Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union

• Jurisdiction: Australia Federal only
• Judge: Kiefel CJ.,Gageler J.,Keane,Nettle,Gordon JJ.
• Judgment Date: 14 February 2018
• Neutral Citation: [2018] HCA 3
• Docket Number: M65/2017
• Date: 14 February 2018
• Court: High Court

[2018] HCA 3

HIGH COURT OF AUSTRALIA

Kiefel CJ, Gageler, Keane, Nettle AND Gordon JJ

M65/2017

Australian Building and Construction Commissioner

Appellant

and

Construction, Forestry, Mining and Energy Union & Anor

Respondents

Representation

T M Howe QC with C J Tran for the appellant (instructed by Sparke Helmore)

R M Doyle SC with J D Watson for the respondents (instructed by Slater & Gordon)

Fair Work Act 2009 (Cth), ss 545, 546, 564.

Federal Court of Australia Act 1976 (Cth), s 23.

Industrial law — Pecuniary penalties — Where union official contravened civil remedy provision of Fair Work Act 2009 (Cth) — Where union contravened civil remedy provision through union official's conduct — Where s 546 of Fair Work Act provides court can order person to pay pecuniary penalty — Where s 545(1) of Fair Work Act provides court can make any order it considers appropriate if satisfied person contravened, or proposes to contravene, civil remedy provision — Where pecuniary penalties imposed on both union official and union — Whether s 545(1) or s 546 of Fair Work Act or s 23 of Federal Court of Australia Act 1976 (Cth) empowers court to order that union not indemnify union official against pecuniary penalty — Whether s 545(1) or s 546 of Fair Work Act or s 23 of Federal Court of Australia Act empowers court to order that union official not seek or accept indemnity or contribution from union in respect of pecuniary penalty.

Words and phrases — “appropriate”, “ Bragdon order”, “civil remedy provision”, “deterrence”, “implied power”, “legally ancillary”, “non-indemnification order”, “pecuniary penalty”, “penal outcome”, “penal purpose”, “person other than the contravener”, “personal payment order”, “reasonably required”.

1 Kiefel CJ. Proceedings were brought in the Federal Court by the statutory predecessor to the Australian Building and Construction Commissioner (“the ABCC”) against the first respondent, the Construction, Forestry, Mining and Energy Union (“the CFMEU”), and the second respondent, Mr Joseph Myles, who was a Vice President of the Construction and General Division of the CFMEU at the relevant time, for contraventions of s 348 of the Fair Work Act 2009 (Cth) (“the FWA”). Section 348 prohibits the taking or organising of action against another person, or threatening to take or organise action, with the intention of coercing a person to engage in industrial activity.

2 The conduct in question was directed by Mr Myles to a representative of the joint venturers of a large construction project for the Victorian Government. Mr Myles demanded that there be a CFMEU delegate on the site. There was no dispute that this constituted a demand that the joint venturers engage in industrial activity within the meaning of s 347. The joint venturers did not agree that this was necessary, as there was a delegate of another industrial organisation, which was a party to the existing Enterprise Agreement, already on site. Mr Myles then organised and participated in a blockade of an entrance to the site which prevented wet concrete being delivered with the result that large quantities of it were spoiled, and concrete which had previously been poured was wasted. He threatened to again blockade the entrance the following day if the CFMEU was not permitted to have a delegate on site.

3 Shortly before the hearing of the charges against them was due to commence, the CFMEU and Mr Myles admitted the conduct in question had taken place with the intention of coercing the joint venturers to comply with Mr Myles' demands. They admitted that Mr Myles, and through him the CFMEU 1, contravened s 348.

4 The primary judge, Mortimer J, made declarations of contravention and imposed pecuniary penalties on both the CFMEU and Mr Myles 2. Section 348 is a “civil remedy provision” of the FWA 3 for which a maximum penalty is provided in the event of contravention 4. At the time of the contravening conduct in May 2013, the maximum penalty that could be imposed for each contravention on the CFMEU was $51,000, and the maximum penalty that could be imposed for each contravention on Mr Myles was $10,200. The CFMEU and Mr Myles

were each found to have engaged in three contraventions of s 348 of the FWA. The primary judge ordered that the CFMEU pay total pecuniary penalties of $60,000 to be paid within 30 days and Mr Myles $18,000 to be paid within 90 days.

5 The initial question on this appeal concerns the further order which her Honour made, which the parties on the appeal referred to as the “non-indemnification order”. It is in these terms:

“The first respondent must not directly or indirectly indemnify the second respondent against the penalties in paragraphs 9 and 10 above in whole or in part, whether by agreement, or by making a payment to the Commonwealth, or by making any other payment or reimbursement, or howsoever otherwise.”

6 The primary judge identified the source of the power to make the order as s 545(1) of the FWA 5. The Full Court of the Federal Court (Allsop CJ, North and Jessup JJ) allowed the appeal brought by the CFMEU and Mr Myles, holding that neither s 545(1) nor s 23 of the Federal Court of Australia Act 1976 (Cth) (“the FCAA”) provides the necessary power 6.

7 An application by the ABCC, made subsequent to the hearing of this appeal, to amend the Notice of Appeal directs attention to s 546(1) as the source of a power to make an order which might achieve the deterrent effect upon both Mr Myles and the CFMEU contemplated by the primary judge. Unlike the non-indemnification order, an order of this kind (a “personal payment order”) would be directed only to Mr Myles and would prohibit him from seeking indemnification from the CFMEU with respect to payment of the penalty.

Provisions of the FWA

8 Section 23 of the FCAA may be put to one side for present purposes. Section 546(1) of the FWA provides that the Federal Court, and other eligible State or Territory courts:

“… may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.”

9 As mentioned, s 348 is a civil remedy provision.

10 Section 546(2) provides that the pecuniary penalty made under s 546(1) must not, in the case of an individual, be more than the maximum allowed under s 539(2), or, in the case of a body corporate, five times the maximum allowed under s 539(2). The court may order that the pecuniary penalty, or part of it, be paid to the Commonwealth or a particular organisation or person 7 and it may be recovered as a debt due to that person 8. Section 546(5) provides:

“To avoid doubt, a court may make a pecuniary penalty order in addition to one or more orders under section 545.”

11 Section 545(1) provides:

“The Federal Court … may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.”

12 Section 545(2) provides:

“Without limiting subsection (1), orders the Federal Court … may make include the following:

• (a) an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;

• (b) an order awarding compensation for loss that a person has suffered because of the contravention;

• (c) an order for reinstatement of a person.”

13 Section 545(4) provides that a court may make an order under s 545 on its own initiative, or upon application to it.

14 Section 564 provides:

“To avoid doubt, nothing in this Act limits the Federal Court's powers under section 21, 22 or 23 of the Federal Court of Australia Act 1976.”

The primary judge's reasoning

The imposition of penalties

15 In considering matters relating to penalty, the primary judge referred to a number of factors. Chief amongst them were the history of contraventions by the CFMEU and Mr Myles, and the role of deterrence, both general and specific, in fixing a penalty 9.

16 In relation to general deterrence, the primary judge said that, in fixing a penalty, the court must “make[] it clear to [the contravener] … that the cost of courting a risk of contravention … cannot be regarded as [an] acceptable cost of doing business” 10. However, general deterrence did not loom as large as specific deterrence in her Honour's reasons.

17 The CFMEU and Mr Myles submitted to the primary judge that it was impermissible, in fixing a penalty, to reason that previous penalties had been ineffective 11. Her Honour rejected that submission. Her Honour inferred that the CFMEU employs a conscious and deliberate strategy to engage in disruptive, threatening and abusive behaviour towards employers without regard to the lawfulness of that action or the prospect of prosecution or penalties. The individuals involved in this conduct are often part of the CFMEU hierarchy and their ongoing behaviour is tolerated, facilitated and encouraged by all levels of the organisation. Her Honour considered that penalties needed to be fixed so as to provide specific deterrence to the CFMEU and to Mr Myles, and observed that this would be his fifth set of contraventions 12.

18 There can be no doubt that the primary judge was applying s 546 in determining the penalties to be imposed on each of the CFMEU and Mr Myles, but her Honour did not resort to that section in making the non-indemnification order.

The non-indemnification order

19 In addition to an order prohibiting the CFMEU from paying the penalty ordered against Mr Myles, the ABCC sought an order requiring Mr Myles to pay the penalty from his own funds, but her Honour declined to do so 13, leaving him free to seek the funds from sources other than the CFMEU. The prohibition was directed only to the CFMEU. Her Honour did not take the course of prohibiting Mr Myles from...