Barkly Region Alcohol and Drug Abuse Advisory Group Aboriginal Corporation v Naylor

INTRODUCTION 1 Mr Stewart Naylor and Mrs Anna Naylor are the respondents to this proceeding brought under the civil remedies provisions in Part 4-1 of the Fair Work Act 2009 (Cth) (FWA). They are also the defendants in criminal proceedings in the Northern Territory in respect of which they were recently committed to stand trial before the Northern Territory Supreme Court. Because the conduct relied upon for relief in this proceeding is substantially the same as the conduct constituting the offences in the criminal proceedings, the Naylors claim that this proceeding is stayed or, alternatively, that it should be stayed in the exercise of the Court's discretion under s 553 of the FWA. Consequently, they have filed the present application seeking orders to that effect.

FACTUAL BACKGROUND 2 Before identifying the conduct which founds this proceeding and the criminal proceedings, it is convenient to briefly describe the factual context in which that conduct occurred. Barkly Region Alcohol and Drug Abuse Advisory Group Aboriginal Corporation (BRADAAGAC), the applicant, is an Aboriginal corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth). As its name implies, it provides advisory services to Aboriginal people in the Barkly region of the Northern Territory. 3 Between 22 January 2009 and his resignation on 28 September 2016, taking effect from 30 September 2016, Mr Naylor was employed as the Chief Executive Officer (CEO) of BRADAAGAC. Between 3 July 2007 and her resignation on 27 September 2016, also taking effect from 30 September 2016, Mrs Naylor was employed as BRADAAGAC's Corporation Services Manager.

THE CONDUCT 4 The two sets of conduct relied upon to obtain relief in this proceeding occurred during the periods of Mr and Mrs Naylor's employment with BRADAAGAC. It falls into two categories. The first concerns certain payments claimed by Mr Naylor, or which he authorised to be paid to Mrs Naylor, during their employment with BRADAAGAC. The details of those payments are set out in [21] and [26] of the statement of claim (SOC) as follows: 21. During [Mr Naylor's] employment as Chief Executive Officer with [BRADAAGAC], [Mr Naylor] made claims against [BRADAAGAC] for, and was paid amounts for, additional hours of work which the Applicant [sic - Mr Naylor] either did not perform, or was not duly authorised to perform by [BRADAAGAC's] Management Committee. [Mr Naylor] had no contractual entitlement to be paid for additional hours of work. The claims and payments for additional hours were contrary to the interests of [BRADAAGAC]. Particulars Period Amount paid for additional hours claims 1 July 2009 to 30 June 2010 $26,593.22 1 July 2010 to 30 June 2011 $40,503.26 1 July 2011 to 30 June 2012 $53,441.08 1 July 2012 to 30 June 2013 $56,446.06 1 July 2013 to 30 June 2014 $60,437.93 1 July 2014 to 30 June 2015 $91,530.26 1 July 2015 to 30 June 2016 $112,693.31 1 July 2016 to 30 September 2016 $32,641.70 Total $474,286.82

… 26. During [Mr Naylor's] employment as Chief Executive Officer with [BRADAAGAC], [Mr Naylor] wrongly authorised payments to be made by [BRADAAGAC] to [Mrs Naylor] for additional hours because [Mrs Naylor] had no contractual entitlement to be paid for additional hours, there was generally no necessity for her to perform additional hours, and it was contrary to the interests of [BRADAAGAC] to authorise [Mrs Naylor] to perform paid additional hours of work. [Mr Naylor] acted in conflict with his interests to [BRADAAGAC], given that [Mrs Naylor] was his partner, by authorising the payments without declaring his conflict to [BRADAAGAC's] Management Committee. Particulars Period Amount paid for additional hours claims 1 July 2009 to 30 June 2010 $12,260.55 1 July 2010 to 30 June 2011 $19,169.76 1 July 2011 to 30 June 2012 $18,296.72 1 July 2012 to 30 June 2013 $22,115.49 1 July 2013 to 30 June 2014 $24,230.13 1 July 2014 to 30 June 2015 $48,802.13 1 July 2015 to 30 June 2016 $4,554.66 1 July 2016 to 30 September 2016 $4,457.88 Total $153,887.32

5 The second category relates to certain expenditure Mr Naylor authorised for items of property that were allegedly not required by BRADAAGAC. The details of that expenditure are set out in [42] of the SOC as follows: During [Mr Naylor's] employment, [Mr Naylor] authorised expenditure by [BRADAAGAC] on items of property which were not required for, or of use to, its business as a not-for-profit alcohol treatment centre, consisting of items such as iPads, iPhones, iPods, lap tops, and a luxury fashion jacket. (Errors in original) 6 The relief sought in this proceeding also falls under a number of heads. First, a series of declarations is sought (at [51] of the SOC), each involving an alleged contravention of s 50 of the FWA. That section is designated in Part 4-1 of the FWA to be a civil remedy provision (see s 539, item 4). Secondly, orders are sought under s 545 of the FWA (at [52]-]53] of the SOC) for compensation, interest and for the return of, or an accounting in respect of, various items of property. Thirdly, and most relevantly for present purposes, the following relief is sought under s 546 of the FWA (at [54]-[55] of the SOC): 54. … (a) an order that [Mr Naylor] pay pecuniary penalties for civil remedy provisions of the [FWA] that the Court is satisfied [Mr Naylor] contravened; (b) an order that [Mrs Naylor] pay pecuniary penalties for civil remedy provisions of the [FWA] that the Court is satisfied [Mrs Naylor] contravened or is taken to have contravened by reason of section 550 of the [FWA]. 55. Pursuant to section 546(1) of the [FWA], an order that any pecuniary penalties ordered to be paid by [Mr Naylor] and/or [Mrs Naylor] to [BRADAAGAC], within 28 days of the Court's order. (Errors in original) 7 Turning then to the conduct constituting the alleged criminal offences that is described in the Information for an Indictable Offence filed in the criminal proceedings, with respect to Mr Naylor, it is: (a) "by a deception, obtained a benefit, namely, cash claimed by way of overtime payments for yourself, valued at $213,980.23, from another, namely Barkly Region Alcohol and Drug Abuse Advisory Group Inc"; (b) "by a deception, obtained a benefit, namely, a shipping container for yourself, valued at $3500, from another, namely Barkly Region Alcohol and Drug Abuse Advisory Group Inc"; (c) "by a deception, obtained a benefit, namely, cash claimed by way of overtime payments for yourself, valued at $465,766.34, from another, namely Barkly Region Alcohol and Drug Abuse Advisory Group Inc"; (d) "by a deception, obtained a benefit, namely, a television and other personal items for yourself, valued at $3965, from another, namely Barkly Region Alcohol and Drug Abuse Advisory Group Inc"; (e) "by a deception, obtained a benefit, namely, personal items for yourself, valued at $61,129.75, from another, namely Barkly Region Alcohol and Drug Abuse Advisory Group Inc"; (f) "by a deception, obtained a benefit, namely, personal goods and services for yourself, valued at $5286.19, from another, namely Barkly Region Alcohol and Drug Abuse Advisory Group Inc"; (g) "by a deception, obtained a benefit, namely, travelling allowances for yourself, valued at $12,257.45, from another, namely Barkly Region Alcohol and Drug Abuse Advisory Group Inc"; and (h) "by a deception, obtained a benefit, namely, personal annual travel allowance for yourself, valued at $3000, from another, namely Barkly Region Alcohol and Drug Abuse Advisory Group Inc". 8 With respect to Mrs Naylor, it is: (a) "by a deception, obtained a benefit, namely, cash claimed by way of overtime payments for yourself, valued at $213,980.23, from another, namely Barkly Region Alcohol and Drug Abuse Advisory Group Inc"; (b) "by a deception, obtained a benefit, namely, a shipping container for yourself, valued at $3500, from another, namely Barkly Region Alcohol and Drug Abuse Advisory Group Inc"; and (c) "by a deception, obtained a benefit, namely, personal items for yourself, valued at $12,574.98, from another, namely Barkly Region Alcohol and Drug Abuse Advisory Group Inc".

THE ISSUES 9 There is no dispute between the parties that the conduct relied upon to obtain the pecuniary penalty orders in this proceeding is substantially the same as the conduct constituting the offences in the criminal proceeding. As a consequence, the applicant accepts that s 553(1) of the FWA operates to stay the pecuniary penalty component of this proceeding. However, it claims that stay does not extend to the other aspects of this proceeding; specifically the declaratory orders, the orders for the return of property and the compensation orders. There is also no dispute that the Court has a discretion to stay this proceeding if it is in the interests of justice to do so. There are, therefore, two issues to be determined. First, does s 553 of the FWA operate to stay the whole, or only part, of this proceeding? Secondly, if it only operates to stay part of this proceeding, should the Court exercise its discretion to stay the remaining part?

THE RELEVANT STATUTORY PROVISIONS 10 The Court's power to make pecuniary penalty orders is contained in s 546 of the FWA as follows: (1) The Federal Court, the Federal Circuit Court or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision. Note: Pecuniary penalty orders cannot be made in relation to conduct that contravenes a term of a modern award, a national minimum wage order or an enterprise agreement only because of the retrospective effect of a determination (see subsections 167(3) and 298(2)). 11 Section 553 provides: (1) Proceedings for a pecuniary penalty order against a person for a contravention of a civil remedy provision are stayed if: (a) criminal proceedings are commenced or have already commenced against the person for an offence; and (b) the offence is constituted by conduct that is substantially the same as the conduct in relation to which the order would be made. (2) The proceedings for the order may be resumed if the person is not convicted of the offence. Otherwise, the proceedings for the order are dismissed.

THE CONTENTIONS 12 As has already been mentioned above, the Naylors contended that s 553(1) of the FWA operates to stay the whole of this proceeding and that, even if it does not, the Court should stay the proceeding in the exercise of its discretion. On the former, they contended that, properly construed, s 553 applied to stay the whole of this proceeding. On the latter, they relied on a number of considerations which, they contended, justified the Court ordering a stay of the whole proceeding. They included: that they have already been committed to stand trial in the Supreme Court of the Northern Territory, that those proceedings are likely to be finalised in the next 12 months, that they wish to preserve their right to silence, that there is a substantial overlap between the facts and circumstances and, therefore, the evidence and witnesses in both proceedings, that a conviction in the criminal proceedings would likely result in a restitution order which may affect the quantum of any penalty that may be ordered in this proceeding and that no prejudice would be caused to BRADAAGAC if a stay were granted because they do not have the financial means to meet any judgment that may be ordered against them in this proceeding. Lastly, they relied upon Mrs Naylor's poor health. Specifically, they pointed to the fact that she has been diagnosed with cancer and has a prognosis of two years to live. Consequently, she has little energy, low mobility, requires constant care and has many time-consuming medical commitments connected with her cancer treatment. 13 Relying on Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate (2014) 225 FCR 210; [2014] FCAFC 101 (Myer Emporium), BRADAAGAC contended that, as mentioned above (at [9]), the "proceedings against the respondents for pecuniary penalty orders are stayed pending the conclusion of the criminal proceedings", but that their claims for declarations and compensation are unaffected by s 553. On the discretionary aspect, BRADAAGAC contended that "there is no more than a notional danger of injustice in the criminal proceedings". It contended that the Naylors had already pleaded the material matters of fact and law on which their defence was to be based and that they had not identified how the continuation of this proceeding would cause injustice in the criminal proceedings. Further, it argued that it was "not apparent how the prosecutor in the other proceedings [would] be armed with any material which flies in the face of the manner in which a criminal trial is to be conducted". It also contended that appropriate orders could be made to protect the Naylors against any adverse consequences that may flow from the continuation of this proceeding. Finally, BRADAAGAC relied on the judgment in McMahon v Gould (1982) 7 ACLR 202 (McMahon) (see below at [15]), stating that "it is a grave matter to interfere with [an applicant's] entitlement to have their action tried in the ordinary course".

THE RELEVANT PRINCIPLES 14 The usual principles relating to statutory construction were restated recently in SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34 (SZTAL) where the plurality (Kiefel CJ, Nettle and Gordon JJ) said (at [14]): The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected. (Footnotes omitted) 15 As to the principles relating to the Court's discretion to stay this proceeding, it was common ground that they were outlined by Wootten J in McMahon as follows (at 206-207): (a) Prima facie a plaintiff is entitled to have his action tried in the ordinary course of the procedure and business of the court; (b) It is a grave matter to interfere with this entitlement by a stay of proceedings, which requires justification on proper grounds; (c) The burden is on the defendant in a civil action to show that it is just and convenient that the plaintiff's ordinary rights should be interfered with; (d) Neither an accused nor the Crown are entitled as of right to have a civil proceeding stayed because of a pending or possible criminal proceeding; (e) The court's task is one of "the balancing of justice between the parties", taking account of all relevant factors; (f) Each case must be judged on its own merits, and it would be wrong and undesirable to attempt to define in the abstract what are the relevant factors; (g) One factor to take into account where there are pending or possible criminal proceedings is what is sometimes referred to as the accused's "right of silence", and the reasons why that right, under the law as it stands, is a right of a defendant in a criminal proceeding. I return to this subject below; (h) However, the so-called "right of silence" does not extend to give such a defendant as a matter of right the same protection in contemporaneous civil proceedings. The plaintiff in a civil action is not debarred from pursuing action in accordance with the normal rules merely because to do so would, or might, result in the defendant, if he wished to defend the action, having to disclose, in resisting an application for summary judgment, in the pleading of his defence, or by way of discovery or otherwise, what his defence is likely to be in the criminal proceeding; (i) The court should consider whether there is a real and not merely notional danger of injustice in the criminal proceedings; (j) In this regard factors which may be relevant include: (i) the possibility of publicity that might reach and influence jurors in the civil proceedings; (ii) the proximity of the criminal hearing; (iii) the possibility of miscarriage of justice eg by disclosure of a defence enabling the fabrication of evidence by prosecution witnesses, or interference with defence witnesses; (iv) the burden on the defendant of preparing for both sets of proceedings concurrently; (v) whether the defendant has already disclosed his defence to the allegations; (vi) the conduct of the defendant, including his own prior invocation of civil process when it suited him; (k) The effect on the plaintiff must also be considered and weighed against the effect on the defendant. In this connection I suggest below that it may be relevant to consider the nature of the defendant's obligation to the plaintiff; (l) In an appropriate case the proceedings may be allowed to proceed to a certain stage, eg, setting down for trial, and then stayed. (Errors in original; emphasis in original; citations omitted)

The s 553 stay only applies to a part of the proceeding 16 It is convenient to begin my consideration of the first issue above with the Full Court judgment in Myer Emporium. That judgment was delivered in the following factual context. The Director of the Fair Work Building Industry Inspectorate had commenced proceedings under ss 545 and 546 of the FWA against the Construction, Forestry, Mining and Energy Union (the CFMEU) and eight individuals. The conduct to which those proceedings related occurred at two construction sites (the Myer Emporium and McNab sites) in Melbourne on a number of days between mid-August and early September 2012. At about the same time, the CFMEU was tried and convicted of five contempts of court connected with orders made by the Victorian Supreme Court relating to conduct that occurred at the same construction sites between 28-31 August 2012 (the Myer Emporium site) and on 5 September (the McNab site). 17 The CFMEU appealed its contempt convictions to the Victorian Court of Appeal. The Court of Appeal heard that appeal and reserved its decision on 28 July 2014. A three week trial of the Fair Work proceeding was due to commence in the Federal Court on 6 August 2014 (later adjourned to 11 August). The CFMEU applied to the trial judge to vacate those hearing dates pending the civil and criminal appeals. When that application was rejected, it then sought leave to appeal that decision to the Full Court. 18 The Full Court held that the Fair Work proceedings stood dismissed "to the extent that the proceedings sought pecuniary penalty orders in relation to the conduct that is substantially the same as the conduct the subject of the contempt charges" (at [7]). It did so on the footing that, under s 553(2) of the FWA, "[i]n the event that the CFMEU is successful in overturning its convictions [before the Victorian Court of Appeal], then the Director may seek to resume these proceedings to seek a pecuniary penalty order in relation to the conduct that was substantially the same as the conduct which was the subject of the criminal contempts" (emphasis in original) (at [42]). Significantly, however, it held that the balance of the proceedings remained unaffected and that the trial should proceed with respect to it (at [7] and [42]). 19 While the Court considered the construction of s 553 at some length (at [28]-[40]), it focused primarily on the question whether the contempt proceedings in the Victorian Supreme Court were criminal proceedings. Nonetheless, at [41]-[42] of its reasons, the Court made it relatively clear that the stay effected by s 553 is narrowly confined to that particular part of a proceeding where a pecuniary penalty order is sought against a respondent in respect to conduct that is "substantially the same as" the conduct which is the subject of the related criminal proceedings against that respondent, whether those proceedings have already resulted in a conviction, as was the case in Myer Emporium, or are still pending, as is the present case. The Court said: 41 Those conclusions are to be understood against the background of the following additional matters. First, the Federal Court proceedings were stayed and then stood dismissed against the CFMEU, not against the named individuals in the Federal Court proceeding. Second, the Federal Court proceedings for a pecuniary penalty order were only dismissed against the CFMEU to the extent that the conduct in the Federal Court proceedings was substantially the same as the conduct which was the subject of the criminal contempts. The balance of the proceedings against the CFMEU and against the individuals remained and remains unaffected. Third, the Federal Court proceedings were stayed and then stood dismissed against the CFMEU because the Director sought the imposition of a pecuniary penalty order. Indeed, the Federal Court cannot make a pecuniary penalty order against the CFMEU for a contravention of a civil remedy provision if the CFMEU has been convicted of an offence constituted by conduct that is substantially the same as the conduct constituting the contravention of the civil remedy provision: s 552 of the FWA. As we have said, to the extent that the proceedings sought other relief against the CFMEU in relation to the conduct that was substantially the same as the conduct which was the subject of the criminal contempts, those proceedings remained unaffected. 42 Judgment in the Civil and Criminal Appeals is reserved: see [4] above. The outcome of those appeals is not known. The possibility that the convictions might be overturned on appeal does not detract, legally or practically, from the primary judge hearing the trial of these proceedings on and from 11 August 2014. In the event that the CFMEU is found to have contravened the FWA in these proceedings, the Court would (as things now stand) be limited to considering relief comprising declarations and compensation orders in relation to the conduct that was substantially the same as the conduct which was the subject of the criminal contempts. In the event that the CFMEU is successful in overturning its convictions, then the Director may seek to resume these proceedings to seek a pecuniary penalty order in relation to the conduct that was substantially the same as the conduct which was the subject of the criminal contempts. We do not consider that this possibility creates any risk of prejudice to the CFMEU that would warrant vacation of the hearing. (Italicised terms in original; emphasis added) 20 It follows from this reasoning that the stay effected by s 553 does not apply to those parts of a proceeding where a pecuniary penalty order is sought against a respondent where the conduct concerned is not "substantially the same as" the conduct which is the subject of criminal proceedings. Nor does it apply to any other respondents where the pecuniary penalty orders are unrelated to any criminal proceedings. And finally, of particular importance to this matter, nor does it apply to those parts of a proceeding seeking relief other than in the form of a pecuniary penalty order. Accordingly, I consider BRADAAGAC is correct in its contention that the balance of the present proceeding seeking relief in the form of declarations, compensation and other such orders is not stayed by s 553.

The whole proceeding should be stayed 21 This conclusion requires consideration of the second issue above: should this Court exercise its discretion to stay the remaining parts of this proceeding? For the reasons that follow, I consider it should. 22 First, it is appropriate to acknowledge the strength of BRADAAGAC's contention that it is a "grave matter" to interfere with its right to have the balance of its proceeding tried in the ordinary course. Nonetheless, that consideration must be balanced against the fact that s 553 has already effected a significant degree of interference with that right. Secondly, and relatedly, unlike in Myer Emporium, where eight more respondents were involved, this proceeding is confined to the two respondents against whom that part of the proceeding is already stayed. 23 Thirdly, I consider the prejudice the Naylors are likely to suffer if this proceeding is not stayed outweighs the prejudice BRADAAGAC is likely to suffer if it is stayed. On the latter, given the fact that the criminal proceedings are already on foot, the period of any stay is not likely to be lengthy. An unchallenged estimate of approximately 12 months was given in submissions. Furthermore, while it is of lesser significance, there is the Naylors' self-serving claim that they have no assets to meet any judgment obtained against them in this proceeding. 24 As for the former, based on the description of the conduct that underpins both sets of proceedings, I agree with the Naylors that there is likely to be a large degree of overlap between the evidence adduced in both sets of proceedings and this has the potential to cause prejudice to them. That is so for the following reasons. The Court's power to make pecuniary penalty orders under s 546 above is based upon a person having contravened a civil remedy provision of the FWA. In this matter, that provision is s 50 of the FWA (see at [6] above). Accordingly, the declaratory relief that BRADAAGAC seeks in this proceeding will, if established, be directed to the Naylors' contravention of that section as alleged in its SOC above. Hence, it will need to adduce evidence to establish that, by their conduct, the Naylors committed those alleged contraventions. 25 Since it is not in dispute that the conduct involved in those alleged contraventions is substantially the same as the conduct constituting the offences in the criminal proceedings, if the trial of this proceeding is conducted first then, depending on their assessment of the cogency of BRADAAGAC's evidence, and bearing in mind that the civil standard of proof will apply, the Naylors will most likely be confronted with the dilemma of giving evidence in their defence of the allegations made against them in this proceeding or maintaining their right to remain silent about conduct that is substantially the same as that which arises in the criminal proceedings. Whichever course they take is, therefore, likely to result in some prejudice to them. 26 In this respect, I reject BRADAAGAC's contentions that the Naylors have already pleaded to its allegations in this proceeding and that steps can be taken to protect them against any adverse consequences that may flow. As to the former, pleadings are not evidence. As to the latter, it is difficult to see how the Naylors could be protected from the prejudice that may flow. Certainly BRADAAGAC did not identify what steps it had in mind. Of course, the most obvious measure is for the criminal proceedings to go first, but that is essentially what a stay of this proceeding will achieve in any event.

CONCLUSION 27 For these reasons, noting that the pecuniary penalty orders part of this proceeding is, as explained above, already stayed by the operation of s 553 of the FWA, I propose to order that the remaining parts and, therefore, the whole of this proceeding, be stayed until further order. 28 The orders will be:

1. This proceeding be stayed until further order.
2. The parties have liberty to apply, on seven days' written notice, to vary or lift this stay.
3. Costs in the cause. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves.