Does the request for records and documents that came into existence before the commencement of s 558B invalidate the Notice?
28 The applicant's contention that it does is founded on the transitional provisions of the FW Act. Schedule 1 Pt 4 cl 19 of the Act provides:
19 Application of amendments - responsibility of responsible franchisor entities and holding companies
(1) Section 558B of the amended Act applies in relation to contraventions of civil remedy provisions by franchisee entities or subsidiaries that occur after the end of the period of 6 weeks beginning on the day this Part commences.
(2) To avoid doubt, in determining for the purposes of paragraph 558B(1)(d) or (2)(c) of the amended Act whether a person could reasonably be expected to have had knowledge as referred to in that paragraph, a court may have regard to conduct that occurred, or circumstances existing, before the end of the period referred to in subclause (1).
(Emphasis added.)
29 The effect of cl 19(1) is that s 558B applies in relation to contraventions by franchisee entities occurring on and from 26 October 2017. It will be recalled that para 558B(1)(d) is that element of a contravention relating to the actual or putative knowledge of the responsible franchisor entity: that the entity or an officer of the entity "knew or could reasonably be expected to have known that the contravention by the franchisee entity would occur" or that "a contravention by the franchisee entity of the same or a similar character was likely to occur". Paragraph (2)(c) is the equivalent element relating to holding companies.
30 The applicant's argument is that the clause is only concerned with information to which a court may have regard. That is, it does not authorise the issue of a notice under s 712 which requires the production of documents or records that came into existence before 26 October 2017. The argument was based on the words in cl 19(2) emphasised in the extract in [28] above.
31 The applicant submitted that for these reasons "it is not open" to an inspector to issue a notice in reliance on s 558B(1)(d) or 2(c) of the Act to obtain records or documents relevant to the knowledge with which the section is concerned that came into existence before 26 October 2017. The applicant pointed to categories 1, 2, and 3 which seek documents and/or records "from 1 January 2016" and categories 7,8,9,10,11, and 12, and complained that, "if they are said to go to knowledge for the purposes of 558B", they are open-ended and include documents that were created before 26 October 2017. Consequently, the applicant contended, "a condition or authorising purpose for the issue of the [Notice] could not be s 558A(2)". In other words, the documents and records sought by the Notice are irrelevant to the identified compliance purpose and, at least to the extent that the Notice requires their production, it is invalid.
32 I reject the argument.
33 First, while it is true, as the applicant submitted, that cl 19(2) does not give an inspector the power to obtain documents or material that came into existence before 26 October 2017, the inspector's power does not derive from s 558B. The source of the inspector's power is s 712, read with s 706.
34 Second, if a court may have regard to such documents or records it must follow that the legislature contemplated that such documents or records might be relevant to determining whether a person had contravened para 558B(1)(d) or (2)(c). In these circumstances there is no reason to think that the legislature intended to prevent an inspector from requiring their production before deciding whether or not to institute court proceedings.
35 Third, neither expressly nor by implication does cl 19(2) preclude an inspector from seeking documents or records that came into existence before the end of the relevant period. The fact that the clause did not make this clear is of no moment. The applicant's argument proceeds on the assumption that, absent cl 19(2), there would have been doubt about whether a court could have regard to past conduct or existing circumstances and that the failure to make it clear in cl 19(2) that an inspector could issue a notice under s 712 for documents or records relating to that conduct or those circumstances means that an inspector is precluded from issuing such a notice. I do not accept the assumption.
36 As Barrett J remarked with respect to a provision of this nature in Allen v Feather Products Pty Ltd (2008) 72 NSWLR 597 at [25]:
Precisely what the words "to avoid doubt" or "for the avoidance of doubt" add to the meaning of a statutory provision may itself be a matter of doubt. The operative enacted words should have the same effect whether or not the introductory or explanatory words are included. Perhaps the indication is that one has resort to the provision only if some doubt arises, or that the provision deals only with cases of doubt.
37 In Allen at [26]-[27] Barrett J also referred to an observation by a senior draftsperson in the Office of Parliamentary Counsel that commonly such provisions were inserted "to clarify ambiguities that do not really exist".
38 I take the view that cl 19(2) adds nothing to the meaning of s 558B (cf. Allen at [29]).
39 Even without cl 19(2), it is readily apparent that events that took place before 26 October 2017 or circumstances existing at that time would be relevant and admissible to the determination of whether a contravention occurred on or after that date.
40 For a start, to meet the definition in s 558A(2) of a "responsible franchisor entity", the applicant must be a franchisor in relation to the franchisee with "a significant degree of influence or control over the franchisee entity's affairs". Such a degree of influence or control may well be established over time or, as the respondent put it in her submissions, it may be the product of events or circumstances occurring in the past or building over a period of time, including before 26 October 2017. It is logical that documents or records that came into existence before that date could reveal, or tend to reveal, the nature and/or extent of the necessary influence or control after that date.
41 Further, s 558B(3) provides that a person does not contravene s 558B(1) or (2) if, at the time of the contravention, the person has taken reasonable steps to prevent a contravention by the franchisee entity of the same or a similar character. In determining whether such steps have been taken, s 558B(4) provides that a court may have regard to "all relevant matters", including:
(b) the extent to which the person had the ability to influence or control the contravening employer's conduct in relation to the contravention … or a contravention of the same or a similar character;
…
(d) the person's arrangements (if any) for assessing the contravening employer's compliance with the applicable provisions referred to in subsection (7) [the relevant civil remedy provisions];
(e) the person's arrangements (if any) for receiving and addressing possible complaints about alleged underpayments or other alleged contraventions of this Act within:
(i) the franchise[.]
…
(f) the extent to which the person's arrangements (whether legal or otherwise) with the contravening employer encourage or require the contravening employer to comply with this Act or any other workplace law.
42 As the respondent submitted, in order to evaluate each of these matters it will generally be necessary to have regard to events or circumstances that predate the contravention. It is self-evident, for example, that compliance arrangements will need to be in place before any contravention. Longstanding arrangements, particularly those which are enforced, will have greater weight than recent ones.
43 Consequently, for contraventions by a franchisee entity that were committed on or after 26 October 2017, any documents or records touching upon the ability of the applicant to control the contravening employer's conduct in relation to a relevant contravention or relating to the existence or otherwise of the relevant arrangements are likely to have been created some time before 26 October 2017.
44 The applicant also overlooks the fact that the inspector is not seeking the documents and records exclusively for the purpose of determining whether the applicant is a responsible franchisor entity and has contravened s 558B but also to determine whether the applicant has contravened s 550 of the Act. The latter inquiry is directed to the involvement of the applicant in one or more of the Identified Contraventions. Events and circumstances predating the primary contraventions may shed light on whether the applicant knew at the time of the contraventions of the essential elements constituting them so as to make it knowingly concerned in the contraventions of the franchisee entities. That is because, for the purposes of s 550, knowledge of a system producing outcomes which constitute contraventions by a principal can be sufficient to implicate an accessory in those contraventions: see, for example, Australian Communications and Media Authority v Mobilegate Ltd (a company incorporated in Hong Kong) (No 8) [2010] FCA 1197; 275 ALR 293 at [172] (Logan J); Fair Work Ombudsman v Grouped Property Services Pty Ltd [2016] FCA 1034; 152 ALD 209 at [955]-[957] (Katzmann J).
45 The extrinsic material supports this interpretation of the legislation. The Explanatory Memorandum notes that "[d]etermining whether a responsible franchisor entity could reasonably be expected to have known of a contravention (or contraventions of the same or a similar character) … takes into account the responsible franchisor entity's knowledge, experience and acumen". In his second reading speech the Hon Peter Dutton MHR, said that:
What is appropriate in any particular case will depend on the size, resources and control exercised by a particular business and what steps they are already taking to encourage compliance with the law within their corporate networks. In many cases, existing measures will be sufficient and there will be no need to take any further action.
(Emphasis added.)
46 The applicant accepted that cl 19(2) indicates that the legislature recognised that there would be material that came into existence before the operative date which would be relevant to a prosecution. But it argued that the clause did not authorise the use of the power conferred by s 712 to obtain that material. Rather, it claimed that the only way an inspector could secure access was by the use of the coercive powers of the Court after commencing proceedings against an entity, such as through discovery or notices to produce. The applicant submitted that s 558B was a penal provision so it should not be construed beneficially and if an inspector were able to require the production of such documents this would involve "a retrospective element". If Parliament intended to give an inspector this power, the applicant added, it would have said so.
47 I do not accept the argument.
48 As I have already observed, the power to issue a notice is not conferred by s 558B but by s 712. Still, s 712 is also a civil remedy provision. Absent a reasonable excuse, non-compliance exposes the applicant to a pecuniary penalty. Provisions imposing civil penalties should be "certain and its reach ascertainable by those who are subject to it": Construction, Forestry, Mining and Energy Union v Mammoet Australia Pty Ltd (2013) 248 CLR 619 at [48]. It is for this reason that the operation of s 712 must be strictly confined by the purpose for which the power to issue a notice may be exercised. It is for this reason, too, that the notice will only be valid if it discloses that it is an exercise of the power conferred on an inspector by s 712, specifies with reasonable clarity the records or documents the recipient must produce, and identifies the relationship between those records or documents and the matter which is the subject of the exercise of the power. The proper interpretation of s 712, however, is not determined or affected by cl 19(2).
49 In Maxwell v Murphy (1957) 96 CLR 261 at 267 Dixon CJ observed:
The general rule of the common law is that a statute changing the law ought not, unless the intention appears with reasonable certainty, be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events.
(Emphasis added.)
50 This is commonly referred to as the presumption against retrospectivity. But the presumption against retrospectivity has nothing to do with this case.
51 As Kaye J explained in Nicholas v Commissioner for Corporate Affairs [1988] VR 289 at 296, citing Halsbury, 4th ed., vol.44, "Statutes", para [921]:
The common law rule of construction concerning retrospectivity is subject to a qualification that "a statute is not retrospective merely because it affects existing rights; nor is it retrospective because a part of the requisites for its action is drawn from a time antecedent to its passing".
52 The Notice issued by the inspector does not involve the imposition or incorporation of some impermissible "retrospective element". Its evident purpose is to enable the inspector to investigate the extent of influence or control exercised by the applicant over the affairs of the franchisee entities at the time of the alleged contraventions, what the applicant knew or should have known during the Contravention Periods, and whether reasonable precautions were in place during those periods to prevent a contravention - to the extent that documents and records that were created before that time or those periods might shed light on those questions.
53 In my opinion, subject to the resolution of the final question, this was a valid notice.