FEDERAL COURT OF AUSTRALIA Director of the Fair Work Building Industry Inspectorate v CFMEU [2013] FCA 981 Citation: Director of the Fair Work Building Industry Inspectorate v CFMEU [2013] FCA 981 Parties: DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE v CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION and BILL BEATTIE File number: VID 253 of 2012 Judge: JESSUP J Date of judgment: 3 October 2013 Catchwords: INDUSTRIAL LAW – application for civil penalties – admitted contravention of s 417(1) of Fair Work Act 2009 (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), Crimes Act 1914 (Cth), s 4AA Fair Work Act 2009 (Cth), ss 12, 417, 539, 546, 793 Fair Work (Building Industry) Act 2012 (Cth), s 9 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: 25 September 2013 Place: Melbourne Division: FAIR WORK DIVISION Category: Catchwords Number of paragraphs: 13 Counsel for the Applicant: Mr M Felman Solicitors for the Applicant: Australian Government Solicitors Counsel for the Respondents: Mr C Dowling Solicitors for the Respondents: Slater & Gordon IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY FAIR WORK DIVISION VID 253 of 2012 BETWEEN: DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE Applicant AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION First Respondent BILL BEATTIE Second Respondent JUDGE: JESSUP J DATE OF ORDER: 3 October 2013 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The first respondent pay a penalty of $12,500 in respect of the conduct of the second respondent, an official of the first respondent within the meaning of s 793(1) of the Fair Work Act 2009 (Cth), in organising industrial action by employees of GI Pty Ltd on 8 and 9 July 2010 at the Florey Neuroscience Institute at the Austin Hospital in Heidelberg, Victoria, prior to the nominal expiry date of the GI Pty Ltd (on-site) Enterprise Agreement, contrary to s 417(1)(a) of the said Act. 2. The second respondent pay a penalty of $2,500 for his conduct in organising the industrial action referred to in the previous order. 3. The proceeding be otherwise dismissed. 4. 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 FAIR WORK DIVISION VID 253 of 2012 BETWEEN: DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE Applicant AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION First Respondent BILL BEATTIE Second Respondent JUDGE: JESSUP J DATE: 3 October 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 ss 539 and 546 of the Fair Work Act 2009 (Cth) ("the FW Act") in relation to an admitted contravention by the second respondent, Bill Beattie, of s 417(1) of that Act. It is accepted that the first respondent, the Construction, Forestry, Mining and Energy Union should be taken to have engaged in the same conduct as the second respondent under s 793(1) of the FW Act. 2 The office of the applicant is established by s 9 of the Fair Work (Building Industry) Act 2012 (Cth) ("the FWBI Act") and replaces the office of the Australian Building and Construction Commissioner ("the Commissioner") which was established by the Building and Construction Industry Improvement Act 2005 (Cth) ("the BCII Act"). The first respondent is an association of employees registered as an organisation under the Fair Work (Registered Organisations) Act 2009 (Cth). The second applicant is an organiser and employee of the first respondent within the meaning attributed to that term by s 12 of the FW Act. 3 Section 417(1) of the FW Act provides: No industrial action (1) A person referred to in subsection (2) must not organise or engage in industrial action from the day on which: (a) an enterprise agreement is approved by the [Fair Work Commission] until its nominal expiry date has passed; or (b) a workplace determination comes into operation until its nominal expiry date has passed; whether or not the industrial action relates to a matter dealt with in the agreement or determination. The persons referred to in sub-section (2) of that section include "an employer, employee, or employer organisation, who is covered by the agreement or determination" and "an officer of an employee organisation that is covered by the agreement or determination, acting in that capacity". The second respondent was within the latter definition when he carried out the activities which led to his contravention of s 417(1) of the FW Act. 4 The proceeding was commenced on 27 March 2012. On 7 May 2012, I made orders referring the proceeding to mediation by a Registrar of the court. The mediation process lasted some months and, in October 2012, the court was informed that the parties had settled their dispute insofar as it related to the respondents' liability for a contravention of s 417(1) of the FW Act. On 22 July 2013, I made orders requiring the parties to file a statement of agreed facts and submissions concerning the disposition of the proceeding. Those documents have been filed, and the parties propose that the respondents be found to have contravened s 417(1) 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 facts referred to below are taken from the parties' agreed statement. 5 At the relevant times, Cockram Constructions Limited ("Cockram") was the principal building contractor for the construction of a three-storey neurosciences building at the Florey Neuroscience Institute at the Austin Hospital in Heidelberg, Victoria ("the Site"). It engaged GI Pty Ltd ("GI"), a "constitutional corporation" under s 12 of the FW Act, to design, construct and install glass reinforced cement at the Site. GI subsequently dispatched two employees to perform the work at the Site ("the GI employees"). 6 In February 2010, GI and the first respondent agreed to enter into the GI Pty Ltd (on-site) Enterprise Agreement ("the Agreement"). As GI is based in Adelaide, the Agreement was negotiated and signed by the South Australian branch of the first respondent. It was approved by Fair Work Australia (as it then was) on 11 March 2010. Clause 1.6 of the Agreement stated that the nominal expiry date of the Agreement was 17 March 2013. Clauses 1.5.1 and 1.5.4 of the Agreement are also relevant. They read as follows: 1.5.1 This Agreement will be binding on G.I. Pty Ltd ("the company"), on the one hand, the Construction, Forestry, Mining & Energy Union of Australia and employees of the Company [sic] employed onsite in the classifications contained in this Agreement. […] 1.5.4 This Agreement is applicable throughout all States and Territories of Australia. The GI employees were covered by the classifications in the Agreement at the relevant times. 7 On 8 July 2010, a dispute arose between GI and the first respondent. That dispute concerned the applicability of the Agreement to the GI employees. The rates of pay set out in the Agreement were lower than the rates of pay which generally applied in Victoria to the work carried out by employees of GI. It is accepted that GI was aware of this discrepancy and suspected that it would cause issues in GI doing work in Victoria. The first respondent sought to ensure that the GI employees would be paid the rates of pay applicable in Victoria. The dispute continued until 13 July 2010, at which time GI agreed to pay the GI employees the higher rate of pay. 8 The second respondent's contravention of s 417(1) occurred on 8 and 9 July 2010. On those two days, he met with the GI employees, addressed them, and directed and encouraged them to not perform any work on the Site. On both days, he informed Cockram that he had told the GI employees not to return to work, and that he would continue to do so until the dispute between GI and the first respondent was resolved. As stated in the previous paragraph, that resolution did not occur until 13 July 2010 when a meeting took place between GI, the first respondent and Brookfield Multiplex Pty Ltd. Nonetheless, it is not alleged that the second respondent took any other steps on 10, 11 or 12 July 2010. Following GI's agreement to pay the GI employees the higher rate of pay, the second respondent advised Cockram that the GI employees were free to return to work at the Site. 9 The applicant alleges, and the respondents accept, that the GI employees engaged in industrial action within the meaning of s 19(1)(c) of the FW Act and that the second respondent, by his conduct on 8 and 9 July 2010, organised that action. It was the second respondent's organisation of that industrial action at a time prior to the expiry of the Agreement (which was 17 March 2013) which resulted in his contravention of s 417(1) of the FW Act. In the light of the parties' agreement, I am prepared to accept that this was so. 10 The parties have agreed that the first respondent should pay a pecuniary penalty of $12,500, and that the second respondent should pay a pecuniary penalty of $2,500. The court's power to require the first respondent to pay a penalty in excess of the maximum penalty amount arises under s 546(2)(b) of the FW Act, which allows for the imposition of a penalty on a body corporate which is no greater than five times the maximum number of penalty units. 11 The applicant submitted in writing that, in considering the level of penalties appropriate to be imposed for the respondents' contravention of s 417(1), there were circumstances to be taken into account. He submitted that the respondents' contravention of s 417(1) involved a single course of conduct such that there was only one contravention of that provision. He also submitted that the second respondent was "acting under instructions" from the first respondent, implicating the senior management of the first respondent. Other factors which the applicant submitted were relevant was the disruption caused to the work of GI, the respondents' history of contraventions (noting that the second respondent has been found to have contravened industrial legislation on two occasions, albeit that the second contravention occurred after his conduct in the current proceeding), the first respondent's strong financial position, and the respondents' lack of contrition. The respondents, understandably, did not emphasise some of these factors, but, save for two matters, they did not diverge from them in any substantial way. The first matter was their denial that the second respondent was acting on the instructions of the first respondent, and the second was their position that any submission by the applicant that the respondents should be penalised to a greater extent for their lack of contrition "should not be accepted". In the oral hearing before me, counsel for the applicant made it clear that his client did not rely on the suggestion that senior management of the first respondent were involved in the contravention, and did not suggest that the respondents' lack of contrition should be considered an aggravating factor justifying the imposition of a greater penalty. This clarification, which I am prepared to accept, makes it unnecessary for me to consider the matters raised by the respondent further. In the circumstances, therefore, 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 contravention of s 417(1). 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 trial of some duration. The parties also emphasised that the conduct in question involved a single contravention of s 417(1) over a period of approximately two days. Implicit was the parties' agreement that the respondents' conduct was not such as to justify the imposition of a more severe penalty. 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: 3 October 2013