Industrial Relations Commission of New South Wales in Court Session CITATION : Bluescope Steel (AIS) Pty Limited v The Australian Workers' Union, New South Wales (No 2) [2004] NSWIRComm 145 PROSECUTOR BlueScope Steel (AIS) Pty Limited formerly known as BHP Steel (AIS) Pty Ltd PARTIES : DEFENDANT Australian Workers' Union, New South Wales FILE NUMBER: IRC 2153 of 2003 CORAM: Boland J Contravention of industrial instrument - Enterprise Agreement - Steel industry - Hot metal dumped as part of industrial action - Agreement precluded dumping of hot metal - Application for recovery of civil penalty - Factors considered relevant to penalty - Penalty imposed - Costs CATCHWORDS : Enterprise Agreement - Contravention of industrial instrument - Steel industry - Hot metal dumped as part of industrial action - Agreement precluded dumping of hot metal - Application for recovery of civil penalty - Factors considered relevant to penalty - Penalty imposed - Costs Industrial Relations Act 1996 LEGISLATION CITED : Industrial Relations Commission Rules 1996 Legal Profession Act 1987 BHP Steel (AIS) Pty Ltd v CFMEU [2000] FCA 1908 BHP Steel (AIS) Pty Ltd v Construction, Forestry, Mining & Energy Union (2000) 102 IR 275 BlueScope Steel (AIS) Pty Ltd formerly known as BHP Steel (AIS) Pty Ltd v Australian Workers' Union, New South Wales and Ors [2004] NSWIRComm 21 Broken Hill Commerce and Industry Consent Award (No 2) Re (2002) 120 IR 429 CASES CITED : Construction, Forestry, Mining & Energy Union v Coal & Allied Operations Pty Ltd (No. 2) (1999) 94 IR 231 Corrections Health Service Nurses Award Re (1999) 90 IR 235 Ohn v Walton (1995) 36 NSWLR 77 Notification under s130 by BHP Steel (AIS) Pty Ltd of a dispute with the Australian Workers' Union, New South Wales and others (2003) 125 IR 216 Robertson v Marrickville Council [2003] NSWIRComm 394 The Age Company Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2000) 103 IR 148 HEARING DATES: 05/14/2004 DATE OF JUDGMENT: 06/01/2004 PROSECUTOR Mr R J Buchanan QC with Mr P Coleman of counsel Solicitor: Mr D Lloyd BlakeDawsonWaldron LEGAL REPRESENTATIVES: DEFENDANT Mr J Nolan of counsel Solicitor: Mr J Howard Maurice May & Co JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: BOLAND J Tuesday 1 June 2004 Matter No IRC 2153 of 2003 BLUESCOPE STEEL (AIS) PTY LIMITED v THE AUSTRALIAN WORKERS' UNION, NEW SOUTH WALES (NO 2) Application by Bluescope Steel (AIS) Pty Ltd under section 357 of the Industrial Relations Act 1996 JUDGMENT [2004] NSWIRComm 145 1 In BlueScope Steel (AIS) Pty Ltd formerly known as BHP Steel (AIS) Pty Ltd v Australian Workers' Union, New South Wales and Ors [2004] NSWIRComm 21, a judgment delivered on 19 February 2004, the Court gave its reasons for deciding that the Australian Workers' Union, New South Wales ("the defendant") had contravened a provision of an industrial instrument, namely, clause 9 of the BHP Steel Port Kembla Operations Enterprise Agreement 2002 (EA 02/259) ("the enterprise agreement"). 2 Section 357 of the Industrial Relations Act 1996 provides that "If an industrial court is satisfied that a person has contravened a provision of an industrial instrument, it may order the person to pay a pecuniary penalty not exceeding $10,000". The court may also award costs to "either party and assess the amount of those costs". Further, pursuant to s 359 of the Act, the court may, on the imposition of a civil penalty, grant an injunction to "restrain the person from committing further or other contraventions of the industrial instrument concerned". 3 Whilst initially the prosecutor sought an injunction against the defendant perpetually restraining it from committing any further or other breaches of the enterprise agreement, the court was advised, prior to the hearing regarding penalty, that the application for an injunction would not be pressed. 4 The prosecutor did, however, press the Court for the imposition of the maximum penalty ($10,000) on the defendant. This judgment deals with the question of penalty and costs. 5 In pressing for the maximum penalty the prosecutor submitted that the Commission had stated on several occasions the need for strict observance of binding agreements by the parties to such agreements: See Re Corrections Health Service Nurses Award (1999) 90 IR 235 at 245; Re Broken Hill Commerce and Industry Consent Award (No 2) (2002) 120 IR 429 at [33]. Particular reference was made by the prosecutor to the statement by the Full Bench in relation to the enterprise agreement currently before this Court in Re Notification under s130 by BHP Steel (AIS) Pty Ltd of a dispute with the Australian Workers' Union, New South Wales and others (2003) 125 IR 216 at [4] where it was said: 4 The enterprise agreement resulted in and constituted the legally binding arrangements between the employers and employees and their unions at the Steelworks. However, the obligations which come about in such circumstances are not confined to merely legal considerations. The Commission will ensure parties give solemn adherence to the terms of industrial arrangements whether in the form of consent awards or enterprise agreements and will not countenance manoeuvring by parties designed to extricate themselves from good faith bargains: Re Broken Hill Commerce and Industry Consent Award (No. 2) [2002] NSWIRComm 309 at [33]. The operation of this principle is even more significant in the present case where the agreement of the parties (which derives from their own direct agreement and their agreement to be bound by recommendations made by the Commission) constitutes the resolution of significant industrial issues affecting a very substantial corporation employing many employees and where the resolution of the issues in dispute is very much connected to the interests of the citizens of the Illawarra. There are, therefore, powerful public interest considerations in favour of requiring strict adherence to the terms and spirit of the enterprise agreement. 6 It was submitted for the prosecutor that it was clear from the evidence, in particular the handbill and the conduct of Mr Gillespie and Mr Collins in the early hours of 21 February 2003, that the contravention was "intentional, blatant and deliberate." It was further submitted: The handbill, which was printed two days in advance of the contravention and circulated on the day before the contravention, used the words "hot metal will be dumped". There can be no doubt that the contravention was planned well in advance. The contravention was premeditated. It is submitted that whereas intention is not an element of the contravention it is highly relevant to penalty. The defendant proceeded with its premeditated conduct despite being on clear notice as to the impact that it would have, as set out in transcript of proceedings before Grayson DP on 20 February 2003 Indeed following those proceedings, and despite being reminded of the "fundamental obligation" under the agreement by the Commission, Mr Gillespie not only failed to take steps to avoid a contravention, he went to extraordinary lengths, in the early hours of 21 February 2003, to ensure that the planned contravention went ahead. The contravention also had serious consequences. It led directly to the dumping of 2,392 tonnes of hot metal at a cost to the prosecutor of A$420,992. The nature and quality of the contravention, and the serious consequences which flowed from it, are such that the imposition of the maximum pecuniary penalty is appropriate. 7 As to the question of costs, the prosecutor submitted that s 357(6) did not add to or detract from the general costs provisions in s 181(1) of the Act in relation to the prosecutor's right to seek costs from the defendant. The prosecutor sought an order that the defendant pay its costs as agreed or to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 as provided for in s 181(1)(d) of the Industrial Relations Act and rr 204 to 206 of the Industrial Relations Commission Rules 1996. 8 Mr Buchanan QC for the prosecutor submitted that whilst costs were at the discretion of the Commission, the exercise of that discretion was usually in favour of the successful party. In other words, costs should follow the event unless the circumstances of the case require the exercise of discretion not to do so: Ohn v Walton (1995) 36 NSWLR 77 at 79 per Gleeson CJ. It was submitted that there were no features of the present case that would lead to the exercise of discretion in any way other than for costs to follow the event. 9 Mr Buchanan noted that in Robertson v Marrickville Council [2003] NSWIRComm 394 at [34] Peterson J ordered the prosecutor's cost to be paid by the defendant in the amount as agreed or assessed. 10 In its earlier judgment, the Court found that two co-defendants, namely the Electrical Trades Union of Australia, New South Wales Branch ("ETU") and the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch ("AFMEPKIU") were not guilty of any contravention. Nonetheless, the prosecutor contended in relation to the question of costs that although there had been three defendants the Court should not limit the defendant's liability to one third of the costs. In support of this contention it was submitted: · The case against the other two industrial organisations was more confined in nature than the case against the defendant. It involved essentially their involvement in publishing the handbill which overlapped completely the case against the defendant. · The evidence of the other two defendants was not challenged or objected to by the prosecutor. There was no cross-examination of their witnesses. The representatives of those parties did not have a significant role in proceedings. There was little in the way of cross-examination of the prosecutor's witnesses by them or submissions made by them. · Had the prosecution of the defendant been pursued in isolation and separate to the prosecution of the other two defendants, the course of the proceedings would have been substantially the same and taken virtually the same amount of preparation and court time. · If the Court was inclined to make an order for costs as a percentage of the total costs of the proceedings concerning all three cases then the Court was entitled to bear in mind the weakness of the defendant's case and the court time taken to deal with it. The percentage ought, it was submitted, be close to 100 per cent. 11 Mr J Nolan of counsel for the defendant relied on an affidavit by Andrew Gillespie. Mr Gillespie's evidence went to the following relevant matters: · The size, operation and financial position of the Port Kembla, South Coast and Southern Highlands Branch of the defendant of which Mr Gillespie is secretary. Mr Gillespie deposed that "The reality is the Branch suffers from an ongoing problem that all trade unions generally suffer from, that is a decreasing membership and increasing costs". However, no accounts were provided and it is apparent from Mr Gillespie's description that the branch of which he is secretary is a substantial organisation. · The defendant has not previously been found to have contravened an enterprise agreement. · The breach occurred in circumstances where a sensitive issue arose, It was thought that it was important to have all members of the union subject to the proposed outsourcing hear the issues and the meeting was called for that purpose. The Branch endeavoured to keep the meeting as short as possible and further endeavoured to cause as little disruption as possible to BlueScope's business. The Branch maintained a belief that no metal would be dumped as a result of the meeting. · Mr Gillespie would apply his best endeavours to ensure such a breach as found in this case will never happen again. He did not appreciate at the time that the amount of metal which the Prosecutor says was dumped, would be dumped and he is sensitive that compliance with the Enterprise Agreement that will eventually be negotiated will be complied with so circumstances of this type will not arise again. · Mr Gillespie said that: "To this extent I apologise on behalf of the Branch for the contravention found in the Judgment and will work with BlueScope and the Industrial Relations Commission in the future to ensure that such a situation never arises again." 12 Mr Nolan submitted that the principles that should inform the Court in determining the amount of penalty to be imposed on a defendant for the contravention of an industrial instrument by reason of industrial action were those set out in the decision of Branson J, in Construction, Forestry, Mining & Energy Union v Coal & Allied Operations Pty Ltd (No. 2) (1999) 94 IR 231. At [8] of her judgment her Honour said: [8] The following matters, which are not intended to comprise an exhaustive list, seem to me to be considerations to which the Court may appropriately have regard in determining whether particular conduct calls for the imposition of a penalty, and assuming that it does, the amount of the penalty: (a) The circumstances in which the relevant conduct took place (including whether the conduct was undertaken in deliberate defiance or disregard of the Act); (b) Whether the respondent has previously been found to have engaged in conduct in contravention of PtXA of the Act; (c) Where more than one contravention of PtXA is involved, whether the various contraventions are properly seen as distinct or whether they arise out of the one course of conduct; (d) The consequences of the conduct found to be in contravention of PtXA of the Act; (e) The need, in the circumstances, for the protection of industrial freedom of association; and (f) The need, in the circumstances, for deterrence. 13 In seeking to apply these considerations to the present case it was submitted for the defendant that: (a) The defendant accepts the decision of the Court in relation to the circumstances of the conduct, including those findings that the conduct was undertaken in deliberate disregard of the terms of the relevant industrial agreement. The episode of industrial action concerned was relatively short in duration and limited to a single stop work meeting on February 21, 2003 – albeit the consequences of the stoppage were serious. (b) This is the first time upon which the defendant union has been found to have committed a contravention of s 357. (c) While it is accepted that substantial disruption was caused by the industrial action, the duration of the stoppage was, relatively speaking, short and that there was no recurrence. The stoppage was of limited duration. (d) The evidence of Mr Gillespie now makes it clear that the AWU its members and branch officers fully appreciate the gravity and significance of stoppages of the kind which was undertaken in this case. Mr Gillespie has undertaken in his affidavit that he will use his best endeavours to avoid any repeat of the circumstances of the stoppage which occurred on February 21, 2003 – namely the dumping of hot metal. (e) The evidence from Mr Gillespie indicates that he will use his best endeavours to ensure that no repeat of the industrial action will occur. It follows that deterrence should not figure significantly in the overall assessment of the penalty. 14 Mr Nolan referred to BHP Steel (AIS) Pty Ltd v Construction, Forestry, Mining & Energy Union (2000) 102 IR 275 (contravention judgment) and BHP Steel (AIS) Pty Ltd v CFMEU [2000] FCA 1908 (penalty judgment) where Beaumont J imposed a total fine of $2,200 for a contravention of orders made by the Australian Industrial Relations Commission under s 127 of the Workplace Relations Act 1996 (Cth). The penalty was imposed pursuant to s 178 of that Act. The maximum penalty that may be imposed under s 178(1) for a breach of a term of an order is $10,000. 15 In imposing the penalty Beaumont J said at [8]: At the same time, I regard the breaches as serious. No attempt was made by the Union to explain, let alone justify, why no step was taken by it to comply with the Order. Taking into account the circumstances that, in essence, a single action is involved here, and upon applying the totality principle to an appropriate extent, I am of the view that penalties of $2,000 (par 3.3) and $200 (par 5.1) ought to be imposed. I will further order that the penalty be paid to BHP (see s 356). 16 Mr Nolan submitted that the contravention dealt with by Beaumont J was very similar to the present case, "since it involved essentially a single episode of industrial action – albeit found to be serious – in the context of an industrial dispute about a new agreement." It was further submitted that: [I]t is not unreasonable to assume (to paraphrase Branson J) that the legislature intended penalties at or near the maximum allowed by s357(1) of the Act to be reserved for serious incidents of industrial misconduct in contravention of the Act, and it might be added, serious incidents committed by a repeat offender. Equally, it is possible to envisage single industrial disputes which could have consequences far in excess of those which have been found to have occurred in this case. The contravention in BHP/CFMEU was relatively brief in duration, although serious in terms of consequence. The contravention in this case was relatively brief in duration, although serious in terms of consequence. There was however no continuing disruption to the production process and there are now earnest commitments given to he effect that there will be no recurrence of the industrial action. It is submitted that the dispute although serious, must not be regarded as being in that category of disputes which might be attract the maximum penalty. It is respectfully submitted that there is no warrant in this case for significant consideration to the need for protection since it is clear that the AWU Branch and Mr Gillespie understand the gravity of the contravention and have undertaken that they will use their best endeavours to ensure that there is no recurrence. Similarly, it is submitted that relatively little weight should be given to he requirement of deterrence because of the special circumstances in which the industrial action arose and the subsequent making of the award. The AWU has been chastened by the experience of the dispute and would not countenance a repetition. Mr Gillespie has indicated significant contrition and apologised on the branch's behalf. 17 As to the question of costs it was submitted for the defendant that the Court should have regard to the magnitude of any costs order in assessing the level of penalty. Further, that: Before the Court were three (3) separate applications against three (3) separate industrial organisations. One (1) judgment was delivered for all three (3) applications. The evidence relied on in one (1) application was the same in the other two (2) applications. Throughout the hearing of the three (3) applications, the prosecutor maintained that all three (3) industrial organisations were guilty of contravening the enterprise agreement. It is difficult to distinguish or differentiate the costs which the prosecutor incurred in prosecuting one (1) matter as opposed to all three (3) matters. In the prosecutor's outline of submissions dated 2 February 2004, the prosecutor relied on the evidence of the handbill implicating each of the defendants. Although it separately identified the conduct of the AWU on 21 February 2003 in its submissions, nonetheless representatives of each of the three (3) industrial organisations provided affidavit evidence and as a result, each was available for cross-examination. It is submitted that in the circumstances, it would be appropriate if, in its discretion, the Court determined that costs on a party/party basis be awarded against the AWU, that it only be responsible for a third of the costs. In the alternative, if it can be successfully argued that the evidence required a greater concentration on the activities of the AWU rather than the other two (2) industrial organisations, then a proportionate determination would have to be made. The alternative would be for the prosecutor to identify the costs incurred in relation to matter number IRC 2153 of 2003 and isolate those costs for assessment on a party/party basis. 18 In reply, Mr Buchanan referred to The Age Company Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2000) 103 IR 148. This case involved a contravention of s 170NC of the Workplace Relations Act. The maximum penalty was $10,000. In assessing penalty Finkelstein J said at [19] to [22]: [19] This brings me to the penalty that should be imposed. The maximum penalty that can be imposed is not high. If the offender is a body corporate the penalty is $10,000 and if an individual it is $2,000. In part the low penalty is a reflection of the fact that it is often only by resort by a union or its members to industrial action, whether lawful or unlawful, that there will be improvements in the terms and conditions of employment. Be that as it may, an appropriate penalty should bear some relation to the loss that has been caused. It should also reflect the deliberateness of the defendant's conduct. Moreover, in a case where an organisation exhibits a disregard of the public interest, there will be little reason to display leniency. [20] Of course, matters to be taken into account in determining the appropriate penalty extend beyond an assessment of the cost of a contravention. Although we are not concerned with the commission of a criminal offence, various of the matters that are considered when imposing a sentence for a breach of the criminal law are also relevant. For example, it cannot be denied that deterrence is one object of the imposition of a penalty. The flagrancy and deliberateness of a breach are other factors. On the other side, if there are mitigating factors, they should be taken into account. Here I have in mind matters such as the offender's past good behaviour and his remorse. In a case where there is a frank admission of unlawful conduct that would reduce the need for a penalty that deters. [21] Bearing these general considerations in mind, there are two aspects of this case that should significantly influence the penalty. The first is the serious harm that has been occasioned not only to the applicant, but to other persons who are not in any way involved in the industrial dispute. Secondly there is, at least in the case of AMWU, the blatant disregard, if not defiance, of the order made by Marshall J. Frankly, I find it disturbing that the union officials who were manning the picket took no account whatsoever of the order that had been made. While there has not been, and no doubt will not be, any proceeding for contempt, I will not disregard the events that occurred after Marshall J's order was announced. [22] In my opinion, having regard to the great loss caused by the contravention, the deliberateness of the conduct, the involvement of senior officials of a major union, and the defiance of Marshall J's order, an appropriate penalty to impose on the AMWU is $8,000. In the case of CEPU, a lesser penalty should be imposed because the order made by Marshall J was not directed to that union and neither it nor its officials were arguably in contempt. It is only for that reason that I regard a penalty of $6,000 as appropriate. 19 Senior counsel for the prosecutor submitted that the similarities between the present case and Age v AFMEPKIU included the serious consequences which flowed from the contravention, the flagrancy and deliberateness of the offending conduct and contravention, and the involvement of a senior official of a major union. In addition, it was submitted, the defendant in the present case showed a disregard for the public interest. 20 Mr Buchanan also sought to distinguish the present case from Robertson v Marrickville Council where a fine of $5,000 was imposed. In that case the defendant did not defend the prosecution and had accepted that the breach had occurred. It was submitted that the nature of the contravention in that case was much less serious than in this case. Consideration 21 The factors that I consider are relevant to the question of penalty in this case are as follows: 1. The prosecution was in relation to the contravention of an enterprise agreement in respect of which the defendant was on notice that the Commission unambiguously regarded as important that the parties adhere to its terms. 2. The contravention was premeditated and deliberate. There could have been no misunderstanding by the defendant about its obligations under the enterprise agreement not to dump hot metal. Nonetheless, the defendant directed its members to dump hot metal and an official and delegate of the defendant actively intervened in the production processes of the prosecutor to ensure that the direction to dump hot metal was complied with by members of the defendant. 3. The industrial stoppage on 21 February 2003 could have been avoided by appropriate consultation beforehand and the Commission was available to assist through its conciliation processes, a matter known to the defendant. 4. The contravention had serious consequences. The cost to the prosecutor of the dumped metal was A$420,992. 22 Factors that are relevant to be taken into account in mitigation are as follows: 1. The defendant has not previously committed a contravention of s 357 of the Act. 2. The stoppage was of limited duration. 3. Mr Gillespie, an influential official of the defendant in its dealings with the prosecutor, has recognised the seriousness of the contravention, apologised, expressed contrition and has undertaken that he will work with BlueScope and the Industrial Relations Commission in the future to ensure that such a situation never arises again. 23 The maximum penalty of $10,000, which it must be said, is not a high one. Nevertheless, it is reserved for the worst of cases. Is this one of those cases? The prosecutor contended that it is. The premeditation and deliberateness of the defendant's conduct exhibited a flagrant disregard for its obligations under the enterprise agreement. The provisions in the agreement aimed at avoiding the dumping of hot metal were fundamentally important to the prosecutor because of the damage that results if hot metal is dumped. The defendant would have been acutely aware of the effects of any decision to dump hot metal as part of any industrial action but proceeded to direct its members to do so in circumstances where it was not only a breach of an agreement freely entered into by the defendant but where it was completely unnecessary, in my opinion, given the opportunities available to the defendant to avoid industrial action. 24 The seriousness of the contravention was exacerbated by the conduct of Mr Gillespie and Mr Collins who, on becoming aware that some members of the defendant were not likely to comply with the direction to dump the hot metal, used their power and influence as officials of the defendant to enforce compliance. 25 If it had not been for the defendant's good record of not having previously contravened s 357 and in the absence of Mr Gillespie's contrition and his undertaking to endeavour to ensure that such a situation never arises again, the Court would have been inclined to impose a penalty at the high end of the scale. The undertaking by Mr Gillespie is a solemn one and I accept that it was given in good faith. I regard a penalty of $6,500 as appropriate. 26 As to the question of costs, that lies within the Court's discretion: s 181(1). The prosecutor laid three charges, one against the AWU and the other two against the ETU and AFMEPKIU. It was held in the Court's earlier judgment that charges against the ETU and AFMEPKIU were not made out and the summonses were dismissed. 27 The evidence shows that to the extent the ETU and AFMEPKIU were involved in organising the stoppage on 21 February 2003 it was very much in circumstances where the AWU played the leading role in publishing the handbill and in actively ensuring the direction to dump hot metal and to attend the stop work meeting were complied with. Further, the involvement of the ETU and AFMEPKIU in the proceedings before the Court was very much less than that of the defendant. However, the defendant should not have to pay all of the prosecutor's costs because, clearly, part of those costs would have been incurred in relation to the prosecutions brought against the ETU and AFMEPKIU. 28 I consider that the defendant should pay 70 per cent of the prosecutor's costs. Orders 29 The Court makes the following orders: 1. A penalty of $6,500 is imposed on the defendant for a contravention of an industrial instrument namely, clause 9 of the BHP Steel Port Kembla Operations Enterprise Agreement 2002 (EA 02/259). The penalty is payable within 21 days. 2. The defendant shall pay 70 per cent of the prosecutor's costs of the proceedings in an amount as agreed or, if agreement cannot be reached, leave is granted to either party to approach the Court for final orders as to costs. _______________________________ DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.