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  • Some unions have the financial capacity to use their funds to pay civil penalties levied by the courts on individual union officials for contravention of regulatory legislation, rendering the deterrent effect of the penalties nugatory for the individual contravenors.
  •  Attempts by judges of the Federal Court to circumvent this practice by restraining the indemnification of contravenors in building industry penalty proceedings have not been successful.
  •  The Full Court has now determined that the Fair Work Act does not even confer a power to make such restraining orders, lending substance to the apparent impunity with which the ACTU has declared that the breaking of laws is appropriate where it decides the laws are ‘unfair’.

There is good reason why Sally McManus, the new federal ACTU Secretary, could brazenly state on the 7.30 Report on 16 March that the ACTU does not think there is a problem with breaking the law where it considers it appropriate. On 21 December 2016, the Full Federal Court handed the ACTU a Christmas present in the form of a unanimous finding that the Fair Work Act 2009 (Cth) (the Act), specifically s 545(1), did not provide the Federal Court with power to make orders to ensure that civil penalties imposed for contraventions of the Act were paid by those individuals responsible for the contraventions (Construction Forestry Mining and Energy Union v Australian Building and Construction Commissioner [2016] FCAFC 184, Allsop CJ, North and Jessup JJ – the ‘Maribyrnong River Project case).

In other words, where a union has the financial capacity to use its members’ funds to pay the penalties of its officers and employees, there is no power to enforce the substantive deterrent effect of penalties. Individual union officials therefore have a form of covert legal immunity from suffering the full consequence of deliberate contraventions of the law.

The decision in the Maribyrnong Project River case threatens to undermine the efficacy of Parliamentary supervision of the building and construction industry through existing regulatory legislation. Unlike criminal prosecutions, where the aim of sentencing is to serve equally the purposes of retribution, deterrence and rehabilitation, according to the High Court, civil pecuniary penalties are primarily if not wholly intended to deter contraventions and be protective in promoting the public interest in compliance with legal standards of conduct for economic activity (Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 255 IR 87 at [55] per French CJ, Kiefel, Bell, Nettle and Gordon JJ). French J (as he then was) described the principal object of civil pecuniary penalties as putting a price on contravention sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the relevant Act (Trade Practices Commission v CSR Limited (1991) ATPR 41-076 at 52, 152).

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