Significant litigation outcomes

The following examples of significant cases are illustrative of the continuing serious unlawful conduct within the building and construction industry.

Director of the Fair Work Building Industry Inspectorate v Baulderstone Pty Ltd & Ors

[2015] FCCA 2129

This matter related to the employment of Tama Teariki as a Safety Officer employed by Baulderstone Pty Ltd on a construction site in the ACT known as the “SA3” site, being the construction of student accommodation at the Australian National University. Mr Teariki was a member of the Construction, Forestry, Mining and Energy Union (CFMEU) until he resigned while employed on the SA3 site on 17 February 2010.

Prior to working on the SA3 site, Mr Teariki had been employed by Baulderstone on the Edmund Barton Building site in Canberra (EBB site). Mr Teariki commenced employment on the EBB site in May 2008. Mr Teariki was employed as a construction worker.

On the EBB site, Mr Teariki was employed to carry out the tasks of the Safety Officer and also assisted with construction duties. The enterprise agreement (EA) did not classify the Safety Officer position, but Mr Teariki was also elected the Chairman of the Safety Committee, which the EA classified as a CW5 level construction worker.

In January 2009, at Mr Teariki's request, Baulderstone agreed that Mr Teariki's employment as Safety Officer would be regulated by an employment contract and he would be paid a salary rather than in accordance with the EA. Mr Teariki asked for salaried employment because he wanted the security of regular income payments and did not want to work overtime on weekends due to having a young family living in Sydney he wished to see and the desire to observe his religion on Sundays.

In February 2010, Mr Teariki was harassed by the CFMEU about membership fee payments. He decided to exercise his right to resign from the union, which he did on 17 February 2010 by sending a facsimile transmission to the union's offices. Shortly after his resignation from the CFMEU Mr Teariki's contract was terminated by Baulderstone.

The court found that Baulderstone, Nicole Kidman, Baulderstone Human Resources Manager, and Raz Razzlog, Baulderstone Employee Relations Manager, had taken adverse action against Mr Teariki for reasons that included as a substantial and operative factor Mr Teariki's not being, or having ceased to be, a member of the union.

The Court found that Baulderstone's:

… contravening conduct… merits a high level of punishment. Baulderstone engaged in the contravening conduct deliberately and concertedly. The conduct was the product of the decision of a senior manager, and was implemented by two subordinate, but, nevertheless, senior managers. It was directed to coercing an employee to abandon a contract of employment the employee freely negotiated with Baulderstone. And the conduct was accompanied by the concealment of the reason or reasons for which Baulderstone engaged in the conduct.

The Court found that Baulderstone, Ms Kidman and Mr Razzlog had contravened section 346 of the FW Act and imposed the following pecuniary penalties:

  • $25,000 on Baulderstone, and
  • $3,500 on each of Ms Kidman and Mr Razzlog.

Commonwealth of Australia v Director of the Fair Work Building Industry Inspectorate; Construction Forestry Mining and Energy Union v Director of the Fair Work Building Industry Inspectorate

[2015] HCA 46

The matter of the Director of the Fair Work Building Industry Inspectorate v CFMEU and CEPU was filed on 23 May 2013 in the Federal Court in Queensland, alleging the two respondent unions had contravened the Building and Construction Industry Improvement Act 2005 (Cth) on three government-funded projects in Queensland on 24, 25 and 26 May 2011:

  1. The Queensland Children's Hospital Project was the construction of the hospital now known as the Lady Cilento Children's Hospital, in South Brisbane. The project was the construction of a multistorey building, consisting of four levels of carpark, eight levels of hospital facilities and four levels of ward facilities associated with the hospital. The construction project was worth approximately $800 million and was to be completed by the end of 2013. The principal contractor was Abigroup.
  2. The Brisbane Convention and Exhibition Centre project (BCEC Project) was an extension to the existing Brisbane Convention and Exhibition Centre at Southbank, Brisbane. The BCEC Project was worth approximately $120 million, and was to be completed by the end of 2013. The principal contractor for the BCEC Project was Laing O'Rourke.
  3. The Queensland Institute of Medical Research Project (QIMR Project) was located at the Royal Brisbane Hospital, Brisbane. The principal contractor was Watpac. The QIMR Project was funded by a philanthropic foundation, together with the Queensland Government and the federal government. The project consisted of construction of a 15-storey medical research centre made up of administration, education and research facilities. The construction, which was worth approximately $167 million, occurred in three phases, with the relevant second stage to be completed by the end of February 2012.

The matter was originally listed for a penalty hearing on 31 March 2014; however, on 10 April 2014, the Chief Justice directed the Full Court of the Federal Court, exercising the Court's original jurisdiction, to consider whether the reasoning in the High Court's decision in Barbaro v The Queen (2014) 253 CLR 58 (Barbaro), applied to civil penalty proceedings. The Commonwealth was granted leave to intervene to make submissions.

On 1 May 2015, the Full Federal Court found that Barbaro did apply to civil penalty proceedings. On 18 June 2015, the Commonwealth was granted special leave to appeal the decision to the High Court. On 9 December 2015, the High Court unanimously allowed the appeal. The joint judgment (French CJ, Kiefel, Bell, Nettle and Gordon JJ) held that the decision in Barbaro did not apply to civil penalty proceedings and that a court can receive and accept an agreed or other civil penalty submission. The decision held that there is a principled basis for distinguishing between criminal prosecutions and civil penalty proceedings and that there is an important public policy involved in promoting the predictability of outcomes in civil penalty proceedings.

Given the importance of the appeal to a number of Commonwealth Regulators, the costs of arguing the appeal before the High Court was shared among five different agencies, including FWBC.

The original proceeding was remitted back to the Full Federal Court for determination in accordance with the High Court's decision. On 17 May 2016, the matter was heard before Dowsett, Greenwood and Wigney JJ in which submissions were made by the parties concerning the penalties that should be imposed for the admitted contraventions. The Court has reserved its decision.

Director of the Fair Work Building Industry Inspectorate v CFMEU (no. 2)

[2015] FCA 1462 (The Red & Blue case)

This case involved the President of the Victorian and Tasmanian Branch of the CFMEU threatening to coerce a scaffolding company to employ a person as a CFMEU shop steward. The President made it clear that he had the power to put the company out of business if the demand was not complied with.

During the hearing of the case the court highlighted the CFMEU's poor record of law-breaking, posing the question, ‘Has there ever been a worse recidivist in the history of the common law?'

In handing down its penalty decision, the Court observed the President's conduct `could not have been a clearer instance of a contravention' and the threat to put the company out of business `was as prejudicial an outcome as any that might be suffered by a trading entity'.

The Court further commented that, ‘… penalties … imposed upon the Union have been inadequate to provide the specific deterrence which is so conspicuously required in this area of the law.'

The Court imposed significant penalties of $245,000 on the union and the union President.

In addition, the decision referenced judicial observations on the culture of unlawfulness displayed. A summary of comments related to matters from the reporting period follows.

  • On 3 July 2015, Justice Gilmour observed:

    The CFMEU's long history of its officials conducting themselves unlawfully ... calls for a significant component of specific deterrence.

    Director of the Fair Work Building Industry Inspectorate v Upton [2015] FCA 672

  • On 14 August 2015, Justice Mansfield observed:

    There is clearly, as other judges have recorded, a strong record of non-compliance on the part of the Union through its officers with provisions of industrial relations legislation, although that does not mean that a disproportionate penalty can or should be imposed. I note that significant past penalties have not caused the Union to alter its apparent attitude to compliance with the entry provisions and restrictions under the FW Act.

    There is clearly an ongoing need for an order to be made for a pecuniary penalty which has a deterrent effect upon the Union and signals to others who may consider engaging in such conduct or like conduct that it is inappropriate to do so.

    Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 3) [2015] FCA 845

  • On 4 November 2015, Justice Jessup observed:

    As has become customary in cases such as this, the applicant has placed before the court a schedule of the Union's previous contraventions of civil penalty provisions in the FW Act, and of corresponding provisions in the Building and Construction Industry Improvement Act 2005(Cth). The pattern of contravention which emerges from material such as this has been the subject of comment by the court on a number of occasions. The schedule paints, one would have to say, a depressing picture. But it is more than that. I am bound to say that the conduct referred to in the schedule bespeaks an organisational culture in which contraventions of the law have become normalised.

    Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 1173 (The Mitcham Rail Case)

  • On 11 November 2015 the judgment of Tracey J included:

    They, nonetheless, bespeak a deplorable attitude, on the part of the CFMEU, to its legal obligations and the statutory processes which govern relations between unions and employers in this country. This ongoing willingness to engage in contravening conduct must weigh heavily when the need for both specific and general deterrence is brought to account.

    … Their continued willingness to engage in contravening conduct supports the view that earlier penalties, some of them severe, had not had a deterrent effect. … The longer such recidivism continues the more likely it is that this consideration will carry greater weight than the principle that the maximum available penalty must be reserved for the worst possible offending.

    Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 1213

Director of the Fair Work Building Industry Inspectorate v Scott Vink Anor

[2016] FCCA 488

Mr Vink entered the Pacific Fair site purportedly for safety purposes. However, he went to the site sheds and removed workers' belongings, including taking their lunches from the fridge and leaving them outside on the ground. When approached by a subcontractor's health and safety manager, Vink launched into an obscenity-laced tirade, claiming workers should not use site amenities unless they were CFMEU members.

In penalising the near-maximum amounts against the official ($9,000) and the CFMEU ($48,000), the Court said the only reason for Mr Vink's behaviour was ‘to intimidate the employees and to reinforce to others at the building site the notion that non−union membership (was) not going to be tolerated'.

Vink's behaviour was described by the court as ‘sheer thuggery'.

Following the court's decision, the Gold Coast Bulletin (10 March 2016) reported that Mr Vink claimed he did nothing wrong stating, ‘It's a political witchhunt and I'm not concerned about it at all.'

Director of the Fair Work Building Industry Inspectorate v Robinson

[2016] FCA 525

Penalties totalling $94,600 were ordered against the CFMEU, the CEPU and three union officials following unlawful industrial action relating to the $45 billion Ichthys LNG development, one of the world's most significant oil and gas projects.

The Court found a CFMEU organiser had organised unlawful industrial action by taking action that led to workers that attended one of the projects ‘park-and-ride' locations failing to board their transport and attend work for the day; at another site a CFMEU and a CEPU organiser organised unlawful industrial action by taking similar action.

In handing down penalty orders, the Court noted, ‘In all of the circumstances, I regard the mental attitudes accompanying the contraventions [of the organisers] as defiant and serious'.