FEDERAL COURT OF AUSTRALIA Director of the Fair Work Building Industry Inspectorate v CFMEU [2013] FCA 515 Citation: Director of the Fair Work Building Industry Inspectorate v CFMEU [2013] FCA 515 Parties: DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE v CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION, DANNY BERARDI, BILLY BEATTIE, THEO THEODOROU, BRENDAN PITT, JASON BELL and ADAM PATCHING File number: VID 631 of 2012 Judge: JESSUP J Date of judgment: 31 May 2013 Catchwords: INDUSTRIAL LAW – application for civil penalties – admitted contraventions of s 43(1)(a) of Building and Construction Industry Improvement Act 2005 (Cth) – quantum of penalties which should be imposed agreed between the parties – whether quantum agreed between the parties within permissible range – matters relevant to exercise of discretion Legislation: Building and Construction Industry Improvement Act 2005 (Cth), ss 43, 49, 69 Building and Construction Industry Improvement Amendment (Transition to Fair Work) Act 2012 (Cth) Building and Construction Industry Improvement Amendment (Transition to Fair Work) Regulations 2012 (Cth), reg 2.3 Fair Work (Building Industry) Act 2012 (Cth) Fair Work (Registered Organisations) Act 2009 (Cth) Cases cited: Hills v Sutton (2007) 169 IR 327 Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] ATPR 41-993 NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 Date of hearing: 21 May 2013 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 13 Counsel for the Applicant: J Bourke SC with T Jacobs Solicitors for the Applicant: Australian Government Solicitor Counsel for the Respondents: C Dowling Solicitors for the Respondents: CFMEU, Legal Branch IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 631 of 2012 BETWEEN: DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE Applicant AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION First Respondent DANNY BERARDI Second Respondent BILLY BEATTIE Third Respondent THEO THEODOROU Fourth Respondent BRENDAN PITT Fifth Respondent JASON BELL Sixth Respondent ADAM PATCHING Seventh Respondent JUDGE: JESSUP J DATE OF ORDER: 31 MAY 2013 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The second respondent pay a penalty of $5,000 for encouraging and persuading a mobile crane crew to not enter the Ashwood Chadstone Gateway Project ("the Ashwood Site") on 2 September 2011, such conduct being engaged in with the intent to coerce St Hilliers' Construction Pty Ltd ("St Hilliers") to reinstate a Warren Whitney ("Whitney") as an employee, contrary to s 43(1)(a) of the Building and Construction Industry Improvement Act 2005 (Cth) ("BCII Act"). 2. The third respondent pay a penalty of $5,000 for encouraging and persuading a mobile crane crew to not enter the Ashwood site on 2 September 2011, such conduct being engaged in with the intent to coerce St Hilliers to reinstate Whitney as an employee, contrary to s 43(1)(a) of the BCII Act. 3. The fifth respondent pay a penalty of $3,000 for his conduct on 2 September 2011 in directing employees of Williamstown Crane Hire not to operate a 200 tonne crane at the Ararat Prison site ("the Ararat site"), such conduct being engaged in with the intent to coerce St Hilliers to reinstate Whitney as an employee, contrary to s 43(1)(a) of the BCII Act. 4. The first respondent pay a penalty of $34,000 for a contravention of s 43(1)(a) of the BCII Act by reason of being vicariously liable for the conduct referred to in orders 1 to 3 above. 5. The second respondent pay a penalty of $4,500 for his conduct on 14 September 2011 in encouraging and persuading workers at the Canterbury Project at 2-4 Gascoyne Street, Canterbury, Victoria to strike for the day, such conduct being engaged in with the intent to coerce St Hilliers to reinstate Whitney as an employee, contrary to s 43(1)(a) of the BCII Act. 6. The third respondent pay a penalty of $5,500 for his conduct on 14 September 2011 in: (a) encouraging and persuading workers at the Simpson Barracks, Watsonia Military Camp, Watsonia, Victoria to strike for the day; and (b) stating to two representatives of St Hilliers that the workers at the Watsonia site were going on strike and that unless St Hilliers reinstated Whitney as an employee, there might be prolonged closures – the above conduct being engaged in with the intent to coerce St Hilliers to reinstate Whitney as an employee, contrary to s 43(1)(a) of the BCII Act. 7. The fourth respondent pay a penalty of $4,500 for his conduct on 14 September 2011 in encouraging and persuading workers at the apartments at 473 Keppel Street, Carlton, Victoria to strike for the day, such conduct being engaged in with the intent to coerce St Hilliers to reinstate Whitney as an employee, contrary to s 43(1)(a) of the BCII Act. 8. The sixth respondent pay a penalty of $3,500 for his conduct on 14 September 2011 in encouraging and persuading workers at the Ararat site to strike for the day, such conduct being engaged in with the intent to coerce St Hilliers to reinstate Whitney as an employee, contrary to s 43(1)(a) of the BCII Act. 9. The first respondent pay a penalty of $50,000 for contravention of s 43(1)(a) of the BCII Act by reason of being vicariously liable for the conduct referred to in orders 5 to 8 above and the conduct of its official on 14 September 2011 at the Ashwood site in encouraging and persuading workers at the Ashwood site to strike for the remainder of the day at the Ashwood site, such conduct being engaged in with the intent to coerce St Hilliers to reinstate Whitney as an employee, contrary to s 43(1)(a) of the BCII Act. 10. The proceeding be otherwise dismissed. 11. There be no order as to costs. Note: Entry of orders is dealt with in rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 631 of 2012 BETWEEN: DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE Applicant AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION First Respondent DANNY BERARDI Second Respondent BILLY BEATTIE Third Respondent THEO THEODOROU Fourth Respondent BRENDAN PITT Fifth Respondent JASON BELL Sixth Respondent ADAM PATCHING Seventh Respondent JUDGE: JESSUP J DATE: 31 MAY 2013 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 This is an application by the Director of the Fair Work Building Industry Inspectorate ("the applicant") for a pecuniary penalty to be imposed under s 49(1) of the Building and Construction Industry Improvement Act 2005 (Cth) ("the Act") in relation to admitted contraventions of s 43(1)(a) of that Act. The way in which the court's jurisdiction to grant the pecuniary penalties sought arises is not straightforward. The Act has recently been renamed, and a number of its sections repealed, by the commencement of Schedule 1 to the Building and Construction Industry Improvement Amendment (Transition to Fair Work) Act 2012 (Cth) on 1 June 2012. The Act's short title is now the Fair Work (Building Industry) Act 2012 (Cth). The Building and Construction Industry Improvement Amendment (Transition to Fair Work) Regulations 2012 (Cth) ("the Regulations") commenced operation on 1 June 2012. Sub-regulation 2.3(1)(b) of the Regulations provides that if a proceeding could have been (but was not) commenced under the Act in relation to conduct that happened before the commencement of the Regulations, the Act (with some exceptions, none of which apply here) continues in force to the extent necessary to allow the proceeding to be commenced and dealt with. The applicant's standing to bring the application presently before the court arises under sub-regulation 2.3(3)(a) of the Regulations, which provides that the applicant occupies the same position as was previously occupied under the Act by the Australian Building and Construction Commissioner and, therefore, remains eligible under s 49(b) of the Act to institute an application for orders in relation to a person who has contravened a civil penalty provision. 2 The first respondent is an association of employees registered as an organisation under the Fair Work (Registered Organisations) Act 2009 (Cth). The second to sixth respondents are organisers employed by the first respondent. The seventh respondent is a union delegate of the first respondent. Each of the second to seventh respondents is an "officer" of the first respondent within the meaning of that term in s 69(3) of the Act. 3 The proceeding was commenced by originating process filed on 4 September 2012. Sometime between the filing of the application and late November 2012, the parties informed the court that they had settled and orders were made on 27 November 2012 requiring the parties to file an agreed statement of facts and submissions concerning the disposition of the proceeding. Those documents have been filed, and the parties propose that each of the first to sixth respondents be found to have contravened s 43(1)(a) of the Act and be required to pay an agreed pecuniary penalty in respect thereof but that the proceeding otherwise be dismissed with no order as to costs. The applicant withdrew its application insofar as it related to the seventh respondent but continued to rely on the conduct of that respondent as part of its case as to the appropriateness of the pecuniary penalty sought against the first respondent. The facts referred to below are taken from the parties' agreed statement. 4 St Hilliers Construction Pty Ltd ("St Hilliers") is a contractor satisfying the definition of a "constitutional corporation" and a "building industry participant" under the terms of the Act. It is engaged in construction projects around Australia, a number of which are being undertaken in Victoria. At the times presently relevant, St Hilliers, or a related body ("St Hilliers Ararat"), was engaged as a building contractor for projects being undertaken at sites in Carlton, Ashwood, Canterbury, Watsonia and Ararat. At each of these sites, St Hilliers or, in the case of the Ararat site, St Hilliers Ararat, employed persons or engaged sub-contractors to perform work. Those employed were either members, or were eligible to be members, of the first respondent. 5 On 25 August 2011, St Hilliers terminated the employment of five employees in New South Wales on the grounds that their positions were redundant. One of these employees was Warren Whitney, a delegate of the first respondent and a member of one of its committees of management. He was also the Chairman of the St Hilliers Consultative Committee and Safety Committee, and a Workplace Safety Representative. The first respondent demanded that St Hilliers reinstate Mr Whitney, which it refused to do until after the events giving rise to the contraventions of s 43(1)(a) alleged in this proceeding. Those events took place on 2 and 14 September 2011. 6 On 2 September 2011, a St Hilliers' sub-contractor, D&G Hoists and Cranes (Aust) Pty Ltd ("D&G"), was scheduled to set up a large mobile crane at St Hilliers' Ashwood site in order to dismantle a tower crane that was then present on that site. That was not to be, however, as the second and third respondents persuaded D&G's employees to leave the Ashwood site with the mobile crane. On the same date, another St Hilliers' sub-contractor, Williamstown Crane Hire Pty Ltd ("Williamstown Crane"), was scheduled to operate a large crane at the Ararat site to lift condensers for the air-conditioning units at that site. This too was not to be as the fifth respondent directed Williamstown Crane's employees not to operate the crane despite it having been set-up for operation. In both instances, representatives of St Hilliers were told that the situation would only improve if Mr Whitney was reinstated as an employee. 7 The events of 14 September 2011 were more extensive. They concerned strike action undertaken at the sites at Ararat, Ashwood, Canterbury, Watsonia and Carlton. There were significant similarities in the way in which the strike action at each site unfolded. In each case, the strike action was undertaken after one of the second to seventh respondents attended a site, without notice to St Hilliers, and encouraged the employees and sub-contractors working at that site to go on strike. In the case of the strike at the Watsonia site, the third respondent made a further threat that there may be prolonged closures if Mr Whitney was not reinstated as an employee. 8 The events of 2 and 14 September 2011 had their desired effect. On the evening of 14 September 2011, after discussions between representatives of St Hilliers and representatives of the first respondent, Mr Whitney was reinstated as an employee of St Hilliers. 9 The applicant alleged, and the respondents agreed, that, in the circumstances referred to above, the second to seventh respondents organised or took action against St Hilliers with the intent of coercing it to employ Mr Whitney as a building employee, and that this constituted a contravention of s 43(1)(a) of the Act. It was further alleged and agreed that the first respondent was responsible for the acts committed by the second to seventh respondents under s 69(1)(b) of the Act. In the light of the parties' agreement, I am prepared to accept that this was so. 10 Under s 49(2)(a) of the Act, the maximum penalty that may be imposed for a contravention of s 43(1)(a) is $110,000.00 for a body corporate and $22,000.00 for an individual. The parties are agreed that an appropriate penalty, in the circumstances of the present case, would be: (a) In respect of the conduct on 2 September 2011: (i) A penalty of $5,000 for [the second respondent] for the…Ashwood conduct; (ii) A penalty of $5,000 for [the third respondent] for the…Ashwood conduct; (iii) A penalty of $3,000 for [the fifth respondent] for the…crane direction; (iv) A penalty of $34,000 for the [first respondent] for the…[first respondent] co-ordinated action. (b) In respect of the conduct on 14 September 2011: (i) A penalty of $4,500 for [the second respondent] for the encouragement…to strike; (ii) A penalty of $5,500 for [the third respondent] for the encouragement…to strike and the…threat; (iii) A penalty of $3,500 for [the sixth respondent] for the encouragement…to strike; (iv) A penalty of $4,500 for [the fourth respondent] for the encouragement…to strike; (v) A penalty of $50,000 for the [first respondent] for the …co-ordinated strike action. As a percentage of the maximum penalty available, the penalties agreed for the events of 2 September 2011 were as follows: 22.73% for the second and third respondents; 13.64% for the fifth respondent; and 30.91% for the first respondent. For the events of 14 September 2011 those percentages were as follows: 20.45% for the second respondent; 25% for the third respondent; 15.91% for the sixth respondent; 20.45% for the fourth respondent; and 45.45% for the first respondent. 11 The applicant submitted that, in considering the level of penalty appropriate to be imposed for the respondents' contraventions of s 43(1)(a), there were circumstances to be taken into account. They submitted that it was "significant that the events…constituted a coordinated strategy on the part of" the first respondent with the intent of coercing St Hilliers to reinstate Mr Whitney in circumstances where the first respondent had other, lawful, means by which to achieve that aim. Other factors which the applicant submitted were relevant was the nature of the damage and loss suffered by St Hilliers, the fact that the first respondent's senior management was not involved in the contraventions, the first respondent's history of contraventions, the first respondent's strong financial position, and the respondents' lack of contrition. The respondents, understandably, did not emphasise some of these factors but they did not diverge from them in any substantial way. Where the respondents disagreed with the relevance or probity of the circumstances submitted by the applicant, the highest their objection could be put was that the court ought to be "cautious" in accepting them. In the circumstances, I consider that there was general agreement between the parties as to the circumstances to be taken into account in considering whether the penalties agreed between them were appropriate. 12 The court is not bound by the agreement of the parties as to the level of penalty which should be imposed in a case such as the present. However, the court will not depart from an agreed figure merely because it might otherwise have been disposed to award some other figure. The predictability involved in the resolution of penal proceedings in accordance with a pre-trial agreement reached by the parties is something which should, as a matter of public policy, be regarded as beneficial. Only where the agreed penalty falls outside the permissible range should the court depart from the figure agreed by the parties. In this context, the permissible range is the range which would be permitted by the court, that is, a range within which the penalty is neither manifestly inadequate nor manifestly excessive. See NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285, 290-91; Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] ATPR 41-993, [53]; Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543, 565; and Hills v Sutton (2007) 169 IR 327, 329. 13 It is clear from the parties' submissions that careful consideration was given to the appropriateness of the penalties sought to be imposed on the respondents for their contraventions of s 43(1)(a). Both parties emphasised that the respondents, by admitting liability and participating in an agreed statement of facts, have saved the public the expense of what the parties estimated would be a reasonably lengthy trial. I am satisfied that the penalty proposed by the parties is within the permissible range and I shall not, in the circumstances, depart from it. The parties agreed that the proceeding should otherwise be dismissed with no order as to costs, and I shall so order. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup. Associate: Dated: 31 May 2013