MATTHEW STEVENS

High price for union misconduct
PUBLISHED: 01 APR 2014 00:05:32 | UPDATED: 01 APR 20 2014 20:38:38 Reprints & permissions
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CFMEU secretary John Setka believes penalties are the price for being a militant union. Photo: Craig Abraham MATTHEW STEVENS

In a national legal landmark, the Victorian Supreme Court has made criminal contempt findings against building union the CFMEU while slapping the occasionally rogue organisation with $1.2 million in fines and penalties. This apparently unprecedented criminal sanction is the product of the union’s refusal to suspend a campaign of street protests in Melbourne back in August and September 2012. The ugly and intimidating siege of a Grocon building site and its surrounding Mel Melbourne CBD was led by a state secretary of the Victorian branch of the building union, John Sekta. And his campaign was conducted in deliberately naked defiance of court orders that required the action to end. Now, when he was told last September that the union had been found guilty of six separate counts of contempt, the militant hardman Setka commented that his was not the first union to be found guilty of contempt of court and neither would it be the last. Setka went on to indicate that any penalties triggered triggered by the court’s decision would represent only the price that needed to be paid if members wanted a militant union.

Perhaps now that the members of the Victorian branch of the building union understand just what that price can be, they might ponder the folly of any form of militancy that takes the form of informed and repeated insult to the Supreme Court. In the end, a coalition of circumstances, from the original refusal to respond to court orders to Sekta’s commentary and the union’s steadfast refusal to entertain the idea of contrition, appear to have convinced Judge Tony Cavanough to cross the Rubicon from civil to criminal sanction against the union. Past union failures to act in accordance with court orders have been treated as a civil matter. “However  . . . I regard these contempts as exceptionally serious,” Justice Cavanough advised. “So much so that they warrant explicit classification as criminal contempts, perhaps for the first time in the Australian industrial context. “I have already explained why I consider these contempts to be so serious,” he continued. “In short, they were highly contumacious. They were also highly visible and highly memorable. “The Court must visit the defiance of the CFMEU with a penalty which will not only adequately respond to the scale of the defiance but also act as a general and specific deterrent. No fines of the level previously imposed could do that.” Outside of the obvious balance sheet impact of the court’s findings, the decision to assign criminal sanction to this behaviour could well seriously complicate working life for the leadership of the Victorian branch of the building union. The most obvious point of stress here is political. The CFMEU in all its guises, from mining to building and beyond, provides financial succour to the Labor Party. Recent court decisions in Queensland, Western Australia and now Victoria make it clear that the union has a powerful rogue element that is prepared to act outside of the law and its conventions in the pursuit of lost relevance. The question for Labor is whether its financial umbilical cord to this union and others like the MUA need now be very publicly severed. There might be consequences too at a purely operation level for Setka and others. One of the key tools of the unionists trade is the right of entry to a site that is, or might properly be, covered by any union. Their right is bestowed by the Fair Work Commission and one of its points of challenge is whether or not the union representative is a person of good standing. In a recent West Australian case, a full FWC bench refused an appeal by an MUA official whose right of entry application to a Patrick Stevedore site had been rejected on the basis he was not a fit and proper person. It could well be that similar applications by Setka and others might face a similar

challenge from construction contractors with the stomach for a contest that really needs to be had in Victoria. Interestingly, the CFMEU’s sturdy cash position and strong balance sheet played a role in the quantum of the fines levied by the court. While some will be a tad disappointed that the total only just crossed the $1 million threshold, there can be no question that this defeat is going to hurt the union. The first thing to say here is that the fines are just part of the impost. The court has ordered the union to pay Grocon’s costs. This is schedule three for the Grollo camp, with the first two actions costing $1.2 million so far and a third application costing $400,000. And once it works out its Grocon liability, the union will also have to cover its own costs. In his judgment, Cavanough helpfully outlined the union’s current financial standing. He noted evidence that the 2012 annual report shows that the CFMEU Victorian/Tasmanian Branch had already provisioned $2 million for legal settlements. That number came in at $85,000 in 2011. The transparency forced on the union by accounting rules, along with Sekta’s September reaction, does not appear to have helped the union’s cause. The judge noted his acceptance of the Attorney-General’s proposition that the imposition of a penalty for contempt of court should not be viewed as simply an anticipated cost of industrial action. “As he further submits, few things could be more destructive to the authority of the court and to the rule of law, than the idea that fines or similar punishment are akin to a tax that, once budgeted for, enable the use of unlawful conduct to achieve industrial outcomes.” Cavanough reported that the union had $12,382,559 in the bank at the end of FY12, that its cash flow from operations was $7,160,522. and its net assets were $51,931,494. “Both the Grocon plaintiffs and the Attorney-General submit that the CFMEU can easily afford to pay very large fines,” the judge noted. The union proposition was that it should not be forced to pay huge fines here because they would ultimately be paid by its members and they are working people. Justice Cavanough was having none of that though and concluded “. . . if the members are dissatisfied with the conduct of the officers who have engaged in or condoned the offending conduct, they may vote against them when they next stand for election”. We couldn’t agree more.