FEDERAL COURT OF AUSTRALIA Director of the Fair Work Building Industry Inspectorate v Merkx [2015] FCA 316 Citation: Director of the Fair Work Building Industry Inspectorate v Merkx [2015] FCA 316 Parties: DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE v JACOBUS MERKX, PIUS CAREY, PADDY DOWER, DANIEL MASSEY, GLENN METCALFE, CHLOE MUNRO-CHAMBERS, JARRED PRICE, ADAM RANKIN, RONALD SHAW, JIM SPYRO, VIRGIL TANGOHAU, MICHAEL TSESMELIS, SCOTT DAVIES, MICHAEL GLENN, DAVID KJESTRUP, JOSHUA LEES, DAVID MEAD, BENJAMIN NORTHCOTT, CARMINE PALUMBO, STEPHEN WISE, JOSHUA WITHYCOMBE and DAVID WORGAN File number: SAD 182 of 2014 Judge: BESANKO J Date of judgment: 2 April 2015 Catchwords: INDUSTRIAL LAW – where the respondents admitted to engaging in industrial action by failing to attend for work between the times during which they were rostered to work – where the parties agreed on relief – whether the declaration and pecuniary penalty proposed by the parties should be granted – the matters to be considered in determining the pecuniary penalty – Fair Work Act 2009 (Cth) ss 19, 417. Held: Orders made for a declaration and pecuniary penalty of $1,000. Legislation: Crimes Act 1914 (Cth) s 4AA Fair Work Act 2009 (Cth) ss 12, 19, 53, 186, 417, 539, 545, 546 Federal Court of Australia Act 1976 (Cth) s 21 Workplace Relations Act 1996 (Cth) Cases cited: Australian Competition and Consumer Commission v Actrol Parts Pty Ltd [2015] FCA 312 Director of the Fair Work Building Industry Inspectorate v McDonald [2013] FCA 1431 Kelly v Fitzpatrick [2007] FCA 1080 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 (1997) 71 FCR 285 Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357 R v Olbrich (1999) 199 CLR 270 Date of hearing: 28 January 2015 Place: Adelaide Division: FAIR WORK DIVISION Category: Catchwords Number of paragraphs: 30 Counsel for the Applicant: Mr S McDonald Solicitor for the Applicant: Piper Alderman Counsel for the First to Thirteenth and Fifteenth to Twenty-Third Respondents: Mr A Allen Solicitor for the First to Thirteenth and Fifteenth to Twenty-Third Respondents: Lieschke & Weatherill Lawyers IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY FAIR WORK DIVISION SAD 182 of 2014 BETWEEN: DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE Applicant AND: JACOBUS MERKX First Respondent PIUS CAREY Second Respondent PADDY DOWER Third Respondent DANIEL MASSEY Fourth Respondent GLENN METCALFE Fifth Respondent CHLOE MUNRO-CHAMBERS Sixth Respondent JARRED PRICE Seventh Respondent ADAM RANKIN Eighth Respondent RONALD SHAW Ninth Respondent JIM SPYRO Tenth Respondent VIRGIL TANGOHAU Eleventh Respondent MICHAEL TSESMELIS Twelfth Respondent SCOTT DAVIES Thirteenth Respondent MICHAEL GLENN Fifteenth Respondent DAVID KJESTRUP Sixteenth Respondent JOSHUA LEES Seventeenth Respondent DAVID MEAD Eighteenth Respondent BENJAMIN NORTHCOTT Nineteenth Respondent CARMINE PALUMBO Twentieth Respondent STEPHEN WISE Twenty-First Respondent JOSHUA WITHYCOMBE Twenty-Second Respondent DAVID WORGAN Twenty-Third Respondent JUDGE: BESANKO J DATE OF ORDER: 2 APRIL 2015 WHERE MADE: ADELAIDE THE COURT DECLARES THAT: 1. Whilst covered by an enterprise agreement that had not passed its nominal expiry date, the respondents set out hereunder, failed and refused to attend for work on the afternoon of 25 June 2013 without authority from their employer, in contravention of s 417(1) of the Fair Work Act 2009 (Cth): First Respondent (Jacobus Merkx) Second Respondent (Pius Carey) Third Respondent (Paddy Dower) Fourth Respondent (Daniel Massey) Fifth Respondent (Glenn Metcalfe) Sixth Respondent (Chloe Munro-Chambers) Seventh Respondent (Jarred Price) Eighth Respondent (Adam Rankin) Ninth Respondent (Ronald Shaw) Tenth Respondent (Jim Spyro) Eleventh Respondent (Virgil Tangohau) Twelfth Respondent (Michael Tsesmelis) Thirteenth Respondent (Scott Davies) Fifteenth Respondent (Michael Glenn) Sixteenth Respondent (David Kjestrup) Seventeenth Respondent (Joshua Lees) Eighteenth Respondent (David Mead) Nineteenth Respondent (Benjamin Northcott) Twentieth Respondent (Carmine Palumbo) Twenty-First Respondent (Stephen Wise) Twenty-Second Respondent (Joshua Withycombe) Twenty-Third Respondent (David Worgan) THE COURT ORDERS THAT: 1. The First Respondent (Jacobus Merkx) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 2. The Second Respondent (Pius Carey) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 3. The Third Respondent (Paddy Dower) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 4. The Fourth Respondent (Daniel Massey) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 5. The Fifth Respondent (Glenn Metcalfe) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 6. The Sixth Respondent (Chloe Munro-Chambers) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 7. The Seventh Respondent (Jarred Price) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 8. The Eighth Respondent (Adam Rankin) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 9. The Ninth Respondent (Ronald Shaw) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 10. The Tenth Respondent (Jim Spyro) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 11. The Eleventh Respondent (Virgil Tangohau) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 12. The Twelfth Respondent (Michael Tsesmelis) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 13. The Thirteenth Respondent (Scott Davies) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 14. The Fifteenth Respondent (Michael Glenn) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 15. The Sixteenth Respondent (David Kjestrup) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 16. The Seventeenth Respondent (Joshua Lees) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 17. The Eighteenth Respondent (David Mead) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 18. The Nineteenth Respondent (Benjamin Northcott) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 19. The Twentieth Respondent (Carmine Palumbo) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 20. The Twenty-First Respondent (Stephen Wise) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 21. The Twenty-Second Respondent (Joshua Withycombe) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 days of this order. 22. The Twenty-Third Respondent (David Worgan) pay a pecuniary penalty of $1,000 to the Commonwealth of Australia within 30 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 SOUTH AUSTRALIA DISTRICT REGISTRY FAIR WORK DIVISION SAD 182 of 2014 BETWEEN: DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE Applicant AND: JACOBUS MERKX First Respondent PIUS CAREY Second Respondent PADDY DOWER Third Respondent DANIEL MASSEY Fourth Respondent GLENN METCALFE Fifth Respondent CHLOE MUNRO-CHAMBERS Sixth Respondent JARRED PRICE Seventh Respondent ADAM RANKIN Eighth Respondent RONALD SHAW Ninth Respondent JIM SPYRO Tenth Respondent VIRGIL TANGOHAU Eleventh Respondent MICHAEL TSESMELIS Twelfth Respondent SCOTT DAVIES Thirteenth Respondent MICHAEL GLENN Fifteenth Respondent DAVID KJESTRUP Sixteenth Respondent JOSHUA LEES Seventeenth Respondent DAVID MEAD Eighteenth Respondent BENJAMIN NORTHCOTT Nineteenth Respondent CARMINE PALUMBO Twentieth Respondent STEPHEN WISE Twenty-First Respondent JOSHUA WITHYCOMBE Twenty-Second Respondent DAVID WORGAN Twenty-Third Respondent JUDGE: BESANKO J DATE: 2 APRIL 2015 PLACE: ADELAIDE REASONS FOR JUDGMENT INTRODUCTION 1 On 22 July 2014, the applicant, the Director of the Fair Work Building Industry Inspectorate, issued an originating application for relief in respect of alleged contraventions of s 417 of the Fair Work Act 2009 (Cth) ("the FW Act") by the respondents. The conduct said to constitute the contraventions was identified in the applicant's statement of claim as conduct involving a failure to attend for work between the times during which the respondents were rostered to work, thereby engaging in industrial action within the meaning of s 19(1)(c) of the FW Act while enterprise agreements were in force. 2 The respondents did not contest the alleged contraventions, and co-operated with the applicant in the formulation of a Statement of Agreed Facts ("SOAF"), which included an admission that the respondents engaged in the alleged industrial action. The applicant submits, and the respondents agree, that the appropriate relief in the circumstances is a declaration that each respondent contravened s 417(1) of the FW Act on the relevant date, and a pecuniary penalty of $1,000 payable by each of the respondents. Before considering whether this relief should be granted, it is necessary to set out the background to the contraventions. BACKGROUND The Parties 3 The applicant has standing and authority to bring these proceedings under s 539 of the FW Act. 4 The first to twelfth respondents (the "Hansen Yuncken Employees") were, at all material times, employees of Hansen Yuncken Pty Ltd ("Hansen Yuncken"). The thirteenth and fifteenth to twenty-third respondents (the "Leighton Contractors Employees") were, at all material times, employees of Leighton Contractors Pty Ltd ("Leighton Contractors"). The proceeding has been discontinued as against the fourteenth respondent. 5 The Hansen Yuncken Employees and the Leighton Contractors Employees fell within the definition of "building industry participants", as they were "building employees", being employees whose work consisted of, or included, "building work". Hansen Yuncken and Leighton Contractors also fell within the definition of "building industry participants", as they were "building employers", being employers who employed "building employees". The Facts 6 Hansen Yuncken and Leighton Contractors entered into a joint venture with one another as the head contractors responsible for the construction of the new Royal Adelaide Hospital, located at the junction of West Terrace, North Terrace and Port Road in Adelaide ("the Site"). The Site comprised two areas, the Site work area, and the Amenities area, comprising the offices and lunch sheds. 7 Under s 186 of the FW Act, the Fair Work Commission, consisting of persons including the Deputy President of Fair Work Australia, must approve an enterprise agreement if the requirements set out in the section are satisfied. On 24 November 2012, Senior Deputy President O'Callaghan approved an enterprise agreement entitled "The Leighton Contractors Enterprise Agreement" (the "Leighton Contractors Enterprise Agreement"), and, on 29 November 2012, approved the "The Hansen Yuncken Pty Ltd Enterprise Agreement 2012" (the "Hansen Yuncken Enterprise Agreement"). At all material times, the Leighton Contractors Enterprise Agreement, and the Hansen Yuncken Enterprise Agreement, "covered" each of the Leighton Contractors and Hansen Yuncken employees, within the meaning of s 53 of the FW Act. The nominal expiry dates of the Leighton Contractors Enterprise Agreement, and the Hansen Yuncken Enterprise Agreement, were 6 December 2016, and 1 May 2015, respectively. 8 On 25 June 2013, the Hansen Yuncken Employees and the Leighton Contractors Employees were rostered to, and did, commence work at the Site between 5:00 am and 7:00 am. The Hansen Yuncken Employees and the Leighton Contractor Employees were rostered to finish work no earlier than 1:30 pm. At some time before 8:00 am, works being conducted offsite by SA Water caused a decrease in water pressure on the Site, affecting the showers, hand basins and lavatories in the Amenities area, and making the lavatories difficult to flush. The hand basins and lavatories in the Site work area were not affected. 9 Shortly after 10:00 am, managers from Hansen Yuncken and Leighton Contractors held a meeting in the lunch shed with the crane crew and labourers engaged by Hansen Yuncken and Leighton Contractors, including the respondents, to provide an update on the water pressure issue. The first respondent, Jacobus Merkx, asked the managers to leave the shed so he could speak to the crane crew and labourers, and the managers left in accordance with the request. While the managers were outside, the crane crew and labourers, including the respondents, voted to leave the Site due to a reasonable concern for the health of the crane crew and labourers based on the low water pressure affecting the lavatories. 10 Approximately ten minutes after the managers left the shed, the crane crew and labourers left the shed, with most of them making their way towards the Site exit. From 10:40 am, at or about the same time that it became apparent that some of the water pressure issues had been rectified, the respondents started leaving the Site without the authorisation of the Hansen Yuncken or Leighton Contractors managers. None of the respondents returned to the Site for work that day. 11 By leaving the Site earlier than the rostered completion time of 1:30 pm, each of the respondents failed and refused to attend for work, and thereby engaged in industrial action within the meaning of s 19(1)(c) of the FW Act. Section 19(2)(c)(i) of the FW Act provides that industrial action does not include action by an employee, which would otherwise fall within the definition of "industrial action", that is based on a reasonable concern about an imminent risk to his or her health or safety . It is agreed between the parties that the reasonable concerns of the respondents regarding the water pressure issue did not amount to a reasonable concern about an imminent risk to the respondents' health. 12 By engaging in the industrial action before the nominal expiry dates of the Hansen Yuncken Enterprise Agreement, and the Leighton Contractors Enterprise Agreement, each of the respondents contravened s 417(1) of the FW Act. THE RELIEF CLAIMED 13 By way of relief, the applicant claims a declaration that each of the respondents contravened s 417(1) of the FW Act on 25 June 2013, and a pecuniary penalty in the amount of $1,000 in respect of each respondent. The respondents agree that this relief is appropriate in the circumstances. Declaration 14 By reason of s 21 of the Federal Court of Australia Act 1976 (Cth), the Court has power to make declarations of right. Furthermore, s 545(1) of the FW Act provides that this Court may make any order the Court considers appropriate if satisfied that a person has contravened, or proposes to contravene, a civil remedy provision. These provisions empower the Court to make a declaratory order that a party contravened a civil remedy provision at a particular time. 15 I am able to make a declaration on the basis of the SOAF put before me. I refer to, without repeating, what I said in Australian Competition and Consumer Commission v Actrol Parts Pty Ltd [2015] FCA 312 ("Australian Competition and Consumer Commission v Actrol Parts") at [21]. 16 The parties each put proposed declarations before me. The proposed declaration of the applicant provides as follows: THE COURT DECLARES THAT: Whilst covered by an enterprise agreement that had not passed its nominal expiry date, the respondents set out hereunder failed and refused to attend for work on the afternoon of 25 June 2013 without authority from their employer, in contravention of s 417(1) of the Fair Work Act 2009 (Cth)… 17 The proposed declaration of the respondents contains more detail and provides as follows: THE COURT DECLARES THAT: By failing and refusing to attend for work on the afternoon of 25 June 2013 because of a reasonable concern about health which did not relate to an imminent safety risk pursuant to section 19(2)(c)(i) of the Fair Work Act 2009 (Cth) (FW Act), whilst covered by an enterprise agreement that had not passed its nominal expiry date, and without authority from the employer, the respondents set out hereunder contravened s 417(1) of the FW Act… 18 In my opinion, the proposed declaration of the applicant is appropriate. It identifies the contravention and main elements of the contravention, and that is sufficient. Pecuniary Penalty 19 The Court's power to make an order that a person pay a pecuniary penalty in respect of a contravention of a civil penalty provision is contained in s 546(1) of the FW Act. Sections 539(2) and 546(2)(a) of the FW Act prescribe a maximum penalty of 60 penalty units for a contravention of s 417(1) of the Act by an individual. Section 12 of the Act provides that a "penalty unit" has the meaning given by s 4AA of the Crimes Act 1914 (Cth), which defines a penalty unit to mean $170.00. It follows that the maximum penalty the Court can therefore impose on each respondent is $10,200.00. 20 The approach to be taken by the Court in considering an "agreed" penalty proposed by the parties is that laid down by the Full Court of this Court in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1997) 71 FCR 285, and subsequently in Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993. Again, I refer to, without repeating, what I said in Australian Competition and Consumer Commission v Actrol Parts at [26]-[27]. 21 The considerations relevant to a determination of the appropriate penalty are well established. In their written submissions, the parties referred me to the decision of Branson and Lander JJ in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357 ("Plancor") at 374-375, which endorsed the list of considerations identified by Tracey J in Kelly v Fitzpatrick [2007] FCA 1080, which, although decided in the context of a dispute under the Workplace Relations Act 1996 (Cth), remains relevant. Those considerations were as follows: The nature and extent of the conduct which led to the breaches; The circumstances in which that relevant conduct took place; The nature and extent of any loss or damage sustained as a result of the breaches; Whether there had been similar previous conduct by the respondent; Whether the breaches were properly distinct or arose out of the one course of conduct; The size of the business enterprise involved; Whether or not the breaches were deliberate; Whether senior management was involved in the breaches; Whether the party committing the breach had exhibited contrition; Whether the party committing the breach had taken corrective action; Whether the party committing the breach had cooperated with the enforcement authorities; The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and The need for specific and general deterrence. 22 The decision in Plancor emphasised that this is a non-exhaustive list of considerations that may, but may not, be relevant and applicable in any particular case (at [58]). I turn now to the application of these considerations as relevant and applicable to the facts of this case. 23 As discussed in paragraph [11] above, the conduct of the respondents in leaving the Site occurred in the context of a reasonable concern for the health of the respondents resulting from the water pressure issue, albeit a concern that did not amount to a reasonable concern about an imminent risk to the respondents' health or safety within the meaning of s 19(2)(c)(i) of the FW Act. 24 There is no evidence before me as to the nature and extent of any loss or damage sustained as a result of the contraventions. The applicant, in his supplementary submissions on penalty, referred me to the High Court decision in R v Olbrich (1999) 199 CLR 270 at 278, [15]-[16] and 280-282, [24]-[28], which established that a Court may fix a sentence in the absence of evidence establishing a particular fact relevant to the appropriate sentence on the basis that the prosecution has not established the fact beyond reasonable doubt, and the defendant has not negatived the fact. The applicant asks that I follow this approach, and determine the penalty on the basis that the applicant has not established that the contraventions led to any loss or damage, while, equally, the respondents have not established, as a mitigating factor, that the contravention caused no loss or damage. I note that this approach has previously been adopted by this Court in fixing civil penalties: Director of the Fair Work Building Industry Inspectorate v McDonald [2013] FCA 1431 at [62] per Barker J. 25 The applicant does not allege any previous similar conduct by any of the respondents, or that the breach was part of a broader course of conduct. As each respondent is an individual employee, and acted on their own initiative, the size of the contracting companies, Hansen Yuncken and Leighton Contractors, is not a relevant consideration. 26 The conduct that gave rise to the contraventions was initiated by a vote in which the crane crew and labourers, including the respondents, took part, and was therefore deliberate. 27 In terms of whether the respondents exhibited contrition, took corrective action, or cooperated with the enforcement authorities, the respondents admitted the contraventions at an early stage in the SOAF, thereby avoiding the need for a more comprehensive trial. This is a factor relevant to mitigating the applicable penalty. There is no other evidence before me in regards to contrition or any other corrective action taken by the respondents. 28 The need to deter unregulated industrial action is an important consideration given the disruptive potential of unregulated industrial activity. However, in this case, the conduct arose from a unique set of circumstances that are unlikely to reoccur. The parties submit that, in these circumstances, the need to consider general deterrence in fixing the appropriate penalty is less prominent. It is also submitted that the consideration of personal deterrence should assume less weight in this case, as the gravity of the conduct has been pressed on the respondents through the bringing of the proceedings and the associated threat of pecuniary penalty, and the respondents have not previously been found to have contravened any industrial legislation. In general terms, I accept those submissions. 29 Having regard to all the considerations that are relevant and applicable to this case, I am satisfied that the proposed pecuniary penalty of $1,000 in respect of each respondent is appropriate. CONCLUSION 30 I will make the declaration sought by the applicant. I will impose a pecuniary penalty on each respondent of $1,000 payable to the Commonwealth of Australia within thirty days. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. Associate: Dated: 2 April 2015