, although hardly in this type of contravention, rehabilitation is an important factor.
94 The individual or personal circumstances of the contravenor must be taken into account as also any relevant matter in mitigation. For a contravention of these sections the minimum penalty which addresses punishment and deterrence, both personal and general, will be appropriate. Where one act may involve a number of contraventions, as in this case, it would be generally inappropriate to impose separate penalties because almost inevitably that would offend against the totality principle as known to the criminal law. The better approach is to assess the culpability of the contravenor and have regard to the number of employees affected by that action.
95 The 101 contraventions by Caelli of s 187AA were deliberate and the payments made knowingly in contravention of s 187AA. Not only were the contraventions deliberate but they were made for a commercial purpose and to avoid any further industrial action on the part of the Union. Caelli, to that extent, succumbed to the industrial pressure which s 187AB is designed to prevent.
96 Contraventions by an employer of s 187AA must be difficult to detect because both the employer and employee commit a contravention if a payment is made and accepted. In those circumstances, it is unlikely that any party would bring the circumstances of the payment to the attention of the responsible authority.
97 Deterrence, both personal and general, need to be addressed. The primary judge's finding that it was unlikely that Caelli would contravene the section again is relevant to the question of personal deterrence. However, in my opinion, his Honour failed to have sufficient regard to aspects of general deterrence in that, by dismissing the application, he failed to impose a penalty which would deter others who might be likely to contravene the section.
98 The contraventions occurred 12 months after Commissioner Cole's first report and six months after his second report in which he identified 'widespread disrespect for, disregard of and breach of the law in the building and construction industry'.
99 There are the relevant matters, some of which are identified by the primary judge which need to be taken into account. First, Caelli has not previously contravened Part VIIIA of the Act; secondly, Caelli did not resist the application and cooperated from an early stage which is evidence of remorse and contrition; and, thirdly, Caelli has been put to some expense in connection with the proceeding.
100 The primary judge took into account that Caelli had reviewed its strike pay procedure. This was not, in my opinion, a relevant matter. The procedure which obtained at the time clearly recognised that payments of this kind ought not to be made. Thus, there was an appropriate procedure in place at the time. The primary judge also took into account that although the payments had been made knowingly in contravention of the Act, they were made under significant pressure from the other respondents. Whilst that is a relevant matter, of course, it is not a matter, in my opinion, which may be relied upon by Caelli (if, in fact, it was) to reduce the penalty. Section 187AB is designed to ensure that a payment is not made by the employer as a result of union or union members' pressure. In those circumstances, it is not a mitigating factor that the payments were made in response to union pressure.
101 His Honour also took into account that since August 2003 Caelli has resisted making payments in contravention of s 187AA of the Act in relation to a number of other instances of industrial action. That also, in my opinion, is not a matter which may be relied upon for reducing what would otherwise be the appropriate penalty. When boiled down, the proposition is no more than a statement that Caelli has complied with its obligations under the Act which, of course, by law, it had to do in any event. If it is a relevant factor, it points against a lower penalty because it suggests, notwithstanding the events of 5 and 6 August 2003, there is still a culture within the industry that the provisions of the Act may be disregarded.
102 The expense to which Caelli has been put might be a relevant matter but it is barely relevant when discussing the imposition of a penalty that will not, if Caelli observes the law for a period of 12 months, have to be paid. I do not accept that it is a relevant matter to have regard to 'the time and trouble involved with defending the proceeding'. Caelli has contravened the Act. It has not been put to trouble by this proceeding. If it has been put to any time or trouble it has been by its contraventions of the Act.
103 I do not accept, as his Honour found, that the circumstances of the contravention were at the lower end of seriousness.
104 His Honour also found, as I have said, that it was unlikely that Caelli would contravene again which is relevant to personal deterrence. That was a finding open to his Honour and, in my opinion, cannot be disturbed. However, if that be the correct finding, then the proposed penalty must be viewed in that light. If it is right to assume that Caelli will not contravene the Act in this regard in the future, then the penalty which the parties agreed upon will be unlikely ever to have to be paid. It is to be remembered that the penalty only becomes payable if Caelli has breached any provisions of the Act within 12 months of the imposition of the penalty.
105 The parties referred the Court to a number of other decisions of the Court including 13 previous prosecutions arising from the same death and on the same dates. They are helpful but they do not indicate that any tariff has been adopted for contraventions of this kind or contraventions under s 187AB(1).
106 The penalty, when viewed against penalties imposed by other judges of this Court in relation to the events of 5 and 6 August 2003, is at the higher end of the range. However, in my opinion, that is not to say that the penalty is inappropriate having regard to the circumstances of the payments. It was not argued by Caelli before the primary judge that no declaration should be made. It would be appropriate, having regard to the penalty to be imposed, to make a declaration that Caelli has contravened s 187AA of the Act. There ought to be a declaration that there has been a contravention by Caelli and a penalty ought to be imposed of the kind agreed by the parties.
107 In my opinion, the conduct of the Union and the third and fourth respondents was more culpable than that of the employer. Caelli attempted to comply with the Act. It complied with its own policy and did not pay its employees for the period of industrial action on 5 and 6 August 2003.
108 In due course, it succumbed to the coercive pressure which was imposed by the Union and the third and fourth respondents.
109 There can be no doubt that the Union and the third and fourth respondents were aware that what they were doing was a contravention of s 187AB(1)(a) and s 187AB(1)(b). They were aware that if Caelli paid its employees in response to that pressure Caelli would also be caused to contravene the Act. The Union should have been aware that, by causing Caelli to make the payments in contravention of s 187AA, any of their member employees who accepted the payment would also be contravening the Act: s 187AA(2).
110 In my opinion, the conduct of the Union and the third and fourth respondents indicated a calculated indifference to the provisions of the Act of the kind that Commissioner Cole spoke about in his report.
111 The conduct was such that a declaration should have been made and a penalty imposed.
112 Having regard to the penalty which the appellant and Caelli agreed, it would be appropriate to impose one penalty notwithstanding the Union and the third and fourth respondents contravened both s 187AB(1)(a) and s 187AB(1)(b), and in respect of 101 employees.
113 There is a need for a penalty which recognises both personal and general deterrence. The primary judge's finding that the Union would be unlikely to contravene the section again must stand for the purpose of assessing the personal deterrence aspect of the penalty. In respect of general deterrence, the Court should indicate that it views coercive behaviour of the kind indulged in by the Union and the third and fourth respondents as a serious contravention of the Act and the penalty should be constructed to deter any like organisations from engaging in the same or similar conduct.
114 The primary judge took into account that industrial action arose out of a fatality in the industry and that fatalities raise immediate feelings of insecurity and threat. The reason for the industrial action is relevant but only for the purpose of understanding the circumstances which gave rise to the actual contravention. The industrial action was not the contravention. The contraventions were the demand for payment and the coercive behaviour.
115 I would make the declarations sought against the Union and the third and fourth respondents.
116 I would impose a penalty in relation to each of the 101 contraventions relating to both paragraphs of s 187AB(1) but impose a total penalty of $5,000, being a penalty of $2,500 for the contravention of s 187AB(1)(a) and $2,500 for the contravention of s 187AB(1)(b).
117 The monetary sum is less than that imposed upon Caelli but the difference is, of course, that the penalty imposed upon Caelli will not have to be paid if Caelli does not contravene any provision of the Act in the next 12 months. In the case of the Union, the penalty must be paid.
118 I agree with the declarations and orders proposed by Jessup J.