Construction Forestry Mining & Energy Union of Australia v Inspector Alfred [2004] FCAFC 36 | Case summary

Federal Court of Australia (Full Court)|2004-02-27|Before: Marshall JJ, Marshall J, Gyles J, As Marshall J, Deane J, Wilcox J

REASONS FOR JUDGMENT WILCOX J: 1 I have had the advantage of reading in draft form the respective reasons for judgment of Moore and Marshall JJ. Marshall J sets out the background to this appeal and the substance of the arguments put to us. I need not repeat what he has said. 2 I agree generally with both my colleagues, and also with the primary judge, Gyles J. However, I wish to summarise my views in my own words. 3 The appellants, the respondents in the principal proceeding before Gyles J, consist of an organisation of employees registered under the Workplace Relations Act 1996 (Cth) ('the Act') and two individuals. It is now clear, and conceded by counsel for the appellants, that the principle against self-exposure to a penalty does not apply to a corporation: see Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; 77 ALJR 40; 192 ALR 561 at [31], upholding Trade Practices Commission v Abbco Iceworks Pty Limited (1994) 52 FCR 96. Consequently, the privilege affords no basis for declining to require the first appellant, Construction, Forestry, Mining and Energy Union of Australia ('CFMEU') to file a defence. As Marshall J points out, it is not to the point that the defence might provide information useful in the proceeding against the two individual appellants. 4 The argument put to us on behalf of the two individual appellants, Peter Zaboyak and David Kelly, is that the proceeding falls within the first category of cases identified by Deane J in Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Live-stock Corporation (1974) 42 FLR 204 at 207-208; that is, the proceeding is an action 'for the recovery of a pecuniary penalty'. 5 The proceeding against the two individual appellants originally had that character. When first filed, the application sought the imposition of a penalty upon those individuals, pursuant to s 170NF of the Act. However, by leave of the primary judge, the application was amended on 15 August 2003 to omit the claims for imposition of penalties upon the two individuals. The amendment left, as the only surviving claims against them, claims for declarations (apparently pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth)) and for injunctions pursuant to s 170NG of the Act. After the amendments were made, it could not properly be said that the proceeding against either of the two individuals was an action for recovery of a penalty. 6 While conceding this would usually be a correct analysis of the position, Mr S Rothman SC, who appeared with Mr J Pearce for the appellants, argued that the character of the entire proceeding was conditioned by the fact that it sought to enforce what the Act describes as 'a penalty provision'. In order to understand the argument, it is necessary to note some statutory provisions. 7 Sections 170NC and 170NG are contained in Part VIB of the Act. That Part concerns certified agreements. Section 170NC(1) proscribes certain conduct. It says: 'A person must not: (a) take or threaten to take any industrial action or other action; or (b) refrain or threaten to refrain from taking any action; with intent to coerce another person to agree, or not to agree, to: (c) making, varying or terminating, or extending the nominal expiry date of, an agreement under Division 2 or 3; or (d) approving any of the things mentioned in paragraph (c).' 8 Division 10 of Part VIB is headed 'Enforcement and remedies'. It commences with s 170ND which provides that, for the purposes of the Division, each of five specified sections is a 'penalty provision'. The specified provisions include s 170NC. 9 Section 170NE provides that, for the purposes of the Division, the Federal Court (amongst other courts) is 'an eligible court'. 10 Section 170NF(1) provides that a contravention of a penalty provision is not an offence. However, by following subsections, an eligible court is empowered to impose a penalty upon a person who contravenes a penalty provision. 11 Section 170NG provides: 'An eligible court may grant an injunction requiring a person not to contravene, or to cease contravening, a penalty provision.' 12 Counsel for the appellants emphasise the words of s 170NG. They say, rightly, that the proceeding against the two individual appellants is a proceeding under s 170NG for an injunction to restrain a breach of s 170NC and that the latter section is described by the Act as a 'penalty provision'. It follows, they argue, that the proceeding is one to enforce a penalty provision; accordingly, it is a proceeding for recovery of a penalty. 13 The defect in this chain of reasoning lies in the last step. The relevant question is not the nature of the statutory provision being enforced, but the nature of the remedy that is being sought. It is true that s 170ND uses the drafting device of calling s 170NC (amongst other provisions) a 'penalty provision'. But this does not mean that any action to enforce s 170NC is a proceeding for recovery of a penalty. A proceeding has that character only if it seeks the imposition of a penalty under s 170NF. If it seeks only an injunction under s 170NG, it is an action to obtain injunctive relief, not an action for recovery of a penalty. If it seeks only a declaration and injunction, it is an action for such relief, not a proceeding for recovery of a penalty. 14 Gyles J recognised the possibility that material which an individual respondent to the principal proceeding might need to include in his defence would be of an incriminatory nature. He observed that, in such an event, a further application might need to be made to the Court. He had in mind that, at such a time, the Court could consider the specific material. I agree with that approach. 15 I agree with my colleagues that the appeal should be dismissed. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox.

GENERAL DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION OF AUSTRALIA

REASONS FOR JUDGMENT MOORE J: 16 The judgment of Marshall J sets out the facts and relevant statutory provisions. 17 I initially considered that an application which sought a declaration that a person had contravened s 170NC (but did not seek the imposition of a penalty) might well be a proceeding of the first class of case discussed by Deane J in Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Live-stock Corporation (1979) 42 FLR 204, namely, proceedings in which the privilege operates at the threshold (in limine). That is, the privilege operates to excuse the party from making any disclosure that might otherwise be required as part of ordinary legal processes. The declaration, if made, would be a penalty of sorts as the Court would have declared that the party had engaged in conduct contravening a provision that the legislature considered so reprehensible as to attract the sanction of a monetary penalty. It would not simply be a determination of the type made in inter partes civil litigation in which the court would be determining whether the party had contravened the provision as part of ascertaining whether the opposing party was entitled to a remedy (whether damages or otherwise). In such a case, no question of a privilege operating in limine would arise. As Gleeson CJ, Gaudron, Gummow and Hayne JJ said in Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 192 ALR 561 at 570; [2002] HCA 49 at [31]: Today the privilege against exposure to penalties serves the purpose of ensuring that those who alleged criminality or other illegal conduct should prove it. 18 The judgment of Beaumont J in R v Deputy Commissioner of Taxation; Ex parte Briggs (1987) 13 FCR 389 supports the approach that an application for a declaration that a party has contravened a penalty provision is sufficient to attract the privilege in limine. In that matter, a declaration was sought that the statutory provision had been contravened. Beaumont J thought that was sufficient to place the proceedings in the first class of case discussed by Deane J, and the privilege would operate in limine. Beaumont J described the proceedings in the following way (at 394): Although these are not proceedings to enforce a penalty, they are analogous to such proceedings. 19 However, Lindgren J expressed doubt about the approach of Beaumont J in Microsoft Corporation v CX Computer Pty Ltd (2002) 116 FCR 372 at 385. Significantly, it was an approach rejected by the Full Court of the Supreme Court of Western Australia in Oretek Ltd v Australian Securities and Investment Commission [2003] WASCA 113 who agreed with Lindgren J. In that matter the Australian Securities and Investment Commission sought declarations that a corporation had contravened the Corporations Act 2001 (Cth) by offering securities in a particular way and an injunction restraining individuals from similarly doing so and engaging in other related conduct. The leading judgment was given by Wheeler J. Her Honour indicated at [19] and [20] that the principles discussed by Deane J should not depend on whether the proceedings were one in which a declaration of contravention and consequential injunctions were sought. It is tolerably clear that the approach of the Full Court is consistent with the view that an application for a declaration of contravention of a penalty provision and consequential injunctions does not result in the proceedings being in the first class discussed by Deane J. 20 I would dismiss the appeal. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Moore.

GENERAL DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION OF AUSTRALIA

REASONS FOR JUDGMENT MARSHALL J 21 This is an appeal from an interlocutory judgment of Gyles J ("the primary judge"), in respect of which leave to appeal was granted by Lindgren J on 21 October 2003. 22 The issue for determination in the appeal is whether the privilege against self-exposure to a penalty may be claimed by the second and third appellants, who are also individual respondents in the substantive proceeding ("the personal respondents"), such that they are excused from their obligation to file a defence. 23 In the substantive proceeding, for which the primary judge is the docket judge, the application is multi-faceted. As against the CFMEU, it is made under s 170NF of the Workplace Relations Act 1996 ("the Act") for the imposition of a penalty for breach of s 170NC of the Act. Section 170NC, inter alia, enjoins a person from threatening to take action with intent to coerce another person to agree to the making of an enterprise agreement. Further, as against both the CFMEU and the personal respondents, the application is made under s 170NG, and ancillary declaratory relief is also sought. Section 170NG authorises the making of an injunction requiring a person not to contravene or cause contravention of a penalty provision, which includes s 170NC. 24 A penalty is not sought against the personal respondents. 25 The applicant in the substantive proceeding, and the first respondent to the appeal, is Gregory Charles Alfred ("the inspector"). He claims to be an inspector appointed by the Minister for Workplace Relations pursuant to s 84(2)(b). 26 The respondents in the substantive proceeding are:

Walter Construction Group Limited ("Walter");
John Storer, a manager employed by Walter;
Construction, Forestry, Mining and Energy Union ("the CFMEU"), an organisation of employees registered under the Act; · The personal respondents, who are officers, employees or agents of the CFMEU. 27 Walter is the principal contractor in the construction of a sewerage treatment plant near Wollongong. One of its sub-contractors is D & D Services and Crane Hire Pty Limited ("D & D"). The inspector contends, in the substantive proceeding, that Walter and the CFMEU, by their officers or agents, have each applied pressure to D & D in breach of s 170NC(1). 28 In the original application and statement of claim, filed in the substantive proceeding, an order under s 170NF imposing a penalty was sought as against both the CFMEU and the personal respondents. On 12 August 2003, pursuant to leave granted by the primary judge, the application and statement of claim were amended to delete any reference to penalties being sought against the personal respondents. 29 By notice of motion dated 28 August 2003, the CFMEU and the personal respondents applied to the primary judge for an order that each of them "not be required to file a Defence to the Further Amended Application and Statement of Claim filed on 15 August 2003." 30 The primary judge held that the personal respondents should not be entirely relieved of the obligation of filing any defence. His Honour acknowledged the principle that a party to a proceeding ought not be compelled to provide information which may expose that party to a penalty. However, his Honour observed that no penalty was being sought against the personal respondents. 31 The primary judge said at [7]: "there does remain the possibility that D & D (and perhaps others) could bring penalty proceedings based upon the same facts as are alleged in this proceeding." 32 His Honour referred to the principles outlined by Deane J in Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Live-stock Corporation (1974) 42 FLR 204 at 208 to 212. In Refrigerated Express, Deane J referred to two types of action. The first was an action for the recovery of a penalty. In such a case, it was held that a respondent should not be ordered to disclose information which may assist in establishing that party's liability to the penalty. The second was an action other than for the recovery of a penalty, in which a party would not be ordered to disclose information which may be used to establish that party's liability to a penalty in other proceedings. In respect of the second type of action, Deane J held at 208: "In the latter case, that is in a case such as the present where the proceedings are not for the recovery of a penalty, there is no general rule precluding the making of an order for discovery or interrogatories and there will ordinarily be no proper ground for objecting to an order for production of documents or provision of information being made. The party against whom such an order is made is left to object to producing particular documents or providing particular information on the ground that such production or provision may tend to expose him to a penalty (see Mayor of the County Borough of Derby v. Derbyshire County Council)." 33 The primary judge considered that the case against the personal respondents fell into the second category referred to by Deane J. Counsel for the inspector on the appeal contended that his Honour was correct in that view. 34 Counsel for the appellants submitted that the proceeding (even as amended) is one for the imposition of a penalty. It was emphasised that in s 170ND(e), s 170NC is referred to as a penalty provision, and that the Court was able to impose a penalty for the contravention of a penalty provision pursuant to s170NF. Counsel for the appellants submitted that "the whole of the proceeding is one for the recovery of a penalty." They contended that a declaration made against the personal respondents is itself a declaration of contravention of a penalty provision. Further, even if no penalty was ordered against the personal respondents in the proceeding, it would not prohibit other persons entitled to bring a proceeding under s170NF(7) from doing so, in reliance on admissions made in the substantive proceeding. On that basis, it was submitted, the proceeding was in the first category of proceedings referred to by Deane J. 35 Whilst conceding that the CFMEU, as a corporation, could not avail itself of the privilege against exposure to a penalty: see Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49, (2002) 77 ALJR 40, at [31], per Gleeson CJ, Gaudron, Gummow and Hayne JJ, counsel for the appellants submitted that the CFMEU should not be compelled to file a defence. The submission was founded on the proposition that the privilege of the personal respondents would be abrogated by requiring the CFMEU to provide evidence, which may be used against the personal respondents in the substantive proceeding or in a future proceeding based on the same facts. 36 The submission in support of the CFMEU's position is answered by the judgment of a Full Court in Trade Practices Commission v Abbco Iceworks Pty Limited (1994) 52 FCR 96 at 116, where the Court said: "…[corporations'] privilege has never been, nor should it be, a shield against the use of incriminating evidence - only a right to decline to be themselves the authors of their own destruction by producing the evidence." 37 The position of the personal respondents is less straightforward. However, I consider that the case against them falls within the second category of cases referred to in Refrigerated Express by Deane J. 38 The substantive proceeding is one in which different relief is sought against different parties. The action, as it applies to the CFMEU, is one for the imposition of a penalty. The action for injunctive relief under s 170NG and ancillary declaratory relief against the personal respondents is not an action for a penalty. 39 The action against the personal respondents may be characterised as an action for a penalty against the personal respondents, if it could be shown that the granting of the relief sought against them would penalise them in some way. Such a penalty may not necessarily be confined to the imposition of a penalty in the nature of a fine payable into Consolidated Revenue. For example, if the personal respondents were at risk of disqualification from elected office in the CFMEU, as a consequence of an adverse result for them in the substantive proceeding, it may be that the proceeding could be characterised as one for a penalty: see Rich v The Australian Securities & Investments Commission [2003] NSWCA 342 at [93] per Spigelman CJ, with whom Ipp J agreed. However, it was not contended by counsel that any such result in this case would lead to disqualification pursuant to Pt 4 of Div 1 of Sch 1B to the Act. 40 Some support for the appellants' position may be drawn from the judgment of Beaumont J in R v Deputy Commissioner of Taxation; Ex parte Briggs (1987) 13 FCR 389. Briggs concerned a proceeding for prohibition and mandamus, and a declaration that any communication between the respondents of information about the affairs of the prosecutors was in breach of the Income Tax Assessment Act 1936 (Cth) and the Crimes Act 1914 (Cth). The prosecutor applied for orders of discovery and interrogatories. The application was refused. Beaumont J held that although the proceeding before him was not one for the recovery of a civil penalty, the only means of protecting the respondent's privilege against self-incrimination was to excuse them from discovery obligations. 41 At 392 in Briggs, Beaumont J said: "The application for discovery was resisted on a number of grounds. Since I have come to the conclusion that discovery should not be ordered because it may expose the respondents to the penalties of a crime, it is unnecessary to deal with the other grounds of objection." 42 At 393 and 394, his Honour said: "It is true that the general rule in civil proceedings where no penalty is sought is that a party ought not to be excused, in limine, from giving discovery on the ground that production might tend to expose him to a penalty. However, as Deane J observed in Refrigerated Express Lines (supra at 211):

"If circumstances arose where the only means of protecting the right against self-incrimination and self-penalisation were to excuse a party in limine from discovery or interrogatories, such circumstances should, in my view, be seen as exceptional and as justifying a departure from the general rule. In particular, if it appeared to the court that the making of an affidavit of discovery as distinct from producing the documents referred to in such an affidavit would tend to expose a party to a penalty, any order for discovery should be adjusted to the extent necessary to preclude that tendency. It is, perhaps, conceivable that circumstances could arise where the mere making of an order for interrogatories might have a similar tendency. The cases where the making of an order for discovery or interrogatories will, in itself, involve exposing a party to self-incrimination or self-penalisation must, however, be rare indeed in view of the fact that the party will remain entitled to refuse to answer questions asked or produce documents discovered if the answers or production might tend to incriminate him or expose him to a penalty."

In my opinion, the present case falls within the exceptional class mentioned by Deane J. Although these are not proceedings to enforce a penalty, they are analogous to such proceedings. The prosecutor seeks a declaration that the statutory provisions in question have been contravened. Thus the main issue in the principal proceedings is whether ay such contravention occurred. There may be a real question whether this is an appropriate use of the declaratory procedure (see Sankey v Whitlam (1978) 142 CLR 1 per Gibbs ACJ at 20-26. It is not now necessary to resolve this and the related question of the standing of the prosecutor to sue. I am prepared to assume, for present purposes, that the prosecutor has at least an arguable claim to the relief he now seeks. But the making of that assumption is necessarily fatal to his claim for discovery, whether general or special: for to order discovery here is to compel the respondents to identify documents which may lead indirectly to their incrimination. As Lord Wilberforce observed in Rio Tinto Zinc Corp v Westinghouse Electric Corp [1978] AC 547 (at 612): "…the tendency to expose to a penalty would be increased if the documents in question were to be validated and connected with the RTZ companies by sworn evidence, as opposed to being, as they are now, pieces of paper found in a file."" 43 His Honour viewed the making of a discovery order as having a tendency to expose the respondents to a penalty in other proceedings. His Honour's reasons do not set out, in any detailed way, why that result would have necessarily occurred. In Briggs the respondents' protection of their privilege may have been secured by their right to object to the production of any particular document. Indeed in Refrigerated Express at 211, Deane J noted that it would be "rare" for a party to be excused from discovery in limine. 44 In Refrigerated Express at 208, as referred to earlier in these reasons for judgment, Deane J said that where the proceeding is not one for the recovery of a penalty, there is no general rule precluding the making of an order for discovery. Notwithstanding the observations of Beaumont J at 91 in Briggs, the position is not that any proceeding analogous to a proceeding to enforce a penalty is, per se, to be treated as if it was a proceeding to enforce a penalty. 45 In a proceeding where a penalty is not sought, exceptional circumstances are required "as justifying a departure from the general rule" to be excused in limine from discovery (or the filing of a defence) under the privilege against self-exposure to a penalty: see Refrigerated Express at 211. 46 In the instant circumstances, there are means of protecting the personal respondents' right against self-exposure to a penalty which do not require them to be excused in limine from filing a defence. The personal respondents retain the right to object to pleading to particular paragraphs of the amended statement of claim, as the primary judge acknowledged. 47 The result in Briggs appears to be inconsistent with the observations made by Deane J in Refrigerated Express. The relevant passage, which follows the extract of the judgment quoted in Briggs, is found at 211-212, where Deane J said: "It was submitted on behalf of the respondents that a general order excusing the respondents in limine from discovery of documents or answering interrogatories was justified in the present matter for the reason that the whole basis of the present action for injunctive relief and damages was alleged contravention and involvement in contravention of the provisions of Pt IV of the Act. In these circumstances, it was said, the only purpose of discovery or interrogatories would be to provide evidence which would tend to establish the alleged contravention and involvement in contravention of the Act which, if established, would inevitably tend to render the respondents liable to a penalty at the suit of the Minister or the Trade Practices Commission. It followed, it was said, that the ordinary approach appropriate to proceedings other than proceedings for a penalty should not be followed and the respondents should be granted the general immunity from discovering documents or answering interrogatories to which they would be entitled in proceedings for a penalty.

While I can see great force in the respondents' argument, I am unable to accept it. In my view, the only circumstances which would warrant a departure in the present case from the ordinary approach that a party should be left to object to production of particular documents or to answering particular interrogatories would be that it appeared that the actual discovery, as distinct from production for inspection, of documents or the actual order for interrogatories would tend to expose the party ordered to make discovery or answer interrogatories to liability to a penalty. Notwithstanding the argument to the contrary advanced on behalf of the respondents, I am unable to see that either an order for discovery or an order for interrogatories would, in the present case, in itself have or be directly productive of that effect. In those circumstances, I consider the ordinary approach should apply and the respondents should be left to object to producing particular documents or answering particular interrogatories."

48 In Microsoft Corporation v CX Computer Pty Ltd (2002) 116 FCR 372 at 385, Lindgren J considered that Refrigerated Express was unsatisfactorily distinguished in Briggs. His Honour said at [54]: "In Briggs, Beaumont J sought to distinguish Refrigerated Express on the basis that in Refrigerated Express the only relief sought was injunctive relief and damages, whereas in Briggs it was a declaration of contravention and consequential mandatory and prohibitory injunctions. With respect, this seems to me an unsatisfactory basis on which to distinguish Refrigerated Express. In Refrigerated Express it was the alleged "contravention" of provisions of Part IV of the TP Act that provided the basis for the injunctive relief and damages sought under ss 80 and 82 of the TP Act. It is difficult to accept that an inclusion in the relief sought in that case of a prefatory declaration of contravention would have had any effect on Deane J's treatment of the issue of self-exposure to a penalty." 49 Wheeler J, with whom Hasluck and Pullin JJ agreed, adopted Lindgren J's view in Oretek Ltd v Australian Securities & Investments Commission [2003] WASCA 113, before the Full Court of the Supreme Court of Western Australia. Her Honour said at [19] and [20]: "In [Briggs] Beaumont J sought to distinguish Refrigerated Express on the basis that in Briggs what was sought was a declaration of contravention, and consequential mandatory and prohibitory injunctions. Of that distinction, Lindgren J observed in Microsoft Corporation at [54]: "With respect, this seems to me an unsatisfactory basis on which to distinguish Refrigerated Express." I would respectfully adopt the view taken by Lingren J. It seems to me that the declaration of contravention sought in this case adds nothing to the applicant's argument." 50 Refrigerated Express has been recently cited with approval by a Full Court in Australian Competition and Consumer Commission v FFE Building Services [2003] FCAFC 132 at [12] and has been generally accepted, since its publication, as providing a correct and detailed statement of law. The approach of the primary judge was consistent with the approach of Deane J in Refrigerated Express, set out in the passage quoted above at [27]. To the extent that Briggs supports a contrary approach, it is at odds with Refrigerated Express and should not be followed. 51 Given that the case against the personal respondents is within the second category referred to in Refrigerated Express and that no circumstances exist which justify departure from the general rule, I consider that the primary judge was correct in his view that the personal respondents were not to be relieved of the obligation of filing a defence. 52 It is open to the personal respondents to object to pleading to particular paragraphs of the amended statement of claim on the basis that in so doing, they may risk exposure to the imposition of a penalty in future proceedings. 53 The appeal should be dismissed. No order as to costs should be made having regard to the provisions of s 347(1). I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall.

Associate: Dated: 27 February 2004 Counsel for the Appellants: Mr S Rothman SC with Mr J Pearce

Solicitor for the Appellants: Taylor & Scott

Date of Hearing: 9 February 2004

Date of Judgment: 27 February 2004

Workplace Relations Act 1996(Cth)

Construction Forestry Mining & Energy Union of Australia v Inspector Alfred

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