FEDERAL COURT OF AUSTRALIA Brookfield Multiplex Engineering and Infrastructure Pty Ltd v McDonald [2014] FCA 389 Citation: Brookfield Multiplex Engineering and Infrastructure Pty Ltd v McDonald [2014] FCA 389 Parties: BROOKFIELD MULTIPLEX ENGINEERING AND INFRASTRUCTURE PTY LTD (ACN 095 282 992) v JOSEPH MCDONALD, WALTER MOLINA and CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION File number: WAD 170 of 2013 Judge: NORTH J Date of judgment: 11 March 2014 Catchwords: INDUSTRIAL LAW – Contraventions of ss 346, 348 and 417 Fair Work Act 2009 (Cth) admitted by respondents – remaining issue for the Court to fix civil penalties for contraventions – relevant principles – whether penalties appropriate after consideration of all the circumstances – purposes to be served by penalties are punishment, personal and general deterrence, and rehabilitation – totality principle – penalties to reflect gravity of contraventions – relevant considerations – motivation for strike action in March 2013 – not appropriate for motivation for October 2013 events to be taken into account – comments of first respondent demonstrating willingness to breach injunction in related proceedings – physically threatening behaviour of first respondent – defiance of first respondent of system of industrial law – settlement agreement reached Legislation: Crimes Act 1914 (Cth) s 4AA(1) Fair Work Act 2009 (Cth) ss 346, 348, 417 Fair Work (Registered Organisation) Act 2009 (Cth) Date of hearing: 11 March 2014 Place: Perth Division: FAIR WORK DIVISION Category: Catchwords Number of paragraphs: 34 Counsel for the Applicant: Mr I M Neil SC with Mr J Kelleher Solicitor for the Applicant: Clayton Utz Counsel for the Respondents: Mr J Gurr Solicitor for the Applicant: Slater & Gordon IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY FAIR WORK DIVISION WAD 170 of 2013 BETWEEN: BROOKFIELD MULTIPLEX ENGINEERING AND INFRASTRUCTURE PTY LTD (ACN 095 282 992) Applicant AND: JOSEPH MCDONALD First Respondent WALTER MOLINA Second Respondent CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION Third Respondent JUDGE: NORTH J DATE OF ORDER: 11 MARCH 2014 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. (a) The first respondent pay a penalty in the amount of $21,000; (b) The second respondent pay a penalty in the amount of $7,000; (c) The third respondent pay a penalty in the amount of $95,000. 2. Further to Order 1, the payment of the penalties shall be made by way of cheque, payable to "Brookfield Multiplex Engineering and Infrastructure Pty Ltd", and delivered to the applicants' solicitors within 60 days of this Order. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY FAIR WORK DIVISION WAD 170 of 2013 BETWEEN: BROOKFIELD MULTIPLEX ENGINEERING AND INFRASTRUCTURE PTY LTD (ACN 095 282 992) Applicant AND: JOSEPH MCDONALD First Respondent WALTER MOLINA Second Respondent CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION Third Respondent JUDGE: NORTH J DATE: 11 MARCH 2014 PLACE: PERTH REASONS FOR JUDGMENT 1 These reasons address the amount of civil penalties which should be imposed on the respondents for contraventions of the Fair Work Act 2009 (Cth) (the Fair Work Act) arising from industrial action taken by the respondents. 2 The applicant, Brookfield Multiplex Engineering and Infrastructure Pty Ltd, was responsible for the construction of the Mundaring water treatment plant, located at Mundaring Weir Road, Mundaring, Western Australia (the site). The first respondent, Joseph McDonald, is an Assistant Secretary of the Construction and General Division, Western Australian Divisional Branch of the third respondent, the Construction, Forestry, Mining and Energy Union (CFMEU) and was, at the time relevant to these proceedings, the Interim National President of the CFMEU. The second respondent, Walter Molina, is an organiser employed by the CFMEU. The third respondent is the CFMEU, an organisation of employees registered under the Fair Work (Registered Organisation) Act 2009 (Cth). The CFMEU was party to several enterprise agreements with subcontractors working on the site. 3 The applicants sought declarations of contravention, compensation, an injunction against the first respondent, and civil penalties for contraventions of ss 346, 348 and 417 of the Fair Work Act against the respondents. 4 Section 346 provides: A person must not take adverse action against another person because the other person: (a) is or is not, or was or was not, an officer or member of an industrial association; or (b) engages, or has at any time engaged or proposed to engage, in industrial activity within the meaning of paragraph 347(a) or (b); or (c) does not engage, or has at any time not engaged or proposed not to engage, in industrial activity within the meaning of paragraphs 347(c) to (g). 5 Section 348 provides: A person must not organise or take, or threaten to organise or take, any action against another person with intent to coerce the other person, or a third person, to engage in industrial activity. 6 Section 417 provides: (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 FWC 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. (2) The persons are: (a) an employer, employee, or employee organisation, who is covered by the agreement or determination; or (b) an officer of an employee organisation that is covered by the agreement or determination, acting in that capacity. Injunctions and other orders (3) If a person contravenes subsection (1), the Federal Court or Federal Circuit Court may do either or both of the following: (a) grant an injunction under this subsection; (b) make any other order under subsection 545(1); that the court considers necessary to stop, or remedy the effects of, the contravention. (4) The court may grant an injunction under subsection (3) only on application by a person referred to in column 2 of item 14 of the table in subsection 539(2). (5) Despite subsection 545(4), the court may make any other order under subsection 545(1) only on application by a person referred to in column 2 of item 14 of the table in subsection 539(2). 7 The parties have reached an agreement in relation to the issues raised by the litigation. The agreement included the making of consent orders which dealt with declarations, orders for payment of compensation in the sum of $250,000 to the applicant, and an agreement as to a range of civil penalties which should be payable for the contraventions of the Fair Work Act. The parties have also filed a statement of agreed facts and admissions. On the basis of those agreed facts, the Court has made the consent orders relating to all the matters save the amount of the civil penalties to be paid. For the purpose of finalising the amount of the penalties, it is necessary to recount some of the agreed facts. 8 On 23 March 2013, an employee of a sub-contractor of the applicant lost control of a water cart truck the employee was driving. The truck came to rest in a ditch at the side of the road. 9 On 25 March 2013, the first and second respondents approached the applicant and made demands on it to, inter alia, perform a safety inspection of the site and required that whilst that was being performed, the employees sit on the site in sheds. 10 The applicant refused, and a meeting was called on that day by the first and second respondents which 150 employees attended. As a result of the meeting, strike action took place that day and the employees failed to attend for work. 11 It was accepted by the respondents that, in contravention of s 348 and s 417 of the Fair Work Act, the action was taken in order to coerce the applicant to comply with their demands for a safety inspection of the site. The first respondent also accepted in the agreed statement of facts that, in contravention of s 346 and s 348 of the Fair Work Act, he took action on the same day which was intended to coerce certain employees of a sub-contractor of the applicant, Hexagon, to join the strike and not return to work. 12 On 26 March 2013, a further meeting of approximately 150 workers took place. The first and second respondents addressed the meeting and said that the safety inspection had not been sufficient. This action was also admitted to be in contravention of s 348 and s 417. As a result of the meeting, the workers voted to continue to strike. 13 On 27 March 2013, three employees of Hexagon attempted to enter the worksite. The first respondent stood at the entrance and attempted to prevent them from entering. A scuffle ensued in which the first respondent physically threatened one of the three employees. It was accepted in the statement of agreed facts that the first respondent's action was an attempt to coerce the Hexagon employees into taking industrial action and joining the strike in contravention of s 346 and s 348 of the Fair Work Act. 14 On the same day, 27 March 2013, a meeting was called by the first respondent which was attended by approximately 100 workers. The subject matter was, however, different to the previous meetings. The meeting was concerned with addressing questions regarding the right of entry of CFMEU officials to the site and other sites controlled by the applicant and its related companies. The first respondent called for strike action. The second respondent accompanied the first respondent and stood next to him during the meeting. It is admitted that he did nothing to disassociate himself from the conduct of the first respondent and that he intended to encourage and incite the taking of strike action. It is accepted that the workers left the site as a result of the meeting, and that the respondents' action in organising the strike was in contravention of s 348 and s 417 of the Fair Work Act 15 The application also raised an earlier event which involved the first respondent alone. This was also the subject of the statement of agreed facts. 16 On 3 October 2012, an employee fell whilst manoeuvring an oxyacetylene cylinder trolley, injuring his ankle. On the following day the first respondent called a meeting at which approximately 80 workers were present. The first respondent called for a strike to address the perceived safety issues which caused the accident. As a result of the meeting the workers, including sub-contractors employed under enterprise agreements made with the third respondent, left the site. It is admitted that the first respondent's action was in contravention of s 417. 17 The remaining issue for the Court to determine is the appropriate amount of the penalties to be paid by each respondent. 18 The narrow issue left to be determined by the Court must be viewed against the complex agreement made between the parties which involved various issues raised by the litigation. Mr Neil SC, who appeared with Mr Kelleher for the applicants, also emphasised the importance of the Court taking into account the balance in the agreement reached by the parties. This is an important consideration in the determination of the remaining matters before the Court. 19 Section 4AA(1) of the Crimes Act 1914 (Cth) provides that the value of a penalty unit is $170. In relation to the actions taken in March 2013, the maximum penalty for each contravention of the Fair Work Act is $10,200 for the first and second respondents and $51,000 for the third respondent. The range agreed between the parties in relation to the first respondent is $18,000 to $21,000, in relation to the second respondent is $6,000 to $9,000, and in relation to the third respondent, $90,000 to $105,000. 20 In relation to the October 2012 contraventions, s 4AA(1) of the Crimes Act 1914 (Cth) provided that the value of a penalty unit was $110. Consequently, the maximum penalty for a contravention of s 417 of the Fair Work Act for the events in October 2012 is $6,600 for the first respondent and $33,000 for the third respondent. 21 Although the parties have reached an agreement, it is nonetheless the responsibility of the Court to determine the appropriate penalty. 22 The parties agreed on the general approach to the determination of penalties. The process to be undertaken by the Court involves consideration of all the circumstances. There is a public interest in the resolution of litigation by agreement, particularly in cases such as the present in which the trial would likely have taken several weeks. In such circumstances, the Court does not determine the appropriate penalty by asking what figure it would arrive at absent the agreement. Rather, the Court should determine whether the figures proposed are within a range which is, in the Court's view, appropriate to the circumstances. 23 The accepted purposes to be served by the imposition of the penalty are punishment, deterrence, both personal and general, and rehabilitation. The penalties must be fixed at a level which acts as a specific deterrent to the respondents from engaging in similar action in the future, as well as a general deterrent to the rest of the community to indicate that conduct in contravention of the Fair Work Act will be visited by appropriate penalties. 24 The penalty must be fixed by reference and in proportion to, the gravity of the contravention. 25 Just as in the exercise of sentencing in criminal cases, so in the fixing of the amount of civil penalties, the process undertaken by the Court requires, in the end, an instinctive synthesis of all the relevant factors. Finally, at the end of the process the Court must have regard to the totality principle to ensure that the final figure properly reflects the circumstances of the contravention. Thus, the approach taken by the parties in this case was to view the conduct in totality without disaggregating each of the contraventions. 26 The applicant pointed to a number of factors which should be taken into account when fixing the penalties in relation to the events at the Mundaring site. 27 The applicant argued that the industrial action on 4 October 2012 could not have been motivated by genuine health and safety concerns, because it did not affect the safety of the worksite but involved injury to one employee. The facts surrounding this event are only briefly recounted in the statement of agreed facts and it is not appropriate to place much importance on the motivation for this event. 28 In relation to the March 2013 incidents, the applicant contended that the facts demonstrate that the purported safety motivation for the strike action was manufactured. It argued that safety was not the true motivation, but rather disguised some other purpose. The statement of agreed facts does not support that contention and it should be accepted that the motivation for the strike action was to procure a safety inspection of the site. This motivation is relevant to the decision the Court must ultimately make and to the severity of the civil penalty imposed, and should be taken into account. It demonstrates that the contravention is of a lower magnitude of wrong-doing than a contravention in which the motivation for the industrial action was for some entirely self-interested purpose. 29 The applicant contended that the statement of agreed facts demonstrated that the first respondent exhibited malevolence towards the applicant and its related corporations. It pointed to the statement of agreed facts in which it was agreed that the first respondent said at the meeting on 26 March 2013: Three contractors on site aren't in a union. We need to put a stop to this for the future of the union and our power. 30 The applicant also referred to a statement made by the first respondent at the meeting on 27 March 2013: Other Multiplex jobs have got to know what's happened… Other Multiplex jobs we've got injunctions on them at the Fiona Stanley Hospital so we've got to work out how we get around that. This comment related to the events with which WAD 44 of 2013 (a related proceeding) was concerned. The Court was told from the bar table by Mr Neil that at the time the latter comment was made, the applicants in WAD 44 of 2013 had filed an application against the first respondent for contempt for breach of interim injunctions ordered against him in those proceedings, preventing him from accessing the construction site at the Fiona Stanley Hospital. This was not contradicted by Mr Millman, who appeared on behalf of the respondents. Those events make the circumstances of the contravention in these proceedings serious. This seriousness outweighs the apparent safety concerns which were the genesis of the meeting. 31 Mr Neil also drew the Court's attention to the circumstances of the first respondent's alleged contravention of s 346 of the Fair Work Act, which involved the physically threatening behaviour taken against the Hexagon employees on 27 March 2013. The agreed circumstances of that event add a degree of seriousness which moves the level of the penalty on the scale towards the higher end. 32 In the final analysis those elements which rendered the contravention serious are particularly relevant and take the contravention to the higher end of the scale. These elements are the physical obstruction of the Hexagon employees and the defiance of the system of industrial law expressed in the meeting of 27 March 2013, which reflects upon the motivation for which the meeting was taken. Against those factors, the respondents' cooperation to achieve an early resolution of the case is a major consideration. The agreement between the parties was reached without the need for the applicant to engage in the onerous and lengthy process of proving a compensation claim. 33 Taking all of the above circumstances into account, the penalty in relation to the first respondent is fixed at $21,000, the highest end of the range. In relation to Mr Molina, an appropriate penalty is $7,000, given the level of his involvement in contraventions of the Fair Work Act. 34 In relation to the third respondent, the question arises as to whether the serious circumstances which have caused the first respondent's penalty to be fixed at the highest end of the range should be carried through to the CFMEU, or whether those circumstances were personal to the first respondent. More weight should be given to the cooperation of the third respondent than to those circumstances which make the first respondent's contravention particularly serious. The penalty against the third respondent is fixed at $95,000. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North. Associate: Dated: 17 April 2014