Deliberation - Application of the Principles to the Facts
96 Applying that approach and looking to the reasons given by Mr Enright for the Decision, for the reasons I will expand upon, I have come to the view that the only circumstance or ground relied upon by Mr Enright to form the opinion that there were reasonable grounds to conduct the Investigation as to whether ss 237(1), 285(1), 286(1) and 287(1) of the RO Act had been contravened was that there was a basis for suspecting that each of those provisions had been contravened and, further that Mr Enright's only basis for the suspicion that ss 285(1), 286(1) and 287(1) had been contravened was that the Donations were not made in accordance with the Rules.
97 In relation to the suspected contraventions of s 237(1) it was not contested and, objectively considered by reference to the Decision Record, it is clear that Mr Enright had a reasonable basis for suspecting that, by the failure of the AWU to lodge a statement of particulars of donations made in the 2006 and 2008 financial years within 90 days of the end of each of those years, s 237(1) was contravened. It follows that it was open to Mr Enright to be satisfied that there were reasonable grounds to conduct an investigation as to whether s 237(1) "has been contravened" and the conduct of the Investigation for that purpose was not invalid because the requisite state of satisfaction did not exist.
98 However, in relation to the conduct of the Investigation for the purpose of investigating whether ss 285(1), 286(1) and 287(1) had been contravened, I have arrived at the opposite conclusion. In summary, that is because I have concluded that Mr Enright's suspicion that various acts had occurred in contravention of ss 285(1), 286(1) and 287(1) was predicated upon the view that those acts, if done, were done in breach of the Rules and that, in each case, the breach of the Rules was the basis for the suspected contravention. It was for that reason that Mr Enright formed the opinion that there were reasonable grounds to conduct an investigation as to whether those provisions had been contravened.
99 Taking into account matters of both fact and opinion and objectively considered, the basis relied upon by Mr Enright to ground his suspicion could not sustain the opinion that there were reasonable grounds to conduct an investigation as to whether those provisions had been contravened. There was no basis for Mr Enright's opinion that the suspected contraventions would be grounded in acts done in contravention of the Rules. That is because, by the operation of s 320 of the RO Act (which Mr Enright regarded as inapplicable), the suspected acts in question, if done, must be "taken to have been done in compliance with the [Rules]". The circumstances relied upon by Mr Enright to form his opinion, were insufficient to induce a reasonable person to form the opinion that there were reasonable grounds to conduct an investigation as to whether ss 285(1), 286(1) or 287(1) had been contravened.
100 Consequently, the condition upon the exercise of the power given by s 331(2) for conducting an investigation as to whether ss 285(1), 286(1) and 287(1) had been contravened, was not satisfied. The statutory power to do so was not engaged and the Commissioner's investigation in relation to those provisions exceeded the statutory power conferred by s 331(2) upon the Commissioner. To that extent, the AWU has established jurisdictional error under ground 2.
101 I turn then to provide the detail for the conclusion just expressed.
102 As Allsop CJ said in Minister for Immigration and Border Protection v Stretton (2016) 237 FCR 1 (at [11]), in the related context of legal unreasonableness, the boundaries of power may be difficult to define and an evaluation of whether a decision has been made within those boundaries "is conducted by reference to the relevant statute, its terms, scope and purpose". It is best therefore to commence with observations about the RO Act, the investigative task conferred upon the Commissioner by s 331 and any evident purpose for the imposition of the condition on the exercise of that power expressed by s 331(2).
103 The functions of the Commissioner specified in s 329AB as well as the terms of s 317, which provides a simplified outline of Chap 11 (including for Pt 4 where s 331(2) is found), make it clear that an important part of the Commissioner's function is regulatory and concerned with compliance. The Commissioner's statutory functions are concerned with contraventions or possible contraventions of specified provisions of the RO Act. The Commissioner is empowered to apply to this Court for orders, including for the imposition of civil penalties (s 310(1)). It is evident that, to facilitate that compliance function, the Commissioner has been given the power to make inquiries and the further power to conduct investigations.
104 Section 330 addresses the Commissioner's discretionary power to make inquiries. Section 330(1) empowers the Commissioner to make inquiries as to whether Pt 3 of Chap 8 of the RO Act (dealing with records and accounts) is being complied with, including the reporting guidelines and regulations made under and for the purpose of that Part and rules of a "reporting unit" of a registered organisation relating to its finances or financial administration. Section 330(2) provides that the Commissioner "may make inquiries as to whether a civil penalty provision (see section 305) has been contravened".
105 Subsections 331(1) and (2) are, save for one aspect of significance, in almost identical terms to ss 330(1) and (2). The difference is that the Commissioner need not be "satisfied that there are reasonable grounds for doing so" when exercising his discretion to conduct an inquiry but must be so satisfied when exercising his discretion to conduct an investigation. The reason for that disparity in treatment is, I think, revealed by the nature of the powers made available to the Commissioner for the purposes of making inquiries as compared to the powers available to the Commissioner to conduct an investigation. The difference in approach is most apparent from the terms of s 330(3) which, in relation to inquiries, provide (emphasis added):
(3) The person making the inquiries may take such action as he or she considers necessary for the purposes of making the inquiries. However, he or she cannot compel a person to assist with the inquiries under this section.
106 In contrast to the restriction imposed by that provision, in the conduct of an investigation under s 331 the Commissioner has available a wide array of coercive powers with potential consequences for the rights of others, including upon fundamental common law rights as discussed at [51]. As Gleeson CJ and Kirby J observed in McKinnon v Secretary, Department of Treasury (2006) 228 CLR 423 at [9], the conferral of statutory powers of search and seizure and arrest are often conditioned by the requirement of reasonable grounds for a state of mind such as a suspicion or belief.
107 The comparison with s 330 reveals a relation between the coercive powers conferred on the Commissioner and the limitation imposed on the investigative function for which those powers have been conferred. That relation suggests that the purpose of imposing upon the Commissioner the limitation upon his discretion to commence an investigation is not merely concerned with the utility of the investigation. It may well be that utility, economy, efficiency and even propriety of purpose are not considerations that the limitation has in mind at all. Considerations of that kind are obviously relevant to whether a statutory discretion involving time, effort and resources ought to be exercised and need not be spelt out. The requirement that the power conferred be exercised within the bounds of reasonableness is an implied condition of the conferral of the power.
108 The capacity given to the Commissioner to access coercive power through an investigation, and the fact that s 331 expressly imposes a limitation on the discretion and does so on the standard that the power is only to be exercised on "reasonable grounds", are indicative of a protective purpose for the limitation on power in s 331(2). That limitation is to be understood as harbouring a concern for the rights ordinarily enjoyed by others and the capacity for those rights to be adversely affected by the conduct of an investigation.
109 Further, coercive powers are not usually conferred on fishing expeditions and the language of s 331(2) is specific. The Commissioner is not at large. The purpose of the investigation is to determine "whether a civil penalty provision has been contravened". The subject of the power conferred is particular conduct which may have resulted in a particular contravention of a civil penalty provision.
110 All of those considerations should be kept in mind in the assessment of whether a particular investigation has been commenced within the boundaries of the power conferred by s 331(2).
111 The nature of the state of satisfaction required by s 331(2) was in contest. The AWU contended that there will be reasonable grounds to conduct an investigation to which s 331(2) refers if there are sufficient facts to satisfy a reasonable person that:
there are reasonable grounds to believe that a civil penalty provision may have been contravened; and
there are reasonable grounds to believe that the investigation will assist the Commissioner to establish that a civil penalty provision has been contravened.
112 The Commissioner contested the state of mind said by the AWU to be necessary for reasonable grounds to conduct an investigation to exist. In particular the Commissioner denied that he was required to have any state of mind about whether a civil penalty provision "had been contravened". The Commissioner contended that the only question to be answered in the formation of the requisite opinion was "whether it was reasonable to investigate whether a civil penalty provision has been contravened". Or "was it reasonable to think it appropriate to investigate" whether a civil penalty provision had been contravened. Those formulations, however, merely restated the criterion in non-statutory language. Those restatements did not assist in identifying the content of the criterion, that is, the considerations that need to be taken into account. In so far as the Commissioner's submissions dealt with content, he only identified considerations that were said to be not necessary including, as I have detailed already, that the Commissioner have a state of mind as to whether a civil penalty provision had been contravened. Considerations said to be not necessary or not relevant, were unhelpfully supported in the Commissioner's submissions by reference to authorities dealing with a different legislative provision with insufficient equivalence to s 331(2) (s 155 of the former Trade Practices Act 1974 (Cth); Melbourne Home of Ford Pty Ltd v Trade Practices Commission (No 3) (1980) 31 ALR 519 at 529-30; Emirates v Australian Competition and Consumer Commission [2009] FCA 312 at [103]; Singapore Airlines Ltd v Australian Competition and Consumer Commission [2009] FCAFC 136 at [37]).
113 I would agree with the Commissioner's submission that the limitation on the exercise of power imposed by s 331(2) is directed at whether there are reasonable grounds to conduct an investigation. However, that acceptance does not deny the proposition that a necessary condition for satisfaction that there are reasonable grounds to conduct the investigation requires the Commissioner to have a state of mind as to whether the provision being investigated has been contravened. That such a state of mind is necessary for the Commissioner to "proceed reasonably", and that the state of mind be at least a reasonable suspicion of a contravention, seems to me to be implicit from the text, context and purpose of the limitation to which I have already referred.
114 However, whether or not a suspicion that a civil penalty provision has been contravened is a necessary state of mind in the formation of the opinion required by s 331(2) is not a matter I need to determine. In determining whether Mr Enright failed to "proceed reasonably" in the formation of the satisfaction required by s 331(2), I need only assess whether the opinion was reasonably formed by reference to the reasons or grounds relied upon by Mr Enright. Whether or not he was required by the statute to do so, Mr Enright unquestionably held a state of mind about whether ss 237(1), 285(1), 286(1) and 287(1) had been contravened and relied upon that state of mind in forming the opinion that he did. The Decision Record demonstrates that that state of mind was the only ground relied upon by Mr Enright in being satisfied that there were reasonable grounds to commence an investigation into whether each of ss 237(1), 285(1), 286(1) and 287(1) had been contravened. In those circumstances whether it was necessary for Mr Enright to have had that state of mind is beside the point. The real question is whether by acting on that state of mind for the reason that he did, Mr Enright "proceeded reasonably". The lack of a rational basis for the state of mind upon which Mr Enright's satisfaction was based, would call into question whether Mr Enright "proceeded reasonably" and whether the opinion required by s 331(2) had really been formed.
115 Before turning to a further analysis of the Decision Record, a copy of which is attached to these reasons as Appendix 1, I need to deal with its provenance. There is no statutory obligation upon the Commissioner (or his delegates) to provide reasons for a decision, including a decision to conduct an investigation under s 331. Although not obliged to do so, Mr Enright deposed that it was his practice within the established processes of the Commission, to create a decision record in relation to any "significant decision". He regarded a decision to commence an investigation as a significant decision. Mr Enright relevantly stated that "its our practice to - for me to do a case decision [record] setting out what the decision is and why I've made it". I observe that the Decision Record adopts that structure. It is separated into two parts, the first is headed "Decision" and the second "Reasons".
116 The intended accuracy and comprehensiveness of the Decision Record, as a record of Mr Enright's reasons including as to the "reasonable grounds" relied upon by him, was also dealt with in Mr Enright's evidence. A number of drafts of the Decision Record were in evidence. Mr Enright explained that staff of the Commission had assisted him in making the Decision including in preparing various drafts of the Decision Record. He said that preparatory material, including those drafts, were put together to assist him to come to a final decision and that the process was designed to make sure that "all of the relevant reasonable grounds" are identified. Mr Enright said this (emphasis added):
We were preparing drafts or - that's what we do. We prepare drafts of those to make sure that they crystallise all of the relevant reasonable grounds, for example, that I need to commence an investigation under 331. We prepare notices, draft notices to produce in most cases, case decisions, investigation plans, those sorts of documents. So all of those in - when we get advanced - to an advanced level that's possible to conduct an investigation, we continue to develop those until I'm satisfied that all the materials are - fall into place. I make a decision, if I do. Often I won't, but I will make a decision not to do anything based on that we haven't got enough, but when I do make the decision then we finalise the documents and commence the investigation.
117 That the Decision Record was intended to set out all of the grounds regarded by Mr Enright as constituting the "reasonable grounds" to conduct the Investigation and upon which his satisfaction was based, is underscored by other evidence.
118 Mr Enright deposed that the Commissioner often obtains legal advice, including in relation to advice about "our reasonable grounds". There was evidence that in this case and for the preparation of the Decision Record the advice of Mr Chris O'Grady QC was obtained. The Commissioner tendered a memorandum of Mr O'Grady's advice ("Memorandum of Advice") dated 4 October 2017, some two weeks prior to the Decision. Mr Enright explained that he got the advice because he wanted Senior Counsel's advice "about whether or not there were reasonable grounds to commence an investigation in this case, and whether the Commissioner's discretion ought to be exercised to conduct the investigation" as well as to ensure that the legal bases for conducting such an investigation were properly considered.
119 It is evident from the Memorandum of Advice that the matters that Mr O'Grady had been requested to provide advice about included whether "there are reasonable grounds to exercise the Commission's powers to commence an investigation under s 331". Mr O'Grady identified the proposed investigation as relating to "possible contraventions of the RO Act associated with donations made by the [AWU] in the period 2005-2007". I shall return to Mr O'Grady's advice in more detail shortly, but it is useful to record now that in compiling a list of matters "suggesting that there may have been a contravention of the predecessor provisions warranting investigation", Mr O'Grady referred to matters in relation to which either Mr Shorten or the Branch Secretary of the Victorian Branch of the AWU at the relevant time, Mr Cesar Melhem, are specifically mentioned. Those matters, which I will detail later, are not referred to at all in the Decision Record.
120 Mr Enright's evidence was that the grounds considered relevant in reaching the satisfaction that he did were his own. When it was pointed out to him that the Decision Record made no reference to the advice he had received from Mr O'Grady and he was asked why that was so, Mr Enright said this:
I took into account the advice that I received from counsel, but this is my decision. These are decisions based on my - reasonable grounds that I [formed] a view about and, therefore, it's my decision, taking into account a range of relevant factors, including the advice from counsel who asserted that the - there were grounds to commence the [Investigation].
121 Turning back to the content of the Decision Record in order to examine what grounds were relied upon by Mr Enright, it is apparent that there are no considerations relied upon for the satisfaction reached by Mr Enright other than considerations that he perceived supported a suspicion that either ss 237(1), 285(1), 286(1) and 287(1) had been contravened. So much is apparent from the matters set out on the second and third pages of the Decision Record which are preceded by the words "In my view, the reasonable grounds to conduct an investigation flow from the following".
122 No matters going to other considerations are raised by the Decision Record. That is not an intended criticism. It merely demonstrates that Mr Enright construed s 331(2) as I have, recognising that his assessment of whether there were reasonable grounds had to focus upon whether there was a basis for suspecting a contravention of particular civil penalty provisions. As his conclusions at the foot of the Decision Record show, Mr Enright was of the view that there were reasonable grounds for conducting the Investigation because:
e i. there are reasonable grounds for suspecting the National Executive may have neither satisfied itself that the GetUp donations were made in accordance with the [Rules] nor approved the GetUp donations. The failure to report these and other donations made during the financial year ending 30 June 2008 [an intended reference to 30 June 2006] within the required statutory timeframes is also something that warrants investigation.
e ii. there are reasonable grounds for suspecting that the National Executive may have resolved to delegate its power to approve the political donations relating to the 2007 Federal Election. This further [gives] rise to reasonable grounds for suspecting that the National Executive may not have approved the aforementioned political donations or satisfied itself that the donations were made in accordance with the [Rules]. The failure to report these and other donations made during the financial year ending 30 June 2008 within the required statutory time frame is also something that warrants investigation.
123 When those conclusions are read in the context of all that preceded them, it is clear that the first sentence of each sub-paragraph is addressing the basis for Mr Enright's suspicion that ss 285(1), 286(1) and 287(1) were contravened, whilst the second sentence of each sub-paragraph addresses the basis for his suspicion in relation to contraventions of s 237(1).
124 Section 237(1) imposes an obligation upon a registered organisation to, within 90 days after the end of each financial year (or such longer period as the Commissioner allows), lodge with the Commissioner a statement showing the relevant particulars in relation to each loan, grant or donation of an amount exceeding $1,000 made by the organisation during the financial year. The requisite particulars are specified in ss 237(5) and (6).
125 That provision, as Mr Enright recognised, imposes an obligation upon a registered organisation to lodge within the required statutory timeframe the particularised statement specified.
126 The basis for Mr Enright's suspicion that s 237(1) was contravened is made plain by the content of para c on the third page of the Decision Record as follows:
A review of the Loans, Grants and Donations Statements lodged by the National Office and the Victorian Branch of the AWU for the financial year ending 30 June 2006 and by the National Office for the financial year ending 30 June 2008 suggests that these statements were in each case lodged late in contravention of s. 237.
127 There is little doubt therefore, and the AWU did not contend to the contrary, that it was open for Mr Enright to come to the view, by reference to the consideration he relied upon, that there was a reasonable basis for suspecting contraventions of s 237(1) and that therefore, there were reasonable grounds for conducting an investigation as to whether s 237(1) was contravened by the AWU in the financial years ending 30 June 2006 and 30 June 2008.
128 However, whether objectively considered a reasonable basis existed for Mr Enright's suspicion that ss 285(1), 286(1) and 287(1) were contravened, is far more problematic.
129 Broadly stated, s 285(1) requires an officer of a registered organisation to exercise powers and discharge duties with the degree of care and diligence that a reasonable person would do in the same circumstance occupying the same office and with the same responsibilities. It may be accepted, and the AWU did not contend to the contrary, that it is at least arguable that in exercising the powers and discharging the duties of his or her office an officer of an organisation may contravene s 285(1) because, in so doing, the officer acted in contravention of the rules of the registered organisation. In other words, it may be accepted that it is at least arguable that an act of that kind done in contravention of the rules of an organisation can, by reason that it was done in contravention of the rules, be the ground or basis for a finding of a contravention of s 285(1)
130 Of course, many other acts including acts done in compliance with the rules of an organisation are also capable of grounding a contravention of s 285(1).
131 Section 286(1) has two limbs. Broadly stated, it requires that an officer of an organisation must exercise his or her powers and discharge his or her duties in good faith, in what he or she believes to be the best interests of the organisation, and for a proper purpose. An exercise of power or the discharge of an officer's duties not done in accordance with the rules of the organisation may, by reason of the contravention of the rules itself, arguably provide a ground for a finding that s 286(1) has been contravened. An act done without the authority of the rules is arguably capable of being regarded as an act not done "for a proper purpose". Again, it is obvious that s 286(1) may be contravened by a range of acts including an act taken in accordance with the rules of the organisation.
132 Section 287(1) requires an officer of an organisation not to improperly utilise his or her position to either gain an advantage for himself or herself or for someone else or cause detriment to the organisation or to another person. It is not immediately apparent how a contravention of the rules of the organisation would of itself contravene s 287(1), unless the contravention of the rules of an organisation was itself the means by which an advantage was gained or a detriment caused. It was not contended by the AWU that an act done in contravention of the Rules was not capable of founding a ground of contravention of s 287(1). For present purposes, I will proceed on the basis that such a contravention is at least arguable. As stated in relation to ss 285(1) and 286(1), a contravention of s 287(1) may be grounded in a multitude of different acts and the provision may be infringed despite the infringing act being in compliance with the rules of the organisation concerned.
133 A fair reading of the Decision Record shows that Mr Enright suspected that a number of acts had occurred which may have contravened each of ss 285(1), 286(1) and 287(1). The acts are identified as acts of the "National Office" or of the "Victorian Branch" of the AWU or of the "National Executive". The reference to "National Office" is presumably a reference to the office of the National Executive of the AWU. Specifically, the acts are described in the Decision Record under the heading "Decision", as:
(i) a "donation of $50,000 from the National Office of the AWU to [GetUp] during the financial year ending 30 June 2006";
(ii) a "donation of $50,000 from the Victorian Branch of the AWU to GetUp during the financial year ending 30 June 2006";
(iii) a number of "separate donations from the National Office of the AWU to a range of entities during the financial year ending 30 June 2008" (being the donations listed at para 3 of the Decision Record); and
(iv) the "alleged passing of a resolution in either 2006 or 2007 by the National Executive to delegate its powers to approve loans, grants and donations over $1,000 ... (and any related actions or omissions of the National Executive)".
134 No particular officers or employees are named in the Decision Record as being the actors in relation to any of the acts relied upon by Mr Enright. However, it may be inferred that what Mr Enright had in mind was one or more of those officers or employees working in the National Office of the AWU in relation to the acts described at (i) and (iii) above; one or more of the officers or employees of the Victorian Branch of the AWU in relation to the act described at (ii) above; and the officers of the National Executive in relation to the acts described at (iv). The acts referred to at (i), (ii) and (iii), being the Donations, must have been perceived by Mr Enright to be acts involving the expenditure of the funds of the AWU. The primary act referred to at (iv) must have been regarded as an exercise of the power given to the National Executive to make resolutions. It is not clear what Mr Enright meant by "related actions or omissions" but, read in context, the better view is that he meant the exercise or failure to exercise the powers of the National Executive.
135 In relation to those acts, the only concern recorded in the Decision Record about them is that they may not have been done in accordance with the Rules. For the acts of expenditure (the making of the Donations), read fairly, the Decision Record is to be understood as recording Mr Enright's suspicion that those acts were done in contravention of the Rules because the National Executive had not, in accordance with the requirements of r 57, satisfied itself that the Donations would be in accordance with the Rules and had not approved the Donations. In relation to the acts of the National Executive described at (iv) above, understood by reference in particular to the content of the first two sentences of para e ii (set out above), Mr Enright considered that the possibility that the National Executive had resolved to delegate its power to approve the donations described at (iii) above, supported his suspicion that those donations were made in contravention of the Rules. Additionally, there is some suggestion in the Decision Record (from the reference made to s 149(1) of the RO Act) that Mr Enright suspected that the act of resolving to delegate the approval function under r 57, may itself be a contravention of the Rules.
136 Whilst the whole of the Decision Record needs to be considered, those conclusions are most apparent from a consideration of paras 1, 2 and 3 of the Decision Record and from the matters identified on pages 2 and 3, said to be the matters from which "the reasonable grounds to conduct an investigation flow". Those matters include the specific reference to s 149(1), the setting out of the terms of r 57 including the emphasis given to those parts considered of primary relevance, the content of para e (referred to above) and also by the content of para d which identified the source of Mr Enright's concern as follows:
d. It has been reported in various media articles that the GetUp donations and the political donations relating to the 2007 Federal Election were not approved by the National Executive in accordance with Rule 57. I have invited the AWU to provide documents voluntarily as to whether each donation was approved by the National Executive in accordance with Rule 57, but the AWU has failed or refused to do so.
137 The Decision Record is sufficiently clear in demonstrating that the basis for Mr Enright's suspicion that ss 285(1), 286(1) and 287(1) had been contravened was that the Rules had been contravened. However, beyond the Decision Record there was also extensive evidence of communications, either made directly by Mr Enright or made with his approval, which reported the basis for the Investigation as the making of donations not approved in accordance with the Rules (see [234], [246] and [257] below).
138 Further still and serving to underscore Mr Enright's focus on suspected contraventions of the Rules, the evidence demonstrated that Mr Enright was selective in relation to the matters he chose to rely upon to form the opinion that he was satisfied that there were reasonable grounds to conduct an investigation as to whether ss 285(1), 286(1) and 287(1) had been contravened. There were two circumstances in particular which it appears Mr Enright chose not to rely upon. Each of those circumstances were not directly concerned with a contravention of the AWU's Rules and each was suggested to Mr Enright by Mr O'Grady's Memorandum of Advice as providing a basis for a reasonable person to form the view that there were potential contraventions of provisions of the RO Act warranting investigation.
139 In para 29 of his advice, Mr O'Grady set out what he characterised as "good grounds for suspecting" that a reasonable person could form the view that there were potential contraventions of provisions of the RO Act warranting investigation. Read in context, the provisions Mr O'Grady was referring to were ss 285(1), 286(1), and 287(1).
140 Mr O'Grady identified the making of the donations to GetUp at para 29(c). At para 29(d), he referred to the possible rule contravention (in context a reference to r 57) in relation to those donations. Earlier, at para 15, Mr O'Grady identified the "immediate significance" of r 57 as providing the context in respect of which conduct was to be assessed and said:
On the premise that the decision to make the donations described below relate to the financial management of the organisation, the fact that it would appear that the donations were made in a way that did not conform with the [Rules], goes to whether or not there is a basis for being satisfied that there are reasonable grounds that the AWU, the National Executive at the time, Mr Shorten and Mr Melhem engaged in conduct that warrants investigation as potentially involving non-compliance with ss. 285, 286, 287 or 237 of the RO Provisions.
141 The Decision Record shows that a ground for suspicion that r 57 was contravened in the making of donations to GetUp was relied upon by Mr Enright in forming the opinion that he formed.
142 However, Mr O'Grady also suggested that the circumstance that Mr Shorten may have been a director of GetUp at the time the donations to GetUp were made by the AWU was also a circumstance giving "good grounds for suspecting" the possible contravention of the RO Act. Mr Enright's decision record does not refer to those circumstances at all.
143 Similarly, Mr O'Grady advised that on the material provided to him by the Commission there were good grounds for suspecting that donations were made by the AWU to political campaigns, referred to by Mr O'Grady as the "2007 Federal Election Donations" which (again read in context) were not made in accordance with the requirements of r 57. That matter, going to the breach of the Rules, was taken up by Mr Enright as a ground for the Decision in relation to donations made during the financial year ending 30 June 2008 (although not confined to the three political campaigns which Mr O'Grady seems to have had in mind). However, Mr O'Grady's basis for saying there were good grounds for suspicion went beyond the possible contravention of the Rules and were specific to possible circumstances attending Mr Shorten. In that respect, unlike Mr Enright's position as recorded in the Decision Record, Mr O'Grady at paras 29(e) and (f) of his advice stated that there are grounds for suspecting that the National Executive delegated to Mr Shorten the capacity to make donations at his discretion to candidates in the 2007 Federal Election and that Mr Shorten donated $25,000 to his own political campaign. None of those matters are referred to in the Decision Record.
144 It is apparent then that, beyond possible contraventions of the AWU's Rules, Mr O'Grady advised Mr Enright that there were grounds for suspicion which, broadly stated, may be characterised as giving rise to possible conflicts of interest for Mr Shorten, which could be relied upon to form the view that there were potential contraventions of ss 285(1), 286(1) and 287(1). However, those matters were not relied upon by Mr Enright.
145 Furthermore, in cross-examination Mr Enright was also taken to earlier drafts of the Decision Record including drafts which were based on there being reasonable grounds to conduct an investigation specific to the conduct of Mr Shorten in relation to the making of the Donations as well as two other officials of the AWU (see [230] and [232] below). Mr Enright was questioned as to why later drafts of the Decision Record were differently cast without reference to or naming any particular officials. Mr Enright indicated that it was his understanding that this had occurred because, consistently with his own view, the Investigation was an investigation "into a range of office holders at the AWU and no particular office holder - there were no office holders in particular". Asked to further explain his answer, Mr Enright emphasised that "we weren't focusing on any office holder in particular".
146 Senior Counsel for the Commissioner accepted that Mr Enright's "reasonable grounds" were set out in the Decision Record. The Commissioner denied, however, that Mr Enright's suspicion of contraventions of ss 285(1), 286(1) and 287(1) were purely based in contraventions of the Rules. The Commissioner submitted that the fact that donations had been made by the AWU to GetUp at a time when the National Secretary (Mr Shorten) was a Board Member of GetUp, was part of the (assumed) factual matrix upon which Mr Enright's suspicion of contraventions was based. Further, reference was also made to the donations made to Mr Shorten as an election candidate and it was said that there "may well be an argument about conflict of interest or [the] best interests of the AWU".
147 Those matters hark back to the additional matters that Mr O'Grady had suggested could be relied upon by Mr Enright to substantiate the existence of "reasonable grounds" for the conduct of the Investigation. The difficulty for the Commissioner, however, is that on the basis of what is recorded in the Decision Record and on the evidence of Mr Enright to which I have referred, Mr Enright selected from the available information before him that which he considered he should rely upon to found his suspicion of possible contraventions and thus his satisfaction that reasonable grounds existed for the conduct of the Investigation. In so doing, Mr Enright did not select the very matters that the Commissioner now suggests he did. The matters the Commissioner now points to, were not part of Mr Enright's reasons for suspecting contraventions of ss 285(1), 286(1) and 287(1). In that and various other respects the Commissioner's submission strayed from an assessment of whether Mr Enright "proceeded reasonably" into an assessment of whether he could have proceeded reasonably if he had relied on matters that were not relied upon to form his satisfaction.
148 The position is similar to, although here more conclusive than, that dealt with by North J in Cotterill v Minister for Immigration and Border Protection (2016) 240 FCR 29 at [67]-[79]. His Honour was there considering a ground of appeal which, although agreeing with North J in the result, Kenny and Perry JJ considered unnecessary to deal with. The ground considered by North J was whether legal unreasonableness attended a conclusion made by the Minister for Immigration that the risk of the appellant reoffending was low. In considering that issue, the Minister had been provided with an Issues Paper prepared by his Department. The Minister contended that the Issues Paper could be taken into account in determining the reasoning of the Minister on the impugned conclusion. Applying the reasoning in Singh (referred to at [95] above) that the "intelligible justification" for a decision must lie within the reasons the decision-maker gave for the exercise of the power, North J rejected the contention that two matters raised by the Issues Paper, which could have been relied upon to support the impugned conclusion, should be regarded as part of the Minister's reasons for concluding that the risk of the appellant reoffending was low. In the statement of reasons given by the Minister, the Minister stated that he had assessed the information set out in the Issues Paper and that he had considered all the evidence available to him. That, however, as North J stated at [79], did not amount to the adoption of the reasoning suggested in the Issues Paper. North J continued:
The Minister's references to the Issues Paper say no more than that the Minister viewed and considered the material provided to him in the Issues Paper for the purpose of determining his own approach. The reasons provided by the Minister, however, made a selection from all of the material provided to him and thereby focused on the matters which the Minister regarded as determinative of his view. He did not select [the two matters raised in the Issues Paper] as matters which motivated his decision. Hence, those matters cannot be regarded as part of the Minister's reasoning.
149 As, at the time of the Decision, more than 4 years had passed since the Donations were made, the AWU contended that s 320 of the RO Act has the effect that each of the Donations is taken to have been made in compliance with the Rules. Similarly, the AWU contended that any resolution of the National Executive referred to at [133] above is taken to have been passed in compliance with the Rules and that, moreover, any expenditure of funds made pursuant to that resolution is likewise taken to have occurred in compliance with the Rules. Given the effect of s 320 of the RO Act, the AWU contended that as at the time of the Decision, no reasonable person could have been satisfied that the possible contraventions of the Rules that Mr Enright had in mind, could have grounded a contravention of ss 285(1), 286(1) or 287(1).
150 It is necessary to commence this part of the analysis by reference to the terms of s 320 which have earlier been set out. Relevantly for present purposes, s 320 operates upon an "act" either (i) done by a collective body of an organisation or branch thereof purporting to exercise power conferred by or under the rules of the organisation or branch (s 320(1)(a)(i)); or (ii) by a person holding (or purporting to hold) office or position in an organisation or branch and purporting to exercise power conferred by or under the rules of the organisation or branch (s 320(1)(a)(ii)).
151 The exercise in which I am engaged, cannot and need not be done by reference to actual facts. Whether particular acts suspected to have occurred by Mr Enright fall within the scope of s 320 cannot be adjudged without knowing the actual nature and content of those acts. However, the objective reasonableness of Mr Enright's opinion and its interaction with the possible operation of s 320 need only be analysed by reference to the facts as likely envisaged by Mr Enright in the hypothesis upon which he based his suspicion that acts had occurred in contravention of the Rules.
152 On Mr Enright's hypothesis, as the matters set out at [133] demonstrate, the Donations were expenditure made by the AWU effectuated by an officer or employee of the National Office or the Victorian Branch of the AWU. Including because it is implicit from the terms of r 57 itself, Mr Enright's hypothesis must have been predicated on the Rules conferring a power on the AWU to expend its funds by making donations. Further, the hypothesis is based upon that power being exercised, by an officer without authority under the Rules and thus as a purported exercise of the expenditure power conferred by the Rules. On that hypothesis, the Donations were acts which would fall within s 320(1)(a)(ii) as, in each case, an act by a person holding an office or position in the AWU or its Victorian Branch purporting to exercise the power conferred by or under the Rules to expend the AWU's funds. I have arrived at that conclusion assisted by the proposition that acts that could have been done in accordance with the rules of an organisation, if done out of accordance with those rules, are taken to have been done by persons "purporting to exercise power conferred by or under" those rules: see Geneff v Peterson (1986) 19 IR 40 at 76 to 77 (Gray J); Bailey v Krantz (1985) 13 IR 339 at 392 (Gray J).
153 As for any resolution of the National Executive to delegate its powers of approval of loans, grants and donations, and on the assumption that Mr Enright regarded such a resolution as possibly grounding the contravention of ss 285(1), 286(1) or 287(1), Mr Enright's hypothesis must have been that in contravention of the Rules, the National Executive exercised a power to delegate its functions. On that hypothesis, the act would fall within s 320(1)(a)(i) as an act of a collective body of the AWU purporting to exercise power conferred by or under the Rules.
154 For those reasons and despite the Commissioner's submissions to the contrary, the hypothesis the subject of Mr Enright's suspicion was based upon acts of the kind referred to in either ss 320(1)(a)(i) or 320(1)(a)(ii).
155 After the end of 4 years from the doing of those acts (if done), the effect of s 320(1) is that the doing of each of those acts "is taken to have been done in compliance with the rules of the organisation or branch".
156 In Egan v Harradine (1975) 25 FLR 336 at 380, Sweeney and Evatt JJ said this of s 171F of the Conciliation and Arbitration Act 1904-1975 (Cth), the terms of which were not materially different from s 320 of the RO Act:
The purpose of the section is quite clearly to prevent the challenge of acts as defined after the lapse of a period of four years. The language used in the section is that the act, etc., shall for all purposes be deemed to have been done in compliance with the rules of the organization or branch. It is language which is markedly different from that used in s. 171B which provides that certain acts done in good faith are to be valid and in s. 141 (5) or (6) which prevent the making of an order having the effect of treating elections as invalid.
Section 171F goes beyond the mere question of validity of the particular act and requires that the act shall be deemed to have been done in compliance with the rules of the organization or branch. The effect of this is to go beyond the mere validity of a particular act. As we said in the ruling, the section adjudges or determines conclusively that the act was done in compliance with the rules. Its effect is that if in fact there was not compliance with the rules the section notionally alters those facts (cf Hunter Douglas Australia Pty. Ltd. v. Perma Blinds (62)).
See further Re Application for Inquiry into Election in Australian Workers' Union (1982) 2 IR 69 at 72 to 73 (Evatt J) and Prichard v Krantz (1983) 5 IR 437 at 443 (Evatt J).
157 I well appreciate that the words in s 320(1) - "is taken to have been done in compliance with", have substituted the words which did the same work in s 171F - "shall, for all purposes, be deemed to have been done in compliance with". However, my view is that the modern formulation is not different in substance to that which it replaced, despite submissions made by the Commissioner to the contrary.
158 The Commissioner submitted by reference to the terms of s 331(2) that the subject matter of an investigation is whether a civil penalty provision has been contravened. The contention was that when the conduct suspected by Mr Enright to have occurred did occur, it was perfected and had crystallised. It was said that it was doubtful that s 320 does or can "expunge" or "remove" the existence of a contravention for the purposes of "the past tense inquiry".
159 The Commissioner's submission seems to be based on a view which only gives the deeming effect of s 320 prospective operation commencing from the end of the 4 year period referred to in the provision. That view is out of accord with the text of s 320, and in particular the words "have been done" as well as the settled interpretation of s 320. As Sweeney and Evatt JJ said in Egan v Harradine in the passage quoted above, the effect of s 320 is to notionally alter the facts so that the act in question is deemed to have been done in compliance with the Rules at the time the act was done.
160 Even if that analysis is wrong and the deeming effect of s 320 operates prospectively from the end of the 4 year period, the Commissioner's position is not improved. On this approach, and as the Commissioner's submissions accepted, the suspected contraventions "may not be capable of proof in Court if penalty proceedings were brought". However, there is nothing to suggest that Mr Enright was satisfied that there were reasonable grounds to conduct an investigation of possible contraventions of ss 285(1), 286(1) and 287(1) on the basis of rule contraventions that could not be proved. To the contrary, given the limited basis for his satisfaction that reasonable grounds existed and the compliance purpose of the Commissioner, including his capacity to bring proceedings for a contravention of a civil penalty provision, Mr Enright's satisfaction must be understood to have been based upon his suspicion that there were contraventions of ss 285(1), 286(1) and 287(1) capable of being proved. Mr Enright did not embark on an academic exercise to investigate historical facts of no or little relevance to the Commissioner's functions. If he had, the grounds upon which he relied to form the satisfaction he did could hardly be regarded as reasonable and Mr Enright would not have "proceeded reasonably".
161 The Commissioner put two further submissions. He said, apparently in the alternative to the submission just addressed, that it is arguable that s 320 cannot have the effect of defeating civil penalty proceedings. For that proposition the Commissioner relied on the absence of authorities where the operation of s 320 has been held to have that consequence. There may be many reasons for such an absence in the authorities, including that the plain intent of s 320 has been appreciated by those whom might otherwise have instituted proceedings. The absence of examples in the authorities does not support a contention which, if it is to be made, must be made by reference to the text of s 320 and its intended operation. There is neither textual or contextual support for construing the deeming effect of s 320 as being selective in its operation, so that it would have no operation on an act when that act is relied upon to found a contravention of a civil penalty provision. Furthermore, the terms of s 320(2) support the operation of s 320(1) in relation to court orders or other judicial acts made after the end of the 4 year period referred to in s 320(1).
162 Next, the Commissioner relied upon s 321 of the RO Act which provides that where, having had regard to the interests of the organisation, or members or creditors of the organisation or persons having dealings with the organisation, this Court is satisfied that the application of s 320 in relation to an act "would do substantial injustice", s 320 does not apply and is taken never to have applied to that act. It was said that the potential operation of s 320 of the RO Act could rarely (if ever) deprive the Commissioner of reasonable grounds in circumstances where the Commissioner would have standing to bring an application under s 321 and where the Court could be expected to make a declaration of substantial injustice in relation to an act which was contrary to the interests of members and in contravention of the RO Act.
163 The submission is highly speculative and impermissibly departs from Mr Enright's reasoning to take up a possibility which played no part in the formation of Mr Enright's satisfaction that reasonable grounds existed. It is speculative in a number of respects but, primarily, it suffers from the Commissioner failing to provide any basis for the assumption which he has made that a declaration of "substantial injustice" to the interests of members would be made. That an act was done out of accordance with the rules of an organisation is a necessary characteristic of every act to which s 321 can have application. If that was all that was required, every such act would satisfy the criteria of "substantial injustice". Some vice or detriment beyond the fact that the act was not authorised under the Rules is called for by s 321. No additional element of that kind was identified by the Commissioner's submission.
164 However and more pertinently, no such factor was identified by Mr Enright as having been relied upon by him in forming his suspicion of contraventions of ss 285(1), 286(1) and 287(1). Mr Enright thought that s 320 "didn't have any - any work to do", and "that it was not applicable in this case". He had not requested that Mr O'Grady turn his mind to s 320, as Mr Enright had his "own view" about that provision.
165 As Gordon J in Prior said (at [101]), referring to Gleeson CJ and Kirby J, in McKinnon at [12], in the objective assessment of whether reasonable grounds existed matters of "both fact and opinion must be considered". The assumed facts which were central to Mr Enright's suspicion of contraventions - the various acts done in contravention of the Rules - could not have existed as acts done in contravention of the Rules at the time Mr Enright formed his opinion that there were reasonable grounds for the Investigation. Further, no part of that opinion relied upon the operation of s 321 of the RO Act. Objectively considered, Mr Enright's rationale for his suspicion and in turn the opinion which relied upon that suspicion, was critically flawed. A reasonable person with a correct understanding of the operation of s 320 upon the assumed facts central to Mr Enright's suspicion of acts in breach of the Rules could not have been satisfied, as Mr Enright was satisfied, that by reason of that suspicion, reasonable grounds existed for the conduct of an investigation into whether ss 285(1), 286(1) and 287(1) had been contravened.
166 I should add that even if I had been satisfied that there were matters beyond the contraventions of the Rules which grounded Mr Enright's suspicion of contraventions of ss 285(1), 286(1) and 287(1), I would have arrived at the same ultimate conclusion as that just expressed. That is because there is nothing in Mr Enright's Decision Record to suggest that the suspicion he arrived at and the satisfaction he formed based upon it, would have been arrived at by Mr Enright in the absence of his reliance upon his view that "there are reasonable grounds for suspecting" contraventions of the Rules: see Gill v Minister for Immigration and Border Protection (2017) 250 FCR 309 at [94] (Griffiths and Moshinsky JJ).
167 Given my conclusion on the first limb of ground 2, it is not strictly necessary for me to determine the second limb. If it had been necessary, I would have rejected the second limb. I will set out my reasons briefly.
168 I do not accept the AWU's contention that Mr Enright did not consider s 320 of the RO Act. He said he regarded the provision as inapplicable in this case. That suggests that s 320 was considered but given no work to do because it was regarded as inapplicable. Mr Enright did not explain why he regarded the provision as inapplicable but nor was he pressed on that matter or challenged as to the veracity of that evidence. There is no basis for the AWU's contention that Mr Enright ought not be accepted as to the evidence he gave which supports the conclusion that s 320 was considered.
169 The alternative submission made by the AWU is that, if Mr Enright thought that s 320 was inapplicable, Mr Enright must have misunderstood the operation of s 320. For the reasons already given, I accept that Mr Enright was wrong to have regarded s 320 as inapplicable for the purpose of arriving at the suspicion and the consequent opinion arrived at by him. But that did not constitute jurisdictional error of itself.
170 Mr Enright needed to form his opinion on a correct understanding of s 331(2). If Mr Enright had misunderstood s 331(2) that misunderstanding would have, in the words of Kiefel CJ, Gageler and Keane JJ at [34] in Hossain, involved Mr Enright not proceeding "on a correct understanding and application of the applicable law". As the passage from the judgment of Latham CJ in Hetton Bellbird referred to at [87] demonstrates, "misconstruing the terms of the relevant legislation", means to misconstrue the law under which the decision-maker is required to reach the requisite opinion. In this case that law was s 331(2) and not s 320 of the RO Act.
171 Accordingly, the misconstruction by Mr Enright of s 320 would not, of itself, have given rise to jurisdictional error. However, the misconstruction of s 320 contributed to Mr Enright "not proceeding reasonably" under s 331(2) because a reasonable person proceeding on a correct construction of s 320 could not have formed the opinion that was formed by Mr Enright. Accordingly, the AWU has succeeded in its reliance on s 320 for the first limb of ground 2 but not for the second limb.
172 For those reasons, I hold that Mr Enright's decision to conduct the Investigation for the purpose of investigating whether ss 285(1), 286(1) and 287(1) were contravened is affected by jurisdictional error and, to that extent, the Decision to conduct the Investigation is invalid. Whether the Decision is an integrated whole so that, that part of it which concerns an investigation into whether s 237(1) of the RO Act has been contravened cannot be severed, has not been the subject of any submissions. I will return to that issue when I consider the question of what relief should be granted.