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[2019] FCA 1852
Federal Court of Australia
2019-11-12
Mr P, Mortimer J
Original judgment source is linked above.
Introduction and summary 1 This proceeding concerns alleged contraventions by the second respondent, Mr Melhem, of certain provisions of the Fair Work (Registered Organisations) Act 2009 (Cth) (FWRO Act). Shortly before trial, the applicant and the first respondent, the Australian Workers' Union (AWU), reached agreement about the first respondent's liability for contraventions alleged against it. The question of the orders to be made as a result of the first respondent's admissions, together with the question of whether penalties should be imposed against the first respondent, were separated and allocated to another judge. 2 The day before the trial against Mr Melhem was due to commence, the parties informed the Court they had reached agreement on Mr Melhem's liability for the alleged contraventions. The agreement was reflected in an Agreed Statement of Facts (ASOF) filed as between the applicant and Mr Melhem. The applicant withdrew ten allegations of contravention, and Mr Melhem has admitted eight contraventions. 3 Accordingly, the trial was vacated, and the matter proceeded to hearing on appropriate orders and penalties. There was no dispute between the parties about the grant of declaratory relief. The parties also jointly submitted it was appropriate for the Court to impose a single penalty for each of five contraventions, although, as I have noted, there are eight admitted contraventions in total. The dispute between the parties centred on the size of the penalties which should be imposed, including how the changes in the maximum applicable penalties during the contravention period should be approached. 4 For the reasons set out below, I have concluded that it is appropriate to impose five penalties on Mr Melhem, of $6,800, $5,500, $1,320, $1,870 and $5,100, being a total amount of $20,590.
Background 5 The findings I make in this section are largely based on the ASOF. Each party read affidavits in support of the party's position on penalty, and I refer to those affidavits below. 6 The applicant holds an office established by s 329AA of the FWRO Act, and is by s 310(1) empowered to apply to the Court for orders under Pt 2 Ch 10 of the FWRO Act, which includes pecuniary penalty orders. 7 The AWU is an organisation registered under the FWRO Act and its predecessor legislative instruments. 8 Until August 2006, Mr Melhem was the Assistant Secretary of the Victorian Branch of the AWU (AWU Vic). He was elected as Secretary of the AWU Vic in August 2006 and held that position until May 2013. He was at the time of trial a member of the Victorian Parliament. 9 The applicant's allegations against Mr Melhem centred on three matters, which occurred through a series of events involving five employers and organisations. Those three matters were: (a) the recording of individuals as members of the AWU when in fact they had not applied to be members in accordance with the rules of the AWU (AWU Rules); (b) the receipt by the AWU of sums of money in relation to the (allegedly non-compliant) membership of such individuals; and (c) (in some cases) the identification in invoices issued by the AWU of the payments being made for other kinds of services provided by the AWU, which were not in fact delivered, or only partially delivered, such as occupational health and safety (OH&S) training. 10 The proceedings were brought against both the AWU and Mr Melhem, but were split after the AWU resolved the question of its liability at an earlier stage, as I have noted above. As against Mr Melhem, the applicant contends Mr Melhem had direct and personal involvement in the events I have summarised at [9], and that his conduct amounted to more than simply a failure to supervise other officers or employees within the AWU Vic, and more than a mere failure of record keeping. The question of the appropriate characterisation of Mr Melhem's conduct, and its seriousness, was a key contentious issue on the question of appropriate penalty.
The conduct of the penalty hearing 11 In addition to the ASOF, the applicant read and relied upon the affidavit of Abigail Caitlin Cooper dated 23 September 2019, and Mr Melhem read and relied upon two affidavits of Fiona Marguerita Rothville dated 19 September 2019. 12 The ASOF filed on 10 September 2019 was admitted into evidence pursuant to s 191 of the Evidence Act 1995 (Cth). 13 During the hearing one further factual matter emerged, which was addressed by the parties agreeing a further fact, which was admitted into evidence pursuant to s 191 of the Evidence Act following the filing of a supplementary ASOF on 7 October 2019. 14 The ASOF referred to a number of documents which had formed part of the Court Book to be tendered at trial. At the conclusion of the penalty hearing, the parties were asked to confer and produce an amended version of the Court Book, which only contained the documents to which the ASOF referred, and removed those which would have otherwise been the subject of tender at trial. An amended Court Book index was provided to the Court on 14 October 2019, and the index and accompanying documents were also marked as an exhibit in the penalty hearing and placed on the electronic Court file. 15 Following the penalty hearing, and after this Court's decision was reserved, the Court's decision in Australian Workers' Union v Registered Organisations Commissioner (No 9) [2019] FCA 1671 was handed down. The parties requested and were given an opportunity to consider whether to make any further submissions by reason of that decision, but subsequently informed the Court they did not wish to make further submissions. Accordingly, that decision is not the subject of any express consideration in these reasons.
The allegations against Mr Melhem 16 This section is a summary of the allegations made by the applicant against Mr Melhem, which he has now admitted, together with the relevant legislative provisions. I refer to the parties' more detailed argument about the proper characterisation of Mr Melhem's admitted conduct in resolving the appropriate penalties for each contravention. 17 For some of the period covered by the applicant's allegations (ie prior to 1 July 2009), the relevant prohibitions or legislative duties were located in Sch 1 (previously numbered as Sch 1B) of the Workplace Relations Act 1996 (Cth). From 1 July 2009, Sch 1 of the Workplace Relations Act 1996 (Cth) became the FWRO Act. The ASOF proceeds on the basis that the terms of the legislation did not change. However, the amount of penalty imposed for some of the contraventions did change, and this became a feature of the parties' respective arguments. Further, given the timing of when some of the contraventions occurred, where relevant - and consistently with the terms of the declaratory relief - I note where a contravention is agreed to have occurred during the period in which the predecessor legislation to the FWRO Act was in force. 18 The applicant initially alleged that Mr Melhem contravened three separate provisions of the FWRO Act, in respect of conduct connected with each of six employers and organisations. The sixth organisation - the Australian Netball Players' Association - is not the subject of any admissions by Mr Melhem and the applicant has withdrawn its allegations against Mr Melhem about this organisation. 19 The first set of admitted contraventions relates to s 285(1) of the FWRO Act, and, as applicable, its equivalent in the predecessor legislation, which provides: (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. 20 In general terms, the applicant contends, and Mr Melhem admits, that in respect of each of the five employers and organisations, while he was an officer of AWU Vic, Mr Melhem exercised his powers, or discharged his duties, relating to the financial management of the Victorian Branch without exercising the degree of care and diligence that a reasonable person would exercise if she or he were in his position. The details of what is admitted, and its characterisation, are dealt with below. 21 The second set of contraventions is alleged to be of s 286(1)(a) of the FWRO Act, and, as applicable, its equivalent in the predecessor legislation. Section 286(1) provides: (1) An officer of an organisation or a branch must exercise his or her powers and discharge his or her duties: (a) in good faith in what he or she believes to be the best interests of the organisation; and (b) for a proper purpose. 22 In general terms, the applicant contends that in respect of each of the five employers and organisations, while he was an officer of AWU Vic, and in relation to the financial management of the Victorian Branch, Mr Melhem failed to exercise his powers and discharge his duties as Secretary of the Victorian Branch in good faith in what he believed to be the best interests of the AWU. The details of what is admitted, and its characterisation, are dealt with below. 23 It should be noted that the original allegation of contraventions of s 286(1)(b) has been withdrawn. Thus, the question of the purpose for Mr Melhem's conduct is not an element of liability for the admitted contraventions. That may be one of several explanations for a considerable number of gaps in the evidence about why Mr Melhem engaged in certain conduct constituting the contraventions. This is a matter to which I return below. 24 The applicant has also withdrawn its allegations that Mr Melhem contravened s 287(1) of the FWRO Act. The fact of that withdrawal was the subject of some emphasis in the submissions made on behalf of Mr Melhem. For completeness, and so Mr Melhem's submissions can be placed in context, s 287(1) of the FWRO Act provides: (1) An officer or employee of an organisation or a branch must not improperly use his or her position to: (a) gain an advantage for himself or herself or someone else; or (b) cause detriment to the organisation or to another person. 25 The applicable provision imposing pecuniary penalties for the contravening conduct is s 306(1) of the FWRO Act. It is currently in a different form to the applicable form at the time of Mr Melhem's conduct. Section 306(1) has been in its current form since 2 May 2017. During the period over which Mr Melhem's contravening conduct occurred (2007-2013), s 306(1) took two different forms. 26 Relevantly, until 28 June 2012, s 306(1) of the FWRO Act provided that: In respect of conduct in contravention of a civil penalty provision, the Federal Court may make an order imposing on the person or organisation whose conduct contravened the civil penalty provision a pecuniary penalty of not more than: (a) in the case of a body corporate - 100 penalty units; (b) in any other case - 20 penalty units. 27 From 29 June 2012, and until the end of the contravening conduct in 2013, s 306(1) of the FWRO Act provided that: In respect of conduct in contravention of a civil penalty provision, the Federal Court may make an order imposing on the person or organisation whose conduct contravened the civil penalty provision a pecuniary penalty of not more than: (a) in the case of a body corporate - 300 penalty units; (b) in any other case - 60 penalty units. 28 The value of a penalty unit also changed during the period of the contravening conduct. 29 In summary, the applicant submitted and I accept: (a) relevantly, until 28 June 2012, the maximum penalty that could be imposed on an individual under s 306(1) was 20 penalty units; (b) relevantly, until 27 December 2012, the value of a penalty unit was $110; (c) after the enactment of the Fair Work (Registered Organisations) Amendment Act 2012 (Cth) the maximum penalty under s 306(1) that could be imposed on an individual was increased to 60 penalty units; and (d) from 28 December 2012 to 30 July 2015, the value of a penalty unit was $170. 30 The parties disagreed about the effect of these changes in the maximum penalty on the Court's consideration of the appropriate penalty to impose on Mr Melhem. I deal with this at [167]-[187] below.
The number of contraventions 31 The terms of s 306(3) led the parties to submit that only five penalties should be imposed by the Court, even though the parties submit, and Mr Melhem admits, he engaged in eight contraventions of s 285 and s 286. Section 306(3) provides: A person is not liable to more than one pecuniary penalty under this Part in relation to the same conduct. 32 I note that s 306(3) was inserted into the FWRO Act in 2016, by item 208 of the Fair Work (Registered Organisations) Amendment Act 2016 (Cth). It took effect from 2 May 2017. The Explanatory Memorandum for the Fair Work (Registered Organisations) Amendment Bill 2014 (Cth) stated at [254] that: Item 208 inserts a new subsection that makes clear that a person is not liable for more than one pecuniary penalty in relation to the same conduct. 33 Although some time was spent in the parties' submissions about the changes in penalty amounts over the period of Mr Melhem's contravening conduct, with the second respondent submitting that the Court should be astute not to give retrospective effect to the increase in penalties, the parties (and in particular the second respondent) did not address whether s 306(3) was capable of applying to all of Mr Melhem's contravening conduct, including that engaged in prior to the enactment of this provision. I have assumed the parties' positon is that, in substance, what matters is that the provision is in effect at the time the penalties are imposed by the Court. I proceed on that basis. 34 In summary, the parties jointly submit that the Court should impose five penalties in total, namely (taking the names of the employers and organisations as a short-hand way of reflecting the conduct constituting the contraventions, and noting the details of the employers and organisations are set out below): (a) Cleanevent: one penalty to be imposed in respect of the admitted contraventions of s 285 and s 286, those two contraventions being in relation to the same conduct; (b) Winslow: one penalty in respect of the admitted contravention of s 285; (c) BMD: one penalty in respect of the admitted contravention of s 285; (d) AJA and VJA: one penalty to be imposed in respect of the admitted contraventions of s 285 and s 286, those two contraventions being in relation to the same conduct; and (e) Geotech: one penalty to be imposed in respect of the admitted contraventions of s 285 and s 286, those two contraventions being in relation to the same conduct. 35 The parties submitted that this approach was consistent with the terms of s 306(3). This approach was not, senior counsel for Mr Melhem submitted, a consequence of applying any "course of conduct" analysis. As to the warnings issued by the Full Court in the way that concept might be used (in the absence of a statutory provision such as s 557(1) of the Fair Work Act 2009 (Cth)), see Transport Workers' Union of Australia v Registered Organisations Commissioner (No 2) [2018] FCAFC 203; 363 ALR 464 (2018 TWU Case) at [83]-[91]. 36 It should also be noted, as the Full Court observed in the 2018 TWU Case at [105], that (subject to the need, generally, for the Court to give notice) the Court is not obliged to accept the parties' joint proposal to impose a single penalty for multiple contraventions, if it is not persuaded such a course is appropriate in the circumstances. 37 Here, the question is whether the Court is satisfied that the parties' submission is a correct reflection of the intended operation of s 306(3) of the FWRO Act. That provision is textually different from s 557(1) of the FW Act. However, its intention, and effect, would appear to be the same. Section 306(3) does not appear to have been the subject of any judicial consideration. 38 I am satisfied the parties are correct to submit that the purpose of s 306(3) is to ensure that a contravener is not punished twice for the same conduct, the statutory mechanism being that only one penalty can be imposed. On the facts of any given case, there may well be a debate whether the conduct is "the same". There is no such debate between the parties here, and I agree with the parties' submission that five penalties should be imposed on Mr Melhem, one for his conduct in respect of each of the employers and organisations identified in the ASOF and to which he has made admissions. That is not to say that the amount of the single penalty cannot reflect the admitted fact that Mr Melhem's conduct constituted a contravention of two different statutory obligations, with different elements and purposes. I consider it can, and it should: I deal with this matter at [239] below.
The factual background and the conduct constituting the contraventions 39 In this section of my reasons, I make findings of fact which are largely based on the ASOF filed as between the applicant and Mr Melhem, and on any uncontroversial affidavit material. 40 Where it is necessary to resolve a particular factual matter, I make findings of fact in the section of my reasons below.
The relevant actors and their roles 41 At the relevant time, the AWU had a National Executive consisting of National Officers, as well as delegates to the National Executive, who were Branch Officers elected by each Branch (see Rule 24(1)(b) of the AWU Rules). Mr Melhem, as Secretary of the AWU Vic at the relevant time, was the holder of an "office" in the AWU Vic within the meaning of s 9 of the FWRO Act, and therefore was an "officer" of the AWU Vic as defined in s 6 of the FWRO Act. Mr Melhem had the powers, duties and functions set out in Rule 39 of the AWU Rules. 42 The AWU maintained a Register of Members and kept copies of the Register as at 30 June and 31 December for all relevant years.
The FWRO Act provisions 43 As senior counsel for Mr Melhem submitted, the objects of the FWRO Act should be recalled, and borne in mind, when considering the nature and scope of duties such as those imposed by s 285 and s 286. 44 Section 5 of the FWRO Act provides: 5 Parliament's intention in enacting this Act (1) It is Parliament's intention in enacting this Act to enhance relations within workplaces between federal system employers and federal system employees and to reduce the adverse effects of industrial disputation. (2) Parliament considers that those relations will be enhanced and those adverse effects will be reduced, if associations of employers and employees are required to meet the standards set out in this Act in order to gain the rights and privileges accorded to associations under this Act and the Fair Work Act. (3) The standards set out in this Act: (a) ensure that employer and employee organisations registered under this Act are representative of and accountable to their members, and are able to operate effectively; and (b) encourage members to participate in the affairs of organisations to which they belong; and (c) encourage the efficient management of organisations and high standards of accountability of organisations to their members; and (d) provide for the democratic functioning and control of organisations; and (e) facilitate the registration of a diverse range of employer and employee organisations. (4) It is also Parliament's intention in enacting this Act to assist employers and employees to promote and protect their economic and social interests through the formation of employer and employee organisations, by providing for the registration of those associations and according rights and privileges to them once registered. (5) Parliament recognises and respects the role of employer and employee organisations in facilitating the operation of the workplace relations system. 45 As this provision reveals, the FWRO Act has a focus on the setting of standards, and on the accountability of those who hold office within the organisations to which the Act applies. Organisations are required to have rules, and those rules are required to have specific content: see generally Ch 5 of the Act. The need for particular rules about membership is a focus of Ch 5: see s 141. The FWRO Act then separately seeks to regulate conduct relating to membership of organisations covered by the Act: see Ch 6. 46 Chapter 9 contains provisions regulating the conduct of organisations' officers and employees. Part 2 of Ch 9 sets out the duties of those officers and employees in relation to the financial management of the organisations: see in particular s 283. It is in this Part that s 285 and s 286 are located. It is now not disputed by Mr Melhem that the exercise of powers or the performance of duties which constitute the contravening conduct he has admitted were "related to the financial management" of the AWU Vic.
Section 285 47 It is common ground that s 285(1) is in relevantly the same terms as s 180(1) of the Corporations Act 2001 (Cth). As senior counsel for Mr Melhem submitted, the context in which the provision appears in the FWRO Act is quite different from the context of the Corporations Act, and there are substantive differences between the roles and functions of directors of corporations and officers of a union. The effect of those differences is not a matter which arises for consideration in this proceeding, as it was also common ground that, as in the Corporations Act, what s 285(1) does is set out an objective test of how a "reasonable" person in the position of the officer could have been expected to behave: see generally Shafron v Australian Securities and Investments Commission [2012] HCA 18; 247 CLR 465 at [18]-[19]. The parties did not refer to s 285(2) in their submissions, but its exculpatory terms may not be irrelevant to a consideration of the nature and character of Mr Melhem's conduct.
Section 286 48 Justice Barker discussed the terms of s 286(1)(a) in his Honour's reasons for judgment in General Manager of the Fair Work Commission v McGiveron [2017] FCA 405 at [18]-[19]. I respectfully agree with his Honour's observations in those passages, as he sought to adapt them to the industrial context. In my opinion, the notion of acting in "good faith" in s 286(1)(a) connotes no abuse or misuse of powers or functions conferred on a union officer, the avoidance of conflicts of interest, and no advantage being taken of an officer's position for her or his personal benefit, or the benefit of persons other than the union. Acting in "good faith" involves acting honestly and transparently, in the genuine pursuit of the best interests of the union, and its members.
The AWU Rules 49 The applicant placed some emphasis on the content of the AWU Rules, made in compliance with s 140 of the FWRO Act. The applicant sought to highlight the divergence between the requirements of the Rules in relation to admitting individuals to membership, and payment of membership fees, and what occurred in the admitted contraventions. It is not necessary to set out the text of the Rules, but the summary of the relevant rules in the applicant's written submissions (at [8]) can be accepted: In order to be admitted as a member of the AWU under the AWU Rules, an applicant for membership was required to, inter alia, provide to the AWU a completed application form and pay the membership contribution prescribed by Rule 9 of the AWU Rules (as required by Rule 7(1) of the AWU Rules and section 166(1)(a) of the FWRO Act). Further, at all material times, the AWU was required under Rule 7(8) of the AWU Rules to advise every applicant for membership in writing of the financial obligations arising from membership and the circumstances and the manner in which a member may resign from the AWU. (Footnotes omitted.) 50 The ASOF at [11] and [12] sets out how the Rules (specifically Rules 9 and 10) provided for membership fees to be paid (or waived by the National Executive), and what the membership contribution rates were at relevant times. Mr Melhem did not dispute that the payments from the five employers and organisations did not conform to those Rules, either in process or in amount. 51 At all material times, the AWU was required to keep a Register of Members, showing the name and postal address of each member: see s 230(1)(a) of the FWRO Act. Section 230(2) imposed a number of obligations about the entry of members' details into the Register, and about maintenance of the Register, to ensure that it provided an accurate reflection of the membership of the organisation concerned. It is common ground, and part of the admissions made by Mr Melhem, that in respect of the events which are the subject of this proceeding, in relation to the five employers and organisations, that the AWU was exposed by Mr Melhem's conduct to civil penalties for contravention of s 230.
The basic narrative 52 The five employers and organisations whose employees or members are alleged to have been improperly or unlawfully recorded as members of the AWU are as follows: (a) Cleanevent Australia Pty Ltd (ACN 091 953 089) (Cleanevent) operated a business providing cleaning services at events, including sporting events. It had employees who were eligible to be members of the AWU, and also had employees who were in fact admitted as members of the AWU. (b) Winslow Constructors Pty Ltd (ACN 006 581 764) (Winslow) is a civil construction company. Winslow and the AWU Vic had an arrangement since the mid-1990s whereby Winslow paid to the AWU a sum in respect of membership fees for a number of Winslow's permanent employees. (c) B.M.D. Constructions Pty Ltd (ACN 010 126 100) (BMD) is also a civil construction company. BMD's business included project work involving major urban development, such as building roads for state governments. (d) The Australian Jockeys' Association Inc (AJA) is the national peak body representing the interests of jockeys in Australia. The Victorian Jockeys' Association Inc (VJA) is the State body representing the interests of jockeys in Victoria. I shall describe them as "the Jockeys' Associations" in these reasons, unless I need to distinguish them. I have counted them as one organisation for the purposes of descriptions in these reasons. (e) Geotechnical Engineering (Geotech) is a civil contracting business, whose employees were working on the Esso Longford gas project in Gippsland, Victoria. Following discussions between Mr Melhem and a director of Geotech in late 2012, it was agreed that the AWU would provide "EEO training" to Geotech employees working on the project. 53 The narrative which I now set out is organised by reference to each of these five employers and organisations. The ASOF set out in some detail all of the conduct and communications which establish the contraventions to which Mr Melhem has admitted liability. It is not necessary to set out the narrative in the kind of detail which appears in the ASOF. I am satisfied each of the contraventions have been established on the evidence. What follows is a more compact description of the events surrounding the payments made by each of the employers or organisations. Where necessary for the purpose of explaining the conclusions I have reached about appropriate penalties, I refer to particular parts of the evidence, or the documents which contain statements or communications material to the proper characterisation of Mr Melhem's role in these events.
Cleanevent 54 In late December 2006, Cleanevent and the AWU entered into an enterprise agreement (EBA) - the Cleanevent Australia Pty Ltd AWU Agreement 2006 - which was to remain in force until 1 December 2009. In early November 2009, the AWU and Cleanevent commenced bargaining negotiations for a replacement EBA. It is common ground that the contravening conduct by Mr Melhem occurred in the context of negotiations for that new EBA. 55 In May 2010, and at a meeting which formed part of these negotiations, Mr Melhem said words to the effect that the reason Cleanevent had no industrial issues was because of the relationship between the AWU and Cleanevent, and that Cleanevent would need to pay an amount to the AWU because of all of the work that AWU delegates were putting in at Cleanevent. In late May 2010, Michael Robinson (the then General Manager of Human Resources and Risk at Cleanevent) prepared a draft memorandum of understanding (MOU) which, amongst other matters, provided that Cleanevent would pay to the AWU, on behalf of employees of Cleanevent who are or become members of the AWU, the employees' union fees up to $10,000. Mr Melhem directed an AWU organiser, John-Paul Blandthorn, to request Cleanevent to provide a letter or email stating that it was happy to pay a contribution to the AWU, and to advise that Cleanevent's responding proposal to draft a second MOU was "too formal". Drafting of the MOU continued, but a "side letter" was also drafted. Ultimately, the "side letter" that was sent by Cleanevent to the AWU Vic was in the following terms: I am writing to you regarding the implementation of new pay scales and the continuation of the terms and conditions as prescribed in the Cleanevent Australia Pty Ltd AWU Agreement 2006 (Cleanevent EBA) and the agreements by Cleanevent to pay membership fees on behalf of some employees who wish to join the AWU. While the MOU is in operation, Cleanevent will pay, on behalf of employees of Cleanevent who are or become members of the AWU, the employees' union fees up to $25,000 for each financial year up to 30 June 2013. Payments will be made by Cleanevent biannually (December and June) to the AWU on receipt of a list of Cleanevent employees and the associated membership fees that Cleanevent are being requested to pay. During the period of operation of the MOU it is understood that the AWU will not commence or take any step which may result in the commencement of enterprise bargaining under the Fair Work Act 2009; or seek to terminate (or support or encourage the termination of) the Cleanevent EBA or the aforementioned MOU. 56 After the MOU was signed by Mr Robinson of Cleanevent, it was sent to the AWU's National Office, but the side letter was not. There is no evidence as to why it was not sent. Cleanevent's employees were not informed of or given a copy of the side letter either: again, there is no evidence as to why this did not occur. The National Secretary of the AWU signed the MOU, following a review of the MOU by National Office staff, consultation with union branches, and approval of the MOU at meetings of Cleanevent employees. 57 Three payments were made by Cleanevent to the AWU between December 2010 and March 2013. 58 The first payment occurred on 17 December 2010, after Mr Blandthorn had "reminded" Cleanevent by phone and email to make payments due under the side letter. Cleanevent paid $12,500 by EFT to the AWU on this occasion. 59 At the direction of Mr Melhem, the $12,500 was recorded on the AWU general ledger as membership income. Mr Melhem also personally directed one of his officers (Ms Lin) to ask Mr Blandthorn to get Cleanevent to send the AWU a list of its employees, in response to which Cleanevent supplied a list of 100 names of Cleanevent employees. Mr Melhem then directed that the $12,500 be allocated to the "members" in that list. 60 In accordance with Mr Melhem's directions, the following steps were taken by AWU officers: (a) the names and details of 98 of the 100 Cleanevent employees on the list were entered on the Register of Members and were recorded on the Register of Members as having joined the AWU on 1 January 2011; (b) the address of each of the 98 Cleanevent employees was recorded as 95 Buckhurst Street, South Melbourne, which was the business premises of Cleanevent; and (c) an amount of $125 was allocated to pay membership fees for the people on the list. 61 At the time, the individual membership fee fixed by the AWU Rules was $500. 62 These Cleanevent employees did not provide the AWU with a completed application form as required by Rule 7 of the AWU Rules, they were not given a union membership card, they were not told they were members of the AWU, they were not advised in writing of the financial obligations attached to being an AWU member and how they could resign from the AWU as required by Rule 7(8), and they did not know their names had been added to the Register. 63 On 18 April 2012, the AWU issued Cleanevent an invoice for $27,500. The subject of the invoice was described as "Membership Fees for Financial Year 2011 - 2012". The same day, Mr Melhem himself asked Mr Robinson by email for "an up to date list of employees for the financial year so we can put them on our system". Cleanevent sent a list of 100 employees two days later. The names were cross-checked against the AWU membership database and Mr Melhem directed an AWU officer (Ms Raimondo) to add the "non-members" on the list as members as of 1 May 2012 and to credit the payment from Cleanevent to all members on that list. Those employees entered into the AWU membership database by these events were placed on a "mail suspend" so that no notifications relating to their membership went to their personal addresses, the explanation being "they are all under the company address". 64 This process resulted in an extra 66 Cleanevent employees being added to the AWU Register of Members. The $27,500 paid by Cleanevent was less than the amount of membership contributions required by the AWU Rules for that number of employees. Contrary to the AWU Rules, and as with the first round of Cleanevent employees, these employees did not provide the AWU with a completed application form, they were not given a union membership card, they were not told they were members of the AWU, they were not advised in writing of the financial obligations attached to being an AWU member and how they could resign from the AWU and they did not know their names had been added to the Register. 65 On or about 29 June 2012, Cleanevent paid $27,500 to the AWU in respect of the April 2012 invoice. That sum was proportionally applied as membership fees against the names of the 66 Cleanevent employees whose names had been added to the Register of Members. 66 The third payment occurred at the end of March 2013. As with the 2012 payment, the AWU issued an invoice to Cleanevent, again for $27,500 and using the subject "Membership fees for $ Financial Year 20120 - 2013" (including a typographical error). This invoice was paid by Cleanevent around 27 March 2013, and the sum was proportionally applied as membership fees against the names of the same 66 Cleanevent employees who had been added to the Register of Members in 2012. 67 Mr Melhem has admitted that: (a) the Cleanevent employees whose names were on the lists provided to the AWU and who were added to the Register of Members were not and did not become members of the AWU pursuant to the AWU Rules; (b) despite this, he directed, caused or permitted the payments made by Cleanevent to be applied on account of membership contributions; and (c) he directed, caused and permitted the membership department of the AWU to treat the Cleanevent employees as members of the union, and to proportionally apply the amounts Cleanevent had paid to the names of those employees entered on the Register.
Winslow 68 As I have noted above, there had been what the evidence describes as an "arrangement" between Winslow and the AWU Vic since the mid-1990s that Winslow paid the AWU a sum for membership fees for all of Winslow's permanent employees of more than one year's standing. Until March 2008, the arrangement had the following features: (a) Winslow would send a list of employees to the AWU (according to the ASOF, the AWU's Victorian Branch) on a six-monthly or yearly basis; (b) the AWU would send Winslow an invoice for membership fees for the employees, attributing the payment to "membership fees" for the period in question, and identifying the number of members whose fees were being paid; (c) the AWU would apply the amount paid by Winslow under the invoice as membership fees for the employees for the period to which the invoice related; and (d) any of the Winslow employees who were not existing members of the AWU would be added to the AWU's Register of Members. 69 The evidence is that "at least some" Winslow employees knew about this arrangement. There is no evidence whether any of the steps required by the AWU Rules were taken in respect of Winslow employees who were added to the Register of Members under this arrangement, prior to March 2008. 70 In March 2008, the AWU issued Winslow with an invoice in the amount of $9,945, following which an undated version of that invoice was emailed to Winslow, and copied to Mr Melhem. Mr Melhem admits this invoice was issued with his knowledge and approval, and on his instructions. The invoice stated it was for "OH&S Training & Workplace Inspections" for the period 1 January-30 June 2008. The invoice also stated that the total amount due was calculated as $117 multiplied by 85 members. At the time, the amount of $117 was the quarterly, rather than the yearly, membership fee for an adult under the AWU Rules. 71 The evidence is that some OH&S training was, in fact, delivered by the AWU to Winslow employees. During the 2007-2008 financial year, 17 Winslow employees participated in what is described as "redcard/OHS training" supplied by the union and one Winslow employee undertook the "delegate's training course". There is no evidence of any correlation between the nature and amount of training undertaken and the sum of $9,945 on the March 2008 invoice. 72 During the relevant period, there were seven more invoices issued to Winslow by the AWU, the last of which was dated 6 March 2013. Essentially the same process as that for the March 2008 invoice was followed for the additional seven invoices: an invoice was issued to Winslow recording the payment as being for activities including "OH&S Training", "Workplace Inspections", "Red Card Training" or "EEO training", a specified number of Winslow employees were identified and the invoice amount was divided proportionally between them and assigned to their AWU membership fees. 73 In respect of six of the Winslow invoices, those invoices contained what I regard as somewhat contradictory information. Each of them included a description referring to one or more of the activities I referred to above (such as "OH&S Training" or "Red Card Training"), however, in a column titled "Item Code", the description "MEMBERSHIP" appeared. The evidence does not explain this discrepancy. 74 It is not necessary to set out all the evidence about the transactions and communications for each invoice, but the following points can be made from the evidence: (a) on one occasion (an invoice dated 1 June 2009) the invoice amount divided by the number of Winslow employees listed on the invoice did add up to the equivalent of the annual membership fee, but on all other occasions it fell short of the amount required under the AWU Rules; (b) each invoice was issued on the instructions of, and with the knowledge and approval of, Mr Melhem; and (c) during the 2007-2008 and 2008-2009 financial years (in respect of the 19 March 2008 and 1 June 2009 invoices), there was some training delivered to Winslow employees by the union, and in subsequent years no training referable to the further invoices took place. 75 In one case, in January 2010, the initial invoice sent by the AWU to Winslow was for a 12 month period, in the sum of $45,396. The AWU subsequently issued a tax credit note to Winslow bearing the words "REVERSE IT AS PER CESAR MELHEM", with a handwritten note which stated: "Only pay 6mth membership first". A new invoice for the amount of $23,166 was then issued by the AWU and paid by Winslow. The evidence does not explain why this sequence of events occurred. 76 Unlike the Cleanevent employees, some of the Winslow employees completed membership application forms - on some occasions before their names were entered onto the AWU Register of Members, and on some occasions afterwards. Senior counsel for the applicant submitted, and Mr Melhem did not dispute, that the proportion of Winslow employees who completed such forms, out of the total number of Winslow employees added to the Register of Members between 2008 and 2012, was about 20%. Accepting that calculation was done quickly during oral argument, it would appear the percentage is more like 14% (56 out of a total of 401 employees). 77 Unlike the Cleanevent employees, some Winslow employees received welcome letters from the AWU addressed to their home addresses.
BMD 78 Mr Melhem's conduct in relation to BMD concerns one particular invoice issued to and paid by BMD, pursuant to a similar process to that used for Cleanevent and Winslow. 79 The evidence is that during 2007, but prior to 28 November 2007, Mr Melhem had some discussions with Mr Andrew Marcos of BMD about matters including the terms of a proposed agreement to cover the work of BMD's employees in Victoria, and union membership and payment of union membership fees for BMD employees in Victoria. 80 An invoice for the amount of $14,300 dated 28 November 2007 was issued by the AWU to BMD. Similar to the circumstances concerning Winslow, this invoice stated as the subject of the payment "OH&S inspection at various work sites in Victoria". 81 The AWU did not provide the OH&S inspections for various work sites in Victoria identified in that invoice, but BMD did not then or at any time dispute the description given on the invoice or otherwise dispute or query the invoice. 82 Mr Melhem instructed the AWU's membership department to enter the details of 45 BMD employees on the AWU's Register of Members, and to apply the $14,300 paid by BMD proportionally across each of the membership accounts of each of the 45 employees whose names were added to the Register, meaning that an amount of $288.88 (substantially less than the applicable AWU annual membership fee) was applied in respect of each employee. 83 The BMD employees whose names were added to the Register did not provide the AWU with a completed application form, they were not advised in writing of the financial obligations attached to being an AWU member and how they could resign from the AWU and they did not know their names had been added to the Register.
The Jockeys' Associations 84 The evidence is, and Mr Melhem admits, that following discussions in 2008, the VJA and the AJA agreed to pay an "annual service fee" to the AWU. This was explained in the evidence to be as "a contribution for [the AWU's] support in the past and in relation to industrial matters that might occur in the future". At its 2009 annual general meeting, the AJA resolved to pay an annual service fee to the AWU. The minutes of the meeting record that Mr Paul Innes of the AJA stated approximately $30,000 per annum had been allocated in the AJA budget for this purpose. 85 At some time prior to 22 December 2008, the AWU membership department obtained a list of jockeys' names and addresses, and this list was used to enter names and details of 156 jockeys into the AWU's membership database. Those entries occurred between 22 and 24 December 2008. There is no evidence of any fees paid to the AWU by the AJA or the VJA on behalf of these jockeys, and there is no evidence any of these jockeys paid membership fees themselves, in the period prior to the issue of the three invoices set out below. 86 However, in subsequent years, three invoices were issued by the AWU to the Jockeys' Associations and payments were made by the AJA and the VJA. The evidence establishes the following matters: (a) $7,500 invoiced on 16 June 2010 with the description "Consultancy on Riding Fee Negotiations" and paid by the VJA on or around 22 June 2010, recorded by the AWU as membership income on the instruction of Mr Melhem, or alternatively at least with his knowledge and approval. This amounted to only $48 per jockey, at a time when the AWU's annual membership fee was $450; (b) $7,500 invoiced on 30 May 2011 with the description "Services provided to Victorian Jockeys throughout racing season 2011/2012" and paid by the AJA on or around 8 June 2011, recorded by the AWU as membership income on the instruction of Mr Melhem, or at least with his knowledge and approval. This amounted to only $48 per jockey, at a time when the AWU's annual membership fee was $450 (although it reduced to $125 from 1 July 2011); and (c) $8,250 invoiced on 16 April 2012 with the description "Services provided to Victorian Jockeys" and paid by the AJA on or around 1 May 2012, recorded by the AWU as "membership income" on the instruction of Mr Melhem, or at least with his knowledge and approval. This amounted to only $53 per jockey, at a time when the AWU's annual membership fee was $125. 87 None of the jockeys whose names were added to the Register in December 2008 had provided the AWU with a completed application form and they did not know their names had been added to the Register. 88 Mr Melhem admits that he directed, caused and permitted the names of the 156 jockeys to be entered on the AWU Register of Members, and for the payments received from the AJA and VJA pursuant to the three invoices to be divided up between the jockeys on the Register.
Geotech 89 Mr Melhem admits that in late 2012, he had discussions with a director of Geotech, Mr Bede Noonan, about the making of a new industrial agreement to cover work proposed to be performed by Geotech in Victoria, including an agreement by Geotech to apply a new rate for its workers, $16 per hour higher, for the Esso Longford project. That agreement was reached on 25 October 2012. Mr Melhem subsequently suggested to Mr Noonan that the AWU provide "EEO training" to those Geotech employees working at Longford. The training was to be provided by an AWU employee, Mr Buntman. 90 An invoice with somewhat contradictory information on it was issued on 5 March 2013 to Geotech, in the amount of $17,160. On the one hand, the invoice stated that it was for "EEO Training for Geotech Employees at the ESSO Gasplant Gippsland". Yet, in a column titled "Item Code" appeared the descriptor "MEMBERSHIP". This is a similar situation to the one I have described above regarding six of the Winslow invoices, and again, the evidence does not explain this discrepancy. 91 Mr Buntman provided Mr Noonan with some slides for use in the EEO training, requested a list of attendees and on 20 March 2013 conducted EEO training for 18 employees of Geotech in Victoria. Mr Buntman forwarded the list of attendees onto another AWU employee, with the comment that "some guys took membership forms (not many though)". 92 The $17,160 received from Geotech was recorded in the AWU's ledger as membership income, and the names of the 18 Geotech employees were added to the AWU's Register of Members. Mr Melhem instructed the AWU's membership department to apply the sum of $17,160 proportionally across the accounts of the 18 Geotech employees, meaning that each was recorded as paying $953.33 for membership, a sum which did not on the evidence accord with the AWU's applicable annual membership fee. Further, at the time this all occurred, Mr Melhem admits that none of the Geotech employees had completed application forms, none of them had been advised in writing of the financial obligations attached to being an AWU member and how they could resign from the AWU, and none of them knew their names had been added to the AWU's Register of Members. 93 There is also an admission by Mr Melhem that he instructed the membership department of the AWU to record the 18 Geotech employees as being "suspended" in the Register of Members once the funds had been allocated, and that they were so recorded. It is unclear what this means, and the evidence did not enlighten the matter. This is another example of the carefully selected admissions, and facts, which do not necessarily provide a complete narrative of what occurred, or why it occurred.
The AWU 94 The evidence discloses that on 27 August 2019, the AWU admitted contraventions of s 230 of the FWRO Act arising from the facts agreed above in relation to the addition of names to the Register of Members where those individuals were not members of the AWU pursuant to the AWU Rules.
Mr Melhem's contraventions 95 In respect of each of the five employers and organisations, I accept and find that Mr Melhem has contravened s 285(1) and s 286(1)(a) of the FWRO Act, and the equivalent provisions of the predecessor legislation where applicable, by reason of the matters set out at [38]-[92] above. I accept Mr Melhem has made admissions about the nature of his contraventions, and I accept those admissions, together with the documentary evidence and the other evidence in the ASOF, are sufficient to prove contraventions of s 285(1) and s 286(1)(a), as described in the following ways. These descriptions are substantively based on the ASOF, but I have expressed my findings in my own language.
Cleanevent 96 In respect of both s 285(1) and s 286(1)(a), Mr Melhem's conduct related to the exercise of powers or discharge of duties related to the financial management of the AWU Vic within the meaning of s 283 of the FWRO Act. 97 In respect of s 285(1), I find that Mr Melhem failed to exercise his powers and discharge his duties with the degree of care and diligence that a reasonable person would exercise, as an officer of an organisation in the AWU's circumstances holding the plainly senior office of Secretary of the AWU Vic. That is because: (a) he neither confirmed himself, nor asked the AWU membership department, nor Cleanevent to confirm that any or all of the Cleanevent employees whose names had been added to the AWU Register of Members in May 2011 and April 2012 had completed application forms, or had been advised in writing of their financial obligations arising from membership or the circumstances and the manner in which they could resign from the AWU, or had been provided with union membership cards, or - significantly - even knew that their names had been added to the Register; (b) he directed, caused or permitted the payments made by Cleanevent to be applied on account of membership contributions in circumstances where there was obvious non-compliance with the AWU Rules, and the Cleanevent employees had not been admitted to membership of the AWU in accordance with the AWU Rules. 98 At the time of his conduct, it was reasonably foreseeable that if Mr Melhem did not take care and exercise diligence in connection with the way the Cleanevent employees purportedly became members of the AWU, the interests of the AWU itself might be harmed, because his conduct exposed the AWU to the reasonably foreseeable risks that it: (a) would contravene its own Rules; and (b) would contravene s 230 of the FWRO Act; and (c) therefore might be exposed to civil penalties. 99 In respect of s 286(1)(a), I find Mr Melhem failed to exercise his powers and discharge his duties as Secretary of the AWU Vic in good faith in what he believed to be the best interests of the AWU because of the matters described at [96(a)-(b)] above. 100 I find Mr Melhem could not have believed, and indeed he has admitted that he did not believe, that it was in the best interests of the AWU for the Cleanevent employees to be added to the Register of Members in circumstances that did not comply with the AWU Rules, because doing so may have led to a breach of s 230 of the FWRO Act and the AWU's exposure to civil penalties. Accordingly, I find that Mr Melhem did not exercise his powers and discharge his duties in good faith in what he believed to be the best interests of the AWU.
Winslow 101 The Winslow contraventions occurred over a period of time which engages both the FWRO Act and the predecessor legislation. Since the content of the provisions did not change, it is sufficient to refer to s 285(1) and s 286(1)(a) without any further distinctions. 102 In respect of s 285(1), Mr Melhem's conduct related to the exercise of powers or discharge of duties related to the financial management of the AWU Vic within the meaning of s 283 of the FWRO Act. 103 In respect of s 285(1), I find Mr Melhem directed, caused and permitted: (a) 347 Winslow employees to be added and recorded in the AWU's Register of Members where those employees were not members of the AWU pursuant to its Rules; (b) the monies received on eight occasions from Winslow in relation to these 347 Winslow employees to be applied on account of membership payments despite the fact that those employees had not been admitted to membership in accordance with the AWU Rules. 104 I find that Mr Melhem, in directing, causing and permitting the addition of the 347 Winslow employees to the Register and the recording of the monies received from Winslow as membership income, failed to exercise his powers and discharge his duties with the degree of care and diligence that a reasonable person would exercise, as an officer of an organisation in the AWU's circumstances holding the plainly senior office of Secretary of the AWU Vic. That is because he did not: (a) confirm for himself, nor require the membership department of the AWU to take steps to ensure, that every Winslow employee entered onto the Register of Members pursuant to Winslow's "arrangement" with the AWU Vic had signed a membership application form as required by the AWU Rules; (b) ensure the amounts in the invoices reflected what the AWU Rules required each person who wished to join the AWU to pay by way of membership fees (except for the 1 June 2009 invoice). 105 Further, at the time of his conduct, it was reasonably foreseeable that if Mr Melhem did not take care and exercise diligence in connection with the way the Winslow employees purportedly became members of the AWU, the interests of the AWU itself might be harmed, because his conduct exposed the AWU to the reasonably foreseeable risks that it: (a) would contravene its own Rules; and (b) would contravene s 230 of the FWRO Act; and (c) therefore might be exposed to civil penalties.
BMD 106 The period over which Mr Melhem's conduct occurred in respect of BMD falls wholly within the period of time in which a predecessor provision to s 285 of the FWRO Act was in force; namely s 285 of the Registration and Accountability Organisations Schedule of the Workplace Relations Act 1996 (Cth). Although the ASOF referred jointly to the FWRO and the predecessor legislation as the "Registered Organisations Provisions", it is only the predecessor legislation which is relevant in relation to BMD. 107 In respect of s 285(1), Mr Melhem's conduct related to the exercise of powers or discharge of duties related to the financial management of the AWU Vic within the meaning of s 283 of the FWRO Act. 108 In respect of s 285(1), I find Mr Melhem instructed the membership department of the AWU: (a) to add and record the details of 45 BMD employees into the AWU's Register of Members where those employees were not members of the AWU pursuant to its Rules; (b) to apply the monies received on one occasion from BMD in relation to these 45 BMD employees on account of membership payments despite the fact that those employees had not been admitted to membership in accordance with the AWU Rules. 109 I find that Mr Melhem failed to exercise his powers and discharge his duties with the degree of care and diligence that a reasonable person would exercise, as an officer of an organisation in the AWU's circumstances holding the plainly senior office of Secretary of the AWU Vic. That is because he did not confirm for himself, nor require any person from BMD or the membership department of the AWU to confirm that the 45 BMD employees entered onto the Register of Members after BMD paid the sum of $14,300 had signed a membership application form as required by the AWU Rules, or had been advised in writing of their financial obligations arising from membership or the circumstances and manner in which they could resign from the AWU, or had been provided with union membership cards, or - significantly - even knew their names had been added to the Register. 110 I find Mr Melhem (whether by himself or by not directing another AWU Vic officer or employee to do so) did not ensure the amount of the BMD invoice reflected what the AWU Rules required each of the 45 employees to pay by way of membership fees, if they wished to join the union. 111 Further, at the time of his conduct, it was reasonably foreseeable that if Mr Melhem did not take care and exercise diligence in connection with the way the BMD employees purportedly became members of the AWU, the interests of the AWU itself might be harmed, because his conduct exposed the AWU to the reasonably foreseeable risks that it: (a) would contravene its own Rules; and (b) would contravene s 230 of the predecessor legislation; and (c) therefore might be exposed to civil penalties.
The Jockeys' Associations 112 These contraventions engage both the predecessor legislation and the current terms of the FWRO Act. 113 In respect of both s 285(1) and s 286(1)(a), Mr Melhem's conduct related to the exercise of powers or discharge of duties related to the financial management of the AWU Vic within the meaning of s 283 of the FWRO Act. 114 In respect of s 285(1), I find that Mr Melhem directed, caused and permitted the AWU membership department to add the names of 156 jockeys to the Register of Members, and to divide the monies received from the Jockeys' Associations on three occasions between those jockeys. 115 I find that Mr Melhem failed to exercise his powers and discharge his duties with the degree of care and diligence that a reasonable person would exercise, as an officer of an organisation in the AWU's circumstances holding the plainly senior office of Secretary of the AWU Vic. That is because he neither confirmed himself, nor asked Mr Blandthorn or the AWU membership department to confirm, that any or all of the 156 jockeys whose names had been added to the AWU Register of Members had completed application forms, or had been advised in writing of their financial obligations arising from membership or the circumstances and manner in which they could resign from the AWU, or had been provided with union membership cards, or paid the required fee to become an AWU member, or - significantly - even knew that their names had been added to the Register. 116 At the time of his conduct, it was reasonably foreseeable that if Mr Melhem did not take care and exercise diligence in connection with the way the 156 jockeys purportedly became members of the AWU, the interests of the AWU itself might be harmed, because his conduct exposed the AWU to the reasonably foreseeable risks that it: (a) would contravene its own Rules; and (b) would contravene s 230 of the FWRO Act; and (c) therefore might be exposed to civil penalties. 117 In respect of s 286(1)(a), I find Mr Melhem failed to exercise his powers and discharge his duties as Secretary of the AWU Vic in good faith in what he believed to be the best interests of the AWU because: (a) he neither confirmed for himself, nor required Mr Blandthorn or the membership department of the AWU to confirm, that any or all of the jockeys whose names had been added to the AWU Register of Members had completed application forms, or had been advised in writing of their financial obligations arising from membership or the circumstances and the manner in which they could resign from the AWU, or had been provided with union membership cards, or - significantly - even knew their names had been added to the Register; and (b) he directed, caused or permitted the three invoices to be issued to the AJA and the VJA and for the payments made on three occasions to be applied on account of membership contributions in circumstances where the amounts applied were materially less than the applicable individual membership fees. 118 I find Mr Melhem could not have believed, and indeed he has admitted that he did not believe, that it was in the best interests of the AWU for the 156 jockeys to be added to the Register of Members in circumstances that did not comply with the AWU Rules, and for the three payments received from the AJA and VJA to be recorded as membership income, because doing so exposed the AWU to a breach of s 230 of the FWRO Act and to civil penalties. Accordingly, I find that Mr Melhem did not exercise his powers and discharge his duties in good faith in what he believed to be the best interests of the AWU.
Geotech 119 In respect of both s 285(1) and s 286(1)(a), Mr Melhem's conduct related to the exercise of powers or discharge of duties related to the financial management of the AWU Vic within the meaning of s 283 of the FWRO Act. 120 In respect of s 285(1), I find that Mr Melhem directed, caused and permitted the names of 18 Geotech employees to be added to the Register of Members in circumstances where those employees had not completed membership applications forms, or had been advised in writing of the financial obligations arising from membership or the circumstances and manner in which they could resign from the AWU, or - significantly - even knew their names had been added to the Register. 121 I find that Mr Melhem failed to exercise his powers and discharge his duties with the degree of care and diligence that a reasonable person would exercise, as an officer of an organisation in the AWU's circumstances holding the plainly senior office of Secretary of the AWU Vic. That is because he neither confirmed himself, nor required Geotech or the AWU membership department to confirm the matters set out at [119] above. 122 At the time of his conduct, it was reasonably foreseeable that if Mr Melhem did not take care and exercise diligence in connection with the way these 18 Geotech employees purportedly became members of the AWU, the interests of the AWU itself might be harmed, because his conduct exposed the AWU to the reasonably foreseeable risks that it: (a) would contravene its own Rules; and (b) would contravene s 230 of the FWRO Act; and (c) therefore might be exposed to civil penalties. 123 In respect of s 286(1)(a), I find Mr Melhem failed to exercise his powers and discharge his duties as Secretary of the AWU Vic in good faith in what he believed to be the best interests of the AWU because of the matters I have set out at [119] above, and because he directed, caused and permitted the monies received on one occasion from Geotech to be applied and allocated towards membership contributions in circumstances where the 18 Geotech employees did not become members of the AWU in accordance with the Rules. 124 I find Mr Melhem could not have believed, and indeed he has admitted that he did not believe, that it was in the best interests of the AWU to admit the 18 Geotech employees as members in breach of its own Rules, and to record the payments as membership income, in circumstances where doing so exposed the AWU to civil penalties for contravention of s 230 and where the AWU Rules stipulated that only those who applied for membership in accordance with the Rules should be admitted as members of the AWU.
Applicable principles in determining penalties 125 The parties were not in dispute about the applicable principles, only about their application to Mr Melhem's conduct. 126 I recently discussed the principles relevant to the imposition of civil penalties in Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (Geelong Grammar School Case) (No 2) [2019] FCA 1498 at [14]-[18]. I refer also to the Full Court's discussion of relevant principles in Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) [2018] FCAFC 97 at [19]-[22]. Further, I respectfully agree with the following summary given by White J in Australian Building and Construction Commissioner v Gava [2018] FCA 1480 at [16]: The object of the imposition of a civil penalty is deterrence, both specific and general: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46, (2015) 258 CLR 482 at [55]; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; (2018) 351 ALR 190 at [116]. The Court is to determine penalties which are proportionate to the contravening conduct and to the contravener's circumstances by a process of instinctive synthesis after taking into account all relevant factors. Those factors include the nature, character and seriousness of the conduct; the loss and damage caused (if any); the circumstances in which the conduct took place; the size of the contravener and its degree of power; the deliberateness of the conduct and the time over which it occurred; the degree of involvement of senior officials or management; the culture of the organisation as to compliance or contravention; any co-operation with the regulator; and contrition: The Non Indemnification Personal Payment Case at [20].
A preliminary matter 127 The evidence before the Court, principally in the ASOF, including Mr Melhem's admissions and the documents to which the ASOF refers, tells a somewhat disjointed story. The Court has the bare narrative, sufficient to establish the (now) eight alleged contraventions, and some conclusory facts, but from the evidence before the Court it is not possible to understand why the course of events occurred as they did. 128 For example, during oral argument, there was initially a lack of clarity in the submissions on behalf of the applicant about what the Court was being invited to make of the fact that the events in relation to Cleanevent occurred during the course of the negotiation of a new EBA. Ultimately, as I set out below, the Court was not invited to draw any inferences about Mr Melhem's (or Cleanevent's) purpose or motivation from the documents which were tendered. 129 In respect of each of the five sequences of events, the Court has no evidence tending to prove, and has not been invited to make any findings about, why a person in Mr Melhem's senior and responsible position, who can be assumed to know the AWU's relatively prescriptive membership rules, was engaging in conduct pursuant to which the union was securing further members without compliance with those rules. 130 In relation to Cleanevent, for example, there are snippets of information in some of the documents tendered (emails and the like) but both parties accept these documents form only part of the entire picture of the negotiations conducted for the new EBA between Cleanevent and its employees. As senior counsel for Mr Melhem submitted, there is insufficient evidence to demonstrate a connection - let alone what kind of connection - between the agreed facts on the negotiations and the payment of a sum of money which was attributed to membership fees, nor about what Mr Melhem had set out to achieve by these arrangements. 131 The Winslow facts are also opaque. The invoices referred to the provision of training or workplace inspections and in many cases included the item code description of "MEMBERSHIP". The number of employees in respect of whom payment was being made was stated on the invoices. It is agreed that only some employees attended training (under some invoices but not others). It is fruitless, and inappropriate, to search for a rational explanation - whether a lawful one or an unlawful one. The parties have chosen not to put forward any explanation to the Court, whether one favourable to Mr Melhem or adverse to him. 132 While there is certainly authority for the proposition that in fixing penalty, this Court can draw inferences from the evidence before it, there will be limits on what kind of inferences can be drawn, especially as to matters going to the state of mind of the contravener, where that state of mind is expressly - and consciously - not the subject of direct evidence, or is the subject of direct evidence in a carefully chosen way. In circumstances such as the present, an adversarial context where the parties have elected to resolve the question of liability through a negotiation that involves compromise on both sides, the Court must be astute not to act disconformably with the adversarial context, and the agreement reached. To say as much is not to abdicate the Court's function to the parties (cf Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; 340 ALR 25 at [132]). Rather, it is to respect the parties' roles in an adversarial system, and to be careful not to venture too far beyond the evidence placed before the Court, and into the realm of speculation. 133 I accept there are some authorities which support the proposition that in fixing an appropriate penalty, a Court may draw inferences about a contravener's state of mind: see The Non-Indemnification Personal Payment Case at [12]-[13], and the Full Court's reference at [12] to my reasons at first instance, in particular at [104]. 134 Those circumstances were quite different. The inference drawn related to the respondents' and relevant CFMEU officers' knowledge of the unlawfulness of the respondents' conduct, based on the evidence. It was a straightforward inference in the circumstances. In contrast, the motivations or purposes of Mr Melhem in engaging in the conduct he did, in respect of four different employers and the Jockeys' Associations, over several years, is quite a different undertaking and not one appropriate to inferential reasoning, especially on the basis of evidence the parties both accept is incomplete. 135 In this context, some of the Full Court's observations in Reckitt at [131] should also be set out: If a contravention does not involve any state of mind then it is for the party asserting any particular state of mind (be it a deliberate flouting of the law, recklessness, wilful blindness, "courting the risk", negligence, or innocence or any other characterisation of state of mind) to prove its assertion. If, in the event, neither party discharges its onus to establish any particular state of mind in relation to the contraventions, the Court determines penalty on no more than the fact of the proscribed nature of the conduct (see, by analogy see R v Olbrich [1999] HCA 54; (1999) 199 CLR 270 at [22]-[28]). However, if any degree of awareness of the actual or potential unlawfulness of the conduct is proved then, all other things being equal, the contravention is necessarily more serious. Such awareness may be able to be inferred from the very nature of the conduct or representations constituting the conduct. 136 Ultimately, as I set out below, the applicant did not allege any particular state of mind in Mr Melhem, beyond that necessary to establish the contraventions, especially in relation to s 286. Mr Melhem made admissions about his state of mind which were sufficient to establish the contraventions. He also did not assert, by evidence, any particular exculpatory state of mind or explanation for his conduct. Accordingly, the Court fixes the appropriate penalty, taking into account all the circumstances and by reference to the admissions made as to Mr Melhem's belief for the purposes of s 286, together with the inference I consider is available as to his knowledge of the unlawfulness of the methods by which he sought and obtained the recruitment of individuals as members of the AWU, and payments for their membership from their employers or representative associations. 137 In Weininger v The Queen [2003] HCA 14; 212 CLR 629 at [19]-[23], the plurality's reasons remind the reader that much may remain unknown about the circumstances in which offences are committed: For present purposes, however, attention to questions of onus and standard of proof may distract attention from another important aspect of the decision in Olbrich. Framing the question in terms of the onus and standard of proof may suggest that all disputed issues of fact related to sentencing must be resolved for or against the offender. That is not so. As was recognised in Olbrich, some disputed issues of fact cannot be resolved in a way that goes either to increase or to decrease the sentence that is to be imposed. There may be issues which the material available to the sentencing judge will not permit the judge to resolve in that way. It had been submitted in Olbrich that, in sentencing a person knowingly concerned in the importation of narcotic drugs into Australia, it was necessary to classify that person's participation in the importation as that of a principal or a courier, and it was further submitted that, if it was not established beyond reasonable doubt that the offender was a principal, the offender should be sentenced as a courier. As the majority pointed out in Olbrich, prosecuting authorities and a sentencing judge will often have only the most limited and imperfect information about how it was that the accused came to commit the offence for which he or she is to be sentenced. Although s 16A(2)(a) requires a sentencing judge to take account of the nature and circumstances of the offence, that requirement is not absolute. They are to be taken into account only to the extent that they are relevant and known to the court. The sentencing judge may not be able to make findings about all matters that may go to describe those circumstances. … In addition to the points just made about what is known to the sentencing judge, there is another important feature of fact finding in sentencing which must be recognised. Many matters that must be taken into account in fixing a sentence are matters whose proper characterisation may lie somewhere along a line between two extremes. That is inevitably so. The matters that must be taken into account in sentencing an offender include many matters of and concerning human behaviour. It is, therefore, to invite error to present every question for a sentencer who is assessing a matter which is to be taken into account as a choice between extremes, one classified as aggravating and the opposite extreme classified as mitigating. Neither human behaviour, nor fixing of sentences is so simple. Further, a sentencing hearing is not an inquisition into all that may bear upon the circumstances of the offence or matters personal to the offender. Some matters may be fixed by the plea or verdict of guilty although, even there, there may be ambiguities (as for example, in some homicide cases where a verdict of manslaughter is returned). Many of the matters relevant to fixing a sentence are matters which either the prosecution or the offender will draw to the attention of the sentencing judge. Some matters will remain unknown to the sentencing judge. The question then becomes, what use is the sentencing judge to make of what is known, and of the matters urged by the parties? This is not just a series of choices for the judge between alternatives. Not only may some things be unknown, some will concern matters in which a range of answers may be open. (Footnotes omitted.) 138 Although those observations were made in the context of the task of a sentencing judge in a criminal trial, as with other parallels the law draws with the imposition of a civil penalty, there is at least enough of a parallel for these observations to have relevance here, in the context of the Court recognising that the evidence does not permit it to "know" why Mr Melhem acted as he did. 139 Ultimately, and in reply, senior counsel for the applicant submitted: The primary inference that the applicant asks the court to draw is that Mr Melhem knew that the persons who were being admitted to the register, and the moneys that were being allocated towards membership, were not persons who should have been so admitted to the register, and those moneys should not properly have been allocated as membership moneys. … We say that Mr Melhem should be taken to have known that there were persons who were admitted to the register who were not entitled to be so admitted in accordance with the AWU Rules, with the corollary that there were moneys being allocated as membership moneys when those moneys were not being properly so allocated. And that had two consequences which we also say Mr Melhem should be taken to have been conscious of. Firstly, the numbers of members of the AWU Victorian branch were being artificially increased or improperly increased, and secondly, the moneys being received on behalf of membership for that branch were also being improperly inflated. 140 I accept those inferences are available and it is appropriate to draw them. They do not go as far as providing any explanation as to Mr Melhem's motivation or purpose in engaging in the conduct he did over several years, and that is a matter which remains "unknown" to the Court for the purposes of fixing an appropriate penalty.
Nature, extent and characterisation of Mr Melhem's conduct 141 Although the parties both accepted that there were eight contraventions, they submitted, and I am prepared to accept, that the appropriate way to view Mr Melhem's conduct is by dealing with it by employer or organisation, and looking at each set of events and transactions with one employer or organisation as one course of conduct. That is an approach which is favourable to Mr Melhem. 142 As I note below, in relation to Geotech there was only one invoice, one "transaction" and one episode of 18 employees being added to the Register of Members without compliance with the AWU Rules. The parties accept that is a single contravention of s 285(1) and s 286(1)(a), and that one penalty should be imposed on Mr Melhem for that conduct. This, they submit, is the necessary result of the application of s 306(3). I accepted that submission at [37] above. Yet, in respect of Cleanevent, there were three payments made by Cleanevent to the AWU between 2010 and 2013, and two episodes of names and details of Cleanevent employees being entered on the AWU Register of Members. Nevertheless, on a "site" basis, the pleading is alleged as a single contravention of s 285(1) and s 286(1)(a), for which one penalty should be imposed. I have some difficulty in accepting that is the most rational characterisation of Mr Melhem's conduct for the purposes of liability, but it is a foundation of the way the applicant's case was pleaded and of the parties' settlement of the issues on liability in this proceeding, and the Court should be cautious in imposing penalties in a way which contradicts such an agreed position, even if it has power to do so. Otherwise, the considerable benefits of encouraging settlement of allegations of liability in penalty proceedings, and the concomitant savings in resources to the parties and the Court - especially publicly funded resources - could be undermined. 143 Mr Melhem's overarching submission, in terms of the characterisation of his conduct, is that his contravening conduct concerned union governance, not corruption or self-dealing, and that this was a principal factor to consider in determining the appropriate level of penalty. Senior counsel for Mr Melhem emphasised that the provisions of the FWRO Act in respect of which Mr Melhem has admitted contraventions, are focused on union governance. Senior counsel for Mr Melhem submitted the contravening conduct here was about "record keeping, systems, accountability, functioning and control", and far removed from the line of cases where the person prosecuted had profited personally, or sought to profit personally, from non-compliance with obligations in the FWRO Act (such as McGiveron; General Manager of the Fair Work Commission v Thomson (No 3) [2015] FCA 1001 and Health Services Union v Jackson (No 4) [2015] FCA 865; 108 ACSR 156). 144 The absence of any "disputing" of the invoices by any of the employers or organisations, which was highlighted in Mr Melhem's submissions, is not especially significant, where it is clear the facts agreed have been the subject of careful negotiation and agreement, and there are many gaps in the evidentiary narrative, including no real explanation of why much of the admitted conducted occurred. On the one hand, as senior counsel for Mr Melhem submitted, the absence of any dispute may indicate that no employer or organisation felt misled by the descriptions in the invoices. On the other hand, it may also indicate that whatever the explanation for the practices which are the subject of the contraventions, the employers or organisations knew about the explanation and did not object. 145 Having carefully considered the parties' respective submissions, I do not consider it is appropriate to describe what Mr Melhem did as failures in "record keeping, systems, accountability, functioning and control". I do not consider there is much of a comparison at all with the circumstances in Registered Organisations Commissioner v Australian Nursing and Midwifery Federation (No 2) [2018] FCA 2004 (ANMF). 146 In General Manager of the Fair Work Commission v Thomson (No 4) [2015] FCA 1433 at [20], Jessup J relevantly stated: The respondent's conduct in this area involved no momentary lapse in judgment: rather, it involved a consistent, focussed and, one would have to say, businesslike diversion of the services of an employee of the HSU to activities which were to the advantage of the respondent. There is no way in which this conduct could be dressed up to present a persuasive case for leniency. 147 I accept the nature of the contravening conduct by Mr Melhem is quite different to that of the respondent in Thomson (No 4). However, the point of referring to Jessup J's findings is to illustrate that in assessing seriousness, factual matters such as whether the contravention was momentary, inadvertent, or negligent but not conscious, are the kinds of factors which legitimately inform the Court's assessment of seriousness. 148 In the present case, the evidence establishes there was conscious and deliberate conduct by Mr Melhem in seeking out and facilitating the recruitment of new members to the AWU outside the process set out in the AWU Rules, and the payments of significant sums of money for those recruitments, which amounts generally bore little if any correlation to the membership rates set by the AWU Rules. For reasons that remain unexplained, almost all of the payments were attributed to services which were not provided, or were provided in a limited way. All this conduct, in my opinion, was not inadvertent, or negligent, or careless; it was deliberate. 149 Mr Melhem's involvement was not peripheral. Nor was it intermittent. The evidence shows he was regularly, closely and personally involved in the communications which led to the provision of lists of employees or individuals (in the case of the Jockeys' Associations); and he was personally involved in securing payments which were attributed to membership contributions although the amounts overwhelmingly bore no relationship to the amounts prescribed for membership fees in the AWU Rules. He was also directly involved in, and authorised, the issue by the AWU of invoices which described the payments to be made to the AWU in a way which did not conform to the purpose to which the AWU put the funds once received. 150 Contrary to the submissions made on behalf of Mr Melhem, I do not consider there is any binary distinction, in terms of characterisation of the contravening conduct, between "record keeping" errors (such as those considered in the ANMF case) and "self-dealing". Characterising conduct like this risks the error identified by the plurality in Weininger, of identifying two extremes and choosing between them. The conduct of individuals which constitutes the contraventions is not so binary in nature. While I do accept that there is no evidence of any personal profiting by Mr Melhem, and no suggestion of any corrupt behaviour designed to advance his personal interests, that does not mean the only way to describe the contravening conduct is as a failure of record keeping, or systems. 151 This is, again, where the absence of any explanations about why Mr Melhem took the steps he did, precludes any firm characterisation of either the minor or extreme categories of behaviour. 152 Senior counsel for Mr Melhem submitted the correct characterisation of Mr Melhem's conduct was: As your Honour will have seen working through the agreed statement of facts, the gravamen of the offending and the contravening which is admitted across all five sites or associations with respect to section 285 comes to this: of course, the precise language of the agreed facts is important, but if a theme can be extracted, in my submission, it is fairly put as follows, that the entry of names on the membership register of the union other than in accordance with the rules has occurred. That has been admitted. And that with respect to the entry of those names there was also receipt of income which was attributed at the union's end or in the union's books as membership income. Those two facts or admitted matters may tend to undermine the integrity that the register of members has been acknowledged. And it has been admitted that that falls short of the degree of care and diligence that a union official - reasonable union official in the second respondent's position might be expected to display. Now, it is only with respect to three sites that there is also a cognate admission pertaining to the first limb of section 286(1)(a). And it's important to go back time and time again to the wording of that first limb, as your Honour has no doubt done, to see what it says and what it does not say. 286(1)(a) refers to an officer of an organisation who must exercise his powers and discharge, in this case his duties, in good faith in what he believes to be the best interests of the organisation. 153 With respect, Mr Melhem's conduct amounted to more than a failure to maintain the "integrity" of the AWU's Register of Members. He was involved in deliberate conduct to add employees and individuals to that Register otherwise than in accordance with the AWU's own, carefully drafted rules. He was involved in deliberate conduct which directed the preparation and submission of invoices to three of the four employers and to the Jockeys' Associations which could not be said in any substantive way to reflect the purpose of the payments made by the employers and the Jockeys' Associations, or to reflect the way the AWU Vic accounted for those payments. 154 The fact that none of the employers, nor the Jockeys' Associations, apparently complained about the descriptions on the invoices, or about other aspects of these arrangements, does not mitigate the seriousness of the contravening conduct. There is simply an absence of evidence about why the four employers and the Jockeys' Associations were apparently content with the misdescriptions, to use a relatively neutral term. 155 Mr Melhem's powers, duties and functions as Secretary of the AWU Vic relevantly included, pursuant to Rule 39 of the AWU Rules: Cause to be kept a correct account of all moneys received and expended but must not pay, lend or otherwise appropriate any of the funds of the Union except in accordance with the Rules, resolutions and Minutes of the Branch Executive and Delegate or General Meetings. … As far as practicable and subject to Rule 17(11) having been complied with, keep a correct Register of the names, postal addresses and occupations of all Officers and of the name, postal address and number of ticket of each member in the Branch and the date on which each person became a member of the Union, and must supply a copy of the Branch Register of members to the National Secretary when required. … Endeavour to increase the membership of the Branch. 156 Mr Melhem's duty and function as Secretary to endeavour to increase the membership of the AWU Vic was not to be achieved at all costs, by any means, and certainly the AWU Rules should not be read as encouraging a Branch Secretary to do so by bypassing or ignoring the union's own rules about membership. 157 For the purposes of s 285(1), Mr Melhem's conduct fell far short of the standard required by a senior union official in his position, and who was directly involved in these events and transactions. Indeed, it fell far short of the standard required and reasonably expected of any union official involved in such events and transactions, let alone the most senior union official in the AWU Vic. Any reasonable AWU official, holding the position of Secretary of the AWU Vic, the Branch to which these payments flowed and in respect of which these membership arrangements were made, could not possibly have engaged in the kind of conduct Mr Melhem admits he engaged in, if that person had shown any degree of care and diligence for the rules and processes of the AWU, in a matter as central to the union as its membership. 158 For the purposes of s 286(1)(a), and accepting that possession of a proper purpose is not an element of the statutory obligation in that subparagraph, in my opinion Mr Melhem's conduct was a clear and serious example of the most senior office holder within the AWU Vic, and a senior office holder within the national AWU structure, failing to discharge his powers and duties in the best interests of the AWU. It could not possibly have been in the best interests of the AWU for its own membership rules, including as to amounts payable for membership, to be bypassed, in a serious and sustained way. Mr Melhem has conceded that admitting people as members otherwise than in accordance with the AWU Rules was not in the best interests of the union. 159 Mr Melhem has admitted he did not act in good faith, in what he believed to be the best interests of the AWU, because he did not confirm himself or through any AWU officer that the membership rules had been followed. He has also admitted that he directed, caused or permitted payments from Cleanevent, Geotech and the Jockeys' Associations to be applied on account of membership contributions, even though the "members" in respect of whom those payments were made had not been admitted in accordance with the AWU Rules. 160 It is not clear what the Court is to take from the admission of a lack of good faith on Mr Melhem's part. In my opinion, this is one of the areas where gaps in the evidence do not enable the Court to draw any inferences about what is meant, in substance, by this admission, aside from it being an acceptance of a contravention of s 286(1)(a). How the absence of good faith is said to manifest itself is not explained on the evidence. 161 "Good faith" is a phrase which may have various meanings, or various emphases in meaning, depending on the context in which it is used. It includes matters such as cooperation, honesty and reasonableness: see the discussion by Colvin J in Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 3) [2019] FCA 72 at [715]-[716], albeit his Honour was there dealing with a contractual context. When used in conjunction with the performance by an office holder of powers and duties, it at least includes notions of honesty and transparency, and faithfulness or allegiance to the purposes for which a person has been appointed or elected to the office she or he holds: see, albeit in a slightly different context, the observations of the High Court in SZFDE v Minister for Immigration and Citizenship [2007] HCA 35; 232 CLR 189 at [13], and the authorities there referred to. In Mr Melhem's case, one of those purposes was to uphold and observe the AWU Rules, and not expose the AWU to foreseeable risks of harm. Such purposes are likely to be common to the appointment of many if not most office holders. 162 Mr Melhem's conduct has, as he has admitted, exposed the AWU itself to proceedings for contravention of s 230 of the FWRO Act and its equivalent in the predecessor legislation, and, I infer, to findings of contravention and the imposition of penalties for that contravention. He placed the interests of his union, and the funds of his union, in jeopardy. The evidence does not permit the Court to make any findings about why, precisely, Mr Melhem considered it was acceptable to do this. 163 Other features of Mr Melhem's conduct can also be noted here. The conduct persisted, and was repeated, over the course of around five years. It was neither isolated, nor of short duration. The applicant describes this as a "culture of non-compliance". Whether or not that is an accurate description, the important point for the purposes of fixing penalty is that it was conduct repeated, in something of a pattern and with an apparent method, over a number of years, across a range of employers and a state and national association. These features add to the deliberateness of the conduct. 164 The conduct involved significant numbers of people being added to the AWU's Register of Members, and being treated as members, in substantial non-compliance with the AWU Rules. The numbers of people added to the Register were as follows: (a) 164 Cleanevent employees; (b) 347 Winslow employees; (c) 45 BMD employees; (d) 156 jockeys; and (e) 18 Geotech employees. 165 The findings I have made above indicate that at least some of these individuals ultimately filled out membership forms, and can be taken to have made a conscious decision themselves to join the AWU. However, the findings I have made, and Mr Melhem's admissions, indicate that the overwhelming majority of these individuals did not themselves decide to join the AWU. The decision whether to join a union is a personal decision. Individual workers may have different views. The clear intent of the AWU Rules as to membership is to reflect the personal nature of the decision. It is not the kind of decision that others should make for an individual. 166 The amount of money paid to the AWU, and accounted for by the AWU as membership fees was: (a) Cleanevent: $12,500 paid in December 2010 (allocated to pay membership fees of 100 Cleanevent employees); $27,500 paid in June 2012 (allocated to pay membership fees of 66 Cleanevent employees); and $27,500 paid in March 2013 (allocated to pay membership fees of 66 Cleanevent employees); (b) Winslow: $9,945 paid in March 2008 (allocated to pay membership fees of 85 Winslow employees); $43,650 paid in June 2009 (allocated to pay membership fees of 97 Winslow employees); $23,166 paid in January 2010 (allocated to pay membership fees of 99 Winslow employees); $44,401.50 paid in August 2010 (allocated to pay membership fees of 117 Winslow employees); two invoices for $38,857.50 (totalling $77,715) paid in July 2011 (allocated to pay membership fees of 237 Winslow employees); $81,640 paid in June 2012 (allocated to pay membership fees of 192 Winslow employees); and $85,280 paid in April 2013 (allocated to pay membership fees of 189 Winslow employees); (c) BMD: $14,300 paid in December 2007 (allocated to pay membership fees of 45 BMD employees); (d) Jockeys' Associations: $7,500 paid in June 2010 (allocated to pay membership fees of 156 jockeys); $7,500 paid in June 2011 (allocated to pay membership fees of 156 jockeys); and $8,250 paid in May 2012 (allocated to pay membership fees of 156 jockeys); and (e) Geotech: $17,160 paid in March 2013 (allocated to pay membership fees of 18 Geotech employees). The total amount of money paid to the AWU pursuant to the above invoices was: $488,007.50. 167 Mr Melhem engaged in the contravening conduct while he held the most senior office within the AWU Vic. He should have been setting an exemplary standard of behaviour in terms of his observance of the law, and of the AWU Rules. Why he did not do so remains a matter on which the evidence is silent. However, the fact is that as the most senior office holder in the Victorian Branch of the AWU he did not even attempt to ensure that the rules of the union he was charged with administering in Victoria were observed, on a matter as fundamental to the running of the union as the way that workers become members.
The arguments about what are the applicable maximum penalties 168 Consideration by the Court of what are the maximum applicable penalties in any given situation can operate as some kind of yardstick for understanding what Parliament's view is of the "worst possible case" for a particular kind of contravening conduct: see, generally, Reckitt at [154]-[156]. 169 In the present circumstances, from 29 June 2012, the maximum penalty for an individual who contravened (relevantly) s 285 and s 286 of the FWRO Act was tripled to 60 penalty units. 170 As to three of the employers and organisations, the parties are agreed on the applicable maximum penalty. They are: (a) BMD (conduct occurring from November 2007-January 2008): maximum penalty is 20 penalty units (at $110 per unit) and the maximum total penalty is $2,200; (b) Jockeys' Associations (conduct occurring from December 2008-April 2012): maximum penalty is 20 penalty units (at $110 per unit) and the maximum total penalty is $2,200; and (c) Geotech (conduct occurring in March 2013): maximum penalty is 60 penalty units (at $170 per unit) and the maximum total penalty is $10,200. 171 The parties disagree about the calculations of the applicable maxima for Cleanevent and Winslow. That is because Mr Melhem's conduct spans the time periods of September 2010-March 2013 (for Cleanevent) and March 2008-March 2013 (for Winslow). 172 The applicant has calculated the maximum penalty by reference to 60 penalty units, being the number of applicable penalty units at the time of the "latest conduct", which was in March 2013 for both employers. That results in the applicant submitting the maximum penalty for each of the contraventions in respect of Cleanevent and Winslow is $10,200. 173 In contrast, Mr Melhem submits that, in respect of the admitted contraventions, the contravening conduct occurred predominantly during the period prior to 28 June 2012. Accordingly, he contends the maximum applicable penalty with respect to each of those contraventions should be treated as $2,200, being the maximum applicable penalty up until that date (calculated by reference to 20 penalty units). 174 Both parties rely on the decision of Barker J in ANMF to support their differing contentions. ANMF concerned contraventions of the FWRO Act in respect of the reporting obligations of the Australian Nursing and Midwifery Federation (ANMF) Western Australian Branch. Both the ANMF and its WA Branch Secretary were prosecuted. The ANMF was found to have failed, for the financial years ending 30 June 2010, 2011 and 2012, to prepare and circulate to its members the financial reports for the WA Branch in accordance with the requirements of the FWRO Act. 175 Mr Olson was the ANMF's WA Branch Secretary. He was found to have contravened s 285(1) of the FWRO Act. At [95], Barker J described Mr Olson's conduct in the following way, by reference to submissions made by the Commissioner: As Branch Secretary [Mr Olson] was obliged to undertake the steps required to lodge the relevant statutory returns. He was aware of his obligations. His failure resulted in the statutory returns being lodged extremely late. 176 Justice Barker found that as with the ANMF itself, Mr Olson's contravention was not deliberate. He was found to have had no specific intent to wilfully contravene the obligations. Mr Olson's contravening conduct occurred over three reporting periods, but in fact, Barker J found the same conduct had occurred over six financial years. 177 Justice Barker's reasoning about how to approach the question of an appropriate penalty when the maximum penalties had changed over the course of the contravening conduct was as follows: For that reason, the Commissioner contends that, considering all of the circumstances, the Court should impose penalty against Mr Olson of between $7,140 and $8,670. It would reflect between 70% and 85% of the maximum and would not be manifestly excessive or manifestly inadequate. As noted above, Mr Olson submits that an appropriate penalty is $4,500. I take into account the fact that the penalty maximum increased during the period. I do not fully accept, however, Mr Olson's submission that because the contravention of a continuing nature occurred for a more substantial time during the first period, that the penalty should be materially reduced on that account. To take that approach would be, in the present circumstances, to take too much of a mathematical or mechanistic approach to sentencing and to pay insufficient regard to the seriousness of the contravention that occurred over a three year period and, in a practical sense, got worse as each reporting period passed. There is no doubt that the contravention is serious. While Mr Olson now, to his credit, says words to the effect that he now recognises the error of his ways, the fact is that the contravention continued for three years, and indeed had been the subject of noncompliance for three years before that. I do not impose a penalty on account of that earlier period. That earlier period demonstrates, however, as my primary judgment indicates, how important it was at all material times in the relevant three year period for Mr Olson to get the WA Branch's reporting affairs in order. Therefore, there should be no mathematical reduction according to time periods in which particular maximum penalties applied. Nonetheless, I take into account that the penalty I impose should reflect the fact that at material times there was a lower penalty, in the first period, of $2,200, in the second period of $6,600 and in the final period, $10,200. In the final event, I consider that a pecuniary penalty of $6,630 should be imposed. While this represents about 65% of the maximum for the final period of $10,200, it is not calculated on that basis, but recognises that a lower maximum applied for the first two periods of the contravention. So, calculating the penalty in these terms takes account of the differing penalty rates in the different periods. But it also seems to me properly to reflect the seriousness of the contravention. Notwithstanding that I accept that Mr Olson is very unlikely to contravene the reporting obligations again, particularly by reason of the corrective actions taken in the WA Branch, an appropriate specific deterrent is required in his case given the laxity of Mr Olson's approach to the reporting obligations at material times. Additionally, a strong message must be sent to others in his position who might be inclined to treat lightly, as Mr Olson did, the reporting obligations imposed by the RO Act. 178 The applicant contends that the approach taken by Barker J was to start "with the maximum penalty at the end of the final period, but [take] into account the fact that the penalty had changed during the period as one of the relevant 'factors' used in assessing the level of penalty, along with other factors, such as deterrence". Mr Melhem contends Barker J rejected a similar approach put to him by the Commissioner in that case. 179 It is correct that before Barker J, the Commissioner took the starting point of the maximum penalty for the latest period, and submitted the Court should impose a penalty which was between 70% and 85% of that maximum: see [121] of his Honour's reasons. 180 In fact, it appears it was Mr Olson who submitted that the Court should approach penalty by looking at when the bulk of the contravening conduct occurred, which he submitted was in the earlier (lower penalty) period: see [123]. Justice Barker did not agree with this approach. I respectfully agree with Barker J's observation at [123] that an approach which focusses on the changes in penalty and seeks to measure those changes against the proportion of the contravening conduct which occurred during any one penalty period is too "mathematical or mechanistic" an approach. 181 At [124]-[125], Barker J relevantly said: That earlier period demonstrates, however, as my primary judgment indicates, how important it was at all material times in the relevant three year period for Mr Olson to get the WA Branch's reporting affairs in order. Therefore, there should be no mathematical reduction according to time periods in which particular maximum penalties applied. Nonetheless, I take into account that the penalty I impose should reflect the fact that at material times there was a lower penalty, in the first period, of $2,200, in the second period of $6,600 and in the final period, $10,200. In the final event, I consider that a pecuniary penalty of $6,630 should be imposed. While this represents about 65% of the maximum for the final period of $10,200, it is not calculated on that basis, but recognises that a lower maximum applied for the first two periods of the contravention. 182 These passages make it clear Barker J did not start with the maximum for the last period of contravening conduct and fix an appropriate penalty based on that figure. His Honour expressly disclaimed such an approach. Rather, as his Honour said, he took into account the fact that there were three periods where the penalties were different (and increasing) and he factored that into his consideration. 183 I respectfully agree this is the better approach, and I reject the applicant's submission that in respect of Mr Melhem the Court should start from the position that his contravening conduct in relation to Cleanevent and Winslow attracts the maximum penalty of $10,200. 184 In the case of Cleanevent, the first payment, and the events leading to it, occurred in December 2010; the second in June 2012 (around the time of the penalty increase) and the third in March 2013 (after the penalty increase). 185 In the case of Winslow, seven of the invoices and payments occurred before the penalty increase, and the eighth invoice and payment after it. 186 Nevertheless, as the Geotech example illustrates, a contravention of s 285(1) and s 286(1)(a) can be established by one transaction, and one episode of registration of employees without compliance with the AWU Rules. In that sense, the transaction and episode of registration which occurred, for example, in May-June 2012 in respect of Winslow would have been sufficient, if the same facts were proven or admitted, to constitute a contravention, without all the previous episodes and transactions in respect of Winslow. This is why it is fruitless to engage in some mathematical, or proportional, comparison of the amount of conduct "before and after" a penalty increase. 187 A point that has rather more force was made on behalf of Mr Melhem in written and oral submissions. The initial maximum penalty was fixed at $2,200. Where conduct occurred over a long period of time, there is an element of arbitrariness, or unfairness, in seeing the "yardstick" maximum penalty as the one applying only when the last transaction or episode of conduct occurred. Where a substantial portion of conduct occurred before the increase in the maximum penalty, such a focus achieves retrospectivity in penalty amounts "by the back door", as senior counsel put it. 188 These matters all reinforce my view that the Court must take a holistic view of Mr Melhem's contravening conduct, across the entire period of time over which it occurred in respect of Cleanevent and Winslow: three years for Cleanevent, and five years for Winslow. That his conduct persisted, and was repeated, over such a lengthy period of time is a matter which weighs in favour of the characterisation of his conduct as towards the serious end. At the same time, given the fact that during a material portion of this period, Parliament had seen fit to impose more modest penalties than those it imposed after 29 June 2012 is a matter which cannot be ignored in determining the appropriate penalty.
Deterrence 189 In Thomson (No 4) at [5], Jessup J said: The significance of general deterrence is, if anything, somewhat magnified in the circumstances of the present case, for two reasons. First, the respondent's position was a very senior one in a national union. Subordinate officials, and members, of the HSU would inevitably have regarded him as an example to be followed, most particularly in the areas of honesty and loyalty to the organisation which he served. Secondly, as stressed in my reasons of 11 September 2015, the respondent worked in an environment where he was subject to little or no supervision, nor even surveillance, by other officers of the HSU. These considerations reflect on the inherent gravity of his contraventions, of course, but they also add relevance to the matter of general deterrence: how the court is prepared to deal with a contravenor in the position of the respondent should, in the perception of others in like positions, be the subject of no ambiguity. 190 Both those factors apply to Mr Melhem's circumstances, even if the contravening conduct is of a different character. I respectfully adopt them. 191 This is a situation which calls for significant weight to be given to general deterrence. As the evidence establishing the contraventions in this case demonstrates, it is possible for the carefully and purposefully drafted rules of an organisation such as a union to be completely circumvented for a period of years, and for significant funds to be paid to that organisation on a basis apparently known to be incorrect (excluding Cleanevent), and for those funds to be applied for a different purpose within the union, despite receipt of such funds requiring a detailed and prescriptive process to have been followed, which was not. The facts of these contraventions demonstrate it is possible for all this to occur in respect of one of the most fundamental aspects of a union - how its members are recruited and admitted. 192 The penalty imposed on Mr Melhem should send a strong message to office holders in other registered organisations who might be inclined to see the organisation's rules as optional, and to see membership recruitment as an "ends justifies the means" kind of process, that the law will view such conduct as serious and with significant penalties likely to be imposed. 193 I accept, as the parties submitted, that there is less weight to be given in the current case to specific deterrence, because Mr Melhem no longer holds office in the AWU. However, Mr Melhem still holds public office. Indeed, he holds an even more senior and responsible kind of public office. The penalty imposed should reinforce what on the evidence he does now accept and understand: that no short cuts should be taken around rules and processes which are fundamental, and prescribed as fundamental, to the operation and funding of any organisation with public functions and which has as one of its premises that those in power will be accountable for, and transparent about, the way they perform their duties and exercise their powers.
Cooperation 194 Mr Melhem submits that significant weight should be given to the level of cooperation shown by him in making admissions as to liability, but also in respect of his conduct during the proceeding prior to those admissions. He submits that rather than invoking the penalty privilege, as was his right, he filed a substantive defence as to fact and law, thus narrowing the issues and making his position clear to the applicant and to the Court. He submits that he also engaged in a substantive process of agreeing facts, prior to any admission of liability. I accept those submissions, and I accept they are factors which weigh in Mr Melhem's favour. 195 However, as the applicant emphasised in its submissions, Mr Melhem's admissions of liability, and his agreement not to contest liability, came immediately prior to the commencement of the trial. The Court was notified of the agreement as to liability on the morning of the day prior to the trial commencing. Most of the costs of trial preparation had been incurred by that point. Nevertheless, the cost of the trial itself, and the occupation of the Court's resources which could otherwise have been applied to other litigants and other proceedings, were avoided by Mr Melhem's admissions. 196 There could be no debate that this was to be a strongly contested trial, occupying just over two weeks. A large number of witnesses under subpoena would have been required to attend, including at least one witness from overseas, on the basis of the Court accepting a submission put by Mr Melhem that this witness should attend in person. Judgment would have been reserved for some time, in a matter which would have been factually and legally complex. Whatever the outcome, the prospect of an appeal could not be discounted. The costs, time and resources associated with all those matters have been avoided by Mr Melhem's cooperation and he should be given some credit for that. 197 Further, as I have noted above, ten out of 18 allegations made by the applicant were withdrawn, so this was plainly a carefully negotiated outcome, also requiring considerable cooperation and compromise for it to be achieved. This was no complete capitulation.
Previous conduct by Mr Melhem 198 The applicant does not dispute Mr Melhem's submission that there is nothing in Mr Melhem's prior conduct, in his many capacities and service in public life, and in his service to Australian workers, that should be taken into account adversely to him. Until the findings made in this proceeding, he served the union, without any blemish on his record, for 23 years. 199 Indeed, the references provided to the Court demonstrate there is much in Mr Melhem's service to the union movement, to the Australian community, and to Australian workers, which reflects positively on him. 200 The applicant does submit that Mr Melhem had occupied his position as Secretary of the AWU Vic for only around a year before the contravening conduct commenced, and that the conduct continued almost until he resigned from the union in May 2013. Mr Melhem resigned at that point to take up a casual vacancy in the Victorian Legislative Council, notwithstanding he had recently been elected to serve a further four year term as Secretary of the AWU Vic. I accept the applicant's submissions that some weight should be given to the fact that the contravening conduct occurred across almost the entire spread of Mr Melhem's time as Secretary of the AWU Vic.
Referees 201 Through Ms Rothville, Mr Melhem tendered a number of written references. 202 During oral submissions, the Court asked the parties to prepare a joint note concerning the use of evidence of good character in civil penalty proceedings. They provided a joint note on 7 October 2019, and the Court is grateful for the parties' assistance. I have considered the joint note in making the findings below. 203 The references tendered were from the following individuals: (a) Mr Wayne Blair, now retired, who was formerly a commissioner of the Australian Industrial Relations Commission (now Fair Work Australia and the Fair Work Commission). Mr Blair states that he has known Mr Melhem for over 15 years and dealt with Mr Melhem during his term at the AWU Vic. Mr Blair states that he also knows Mr Melhem in a personal capacity. (b) Mr Ray Horsburgh AM, the Chairman for AFL Victoria and a director of Pact Group Holdings and the Ricky Ponting Foundation. Mr Horsburgh states that during his time as CEO of Smorgon Steel Group and as the MLC for the Western Metropolitan Region he dealt with Mr Melhem, who assisted Mr Horsburgh with issues that arose out of some of his then chairmanships. (c) Mr Dragan Kovacevic, who states that during his time as a member of the AWU, he dealt with Mr Melhem through his position as a workplace delegate at Ajax Fasteners. He states that Mr Melhem assisted the employees of Ajax Fasteners in securing their entitlements when the company went into receivership. (d) Mr Gerald Wilkie, who states that also during his time as a member of the AWU, he dealt with Mr Melhem when employed as a plant operator for the Alex Fraser Group. Mr Wilkie was injured at work and states that Mr Melhem assisted him in negotiating with his employer to receive his full wage for a period of eight years after the accident. (e) Mr Les Twentyman OAM, founder of the Les Twentyman Foundation, who states that he has known Mr Melhem for 25 years through Mr Melhem's involvement with various community organisations and fundraising activities that he participated in through his association with the AWU. 204 All of these individuals stated they were aware of the admissions made by Mr Melhem about contravening conduct, but these statements were made in the most general of terms. None of these individuals were called to give oral evidence. That is, they were not exposed to cross-examination about their opinions of Mr Melhem, or how these opinions might be affected by understanding some of the details of the contravening conduct. 205 This is not a criminal sentencing process. Matters such as rehabilitation and punishment in the criminal law sense form no part of the Court's function in imposing a civil penalty. While, as the parties submitted, character references may be given some weight in assessing the role to be played by specific deterrence in imposing penalty, in my opinion much will depend on the individual circumstances. There is certainly no prohibition on the Court receiving such evidence, and the applicant did not submit there was. The parties' joint note referred to a number of examples where such evidence had been received in a civil penalty context, including Australian Securities and Investments Commission v Soust (No 2) [2010] FCA 388; 78 ACSR 1 and Australian Securities and Investments Commission v Healey (No 2) [2011] FCA 1003; 196 FCR 430. 206 The function of such evidence is to persuade the Court to impose lesser penalties on Mr Melhem than it might otherwise have been inclined to impose, because he is a person of good character, admired and appreciated by those making these statements. Evidence such as these statements may allow the Court to see a person's contravening conduct as "out of character", and to see the person as not in need of a serious penalty in order for the purposes of specific deterrence to be properly served. 207 In the present case, however, I find it difficult to give much weight to these references. As evidence, they constitute hearsay, and opinion evidence. They refer only in the most general terms to Mr Melhem's contravening conduct. The people who gave them did not give oral evidence, and it is difficult for the Court to assess the whole context in which their statements have been made. Where it might be controversial (as no doubt aspects of these statements are), context and persuasiveness would usually be established through the Court listening to a witness give oral evidence, and giving consideration to any testing of their evidence. 208 Further, as the applicant submitted, the contents of the references do not go to the subject of the contraventions. To that extent, even if references are in theory capable of being given some weight in terms of assessing the role to be played by special deterrence in a given civil penalty case, I do not consider these particular references can perform such a role in the present circumstances, where they disclose little knowledge about Mr Melhem's contravening conduct, including the fact that it took place over most of the period for which he was Secretary of the AWU Vic. 209 Subsequently, the parties also referred the Court to the decision of Nicholas J in Australian Securities and Investments Commission v Vocation Limited (In Liquidation) (No 2) [2019] FCA 1783. I have considered all the cases to which the parties referred the Court. Each case turns on its own facts and circumstances, in terms of the relevance and weight to be given to character references and to matters such as reputation and public service. In Mr Melhem's case, for the reasons I have given, in reaching my conclusions about the appropriate penalties, I have given some weight to the evidence about Mr Melhem's public service, and his reputation as disclosed by the character references, but as I have explained, in the particular circumstances of this proceeding and taking into account the nature of the references, I do not consider they should substantially affect the appropriate penalty figures. I note also that the applicable penalty amounts in this proceeding (even with the most recent maximum amounts) are relatively modest, and the proportional distinctions between a penalty of 50% of the maximum and 75 % of the maximum (to take a hypothetical example) are, in dollar terms, quite small.
Benefits to workers 210 It was submitted on behalf of Mr Melhem that there were benefits flowing to some workers as a result of his contravening conduct. At [54] of his written submissions, Mr Melhem contended there was no harm suffered by the workers whose membership of the AWU was attained through non-compliance with the AWU Rules: Indeed, the union's association with the employees at the workplaces the subject of the contraventions included positive outcomes. The union conducted industrial bargaining for Winslow employees and for BMD employees. The union secured a significant backpay claim on behalf of BMD employees. The union provided substantial ongoing support to jockeys in Victoria and particularly in relation to industrial matters. The union provided industrial representation for Geotech employees, including securing substantial pay increases in the form of site and travel allowances. (Footnotes omitted.) 211 The applicant did not appear to dispute the factual underpinning of this submission, save for some submissions about the timing of the delivery of some of these benefits not being co-extensive with the entry of workers' names on the Register of Members in contravention of s 285(1) and s 286(1)(a). Further, the applicant rejected the purported characterisation of Mr Melhem's contraventions as "victimless", and submitted that Mr Melhem's conduct undermined workers' freedom of association, "[b]y directing, causing and permitting persons to be added to the register without their knowledge". Senior counsel for Mr Melhem objected to the applicant's reliance on the concept of freedom of association. Regardless of whether that is an appropriate concept to employ, the underlying point made by the applicant (that a significant proportion of the individuals concerned were joined up to a union without their knowledge or consent) is one with which I agree, as I have indicated elsewhere in these reasons. 212 As I have noted above, pursuant to leave granted at the penalty hearing, on 7 October 2019 the parties provided to the Court a supplementary ASOF, which was admitted into evidence pursuant to s 191 of the Evidence Act. The supplementary ASOF provided more specific information concerning the "back pay claim" secured by the AWU on behalf of the BMD employees as described in [54] of Mr Melhem's written submissions, and stated that: (a) 38 BMD employees received back pay as described in the schedule to the letter exhibited at "FMR-23" of Ms Rothville's second affidavit; and (b) of those 38 employees, 19 employees had their names added to the Register of Members on 1 or 2 January 2008. 213 Therefore, the evidence appears to be that the AWU negotiated back pay for BMD employees irrespective of whether they had been added to the AWU Register of Members pursuant to the arrangement which underlies the contraventions Mr Melhem has admitted. However, even on an assumption favourable to Mr Melhem that, save for the BMD back pay claim addressed in the supplementary ASOF, the submission at [54] of his written submissions is entirely factually accurate on the evidence, the submission does appear, with respect, to have an apparent illogicality about it. It is not clear to me how it is said that contravening conduct can objectively be characterised as less serious because some third parties (here, the workers who became members of the AWU otherwise than in compliance with the AWU Rules) secured an ancillary benefit from what Mr Melhem had done, or permitted or directed to be done. 214 Nor is it apparent to me how it can be said that the fact that some workers did secure benefits from their AWU membership, even if that membership was attained outside the process prescribed by the AWU Rules and without the knowledge and consent of all of them, should mitigate or reduce the penalty to be imposed on Mr Melhem. That is akin to an "ends justifies the means" kind of submission which, in my opinion, has no place in assessment of appropriate penalty in a context such as the present. 215 I do not propose to give any weight to the submission I have extracted at [209], as I consider it is misplaced.
Consequences for Mr Melhem of the applicant's allegations in this proceeding 216 In Ms Rothville's first affidavit there is evidence about the impact on Mr Melhem and his family from the conduct of the Royal Commission into Trade Union Governance and Corruption, in which allegations about the conduct of Mr Melhem and the AWU in relation to membership recruitment through the employers and organisations identified in this proceeding were first raised. There is also evidence about the impact on Mr Melhem and his family from proposed criminal charges against him arising out of the evidence before the Royal Commission, and the Royal Commissioner's findings. Finally, there is evidence about the impact of the conduct of these proceedings on Mr Melhem and his family. 217 None of that evidence is given by Mr Melhem himself. Rather, it is given through his lawyer on instructions. Even if this evidence was relevant, I would give it little weight. Again, Mr Melhem is not a defendant to a criminal proceeding: he is a respondent to a civil penalty proceeding. Affidavit evidence from him had been filed ahead of the trial on liability and he was scheduled to be called as a witness in that proceeding. He was not relying on any penalty privilege, as his senior counsel submitted. Yet he did not give evidence himself about the impact of these matters on him and his family. There was no explanation in the evidence about why he did not do so. In those circumstances, and with the evidence being of a hearsay nature, some of it second-hand hearsay, and completely untested as to reliability and context, I do not propose to give it any weight. 218 As to relevance, I accept the applicant's submissions that the evidence about the impact on Mr Melhem of what must be seen as entirely separate processes of the Royal Commission and consideration of criminal charges are not matters which can be relevant to the question of appropriate penalty in this proceeding. I do not see how the impact of what occurred, or did not occur, during separate legal processes can tend to prove what might be the appropriate penalty for contraventions of two specific provisions in the FWRO Act, and the equivalent provisions of the predecessor legislation. The analogies to a sentencing process fall down here, when it is recalled that the purpose of a civil penalty proceeding is concerned with deterrence. 219 I accept that evidence about the impact on Mr Melhem of this proceeding might fall into a different category. Like character references, it is not inconceivable that such evidence could be relevant to how the Court might assess the role to be played by specific deterrence in imposing a particular civil penalty in a given case. Hypothetically, if an individual respondent has been through a particularly traumatic process by reason of being a respondent to a civil penalty proceeding, it is not inconceivable that a Court could include this as a factor in deciding whether it is necessary in fixing penalty to accord particular weight to specific deterrence, the respondent having perhaps already been through so much that the experience of the process itself would be enough to satisfy the objective of specific deterrence. As I say, such a reasoning process is not inconceivable. 220 However, that is not this case. At [45]-[55] of her first affidavit, Ms Rothville deposes to the media coverage about this proceeding. I deal with this as a separate issue below. She deposes at [55]: Mr Melhem has informed me that each time the media has reported on these matters, he and his family have endured renewed scrutiny, including on occasion negative comments on social media, and renewed feelings of stress and embarrassment caused by the publicity. 221 Mr Melhem could have given this evidence himself. It is about his experience, and that of his family. The persuasiveness of his account could have been assessed. He could have been tested on it. Perhaps that testing would have meant the extent of his suffering, his family's suffering, and its cause, became apparent in his oral evidence. Perhaps the opposite would have been the case. The Court cannot know. The point is he elected not to expose himself to those potential outcomes, where the subject-matter of the evidence is personal to him, and his family, and where he seeks to have the Court give him some kind of "discount" on penalty for these experiences. 222 Without further detail and testing, aspects of the evidence are not probative of any connection between Mr Melhem's participation in this proceeding and the suffering to which his lawyer deposes. For example, at [57] of her first affidavit, Ms Rothville deposes the following, having referred to Mr Melhem's involvement in the Royal Commission: Mr Melhem informs me that the first 3 years of investigations had such an impact that he required treatment for depression. With medical treatment and help, as well as the support of friends and family, his health has since improved. 223 The evidence as it stands is not of much probative value, and I give it little weight. It can be accepted that, as a person with some public profile, and as a member of the Victorian Parliament, Mr Melhem and his family experience a level of public scrutiny. When allegations of wrongdoing are made, it is inevitable that scrutiny may be adverse in some respects, and it is possible it may be more heightened than that applied to a person without a pre-existing public profile. However, that will not necessarily be the case, and much will depend on the facts and circumstances. "Ordinary" members of the Australian community can experience significant adverse scrutiny when they become involved in a public proceeding, whether a royal commission, another kind of public inquiry, or a court or tribunal proceeding. It is a consequence of the transparency which accompanies public processes, and it is a core aspect of the rule of law, that justice is administered in public. For better or for worse, the experience of adverse scrutiny is a potential consequence for all who participate in the process of open justice. No-one emerges from that process unscathed and unaffected. It cannot be given any particular role in the imposition of penalty, aside from some kind of exceptional case, and on the basis of probative and tested evidence where, as I have noted, it may have a role to play in determining the weight to be given to special deterrence. 224 At [58]-[59] of her first affidavit, Ms Rothville deposes: Mr Melhem informs me that the allegations which are the subject of this proceeding have affected his political career. On 9 June 2015, Mr Melhem resigned from his position as Government Whip in the Legislative Council. The loss of the whip's role was a demotion and a loss of pay. Mr Melhem informs me that the whip position attracts an 11 % loading in addition to a backbencher's salary. From June 2018 to the end of the term in November 2018, the loss of that salary equates to approximately $65,000. 225 Again, in terms of the severity of the impact, little weight can be given to the evidence of Mr Melhem's lawyer in this respect. The bare facts recited by Ms Rothville can be accepted. However, again, why Mr Melhem resigned from his position as Government Whip is not the subject of any evidence. Mr Melhem maintained he had not contravened the law until the day before the trial was due to commence. The applicant points, with some force, to public statements by Mr Melhem to this effect. For example, the applicant submitted (and Mr Melhem did not dispute) the following: In May 2018, in the context of this proceeding, [Mr Melhem] described the Registered Organisations Commission as "an organisation with no credibility", and said that, "To me it is a tainted organisation, I'll be defending these administrative matters." As recently as 10 August 2019, Mr Melhem's solicitor said of this proceeding that, "These old allegations stem from Tony Abbott's failed royal commission into trade unions". (Original emphasis and footnotes omitted.) 226 Mr Melhem's admissions make it plain these contraventions are more than "administrative matters". Yet that was how he saw fit, until recently, to describe them. 227 I do not consider Ms Rothville's evidence in this respect is a matter which weighs to any real extent in the determination of what penalty is appropriate for Mr Melhem's contravening conduct.
Publicity 228 Ms Rothville's affidavit deposes, as I have noted, to media articles about the allegations against Mr Melhem at the Royal Commission and after it, and then in relation to this proceeding. She deposes (at [56]) to Mr Melhem having informed her that the media attention has had a "significant effect" on him and his family. 229 Mr Melhem also relies on the fact that the applicant has sought to give "fresh publicity" to the Royal Commission's findings against Mr Melhem and the AWU, in the context of this proceeding, referring to some recent media releases from the applicant after the parties had settled the liability aspect of this proceeding. Those media releases by the applicant included several statements about the Royal Commission and its findings under the headings "background" or "additional background". 230 While the content of the press releases might be seen as somewhat zealous, they are, as senior counsel for the applicant submitted, factually accurate. The admissions made by Mr Melhem in this proceeding mean that it cannot be said the publicity is intrinsically inaccurate, unfair, or unwarranted: cf New Image Photographics Pty Ltd v Fair Work Ombudsman [2013] FCA 1385 at [67] (Collier J). 231 Properly, after judgment was reserved, Mr Melhem's solicitors referred the Court to a recent decision of Wheelahan J on 20 September 2019, in Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining, and Energy Union (Syme Library Case) (No 2) [2019] FCA 1555. In that judgment, at [118], his Honour dealt with whether the fact of "adverse publicity" is a matter to be considered in fixing an appropriate penalty, and specifically as a matter in mitigation. His Honour referred to Hansen J's decision in Cousins v Merringtons Pty Ltd (No 2) [2008] VSC 340 at [64]. Justice Wheelahan found at [118]: As to the adverse publicity upon which the Harris respondents relied, that publicity is no more than an ordinary incident of the discharge of the Commissioner's functions under s 16(1) of the Building and Construction Industry (Improving Productivity) Act 2016 (Cth), the corresponding functions of the Director under s 10 of the Fair Work (Building Industry) Act 2012 (Cth) (repealed from 2 December 2016), and the prosecution of this proceeding. I do not take the publicity into account as a matter in mitigation: see, Cousins v Merringtons Pty Ltd (No 2) [2008] VSC 340 at [64] (Hansen J). Indeed, publicity is necessary so that any penalties achieve the object of general deterrence. 232 In Cousins, Hansen J stated the following at [64]: It is also to be borne in mind that publicity of the type complained of is foreseeable as the consequence of conduct such as that engaged in by the defendants. In truth the defendants are the authors of their own misfortune. That engaged in the offending conduct and then thumbed their nose at the attempts of the plaintiff to resolve the problems without resort to litigation. 233 I do not make findings against Mr Melhem of the kind Hansen J made in Cousins. Nevertheless, I do respectfully agree with his Honour that adverse media reports, in and of themselves, are an expected consequence of a proceeding held in public, and are an aspect of open justice. Indeed, as Wheelahan J acknowledged in the above extract from his Honour's reasons in the Syme Library Case, publicity of allegations of contravention, and publicity of admissions or findings of contravention, do also have a role to play in general deterrence. What Mr Melhem has experienced is in my opinion what many members of the Australian community experience when they become involved, willingly or unwillingly, in a court proceeding, and in many cases with less access to resources for support, including financial resources and ongoing employment, than Mr Melhem. 234 A similar approach was taken by White J in Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832 at [72]-[83], and I respectfully agree with what his Honour said in those passages.
Contrition 235 Mr Melhem's lawyer did not depose, even on a hearsay basis, to Mr Melhem expressing any contrition. There was no evidence at all about contrition. Rather, in written submissions filed on behalf of Mr Melhem, the following statement was made: Mr Melhem has instructed counsel to record his contrition in these submissions. Mr Melhem is contrite and regrets his contravening conduct (as set out in the ASOF), and regrets any harm to which the AWU may have been exposed in connection with that contravening conduct. In particular, he regrets not having confirmed in relation to the employers and the association the subject of these proceedings that the organisers and the membership department of the AWU were following a process to ensure that the only persons added to the register of members were those who had submitted application forms in accordance with the union's rules. 236 This statement must be weighed against the public statements made by Mr Melhem himself, and to which I have referred above, which admitted nothing and certainly showed no contrition, or regret. 237 The substance of this paragraph in the submissions should also be noted: (a) The first regret expressed is about harm to the AWU. No regret is expressed about signing up workers as AWU members without their knowledge. (b) The second regret expressed is about "not confirming" that processes prescribed by the AWU Rules were followed. By this point in my reasons, it should be apparent that I find Mr Melhem's conduct went some considerable distance beyond this, as did his admissions, and as did the ASOF. (c) There is no indication of what Mr Melhem is "contrite" about. 238 Thus, even taken on its face, the paragraph in the submissions is not an assertion which can carry much weight. Added to that is the fact no evidence was given. This is not a plea in a criminal sentencing process. Mr Melhem had sworn an affidavit and intended to give oral evidence at trial. If he wished to express contrition to the Court, he could have given evidence. As I said during oral argument to senior counsel for Mr Melhem, in my opinion contrition is a very personal matter. It should be personally expressed if weight is sought to be attached to it.
Totality 239 The parties agreed, and I accept, that the Court must take account of the principle of totality in determining the overall penalties to be imposed on Mr Melhem for the five contraventions. I have done so, and I consider the penalties I set out below, including looking at the total penalties to be imposed on Mr Melhem, are appropriate.
Appropriate penalties 240 I consider it is appropriate that where a single penalty is to be imposed in respect of two contraventions (ie of s 285(1) and of s 286(1)(a) of the FWRO Act and equivalent provisions in the predecessor legislation), a larger penalty should be imposed than for those circumstances where the penalty is being imposed for a contravention of s 285(1) only. To do so is not to frustrate the intention of s 306(3), nor to punish Mr Melhem twice for the same conduct. In the cases of Cleanevent, the Jockeys' Associations and Geotech, what Mr Melhem has admitted pursuant to s 286(1)(a) is that he failed to act in good faith and in the best interests of the AWU, which is a qualitatively different failure to that described in s 285(1), which concerns care and diligence. The single penalty imposed in respect of these employers and organisations should reflect the fact that in these three instances, Mr Melhem's failures to perform his duties and exercise his powers as he should have were more serious, because they involved two qualitatively different kinds of failures under the FWRO Act. 241 Taking into account all of the findings and matters to which I have referred, I consider the following penalties are appropriate: (a) Cleanevent: in respect of the admitted contraventions of s 285 and s 286 of the FWRO Act, a penalty of $6,800; (b) Winslow: in respect of the admitted contravention of s 285 of the FWRO Act and the equivalent provision of the predecessor legislation, the penalty to be imposed is $5,500. I consider that although this contravention only relates to s 285, in all the circumstances a proportionally larger penalty is justified because the contravening conduct - with all the attributes I have found it to have - occurred over a period of five years, involved the largest number of workers and indeed the largest amount of monies paid to the AWU (being a total of $365,797.50); (c) BMD: in respect of the admitted contravention of s 285 of the predecessor legislation, a penalty of $1,320; (d) Jockeys' Associations: in respect of the admitted contraventions of s 285 and s 286 of the FWRO Act and the equivalent provisions of the predecessor legislation, a penalty of $1,870. I consider a higher penalty should be imposed than for BMD (although the applicable maxima for these two are the same), taking into account the contravening conduct occurred over a longer period of time and involved two qualitatively different kinds of failures; and (e) Geotech: in respect of the admitted contraventions of s 285 and s 286 of the FWRO Act, a penalty of $5,100. Even though there are two qualitatively different contraventions, I consider a proportionally smaller penalty should be imposed because this contravention involved only one instance of adding the names of workers to the Register of Members, one payment, and a smaller number of workers. 242 The penalties imposed are of a total amount of $20,590. Taking the above factors into consideration, the penalties separately and totalled are proportionate to Mr Melhem's contravening conduct.
Conclusion 243 I agree that declaratory relief is appropriate, although after the hearing, the parties were asked to make further submissions on the proposed form of declaratory relief. I have taken those submissions into account in formulating the declaratory relief. I did not agree with some of Mr Melhem's objections to the form of declaratory relief, and I consider the form as pronounced reflects the Court's findings, including inferences drawn, as well as what was expressly admitted by Mr Melhem. 244 It should be emphasised that it is no part of this Court's function or task to examine what occurred at the Royal Commission into Trade Union Governance and Corruption in respect of the five sequences of events which are the factual basis for the (now) eight admitted contraventions of the FWRO Act. Nor does this Court take into account what observations or findings may have been made by that Royal Commission. This Court proceeds on the evidence before it, which is of a more limited kind. In some of the press releases which were tendered in evidence before the Court by Mr Melhem, as part of his submissions about the difficulties he has experienced over the last few years because of these allegations, the applicant has sought, publicly, to link the findings of the Royal Commission with the admissions made by Mr Melhem in this Court, and with the subject-matter of this proceeding. Whilst a link to the Royal Commission, in terms of the origin of these allegations, can be accepted, that is as far as the link goes. The evidence on which this Court has proceeded is different, and in making the orders in this proceeding and in imposing penalties on Mr Melhem, this Court does not make, nor refuse to make, the kind of findings the Royal Commission made. It is important that this matter be clearly understood. I certify that the preceding two hundred and forty-four (244) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mortimer.
Registered Organisations Commissioner
Australian Workers' Union
Transport Workers' Union of Australia v Registered Organisations Commissioner (No 2) [2018] FCAFC 203; 363 ALR 464 Weininger v The Queen [2003] HCA 14; 212 CLR 629
[2008] VSC 340
[2007] HCA 35
(2015) 258 CLR 482
(2018) 351 ALR 190
(1999) 199 CLR 270