Registered Organisations Commissioner v Communications, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia

Registered Organisations Commissioner v Communications, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia - [2020] FCA 96 - FCA 2020 case summary — Zoe

[9]

FLICK J: 1 The Applicant in the present proceeding is the Registered Organisations Commissioner ("the Commissioner"). 2 The Respondent is the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia ("the Union"). It has three Divisions, namely: the Electrical, Energy and Services Division (the "EES Division"); the Plumbing Division; and the Communications Division. These three Divisions consist of a total of 17 Divisional Branches. For the financial year ending in 2017 (and March 2018), the Union's total income exceeded about $20.7 million and had a total net equity exceeding $170 million. 3 The Union is one of 106 federally registered organisations and represents approximately 2 million members nationally. 4 The Commissioner seeks declaratory relief and the imposition of penalties pursuant to s 306 of the Fair Work (Registered Organisations) Act 2009 (Cth) (the "Registered Organisations Act") for a total of four contraventions of s 230(1) and 82 contraventions of s 233(2) of that Act. In summary form, the four contraventions of s 230(1)(b) and (c) relate to a failure to include in the annual List of Offices and Office Holders (the "Annual Return") for 2015 and 2016 the office of Divisional Trustee in the Plumbing Division and the failure to include in those Lists the required information regarding the persons holding that office; the 82 contraventions of s 233(2) relate to the failure to notify of changes made to records within the prescribed period of 35 days. 5 The Union initially admitted all contraventions but contended that it should be relieved from any penalty by reason of s 315(2) of the Registered Organisations Act in respect to some or all of the admitted contraventions. In the alternative, in its written submissions filed in December 2018, the Union submitted that "either no or a very low pecuniary penalty should be imposed in respect of any remaining contraventions for which relief from penalty has been provided". In March 2019, however, the Union filed an interlocutory application seeking leave pursuant to r 26.11 of the Federal Court Rules 2011 (Cth) (the "Federal Court Rules") to withdraw its admission in respect to four contraventions. During the course of the hearing the Union withdrew its application for relief from liability pursuant to s 315(2). 6 Together with the Union's National Office and the three Divisions and their Branches, the Union comprises 21 separate reporting units for the purposes of Div 2, Pt 3 of Ch 8 of the Registered Organisations Act. Given the large number of Divisional Branches within the Union there is a correspondingly large number of offices. The Annual Return 2018 - as at 31 December 2017 thus discloses in excess of 550 offices, comprising, at least: National Council: 56 EES Division: 259 Plumbing Division: 86 Communications Division: 150 Notwithstanding the structure of the Union as a single Union comprising three Divisions, the National Secretary (Mr Allen Hicks) described it as essentially three separate Unions operating autonomously. Indeed, Mr Hicks further described the Branches as also operating autonomously. It is this dysfunctional structure of the Union which largely occasioned many of the contraventions. 7 In very summary form it has been concluded that: the Union's submission that "either no or a very low pecuniary penalty" should be imposed (with the Union initially submitting a penalty in the range from $25,000 to $75,000 and later a penalty of $90,360 (or less)) should be rejected; leave to withdraw the admissions as to liability in respect to contraventions 66 to 69 should be granted; contraventions 66 to 69 have been made out by the Commissioner; and penalties should be imposed in the total sum of $445,000 payable to the Commonwealth.

[10]

THE REGISTERED ORGANISATIONS ACT 8 Section 5(1) of the Registered Organisations Act provides that it "is Parliament's intention in enacting this Act to enhance relations within the workplaces between federal system employers and federal system employees and to reduce the adverse effects of industrial disputation". 9 Section 5(2) provides that 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". 10 Section 5(3) and (4) then provides as follows: (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. 11 The provisions of the Registered Organisation Act which assume present relevance are found within Ch 8 of that Act, a chapter which is headed "Records and accounts". Within that Chapter, s 230 provides as follows: Records to be kept and lodged by organisations (1) An organisation must keep the following records: (a) a register of its members, showing the name and postal address of each member and showing whether the member became a member under an agreement entered into under rules made under subsection 151(1); (b) a list of the offices in the organisation and each branch of the organisation; (c) a list of the names, postal addresses and occupations of the persons holding the offices; (d) such other records as are prescribed. Civil penalty: 60 penalty units. (2) An organisation must: (a) enter in the register of its members the name and postal address of each person who becomes a member, within 28 days after the person becomes a member; (b) remove from that register the name and postal address of each person who ceases to be a member under section 171A, or under the rules of the organisation, within 28 days after the person ceases to be a member; and (c) enter in that register any change in the particulars shown on the register, within 28 days after the matters necessitating the change become known to the organisation. Civil penalty: 60 penalty units. (note omitted) 12 Also within Ch 8, s 233 provides as follows: Obligation to lodge information with the Commissioner (1) An organisation must lodge with the Commissioner once in each year, at such time as is prescribed: (a) a declaration signed by the secretary or other prescribed officer of the organisation certifying that the register of its members has, during the immediately preceding calendar year, been kept and maintained as required by paragraph 230(1)(a) and subsection 230(2); and (b) a copy of the records required to be kept under paragraphs 230(1)(b), (c) and (d), certified by declaration by the secretary or other prescribed officer of the organisation to be a correct statement of the information contained in those records. Civil penalty: 60 penalty units. (2) An organisation must, within the prescribed period, lodge with the Commissioner notification of any change made to the records required to be kept under paragraphs 230(1)(b), (c) and (d), certified by declaration signed by the secretary or other prescribed officer of the organisation to be a correct statement of the changes made. Civil penalty: 60 penalty units. (3) A person must not, in a declaration for the purposes of this section, make a statement if the person knows, or is reckless as to whether, the statement is false or misleading. Civil penalty: 100 penalty units. 13 Although ss 230 and 233 may properly be characterised as "record keeping provisions", those provisions impose important and "significant" obligations upon a registered organisation: Registered Organisations Commissioner v Transport Workers' Union of Australia [2018] FCA 32. Perram J when considering the need for deterrence there observed: [79] … Because of the democratic principles underpinning the RO Act (see s 5 above), record keeping under this legislation is a significant matter ... On appeal, in Transport Workers' Union of Australia v Registered Organisations Commissioner (No 2) [2018] FCAFC 203, (2018) 363 ALR 464 at 489 ("Registered Organisations Commissioner (No 2)"), the Full Court (also when considering the need for deterrence in imposing penalties) similarly observed: [130] The overwhelming sentencing factor in this case is general deterrence. As the objects set out in s 5 of the Registered Organisations Act make clear, registration confers rights, privileges and protections upon registered organisations. However, those advantages come with serious obligations, including obligations to keep accurate records about their membership. It is important that registered organisations should understand that those obligations must be complied with and that non-compliance will attract substantial penalties. [131] Whilst ignorance of compliance may explain, it does not excuse. Registered organisations should have it made clear to them the importance of record-keeping of members. ... 14 When addressing the requirement to prepare and provide copies of a general purpose financial report as required by ss 253, 265 and 266 of the Registered Organisations Act, Barker J has similarly referred to the joint agreement of the parties that "the obligation to prepare reports required by the RO Act is an important matter in the administration of an organisation registered under the RO Act…": Registered Organisations Commissioner v Australian Nursing and Midwifery Federation (No 2) [2018] FCA 2004 at [34] ("Australian Nursing and Midwifery Federation (No 2)"). His Honour agreed that this was "undoubtedly so" and went on to observe that "[u]nless the responsible officers of reporting units take the steps that they are expected to take to comply with the law, members and regulators alike risk being deprived of an effective means of understanding, detecting and responding to any issues that might arise in connection with the management of organisations". 15 Chapter 10 of the Registered Organisations Act is headed "Civil penalties". Within that Chapter, s 315 provides as follows: Relief from liability for contravention of civil penalty provision (1) In this section: eligible proceedings: (a) means proceedings for a contravention of a civil penalty provision; and (b) does not include proceedings for an offence. (2) If: (a) eligible proceedings are brought against a person or organisation; and (b) in the proceedings it appears to the Federal Court that the person or organisation has, or may have, contravened a civil penalty provision but that: (i) the person or organisation has acted honestly; and (ii) having regard to all the circumstances of the case, the person or organisation ought fairly to be excused for the contravention; the Court may relieve the person or organisation either wholly or partly from a liability to which the person or organisation would otherwise be subject, or that might otherwise be imposed on the person or organisation, because of the contravention. (3) If a person or organisation thinks that eligible proceedings will or may be begun against them, they may apply to the Federal Court for relief. (4) On an application under subsection (3), the Court may grant relief under subsection (2) as if the eligible proceedings had been begun in the Court.

[11]

The power to impose penalties & the maximum penalty 16 The source of the statutory power for this Court to impose penalties is to be found in ss 305 and 306 of the Registered Organisations Act. 17 Section 305 provides that an application may be made to this Court for an order under s 306 "in respect of conduct in contravention of a civil penalty provision". Section 306 provides that the Court may make an order imposing a penalty. In the case of a body corporate, the maximum penalty that may be imposed is "5 times the pecuniary penalty specified for the civil penalty provision" (s 306(1)(a)) and, in any other case, the maximum penalty is "the pecuniary penalty specified for the civil penalty provision" (s 306(1)(b)). 18 Contraventions of ss 230 and 233(2) each attracted a penalty of 60 penalty units. 19 For those contraventions that occurred prior to 31 July 2015, the value of a penalty unit was $170, giving a total maximum of $10,200 per contravention. For contraventions after that date, the value of a penalty unit was $180, giving a maximum of $10,800 per contravention. 20 Pursuant to s 306(1)(a), the maximum penalty per contravention which could be imposed on the Union (as a body corporate) is $51,000 for those contraventions that occurred prior to 31 July 2015 and $54,000 for those contraventions that occurred after that date. 21 The maximum penalties that could potentially be applied in the present case, assuming that each of the contraventions pleaded by the Commissioner is made out and that each attracted its own individual penalty, has been calculated by the Commissioner as follows: The Union accepted, in its written submissions, that the Commissioner "correctly identified the value of penalty units at the relevant times". 22 The maximum penalty that can be imposed serves, it has been said, as a "yardstick" against which the assessment of penalties is generally to proceed: Markarian v The Queen [2005] HCA 25, (2005) 228 CLR 357 at 372 ("Markarian"). Gleeson CJ, Gummow, Hayne and Callinan JJ there observed: [30] Legislatures do not enact maximum available sentences as mere formalities. Judges need sentencing yardsticks. It is well accepted that the maximum sentence available may in some cases be a matter of great relevance. In their book Sentencing, Stockdale and Devlin observe that: "A maximum sentence fixed by Parliament may have little relevance in a given case, either because it was fixed at a very high level in the last century … or because it has more recently been set at a high catch-all level … At other times the maximum may be highly relevant and sometimes may create real difficulties … A change in a maximum sentence by Parliament will sometimes be helpful [where it is thought that the Parliament regarded the previous penalties as inadequate]." [31] It follows that careful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick… (footnote omitted) Their Honours there continued (at 372): [31] … That having been said, in our opinion, it will rarely be, and was not appropriate for [the Judge below] to look first to a maximum penalty, and to proceed by making a proportional deduction from it. That was to use a prescribed maximum erroneously, as neither a yardstick, nor as a basis for comparison of this case with the worst possible case… (footnote omitted) Although these comments were made in the context of the criminal law and sentencing for drug offences, they have since been applied by this Court when assessing penalties under fair work legislation: e.g., Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 at [390] to [391] per Katzmann J ("Grouped Property Services Pty Ltd (No 2)"); Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [106], (2017) 254 FCR 68 at 90 per Dowsett, Greenwood and Wigney JJ ("ABCC v CFMEU"); Registered Organisations Commissioner v Australian Nursing and Midwifery Federation (No 2) [2018] FCA 2004 at [23] per Barker J.

[12]

The quantification of penalties - the principles to be applied 23 Although the maximum penalty prescribed by the Commonwealth Legislature for contravention of civil remedy provisions always serves as a useful "yardstick" against which the assessment of penalties is generally to proceed (cf. Markarian), the considerations to be taken into account when making the evaluative judgment as to what should be the appropriate penalty - or total penalty - to be imposed are well settled. 24 In Kelly v Fitzpatrick [2007] FCA 1080 at [14], (2007) 166 IR 14 at 18 to 19, Tracey J was called upon to quantify penalties for admitted contraventions of the Transport Workers Award 1998 and in doing so adopted the following as a "non-exhaustive range of considerations" to be taken into account: the nature and extent of the conduct which led to the breaches; the circumstances in which that conduct took place; the nature and extent of any loss or damage sustained as a result of the breaches; whether there had been similar previous conduct by the respondent; whether the breaches were properly distinct or arose out of the one course of conduct; the size of the business enterprise involved; whether or not the breaches were deliberate; whether senior management was involved in the breaches; whether the party committing the breach had exhibited contrition; whether the party committing the breach had taken corrective action; whether the party committing the breach had cooperated with the enforcement authorities; the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and the need for specific and general deterrence. 25 Two of these considerations should be further expanded upon. 26 First, the "course of conduct" concept recognises that the legal and factual interrelationship between a series of contraventions may be such that the imposition of one or more penalties for each contravention would be to repeatedly punish the offender for the same conduct. The legal and factual interrelationship between a series of contraventions may be such that it is open to conclude that the multiple contraventions are but a single course of conduct and that the penalty to be imposed should reflect that interrelationship. 27 But caution must be exercised when considering and applying that phrase. The use of the phrase, it has been said, can be "problematic": Registered Organisations Commissioner (No 2) [2018] FCAFC 203 at [84], (2018) 363 ALR at 479 per Allsop CJ, Collier and Rangiah JJ. Their Honours there went on to further observe that the "singular phrase should not be simplistically adopted to transform multiple contraventions into one contravention, or, necessarily impose one penalty by reference to one maximum amount": [2018] FCAFC 203 at [85], (2018) 363 ALR at 479. 28 Absent statutory authority, separate contraventions of civil remedy provisions should generally each attract a separate penalty. 29 In an appropriate case, however, a single penalty can be imposed in respect to a single course of conduct comprising multiple contraventions: Registered Organisations Commissioner (No 2) [2018] FCAFC 203 at [90], (2018) 363 ALR at 481. But a finding that there is a single course of conduct does not imply a single contravention or a single maximum penalty. That, according to Allsop CJ, Collier and Rangiah JJ "is the danger of the phrase": [2018] FCAFC 203 at [91], (2018) 363 ALR at 481. 30 In ABCC v CFMEU [2017] FCAFC 113, (2017) 254 FCR, Dowsett, Greenwood and Wigney JJ thus summarised the approach in relevant part as follows (at 91 to 92): Course of conduct [111] Like many of the principles that apply to the fixing of pecuniary penalties, the so-called course of conduct, or one-transaction, principle is derived from criminal law sentencing principles. … [112] The principle, as applied in sentencing for criminal offences, was explained in the following terms by Owen JA in Royer v Western Australia (2009) 197 A Crim R 319 at [22]: … At its heart, the one transaction principle recognises that, where there is an interrelationship between the legal and factual elements of two or more offences with which an offender has been charged, care needs to be taken so that the offender is not punished twice (or more often) for what is essentially the same criminality. The interrelationship may be legal, in the sense that it arises from the elements of the crimes. It may also be factual, because of a temporal or geographical link or the presence of other circumstances compelling the conclusion that the crimes arise out of substantially the same act, omission or occurrences. [113] In the criminal sentencing context, the course of conduct is a tool of analysis that generally assists a sentencing judge in determining whether sentences of imprisonment for separate offences should be ordered to be served concurrently or consecutively. … [114] The important point to emphasise is that the course of conduct principle, in the criminal context at least, does not operate to permit a sentencing judge to impose a single sentence in respect of multiple offences on the basis that the offences formed part of a course of conduct. Absent a statutory provision that provides otherwise, a sentencing judge is to impose a separate sentence, albeit with the option of concurrency, for each offence. [115] The course of conduct principle has been applied in the civil pecuniary penalty context … Their Honours went on to further observe (at 99-100): [148] The important point to emphasise is that, contrary to the Commissioner's submissions, neither the course of conduct principle nor the totality principle, properly considered and applied, permit, let alone require, the Court to impose a single penalty in respect of multiple contraventions of a pecuniary penalty provision. There is no doubt that, in an appropriate case involving multiple contraventions, the Court should consider whether the multiple contraventions arose from a course or separate courses of conduct. If the contraventions arose out of a course of conduct, the penalties imposed in relation to the contraventions should generally reflect that fact, otherwise there is a risk that the respondent will be doubly punished in respect of the relevant acts or omissions that make up the multiple contraventions. That is not to say that the Court can impose a single penalty in respect of each course of conduct. Likewise, there is no doubt that in an appropriate case involving multiple contraventions, the Court should, after fixing separate penalties for the contraventions, consider whether the aggregate penalty is excessive. If the aggregate is found to be excessive, the penalties should be adjusted so as to avoid that outcome. That is not to say that the Court can fix a single penalty for the multiple contraventions. 31 Their Honours there also addressed the "totality" principle, namely the need to ensure that the aggregate penalty is "just and appropriate". The "totality" principle, their Honours there emphasised, stood separate and apart from the "course of conduct" principle. In doing so, their Honours observed in relevant part (at 92 to 94): Totality [116] The totality principle, like the course of conduct principle, has its origins in criminal sentencing. … [117] The totality principle is sometimes confused or conflated with the course of conduct principle. That is perhaps not surprising because application of the totality principle may again result in a court adjusting what would otherwise have been consecutive or cumulative sentences to sentences that are wholly or partially concurrent. The proper approach, however, is to first consider the course of conduct principle and determine whether the sentences should be consecutive, or wholly or partly concurrent. Once that is done, the Court should then review the aggregate sentence to ensure that it is just and appropriate. That may require a further adjustment of the sentences: either by ordering further concurrency or, if appropriate, lowering the individual sentences below what would otherwise be appropriate. [118] While, in the criminal sentencing context, the totality principle is generally applied in cases involving sentences of imprisonment, it has been held to apply to the fixing of fines. In the case of fines, the Court must fix a fine for each offence and then review the aggregate to ensure that it is just and appropriate. If the result of the aggregation of multiple fines is that the penalty is excessive, that may lead to the moderation of the fine imposed in respect of each offence. … [119] Once again, the important point to emphasise is that, in the criminal sentencing context, application of the totality principle does not authorise or permit the sentencing court to impose a single sentence for multiple offences. That has been made clear in a number of cases. … [120] Like the course of conduct principle, the totality principle has been picked up and applied in the context of civil pecuniary penalty proceedings: … [121] It would also appear that in the civil penalty context the totality principle, often in conjunction with the course of conduct principle, has been relied on to support the imposition of a single pecuniary penalty for multiple contraventions. Consideration must now be given to whether that is permissible and appropriate, either pursuant to the course of conduct principle, the totality principle, or on some other basis. (citations omitted) 32 The totality principle had previously been summarised by Goldberg J in Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 145 ALR 36 at 53 as follows: The totality principle is designed to ensure that overall an appropriate sentence or penalty is appropriate and that the sum of the penalties imposed for several contraventions does not result in the total of the penalties exceeding what is proper having regard to the totality of the contravening conduct involved: McDonald v R (1994) 48 FCR 555; 120 ALR 629. But that does not mean that a court should commence by determining an overall penalty and then dividing it among the various contraventions. Rather the totality principle involves a final overall consideration of the sum of the penalties determined. In Mill v R (1988) 166 CLR 59; 83 ALR 1 the High Court accepted the following statement as correctly describing the totality principle: The effect of the totality principle is to require a sentencer who has passed a series of sentences, each properly calculated in relation to the offence for which it is imposed and each properly made consecutive in accordance with the principles governing consecutive sentences, to review the aggregate sentence and consider whether the aggregate is "just and appropriate". The principle has been stated many times in various forms: "when a number of offences are being dealt with and specific punishments in respect of them are being totted up to make a total, it is always necessary for the court to take a last look at the total just to see whether it looks wrong"; "when … cases of multiplicity of offences come before the court, the court must not content itself by doing the arithmetic and passing the sentence which the arithmetic produces. It must look at the totality of the criminal behaviour and ask itself what is the appropriate sentence for all the offences". See also: Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 at [428] per Katzmann J. 33 The second consideration referred to by Tracey J in Kelly v Fitzpatrick which warrants further consideration is "the need for specific and general deterrence". It is well-accepted, that a primary purpose in imposing any civil penalty is that of deterrence: Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 at [55], (2015) 258 CLR 482 at 506 per French CJ, Kiefel, Bell, Nettle and Gordon JJ. See also: ABCC v CFMEU [2017] FCAFC 113 at [98] to [99], (2017) 254 FCR at 88 per Dowsett, Greenwood and Wigney JJ. The purpose of imposing a civil penalty is to promote the public interest in compliance. 34 The objective of a penalty acting as a deterrent focusses not only upon the objective of deterring the entity involved in a particular proceeding from again engaging in the same conduct (i.e., "specific deterrence") but also upon deterring others from engaging in like conduct (i.e., "general deterrence"): Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union ("Cardigan St Case") [2018] FCA 957. Bromberg J there helpfully summarised this objective as follows: [50] In relation to specific deterrence, it has been frequently observed that a pecuniary penalty for a contravention of the law must be fixed with a view to ensuring that the penalty is not to be regarded by the offender or others as an "acceptable cost of doing business": Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at [66] (French CJ, Crennan, Bell and Keane JJ); Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20 at [62]-[63] (Keane CJ, Finn and Gilmour JJ). On the other hand, general deterrence is directed at sending a message to a broader audience that contraventions of the kind under consideration are serious and not acceptable: Australian Securities and Investments Commission v Southcorp Ltd (No 2) (2003) 130 FCR 406 at [32] (Lindgren J). An option not to be countenanced is that an offender may not "choose to break the law and simply pay the penalty": Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 53, (2017) 249 FCR 458. Dowsett and Rares JJ there observed (at 481): [100] In a liberal democracy, it is assumed that citizens, corporations and other organisations will comply with the law. Such compliance is not a matter of choice. The community does not accept that a citizen, corporation or other organisation may choose to break the law and simply pay the penalty. The courts certainly do not accept that proposition. Such acceptance would pose a serious threat to the rule of law upon which our society is based. It would undermine the authority of Parliament and could lead to the public perception that the judiciary is involved in a process which is pointless, if not ridiculous. [101] The Parliament's purpose in legislating to provide that particular proscribed conduct will attract a civil penalty was to deter persons, including but not limited to trade unions or corporations, from engaging or continuing to engage in such conduct. A civil penalty would lose its utility if the person on whom it was imposed simply treated it as a cost of continuing to carry on with the very conduct that had just been penalised.

[15]

The 82 pleaded contraventions of s 233(2) 38 Appendix A to the Statement of Claim filed by the Commissioner is a Table setting forth each of the 82 contraventions relied upon by the Commissioner and - subject to contraventions 66 to 69 and the corrections as to the dates upon which notifications were required to have been given - admitted by the Union. The Union in its written submissions (noting these submissions were filed prior to the interlocutory application seeking leave to withdraw the admissions with respect to contraventions 66 to 69) groups these contraventions in a somewhat similar manner but in a manner which seeks to group individual contraventions in what it perceives to be those arising out of the same event which occasioned the contravention. 39 Relying upon the groupings of contraventions relied upon by the Union, a summary broadly drawn from the Union's written submissions (and not an exhaustive review of the evidence) is as follows: Items Nature of change leading to contravention Person responsible Delay (days) Reasons 1 - 4 Four changes to office holders in Queensland; namely the resignation of Mr Towler from State Council; Divisional Branch Secretary, Mr Simpson 16 Notification of changes due 15 June 2015 but were not notified until 1 July 2015. Appointment of Messrs Muller & Mills to State Council and Mr Taylor to Divisional Branch Executive Mr McKenzie, the current Assistant Divisional Branch Secretary, was "unable to determine why these changes were filed late" and was "unaware of … there being any intent for these changes not to be notified". 5 - 10 Six changes in office holders in the Western Australian Divisional Branch Mr Coffey (from the Victorian Divisional Branch) told Mr Bintley (the WA Divisional Branch Secretary) that the Victorian Divisional Branch would deal with the paperwork 31 Notification of changes due 15 June 2015 but were not notified until 16 July 2015. Divisional Branch Secretary, Mr Bintley, forwarded to Mr Coffey in the Victorian Divisional Branch a Declaration of results of the 2015 Divisional Branch Quadrennial Elections. The Victorian Divisional Branch then being responsible for dealing with the "paperwork". Mr Coffey thought the AEC provided a copy of the Declaration to the FWC and did not lodge notifications with the FWC. The National Office lodged the notifications. The Union submits that the failure to lodge the notifications in time was "mere oversight & not intentional". 11 - 15 Five changes in office holders in the New South Wales Divisional Branch Divisional Branch Secretary, Mr Broadley 14 Notification of changes due 2 July 2015 but were not notified until 16 July 2015. Current Divisional Branch Secretary, Mr Samartzopoulous, states there is "…nothing to suggest that the delay was deliberate or intentional…" but that his impression of the then Divisional Branch Secretary, Mr Broadly, was that "his focus as Divisional Branch Secretary was upon representing members in their workplaces at the expense of the union's compliance obligations…" 16 - 29 Fourteen changes to office holders in the Victorian Divisional Branch as a result of the 2015 Branch Quadrennial elections Chief Operations Officer 31 Notification of changes due 24 August 2015 but were not notified until 24 September 2015. The Chief Operations Officer had resigned in September 2015 and the Divisional Branch Secretary, Mr Gray, "had omitted to allocate responsibility for this task to another staff member". Mr Gray "was unaware at the time that the changes had not been notified". 30 - 37 Eight changes to office holders in the South Australian and Northern Territory Divisional Branch Divisional Branch Secretary, Mr Townsend varied Contraventions 33-36 each had a due notification date of 5 September 2015. The remaining contraventions each had due notifications dates varying from 19 August to 3 October 2015. Divisional Branch President, Mr Lorrain All contraventions were notified on 21 October 2015 Mr Townsend states he was "…a newly appointed Divisional Branch Secretary… it was unclear who was going to be responsible… as there was no established process …" 38 - 40 Three changes in office holders in the Victorian Divisional Branch due to a second-tier quadrennial election Chief Operations Officer 33 Notification of changes due 29 October 2015 but were not notified until 1 December 2015. After the resignation in September 2015 of the former Chief Operations Officer, the Divisional Branch Secretary, Mr Gray, had at the relevant time "not allocated the responsibility for the notification of changes to another member of staff…" 41 - 42 Two changes in office holders in the Western Australian Divisional Branch due to a second-tier quadrennial election Divisional Branch Secretary, Mr McLaughlin 16 Notification of changes due 11 November 2015 but were notified on 1 December 2015. Mr McLaughlin mistakenly believed AEC's notification to the FWC discharged his own obligation. The branch received a letter from the FWC on 16 November 2015 about the reporting obligations but Mr McLaughlin does "not know why it took a further two weeks for the notice to be filed. I do not know of any improper reason for that two week delay". 43 Mr Halloran replaces Mr O'Carroll as Assistant General Secretary, Plumbing Division, Victorian Branch Industrial Officer, Mr Coffey 110 Notification of change due 21 August 2015 but was not notified until 9 December 2015. Mr Coffey did not think he had to notify the FWC because he thought AEC notified the FWC. Mr McCrudden brought the oversight to Mr Coffey's attention in November 2015 and the FWC was notified in December 2015. 44 - 46 Three resignations from the South Australian State Council - Mr Smith in September 2015; Mr Mutton in December 2015 and Mr Buchanan in February 2016 Divisional Branch Secretary, Mr Adley Various delays; notice given in June 2016 for all three changes Notification of each change due at various times in 2016 but notifications were not made until 22 June 2016. Mr Adley was "unaware of the requirement to notify changes in office holders within 35 days" and stated "I regret my mistake". 47 Mr Bland resigns as the Victorian Divisional Branch President Divisional Branch Secretary, Mr Ellery 20 Notification of change due 22 September 2016 but was not notified until 12 October 2016. Mr Ellery "believed notices of change … were only required where an office was filled …." He further stated that "The delay…occurred at the Divisional Branch level due to my misunderstanding … It was in no way intentional. I regret the errors that I made". 48 Ms Stubberfield resigns as Elected Divisional BCOM Member in the Victorian Branch Divisional Branch Secretary, Mr Ellery 21 Notification of change due 18 October 2016 but was not notified until 8 November 2016. Mr Ellery believed notification only required when an office was filled. The "failure to notify… inadvertently occurred as a result of [his] misunderstanding…[he] regret[s] the errors that [he] made". 49 - 51 Three changes to office holders in the Western Australian Branch Ms Stewart 64 Notification of changes due 7 September 2016 but were not notified until 10 November 2016. Divisional Branch Secretary, Mr McLaughlin Ms Stewart had taken on responsibility for notifications but "was not provided any training…". Mr McLaughlin accepts "this was a mistake and I should have provided that training" 52 - 63 The merger of the Communications Branch and Electrical Branch of the Union in Tasmania Divisional Branch Secretary, Mr Gauld 67 Notification of changes were due 15 September 2016 but were not notified until 21 November 2016. This was Mr Gauld's first branch merger. The process was complicated due to the loss of important administrative staff. Mr Gauld maintains that the "errors were no intentional, and were not dishonest." He further maintained "I regret that these errors were made…" 64 - 65 Two changes in office holders in the New South Wales Divisional Branch Divisional Branch Secretary, Mr Metcher Various delays Notification of changes were due on 9 September and 4 November 2016 respectively but were not notified until 5 December 2016. Current Divisional Secretary, Mr Murphy, explains that the period prior to Mr Metcher's departure "was a personally difficult one … and that he was under significant pressure in relation to allegations of his personal conduct…" and that "nothing from the records…suggest that the non-compliance was deliberate". 66 - 69 Four vacant positions in the South Australian Divisional Branch Committee of Management were purportedly abolished Divisional Branch President, Mr Lorrain 72 Notification of changes due 26 October 2016 but were not notified until 6 January 2017. Mr Lorrain only became aware of the Divisional Branch's obligation to notify of changes in office holders in December 2016. Further, Mr Lorrain states: "December was a very busy month and it took me some time to gather the appropriate documents. I was also on leave from 24 December 2016, returning 2 January 2017". 70 Resignation of a State Councillor in the New South Wales Branch Unknown but usually the Operations Manager or Legal Officer in the Divisional Branch 35 Notification of change due 12 December 2016 but was not notified until 16 January 2017. The then Divisional Branch Secretary, Mr Butler is "…unaware why this notice was not filed on time but it may have been due to [his] absence and not being there to follow the matter up…" 71 Change in office holder in the Victorian Divisional Branch in the EES Division Divisional Branch Secretary, Mr Gray 40 Notification of change due 29 December 2016 but was not notified until 7 February 2017. According to Divisional Branch Secretary, Mr Gray "at the time there was no process in place for notifying changes in office holder mid-term" and it was an "an oversight on [his] part" 72 Mr Betts resigns from four offices but notification is only given in respect to three offices - New South Wales Divisional Branch in the EES Division Divisional Branch Secretary 160 Notification of change due 6 October 2016 but was not notified until 15 March 2017. Current Divisional Branch Secretary, Mr McKinley does not know "why this particular change was not notified". Former Divisional Branch Secretary, Mr Butler does "not believe that the omission was deliberate". 73 Mr Hancock resigned from the Divisional Branch Committee of Management of the Western Australian Branch of the Plumbing Division Divisional Branch Secretary, Mr Bintley 50 Notification of change due 27 March 2017 but was not notified until 16 May 2017. Divisional Branch Secretary, Mr Bintley "forgot to pass on the resignation in accordance with the new procedure. I mistakenly believed that I had notified the Victorian Divisional Branch when I had not. I do not know why I believed this. It was a genuine oversight…" 74 - 76 Messrs McCrudden, Kelly and Menzies elected as Divisional Trustees of the Plumbing Division Industrial Officer, Mr Coffey No notification lodged prior to proceeding commencing Notification of changes due 21 August 2015 but no notification has been lodged prior the proceeding commencing. Mr Coffey "was under the mistaken belief that there was no distinction between the office of the Divisional Councillor and Divisional Trustee, as these offices were occupied by the same persons." 77 Change in office holders as a result of the Queensland Branch's quadrennial election, Mr Humphrey's appointment to State Council was not included in the notification of changes provided Assistant Divisional Branch Secretary, Mr McKenzie No notification lodged prior to proceeding commencing Notification of change due 11 September 2015 but no notification was lodged prior the proceeding commencing. Current Assistant Divisional Branch Secretary, Mr McKenzie, does "not know why [the notice] does not" include Mr Humphrey's name. Mr McKenzie has " been unable to determine the cause of the initial oversight" 78 Change in office holder as Mr Banting resigns from the Divisional Branch Committee of Management (Western Australia) Divisional Branch Secretary, Mr McVee No notification lodged prior to proceeding commencing Notification of change due 14 September 2015 but no notification was lodged prior the proceeding commencing. Ms Di Re received Mr Banting's resignation but did not pass the email on to Divisional Branch Secretary, Mr McVee. Further, Mr McVee "believed that by writing to the FWC in the first instance, we had complied with our obligations in the process…" 79 - 80 Changes in office holders in in the South Australian EES Divisional Branch; Mr Harrison replaces Mr Borg as Vice President of the Divisional Branch and Mr Borg appointed as Divisional Branch Executive Member Divisional Branch Secretary, Mr Adley No notification lodged prior to proceeding commencing Notification of changes due 17 December 2015 but no notification was lodged prior the proceeding commencing. Mr Adley misread an email from Ms Moran and "formed the incorrect impression from the email that the Divisional Office was attending to the filing of the notices…" 81 - 82 Two changes in office holders; Messrs Thomas & Van Der Stelt elected to Divisional Branch Committee of Management (Western Australia) Divisional Branch Secretary, Mr McVee No notification lodged to proceeding commencing Notification of changes due 23 May 2016 but no notification was lodged prior the proceeding commencing. At the time the Divisional Branch Secretary, Mr McVee, did not appreciate he was to separately notify the FWC.

[16]

Mr Hicks, in his affidavit affirmed 10 July 2019, made statements to the effect that he "acted promptly upon being advised" of the change in office holders with respect to items 5 - 10, 11 15, 16 - 29, 38 - 40, 41 - 42, 49 - 51, 71 and 73 of Annexure A to the Statement of Claim. 40 The Union's corrections as to the dates upon which notifications were required to be given, being corrections agreed to by the Commissioner, affected: contravention 31 - the correction being that the notification date was 31 August 2015 and not 30 August 2015 (30 August 2015 being a Sunday); contraventions 33 to 36 - the correction being that the notification date was 7 September 2015 and not 5 September 2015 (5 September 2015 being a Saturday); and contravention 37 - the correction being that the notification date was 5 October 2015 and not 3 October 2015 (3 October 2015 being a Saturday). But nothing of relevance to the assessment as to the penalties to be imposed turns upon these corrections. 41 If reference is made to the pleaded contraventions, what this summary exposes (and as submitted on behalf of the Commissioner) is that: in nine instances there was no notification of changes made at all prior to the commencement of the present proceeding. The summary, as contended by the Commissioner in its Reply, also exposes the fact that in at least: 5 instances, notification was between 100 and 255 days outside the prescribed period; 23 instances, notification was between 45 days and 99 days outside the prescribed period; 31 instances notification was between 30 and 44 days outside the prescribed period; and 14 instances, notification was between 14 and 30 days outside the prescribed period. 42 The summary also exposes the fact, again as submitted on behalf of the Commissioner, that the contraventions were wide-ranging and persistent in that the contraventions occurred: over an extended period of time - from 2015 through to 2017. The contraventions occurred across six States and one territory, namely: Queensland (EES Division); Victoria (EES and Communications Divisions); Western Australia (EES, Communications and Plumbing Divisions); South Australia (EES and Communications Divisions); South Australia and Northern territory (Communications Division); New South Wales (EES, Communications and Plumbing Divisions); and Tasmania (Communications/EES Division). Expressed differently, the contraventions occurred: within all of the six Branches of the EES Division; within a number of Branches of the Communications Division; and within 2 out of 3 Branches of the Plumbing Division. To this list of considerations is the further fact that the failures to notify: extended to the most senior positions within the Branches, Divisions and the Union as a national body. 43 The impact upon this analysis of the withdrawal of the admissions as to contraventions 66 to 69 and the impact of the corrections to the dates upon which notifications were required to be given, may presently be placed to one side. On any view, the analysis exposes widespread contraventions over a considerable period of time.

[18]

Contraventions 66 to 69 - the abolition of an office 50 Contraventions 66 to 69 centre upon action taken on 21 September 2016. 51 On that date the Divisional Branch Committee of Management in the SA/NT Communications Division Branch resolved "to abolish four of the vacant Branch Committee of Management Telecommunications & Information Technology Industry Section positions effective immediately". Attempts to fill those four positions, the then Divisional Branch President (Mr Lorrain) maintained, had proved unsuccessful. 52 The Commissioner contends that notification of the abolition of those four positions should have been given by 26 October 2016. Notification was not in fact given until 6 January 2017. 53 So much was accepted by the Union in its Defence as first filed. The Union's present position, and the position it can now pursue given the grant of leave to withdraw its admissions, is that there was no power to abolish these positions. The only express power conferred by the CEPU Communications Division Rules to abolish an office is that conferred by r 70 and that power, so the Union contends, is a power to abolish a "full time" position. And the four positions abolished, so the Union submits by reason of the identification of "full-time" positions in r 75, were not full-time. The Court, it is further submitted, should give to the rules of a union "a sensible practical construction" (cf. ResMed Ltd v Australian Manufacturing Workers' Union (No 2) [2017] FCAFC 14 at [14], (2017) 249 FCR 408 at 413 per Siopis, Bromberg and Katzmann JJ) and should be reluctant to imply a power to abolish other positions, especially given the express conferral of power effected by r 70. 54 The preferred approach of the Commissioner was not to cavil with the difficulties inherent in implying a power to abolish non full-time positions in the face of an express power to abolish full-time positions but to contend that the Rules, "properly construed", permitted of a power to abolish the positions the subject of the 21 September 2016 resolution. 55 Had it been necessary to do so, these competing submissions would in all likelihood have been resolved in favour of the Union. 56 But it is unnecessary to reach any concluded position. Even in the absence of any such power, and even assuming that the 21 September 2016 resolution was of no effect such that the four positions remained and were not abolished, it is nevertheless concluded that there remained a requirement imposed by s 233(2) of the Registered Organisations Act to lodge a notification of the purported change with (at that time) the Fair Work Commission. 57 Any construction of s 233(2) which confined the requirement to "lodge" with the Fair Work Commission (or the Commissioner) a notice of "any change" to the records to such changes as were within the power of a Union or a Division or Branch to make should be rejected principally by reason of: the use of the term "any" and its juxtaposition with the term "change". The natural and ordinary meaning of those terms and the phrase as a whole is such that the requirement to "lodge" with the Fair Work Commission or Commissioner attaches to any change in fact made and irrespective of whether or not the change was within or outside of the powers conferred by any relevant rule. Any contrary construction of s 233(2) and a construction which would confine the operation of s 233(2) to such changes as are "validly" made, it is respectfully considered, would: have the potential to defeat or at least frustrate a presumed legislative intent that, at the relevant times, the Fair Work Commission or Commissioner was to be the repository of changes in fact made to offices or office and for those records to be publicly available to those who seek to make inquiries as to what are the offices within a Union, Division or Branch and who are the persons who hold such positions - it may equally be of importance for a person making inquiries to determine what positions have in fact been created (or abolished) within a Union, Division or Branch as it is to know what are the positions for which any rule permits. 58 The extent to which persons may, in practice, seek access to such records is (with respect) not to the point, other than to underline the absence of any prejudice that has in fact resulted from the contraventions in issue. Mr Coffey, for example, maintained in his affidavit that during his time working for the Plumbing Division he could not recall "any instance where a member of any of the Divisional Branches has requested to see the list of office holders of the Divisional Branch…". 59 It is no sufficient answer to that presumed legislative intent to contend that s 230 imposed a separate and discrete obligation upon an organisation "to keep" its own records and that a person seeking to make inquiries could just as easily seek to access the records of the organisation as opposed to accessing such information as is "lodged" with the Fair Work Commission or Commissioner pursuant to s 233(2). The statutory requirement imposed by s 233(2) and the presumed legislative intent of making such information as is "lodged" publicly available remains irrespective of whatever other means may equally be available to access the same information. The importance of "lodging" with the Fair Work Commission or Commissioner the information identified in s 233 is only further emphasised by: section 349 of the Registered Organisation Act; and regulation 20 of the Fair Work (Registered Organisations) Regulations 2009 (Cth). The construction urged upon the Court by the Union would also be potentially productive of mischief in that: a person making an inquiry of the Union on (for example) 22 September 2016 as to the prospect of standing for election to one or other of the positions purportedly abolished would be inevitably confronted with the Union's response that "there is no position" whereas on the Union's current argument the position remained available. The mischief can be further exposed by considering: the same person accessing the records of the Fair Work Commission (for example between 22 September 2016 and prior to 6 January 2017) would have been led to believe that those positions still existed but if making an inquiry after 6 January 2017 would have been informed that the position by then had been abolished. Such a state of potential mischief is best addressed by a construction of s 233(2) which promotes certainty - namely, the certainty of requiring there be "lodged" with the Fair Work Commission/Commissioner all such "changes", whether they be later held by to be within or without power. A construction of s 233(2) which invites scrutiny going beyond the resolution abolishing those positions and into a construction of the rules and possible distinctions between resolutions which are a "nullity" or "void" or "invalid" (cf. Hossain v Minister for Immigration and Border Protection [2018] HCA 34 at [24], (2018) 92 ALJR 780 at 787 per Kiefel CJ, Gageler and Keane JJ) is to be rejected. 60 The consequence is that there remain 82 contraventions of s 233(2) which attract the imposition of a penalty and not 78 contraventions, as would have been the position had the Union's current submissions in respect to contraventions 66 to 69 prevailed.

[20]

Pre-2016/2017 - An "ad hoc" system of reporting or "no system" 64 Throughout that period of time when most of the contraventions took place, the internal rules of the Union nevertheless contained provisions allocating responsibility for compliance with administrative and record keeping responsibilities. 65 Thus, by way of example, in the case of: the Union, r 8.4.2.2 of the National Rules (as certified on 5 July 2016) provided that the National Secretary "shall prepare and forward records and returns to the Industrial Registrar in accordance with the Industrial Relations Act 1988" and r 8.5.2 provided that in his absence it was the Assistant National Secretary who was to "carry out the duties and assume the responsibilities of the National Secretary". The National Secretary was (and remains) Mr Allen Hicks. the EES Division, r 9.4.2.2 of the EES Divisional Rules (as certified on 30 June 2014) provided it was the Divisional Secretary who "shall prepare and forward all appropriate records and returns to the General Manager in accordance with the Fair Work (Registered Organisations) Act 2009" and in their absence r 9.5.5 provided that it was the Assistant Divisional Secretary who was to assume those responsibilities. Rule r 33.1 provided that it is the duty of "every member to observe the rules of the Union and the Division and Branch". The EES Divisional Secretary was Mr Allen Hicks. the Communications Division, r 40(ii) of the Communications Divisional Rules (for example, as certified on 17 October 2014) provided that it was the Divisional Secretary who was "responsible for the overall administration of the Divisional Office …". The Divisional Secretary was Mr Dan Dwyer until August 2015 and thereafter Mr Greg Rayner. the Plumbing Division, r 30.3.1 Plumbing Divisional Rules (as published on 28 August 2015) provided that the General Secretary was to "keep and provide to the National Secretary … the Divisional records required to be kept by the Fair Work (Registered Organisations) Act 2009". In his absence, r 30.4.2 provided for the Assistant General Secretary to "carry out the duties of the General Secretary". The General Secretary was Mr Earl Setches. Messrs Hicks, McKenzie, Bintley, Coffey, Samartzopoulos, McCrudden, Gray, McVee, Townsend, McLaughlan, Adley, Ellery, Murphy and McKinley have each undertaken the ACTU's union governance training. 66 But whatever the rules may have provided, it was accepted by Mr Hicks that prior to 2016/2017 the system or responsibility for reporting was variously described as "ad hoc", or "no system" or "very light on". In his evidence in chief he thus proffered the following account: …His Honour wants to know prior to the implementation of rule 35, what obligations were provided under the rules in respect of reporting obligations in respect of each of the divisions and/or branches?--So the - there's one particular rule in the CEPU, obviously, in the - the responsibility of the National Secretary and that's to deal with the paperwork of the union and to - I think - I think the rule even still says now to the Industrial Registry under the - you know, the previous Act and that sort of stuff. The - where this information would be found is in the actual roles of the divisional secretaries and of the branch secretaries, so what their roles are, and that is under rule, and in those, it would talk about lodging the paperwork required, but again confined to the state or the territory that they're responsible for. So I can't tell you exactly what those - that - that says in the particular unless I go and grab the rule, but certainly, in the roles of the branch secretary and in the role of the divisional secretaries, there's certain requirements but it - it - it was very - very light on, if I could say that, with any respect to reporting requirements other than general statements about submitting paperwork to industrial registries and the like. All right. And how did it work in practice prior to rule 35?--So, again, it was a - an ad hoc-type arrangement where the Branch Secretary - and if I can just use Victoria, for example, if the Victorian Branch Secretary of the Electrical Division had an office holder change and it was a requirement upon him because it happened in Victoria to notify that change, but, again, there was no real system in place because some of the branches would contact Annette when she was working for the Electrical Division and ask her to do it. Others would do it themselves and I think that's evidenced by the fact that there has been a whole range of - like, we did a lot through the National Office - the - the Divisional Office, I should say, but there was also a lot that was done from branches and from divisional offices, as well. And what do you say about that system now, given all of the consequences?--Well, the system - the system needed significant - there was no system. There was an ad hoc process where the responsibility of those office holders to report is clearly - over - over a period of time was clearly shown to be deficient and we needed to fix it. And the only way I believe that we could fix it and fix it properly was to centralise the system, to have a rigorous process in place that ensured that there was reporting mechanisms and checks and balances and a capacity to go back to review those ... That account is accepted. Whatever the rules of individual Divisions or Branches may have provided, the fact is that the pre-2016/2017 position within the Union as a whole was productive of an unacceptable level of non-compliance with reporting requirements.

[21]

Rule 35 - a centralised system of reporting 67 Without ignoring the unacceptable state of affairs prior to the 2016/2017 reforms, the Union as a whole - and Mr Hicks in particular - is to be given credit for implementing changes by the introduction of rule 35 of the National Rules and for further refining the new system of reporting to make it more effective. But for his intervention the total penalty to be imposed upon the Union would have been much greater. 68 In June 2016, the National Council of the Union voted in support of the introduction of a new rule - rule 35. That Rule (as at 5 July 2016) provided as follows: 35 - GOVERNANCE AND COMPLIANCE 35.1 Powers of the National Secretary 35.1.1 Notwithstanding anything in the rules of the Union, the National Council is empowered to authorise the National Secretary to take all steps necessary to ensure compliance by the CEPU in connection with the Reporting Obligations. 35.1.2 Without limitation to the power conferred by rule 35.1.1, the National Council is empowered to authorise the National Secretary to: • direct any officer or employee of the CEPU, including of its branches, to provide any information or document within their possession or control necessary for the satisfaction of the Reporting Obligations; • access any premises and review any databases held by the CEPU, including its branches, for the purpose of satisfying the Reporting Obligations; and • require any officer or employee of the CEPU, including of its branches, to provide such assistance as is necessary for the satisfaction of the Reporting Obligations. 35.2 Auditing of membership data 35.2.1 Where a reporting unit is required to include membership numbers in any report prepared pursuant to the Reporting Obligations, the reporting unit shall obtain an audit report of these numbers. 35.2.1 Each reporting unit shall comply with the following conditions in obtaining an audit report of its membership numbers under rule 35.2.1: (a) engage a registered company auditor; and (b) request that the work performed in the audit be in accordance with Australian Accounting Standard 802 "The Audit Report on Financial Information Other than a General Purpose Financial Report" and Auditing Guidance Standard 1044 "Audit Reports on Information Provided Other than a Financial Report" or any successor to these standards. 35.2.3 The independent audit report shall include an audit certificate signed by the auditor detailing the financial and total membership of the reporting unit. 35.3 Governance Officer 35.3.1 The National Executive Officers shall appoint a Governance Officer. The Governance Officer shall be an employee of the Union, with the salary and on-costs met by the funds of the National Council. 35.3.2 The Governance Officer shall carry out such duties as the National Secretary may direct. 69 It is unclear whether this Rule was introduced in response to the concerns being raised by the Commissioner. 70 A Governance and Compliance Officer, Ms Annette Moran, commenced in January 2017 with the annual expenditure in employing Ms Moran being about $150,000. In her opinion, the reasons for the failures to comply with reporting obligations in the past have been "greatly improved" by the new regime implemented in 2017 which incorporates, for example: a monthly reporting process; an audit of all office holders; monthly spot checks on office holders; and procedures policy. 71 With reference to the "monthly spot checks", Mr Hicks maintains that as "an added measure to ensure the compliance process adopted by the CEPU was robust", he directed that "each month an administration officer, under the supervision of the Governance Officer, contacts at random 3 office holders from each Division to confirm" (inter alia) that the office holder continues to hold the office stated on the Officer's Register. 72 These changes, Ms Moran maintains, have been further refined by: implementing further checks built into the formal reporting system which follow up with questions regarding eligibility of officer holders to take office under the rules; and the introduction of reminder emails. 73 Mr Hicks maintains that "[f]rom commencing to implement the new system in April 2017" he is only aware of a failure to "properly notify" on three occasions; and, since "the implementation of the complete series of reporting reforms in late 2017 there has only been a single instance of failing to report on time…". That failure "arose from an administrative error which coincided with the Christmas office shutdown, resulting in the notice being lodged 6 days late".

[22]

THE QUANTIFICATION OF PENALTIES 74 In assessing or quantifying the penalty or penalties to be imposed in respect to contraventions of legislation such as the Registered Organisation Act it is to be recognised, at the outset, that it is not an "exact science" but rather a process of "instinctive synthesis": Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [27] to [28], [55] and [78], (2008) 165 FCR 560 at 567 to 568 per Gray J, 572 and 577 per Graham J ("Australian Ophthalmic Supplies"); Australian Nursing and Midwifery Federation (No 2) [2018] FCA 2004 at [20] - [21] per Barker J. 75 With the maximum penalty being the upper limit of any penalty to be imposed, and recognising that the process of assessing or quantifying a penalty or penalties is not an "exact science", the process is nevertheless neither arbitrary nor unguided by well-accepted principles. The considerations to be taken into account are those identified by Tracey J, albeit not exhaustively, in Kelly v Fitzpatrick. 76 In very summary form, and by reference to the generally accepted principles to be applied in respect to the quantification of the penalties to be imposed, it has been concluded that: the maximum penalty which could be imposed in respect to each of the contraventions - and disregarding any consideration as to whether separate contraventions gave rise to a course or courses of conduct - is a sum of $4,593,000; the Commissioner and the Union were correct in contending that the maximum penalty should not be imposed and not be imposed in disregard of such conclusions as may be reached as to which contraventions constituted a "course of conduct"; although individual penalties should be assessed in respect to each contravention which has been made out, it is nevertheless been further concluded that the facts are such that there are: 13 separate "courses of conduct" in respect to the contraventions of s 233(2) and eighteen remaining contraventions of s 233(2); and two courses of conduct in respect to the contraventions of s 230(1) - one course of conduct arising in respect to the 2015 contraventions and another in respect to the 2016 contraventions. 77 Given the acceptance of the case advanced on behalf of the Commissioner as to the manner in which the contraventions are to be characterised as separate "courses of conduct" and the number of contraventions that have been made out, it is understood that one of the calculations undertaken by the Commissioner calculated the maximum quantum of the penalties that could be imposed as follows: Of this aggregate, the Commissioner contends that "a penalty at the lower end of the mid range is warranted". 78 The Union initially contended that the "appropriate penalty is in a range between $25,000 and $75,000". With reference to the table above, and expressed as a percentage, the aggregate penalty would therefore be in the range between about 1.5% and about 4.2% of the maximum. As the submission was initially advanced, there was a lack of precision as to the penalty proposed by the Commissioner to be imposed in respect to a particular contravention. In submissions filed after the hearing concluded, the Union revised this figure to $90,360 (or less). Nothing much turns on the difference, other than to expose the very fact that the process of imposing a penalty - or making submissions as to penalties - is not "an exact science" for either a party or the Court itself. 79 It has been concluded on the facts of the present case that an aggregate penalty of $445,000 should be imposed, that being about 25% of the maximum. At the outset of the hearing, a tentative view was expressed that a percentage of about 30% was under consideration. But that tentative expression, together with the tentative observation respect of whether contraventions 30 to 37 and 44 to 46 formed a "course of conduct", were the subject of both further oral and written submissions. 80 The manner in which the aggregate penalty should be assessed, not surprisingly, was the subject of competing submissions - albeit within the confines of the principles expressed (inter alia) by Tracey J in Kelly v Fitzpatrick.

[23]

Other penalties that have been imposed 81 Other decisions of this Court have imposed penalties with respect to the requirements imposed by the Registered Organisations Act and what may loosely be described as "record keeping". 82 In Registered Organisations Commissioner (No 2) [2018] FCAFC 203, (2019) 363 ALR, the Full Court considered penalties that had been imposed in respect to contraventions of ss 172(1) and 231(1) of the Registered Organisations Act. Section 231 addressed the requirement for an organisation to "keep a copy of its register of members … for the period of seven years". The primary Judge had concluded that the penalties for the five contraventions of s 231(1) should be a little less than $75,000 and that the in excess of 20,000 contraventions of s 172 should attract a penalty of $200,000. In total, a penalty of $271,362.36 was imposed. The penalties in respect to the contraventions of s 231(1) represented 45% of the maximum penalty applicable at the relevant date. Before the Full Court, it was concluded in respect to the s 231(1) contraventions that: four of the contraventions constituted a single course of conduct for which a "combined penalty of $48,000" was imposed; and the remaining fifth contravention attracted a penalty of $20,000. Those penalties, the Full Court observed (at para [139]), were "broadly in line with the approach of the primary Judge". 83 In Australian Nursing and Midwifery Federation (No 2) [2018] FCA 2004 the first respondent there admitted nine contraventions of ss 253(1), 265(5) and 266(1) of the Registered Organisations Act. There had been a failure to prepare financial reports and to provide members with a copy of a complying report. Penalties were imposed on the first respondent in the aggregate of $29,250. 84 Although these cases reflect the quantum of penalty that the Courts there considered appropriate, it must necessarily be recognised that the quantum of penalty in any given case must depend upon the particular facts and circumstances there prevailing. As Gray J has observed, "[p]enalties are not a matter of precedent": Australian Ophthalmic Supplies [2008] FCAFC 8 at [12], (2008) 165 FCR 560 at 564. A "hallmark of justice" nevertheless remains "equality before the law" and Courts should attempt to be "even handed": NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 295 per Burchett and Kiefel JJ. 85 Although it thus remains useful to use the quantum of penalties imposed in other cases as one of the means to attempt to achieve a degree of comparability in penalties, the facts and circumstances of an individual case must remain the yardstick against which penalties are assessed and imposed. To the extent that the Transport Workers' Union (No 2) case nevertheless provides some guidance, the penalties imposed in respect to the s 231(1) contraventions provide a more useful yardstick rather than the s 172 contraventions which were there characterised as a single course of conduct.

[24]

A course or courses of conduct? 86 On the facts of the present case the Commissioner quite properly accepts that it would be wrong in principle to not recognise that some of the contraventions - albeit each being a separate contravention - nevertheless should properly be characterised as giving rise to a number of "courses of conduct". 87 The Commissioner's position as advanced in his Outline of Principle Findings of Fact was that the following contraventions should properly be characterised as separate "courses of conduct", namely: 1 to 4; 5 to 10; 11 to 15; 16 to 29; 33 to 36; 38 to 40; 41 to 42; 49 to 51; 52 to 63; 66 to 69; 74 to 76; 79 to 80; and 81 to 82. The remaining 18 contraventions of s 233(2), the Commissioner contends in his Outline of Opening Submissions (albeit in relation to a slightly different composition of proposed courses of conduct), "are properly characterised as separate contraventions as they arise from separate acts", namely contraventions 30, 31, 32, 37, 43, 44, 45, 46, 47, 48, 64, 65, 70, 71, 72, 73, 77 and 78. Section 306(3), the Commissioner contends, has no application in respect to s 233 contraventions as they are not "in relation to the same conduct". 88 The principal division between the Commissioner and the Union as to which contraventions should be regarded as a "course of conduct" focus upon: contraventions 30 to 37; contraventions 44 to 46; and contraventions 64 to 65. At the outset of the hearing, a tentative view was expressed to the parties that: • contraventions 30 to 37 constituted a single course of conduct - those eight contraventions each arising out of eight changes in office holders at different times in 2015 but all eight of which were notified on the same date in October 2015; and that: • contraventions 44, 45 and 46 each involved a separate contravention and not a single course of conduct, as did contraventions 64 and 65. Notwithstanding those tentatively expressed views, it has ultimately been concluded that the Commissioner's analysis is correct. 89 In support of her contention that only contraventions 33 to 36 gave rise to a single course of conduct and that contraventions 30, 31, 32 and 37 are separate contraventions, and in resisting a conclusion that contraventions 30 to 37 form a single course of conduct, Senior Counsel on behalf of the Commissioner relies upon the fact that: contraventions 33 to 36 each had the same date upon which notification was required to be given and that the remaining contraventions each had different notification dates and thus different non-compliance periods; and it is not known whether the reasons for failure to notify were different. It follows, so contends the Commissioner, that it should not be concluded that there is an "interrelationship" between each of the contraventions (other than 33 to 36) that arose out of "substantially the same act": cf. ABCC v CFMEU [2017] FCAFC 113, (2017) 254 FCR 68. 90 This submission is accepted. 91 With respect to the tentative view expressed at the outset of the hearing that contraventions 44, 45 and 46 constituted separate contraventions and not a single course of conduct, that tentative view is now adhered to. Those three contraventions each arose out of the resignation from the State Council of the South Australian Branch of the EES Division of Messrs Smith, Mutton and Buchanan. Each of those resignations occurred at three discrete points of time. It cannot be concluded, with respect, that each arose out of "substantially the same act". Similarly, contraventions 64 and 65 arose out of two changes to office holders in the NSW Postal and Telecommunications Branch of the Communications Division, with both contraventions being notified on the same day in December 2016. However each of the change in office holders occurred on a different date and again it cannot be concluded that contraventions 64 and 65 arose out of "substantially the same act". 92 It thus concluded that: contraventions 33 to 36 constitute a single course of conduct; contraventions 30, 31, 32 and 37 are each separate contraventions and not a single course of conduct; contraventions 44, 45 and 46 do not constitute a single course of conduct; and that contraventions 64 and 65 do not constitute a single course of conduct. 93 The Commissioner's position as advanced in his Outline of Principal Findings of Fact thus prevails such that it is concluded: in respect to the 82 contraventions of s 233(2), there are 13 separate "courses of conduct" and 18 remaining contraventions. The Amended Defence in respect to contraventions 66 to 69, it is to be recalled, has been rejected and further concluded that the events in respect to the purported abolition of the four vacant positions in September 2016 did give rise to four contraventions but that those four contraventions constitute a single "course of conduct", as submitted on behalf of the Commissioner. 94 In respect to the four contraventions of s 230(1), the Commissioner contends that: two contraventions arose from the same act in 2015; and two contraventions arose from the same act in 2016. By reason of s 306(3), the Commissioner contends in its Outline of Opening Submissions that the Union is liable for one penalty for the 2015 conduct and one penalty for the 2016 conduct. 95 That contention is accepted.

[25]

The circumstances in which the contraventions occurred - a dysfunctional union 96 The circumstances in which the contraventions occurred included: the fact that the Union is a national union having many Divisions and Branches; the absence of any centralised system prior to 2016/2017 to ensure notification requirements were complied with - Mr Hicks describing the prior system as "no system" or as being "ad hoc"; the fact that the Union was, particularly (but not exclusively) in respect to reporting requirements, a dysfunctional body operating at times as three separate "Unions". 97 As to the first of these matters, one factor which contributed in large part to the extent of the contraventions that did occur and over a protracted period and throughout the Commonwealth, is the fact that the Union is a national union - the Union having 3 Divisions but also having many committees of management, many reporting units and a host individual offices. Notwithstanding the necessity to recognise that isolated failures on the part of individual persons may well continue to occur, the very fact of the Union having what can be described as a "complex structure" should have alerted it to the necessity to take greater steps than it obviously did in the past to ensure compliance with record keeping and reporting obligations under the Registered Organisations Act. 98 Mr Hicks, in his evidence in chief, referred as follows to the autonomy exercised by Divisions and Branches within the Union and the lack of power vested in the National Council to effect changes (without alteration): …Can you firstly tell the court, please, what do the national and divisional rules provide in respect of divisional autonomy?--So the National Council, in effect, doesn't have powers over their divisions, so the divisions have autonomy, and it's expressed in that way. Unless it's a matter affecting more than one division - that's when National Council have powers to deal with that. National Council does have capacity for the general day to day running of the union, but it doesn't have the capacity to direct the divisions to do certain things. And by way of example, with respect to that, would be the National Council doesn't have the powers to dissolve a division; the National Council doesn't have powers to change the rules of a division unless the division approves of that. National Council can't actually take action against a member if they're in breach of the section A rules. All they can do is process the charges, but those - if the person is found guilty then the disciplinary action taken against that individual goes back to the division from where they come from. So in all - the divisions then have branch autonomy. So the branches themselves don't have autonomy within the divisions. The extent of the difficulties being experienced was further expanded upon by Mr Hicks a little later when he gave the following evidence (without alteration): … Having given that evidence about divisional autonomy, can you describe to the court the impact upon the development of that new compliance system that - the impact of divisional autonomy on the implementation of that new compliance system?--To - to implement the significant change that we need to go through to ensure that we had much stronger compliance, it was - it was difficult - it was a very difficult process to go through because each of - not only - not only the divisions but the branches had this degree of autonomy and they used it to suit their purposes, if I could say that. Every time there was any meaningful change that we wanted to try and advance, then, obviously, some of the divisions could go back and say, "Well, this doesn't - it's not a matter that affects one - more than one division, so the National Council doesn't have any power." It also made it very difficult to try and force anything through because, to be honest, the powers of the National Secretary, unless they have the support of each of the divisions, is very limited. The powers, as I've already spoke about before, the powers of National Council is very limited unless they have the support of all of the divisions. So if a particular branch or a particular division didn't like change, then they could actually use the rules to avoid that change. And one of the first clear examples to me was we were one of the five unions named in the Trade Union Royal Commission. That happened very early in my role as the National Secretary of the CEPU. And, even then, when we were directed under notices to produce, for the CEPU to produce documents and to have only one legal representation, there was much push-back from the divisions, much push-back from the branches. We ended up having a situation where we were - each of the divisions was separately represented legally. Even trying to get notices to produce centrally through the National Office to forward onto - to forward onto the Trade Union Royal Commission was very difficult because we had reporting units or we had branches actually notifying directly. And then, with respect to the rules, in 2014, we had a National Council where we had members of the Communication Division actually walk out of the National Council to make it in court because they didn't like some of the changes that we were trying to push through the National Council body. And it took until May 2015 where we actually took those members of our union to the Federal Court to perform or observe a rule and we got a decision from Tracey J that actually made them turn up to a National Council meeting. So from the period of November 2014 through to about June 2015, our basic union, our - our national union was paralysed because we couldn't even perform the basic function of the union because this group of people were failing to turn up to meetings. That way, we were in court. That way, we couldn't pass anything. So we had to get an order of the Federal Court to actually get our union to function properly and that occurred in about May 2015. So the difficulties with all of that expressed to me quite clearly that if I had to drive some change through, if I tried the approach of saying, "The National Secretary is going to do this", and, "The National Council is going to do this", it would meet with the same level of resistance that I had received previously. So I had to go out and, basically, lobby and go around and talk to each of the individual branches and secretaries and decision-makers within the divisions about the need for change and that process obviously took some time from - from late 2015 through to early 2016. 99 The reference in that evidence to "the decision from Tracey J" was a reference to an interlocutory order made by his Honour on 18 June 2015. That order was made in a proceeding commenced by way of an Originating Application filed by Mr Hicks in this Court against named individual respondents. The interlocutory orders that were made were somewhat exceptional and were expressed as follows: 1) The first, second, fourth, sixth, seventh and tenth respondents perform and observe the rules of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia by attending and remaining at the meeting of the National Council of the National Council of the Union to be held on 30 June 2015 as required by rule 29 of the rules of the Union. 2) Each of the respondents referred to in Order 1 shall attend and remain at the meeting for the purposes of Order 1 by making telephone connection with the National Council by use of the dial-in number for the meeting and maintaining the telephone connection for the duration of the meeting. 3) The further hearing of the proceeding be adjourned to a date to be fixed. 4) Liberty to apply. It would appear that the making of those interlocutory orders brought the proceeding to an end. 100 The account given by Mr Hicks warrants, it is respectfully considered, a conclusion that the Union - at least as at 2015 - was dysfunctional. 101 But one factor which was, with respect, not satisfactorily answered by the Union was that the Commissioner from time to time issued "reminders" to the Union as to its need to comply. These "reminders" sent during 2014 through to 2018 fell broadly within one or other of four categories, namely: letters which were in "standard format", albeit "reminders" which nevertheless sought to achieve an important function; letters which served as "reminders" as to the need to comply in respect to specific events; letters which acknowledged receipt of the notification of changes made to records but which noted that the notification of these changes were lodged outside of the 35 day period and which requested that the Union "[p]lease ensure that all future notifications of change are lodged within 35 days of the change occurring"; and letters which were more specific in their terms and which stated, for example, that "[s]ub-section 233(2) of the RO Act requires that a notification must be lodged within 35 days of the change occurring. You indicated in your letter…that you are aware of this…Organisations must expect that conscious decisions to contravene provisions of the RO Act will be met with an appropriate and regulatory response". What is of some importance is that the fact of the need to comply, and of the need to comply in respect to specific instances, was being brought to the attention of the Union - the Union could not be said, nor did it seek to assert, that it was unaware of a continuing problem of default. The very number of contraventions occurring over such an extended period of time also undermines any suggestion that the continuing contraventions were "inadvertent": cf. Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290 at [24] per Flick J. Indeed, this ongoing problem it may be concluded was part of the impetus to reform and centralise the system of notification. To the extent that it was submitted on behalf of the Union that the events in 2015 were "tumultuous" and presumably that that regrettable state of affairs was to be taken into account, it is to be recalled that the orders made by Tracey J were made in June 2015 and the contraventions in the present case extended well beyond that date.

[26]

The facts & circumstances of each contravention 102 A consideration of "the nature and extent of the conduct which led to the breaches" and "the circumstances in which that conduct took place" (cf. Kelly v Fitzpatrick, supra) necessarily requires consideration to be given to each contravention. 103 But the extent to which consideration should be given to each contravention remains, with respect, an elusive exercise. 104 One course which was shunned by Senior Counsel for the Union was to endorse an approach which simply applied a "broad brush" to all contraventions and to reach a conclusion that a percentage of the maximum penalty could be imposed. A course so crudely pursued, and without regard to each of the contraventions, would cease to be - on the Union's approach - a process of "instinctive synthesis" (cf. Australian Ophthalmic Supplies Pty Ltd). 105 So much may, for present purposes, be accepted. But such analysis of the contraventions as was pursued by the Commissioner, with respect, does not deny sufficient consideration being given to the facts and circumstances of each of the contraventions involved. Such analysis as has been undertaken by the Commissioner exposed (for example) the obvious fact that: the extent of the delay in notification varied - on the analysis undertaken by the Commissioner, the extent of the delay varying from (for example) five instances where the notification was 100 to 254 days outside the prescribed period to 14 instances where the notification was between 14 to 30 days outside the prescribed period; and the actual conduct which occasioned the contraventions varied, as did the people involved. And one or other of those persons had a different reason for non-compliance. A recurring theme underlying the Union's case was either a mistaken belief that the requirement of notification was satisfied by reason of the Australian Electoral Commission notifying the Fair Work Commission or simply oversight. But other reasons for the contravention were more particular to the person responsible for ensuring compliance. Another theme that underlay one or other of the contraventions was that that person responsible for ensuring compliance was new to the office or had not been provided with the requisite training. Other reasons were confined to the individual concerned, such as the personal difficulties confronting the office holder in respect to contraventions 64-65 and a lack of understanding of Branch Officers of the scope of the statutory obligations imposed. Some explanations are more persuasive than others. The reference to these two features of the Commissioner's analysis is not exhaustive. 106 The Commissioner, in supplementary submissions filed after the conclusion of the hearing, further refined his approach to the quantification of penalties by seeking to identify the range in which penalties should be imposed. In these supplementary submissions it was thus contended that "the appropriate penalty would be at the lower end of the mid-range (i.e. 30%)". 107 The analysis of the contraventions which has been undertaken by the Commissioner is sufficient, it is respectfully concluded, to warrant a conclusion that - subject to recourse to the considerations outlined by Tracey J in Kelly v Fitzpatrick - a penalty of about 30% of the maximum would be in the range countenanced by the Legislature. 108 It is not considered necessary in a case where there are many contraventions extending over a period of years and involving many different Union officers to ascribe a particular penalty to each contravention or such contraventions as constituted a course of conduct. 109 A consideration of the facts and circumstances of each contravention does not dictate such a detailed approach. It is not considered necessary, for example, to separately ascribe a higher penalty by reference to (for example) the extent of the delay in notification in each individual contravention or any lack of contrition or remorse or by reference to "culpability" to each contravention. An overall assessment of the varying periods of delay and the variety of the reasons given for the failures to notify remains a consideration of the facts and circumstances of each contravention. Such an overall assessment is sufficient for the process of assessment or quantification to remain a process which is one of "instinctive synthesis". 110 The approach of the Union differed - perhaps more in detail than in substance. On the approach of the Union it was submitted that an assessment as to the penalties to be imposed should be approached on the basis that the contraventions fell into five "Levels" of relative seriousness - with "Level 5" contraventions being the most serious. 111 The very grouping of contraventions, albeit by reference to (inter alia) the extent of delay and the reasons for the delay, nevertheless recognised that individual penalties need not be ascribed to each individual contravention but could be approached on a more broadly expressed basis. The Union's approach was thus, perhaps, a more refined and disciplined approach than that pursued in the Commissioner's Outline of Opening Submissions and his subsequent written submissions. 112 But nothing turns on the difference on the facts of the present case. 113 The approach pursued by Senior Counsel, and accepting that each of the identified contraventions fell within the "Level" assigned to it by the Union, the general nature of the contraventions and the reasons for each contravention, and the maximum penalty that could have been imposed and that proposed by the Union had this course of analysis been pursued may be summarised as follows: Level Contravention Delay (days) Reason Maximum Penalty proposed (%) 1 1 - 4 16 Administrative error - remedied quickly $51,000 ≤ $1,020 (≤ 2%) 5 - 10 31 Mistaken belief regarding AEC - first instance of this mistake - remedied quickly $51,000 ≤ $1,020 (≤ 2%) 11 - 15 14 Remedied quickly $51,000 ≤ $1,020 (≤ 2%) 41 - 42 20 Mistaken belief regarding AEC - second instance of this mistake - remedied quickly $54,000 ≤$1,080 (≤ 2%) 47 20 Mistaken belief that notice not required on resignation - small reporting unit, lack of admin support - remedied quickly $54,000 ≤ $1,080 (≤ 2%) 48 21 Mistaken belief that notice not required on resignation - small reporting unit, lack of admin support - closely related to item 47 - remedied quickly $54,000 ≤ $1,080 (≤ 2%) TOTAL ≤ $6,300 2 16 - 29 31 Administrative error - peculiar circumstances of departure of key staff member - remedied quickly $54,000 ≤ $2,160 (≤ 4%) 30 - 37 between 18 and 63 Administrative error - peculiar circumstances of new Branch Secretary (limited seriousness given Lorrain's limited future role) - remedied quickly (in part) and in a moderate time (in others) $54,000 ≤ $2, 160 (≤ 4%) 38 - 40 33 Administrative error - peculiar circumstances of departure of key staff member - remedied quickly $54,000 ≤ $2,160 (≤ 4%) 64 - 65 87 and 31 Administrative error - outgoing secretary - remedied in moderate time $54,000 ≤ $2,160 (≤ 4%) TOTAL ≤$8,640 3 43 110 Mistaken belief regarding AEC - third instance of this mistake $54,000 ≤ $3,240 (≤ 6%) 70 35 Administrative error - delay lengthened by Christmas shutdown $54,000 ≤ $3,240 (≤ 6%) 71 40 Administrative error - delay lengthened by Christmas shutdown - remedied in moderate time $54,000 ≤ $3,240 (≤ 6%) 74 - 76 1111 Mistaken belief regarding status of trustees as (distinct) officers - occupants held other offices - office is otiose $54,000 ≤$3,240 (≤ 6%) Section 230(1) - 2015 n/a Mistaken belief regarding status of trustees as (distinct) officers - occupants held other offices - office is otiose $51,000 ≤$3,060 (≤ 6%) Section 230(1) - 2016 n/a Mistaken belief regarding status of trustees as (distinct) officers - occupants held other offices - office is otiose $54,000 ≤$3,240 (≤ 6%) TOTAL ≤ $19,260

[27]

4 49 - 51 64 Administrative employee ignorant of obligation - peculiar circumstances, change in employee with carriage of notices - remedied in moderate time $54,000 ≤ $4,320 (≤ 8%) 52 - 63 67 Remedied in moderate time $54,000 ≤ $4,320 (≤ 8%) 66 - 69 72 Mistake of law (unaware of requirement to notify cessation of office) - remedied in moderate time $54,000 ≤ $4,320 (≤ 8%) 73 50 Administrative error - small reporting unit, lack of admin support - remedied in moderate time $54,000 ≤ $4,320 (≤ 8%) 77 1,090 Administrative error $54,000 ≤ $4,320 (≤ 8%) 78 1,087 Mistaken belief regarding AEC - fourth instance of this mistake $54,000 ≤ $4,320 . (≤ 8%) 79 - 80 993 Administrative error - mistake regarding annual return lengthened the delay. $54,000 ≤ $4,320 (≤ 8%) 81 - 82 835 Mistaken belief regarding AEC - fourth instance of this mistake - small reporting unit, lack of administrative support $54,000 ≤ $4,320 (≤ 8%) TOTAL ≤$34,560

[29]

This approach on the part of the Union has been rejected. But the table nevertheless continues to serve as a useful summary of (inter alia) the reasons advanced by the Union in respect to individual contraventions. 114 The force of this approach being advocated on behalf of the Union is that it quite properly focusses attention upon each individual contravention and the circumstances in which it arose. 115 There are, however, two generally expressed reasons for not whole-heartedly embracing it, namely: it only invites reservation as to the manner in which each contravention is sought to be categorised within one or other of the levels suggested - including reservation occasioned by a more detailed examination of the evidence and the reasons given by individual persons for their own failures to comply; and it seeks to place a monetary level of penalty which, in all the circumstances, is considered too low - those circumstances being those identified by Tracey J in Kelly v Fitzpatrick and in particular the need for both specific and general deterrence. It also does not give sufficient attention to the objective of some degree of parity in the penalties imposed. The analysis advanced by the Union, however, has been considered with some degree of care. It has served (inter alia) as a useful touchstone to again consider the circumstances of each contravention and as a valuable touchstone to review the appropriateness of the range of penalties and the aggregate penalty proposed by the Commissioner. On either approach, however, the facts and circumstances of each contravention and each course of conduct have been considered. 116 As to the former of these two reasons, the categorisation advanced on behalf of the Union: immediately invites reservation as to why (for example) contraventions 77, 78, 79 - 80 and 81 - 82 (involving delays of years and not days or months) should not also be regarded as being amongst the most serious of the contraventions, albeit contraventions 79 to 80 and 81 to 82 each involving a single course of conduct. Although the person responsible (for example) for notifying the changes to office holders in respect to contraventions 79 to 80, Mr Adley, explains that the reason for failure to notifying was because he had "misread the email" from Ms Moran and further states in his affidavit that "[a]ll of the breaches … occurred unintentionally" and that he "regret[s] the errors", it is difficult to see how Mr Adley could have misread Ms Moran's email. In an earlier email to Ms Moran (albeit in respect to a different election) he states that the "Branch Exec election request has not been lodged as yet. Jess will do this and copy you in…". There thus seems to be an acknowledgement on the part of Mr Adley as to where the responsibility to lodge changes rested, namely within his office and not that of Ms Moran. At best, the facts reflect a careless attention to the need to satisfy a statutory requirement. But Mr Adley was one of those who supported the January 2017 National Council resolution. By way of further example, with respect to contravention 78, Mr McVee was simply of the understanding, as at August 2015, that when the resignation from office took place, "that by writing to the FWC in the first instance, we had complied with our obligations in the process". Mr McVee, it may be noted, was another of those who supported the January 2017 National Council resolution; fails to recognise that the most serious of the contraventions, accepting that there may be legitimate room for argument as to which contraventions constituted the "most serious" and that even these contraventions varied from one to the other and further accepting that there seems to be a prevailing lack of understanding as to the need to comply with statutory requirements, should attract a far greater penalty than the $5,400 (being 10 %) of the maximum; and fails to recognise that even the least serious of the contraventions, for example those instances where the delay in notification was between 14 and 30 days outside the prescribed period, should attract a greater penalty than the $1,020 or $1,080 (being 2% at the relevant times) of the maximum. The five "Levels" of contraventions, moreover: suggest a greater level of precision than, with respect, is available on the facts - although some limited explanation may be available, it is not at all self-evident that a contravention involving a delay in notification in excess of 1,000 days (for example, contraventions 74 to 76) falls within a "Level 2" category rather than possibly a higher "Level" of contravention. 117 As to the second of these reasons, in addition to considering each of the considerations identified by Tracey J in Kelly v Fitzpatrick, a significant departure from the case advanced on behalf of the Union is the rejection of its stance in respect to deterrence. In submissions filed after the close of the hearing, the Union stated its position as follows: The ROC also persists in suggesting that the amount of the penalties must serve the end of specific deterrence. This should be rejected. So that there can be no doubt about the respondent's position, it maintains that there is no proper basis to find that a pecuniary penalty is needed to serve the purpose of specific deterrence in this case. That submission advanced by the Union is rejected. There remains, it is respectfully concluded, a need to impose a penalty in order to ensure specific deterrence. 118 In the same submissions, the Union repeated a submission made on a number of occasions throughout the hearing itself - namely, that the imposition of a penalty may deter organisations from self-reporting and hence run counter to the legislative objective of securing compliance. In its written submissions, the Union summarised this position as follows: The ROC says little about general deterrence. There is nothing more than the motherhood statement that "[t]he need for general deterrence is also overwhelming: it is important that registered organisations understand that these obligations must be complied with, and that non-compliance will attract substantial penalties"... There is no engagement at all with the points already made by the respondent about general deterrence. Significantly, the ROC fails to deal with the significance of paragraph 72 of Mr Enright's first affidavit, … Mr Enright says that "breaches of s 233(2) largely come to the attention of the regulator through self-reporting of late notifications". The respondent drew attention to this in oral submissions. It puts a different complexion on general deterrence in the context of this specific statutory obligation. Not only should the Court seek to deter non-compliance with s 233(2), but it should also impose a penalty that does not deter self-reporting. Otherwise, other registered organisations will be better off not self-reporting late lodgements, if (a) the ROC is unlikely to discover them anyway and (b) self-reporting will simply lead to a penalty that makes it more economic to stay silent. (references omitted) This submission advanced by the Union is also rejected. Any judicial endorsement of a proposition that directly or indirectly supports a course of non-compliance with statutory requirements for whatever reason is to be summarily rejected. That, it may be accepted, is not what the Union is proposing. Deliberate non-compliance on the part of an organisation with the requirements of the Registered Organisations Act, whatever the reason, it may be further accepted will only attract a greater penalty. And self-reporting is a course which may well lead to a lesser penalty. Indeed, on the facts of the present case, it is the recognition of the need to ensure compliance - and the steps which have been taken by the Union and instigated by Mr Hicks - which is the very reason why the penalty in the present case has in fact been reduced. Notwithstanding the submission of the Union, and indeed contrary to that submission, general deterrence remains a very real consideration to be taken into account when assessing the penalty in the present case. Those organisations who may be found to have contravened provisions of the Registered Organisations Act and which do not seek to address the reasons for non-compliance in the same manner as that pursued by the Union in the present case may warrant the imposition of greater penalties. 119 Once these two reasons are taken into account, it is respectfully considered that the quantum and range of penalties proposed by the Union is inadequate and inappropriate. 120 Penalties, using for the sake of example the rate of penalty for contraventions occurring from 1 August 2015, of about $15,120 for the least serious and up to about $16,200 for the most serious, with respect, seems a more "just and appropriate" sum than the range of $1,080 to $5,400 advocated by the Union. That is a range between 28% to 30% of the maximum penalty per contravention - as opposed to the Union's range of 2% to 10%. 121 One could admittedly cavil with the Commissioner's more simplistic approach in categorising contraventions into only one of two categories and an approach which reflected only a small differential between the least and most serious contraventions - arguably the least serious contraventions perhaps attracting a lesser penalty and the more serious contraventions perhaps attracting a greater penalty. Some of the more serious contraventions, it is considered, could well have attracted a penalty of about 45% of the maximum. But the overall approach, with respect, is one which should be accepted. The quantification of penalties, it is to be recalled, is not an "exact science". 122 The observation previously made that nothing much turns on the difference in approach pursued by the Commissioner (on the one hand) and that of the Union (on the other hand) may be tested by notionally increasing the rate of penalty advocated by the Union. If the rate of penalty (for example) for the "Level 1" contraventions is increased to what is considered to be a more appropriate range of 25% and the range for the "Level 5" contraventions is increased to 45% (with 5% increases at each "Level"), the total penalty would be a sum of about $523,350. It follows that even if the approach of the Union is pursued by considering each individual contravention or each course of conduct, but increasing the range of penalty for each, the difference between that sum and the penalty in fact imposed would be about $78,350.

[30]

Specific and general deterrence 123 On the facts of the present case it is concluded that: specific deterrence assumes comparatively less significance than general deterrence, but remains a consideration of relevance to the assessment of penalties; but that general deterrence remains a very relevant consideration and should be given greater relevance and importance. 124 The need for specific deterrence assumes comparatively less significance than that of general deterrence given the fact that: the 2016/2017 changes have been implemented; the changes effected from January 2017 have been further refined to ensure that there is in place a "robust" system of notification; the new changes seem to have the support of the Union as a whole, at least as evidenced by the fact that the changes have in fact been implemented; since the introduction of the changes there has only been a limited number of failures to notify; and the changes have found favour with the Commissioner and that the Commissioner has not seen fit to make suggestions as to how the new regime can be further amended. 125 As to the last of these matters, it is of importance to the case advanced on behalf of the Union to expressly bring to the fore of any consideration as to the quantum of any penalty necessary to secure specific deterrence, and the quantum of any penalty more generally, the following exchange in the cross-examination of the Executive Director of the Registered Organisations Commission, Mr Christopher Enright (without alteration): After this new mechanism was put in place, did you monitor how successfully they had been complying with the 233 and 230 obligations? --Yes, as a result of these proceedings, we have conducted those inquiries about these particular provisions that you've referred to. And have you found in that analysis that this new mechanism has been a success?--There has certainly been a - an - an increase in compliance, yes, I agree. You would describe it as a success?--I would say there has been - there has been less non-compliance, so I would put it that way. To a level that you are satisfied with?--Well, we're pragmatists. Of course, we would always like to see a compliance of 100 per cent but we've - certainly, we've seen a significant improvement in compliance. Being pragmatists - and if I suggest to you that the compliance percentage now is somewhere in excess of 99, you would be happy to accept that you are happy with that level?--Look, no doubt. 99 per cent is a very, very high level of compliance if - in any - in any assessment, so, yes. All right. And it might be fair to describe that level of compliance amongst registered organisations of employees at the absolute top end?--There are many registered organisations who comply to that extent in - in relation to these provisions. So it's a very, very good level of compliance and one we seek to achieve with every registered organisation. I agree there are others who - who do not meet that - that standard but there are certainly quite a few who do. Given the past history of transgressions, however, it is nevertheless respectfully considered that there remains prudent when quantifying the penalty to be imposed to continue to take into account the need for specific deterrence as against the Union. 126 The steps taken by the Union in 2016/2017 to attempt to secure future compliance has reduced what would otherwise have been a greater penalty overall. Contrary to the submission advanced on behalf of the Union, it is nevertheless respectfully considered that the need for specific deterrence remains a relevant consideration which should be given some weight. 127 "Even though there may be no indication that a respondent will contravene a civil penalty provision in the proximate future, a penalty must be imposed that will act as a reminder to the respondent and the community of the consequences of the admitted contraventions, and this will often be the most significant factor in determining penalty in a particular case": Australian Nursing and Midwifery Federation (No 2) [2018] FCA 2004 at [25] per Barker J. On the facts of that case it may be noted that his Honour there recognised (at para [53]) the fact that the union had "established institutional arrangements to ensure future compliance" but nevertheless further concluded (at para [58]) that there "remain[ed] a need for specific and general deterrence in this case". 128 And there is some limited evidence that the Union in the present case needs such a "reminder". Even after the introduction of the new regime in 2016/2017 a further contravention occurred - namely contravention 73. When addressing this contravention, Mr Bintley (the Divisional Branch Secretary of the Western Australia Branch of the Plumbing Division) referred to this contravention in early 2017 as follows: 21. On 16 May 2017, the National Office lodged a notice of change in office holders on behalf of the Divisional Branch with the FWC. However, this change was lodged outside the 35-day time frame due to an unfortunate, and entirely unintentional, oversight on my behalf. 22. The change occurred on 20 February 2017 when Mr Nathan Hancock resigned from the Divisional Branch Committee of Management, which means the change should have been notified on 27 Mach 2017. I forgot to pass on the resignation in accordance with the new procedure. I mistakenly believed that I had notified the Victorian Divisional Branch when I had not. I do not know why I believed this. It was a genuine oversight. 23. On or around 11 May 2017, Ms Anne Moran, Governance Officer of the National Office of the CEPU, telephoned me and asked who was on the Divisional Branch Committee of Management. In the course of this conversation I advised Ms Moran that Mr Hancock had resigned. It was only at this time I realised that I had failed to pass on the fact of Mr Hancock's resignation. Mr Bintley goes on to explain: 26. The Divisional Branch is a small organisation, with no administrative support staff. As I state above, all administrative work is performed by the Victorian Divisional Branch. The Divisional Branch does not have any inhouse legal or accounting staff. Partly as a consequence of the lack of resources for the Divisional Branch, I have been concerned that I still did not fully grasp my responsibilities. To fix this, I have been in regular telephone contact with Ms Moran, who has greatly assisted me in understanding my responsibilities. 27. Most recently, in October 2018 I contacted Ms Moran and asked for her to attend my office to take me through the CEPU's governance and compliance procedures. 28. Accordingly, on 2 November 2018, Ms Moran came to my office and took me through the Divisional Branch's governance obligations, including an emphasis on notifying changes to office holders. The fact that a senior officer, albeit in a "small organisation" did not "fully grasp" his responsibilities after the 2016/2017 changes is of concern. 129 Either as a matter of general principle or by reference to the specific facts of the present case, specific deterrence remains a matter to be taken into account. 130 The need for a penalty to be imposed which acts as a general deterrent to other registered organisations assumes greater relevance. And this is so: not only because of the public purpose more generally served in a penalty acting as a deterrent to others from failing to comply with like statutory obligations; but also by reason of: the fact that to some extent contraventions largely come to light as to the result of "self-reporting". As to the latter of these two matters, Mr Enright in his affidavit thus maintained: 70. The regulator publishes annual returns on its website. For well over a decade, information has been provide to registered organisations that annual returns and notifications of changes will be, and are, published on the regulator's websites. 71. A possible contravention of s 233(2) may come to the notice of the regulator upon the giving of a late notification (assuming the date of change is accurately recorded in the notification). If no notification is made at all, the absence of a notification would only come to the attention of the regulator on an audit of annual reports year on year, or on comparing known election results against annual reports. 72. It has not been, and is not, the practice of the regulator to date to undertake such an audit of records kept by an organisation. The regulator thus may never become aware about an absence of notification if changes are made to the records after the annual report is lodged. For example, an office may become vacant for a period of 6 months within the 12 month period, but filled before the end of the 12 month period. In the circumstances, breaches of s 233(2) largely come to the attention of the regulator through self-reporting of late notifications. Not surprisingly, there was no cross-examination of Mr Enright upon this evidence. 131 Common to both specific and general deterrence is the need to send a message that a penalty is not to be regarded as an "acceptable cost of doing business": Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54 at [66], (2013) 250 CLR 640 at 659 per French CJ, Crennan, Bell and Keane JJ; Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20 at [62]-[63], (2012) 287 ALR 249 at 265 per Keane CJ, Finn and Gilmour JJ; Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union ("Cardigan St Case") [2018] FCA 957 at [50] per Bromberg J. 132 The range of penalties proposed by the Union, particularly those in the range of at or below 2%, could more properly be characterised as "an acceptable cost of doing business" rather than a "penalty".

[31]

Further considerations 133 Separate from the more specific considerations which warrant greater exposition, remain the other consideration identified by Tracey J in Kelly v Fitzpatrick [2007] FCA 1080 at [14], (2007) 166 IR 14 at 18 to 19. These can be addressed more briefly, namely: the size of the Union - the Union as a whole having a total income (at the end of the 2017 financial year) exceeding $20.7 million and a total net equity exceeding $170 million, albeit with some Divisions and Branches having greater financial backing than others; the nature and extent of the conduct which led to the contraventions - the default in lodging notification of changes in office holders, in summary form, extended over a number of years and spread geographically throughout the Commonwealth with varying in default from 14 days through to no notification at all prior to the commencement of the present proceeding and involved senior office holders of the Union not being aware of their responsibilities; the fact that, for example, the Commissioner had provided information on its website as to the information required to be provided and reminders having been sent to the Union, its Divisions and Branches; the fact that the Union did not admit the contraventions as early as it could and waited for more than a year before putting into place a system of compliance and the fact that not all contraventions were accompanied by an apology; the fact that the Union nevertheless ultimately did admit most of the contraventions in issue and thereby exhibited a degree of co-operation with the Regulator - the withdrawal of the admissions previously made in the Defence as first filed in respect to contraventions 66 to 69 and the filing of the Amended Defence, it is considered, assumes little relevance. The withdrawal of the admission was presumably the consequence of the case being prepared for hearing and the issue between the parties as to whether an argued absence of power affecting the need to report "any change" being an issue that was not frivolous to pursue; the fact that the Union had not previously engaged in like contraventions such that the Commissioner brought proceedings against the Union; the fact that the contraventions have not given rise to an financial advantage to the Union; and the fact that the National Council of the Union has not issued any statement of remorse or apology for the contraventions - although some (but not all) of the individual officers have expressed an apology for the conduct. Of particular relevance is the fact that the National Secretary of the Union, Mr Hicks, has not offered any apology on the part of the Union. Although it may be expected that Mr Hicks as National Secretary would assume that individual office holders would individually comply with the notification requirements imposed by the Registered Organisations Act, it may have been expected that as National Secretary he would "shoulder the responsibility" for the past contraventions and express (at least) some degree of regret for those contraventions. The position assumed by Mr Hicks in his affidavit, however, is to maintain that he acted "to the best of my ability, to ensure that the CEPU met all of its statutory obligations". By way of contrast, however, Mr Moran in her affidavit stated that it "has been a matter of great distress and anxiety that a number of these contraventions arose from delays caused by me". 134 No further reduction in recognition of the "totality principle" the Commissioner contends, is warranted where, as the Court has, the Commissioner's proposed approach to courses of conduct is adopted. That submission is accepted. A total penalty in the sum of $445,000 is also considered to be "just and appropriate": ABCC v CFMEU [2017] FCAFC 113 at [117], (2017) 254 FCR 68 at 93 per Dowsett, Greenwood and Wigney JJ. 135 One further matter which divided the parties was the extent to which the Court should have regard to the fact that the Union initially sought relief from all liability pursuant to s 315(2) of the Registered Organisations Act. That application for relief had attracted the filing of evidence in advance of the hearing directed to that issue. The application was withdrawn by Senior Counsel on behalf of the Union on the second day of the hearing. The application for relief, it is considered, may properly be taken into account when quantifying or assessing the penalty to be imposed: cf. General Manager of Fair Work Australia v Health Services Union [2014] FCA 970 at [142] per North J. The bringing of such an application by the Union tends to flag a limited retreat in its position that it should "pay the price" for the contraventions it has admitted. On the facts of the present case, this consideration certainly does not provide any satisfactory basis for increasing the penalty otherwise considered "just and appropriate" and only reinforces a conclusion that the aggregate penalty contemplated is "just and appropriate".

At a glance

Court

Decision date

Before

Source

Judgment (33 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (36)

Cited By (2)