//
[85]
[2018] FWCFB 3710
General information, not legal advice.
Fair Work Commission (Full Bench)
2018-06-22
Original judgment source is linked above.
[2018] FWCFB 3710 [Note: An application relating to this matter has been filed in the Federal Court - Refer to the Federal Court decision of 14 December 2018 for the result of this matter.]
s.604 - Appeal of decisions
Australian Mines and Metals Association Inc; Master Builders Australia Limited
Construction, Forestry, Maritime, Mining and Energy Union
Appeal against decision [2018] FWC 1017 of Deputy President Gostencnik at Melbourne on 6 March 2018 in matter number D2017/5.
[1] The Australian Mines and Metals Association Inc. and Master Builders Australia Limited (appellants) have lodged an appeal, for which permission to appeal is required, against a decision issued by Deputy President Gostencnik on 6 March 2018[1] (Decision). The Decision concerned a proposed amalgamation between three registered organisations, namely the Maritime Union of Australia (MUA), the Textile Clothing and Footwear Union of Australia (TCFUA) and the Construction, Forestry, Mining and Energy Union (CFMEU), and followed a ballot of the members of the MUA and the TCFUA which approved the amalgamation proceeding. In the Decision, the Deputy President determined that he would cause a notice to be published fixing 27 March 2018 as the day upon which the amalgamation would take effect. In accordance with the Decision, the amalgamation took effect on 27 March 2018 so that the MUA and the TCFUA were deregistered and the CFMEU became the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU).[2]
[2] The critical issue dealt with in the Decision was whether the statutory prerequisite for the fixing of an amalgamation day in s 73(2)(c) of the Fair Work (Registered Organisations) Act 2009 (RO Act) was satisfied. Section 73 relevantly provides:
(1) The scheme of a proposed amalgamation that is approved for the purposes of this part takes effect in accordance with this section.
(a) the period, or the latest of the periods, within which application may be made to the federal court under section 69 in relation to the amalgamation has ended; and
(b) any application to the federal court under section 69 has been disposed of, and the result of any fresh ballot ordered by the court has been declared; and
(c) there are no proceedings (other than civil proceedings) pending against any of the existing organisations concerned in the amalgamation in relation to:
(i) contraventions of this Act, the Fair Work Act or other Commonwealth laws; or
(ii) breaches of modern awards or enterprise agreements; or
(iii) breaches of orders made under this Act, the Fair Work Act or other Commonwealth laws; and
(d) any obligation that an existing organisation has under a law of the Commonwealth that is not fulfilled by the time the amalgamation takes effect will be regarded by the proposed amalgamated organisation as an obligation it is bound to fulfil under the law concerned;
the FWC must, after consultation with the existing organisations, by notice published as prescribed, fix a day (in this division called the amalgamation day) as the day on which the amalgamation is to take effect.
[3] It can be seen that once the Deputy President formed a state of satisfaction about each of the matters specified in s 73(2), he was obliged by the statute to fix an amalgamation day. It was not in dispute before the Deputy President, or in the appeal, that at all relevant times there have been proceedings pending against the CFMEU and the MUA for pecuniary penalties in respect of alleged contraventions of civil remedy provisions in the Fair Work Act 2009 (FW Act) and other Commonwealth statutes (civil penalty proceedings). The appellants contended before the Deputy President that such proceedings did not fall within the exclusion of "civil proceedings" in s 73(2)(c), that the Commission could not be satisfied in relation to the s 73(2)(c) matters, and accordingly that the Commission had no power to fix an amalgamation day. The Deputy President rejected this contention and determined that the civil penalty proceedings against the CFMEU and the MUA fell within the "civil proceedings" exception and were therefore not a bar to him being satisfied in relation to the s 73(2)(c) matters.
[4] The appellants contend in their notice of appeal that the Deputy President erred in his construction of the expression "civil proceedings" in s 73(2)(c) and consequently erred by fixing an amalgamation day when he had no power to do so. This decision is concerned with that issue of construction.
[5] The Decision is lengthy and densely reasoned. For reasons which will become apparent (and at the risk of doing it injustice), it is necessary for us to summarise in some detail the Deputy President's reasoning and conclusions in the Decision concerning the issue of construction the subject of this appeal.
[6] First, after summarising the legal principles applicable to the task of statutory construction in a way which we consider to be uncontroversial,[3] the Deputy President dealt with a submission advanced before him by the appellants that the purpose of s 73 was normative, in the sense that it was designed to encourage the setting and enforcement of standards, rather than remedial, and that s 5 of the RO Act assisted in the identification of that purpose. Section 5 provides (omitting the statutory note):
(1) It is Parliament's intention in enacting this Act to enhance relations within workplaces between federal system employers and federal system employees and to reduce the adverse effects of industrial disputation.
(2) Parliament considers that those relations will be enhanced and those adverse effects will be reduced, if associations of employers and employees are required to meet the standards set out in this Act in order to gain the rights and privileges accorded to associations under this Act and the Fair Work Act.
(a) Ensure that employer and employee organisations registered under this Act are representative of and accountable to their members, and are able to operate effectively; and
(b) Encourage members to participate in the affairs of organisations to which they belong; and
(c) Encourage the efficient management of organisations and high standards of accountability of organisations to their members; and
(d) Provide for the democratic functioning and control of organisations; and
(e) Facilitate the registration of a diverse range of employer and employee organisations.
(4) It is also Parliament's intention in enacting this Act to assist employers and employees to promote and protect their economic and social interests through the formation of employer and employee organisations, by providing for the registration of those associations and according rights and privileges to them once registered.
(5) Parliament recognises and respects the role of employer and employee organisations in facilitating the operation of the workplace relations system.
[7] The Deputy President rejected this submission. In relation to s 5, the Deputy President found that s 5(2) referred to associations before they became registered, and that s 5(3) did not itself set standards but described what standards set out elsewhere in the RO Act ensured, encouraged, provided or facilitated.[4] In relation to whether s 73 had a normative purpose, the Deputy President said (footnote omitted):
"[34] ... I do not accept this contention. As the Applicant organisations point out s.5(2) is concerned with Parliament's consideration that relations between federal system employers and federal system employees will be enhanced and that adverse effects of industrial disputation will be reduced if 'associations of employers and employees' are required to meet the standards set out in the RO Act in order to gain the rights and privileges accorded under the RO Act and the FW Act. As I have already made it clear, I consider that this subsection is directed to the desirability of associations of employers and employees seeking to be registered as organisations and the reference to the rights and privileges in that subsection is to the rights and privileges that come with that registration under the RO Act.
[35] True it is that rights and privileges conferred by registration can be removed. But the mechanism for this is through the cancellation of an organisation's registration under the RO Act."
[8] The Deputy President proceeded to analyse the statutory scheme for the amalgamation of organisations contained in Ch 3 of the RO Act,[5] in particular the provisions governing the amalgamation process to the point of the ballot of members, and said (footnotes omitted):
"[50] It seems to me that these provisions are a manifestation of some of the standards noted in s.5(3) of the RO Act. Specifically, I consider that the aforementioned provisions are designed to ensure organisations participating in a proposed amalgamation are accountable to their members, to encourage members of an organisation that is participating in the proposed amalgamation to participate in the affairs of that organisation and to provide for the democratic functioning and control of the organisations participating in a proposed amalgamation.
[51] It is to be observed from the amalgamation provisions of the RO Act thus far discussed, that neither the existence of extant proceedings of any kind nor a history of contravening conduct involving an organisation that is participating in the proposed amalgamation present as a bar to an application in relation to a proposed amalgamation being made. Nor do such matters warrant any express consideration by the Commission before approval may be given for the submission of an amalgamation to ballot. The absence of any such bar or precondition also weighs against the normative purpose of the provisions suggested by the Objectors."
[9] Reference was then made to the High Court decisions in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate[6] (Commonwealth v FWBII) and Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd,[7] which the Deputy President took to stand for the proposition that proceedings for a pecuniary penalty under the (now repealed) Building and Construction Industry Improvement Act 2005, the Fair Work (Building Industry) Act 2012 (also now repealed), Building and Construction Industry (Improving Productivity) Act 2016 (BCIIP Act) and the FW Act were civil proceedings.[8] The Deputy President gave consideration to a submission advanced by the appellants that there was no simple dichotomy between civil and criminal proceedings, that the classification of proceedings as civil, criminal or otherwise depended on the purpose of the classification and the statutory context, and that in a given case a proceeding may be regarded as "civil" for some purposes and not "civil" for other purposes.[9] In response to this submission, the Deputy President stated the following conclusions:
• The statements in Commonwealth v FWBII concerning the civil nature of proceedings for a civil penalty under the BCII Act were made at a level of generality, and were equally applicable to civil penalty provisions under other Commonwealth statutes.[10]
• That a proceeding might be characterised as for the "good of the public" and a "civil or mixed matter" does not mean that it ceases to be a civil proceeding for that reason alone.[11]
• The High Court judgment in CEO of Customs v Labrador Liquor Wholesale Pty Ltd,[12] relied upon by the appellants at the hearing before him, was concerned only with the standard of proof in proceedings under certain Commonwealth statutes. That a proceeding might have both civil and criminal characteristics did not in and of itself result it in ceasing to be a civil proceeding.[13]
• Labrador was considered in Commonwealth v FWBII, and while it was accepted that the distinction between civil and criminal cases did not hold for all purposes, it was nonetheless sufficiently stable to serve the purposes for which it was drawn.[14]
• The observations in Australian Building and Construction Commissioner v Hall[15] and BHP Coal Pty Ltd v CFMEU[16] (upon which the appellants relied below) that the civil remedy provisions in the FW Act were to be regarded as "quasi-criminal" were made in the context of which party bore the onus of proof or what was the standard of proof. Neither decision supported the proposition that such proceedings ceased to be or were taken outside the description "civil proceedings".[17]
• The reference in some authorities to civil penalty proceedings being "quasi-criminal" in nature does not stand for the proposition that there is a third "quasi-criminal" category standing somewhere in between civil and criminal proceedings.[18]
• None of the authorities relied upon by the appellants below were as recent, authoritative and subject-matter relevant as Commonwealth v FWBII and Quest South Perth Holdings;[19]
• The definition of "proceeding" in s 6 of the RO Act (which referred to proceedings in a court or a tribunal, "whether the proceeding, hearing or examination is of a civil, administrative, criminal, disciplinary or other nature") did not apply for all purposes in the RO Act. The word "proceedings" used in s 73(2)(c) referred to proceedings in a court, given the nature of the proceedings described, and of the categories of proceedings referred to in s 6 could only be categorised as "civil" or "criminal".[20]
[10] The Deputy President next dealt with the submission advanced by the unions that there was no apparent reason to construe s 73(2)(c) as applying to civil penalty proceedings because s 74 of the RO Act transferred the liabilities of an organisation de-registered as at amalgamation day to the amalgamated organisation and s 79 made the amalgamated organisation a party to pending proceedings in substitution for a de-registered organisation. The Deputy President accepted this submission, but noted that s 79 also had potential application to criminal proceedings, and that s 79 only applied to proceedings involving a de-registered organisation, whereas s 73(2)(c) applied to relevant proceedings pending against any organisation involved in the amalgamation. On this basis, it was considered that ss 74 and 79 only provided "equivocal contextual assistance".[21]
[11] It was noted by the Deputy President that the task in s 73(2)(c) was required to be undertaken at the end of the amalgamation process, which did not suggest that it had the purpose of punishing an organisation for its previous behaviour. However he did not accept the unions' submission that this suggested s 73(2)(c) was designed to deal with proceedings not transferable to the amalgamated entity, since one of the amalgamating organisations would not be de-registered but would become the amalgamated entity.[22] The Deputy President went on to reject the submission that the provision established a "normative" regime, saying:
"[108] ... it seems to me a very odd approach to establishing a "normative" regime for the Parliament to have intended to prevent the fixing of an amalgamation date because of pending proceedings against an organisation, but no account need be taken of actual concluded proceedings in respect of which an organisation has been found to have contravene[d] one or more relevant laws. A 'normative' purpose would, it seems to me, not allow the fixing of an amalgamation date, in the event of both pending and concluded proceedings, at least if the quantum of concluded proceedings showed a pattern of disregard for established industrial or workplace law. In the instant case, assume the existence of pending criminal proceedings against the CFMEU. This would, today, prevent the fixing of an amalgamation day. But if tomorrow those proceedings were to be concluded, an amalgamation date could be fixed assuming satisfaction as to the other matters. This would be so whether the CFMEU was convicted of the offence charged or not. Such a legislative scheme is wholly inconsistent with a 'normative' purpose for which the Objectors contend. In addition were criminal proceedings to be commenced on the day after an amalgamation date is fixed under s.73 there does not appear to be any bar on the amalgamation proceeding on the day fixed. This also tells against a 'normative' purpose."
[12] The Deputy President concluded that the context of the RO Act and the judicial consideration of civil penalty proceedings supported the conclusion that the reference to "civil proceedings" in s 73(2)(c) included civil penalty proceedings.[23] The consideration next turned to the context provided by industrial relations legislation generally, and from an analysis of relevant provisions of the FW Act the Deputy President concluded that the FW Act maintained a distinction between civil and criminal proceedings, with civil penalty proceedings falling within the former category.[24] The Deputy President came to a similar conclusion with respect to the RO Act[25] and the BCIIP Act.[26]
[13] The legislative history of s 73(2)(c) of the RO Act and its equivalents in preceding statutes was then analysed in considerable detail. The originating provision was identified in the Decision to be s 158Q(2)(a) of the Conciliation and Arbitration Act 1904 and was characterised by the Deputy President as capturing both civil and criminal proceedings. The Deputy President, by reference to the Federal Court Full Court decision in Gapes v Commercial Bank of Australia Ltd[27] and s 122 of the Conciliation and Arbitration Act, said that at this time a breach of the Act attracted criminal liability but a breach of an award did not.[28] Section 158Q(2)(b) and (c) also did not permit the fixation by the Registrar of a date for an amalgamation to take effect unless there was no penalty under the Act or regulations that remained unpaid and the Registrar was satisfied as to the arrangements for the property of a de-registering organisation to become the property of the amalgamated organisation and the liabilities of the de-registering organisation to be satisfied by the amalgamated organisation. Section 158Q(2)(a) was replaced in the succeeding Industrial Relations Act 1988 by s 249(2)(c), which likewise did not initially exclude civil proceedings. Section 249(2)(d) and (e) were the equivalents of the previous s 158Q(2)(b) and (c).[29]
[14] The existing amalgamation scheme in the Industrial Relations Act was repealed and replaced by the Industrial Relations Legislation Amendment Act 1990.[30] The equivalent new provision was s 253Q(2)(c), which replicated the previous s 249(2)(c) except that it introduced the exception "(other than civil proceedings)" found in the current provision. The Explanatory Memorandum to the Industrial Relations Legislation Amendment Bill 1990 said in relation to this provision that "Before fixing the amalgamation day, the Presidential Member had to be satisfied that ... there are no unresolved criminal proceedings against any organisation concerned in the amalgamation".[31] The Deputy President said in relation to this:
"[152] I consider that this suggests that the intended effect of s.253Q(2)(c) by including the exclusionary phrase 'other than civil proceedings' was that the provision was confined to pending proceedings against any organisation concerned in the amalgamation that were criminal proceedings related relevantly to contraventions of the Act and breaches of awards or orders and that civil penalty proceedings were included as a species of 'civil proceeding'."
[15] The former s 249(2)(d) and (e) were repealed and replaced by a different provision, s 253R, which provision had the effect that on the amalgamation day, all assets and liabilities of a de-registered organisation would become assets and liabilities of the amalgamated organisation, and this would be taken to be the case "For all purposes and in all proceedings...". The Deputy President observed that s 253R was in identical terms to s 74 of the RO Act. The new scheme also introduced s 253V, which substituted the amalgamated organisation for each de-registered organisation in any relevant proceedings in a court or before the Commission, and was in terms which the Deputy President described as "very similar" to s 79 of the RO Act.[32]
[16] The Workplace Relations and Other Legislation Amendment Act 1996 and the Workplace Relations Amendment (Registration and Accountability of Organisations) Act 2002 did not effect any relevant change of substance to the provisions. The latter amending Act moved the amalgamation provisions into Schedule 1B of the Workplace Relations Act 1996 (as the former amending Act had renamed the Industrial Relations Act), so that the previous s 253Q(2) became s 73(2) of Schedule 1B. As set out in the Decision, the Explanatory Memorandum for the Workplace Relations (Registration and Accountability of Organisations) Bill 2002 explained in relation to s 73(2) that (relevantly) "...before fixing the amalgamation day, the Commission must be satisfied that ... there are no unresolved criminal proceedings against any organisation concerned in the amalgamation...".[33]
[17] The next step in the history was that the Workplace Relations Amendment (Work Choices) Act 2005 made s 73(2), and the other provisions of the amalgamation regime, part of Schedule 1 of the Workplace Relations Act. The Deputy President observed that there were a number of provisions in the Workplace Relations Act to which attached criminal liability for contravention, including provision in what was Schedule 1B and became Schedule 1.[34]
[18] The next event was that the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 repealed the Workplace Relations Act except for Schedule 1, which became the RO Act. Finally, the Fair Work (Registered Organisations) Amendment Act 2016 added the definition of "proceeding" to s 6 of the RO Act. The Explanatory Memorandum for the Fair Work (Registered Organisations) Amendment Bill 2014 explained that the amendments included "definitions for new terms used in the Bill", and made specific reference to the new definition of "proceeding" in this respect.[35] The Deputy President concluded:
"[172] I accept that there is nothing elsewhere in the RO Amendment Act or Explanatory Memorandum to suggest that there was any legislative intention to amend, by this indirect route, the meaning and effect which s.73(2)(c) had prior to the inclusion of the definition. Indeed, the Explanatory Memorandum suggests that the relevant definitions which are to be included, are to be introduced "for new terms used in the Bill". The word "proceeding" is used on at least 60 occasions in the RO Amendment Act provisions which are now included in the RO Act, not counting its use in the definition itself. I also accept that there is no evident purpose disclosed that the new definition was intended to derogate that which appears to be a clear distinction that is drawn between civil and criminal proceedings under the RO Act as seems evident from the earlier analysis."
[19] The Deputy President also said that he did not consider that the recently included definition of "proceeding" should be applied in a way which set aside the "established, understood, and historically consistent dichotomy between criminal and civil proceedings", and he referred to provisions in the RO Act such as s 337AD which appeared to continue the established dichotomy.[36]
[20] The Deputy President's overall conclusions concerning the legislative history focused on the amendments to the Industrial Relations Act brought about by the Industrial Relations Legislation Amendment Act 1991. In this respect he said:
"[178] It appears to me based on the review of the legislative history of the provision, that purpose of the amendments to the IR Act made by the IR Amendment Act through the addition of the phrase "other than civil proceedings" was to make clear that the section was concerned only with pending criminal proceedings against organisations participating in the amalgamation that related to, relevantly, contraventions of the Act, its predecessor, other Commonwealth laws and breaches of awards or relevant orders."
[21] The Deputy President also concluded:
"[181] The various passages from explanatory memoranda as extrinsic material to which I have referred in this decision provide that requisite satisfaction is as to the absence of any unresolved "criminal proceedings" before fixing the amalgamation date. The passages support a conclusion that Parliament intended the reference to "other than civil proceedings" to include civil penalty proceedings as they are not criminal proceedings. The extrinsic materials also suggest that the amendments, or at least some of them, to the IR Act made by the IR Amendment Act were directed at encouraging and facilitating union amalgamations by avoiding or minimising impediments to amalgamation. Limiting the kinds of proceedings which would prevent the Commission from fixing an amalgamation date may be regarded as consistent with such encouragement or facilitation.
[182] There is nothing in the material which would suggest that successive Parliaments in amending, repealing and re-enacting provisions which since at least 1991 have been to the same effect, intended a different outcome or that the evident purpose of the provisions had altered.
[183] Discerning a legislative intent or purpose of a provision also requires that attention be given to the entirety of the amalgamation scheme introduced by the IR Amendment Act and the way in which each of the discrete provisions operate harmoniously to comprise the amalgamation scheme. When the words "other than civil proceedings" were introduced, the requirements (which had been in ss. 249(2) (d) and (e) of the IR Act) that the amalgamation scheme had made arrangements for assets and liabilities of the deregistering organisation to become the assets and liabilities of the amalgamated organisation and that there were no penalties imposed on the deregistering organisation remaining unpaid were removed.
[184] Sections 253R of the IR Act (now s.74 of the RO Act) and s.253V (now s.79 of the RO Act) were introduced. The enactment of ss. 253R and 253Q together with the removal of the pre-conditions that had been in ss. 249(2) (d) and (e) suggests that the legislature's purpose was that there was no longer a need to impede organisation amalgamations because of outstanding civil proceedings as any civil liabilities would now transfer to the amalgamated organisation by operation of the statute.
[185] I therefore consider that the legislature history, as context, also supports a conclusion that "civil proceedings" in s.73(2)(c) of the RO Act, includes "civil penalty proceedings". It also supports a conclusion that "proceedings" where first appearing in s.73(2)(c) is confined to "criminal proceedings"."
[22] The Deputy President next addressed a submission advanced by the appellants below that an interpretation of s 73(2)(c) which confined its operation to criminal proceedings would mean that ss 73(2)(c)(ii) and (iii) would have no practical operation since there were no criminal offences attaching to breaches of modern awards, enterprise agreements or orders made under the FW Act. The Deputy President considered that there were two answers to this contention. The first was that the proceedings to which s 73(2)(c) applied only had to be "in relation to" the identified matters in (i)-(iii), so that impugned conduct need not itself be a breach of the relevant laws and instruments, but may merely derive from or encourage such a breach. The second was that even if civil penalty provisions were treated as being included in s 73(2)(c), ss 73(2)(c)(ii) and (iii) would still be left with little or no work to do, because breaches of awards and enterprise agreements were only unlawful if they contravened ss 45 and 50 of the FW Act itself and thus were covered by s 73(2)(c)(i). A similar analysis was applicable to orders under the FW Act and the RO Act.[37] The Deputy President also concluded that even if there was a lack of continuing practical utility in confining the operation of s 73(2) to criminal proceedings, that was not reason enough to read into the provision a meaning which was against the weight of judicial authority as to the nature of civil penalty proceedings, the text read in the context of the statute as a whole and the other contextual considerations, and to ignore the entire legislative history.[38]
[23] The ultimate conclusion on the issue by the Deputy President was as follows:
"[198] In light of the above I consider that the ordinary meaning of the words "civil proceedings" in s.73(2) of the RO Act taking into account the purpose or objects of the legislature as disclosed by the text of the statute, and the context of the statute as a whole in which they appear, include "civil penalty proceedings". This conclusion is also consistent with High Court authority which, as early stated, appears to have settled that such proceedings are civil proceedings. The extrinsic material to which I have referred and given consideration confirms that meaning. To conclude otherwise would require reading into the text words that are not there. Consequently, in my respectful opinion, the scope of inquiry required by s.73(2)(c) is likely to be confined to criminal proceedings of the described kind that are pending against an organisation participating in the amalgamation. However to resolve the issue before me I need not go further than to conclude as I do that "civil proceedings" in s.73(2)(c) includes civil penalty proceedings."
[24] The Deputy President separately dealt with, and rejected, a contention that pending contempt proceedings against the MUA in the Supreme Court of Victoria were covered by s 73(2)(c). As there is no challenge to the conclusions stated in the Decision in this respect, it is not necessary to deal with that matter further.
[25] The appellants submitted that a construction of s 73(2)(c) by which it applied both to pending criminal and civil penalty proceedings, so that the latter category of proceedings was not treated as falling within the exclusion, was made good by the following propositions:
(1) Sections 73(2)(c)(ii) and (iii) had no practical work to do on the construction preferred by the Deputy President. Breaches of modern awards, enterprise agreements and orders made under the RO Act cannot be the subject of a criminal proceeding. The attempt by the Deputy President to find some practical utility for ss 73(2)(c)(i) and (ii) was strained and unlikely. The text of the provision did not refer to "criminal proceedings" but rather the "proceedings (other than civil proceedings)", it was an error to conflate the two, and the Deputy President did not explain why the latter more complex expression had been used instead for the former simpler expression.
(2) It was not workable for the provision to be interpreted as a binary construct of "criminal proceedings" and "not criminal proceedings".
(3) The purpose of s 73(2)(c) was normative, not remedial, in that it was directed at ensuring certain important industrial standards were met before organisations could amalgamate. Its purpose is to promote the standards required of registered organisations in respect to the matters listed in ss 73(2)(c)(i)-(iii). This purpose best achieved the statement of Parliament's intention in s 5, and furthered the purpose of the penalty provisions in the RO Act and the FW Act because it maintained an incentive for organisations to comply with the standards prescribed by those provisions. Section 79 provides that the amalgamated entity will remain a party to all pending proceedings, which are not classified, indicating that the purpose of s 73(2)(c) was normative and not remedial.
(4) If the purpose is normative, civil penalties have a strong normative function. The Deputy President erred in concluding that a normative approach would not allow the fixing of an amalgamation date for both pending and concluded proceedings.
(5) It was overly simplistic to bifurcate the term "proceedings" between "criminal proceedings" and all other proceedings under the banner of "civil proceedings". Whether "civil proceedings" includes "civil penalty proceedings" depends, primarily, on the text appearing in context and for the purpose of a particular provision. Proceedings for a pecuniary penalty are also for a public purpose, but are not treated as criminal proceedings for the purpose of the Barbaro principle, and breach of a pecuniary penalty provision is not regarded as a criminal offence. However in other contexts they have been treated as "quasi-criminal" in nature, which distinguishes them from "purely" civil proceedings which have no quasi-criminal or protective purpose and are simply inter partes litigation for the vindication of a private right. "Civil proceedings" was a broad and protean phrase which may be given a broader or narrower meaning depending on context.
(6) The caution against a simplistic binary classification is demonstrated by the cases which demonstrate that sometimes a civil penalty proceeding will be treated as a civil proceeding for a particular purpose and sometimes it will not.
(7) The definition of "Proceedings" in s 6 of the RO Act supported the appellants' construction, as did the specific regime for civil penalty provision in Ch 10. In respect of Ch 10, ss 315 and 316 in particular exhibited a distinction between "proceedings for a contravention of a civil penalty provision" (s 315) and purely "civil proceedings" (s 316), and ss 305 and 306 treated proceedings for a pecuniary penalty as if they were a "civil matter" or "civil proceeding". They were inconsistent with a binary construction for s 73(2)(c).
(8) The legislative history was consistent with the appellants' construction. Reg 138(d) of the Regulations made pursuant to the Conciliation and Arbitration Act 1904 provided that a request for the cancellation of the registration of an organisation could only be made where there were no proceedings pending against the organisation for a breach of the Act, the regulations, or another law of the Commonwealth or in respect of a breach of an award or order, and no penalty for breach of such left unpaid. The Deputy President placed undue weight on the Explanatory Memorandum referring to "criminal proceedings". This was not an exhaustive statement, simply a gloss on the provision, did not address penalty proceedings and was not a substitute for the statutory text.
[26] The appellants submitted that permission to appeal should be granted because the proposed amalgamation was of national significance; the proper construction of s 73(2)(c) of the RO Act had not yet been tested by a Full Bench or a Court; the Commission at first instance had exceeded its jurisdiction; and substantial injustice would arise if permission was not granted because the proposed amalgamated entity would be very large with coverage across a number of industries of significance to the national economy, there were dozens of pending proceedings against the CFMEU and the MUA seeking pecuniary penalties for breaches of the FW Act and other laws, and the CFMEU's record of non-compliance with the FW Act and other Commonwealth laws was deplorable.
[27] The CFMMEU contended that the appeal was incompetent because the appellants were not persons aggrieved within the meaning of s 604 of the FW Act and were not parties to the proceedings before the Deputy President. In this respect it submitted that:
the appellants could not demonstrate a grievance arising from the Decision over and above that of an ordinary member of the public;
the amalgamation did not effect any change other than how the CFMEU, the MUA and the TCFUA were organisationally structured, and the appellants were outsiders to this;
the appellants' legal rights were not affected, nor were their interests prejudicially affected;
the appellants were merely invited to make submissions on the s 73(2)(c) point before the Deputy President, but had never been parties to the proceedings such as to give them standing to appeal.
[28] In response to the eight propositions advanced by the appellants in support of their preferred construction of s 73(2)(c), the CFMMEU submitted the following (using corresponding numbering):
(1) The appellants had not engaged with the Deputy President's reasoning at paragraphs [197]-[198] of the Decision. Alternatively ss 173(2)(c)(i) and (ii) could be "read out" of the provision on the basis that they were included inadvertently. The task of the Deputy President was to construe the words appearing in the provision, not to speculate why the provision did not contain an explicit reference to "criminal proceedings"; one could also query why the provision did not refer to "quasi-criminal proceedings" or "civil penalty proceedings".
(2) To the extent that the appellants' second proposition was based on a contextual argument, its premise was wrong. Sections 315 and 316 do not draw a distinction between proceedings for a civil penalty and "purely" civil proceedings; s 315 concerns civil penalty proceedings that are actionable in a certain way, but this does not derogate from the fact that civil penalty proceedings are within the category of civil proceedings. Nor does s 306(2) demonstrate that civil penalty proceedings are not civil proceedings for all purposes, but only that such a penalty may be recovered as a debt in a civil proceeding.
(3) The appellants had not engaged with the Deputy President's reasoning rejecting the proposition that s 73(2)(c) has a normative purpose. The proposition has neither a normative nor a remedial purpose; it is a transitional provision facilitative of the amalgamation process. It has no relationship to historical bad behaviour by an organisation, and has nothing to do with s 5(2).
(4) The purpose of imposing civil penalties is of no consequence in construing s 73(2)(c).
(5) The Deputy President took into account the text and context of s 73(2)(c), and no error had been identified in the process in which this was done.
(6) The Deputy President dealt with the cases that concerned the characterisation of civil penalty proceedings which were referred to by the appellants, and rejected the contentions based on those cases advanced by the appellants below. The Deputy President's reasoning concerning these decisions was persuasive and correct, and the appellants had not engaged with that reasoning.
(7) The Deputy President in the Decision rejected the appellants' submission based on s 6 of the RO Act, and the appellants had failed to address the Deputy President's reasoning in that respect.
(8) The appellants had not demonstrated why the Deputy President's reliance on an explanatory memorandum was unsound or how undue weight was placed on a statement within it. In paragraph [198] the Deputy President explained that the extrinsic material to which he referred confirmed the meaning he had assigned to the provision, and this course was consistent with s 15AA of the Acts Interpretation Act 1901. The appellants' reliance on reg 138D(d) of the Regulations made under the Conciliation and Arbitration Act looked at one development in isolation and failed to take into account what has occurred in the following 60 years since the regulation was made in 1958. In any event it was concerned only with unpaid penalties, at a time when there was no equivalent to the current s 74 of the RO Act.
[29] The CFMMEU submitted that permission to appeal should be refused because whether the amalgamation was of national significance was irrelevant, there being no public interest test in the statutory scheme for amalgamations; the novelty of the issue raised was not by itself sufficient; there was no sufficient doubt to warrant reconsideration and the grounds of appeal were extremely weak; and there would be no substantial injustice if permission was refused.
[30] We reject the submission advanced by the CFMMEU that the appeal is not competent. Section 604 of the FW Act confers standing to appeal a decision of the Commission (subject to the grant of permission to appeal) upon a "person who is aggrieved" by that decision. Previous decisions have assigned a broad meaning to the "person aggrieved" formulation: it encompasses any person with an interest in the decision beyond that of an ordinary member of the public and is not confined to persons whose legal interests are affected by the decision.[39] We consider that the appellants are persons aggrieved by the Decision for two reasons. First, they and their members have had extensive dealings for industrial relation purposes with at least the MUA and the CFMEU in the past, and will have such dealings with the CFMMEU in the future, and therefore have a legitimate interest in the question of whether the CFMMEU as an amalgamated organisation has been constituted in accordance with the RO Act. Second, the appellants made submissions in relation to the s 73(2)(c) issue in the proceedings below in response to an invitation by the Deputy President, and those submissions were then rejected in the Decision. In those circumstances they may be characterised as aggrieved by the decision. Whether they were "parties" to the proceedings before the Deputy President is of little or no significance, since the concept of "parties" is of limited relevance in non-inter partes proceedings and finds no express recognition in the FW Act or the RO Act.[40]
[31] We have determined that permission to appeal should be granted. The appeal involves a novel question concerning the construction of s 73(2)(c) of the RO Act which is likely to arise again in any future amalgamation proceedings. That question affects the validity of the amalgamation process for the CFMMEU, which is an organisation which, because of its size and coverage, is of significance to Australian industrial relations.
[32] We consider that the conclusion reached by the Deputy President concerning the interpretation and application of s 73(2)(c) was correct, and with one reservation discussed later in this decision, we agree with the Deputy President's reasons for that conclusion set out in the Decision. We do not consider it necessary to engage in a complete re-analysis of the issue, given the detailed reasoning contained in the Decision which we have earlier attempted to summarise. However in deference to the submissions advanced by the appellants we will deal with what we consider to be the major matters raised by those submissions, even though in doing so our reasoning will largely be the same as that of the Deputy President.
[33] The proper application of s 73(2)(c) requires a determination to be made as to whether any pending proceedings against any of the existing organisations proposing to amalgamate are "civil proceedings" and thereby fall within the provision's exclusion. This requires a general categorisation of the nature of the proceedings in question, not an examination of whether in relation to any particular aspect of the proceedings such as the onus or standard of proof some rule or principle derived from or reflective of the criminal law is to be applied. The proceedings against the CFMEU and the MUA that were pending at the time the Decision was issued were all court proceedings for the imposition of civil penalties (leaving aside the contempt proceedings against the MUA in the Victorian Supreme Court which were not the subject of the appeal). The High Court in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate[41] authoritatively stated that proceedings for the institution of a civil penalty under Commonwealth legislation are civil proceedings. The plurality (French CJ, Kiefel, Bell, Nettle and Gordon JJ) stated:
"[24] In essence, civil penalty provisions are included as part of a statutory regime involving a specialist industry or activity regulator or a department or Minister of State of the Commonwealth ("the regulator") with the statutory function of securing compliance with provisions of the regime that have the statutory purpose of protecting or advancing particular aspects of the public interest. Typically, the legislation provides for a range of enforcement mechanisms, including injunctions, compensation orders, disqualification orders and civil penalties, with or, as in the BCII Act, without criminal offences. That necessitates the regulator choosing the enforcement mechanism or mechanisms which the regulator considers to be most conducive to securing compliance with the regulatory regime. In turn, that requires the regulator to balance the competing considerations of compensation, prevention and deterrence. And, finally, it requires the regulator, having made those choices, to pursue the chosen option or options as a civil litigant in civil proceedings."
[34] The plurality went on to state that, as in other civil proceedings, there was no reason why in civil penalty proceedings a court could not receive agreed submission as to the relief to be granted:
"[53] Civil penalty proceedings are civil proceedings and therefore an adversarial contest in which the issues and scope of possible relief are largely framed and limited as the parties may choose, the standard of proof is upon the balance of probabilities and the respondent is denied most of the procedural protections of an accused in criminal proceedings.
[57] ...in civil proceedings there is generally very considerable scope for the parties to agree on the facts and upon consequences. There is also very considerable scope for them to agree upon the appropriate remedy and for the court to be persuaded that it is an appropriate remedy. Accordingly, settlements of civil proceedings are commonplace and orders by consent for the payment of damages and other relief are unremarkable. So are court-approved compromises of proceedings on behalf of infants and persons otherwise lacking capacity, court-approved custody and property settlements, court-approved compromises in group proceedings and court-approved schemes of arrangement. More generally, it is entirely consistent with the nature of civil proceedings for a court to make orders by consent and to approve a compromise of proceedings on terms proposed by the parties, provided the court is persuaded that what is proposed is appropriate.
[58] Possibly, there are exceptions to the general rule. There is, however, no reason in principle or practice why civil penalty proceedings should be treated as an exception. Subject to the court being sufficiently persuaded of the accuracy of the parties' agreement as to facts and consequences, and that the penalty which the parties propose is an appropriate remedy in the circumstances thus revealed, it is consistent with principle and, for the reasons identified in Allied Mills, highly desirable in practice for the court to accept the parties' proposal and therefore impose the proposed penalty. To do so is no different in principle or practice from approving an infant's compromise, a custody or property compromise, a group proceeding settlement or a scheme of arrangement.
[59] It is true that there is a public interest in the imposition of civil penalties as opposed to the purely private interests which are in issue in many civil proceedings. But civil penalty proceedings are by no means the only civil proceedings in which the public interest is involved. Custody disputes involve the public interest. So do group proceedings and schemes of arrangement. So also do taxation, customs and social security appeals, and detention orders; and examples can be multiplied. Yet in each of those cases, it is wholly unexceptionable for a court to accept an agreed submission as to the nature and quantum of relief, provided the court is persuaded that it is an appropriate remedy. Once it is understood that civil penalties are not retributive, but like most other civil remedies essentially deterrent or compensatory and therefore protective, there is nothing odd or exceptionable about a court approving an agreed settlement of a civil proceeding which involves the public interest; provided of course that the court is persuaded that the settlement is appropriate." (footnotes omitted)
[35] The position that proceedings for a civil remedy in the form of a pecuniary penalty under the FW Act were civil proceedings was also clearly stated by the High Court in Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd.[42]
[36] The appellants' reference to decisions in which civil penalty proceedings have been described as "quasi-criminal" does not assist their case. That appellation only serves to confirm that they are not criminal but rather civil proceedings, and that they do not fall into some intermediate category of proceedings. In the Federal Court judgments of Flick J in Australian Building and Construction Commissioner v Hall[43] and of Collier J in BHP Coal Pty Ltd v CFMEU,[44] which both related to proceedings for contravention of civil remedy provisions of the FW Act and which both characterised such proceedings as "quasi-criminal" in nature, it is notable that the Court treated s 140 of the Evidence Act 1995 as applicable. Section 140 establishes the standard of proof for a "civil proceeding". That expression is defined in the Dictionary to the Act as meaning "a proceeding other than a criminal proceeding", and clearly includes civil penalty provisions.
[37] The High Court decisions to which we have referred in our view leave no room for the conclusion that the pending proceedings are to be categorised other than as "civil proceedings", as that expression is ordinarily understood. For the appellants to succeed, it would be necessary for them to demonstrate that this expression when used in the exclusion in s 73(2)(c) is to be assigned a special meaning by reason of its statutory context. In that connection, as earlier outlined, the appellants submitted that the context of the RO Act dictated that the expression "civil proceedings" in s 73(2)(c) was to be assigned a meaning which excluded civil penalty proceedings. However that submission rested primarily on four propositions that we consider to be unsustainable.
[38] The first of these was that s 73(2)(c) serves a normative purpose - that is, that it was intended to ensure that important industrial standards, notably compliance with Commonwealth industrial relations law, were met in order for organisations to be able to amalgamate. This was said to be consistent with the intention of the Parliament in enacting the RO Act as stated in s 5. However, it is readily apparent that s 73(2)(c) sets no standard at all in this respect, however one interprets it. The pendency of a proceeding against an organisation says nothing by itself about that organisation's propensity to comply with the legislative regulatory regimes which apply to it. Even if s 73(2)(c) was interpreted to apply to civil penalty proceedings, it would not bar an organisation which has an extensive record of contraventions leading to the imposition of civil penalties (such as the CFMEU) from consummating an amalgamation if there did not happen to be, at the time the Commission came to consider the fixation of an amalgamation day, any civil penalty proceedings pending against it. Conversely, an organisation which had never had any civil penalty imposed upon it would, on the appellants' approach, be barred from having an amalgamation day fixed merely because there was a proceeding for a civil penalty pending against it and regardless of the prospects of success of such a proceeding. This would be an absurd outcome if s 73(2)(c) had the purpose sought to be ascribed to it by the appellants. In addition, the following matters also tell against the normative purpose relied upon by the appellants:
(1) As the Deputy President observed in paragraph [108] of the Decision, if a pending proceeding against an organisation for the purpose of s 73(2)(c) is later determined, there would not seem to be any bar to the Commission then fixing an amalgamation day. That would be so even if the proceeding was a criminal one and resulted in the conviction of the organisation. In the circumstances, it is impossible to assign to the provision the purpose of establishing any standard of conduct as a condition precedent to an amalgamation.
(2) It is improbable that if the legislature wanted to establish a standard of conduct as a precondition to amalgamation, it would have done so at the penultimate stage of the process, rather than at the outset or at least prior to the submission of the proposed amalgamation to a ballot, as the Deputy President observed in paragraphs [51] and [108] of the Decision.
(3) Any logical connection between the progression of an amalgamation process and the enforcement of standards of industrial conduct is obscure. It is not clear why a barrier to the fixation of an amalgamation day, which could only be temporary while a proceeding remained pending, would operate as any form of sanction against an organisation for its conduct, particularly as the sanction would operate equally against an amalgamation partner which did not have any proceedings pending against it. As the Deputy President pointed out in paragraph [35], an application for the cancellation of an organisation's registration under s 28 is the recourse provided by the RO Act where it is considered that an organisation has an unacceptable history of contravening conduct.
[39] The second proposition relied upon by the appellants was that the definition of "proceeding" in s 6 of the RO Act, which states that it means any proceeding in a court or a proceeding, hearing or examination before a tribunal "whether the proceeding, hearing or examination is of a civil, administrative, criminal, disciplinary or other nature", indicated that there was no strict dichotomy in the RO Act between civil and criminal proceedings. However, as pointed out by the Deputy President in paragraph [95] of the Decision, the nature of the proceedings referred to in s 73(2)(c) are court proceedings, which cannot aptly be labelled as "administrative" or "disciplinary". Thus the position remains that s 73(2)(c) includes criminal proceedings and excludes civil proceedings. An alternative analysis is that the labels "administrative" and "disciplinary" cannot aptly be attached to civil penalty proceedings, so that even if the exclusion "other than civil proceedings" in s 73(2)(c) means that the provision applies to criminal, administrative and disciplinary proceedings, that does not mean that it applies to civil penalty proceedings. In any event, as explained by the Deputy President in paragraph [170]-[172] of the Decision, the current definition of "proceeding" in s 6 was only introduced into the RO Act by the Fair Work (Registered Organisations) Amendment Act 2016 and there is nothing to suggest that the Parliament intended to widen the application of the pre-existing s 73(2)(c) by the indirect means of introducing this definition, in circumstances where there was no amendment to the terms of s 73(2)(c) itself.
[40] Third, the appellants contended that ss 315 and 316 demonstrated that the RO Act drew a distinction between civil penalty provisions and other "purely" civil proceedings. This is incorrect. Chapter 10 of the RO Act, in which ss 315 and 316 are located, is specifically concerned with civil penalties. The provisions in the chapter directly support the proposition that proceedings for a civil penalty under the RO Act are treated as civil proceedings. In particular, s 305(2) defines a civil penalty provision as one which (relevantly) prescribes a penalty amount and designates it as a "Civil penalty", which must by itself be taken as an expression of legislative intention that the proceedings for such a penalty are civil in nature.[45] Section 305(4) provides: "The Federal Court must apply the rules of evidence and procedure for civil matters when hearing and determining an application for an order under this Part", and s 306(2) provides that a pecuniary penalty imposed for contravention of a civil penalty provision is payable and recoverable as a civil debt payable to the Commonwealth. These provisions confirm the wholly civil nature of civil penalty proceedings. Section 315 provides for relief from liability for contravention of civil penalty provisions in "eligible proceedings" in certain circumstances, with "eligible proceedings" being defined in s 315(1) as meaning proceedings for a contravention of a civil penalty provision and as not including proceedings for an offence. Section 316(1) allows for relief from liability in certain circumstances if "civil proceedings are brought against an officer of an organisation for negligence, default, breach of trust or breach of duty in a capacity as such an officer". These provisions cannot be read as distinguishing between civil remedy proceedings and other civil proceedings; rather they provide for relief from liability in respect of two different types of proceedings, both civil, which are relevant to registered organisations.
[41] Fourth, the appellants contended that an interpretation of s 73(2)(c) that excluded civil penalty proceedings from its operation would leave sub-paragraphs (ii) and (iii) with little or no work to do, and could not for that reason be correct. This contention was founded on the proposition that there are no criminal offences established by the RO Act, the FW Act or any other Commonwealth statute for breaches of modern awards, enterprise agreements or orders made under the FW Act. That proposition may be accepted as correct. The Deputy President identified a residual field of operation for ss 72(2)(c)(ii) and (iii) in paragraphs [187] and [189] of the Decision, but with respect we consider this to be unpersuasive and unlikely to have been intended by the legislature. The real difficulty with the appellants' submission in this respect is the inclusion of civil remedy proceedings as proceedings to which s 73(2)(c) applies would not solve the difficulty identified by the appellants concerning sub-paragraphs (ii) and (iii) because, as explained by the Deputy President in paragraph [196] of the Decision, breaches of a modern award, enterprise agreement or order under the FW Act are actionable only as contraventions of particular provisions of the FW Act and thus are entirely dealt with by sub-paragraph (i). On any view of the scope of the exclusion in s 73(2)(c), sub-paragraphs (ii) and (iii) appear to be substantially redundant. However we consider this to be the result of a failure to properly adapt the provision to changes to the enforcement mechanisms in the various federal industrial relations statutes over the last thirty years.
[42] For the above reasons, we consider that the expression "civil proceedings" in s 73(2)(c) bears its ordinary meaning and includes civil penalty provisions. In accordance with s 15AB(1)(a) of the Acts Interpretation Act 1901, resort may be had to the legislative history as extrinsic material to confirm that ordinary meaning. The relevant legislative history is set out in the Decision at length, and the Deputy President's analysis in that respect has earlier been summarised by us. We consider that the critical event in that history was the enactment of the Industrial Relations Legislation Amendment Act 1990. As we have set out in paragraph [14] above, this amending legislation replaced s 249(2)(c) of the Industrial Relations Act 1988, which had been the earlier equivalent to the current s 73(2)(c) of the RO Act, with s 253Q(2)(a), which included the exemption "other than civil proceedings" for the first time. The applicable Explanatory Memorandum, the relevant part of which we have earlier quoted, makes it absolutely clear that it was intended that s 253Q(2)(c) only apply to "unresolved criminal proceedings against any organisation concerned in the amalgamation". This confirms what we have identified as the ordinary meaning of "civil proceedings" in the provision - that is, all proceedings other than criminal proceedings. The same intention was stated in the Explanatory Memorandum relevant to the Workplace Relations Amendment (Registration and Accountability of Organisations) Act 2002.
[43] The introduction of the "other than civil proceedings" exclusion in s 253Q(2)(c) is likely to have been associated with the enactment of ss 253R and 253V - the then equivalents of the current ss 74 and 79 respectively - effected by the passage of the Industrial Relations Legislation Amendment Act 1990. These provisions, taken together, appear to amount to a scheme which prohibited the fixation of an amalgamation day until any pending criminal proceedings were determined, but dealt with civil proceedings to which a de-registered organisation was a party by substituting the amalgamation organisation for the de-registered organisation in proceedings, with the assets and liabilities of the de-registered organisation transferring to the amalgamated organisation at the same time. However although this is the most likely explanation of the purpose of the 1991 amendments, it is not essential for the conclusion to be reached that s 253Q(2)(c), and subsequently s 73(2)(c), were intended to apply only to criminal proceedings and not to any civil proceedings including civil penalty proceedings.
[44] For these reasons, the appeal must be dismissed.
S Wood QC with B Jellis of counsel for the Australian Mines and Metals Association
H Borenstein QC with Y Bakri of counsel for the Construction, Forestry, Maritime, Mining and Energy Union.
[2] An application for a stay of the Decision pending the hearing and determination of the appeal was denied: [2018] FWC 1500.
[15] [2017] FCA 274; 269 IR 28
[16] [2013] FCA 1291; 239 IR 363
[27] [1979] FCA 99; 38 FLR 431
[39] Tweed Valley Fruit Processors Pty Ltd v Ross and others (1996) 137 ALR 70 at 90-91; Australian Industry Group [2010] FWAFB 4337 at [9]- [12]; Transport Workers' Union of Australia v Coles Supermarkets Australia Pty Ltd [2013] FWCFB 276 at [29]
[40] See 4 yearly review of modern awards - Fast Food Industry Award 2010 [2018] FWCFB 2797
[43] [2017] FCA 274; 269 IR 28
[44] [2013] FCA 1291; 239 IR 363
[45] See Commonwealth v FWBII [2015] HCA 46; 258 CLR 482 at [102] per Keane J; cf. Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd [2003] HCA 49; 216 CLR 161 at [2] per Gleeson CJ.
Printed by authority of the Commonwealth Government Printer
Australian Mines and Metals Association Inc; Master Builders Australia Limited
Construction, Forestry, Maritime, Mining and Energy Union [2018] FWCFB 3710
(1996) 137 ALR 70