Fair Work Ombudsman v Transpetrol TM As

(REVISED FROM THE TRANSCRIPT) RARES J: 1 The Fair Work Ombudsman seeks leave to serve Transpetrol TM As in Norway under the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at the Hague on 15 November 1965 (the Hague Convention) pursuant to r 10.43 of the Federal Court Rules 2011. Transpetrol's name was spelt incorrectly in the originating application because of a typographical error and I granted leave to the Ombudsman to file an amended originating application that spells Transpetrol's name correctly.

Background 2 Transpetrol is a Norwegian corporation that was the employer of labour for the crew on board M/T Turmoil, a Panamanian-flagged oil/chemical carrier. There is a great deal of documentary material which the Ombudsman has put in evidence on the application to serve Transpetrol. 3 In the following reasons, I have made findings based on the currently uncontested material before me in evidence. However, I have not formed any concluded view on any issue, beyond the one that I am required to form in assessing, on a necessarily incomplete ex parte application at a preliminary stage of the case, whether the Ombudsman has discharged his obligation under r 10.43(4) to satisfy the Court that it has jurisdiction in the proceeding, that the proceeding is of a kind mentioned in r 10.42 and that he has "a prima facie case for all or any of the relief claimed in the proceeding". 4 Finn, Weinberg and Rares JJ explained the nature of the prima facie case test in Ho v Akai Pty Limited (In Liq) (2006) 24 ACLC 1526 at [10] (see too Beluga Shipping GmbH & Co KS "Beluga Fantastic" v Headway Shipping Ltd (No 2) (2008) 251 ALR 620 at 628 [32]) as follows: As has been observed on many occasions, the prima facie case requirement has to be met at the outset, usually on an ex parte basis, and without the advantage of discovery and other procedural aids to the making out of a case: see e.g. Merpro Montassa Ltd v Conoco Specialty Products Inc (1991) 28 FCR 387 at 390. It "should not call for a substantial inquiry": WSGAL Pty Ltd v Trade Practices Commission (1992) 39 FCR 472 at 476; see also Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 at 549. For present purposes it is sufficient to say that a prima facie case for relief is made out if, on the material before the court, inferences are open which, if translated into findings of fact, would support the relief claimed: Western Australia v Vetter Trittler Pty Ltd (in liq) (1991) 30 FCR 102 at 110. Or, to put the matter more prosaically as Lee J did in Century Insurance (in provisional liquidation) v New Zealand Guardian Trust [1996] FCA 376: "What the Court must determine is whether the case made out on the material presented shows that a controversy exists between the parties that warrants the use of the Court's processes to resolve it and whether causing a proposed respondent to be involved in litigation in the Court in Australia is justified." 5 The Ombudsman claims that Transpetrol underpaid 61 crew members who, at various times, during 10 voyages, manned Turmoil while she was engaged in coastal trading within the meaning of the Coastal Trading (Revitalising Australian Shipping) Act 2012 (Cth) as applied by Div 3 of Pt 1-3 of the Fair Work Regulations 2009 (Cth), and provisions under the Fair Work Act 2009 (Cth). The Fair Work Act and Regulations provided for the payment of wages in accordance with either, in the case of three crew members, the National Minimum Wage Order, and, in the case of the other 58, one or other of the Seagoing Industry Award 2010 as in force on and from 15 January 2013 or 12 November 2014.

The legislative scheme 6 It is necessary to explain the legislative path pursuant to which the Ombudsman seeks to recover pecuniary penalties under s 546 of the Fair Work Act from Transpetrol. The alleged underpayments of crew members amounted to a little over $250,000. The Ombudsman alleged that the underpayments occurred while Turmoil was sailing on 10 voyages within the jurisdictional area defined under regs 1.15B and 1.15E(1)(c), in the course of coastal trading under temporary licences granted under the Coastal Trading Act. 7 Relevantly, for present purposes, the Fair Work Act provides that a person must not contravene a term of a modern award (s 45) and that an employer must not contravene a term of the Order (s 293). The Parliament provided in s 33(3) of the Fair Work Act that regulations could be made to prescribe further extensions of the Act or specific provisions in it to, or in relation to, either the exclusive economic zone or the waters above the continental shelf. 8 Part of the scheme of regulation of the shipping industry effected by the enactments of the Coastal Trading Act and the Navigation Act 2012 (Cth) involved the introduction of a new system of temporary licences for foreign-flagged and, in some cases, foreign-crewed ships to engage in coastal trade in Australian and adjacent waters. The legislation provided that temporary licences could be granted subject to certain requirements, including compliance with aspects of Australia's employment laws. Regulation 1.15B defined a "temporary licence" to have the meaning given in s 6(1) of the Coastal Trading Act. It then defined a "temporary licensed ship" as meaning a ship that was used to undertake a voyage authorised by a temporary licence if, relevantly, within the 12 months before commencing the particular voyage, the ship had also commenced at least two other voyages authorised by a temporary licence. In other words, the definition of a temporary licensed ship required, as a condition of the extended operation of the Act effected by Div 3 of Pt 1-3 of the Regulations made under s 33(3) of the Fair Work Act, that the relevant ship had sailed at least two prior voyages under a temporary licence before the employer of the crew on that ship became subject to the operation of the Act. Importantly, reg 1.15E(1)(c) provided that for the purposes of s 33(3), the Fair Work Act: extended to and in relation to each of the following ships in the exclusive economic zone or the waters above the continental shelf … (c) a temporary licensed ship. 9 The Coastal Trading Act provided that a temporary licence could be granted by the Minister pursuant to Div 2 of Pt 4 of that Act. Where the Minister decided to grant an application, the temporary licence would be valid for 12 months and the Minister had also to determine the number of voyages authorised by the licence and certain particular characteristics of such voyages, some of which Allsop CJ, with whom Mansfield J agreed, and I discussed in CSL Australia Pty Ltd v Minister for Infrastructure and Transport (2014) 221 FCR 165. In particular, pursuant to s 37 of the Coastal Trading Act, a temporary licence had to include the name of the holder of the licence, the number of voyages, the loading dates, the load and discharge ports and, relevantly, the type of cargo to be carried, that the licence authorised. 10 In Fair Work Ombudsman v Pocomwell Ltd (No 2) (2013) 218 FCR 94 at 113-114 [104]-[105], Barker J held that Australia had the right, under the United Nations Convention on the Law of the Sea 1982 (UNCLOS), to regulate labour relations on vessels that may be classified as foreign-flagged ships operating in Australia's exclusive economic zone in accordance with reg 1.15E. He held that the extension of jurisdiction by reg 1.15E to regulate crew on foreign-flagged vessels was valid and not inconsistent with international law or ultra vires the Fair Work Act. However, his Honour there was considering a different question to the present that concerned the employment of crew on rigs in Australia's exclusive economic zone.

The issues 11 Following his investigation, the Ombudsman asserted that Transpetrol had underpaid the 61 crew members. The Ombudsman engaged in correspondence with both Transpetrol in Norway and solicitors acting for Transpetrol in Australia, namely Holding Redlich. That resulted in Transpetrol, without admissions, agreeing to pay the 61 crew members the amounts of their alleged underpayments. 12 After the proceedings commenced, Transpetrol's solicitors contended in their letter of 14 December 2016 to the Ombudsman that they were not authorised to accept service on behalf of their client because, among other things, it objected to the Court's jurisdiction in the proceedings on the following bases: reg 1.15E(1)(c) was ultra vires the regulation-making power in s 33(3) of the Fair Work Act as it was inconsistent with international law, Pocomwell 218 FCR 94 was wrongly decided and Australia's sovereign rights did not encompass the right to regulate labour relations on board foreign-flagged ships; if reg 1.15E(1)(c) were valid, the question in the present case was distinguishable from Barker J's decision, because Turmoil was not engaged in exploration and exploitation of natural resources in the exclusive economic zone, but rather was engaged in coastal or other trading under a temporary licence; the definition of "temporary licensed ship" in the Regulations was also ultra vires because it was inconsistent with international law; and the voyages the subject of the proceedings did not meet the definition of a "voyage" within the meaning of ss 6 and 7 of the Coastal Trading Act.

The factual context 13 The Ombudsman relied on an example of a voyage under the temporary licence, granted in respect of Turmoil, to make out a prima facie case under r 10.43(4)(c). He identified wage and sailing records produced by Transpetrol in respect of a Bandish Mahadik, a chief engineer (the engineer) on the voyage of Turmoil that commenced at Port Botany on 25 February 2013, to make good his claim that a crew member had been underpaid. The chief engineer embarked on Turmoil on 25 February 2013. 14 The Minister granted temporary licence 0014TL0001 on 13 July 2012. The records of the then Department of Infrastructure and Transport in respect of the licence show that Turmoil had sailed under the licence on two voyages carrying petroleum, namely on 14 February 2013 from Port Botany to Brisbane, and on its return from Brisbane to Port Botany on 19 February 2013. Relevantly, on 25 February 2013, Turmoil commenced a voyage from Port Botany carrying 7970 metric tonnes of petroleum that she discharged at Brisbane. Thus there were two prior voyages by Turmoil conducted under the licence in February 2013 before the voyage complained of commenced on 25 February 2013. 15 The Ombudsman prepared a summary of the wage records produced by Transpetrol. The summary recorded that the total daily payment of the chief engineer, converted to Australian dollars, for the voyage commencing on 25 February 2013 was AUD110.18. That appeared to comprise an aggregation of a base payment and overtime. 16 The Award, as in force on and from 15 January 2013, provided that its Part B applied to vessels that had been granted a temporary licence under the Coastal Trading Act. The Award fixed the minimum weekly wage for a chief engineer under Part B at $1,141.40 (cl 24). Clause 26.1 provided that ordinary hours of work would be eight hours per day, Monday to Friday, and that any hours worked in excess of those would be paid for as overtime. Thus, the total daily amount of the minimum weekly wage under Part B of the Award, based on 40 hours per week, with days of eight hours on Mondays to Fridays, equated to AUD228.28 per day. That was substantially more than the AUD110.18 per day that the chief engineer appeared to have been paid on the voyage of Turmoil that commenced on 25 February 2013.

Consideration 17 Accordingly, I am satisfied on the evidence that there is a prima facie case, for the purposes of r 10.43(4)(c), that the chief engineer was underpaid wages while engaged on the voyage of Turmoil between Port Botany and Brisbane commencing on 25 February 2013. 18 It is safe to infer for the purposes of r 10.43(4)(c) that Turmoil sailed on that voyage within the extended jurisdictional area provided in reg 1.15E(1), namely, the exclusive economic zone or the waters above the continental shelf, to the extent she sailed outside the territorial sea. 19 I am satisfied that the maritime labour certificate, dated 7 August 2013, issued by the Republic of Panama established a prima facie case that Turmoil had been flagged in Panama from 8 August 2011 as an oil or chemical tanker and that she was owned by Transpetrol. 20 I am also satisfied by the evidence of the solicitor for the Ombudsman, Kerry O'Brien, that Norway is a party to the Hague Convention and that Transpetrol's address is Knud Askers vei 20B, 1383 Asker, Norway. 21 The objections to jurisdiction raised by Transpetrol's solicitors in their letter of 14 December 2016 sought to address whether the Court had power under r 10.43(4)(a) to order service out and, so far as it may bear on the question of discretion to do so, the strength of any prima facie case that the Ombudsman demonstrated under subr (c). It is convenient to note that the proceeding satisfies r 10.43(4)(b) because it is of a kind mentioned in each of items 14 and 15 of the table to r 10.42, namely it is a proceeding "in relation to the construction, effect or enforcement of an Act, regulations or any other instrument having, or purporting to have, effect under an Act" (item 14) and "seeking any relief or remedy under an Act", namely the Fair Work Act and the pecuniary penalty sought (item 15). 22 The determination of a question as to the validity of the extended jurisdiction created by regs 1.15B and 1.15E under s 33(3) of the Fair Work Act appears to be within the contemplation of a proceeding covered by item 14. That is because Transpetrol has raised an issue as to whether Div 3 of Pt 1-3 of the Regulations is valid to the extent that it purported to extend the operation of the Act to Turmoil on each of the 10 voyages in question. Taking Transpetrol's objection at its highest, the Regulations "purport … to have effect" under the Fair Work Act. If, of course, the Regulations are valid, they have that effect. However, item 14 in the table to r 10.42 extends to a proceeding in which part of the justiciable controversy or matter includes a question about whether a regulation is intra or ultra vires. Moreover, under s 562 of the Fair Work Act, the Parliament conferred jurisdiction on this Court "in relation to any matter (whether civil or criminal) arising under this Act". 23 As Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ explained in Residual Assco Group Limited v Spalvins (2000) 202 CLR 629 at 639-640 [14], this Court has authority to make binding orders that proceedings are not within its jurisdiction. Their Honours pointed out that, under s 19(1) of the Federal Court of Australia Act 1976 (Cth) (which provides that the Court has such original jurisdiction as is vested in it by laws made by the Parliament), this Court also has vested in it power to dismiss proceedings, for want of jurisdiction, over which it does not have jurisdiction. 24 Part of the controversy which Transpetrol claims to exist between it and the Ombudsman is whether it is amenable to this Court's jurisdiction by force of the Fair Work Act and the extension, pursuant to s 33(3), of the relevant provisions of that Act to Transpetrol's activities as an employer of crew on a ship engaged in coastal trading, as defined under the Regulations, that sails on voyages under the authority of a temporary licence under the Coastal Trading Act. 25 I am satisfied that the Court has jurisdiction to determine that controversy, namely, whether, in fact, the Court's jurisdiction has been validly extended, as reg 1.15E(1)(c) "purports" to do and as the Ombudsman alleges. That raises a similar issue to that decided in Pocomwell 218 FCR 94. 26 For these reasons, I am satisfied that there is a sufficient basis before me that the Court has jurisdiction for the purposes of r 10.43(4)(a). 27 As I have explained, the evidence of underpayment of the chief engineer on Turmoil during the voyage commencing on 25 February 2013 satisfies me that there is a prima facie case for some of the relief claimed in the proceedings, namely, relief by way of the award of a pecuniary penalty based on a contravention of s 45 of the Fair Work Act by Transpetrol in failing to pay the chief engineer his minimum rate of pay in accordance with cl 24 of the Award. I am also satisfied that, if that case is made out, there is a prima facie case that Transpetrol is liable to have an order made against it that it pay a pecuniary penalty for that contravention under s 546 of the Act.

Conclusion 28 Accordingly, I am satisfied that I should grant the Ombudsman leave to serve the amended originating application on Transpetrol in Norway in accordance with the Hague Convention, pursuant to r 10.43(2), together with a copy of the amended statement of claim and the order for service out. I will also require the Ombudsman to convey my reasons, when they are settled, to Transpetrol at its last known address in Norway and to Holding Redlich, the Australian solicitors who were acting for it. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.