First union official hit with personal fine after High Court ruling
Employment June 25, 2018 11:20 pm By Cat Fredenburgh | Melbourne

The first personal fine against a union official has been handed down in the wake of the High Court’s ruling that courts can order union officials to pay out of their own pockets for violating the Fair Work Act.

The High Court said in February that judges were empowered to make so-called non-indemnification orders under the FWA.

The case, brought against union official Joseph Myles and the CFMMEU for organising a blockade at a work site in Victoria, was sent back to the Full Court for a re-hearing on penalties.

On Monday, the reconstituted Full Court fined Myles $12,500 and the CFMMEU $71,000.

The reconstituted Full Court, comprising Chief Justice James Allsop, Justice David O’Callaghan and Justice Richard White, said that in directing the blockage, Myles had shown “a disregard for the Act, for the interests of those on the site, for the public and private interests in the work being done, and a disregard for anyone’s interests other than the Union’s demand for a site representative.”

In leveling the penalty against the CFMMEU, the Full Court noted the union’s prior violations and “its apparent willingness to contravene the Act in a serious way to impose its will”.

The union faced a maximum penalty of $102,000, while Myles faced a maximum penalty of $20,400.

The Australian Building and Construction Commissioner appealed to the High Court after the Full Federal Court sided with the union in its appeal of a ruling by Federal Court Justice Debra Mortimer that banned the CFMMEU from paying Myles’ penalty for the blockage.

“Given that s 546 [of the FWA] expressly empowers the court to order a specific person to pay a pecuniary penalty, it is no stretch to accept that there is power in s 546 to make orders designed to ensure that the person against whom the order is made cannot avoid the incidence of the penalty,” the High Court said.

The ABCC brought the case against the CFFMEU and Myles alleging that Myles, in May 2013, demanded a union delegate be present on a construction site for the Victorian Government’s Regional Rail Link Project in Footscray.

The construction was being carried out as part of a joint venture agreement between John Holland, Abigroup and Coleman Rail.

When officials from John Holland refused to comply with the demand, Myles allegedly organised action to block entrance to the site by cement trucks.

The CFFMEU and Myles admitted to trying to coerce the joint venturers by the blockade in contravention of the FWA, with, as the High Court said, “no remorse”.

Justice Mortimer fined the union $60,000 and Myles a separate $18,000. She also ordered the union not to indemnify Myles and pay his fine for him, saying that otherwise deterrence would be “diminished almost to the point of disappearance”.

That order was appealed to the Full Federal Court by the CFMMEU and Myles.

In upholding the appeal, the Federal Court held that neither section 545(1) of the FWA nor section 23 of the Federal Court of Australia Act 1976 empowered the judge to make her order that the CFMMEU not indemnify its representative.

In its High Court challenge, the ABCC argued that section 546(1) of the FWA did, however, provide for a “personal payment order” that would achieve the same effect as Justice Mortimer’s order.

The CFMMEU argued that it was Parliament’s job to make the FWA permit such a power. The union also argued that a non-indemnification order was not necessary to ensure deterrence.

In siding with the ABCC, the High Court said section 546 not only “expressly confers power on the court to make an order that a person pay a pecuniary penalty” but implicitly empowers judges to “make such other orders as are necessary for or facilitative of the type of orders expressly provided for.”

“That implied power under s 546 includes power to make an order that a contravener pay a pecuniary penalty personally and not seek or accept indemnity from a co-contravener, otherwise known as a ‘personal payment order’.”

While the High Court found Justice Mortimer did have the power to ban Myles from seeking indemnity from the union, it did agree with the Full Federal Court that the judge did not have the power to order the CFMMEU to not indemnify Myles.

“The Fair Work Act does not expressly or otherwise authorise the imposition of a pecuniary penalty on anyone other than the relevant contravener. For the same reason, the Fair Work Act cannot be taken impliedly to authorise the making of an order against a person other than the contravener for the purpose of accomplishing a pecuniary penalty imposed on the contravener,” the High Court said.

Steven J Moore QC with Castan Chambers and Julia Watson with List G Barristers appeared for the CFMMEU and Joseph Myles, instructed by Slater & Gordon.

Michael Wheelahan appeared for the ABCC, instructed by Sparke Helmore.

The case is Construction, Forestry, Mining and Energy Union & Anor v Australian Building and Construction Commissioner.

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Cat Fredenburgh

Cat Fredenburgh has been covering legal news for 12 years. She was previously Editor-in-Chief at US legal news publication Law360. She is the Co-Founder of Lawyerly.