Australia: High Court confirms the Federal Court power to stop unions paying fines of union officials

Last Updated: 23 February 2018
Article by Georgie Richardson and Michael Selinger

Most Read Contributor in Australia, August 2018

The High Court has answered the question of whether a Federal Court can, under the Fair Work Act 2009 (Cth) (FW Act), restrict a union official from seeking indemnity from the union for any penalty imposed on them personally. The majority of the High Court, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3, found in the affirmative.

Background

The second respondent, Mr Myles, was an officer of the first respondent, the Construction, Forestry, Mining and Energy Union (CFMEU). In 2013, Mr Myles and 20 associates carried out a blockade that disrupted a concrete pour at a construction site with the intention of coercing compliance with Mr Myles' requests that there be a CFMEU delegate on the site.

Proceedings were commenced against the respondents in the Federal Court. The respondents admitted to contravening section 348 of the FW Act, and the hearing before the primary judge proceeded in relation to penalty only.

The primary judge ordered that, under section 546 of the FW Act, Mr Myles pay pecuniary penalties of $18,000 and the CFMEU pay pecuniary penalties of $60,000. The primary judge also made a non-indemnification order, pursuant to section 545(1) of the FW Act. The effect of that order was to restrict the union from indemnifying Mr Myles in relation to his personal penalty.

The respondents appealed to the Full Court, which held that the primary judge had no power under section 545(1) to make the non-indemnification order since such an order would "add to the penal outcome" authorised by section 546 and there was no clear and express power to do so.

The Australian Building and Construction Commissioner (ABCC) was then granted special leave to appeal to the High Court. Before the High Court, the ABCC was allowed to argue that, if the primary judge was wrong in finding that a non-indemnification order could be made under section 545(1), the order could have been made under section 546(1) of the FW Act.

Courts can impose personal payment orders under section 546

The question for determination in the appeal was initially whether section 545(1) of the FW Act empowered a judge to order that a union shall not indemnify a union official against a pecuniary penalty imposed on that union official under section 546 of the FW Act.

The High Court unanimously held that neither section 545(1) of the FW Act nor section 23 of the Federal Court of Australia Act 1976 (Cth) can empower a judge to make a non-indemnification order, because such an order is penal and is beyond the scope of those sections.

However, the High Court agreed to consider whether there was an implied power in section 546 of the FW Act that would allow a court to order that a union official not seek or accept indemnity or contribution from the union in respect of a pecuniary penalty imposed on the union official.

The majority of the High Court held that a personal payment order could be made under section 546 of the FW Act. The question became whether the express power given by section 546(1) to require that a person pay a penalty carried with it a power to ensure that Mr Myles' penalty not be paid by the CFMEU. This would be so as to ensure that the effect of the penalty was felt by Mr Myles to a much greater extent.

The High Court noted that the power expressly conferred by section 546 is limited to making an order that a person "pay a pecuniary penalty". However, the express grant of power carries with it implied power to do everything necessary for the effective exercise of the power to impose a pecuniary penalty, and an implied power to make further orders as are reasonably required for the accomplishment of the deterrent effect that the penalty is calculated to achieve.

The majority of the High Court judges found that courts may impose personal fines against union officials for their misconduct and breaches of the FW Act, in addition to any fines issued to unions. Although the Court noted the practical difficulty in ensuring that the union official paid their own fines, the decision affirms that the Courts can impose orders on union officials to pay fines personally, rather than have the union pay them on their behalf.

The appeal was allowed and the matter remitted to the Full Court of the Federal Court for the imposition of penalties, as the High Court determined that whether it was appropriate to make such a personal order against Mr Myles was a matter for the Full Court of the Federal Court to determine.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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