Federal Court of Australia Australian Building and Construction Commissioner v Tyrone Construction Services Pty Ltd [2020] FCA 1185 File number: WAD 41 of 2020 Judgment of: COLVIN J Date of judgment: 17 August 2020 Catchwords: INDUSTRIAL LAW - application by Commissioner for declaratory relief and pecuniary penalties - where dispute arose as to payment of invoice - where respondents engaged in unlawful pickets with demands for payment of disputed amounts - where respondents admitted contraventions of s 47 of Building and Construction Industry (Improving Productivity) Act 2016 (Cth) - orders made substantially in terms sought by Commissioner Legislation: Building and Construction Industry (Improving Productivity) Act 2016 (Cth) ss 47, 81 Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113; (2017) 254 FCR 68 Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640 Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482 Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20 Trade Practices Commission v CSR Ltd [1990] FCA 762 Division: Fair Work Division Registry: Western Australia National Practice Area: Employment and Industrial Relations Number of paragraphs: 24 Date of last submissions: 29 June 2020 (Applicant) 15 July 2020 (Respondents) Date of hearing: Determined on the papers Counsel for the Applicant: Mr SD Harben Solicitor for the Applicant: Clayton Utz Counsel for the Respondents: Mr LJ van Aardt Solicitor for the Respondents: LVA Legal ORDERS WAD 41 of 2020 BETWEEN: AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER Applicant AND: TYRONE CONSTRUCTION SERVICES PTY LTD (ACN 166 240 268) First Respondent ALISTAIR ADAMS Second Respondent order made by: COLVIN J DATE OF ORDER: 17 AUGUST 2020 THE COURT DECLARES THAT: The second respondent, being an officer of the first respondent and acting in that capacity for the purposes of s 94 of the Building and Construction Industry (Improving Productivity) Act 2016 (Cth), contravened s 47 of the Act by organising unlawful industrial pickets at 269-271 Vincent Street, Leederville in Perth on each of 27 June and 1 August 2019 and the first respondent is thereby taken to have contravened section s 47 of the Act on each of those dates by operation of s 94 of the Act. AND THE COURT ORDERS THAT: 1. The first respondent pay a pecuniary penalty of $80,000. 2. The second respondent pay a pecuniary penalty of $16,000. 3. Each of the pecuniary penalties are to be paid to the Commonwealth of Australia within 28 days. 4. The proceeding is otherwise dismissed. 5. There be no orders as to costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT COLVIN J: 1 In 2019, a development known as Skypark was under construction in Leederville, an inner city suburb of Perth, Western Australia. Tyrone Construction Services Pty Ltd (Tyrone) was engaged by Welink Constructions Pty Ltd (Welink) to supply and install concrete and formwork as well as wall panelling at the construction site (Site). Mr Alistair Adams engaged in dealings with Welink on behalf of Tyrone. 2 A dispute arose as to the payments to be made to Tyrone for work done at the Site. Thereafter, the entrance to the Site was blocked by a group of 12 to 20 individuals, including Mr Adams. They refused to move when requested to do so by a representative of Welink. In consequence, other subcontractors were prevented or restricted in their access to the Site. 3 Mr Adams handed over a list of outstanding invoices from Tyrone for payment by Welink and said: This is a list of what we want before moving on. This needs to be done by 10:00 am, otherwise the union will be called. The union are already on notice and the media will be advised. 4 About an hour later, Mr Adams spoke by telephone to a construction manager employed by Welink and said: We want our money and we aren't leaving until we get it. We'll be here twenty-four seven, all over the weekend, we'll camp if we have to. We'll go to your Riseley Street site and close that as well. We need this by 10:00am. We've put the CFMEU on notice and if we aren't paid, we'll call them and the media. 5 Later that morning, Welink paid the amounts demanded. However, by then the crane crew on the Site had been stood down and no work was performed on the Site on that day. 6 About two weeks later, Welink sent a letter to Tyrone notifying its intention to terminate its contract with Tyrone. Ten days later the contract was terminated. About two weeks later a group of 20 to 30 people prevented or restricted access to Site. A director of Welink sought to walk through the group to gain access to the Site. He was pushed away from the gate by a group of individuals, stumbled against plastic chairs that had been placed in front of the gate and fell to the ground. 7 Subcontractors were prevented or restricted from gaining access to the Site. A business manager employed by Tyrone contacted a director of Welink by telephone and demanded the payment to Tyrone of the last claim and retention. After the call, a text message was sent to the director by the business manager. It said: Sam, as discussed earlier, we demand outstanding payments to be made and return of Tyrone Group company tools from site. Payments due: June invoice: $36,965.05 + GST Materials and Hire Invoice: $2432.50 + GST Retentions: $105, 450.17 + GST Total: $144,857.72 +GST We want payment in the bank before we instruct any people to leave site. We also want return of our tools that are on site. We want to collect today and want a 2 hour time window to gain access to collect our equipment. We await response. I told you earlier on the phone. I am Amanda Swift, Business Manager for Tyrone Group. Your accounts department will have our accounts details. 8 At around 9.30 am on that day, the gates were unlocked and subcontractors were able to enter the Site. As they entered, the group congregating at the Site shouted 'scabs!', 'traitors!' and 'scumbags!' towards the subcontractors. Thereafter, construction was able to commence at the Site. Members of the group continued to remain in front of the gate holding up signs which read 'WE-LINK = WE-STEAL'. 9 Tyrone admits that the conduct at the Site on each of the two dates was an unlawful picket for the purposes of s 47(2) of the Building and Construction Industry (Improving Productivity) Act 2016 (Cth) (Act) which prohibits unlawful picketing. Mr Adams admits that he organised the pickets and thereby personally contravened s 47. Tyrone admits that it is liable for the conduct of Mr Adams. 10 The Australian Building and Construction Commissioner seeks declarations of contravention by Tyrone and Mr Adams and orders for pecuniary penalties. Declaratory relief 11 Tyrone and Mr Adams do not oppose orders for declaratory relief. The principles to be applied in determining whether to grant declaratory relief in such circumstances were summarised in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113; (2017) 254 FCR 68 at [90]-[93]. For reasons I have given, the proposed declaratory orders reflect contraventions that have been demonstrated by the facts as agreed. They identify the nature of the contravening conduct. They will serve to record the Court's disapproval of the conduct, inform others of the nature of the contravening conduct and assist in deterring others from engaging in similar conduct. Pecuniary penalties for Mr Adams 12 The Commissioner and Mr Adams are agreed that a pecuniary penalty of $8,000 should be imposed upon him personally for each occasion when a picket was arranged by him at the Site. I am satisfied that it is appropriate to act on the agreed facts for the purpose of fixing penalty. For the following reasons, I am also satisfied that the proposed penalty is within the permissible range of appropriate penalties. Therefore, it is appropriate for those penalties to be imposed: Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at [51] as approved in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482. 13 The Act provides that that s 47 is a Grade A civil penalty provision. The maximum penalty is $210,000 for bodies corporate and otherwise $42,000 (the penalty unit rate at the relevant time being $210). Section 81(6) provides that in determining a pecuniary penalty the Court must take into account: … all relevant matters, including: (a) the nature and extent of the contravention; and (b) the nature and extent of any loss or damage suffered because of the contravention; and (c) the circumstances in which the contravention took place; and (d) whether the person has previously been found by a court (including a court in a foreign country) to have engaged in any similar conduct. 14 Pecuniary penalties put a price on contravention in order to deter repetition: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate at [55] applying the reasoning of French J in Trade Practices Commission v CSR Ltd [1990] FCA 762. Civil penalties of the kind provided for in the Act are to be set so as to deter those engaged in trade and commerce 'from the cynical calculation involved in weighing up the risk of penalty against the profits to be made from contravention': Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20 at [63] cited with approval in Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640 at [66]. It is necessary to fix penalties which will have a general deterrent effect. Indeed, civil penalties are primarily protective in promoting compliance and general and specific deterrence must play a primary role in assessing an appropriate penalty. 15 The conduct of Mr Adams on both occasions was deliberate, objectively serious and caused loss and damage. The latter is to be inferred from the agreed facts that on the first occasion work was stopped on the Site for a day and on the second occasion it was stopped for a number of hours. The conduct was planned and organised and was co-ordinated with demands for payment of disputed amounts. It continued despite requests for it to cease. It resulted in the payment to Tyrone of substantial amounts the liability for which was otherwise in dispute. It resulted in public disturbance. 16 The proper course to be followed by Mr Adams was to cause Tyrone to bring legal claims for the disputed amounts. There is no matter raised by way of mitigation to provide any form of explanation as to why that course was not followed and instead that Mr Adams caused Tyrone to engage in the now admitted unlawful conduct. 17 Mr Adams has not been involved in similar contraventions in the past. Admissions were made shortly after the filing of a defence with all relevant facts being agreed. Mr Adams has shown insight into his unlawful behaviour by making admissions and joining in submissions about penalty. Steps have been taken for Mr Adams to participate in compliance training. 18 Adopting an instinctive synthesis approach to the factors identified in the decided cases, the proposed agreed penalties are appropriate. Pecuniary penalties for Tyrone 19 The Commissioner proposes a penalty of $40,000 for each contravention. For Tyrone, it is submitted that the appropriate penalty is $30,000 for each contravention. The following matters are raised by Tyrone concerning the appropriate level of penalty to be imposed: (1) Admissions were made shortly after the filing of a defence with all relevant facts being agreed. (2) With the benefit of legal advice the respondents understand that their conduct was unlawful and unacceptable and their insight facilitated the resolution of factual matters by informal mediation. (3) The respondents have implemented a training programme concerning compliance with the Act and best practice in debtor control and debt collection. (4) The Court should not infer that there was loss of productivity as a result of the pickets. The possibility of inclement weather on the first occasion is raised, but there is no evidence advanced. It is said that there is no evidence that work being stopped on the first occasion was caused by the picket. (5) Significant loss should not be inferred absent readily available information as to scheduling and weather conditions. 20 I do not accept the submissions concerning proof as to loss of productivity. It is admitted that on the first occasion between 6.15 am and 7.00 am approximately 22 subcontractors engaged by Welink had gathered to perform work on the project seeking to access the Site and that they were prevented or restricted in their access. It is a further agreed fact that the crane crew was stood down and that no work was able to be performed on the Site by reason of the contravening conduct. It is also agreed that the Skypark project involved the construction of a six-storey building consisting of 31 residential apartments. Those agreed facts taken together are a sufficient basis from which to infer that there was a loss of a day's productivity with consequent financial loss that was of some significance. Otherwise, I accept the submissions advanced. 21 The evidence of the quantum of monies sought to be paid on the second occasion provides some indication of the financial advantage that Tyrone sought to secure by its conduct. 22 The conduct was motivated to achieve the commercial object of securing payment of a disputed amount without resorting to due process and by conduct which undoubtedly was intimidating in both its object and effect. Synthesising the relevant matters, the penalty proposed by the Commissioner is appropriate having regard to the facts as agreed, the primary purpose of deterrence, the lack of any prior contravening conduct and the other matters to which I have referred. 23 In all the circumstances, I accept the submission of the Commissioner that the penalty for each contravention by Tyrone should be $40,000. 24 Accordingly, I will make orders substantially in the terms sought by the Commissioner. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Colvin. Associate: Dated: 17 August 2020