FEDERAL COURT OF AUSTRALIA Australian Building and Construction Commissioner v Mamudi [2017] FCA 134 File number(s): WAD 724 of 2015 Judge(s): SIOPIS J Date of judgment: 21 February 2017 Catchwords: INDUSTRIAL LAW – employees engaged on a construction project – employees withdrew their labour for a day – the applicant and the respondents settled litigation on the basis that the respondents admitted liability in respect of a contravention of s 417(1)(a) of the Fair Work Act 2009 (Cth) – both parties made submissions in favour of the imposition of an agreed penalty – whether the penalty was within an appropriate range. Legislation: FairWork Act 2009 (Cth) s 417(1)(a) Cases cited: Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 326 ALR 476 Australian Opthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No 2) (2011) 279 ALR 609 United Group Resources Pty Ltd v Calabro (No 5) (2011) 198 FCR 514 United Group Resources Pty Ltd v Calabro (No 7) (2012) 203 FCR 247 Date of hearing: Determined on the papers. Date of last submissions: 2 August 2016 Registry: Western Australia Division: Fair Work Division National Practice Area: Employment & Industrial Relations Category: Catchwords Number of paragraphs: 37 Counsel for the Applicant: Mr SD Harben Solicitor for the Applicant: Clayton Utz Counsel for the Respondents: Mr D Scaife Solicitor for the Respondents: Slater and Gordon Lawyers ORDERS WAD 724 of 2015 BETWEEN: AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER Applicant AND: MUDZAIT MAMUDI First Respondent DARREN BARRITT Second Respondent PETER COUGAN (and others named in the Schedule) Third Respondent JUDGE: SIOPIS J DATE OF ORDER: 21 FEBRUARY 2017 THE COURT DECLARES THAT: 1. Each of the respondents has contravened s 417(1)(a) of the Fair Work Act 2009 (Cth) by reason of engaging in industrial action on 20 February 2015, being a time from the day on which the York Civil Pty Ltd SA & WA Enterprise Agreement 2013-2017 was approved by the Fair Work Commission until its nominal expiry date had passed. THE COURT ORDERS THAT: 2. Each of the respondents is to pay a pecuniary penalty of $1,000.00. 3. The pecuniary penalties are to be paid to the Commonwealth. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT SIOPIS J: BACKGROUND 1 On 20 February 2015, York Civil Pty Ltd (York Civil) was carrying out work, as a contractor, on a project for the construction of a waste water treatment plant in East Rockingham, Western Australia (the project). The head contractor was TASK JV Pty Limited (TASK JV), being a corporate vehicle for a joint venture between Thiess Pty Ltd and Sinclair Knight Merz Pty Ltd. 2 The work being performed by York Civil on the project included civil works and structural, mechanical and piping work. York Civil was responsible for the construction of the concrete and the below-ground piping of the East Rockingham plant, as well as the structural, mechanical and piping package. York Civil was the main contractor on the project site with a workforce of between 100 to 130 employees. Work on the project site was completed around the end of February 2016. 3 At about 6:00 am on 20 February 2015, a number of union officials from the Construction, Forestry, Mining and Energy Union (CFMEU) and the Australian Manufacturing Workers' Union (AMWU) attended the project site. They addressed the assembled persons who had congregated at the front gate. There were employees of York Civil among the crowd. At the conclusion of the address, the employees voted by a show of hands in favour of leaving work for the day. Prior to the address, a number of union officials were seen distributing a bullying survey to employees, including employees of York Civil, as they arrived at the front gate of the project site. 4 At the conclusion of the address by the union officials, sometime between 6:30 am and 7:30 am, the employees who were at the meeting, left the project site and did not return to work that day. Those employees who did not attend for work that day included 23 employees of York Civil. There was no authorisation given by York Civil for those employees to be absent from work on 20 February 2015. 5 Not all York Civil employees failed to attend work that day, but the absence of those employees that day meant that a concrete pour scheduled for 20 February 2015, was unable to proceed. York Civil's construction progress was, accordingly, delayed by one day. 6 The applicant's predecessor, the Director of the Fair Work Building Industry Inspectorate, commenced a proceeding in this Court against the 23 York Civil employees who did not on 20 February 2015 attend work at the project site, alleging that each of the respondents had contravened s 417(1)(a) of the Fair Work Act 2009 (Cth) (the Act) by failing or refusing to attend for work, or by failing or refusing to perform any work, at the project site on that day, and so unlawfully engaged in industrial action. 7 The applicant sought relief by way of declaration and the imposition of a civil penalty payable by each respondent. 8 Section 417(1)(a) of the Act provides as follows: 417(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;… 9 The applicant subsequently discontinued the application against four of the respondents. 10 It was common cause that each of the respondent's employment with York Civil was covered by the York Civil Pty Ltd SA & WA Enterprise Agreement 2013-2017 whose nominal expiry date had not passed at the time of the impugned conduct. 11 Before the date of the hearing of the applicant's application, the parties reached agreement as to the disposition of the litigation. In furtherance of that agreement, the applicant amended his statement of claim and each of the respondents made admissions in the defence that by his or her conduct on 20 February 2015 he or she had contravened s 417(1)(a) of the Act. 12 The parties also agreed that in considering the appropriate penalty to be imposed, the Court was to have regard to the following affidavit evidence: (a) Affidavit of Christian Joder, dated 3 May 2016: paras 1 to 15 and paras 57 to 82; and (b) Affidavit of Luke Benjamin Spagnolo, dated 5 May 2016: paras 1 to 9 and paras 21 to 37. 13 Mr Joder was, at the material time, the senior project manager employed by York Civil at the project site. Mr Joder's evidence was, relevantly, to the effect as set out at [1] to [5] above. Mr Joder also deposed that the employees who did not attend work on 20 February 2015 were recorded as having taken leave without pay. 14 Mr Spagnolo was, at the material time, employed by Thiess Pty Ltd as the site superintendent. Mr Spagnolo said that on 19 February 2015, the day before the events in question, at about 6:30 am, he observed a meeting of persons at the front gate of the project site. The meeting was conducted by Mr Mick Buchan of the CFMEU and Mr Steve McCartney of the AMWU, with Mr Terry Hayes of the Electrical Trades Union in attendance. After the meeting, Mr Buchan and Mr McCartney spoke to Mr Spagnolo and informed him that they had concerns about health and safety on the project site, as well as harassment and intimidation by York Civil and its subcontractors of workers who were members of the CFMEU and AMWU on the project site. Mr Spagnolo informed Mr Buchan and Mr McCartney that he would discuss their issues with the TASK JV construction manager, Mr Brett McGrane. As Mr Buchan was leaving the project site, he told Mr Spagnolo he would be back the following day for another meeting. 15 Later that day, following his discussion with Mr McGrane, Mr Spagnolo spoke again with Mr Buchan and Mr McCartney and informed them of a plan to conduct a series of "toolbox meetings" onsite to address the unions' concerns. 16 Each of the parties made submissions to the Court to the effect that the appropriate penalty to be imposed upon each of the respondents in respect of his or her contravention was $1,000.00. 17 The Court is not bound to impose a penalty which the parties have agreed as part of the settlement of litigation. However, it is recognised that there is a public benefit in the settlement of litigation because it relieves the parties and the court from conducting a hearing, thereby saving the parties the expense and time involved in the hearing and also freeing the resources of the regulator and the court to be deployed on other cases (Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 326 ALR 476). 18 In these circumstances, the Court will consider whether the penalty which the parties propose is a penalty which falls within the range of appropriate penalties, having regard to the relevant factors. 19 The question of an appropriate penalty is to be determined by a process of "instinctive synthesis" involving consideration of all relevant factors (Australian Opthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [27] and [55]). 20 One such factor is the maximum penalty which may be imposed. The Court will in an appropriate circumstance have regard to the maximum penalty for a contravention as being reserved for the worst cases, and then to assess the proper penalty by reference to that circumstance. In this case, the maximum penalty is $10,200.00. 21 I consider other relevant factors below. Nature and Extent of the Conduct 22 In my view, the impugned conduct comprising the withdrawal by the respondents of their labour on 20 February 2015, without prior notice to York Civil, was a serious contravention of the Act. However, I accept the parties' submissions that the contravening conduct is, in my view, to be ranked at the lower end of the range of seriousness because the labour was withdrawn only for one day and did not cause serious damage to York Civil, their employer. Nature and Extent of any Loss or Damage 23 There is no evidence before the Court, that the industrial action of 20 February 2015, caused any pecuniary loss to York Civil. 24 As mentioned, Mr Joder, in his affidavit, said that the actions of the respondents caused the delay of a concrete pour by one day and this meant that York Civil's construction progress was delayed by a day. However, Mr Joder did not go on to say that that delay had any attendant pecuniary or other adverse consequence for York Civil. I observe that on 7 June 2016, the applicant amended his statement of claim to describe the concrete pour that was delayed as a "minor" concrete pour. 25 In Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No 2) (2011) 279 ALR 609 at [79], Perram J observed that as no evidence had been led which identified the harm suffered, the contraveners were entitled to be sentenced on the basis that their conduct did not cause harm, and this was a mitigating circumstance when considering the appropriate penalty to impose. 26 It is apparent, on the evidence, that the conduct of the respondents did to some extent disrupt the operations of York Civil on 20 February 2015. However, in light of the observations of Perram J referred to above, a penalty should be imposed on the basis that there was no evidence that this disruption caused York Civil to suffer any relevant pecuniary loss. Prior Relevant Conduct 27 Other than Mr Mamudi, none of the respondents has previously been found to have contravened any relevant industrial laws. The fact that a contravener has not previously contravened a relevant industrial law is a factor weighing toward the imposition of a lower penalty. 28 As for Mr Mamudi, he was named as 143rd respondent in a proceeding in this Court (see United Group Resources Pty Ltd v Calabro (No 5) (2011) 198 FCR 514; United Group Resources Pty Ltd v Calabro (No 7) (2012) 203 FCR 247). Mr Mamudi was found to have engaged in strike action in 2010, along with many other employees, in protest at the changes introduced by his then employer for accommodation arrangements for fly-in fly-out workers at Karratha, Western Australia. A penalty was imposed upon Mr Mamudi for his contravention, but it was suspended for a period of seven years. 29 Counsel for the applicant and the respondents each submitted that this circumstance should not result in a higher penalty being imposed on Mr Mamudi. I accept those submissions. Mr Mamudi's contravention occurred about five years prior to the events of this proceeding and since then he has not contravened any industrial laws. Further, the circumstances of that contravention are significantly different to the circumstances of this contravention. Deliberateness of Contraventions 30 The respondents' conduct was deliberate in the sense that the respondents all consciously decided to withdraw their labour on the day in question by voting to that effect and then acting in accordance with that decision. Contrition and Cooperation 31 The respondents have cooperated with the applicant in the disposition of this litigation by agreeing to admit liability, by agreeing to the evidence to which the Court may have regard in the determination of penalty, and by making submissions supporting the agreed penalty. 32 It is well recognised that cooperation is a factor which can be taken into account in favour of a lower penalty being imposed on the contraveners. Specific and General Deterrence 33 There is a need for the Court to have regard to the question of both specific and general deterrence in determining the appropriate penalty to be imposed. 34 I accept the submissions of the parties that specific deterrence is a factor of lesser importance in determining the penalty in respect of the respondents in this case, than in many other cases where there has been a contravention of the industrial laws. This is because each of the respondents, with the exception of Mr Mamudi, has no prior contraventions of industrial laws, and because the respondents have cooperated with the applicant in settling this proceeding before trial. Further, there is no other evidence suggesting that the respondents may be inclined to contravene the industrial laws in the future. 35 As to general deterrence, the Court must seek to impose a penalty that will deter others from contravening the industrial laws. However, it is also necessary to have regard to the principle of proportionality, such that the nature of the penalty imposed is in proportion to the seriousness of the contravention. 36 Applying the instinctive synthesis approach to the considerations to which I have referred above, I have placed weight on the fact that the withdrawal of the respondents' labour without warning to York Civil was a deliberate and serious contravention, but that the seriousness of the contravention was mitigated by the fact that the withdrawal of labour lasted only for a day and there is no evidence that it led to any financial loss having been incurred by York Civil. Also, I have placed considerable weight on the fact that, other than Mr Mamudi, none of the respondents has contravened an industrial law previously and each of the respondents has cooperated with the applicant in settling the litigation at an early stage. 37 In my view, the penalty of $1,000 agreed between the applicant and the respondents falls within the range of penalties which would be appropriate in the circumstances of this case. I, therefore, order that each of the respondents pay a pecuniary penalty of $1,000, and I will make the declaration and the other order sought by the applicant. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. Associate Dated: 21 February 2017 SCHEDULE OF PARTIES WAD 724 of 2015 Respondents Fourth Respondent: ADAM CRAFTER Fifth Respondent: BENJAMIN CROFT Sixth Respondent: ALEESHA ENGLISH Eighth Respondent: WILLIAM HEPBURN Ninth Respondent: DALIBOR JAKOVCEVIC Twelfth Respondent: ANTHONY LONCAR Thirteenth Respondent: REGAN MACKENZIE Fourteenth Respondent: BERTIN MATANDA Fifteenth Respondent: NICHOLAS O'CONNOR Sixteenth Respondent: GAVIN OSBORNE Eighteenth Respondent: EDISON SOTO Nineteenth Respondent: JOHN STIELLER Twentieth Respondent: RICHARD SUSSEX Twenty-first Respondent: SUSAN TAYLOR Twenty-second Respondent: ROBERT WATTS Twenty-third Respondent: JASON WILLIAMSON