FEDERAL COURT OF AUSTRALIA Employment Advocate v National Union of Workers [2000] FCA 965 INDUSTRIAL LAW – freedom of association under Part XA of the Workplace Relations Act 1996– penalty following breach – considerations to which the Court will have regard in determining whether contraventions justify penalty and, if so, the appropriate level of penalty Workplace Relations Act 1996 ss 170ML, 170MU, 298K, 298P, 298L, 298U, 396 Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v DMG Industries Pty Ltd [1999] FCA 735 Construction, Forestry, Mining & Energy Union v Coal and Allied Operations Pty Ltd [No. 2] [1999] FCA 1714; (1999) 94 IR 231 The Employment Advocate v National Union of Workers [2000] FCA 710 Australian Workers Union v Johnson Matthey (Aust) Ltd [2000] FCA 728 THE EMPLOYMENT ADVOCATE v NATIONAL UNION OF WORKERS & ANOR N867 OF 1997 EINFELD J SYDNEY 20 JULY 2000 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N867 of 1997 BETWEEN: THE EMPLOYMENT ADVOCATE Applicant AND: THE NATIONAL UNION OF WORKERS First Respondent PETER ANDREW HEARNE Second Respondent JUDGE: EINFELD J DATE OF ORDER: 20 JULY 2000 WHERE MADE: SYDNEY THE COURT IMPOSES: 1. no penalty on the first respondent in respect of the contravention of Part XA of the Workplace Relations Act 1996 identified in the reasons for judgment of the Court of 29 May 2000 2. a penalty of four hundred dollars ($400) on the second respondent pursuant to section 298U(a) of the Workplace Relations Act 1996 in respect of the contravention of Part XA of the Act identified in the reasons for judgment of the Court of 29 May 2000 THE COURT ORDERS THAT: 3. the penalty be paid into the Consolidated Revenue Fund Note: Settlement and entry of orders are dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N867 of 1997 BETWEEN: THE EMPLOYMENT ADVOCATE Applicant AND: THE NATIONAL UNION OF WORKERS First Respondent PETER ANDREW HEARNE Second Respondent JUDGE: EINFELD J DATE: 20 JULY 2000 PLACE: SYDNEY REASONS FOR JUDGMENT 1 Reasons for judgment in this matter were delivered on 29 May 2000: Employment Advocate v National Union of Workers [2000] FCA 710 (the judgment). The Court found that on 31 January 1997 the second respondent (Hearne) advised, encouraged or incited the employer of Daniel Holloway to injure him in his employment and to alter his position to his prejudice, contrary to sections 298P(3)(a) and 298K(1)(b) and (c) of the Workplace Relations Act 1996 (the Act) respectively, for a prohibited reason within the meaning of section 298L(1)(b) of the Act, namely, that he was not, and did not intend to become, a member of the first respondent (the Union). All these provisions appear in Part XA of the Act which is headed Freedom of Association. Hearne was found to be an officer of the Union acting in that capacity at the time. (There was a typographical error in the final paragraph [122] of the judgment which wrongly stated the date of the contravening conduct. The correct date was stated in the body of the judgment and in the Court's formal order.) The question of any consequent penalties to be imposed was deferred, the parties being directed to provide written submissions on the matter. 2 The Advocate and the respondents duly filed their submissions on 5 and 9 June 2000 respectively. The orders of 29 May 2000 permitted the parties to seek to address the Court on their submissions but neither asked to do so. As mentioned in the judgment, the maximum penalty for the Union is $10,000 and for Hearne is $2000, as provided by section 298U of the Act which relevantly states: In respect of conduct in contravention of this Part, 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 or industrial association whose conduct contravened or is contravening the provision in question a penalty of not more than: (i) in the case of a body corporate - $10,000; or (ii) in any other case - $2,000; … 3 Section 356 of the Act provides: A court that imposes a monetary penalty under this Act (other than a penalty for an offence) may order that the penalty, or a part of the penalty, be paid: (a) into the Consolidated Revenue Fund; or (b) to a particular organisation or person. 4 Essentially, the Advocate has sought orders imposing a "mid to high range" penalty upon each of the respondents to be paid into the Consolidated Revenue Fund. The respondents' position was essentially that penalties towards the top end of the scale should be reserved for serious breaches of the freedom of association regime set up under Part XA and that the circumstances of this case do not reach that level. They argued that the contravention in question was minor and should not attract any penalty at all in respect of either respondent, in particular the Union which was only liable by virtue of the operation of a statutory imputation under Part XA, and not directly implicated in its officer's conduct. The respondents did not oppose an order that any penalty imposed go to Consolidated Revenue. 5 In Construction, Forestry, Mining & Energy Union v Coal and Allied Operations Pty Ltd [No. 2] [1999] FCA 1714; (1999) 94 IR 231 (CFMEU), Justice Branson observed that the Act gives no explicit guidance as to the circumstances in which a penalty under section 298U will be appropriate, nor does it suggest any criteria which might guide the Court as between imposing the maximum or a near maximum penalty, and a 'lower-end' amount. The terms of the section simply direct the Court to consider what is appropriate "in all the circumstances of the case". In determining whether and what penalties are appropriate in respect of any particular conduct, her Honour suggested the considerations to which the Court may appropriately have regard in this respect, which were however "not intended to comprise an exhaustive list" [8]: (a) The circumstances in which the relevant conduct took place (including whether the conduct was undertaken in deliberate defiance or disregard of the Act); (b) Whether the respondent has previously been found to have engaged in conduct in contravention of Part XA of the Act; (c) Where more than one contravention of Part XA is involved, whether the various contraventions are properly seen as distinct or whether they arise out of the one course of conduct; (d) The consequences of the conduct found to be in contravention of Part XA of the Act; (e) The need, in the circumstances, for the protection of industrial freedom of association; and (f) The need, in the circumstances, for deterrence. 6 In that case the employer was found to have engaged in a contravention of Part XA on three occasions by means of written warning notices to employees with the result that they were more vulnerable to being dismissed. Two of the instances arose from a single decision of the employer to refuse leave for employee representatives wishing to attend a hearing of the Australian Industrial Relations Commission involving their union. For the purposes of any penalty to be imposed, her Honour took into account that the matter did not involve simply an isolated instance of contravening conduct. In addition, the conduct was that of senior management, as opposed to relatively junior staff, and her Honour found that it had significant potential to affect the employees concerned. On this basis, her Honour held [12] that the contraventions of Part XA could not be regarded as trivial or merely technical and it was thus appropriate for penalties to be imposed. 7 Justice Branson did not, however, regard any of the three instances of contravening conduct as being "at the serious end of the scale of possible conduct in contravention of Part XA of the Act" [13]. Her Honour was prepared to take account of the fact that the particular conduct flowed from "deficiencies in management practice" resulting from the employer's review of its policy concerning leave from work to engage in union business, and was not undertaken in deliberate disregard of the Act. Her Honour remarked [14]: It seems to be fair to assume that the legislature intended penalties of or near the maximum allowed by the Act to be reserved for serious incidents of conduct in contravention of Part XA of the Act, and perhaps for cases in which the need for protection or deterrence is particularly strong. 8 Her Honour did not consider that the case fell into one of those categories. Finding that two of the instances of contravening conduct were closely related, her Honour made an order imposing a penalty of $2,000 in respect of the first incident and a further penalty of $500 for the second incident. While the third incident involved conduct somewhat distinct from the other two, it nevertheless shared sufficient commonalities with them to attract a further penalty of $1,000. 9 In Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v DMG Industries Pty Ltd [1999] FCA 735 (DMG), a decision delivered earlier in the same year, Justice Marshall considered five separate contraventions of section 298K of the Act, the most serious of which involved a member of the employer's senior management making a speech in which he warned the employees that they were at risk of losing their jobs should they join the union concerned. Justice Marshall found it "difficult to imagine a more deliberate or serious breach" of the section and held that, notwithstanding the lack of any previous similar conduct, it was the type of contravention that would ordinarily call for the imposition of a near maximum penalty of $9,000. In three other separate instances, words were uttered to three different employees in a "personally intimidating fashion" by the employer's principal manager – which in his Honour's view made the comments "all the more pernicious" – each of which called for a penalty of $4,000. However, his Honour actually imposed lesser penalties than those amounts since he took account of the offer of the employer to pay the costs of the applicant union and to make a public statement affirming the right of employees to choose whether or not to join a union. 10 Recently, Justice Marshall again had occasion to consider the imposition of a penalty for a contravention of section 298K, this time coupled with a contravention of section 170MU(1)(a): see Australian Workers Union v Johnson Matthey (Aust) Ltd[2000] FCA 728. A senior representative of an employer told a shop steward that if employee members of the union went on strike, they would not have jobs when they returned. Justice Marshall viewed the remark as a threat conveying a message that going on strike would lead to dismissal. His Honour viewed that conduct, which he had found to be in breach of the freedom of association provisions of Part XA, as "serious". Two regular casual employees were laid off wholly or partly because they proposed to engage in what the Act calls "protected" industrial action (see ss 170MU(1) and 170ML(1) and (2)) in support of collective bargaining to improve their working condition. Justice Marshall found that the conduct was in deliberate defiance of the statute and that the only explanation offered was that it occurred in the context of threatened industrial action. His Honour held [4] that the conduct "struck at the very heart of the ability of an employee to take protected industrial action free from intimidation" and as such the contravention should be viewed as serious even if it did not have "lasting effect" given at least one employee's apparent refusal to be intimidated. His Honour remarked [5]: The lack of long-term adverse consequences, whilst significant, should not loom too large as a mitigating factor on penalty. A transgressor should not unduly benefit from the stoicism of the injured party. Although the Company has no history of offending against the Act, the need to deter like conduct is an important factor to consider on the question of penalty. 11 Taking all the criteria referred to by Justice Branson in CFMEU into account, Justice Marshall considered it appropriate to order "a mid-range penalty" which would be commensurate with the seriousness of the offence, and took into account such mitigating factors as the lack of prior similar conduct, and of continuing consequences for the victims. A penalty of $3,000 was imposed for the contravention of section 298K and $6,000 for the contravention of section 170MU(1)(a). 12 It will immediately be seen that this case is quite different to those considered by Justices Branson and Marshall, for it is apparently the first reported case where the contravention has been committed by a union official. In seeking the imposition of a "mid to high-range" penalty, the Advocate submitted that as the conduct was intentional, involved threats to the employer's trading interests, and was a direct attack on the object of Part XA, it should be treated as "serious" for the purposes of determining a penalty. The Advocate argued that since the conduct was directed to the right of a person to choose not to join a union, the contravention goes to the heart of Part XA and does not simply involve an incidental or technical breach. Relying on DMG where the Court was minded to impose a penalty of $9,000 even in the absence of prior like conduct, the argument was that the lack of previous breach is of no moment. It was also submitted that the penalty should aim to deter both the current respondents and other unions and union officials from engaging in similar conduct. The Advocate argued that the conduct was essentially designed to maintain a 'closed shop' system at the relevant site, either by the removal of the employee to somewhere else, or by his joining the Union. Because he did in fact join the Union, the penalty should take into account that the respondents' two objectives were achieved, to their financial and industrial gain. 13 The Advocate also submitted that it was a relevant consideration in this case that the respondents had "taken every possible point in their defence". I reject this proposition. The principles applied in defamation cases do not apply in this type of case. The respondents were, in my view, perfectly entitled to conduct the case as ferociously as they wished, given that the imposition of significant monetary penalties was a possible outcome. 14 As the respondents have argued, there has been no suggestion that in the three and a half years since the contravening conduct took place in January 1997, there has been any threat of a breach or any continuing breach of provisions of the Act, nor any subsequent improper conduct on the part of either of the respondents. Although in a case involving a particular and unusual set of events this fact is perhaps not surprising, it might be noted that the Advocate has not sought at any time any injunctive orders under section 298U(e) requiring the respondents to refrain from conduct or to remedy the effects of any conduct, or any consequential orders under subsection (f). 15 The respondents submitted that Holloway was not strongly opposed to membership of the Union, pointing out that he remained a member working at the same site for some months after the events in question. Although it might conceivably be relevant to the fixing of a penalty in a case such as this that the employee concerned was fundamentally opposed to union membership, as distinct from being merely uninterested, hesitant or somewhat reluctant, the evidence provides no real basis for any conclusive inference that Holloway was opposed to joining the Union in principle, or that he had a strong desire to maintain his right to remain outside its ranks. Indeed, as the judgment reveals, the only direct interaction between Hearne and Holloway was, by Holloway's own account, amicable. Hearne sought to explain the benefits of union membership to Holloway, who in return expressed misgivings about their relevance to his own circumstances and from his own perspective. It was common ground that Hearne made no direct threat to Holloway nor did he at any time use intimidatory language to him. The argument in the case itself was that Hearne's intention was not to injure Holloway personally but to avoid an industrial dispute erupting over other members being aggrieved that Holloway had not joined the Union. In these respects the case may be seen to lack the aggravating circumstances of the other cases referred to. 16 On the other hand, the judgment explains why this argument was untenable. Moreover, the consequence of Hearne's conduct, had it been conceded by the employer, would have been that Holloway would not have been eligible for work at the relevant site, for reasons that had nothing to do with the manner in which he performed his work, but because he had declined to join the Union. The conduct would also have had the result, if acted upon, that Holloway would have suffered a material reduction in his opportunities for work with obvious serious consequences for him. 17 However, the relevant proscribed conduct is conduct directed at the employer. The real focus is on what the union representative was effectively inciting the employer to do, rather than on the precise circumstances of the employee concerned. The respondents conceded at numerous points in their argument that the series of exchanges between Hearne and representatives of the employer concerning Holloway's non-membership were, in stark contrast to his dealings with Holloway himself, somewhat "heated" and were conducted, at least on Hearne's part, in what was rather quaintly described as the "frank and robust" manner of industrial relations. By all accounts Hearne was extremely upset at the stance taken by the employer on Holloway's membership, and repeatedly used harsh language during a meeting that took place on the same morning as, although after, the contravening conduct. 18 It was submitted that Hearne's conduct should be understood in the context of his genuine, if mistaken, belief that he was entitled to press the employer to uphold the existing 'closed shop' arrangement operating at the site in question. In this regard, the new legislative regime of Part XA had only come into force some three weeks prior to the contravention. On the other hand, it is presumably in precisely those types of situation that the Act seeks to ensure that individuals retain real and substantive freedom of association. Hearne's conduct as directed to the representatives of the employer was, it has been found, clearly an incitement to the employer to act in a way that would have injured Holloway in his employment for a reason and in a way expressly prohibited by the Act. 19 These facts call for a penalty consistent with the intention of the legislation to deter and penalise conduct which interferes, or would if successful interfere, with workers' freedom not to join a Union if that is their wish. In other words, freedom of association embraces freedom of non-association. I take into account the length of time that has subsequently passed since this single instance of contravening conduct without any evidence of repetition, the lack of any similar prior conduct by these respondents, the fact that the contravening conduct was not accompanied by any direct intimidation of the employee concerned, and the fact that Hearne and the Union members at the worksite apparently believed that they were entitled to maintain the closed shop that had existed there for some time. 20 On behalf of the Advocate, the Australian Government Solicitor has apparently written to the respondents' solicitors indicating that, if the Union were to agree to include in one of its publications to its members a statement explaining the effect of the Court's decision on liability in this case, the Advocate would ask the Court to take this agreement into account in mitigation of any penalty imposed. In his submissions in this regard, the Advocate referred to DMG, where the employer's penalty was reduced after it gave a similar undertaking. Somewhat strangely the response was that the matter is irrelevant and no undertaking of this kind has been proffered. I respectfully agree with Justice Marshall that in a given case such an offer may have a mitigating effect. However, it is not unlikely that the result of this case will receive publicity and become known to the Union's officials and members, as well as to others in the workforce. Moreover, the determination of the Advocate to pursue a result in this case, and the Court's findings on liability in a considered judgment, will operate to create an awareness in the community of the limitations that the Act imposes in circumstances of this type. Accordingly, whether this particular matter is aired in a Union publication does not strike me as particularly pertinent to the question of penalty here. I impose a penalty on Hearne of $400. 21 As regards the Union, while Hearne was acting in his capacity as an officer of the Union for the purposes of Part XA, his superiors testified that at no stage in the course of these events did they have knowledge of or give any specific authorisation for his conduct. Their evidence was not challenged in this regard. In addition, there was no evidence that Hearne's conduct was part of a membership recruitment drive or that this type of conduct is prevalent or widespread among officers of the Union or union officials generally. For these reasons, I do not consider a penalty upon the Union to be appropriate in the circumstances of this case. 22 In this jurisdiction, the Advocate is not entitled to an order for costs: s.347 of the Act, and did not seek one. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marcus Einfeld AO. Associate: Dated: 20 July 2000 Counsel for the Applicant: Mr J L Trew QC with Mr S Lloyd Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: Mr W R Haylen QC Solicitor for the Respondent: Ryan Carlisle Thomas Written Submissions completed: 9 June 2000 Date of Judgment: 20 July 2000