JESSUP J:
1 In this proceeding, the first respondent, Musicians' Union of Australia ("the Union"), admits that it contravened ss 253, 265(5) and 266 of Sched 1 to the Workplace Relations Act 1996 (Cth) and ss 253, 265(5) and 266 of the Fair Work (Registered Organisations) Act 2009 (Cth) (together referred to hereafter as "the RO Act") over the period 10 December 2007 -31 December 2012. The second respondent, Terry Noone, an office-holder in the Union over that period, admits that he contravened s 285 of the RO Act in respects which were associated with the Union's contraventions.
2 The matter now before the court is the amount of the penalties that should be imposed on the respondents for their admitted contraventions. The applicant, the General Manager of the Fair Work Commission, submits that, subject to the avoidance of double punishment for the same dereliction, each penalty should be fixed within the range 40%-50% of the applicable maximum. The respondents submit that penalties of anything like that order would be excessive, having regard to a number of factors including, and most obviously, the size and means of the Union, their good record, their contrition, the steps taken by the Union to minimise the prospect of such contravening conduct occurring in the future, and their cooperation with the applicant.
3 This proceeding is concerned with omissions which occurred in the administration of the Melbourne and Sydney branches of the Union, and in the "federal office", as it was called at the hearing. Many of the obligations to be found in Pt 3 of Ch 8 of the RO Act, including those arising under ss 253, 265(5) and 266, are imposed on "reporting units" within organisations. By s 242(3), each of the Melbourne and Sydney branches of the Union was a "reporting unit" upon which obligations were thus imposed. Further, by s 242(5), so much of the Union as was not included in a branch was taken to be a branch, and therefore a "reporting unit". It is agreed that the "federal office" of the Union was a deemed branch under this provision. Then, by s 305(3) of the RO Act, for the purposes of a civil remedy proceeding such as the present, a contravention of one of the provisions that are presently relevant by a reporting unit of an organisation was taken to be a contravention by the organisation itself.
4 Section 253 of the RO Act provided as follows:
253 Reporting unit to prepare general purpose financial report
(1) As soon as practicable after the end of each financial year, a reporting unit must cause a general purpose financial report to be prepared, in accordance with the Australian Accounting Standards, from the financial records kept under subsection 252(1) in relation to the financial year.
(2) The general purpose financial report must consist of:
(a) financial statements containing:
(i) a profit and loss statement, or other operating statement; and
(ii) a balance sheet; and
(iii) a statement of cash flows; and
(iv) any other statements required by the Australian Accounting Standards; and
(b) notes to the financial statements containing:
(i) notes required by the Australian Accounting Standards; and
(ii) information required by the reporting guidelines (see section 255); and
(c) any other reports or statements required by the reporting guidelines (see section 255).
(3) The financial statements and notes for a financial year must give a true and fair view of the financial position and performance of the reporting unit. This subsection does not affect the obligation for a financial report to comply with the Australian Accounting Standards.
[notes omitted]
5 On the facts admitted in the present case, save only that no allegations are made about the Melbourne Branch in the year ending on 30 June 2007, in none of the years concerned did any of the relevant reporting units prepare the financial report required by s 253(1), in which circumstances the provisions of subs (2) and (3) are not directly relevant. Their significance, however, lies in the identification of the content of the report required by subs (1). It is common ground that these are important matters in the administration of an organisation registered under the RO Act, such as the Union was and is. On the matter of timing, although s 253(1) itself goes no further than to require the report to be prepared "as soon as practicable after the end of each financial year", it is clear from the terms of s 265(5), to which I turn below, and it is common ground, that the latest date upon which a report could be prepared was 10 December in a particular year. A report prepared after that would not have been prepared in conformity with s 253(1).
6 Subsections (1) and (5) of s 265 of the RO Act provide as follows:
(1) A reporting unit must provide free of charge to its members either:
(a) a full report consisting of:
(i) a copy of the report of the auditor in relation to the inspection and audit of the financial records of the reporting unit in relation to a financial year; and
(ii) a copy of the general purpose financial report to which the report relates; and
(iii) a copy of the operating report to which the report relates; or
(b) a concise report for the financial year that complies with subsection (3).
…
(5) The copies referred to in subsection (1) must be provided within:
(a) if a general meeting of members of the reporting unit to consider the reports is held within 6 months after the end of the financial year - the period starting at the end of the financial year and ending 21 days before that meeting; or
(b) in any other case - the period of 5 months starting at the end of the financial year.
The General Manager may, upon application by the reporting unit, extend the period during which the meeting referred to in paragraph (a) may be held, or the period set out in paragraph (b), by no more than one month.
7 The Union was required under s 265(1) to provide the "full report" or the "concise report" referred to. The full report had to include the general purpose financial report which would, had the Union attended to its obligations under s 253, have been the report prepared in conformity with that section. Whatever else might have led to contraventions of s 265(5), the absence of a s 253 report meant that there was, inevitably, a contravention in each relevant year. There was no agreement on the question whether para (a) or para (b) of s 265(5) applied to the circumstances of any of the relevant reporting units in any of the relevant years, and the applicant's Amended Statement of Claim (to which there was no Defence) went no further, in every instance, than to echo the hypothetical terms of the subsection. But the applicant has taken the approach, and it is uncontroversial, that, on any hypothesis, the latest that a reporting unit might have complied with the subsection in any year was 10 December, being 21 clear days before the last day (31 December) upon which a general meeting might have been held conformably with para (a).
8 Subsection (1) of s 266 of the RO Act (the only provision of s 266 of present relevance) provides as follows:
Subject to subsection (2), the reporting unit must cause the full report to be presented to a general meeting of the members of the reporting unit within the period of 6 months starting at the end of the financial year (or such longer period as is allowed by the General Manager under subsection 265(5)).
9 This obligation was not complied with in any of the relevant years by any of the three reporting units referred to. It is common ground that the contravention arose, in each case, on 31 December of the year concerned.
10 Section 285(1) of the RO Act provides as follows:
(1) An officer of an organisation or a branch must exercise his or her powers and discharge his or her duties with the degree of care and diligence that a reasonable person would exercise if he or she:
(a) were an officer of an organisation or a branch in the organisation's circumstances; and
(b) occupied the office held by, and had the same responsibilities within the organisation or a branch as, the officer.
11 Mr Noone was an officer of each of the reporting units with which these reasons are concerned. He was, at all relevant times, the Federal Secretary of the Union, the secretary of the Melbourne Branch and responsible for the affairs of the Sydney Branch pursuant to an instruction of the Federal Executive under r 40(j)(23) of the rules of the Union. It was in January 1998 that he first became Secretary of the Melbourne Branch, then a full time, paid, position. In July 2000 he was elected to the position of Federal Secretary and, owing to the deteriorating financial position of the Union, was paid for one day each week for the duties of that office, with the remaining four days being available for the duties of his existing office as Secretary of the Melbourne Branch.
12 As to what happened thereafter, in his affidavit sworn on 1 February 2016, Mr Noone said:
Over the course of 1999 to 2015, the funds available to pay for my employment steadily decreased. As a consequence, so did my hours.
By 2013 I was engaged two days per week part time. I remained at that level for about the last two and a half years. For at least 5 years I have been the sole person engaged to do any work regarding the records and accounts of the union, in the Federal, Sydney and Melbourne branches.
13 The applicant's case against Mr Noone, which he accepts, is that, in permitting the situation to come about whereby the three relevant reporting units defaulted on their obligations under ss 253, 265(5) and 266, he failed to exercise his powers and to discharge his duties with the degree of care and diligence that a reasonable person would exercise in the circumstances which obtained at the relevant times, in contravention of s 285.
14 It will be apparent from what I have said already, and it is admitted, that, for each of the reporting units in each of the years (save only for the Melbourne Branch in respect of the year ending on 30 June 2007), there was a contravention of each of ss 253, 265(5) and 266 of the RO Act on the part of the Union (ie by the operation of s 305(3)). In the case of Mr Noone, it is admitted that, for each contravention by the Union, there was a corresponding contravention of s 285(1) by him. From these starting points, the applicant accepts that all contraventions by a particular reporting unit in a particular year should be treated as part of the same course of conduct, and should, as a matter of practical outcome, be penalised once only. It was submitted that the approach which I took in General Manager of the Fair Work Commission v Thomson (No 4) [2015] FCA 1433 at [11] would be an appropriate way to give effect to that intention and, subject only to the respondents being allowed a reasonably generous time to make the primary payments referred to, I did not understand them to resist this approach.
15 I shall, therefore, fix an appropriate penalty for each contravention to which the respondents have admitted. My orders will provide that, upon payment of the penalty in respect of the contravention of s 253 of the RO Act by a particular reporting unit in a particular year within a stated period, the operation of the orders fixing penalties in respect of the contraventions of ss 265(5) and 266 of the RO Act by the same reporting unit in the same year be permanently stayed. It will, of course, be by reference to the penalties fixed in relation to s 253 that, at the end of these reasons, I shall deal with considerations arising under the totality principle. I shall take a corresponding approach with respect to Mr Noone's contraventions of s 285.
16 The power of the court to impose penalties in the present case arises under s 306(1) of the RO Act. In the specification of the maximum penalty that may be imposed, no distinction is made between the numerous civil remedy provisions set out in s 305(2), including those of present relevance. Over the period covered by the admissions in this case, the legislation has been amended, but, for the case before the court, it is common ground that the maximum penalties are -
in respect of contraventions occurring on or before 27 December 2012, $33,000 in the case of the Union and $6,600 in the case of Mr Noone; and
in respect of contraventions occurring on or after 28 December 2012, $51,000 in the case of the Union and $10,200 in the case of Mr Noone.
17 As noted above, the Union's contraventions of ss 253(1) and 265(5) of the RO Act were complete by 10 December in the year concerned, as were, necessarily, Mr Noone's corresponding contraventions of s 285(1). In those cases, therefore, there were no contraventions which occurred on or after 28 December 2012. On the other hand, the Union's contraventions of s 266 (one by each of the three reporting units involved) in respect of the year ending on 30 June 2012 were not complete until 31 December 2012, making applicable to them, and to Mr Noone's corresponding contraventions of s 285(1), the higher penalties referred to in the previous paragraph.
18 Subject to grouping (as described above) and to the totality principle, what penalties are appropriate in the present case?
19 A significant aspect of the applicant's case for penalties is that the Union - and, necessarily, Mr Noone - were regularly reminded of the obligations arising under ss 253, 265(5) and 266, and urged to attend to them. I do not need to refer in detail to the numerous, repeated, instances of correspondence from the applicant, or the relevant public official with responsibilities at the time, in which the respondents were not only alerted to their defalcations but encouraged to put their house in order. Although, occasionally, Mr Noone, writing on behalf of the reporting units involved, offered various explanations, and made a number of promises, in this regard, nothing was done by way of compliance until early 2014; and even that, as counsel for the applicant pointed out, was not compliance as such, since it post-dated by a considerable margin the times at which the RO Act required these sections to be complied with.
20 Thus I accept the submission made on behalf of the applicant that the contraventions to which the respondents have admitted were wilful, as distinct from inadvertent. And, as the respondents themselves accept, they were serious.
21 Counsel for the applicants pointed to the inordinate length of time which passed, at least in some cases, without the relevant reporting units having done the things required by ss 253, 265(5) and 266 (while at the same time stressing that, strictly, there could be no such thing as "late compliance"). Counsel for the respondents responded that, while it is true that the things required in relation to the year ending on 30 June 2007 were done about six years late, some (not all) of those required in relation to the year ending on 30 June 2012 were done only a little more than a year late. For myself, I would not regard the timing of the doing of these things in respect of the later years as providing a basis for leniency. To the contrary, by then the respondents had become repeat, if not serial, contraveners. Their inaction in the face of repeated reminders from the regulator speaks not only with respect to the years to which the reminders related: it speaks, quite loudly in my view, with respect to the later years where the respondents' inaction is that much the less excusable.
22 Notwithstanding those considerations, I have not been able to discern, in the facts of the case, any basis for discriminating as between contraventions, reporting units or years in fixing the quantum of the penalties to be imposed. I was not invited to do so. Expressly in the case of the applicant, and implicitly in the case of the respondents, the parties approached their submissions on the basis that, subject only to the increase in the statutory maxima in 2012, the same penalty should be imposed for all contraventions.
23 Of the circumstances that bear upon the determination of penalties other than those directly involved in the contraventions themselves, and other than the matters discussed above, most provide support for the imposition of penalties of a modest order. The Union is a small organisation, with insubstantial resources and a limited (and, it seems, diminishing) membership base. I shall not set out the figures here, but they were placed before the court and have been taken into account. It was submitted on behalf of the respondents that, given the number of contraventions involved, the imposition of penalties that may, in the case of a much larger organisation, be regarded as appropriate would present a real risk to the ongoing viability of the Union. I accept that submission. It is, of course, well-established that the court should not be dissuaded from the imposition of an appropriate penalty simply by the prospect that the continued solvency of the company concerned might thereby be imperilled. But the wrongdoing in the present case occurred in the administration of an organisation formed to secure and to advance the interests of its members in their working lives. I must recognise that the members of the Union have been badly let down by the officers who served them, but that does not mean that the Union might not - and, if the present experience has been a salutary one for it, should not - continue to be a force for good in those activities and in the other areas in the music industry where, according to the evidence, it has a legitimate and useful role.
24 A significant - perhaps the foremost - consideration in the determination of civil penalties is the matter of deterrence, both specific and general. As to the former, in 2015, and largely as a result of the matters which were the subject of this proceeding, the Union sought and obtained Mr Noone's resignation from each of the offices which he held. This was, of course, devastating for him, but he made no suggestion that it was unwarranted. Indeed, in his affidavit, he said:
The reason for seeking my resignation (and the reason for tendering it) was solely the conduct that is the subject of these proceedings. As a result of these resignations, I am now, for the first time in 17 years, no longer employed by the union. For the first time in 28 years I am no longer an officeholder in the union. I provided by resignation because I realise I had done the wrong thing by the union and its members by failing to meet my obligations under the Act.
Manifestly, Mr Noone appreciates the gravity of the contraventions for which he will be penalised. I accept the respondents' submission that the need for specific deterrence speaks rather softly in his case.
25 The same cannot be said of the Union. If, as I trust will be the situation, it has an ongoing role in the music industry, it is important that it be left with the impression that obligations of the kind imposed by ss 253, 265(5) and 266 are to be taken seriously. There is evidence that it has already put measures in place that will help to avoid the repetition of what occurred here, but the scale of its contraventions make specific deterrence an important consideration for the court.
26 So too is general deterrence an important consideration, in respect of both respondents. Were this proceeding to have no other consequence, if it alerts other small organisations to the importance of compliance with the RO Act it will have served a salutary public purpose. It is at this stage that the size of the Union becomes a significant factor. As mentioned above, the legislation does not discriminate, in the maximum penalties that may be imposed, as between the many civil remedy provisions which are the concern of Pt 2 of Ch 10. More importantly, there is a single maximum for any "body corporate". For a single contravention, a very large trading company, for example, would be exposed to no higher a maximum penalty than a tiny industrial organisation such as the Union. The deterrent impact of a penal outcome will necessarily vary as between entities at these extremes of the spectrum. This obviously holds at the level of specific deterrence, but it holds also, in my view, at the level of general deterrence.
27 In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285, 293, Burchett and Kiefel JJ said, with the agreement of Carr J:
In [Trade Practices Commission v TNT Australia Pty Ltd [1995] ATPR 40,161] (at 40,168), it was pointed out that some other factors which have been regarded as important actually flow from what French J called in [Trade Practices Commission v CSR Ltd [1991] ATPR 52,135] (at 52,152) "[t]he primacy of the deterrent purpose in the imposition of penalty". One of those factors is the size of the corporation involved, since "[w]hat would deter a small company might have little effect on a very large one". That size was a factor was noted in CSR [Ltd] (at 52,154) and in Trade Practices Commission v Carlton & United Breweries Ltd (1990) 24 FCR 532 at 542.
For a more recent instance of the invocation of this principle, see Australian Competition and Consumer Commission v BAJV Pty Ltd [2014] FCAFC 52 at [34]-[47].
28 Albeit somewhat later than would have been ideal in the case of most of the contraventions, the respondents have come to appreciate the respects in which their conduct fell short of what the community, expressed through its legislation, expects of registered organisations and those who administer them. In the conventional lexicon of the criminal law, they have shown contrition. They have cooperated with the applicant, thereby saving the public the considerable expense of the applicant being obliged to participate in contested proceedings.
29 I take the view that, considered as an entity in its own right, each contravention which occurred on or before 27 December 2012 should attract a penalty, in the case of the Union, of $8,250 and, in the case of Mr Noone, of $1,650; and that each contravention which occurred on or after 28 December 2012 should attract a penalty, in the case of the Union, of $12,750 and, in the case of Mr Noone, of $2,550.
30 On the assumption that the Union makes timely payment of the penalties imposed in respect of its contraventions of s 253 of the RO Act (17 contraventions, all before 27 December 2012), and on the assumption that Mr Noone makes timely payment of the penalties imposed in respect of his contraventions of s 285 constituted by failing to ensure that the Union complied with s 253, the total penalties to be paid by the Union and Mr Noone would be $140,250 and $28,050 respectively.
31 In the case of the Union, and taking into account the purposes of civil penalties as I have described them, I consider that a total penalty of $140,250 would be disproportionately burdensome for an organisation of its size and means. If the figure of $8,250 were reduced to $4,500 in each case, the total would be $76,500. This would still be a real burden for the Union, but one which would, in my view, bear an appropriate relation to the lengthy period of time over which it defaulted on compliance with its statutory obligations.
32 In the case of Mr Noone, I also consider that a total of $28,050 would be disproportionately burdensome for him. If the figure of $1,650 were reduced to $1,000 in each case, the total would be $17,000. That would, in my view, be an appropriate total penalty for the contraventions to which he has admitted, reflecting as they do an ongoing failure to meet the standard prescribed by s 285 of the RO Act.
33 I shall make corresponding adjustments to the penalties to be imposed for the Union's contraventions of ss 265(5) and 266, and for Mr Noone's contraventions of s 285 which relate to those contraventions by the Union. In the case of the Union's contraventions of s 266, and of Mr Noone's corresponding contraventions of s 285(1), in respect of the financial year ending on 30 June 2012, the penalties imposed will, of course, reflect the higher starting point to which I have referred in para 29 above.
34 Given the strained financial circumstances of the respondents, their counsel submitted that they should be permitted a period of four months within which to pay the penalties imposed on them by the orders made today. That would normally be regarded as an excessively indulgent period of grace, but I consider it appropriate in the circumstances. The impression I had was that the respondents were genuinely intent on complying with whatever penal orders the court should make, and that the prospect of compliance would be somewhat enhanced if they were allowed a realistic period within which to make whatever arrangements might be necessary in this regard.
I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup.