Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3

Factual background. The Australian Building and Construction Commission ("ABCC") brought proceedings against the CFMEU and Mr Myles, the then Vice President of the CFMEU's Construction and General Division, in the Federal Court of Australia. The ABCC alleged that the CFMEU and Mr Myles had contravened s 348 of the Fair Work Act 2009(Cth) ("FW Act"), a civil remedy provision, which prohibits a person from organising or taking, or threatening to organise or take, any action against another person with intent to coerce another person to engage in industrial activity. 

The events giving rise to the proceedings took place at a construction site in Victoria in 2013. Mr Myles requested that there be a CFMEU delegate on the site. The site manager did not agree that this was necessary, as there was a delegate of another union, which was a party to the relevant enterprise agreement, already on the site. Mr Myles and other CFMEU members then blockaded the entrance to the site with parked cars, which prevented the delivery of wet concrete. Large quantities of concrete were spoiled and the concrete that had been poured before the blockade began had to be demolished and disposed. 

The Federal Court held that the CFMEU had contravened s 348, and imposed pecuniary penalties on both the CFMEU and Mr Myles. Justice Mortimer also made a "non-indemnification order" under s 545 of the FW Act, which prohibited the CFMEU from directly or indirectly indemnifying Mr Myles against the pecuniary penalties.

The CFMEU and Mr Myles successfully appealed this decision to the Full Court of the Federal Court. The ABCC subsequently appealed to the High Court of Australia. The key issue before the High Court was the lawfulness of the "non-indemnification order", and whether an order prohibiting the CFMEU from indemnifying Mr Myles should have been made under s 546 of the FW Act. 

Legal Background. Section 545 of the FW Act relates to orders that may be made by particular courts. This section provides that 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". This provision was relied on by the Federal Court as the source of power to make the "non-indemnification order". 

Section 546 of the FW Act relates to pecuniary penalties. This section provides that the Federal Court may order a person to pay a pecuniary penalty if it is satisfied that the person has contravened a civil remedy provision.

Decision. The majority of the High Court held that s 546 of the FW Act expressly empowered the Federal Court to order a person to pay a pecuniary penalty. From this express power arose an implied power of the Federal Court to make such orders as are "reasonably necessary for or facilitative of" a pecuniary penalty order. In this case, the implied power under s 546 of the FW Act permitted the Federal Court to order that Mr Myles pay a pecuniary penalty personally and not seek or accept indemnity from the CFMEU (known as a "personal payment order").

Chief Justice Kiefel observed that the principal purpose of a pecuniary penalty order was specific and general deterrence. Her Honour stated, "the greater the sting or burden of the penalty, the more likely it will be that the contravener will seek to avoid the risk of subjection to further penalties and thus the more likely it will be that the contravener is deterred from further contraventions; likewise, the more potent will be the example that the penalty sets for other would-be contraveners and therefore the greater the penalty's general deterrent effect." The High Court held that there was the implied power in s 546 to make orders as are "reasonably necessary for or facilitative of" the accomplishment of the deterrent effect of pecuniary penalty orders. 

The High Court held that the power to make a "personal payment order" lay in s 546 not s 545. That is, the Federal Court could have ordered Mr Myles to pay a "personal payment order" under s 546, but was not permitted to make a "non-indemnification order" under s 545. 

Lessons for employers. If a pecuniary penalty order is imposed on an individual, the Federal Court is empowered to make such other orders that are reasonably necessary for or facilitative of the pecuniary penalty order. This means that a union may be barred from indemnifying its members who have been penalised. The High Court's decision will likely have the effect of discouraging union members from breaching the FW Act. 

We thank associate Katharine Booth for her assistance in the preparation of this Update.