Thorson v Pine

Federal Court of Australia|2004-10-12|Before: Heerey J, Marshall J

REASONS FOR JUDGMENT 1 This proceeding raises for consideration the short point whether a notice sent by an inspector to an employer is, on its face, invalid. 2 The applicants are employees of the second respondent ("Multiplex"). On 7 June 2004, the first respondent ("the inspector") sent a notice to Multiplex in which it sought to procure, among other things, the name and bank account details of Multiplex's employees engaged at the "Concept Blue" site at 336 Russell Street, Melbourne on 5 and 6 August 2003. 3 The applicants are obviously affected by the notice and have raised an objection to Multiplex producing such documents to the inspector. 4 On 21 June 2004 the applicants commenced a proceeding in this Court seeking, amongst other things, a declaration that the notice is invalid and of no effect. Such declaratory relief was claimed pursuant to s 39B(1A) of the Judiciary Act 1903 (Cth). 5 On 21 June 2004, Heerey J ordered that: "1. Until the hearing and determination of the proceeding or further order, the first respondent be restrained … from taking any steps to enforce the Notice pursuant to s 86(1A)(c) of the Workplace Relations Act 1996 (Cth) issued by the first respondent to the second respondent and dated 7 June 2004, or to require the production of documents pursuant to it. 2. Until the hearing and determination of the proceeding or further order the second respondent be restrained … from providing any documents to the first respondent that may otherwise fall within the terms of the Notice."

16 On 7 June 2004 an investigator with the Taskforce requested Mr Gray to make available the remaining applicants for an interview. Mr Gray responded that he had arranged to advise the relevant employees of the request "1st thing" the next morning. 17 On 7 June 2004 the inspector caused a notice to be prepared, requiring Multiplex to produce bank account details for those of its members employed on the Concept Blue site on 5 and 6 August 2003. The documents were required to be produced at 9.00 am on 22 June 2004. The interlocutory order of 21 June 2004 obviated that requirement for production. 18 The decision to issue the notice of 7 June 2004 was part of the inspector's investigation concerning whether Multiplex had breached s 187AA(1) of the Act and whether its employees employed on the Concept Blue site on 5 and 6 August 2003 had observed s 187AA(2) of the Act. 19 Section 187AA(1) prohibits an employer from making a payment to an employee in relation to a period during which the employee is engaged in industrial action. 20 Section 187AA(2) prohibits an employee from accepting payment from an employer if an employer would contravene s 187AA(1) by making the payment.

The notice 21 As the form of the notice is critical to the outcome of the proceeding, it is set out below, omitting formal parts. 22 The notice provided that: "Pursuant to s86 of the Act, for the purpose of ascertaining whether awards, certified agreements and the requirements of the Act are being or have been observed, I am empowered to require a person, by notice, to produce to me documents relevant to that purpose. Pursuant to s 86(1A)(c) of the Act I require you to produce to me at Customs House Level 8 414 Latrobe Street, Melbourne at 9.00am Tuesday 22 June 2004, the following documents which are in your possession or which you have custody of, or access to, concerning or involving the following site: · Concept Blue 336 Russell Street, Melbourne (Site) Employees

Documents by Multiplex Constructions Pty Ltd ("Multiplex Constructions"), that include details of the transfer of payment to the bank accounts of all employees of Multiplex Constructions, including but not limited to, the amount of the payments and the name and bank account details of the employees, who were employed on the Site on the following dates:

· 5 August and 6 August 2003 inclusive. Note:

(a) any paper or other material on which there is writing;

(b) any paper or other material on which there are marks, figure, symbols or perforations having a meaning for persons qualified to interpret them;

(c) any article or material or record of information from which sounds, images or writings are capable of being reproduced; and

(d) any letter, facsimile, email, memorandum, file note, briefing note, diary, industrial instrument, recommendation, advice, report, circular, agenda, minutes, review, appraisal, form, notebook, journal, message slip, receipt, ledger, payment slip, invoice or account; and

(f) does not include an Australian Workplace Agreement. 2. "person" includes but is not limited to:

(b) a body corporate including an incorporated association or society;

(d) a currently or previously registered organisation of employers or employees under any law of the Commonwealth or State;

(e) a trust an (sic) in relation to a trust, one or more or all of those trustees together;

(f) a partnership and in relation to a partnership, one or more or all of the partners together;

(g) a joint venture and in relation to a joint venture, one or more or all of the joint ventures;

(h) an alliance, and in relation to an alliance, one or more or all of the alliance members or participants (howsoever described); 3. "organisation" has the same meaning as "organisation" in s 4(1) of the Workplace Relations Act 1996; 4. "Multiplex Constructions" includes Multiplex Constructions Pty Ltd and any related body corporate, pursuant to s 9 of the Corporations Act 2001. 5. "payment" includes a payment in kind or by the conferral or provision of any benefit. Failure to comply with this Notice without reasonable excuse may be in contravention of s 305 of the Workplace Relations Act 1996. Penalty: 6 months imprisonment. It is a serious offence to knowingly provide false or misleading documents or to provide false or misleading information in response to the Notice to Produce : Sections 137.2 and 137.1 of the Criminal Code Act 1995. Penalty: 12 months imprisonment."

The Statutory Context 23 Section 86 provides as follows: "POWERS OF INSPECTORS

Purpose for which powers of inspectors can be exercised

(1) The powers of an inspector under this section may be exercised for the purpose of ascertaining whether awards and certified agreements, and the requirements of this Act other than section 541, are being, or have been, observed.

(i) premises on which the inspector has reasonable cause to believe that work to which an award or certified agreement applies is being or has been performed; or

(ii) a place of business in which the inspector has reasonable cause to believe that there are documents relevant to the purpose set out in subsection (1); and

(b) on premises or in a place referred to in paragraph (a):

(i) to inspect any work, material, machinery, appliance, article or facility; and

(ii) as prescribed, to take samples of any goods or substances; and

(iv) to require a person having the custody of, or access to, a document relevant to that purpose to produce the document to the inspector within a specified period; and

(v) to inspect, and make copies of or take extracts from, a document produced to him or her; and

(c) to require a person, by notice, to produce to the inspector a document relevant to the purpose set out in subsection (1).

(1B) An inspector may exercise the powers in subsection (1A) at any time during ordinary working hours or at any other time at which it is necessary to do so for the purpose set out in subsection (1).

(2) If a person who is required under subparagraph (1A)(b)(iv) to produce a document contravenes the requirement, an inspector may, by written notice served on the person, require the person to produce the document at a specified place within a specified period (not being less than 14 days).

(3) Where a document is produced to an inspector under paragraph (1A)(c) or subsection (2), the inspector may:

(a) inspect, and make copies of or take extracts from, the document; and

(b) retain the document for such period as is necessary for the purpose of exercising powers or performing functions as an inspector.

(4) During the period for which an inspector retains a document, the inspector shall permit the person otherwise entitled to possession of the document, or a person authorised by the person, to inspect, and make copies of or take extracts from, the document at all reasonable times.

(4A) The notice referred to in paragraph (1A)(c) must:

Service may be effected by sending the notice to the person's fax number.

Person must produce document even if it may incriminate them

(4B) A person is not excused from producing a document under paragraph (1A)(c) on the ground that the production of the document may tend to incriminate the person.

(4C) If an individual produces a document under paragraph (1A)(c), the document produced and any information or thing (including any document) obtained as a direct or indirect consequence of the production of the document is not admissible in evidence against the individual in any criminal proceedings unless it is proceedings for an offence against section 305.

(5) If an inspector proposing to enter, or being on, premises is required by the occupier to produce evidence of authority, the inspector is not entitled to enter or remain on the premises without producing to the occupier the inspector's identity card.

(6) In this section, a reference to an award includes a reference to a contract of employment with an employee in Victoria (other than an employment agreement). The terms of the award, in this case, are taken to be the minimum terms and conditions of employees in Victoria applicable under subsection 500(1).

employee in Victoria has the same meaning as the term employee has in section 489

employment agreement has the same meaning it has in section 489."

24 Section 86, in its current form, came into the Act as a result of Sch 1, Part 1, s 2 to the Workplace Relations Amendment (Improved Protection for Victorian Workers) Act 2003 (Cth). A provision of that kind has consistently been present in federal industrial legislation, at least as far back as 22 June 1928 when the Conciliation and Arbitration Act 1904 (Cth) was amended by the introduction of, amongst other things, a provision allowing for the appointment of inspectors with powers to enter premises 'for the purpose of ascertaining whether awards and the requirements of this Act or the regulations are being, or have been, observed'. This provision, survived (albeit in modified forms) subsequent amendments to the Conciliation and Arbitration Act, until as late as 1986. It was substantially reproduced in the Industrial Relations Act 1988 (Cth) as s 86, which came into operation in March 1989. The chief new requirement introduced as part of the regime set up under s 86, which was not present until the 2003 amendment, is that contained in s 86(1A)(c), that is, to require production of a document relevant to the purpose set out in s 86(1), without the need to enter premises. 25 The Explanatory Memorandum accompanying the relevant Bill which led to the 2003 amendment stated at p 18, para 1.5 that: "Item 2 also proposes the insertion of a new paragraph 86(1A)(c), which would permit an inspector to require a person to produce a document relevant to the purpose of ascertaining compliance with the Act or an award or agreement (other than an Australian Workplace Agreement) made under it, without first having to enter and inspect the premises of the employer. At present, an inspector may only compel a person to provide information in the course of an inspection of premises. That power to obtain documents would remain - proposed subparagraph 86 (1A)(b)(iv). 26 Another important change effected by the 2003 Amendment was the introduction of s 86(4B). That sub-section as stated at para 1.7, p18, of the Explanatory Memorandum: "...would statutorily abrogate the privilege against self-incrimination." Further, s 86(6), also a product of the 2003 Amendment, extended the definition of "award" in the section to include "a contract of employment with an employee in Victoria (other than an employment agreement)."

Proper construction of s 86 27 Documents required for inspection under s 86 may only be sought by an inspector for the purpose set out in s 86(1), that is: "for the purpose of ascertaining whether awards and certified agreements and the requirements of this Act other than section 541, are being, or have been observed." 28 This purpose was described in the relevant explanatory memorandum as: "the purpose of ascertaining compliance with the Act, or an award or an agreement."

See para [26] above. 29 There are sub-purposes contained within the purpose set out in s 86(1). These sub-purposes are: • ascertaining observance of awards; • ascertaining observance of certified agreements; • ascertaining observance of the requirements of the Act, other than those imposed by s541. 30 When an inspector seeks the production of documents under s 86, she or he will have a sub-purpose in mind. The inspector may wish to ascertain observance of an award or observance of a certified agreement or observance of a provision of the Act. Ordinarily therefore it will not be an onerous requirement for the inspector to say in the notice for production that the documents are sought for the particular sub-purpose that the inspector has in mind. It may be one or more of the sub-purposes in s 86(1) set out in the preceding paragraph. A mere statement of the general purpose for which the inspector's powers are conferred will not inform the recipient about the relevance or legitimacy of the request contained in a notice. The power confirmed by s 86(1)(c) is referable to a purpose. The inspector must have a purpose in seeking production of the document. That purpose will relate to observance of the Act, an award or an agreement. It will trouble the inspector little to identify that purpose and once identified, allow the recipient of the notice to adjudge its relevance and hence the validity of the request. 31 A failure to identify the award, certified agreement or the requirement of the Act pertinent to the inspector's investigation will not demonstrate a relevant purpose for the recipient of the document. The inspector has sworn an affidavit in which she states that her purpose in giving the notice relates to an investigation concerning alleged breaches of s 187AA. There is no reason why the inspector could not have disclosed that purpose in her notice. Instead she chose to keep the recipient guessing as to what particular purpose she may have had in mind. 32 A notice under s 86(1A)(c) has a coercive and invasive character. The privilege against self-incrimination is abrogated by s 86(4B). Under s 305(1) it is an offence, punishable by up to six months imprisonment to contravene a requirement made by an inspector under s 86(1A)(c). Consequently there must be strict compliance with the requirements of s 86, if a notice is to be valid. To be valid, it must be obviously so, on its face, or be demonstrably relevant, without reference to extrinsic material, to a purpose referred to in s 86(1). 33 There are no reported authorities, of which I am aware, that deal with s 86, save for Heerey J's most persuasive analysis in his interlocutory judgment in this proceeding: Thorson v Pine [2004] FCA 805. 34 Counsel for the applicants drew the Court's attention to cases dealing with notices given pursuant to s 155 of the Trade Practices Act 1974 ("the TPA"). Counsel for the inspector sought to downplay the significance of such cases by reference to the different phraseology used in the TPA when compared to the Act. Counsel drew attention to the opening words of s 155(1) which refer to where there is "reason to believe that a person is capable of producing documents...relating to a matter that constitutes...a contravention of this Act...". They contended that it was a precondition to the exercise of s 155 that there was a reason to believe that a purpose was capable of producing the documents sought, whereas, it was submitted, there is no precondition to the exercise of power under s 86. However, as counsel for the applicants demonstrated, there is also a precondition to the exercise of the power contained in s 86. The precondition is that the purpose identified in the notice is one which is referable to s 86(1). I therefore reject the submission put on behalf of the inspector that cases such as Bannerman v Mildura Fruit Juices Pty Ltd (1984) 2 FCR 581 are not relevant to the issue before the Court. 35 At 584 in Bannerman, Bowen CJ and Neeves J said: "The requirement that a notice under s 155(1) identify the matter that constitutes or may constitute a contravention of the Act has a two fold purpose. First it is necessary that the notice disclose on its face that it is an exercise of the power which the subsection confers. That power depends upon the existence, objectively determined, of a "matter", in the sense in which that expression has been explained in earlier decisions of the court, that constitutes, or may constitute, a contravention of the Act and a belief in the person issuing the notice that the recipient is capable of furnishing information or producing documents relating to the matter so identified. Secondly, the identification of the matter that constitutes, or may constitute, a contravention of the Act provides for the recipient the point of reference by which to judge whether the notice validly requires the specified information to be furnished or the specified documents to be produced. It will only validly do so if the information and the documents specified in the notice can be seen, from the face of the notice itself, to be information or documents that relate to a matter of the kind described in the subsection and identified in the notice."

36 The notice in the instant case does not disclose, on its face, that it is an exercise of power, which is confirmed by s 86. It merely recites (omitting the reference to the non-availability of an investigation into a breach of s 541) the terms of s 86(1). It does not disclose actual purpose. It does not identify any sections of the Act, any terms of an award or awards (or employment contracts in Victoria) or any terms of certified agreement or agreements. It gives the recipient no point of reference by which to judge whether the notice validly requires the specified documents to be produced. 37 Counsel for the inspector submitted that there is no requirement in s 86(1) that an inspector have a specific purpose in mind. They later contended that the inspector is entitled to engage in a roving inquiry. 38 Such a submission is tantamount to saying that an inspector may target an employer or employee or any other person, and fish through that person's records to see what may be extracted for some still further unstated purpose. 39 Ordinarily, an inspector will seek documents to assist an investigation into, or advance an inquiry about, a specific concern that she or he may have about enforcement of an industrial legislative requirement or the observance of an industrial instrument. It is unrealistic to consider that a busy inspector will target a person to produce documents merely to see what might be dredged up. It is also unrealistic to consider that an inspector will have all the component sub-purposes of the purpose identified in s 86(1) in seeking documents. Further, it is clear, beyond doubt, that in this matter the inspector did not have a multiple purpose and that she did not seek to engage in a roving inquiry. 40 Roving inquiries may be an apposite expression for broadranging inquiries into alleged tax fraud and the like under income tax legislation but such notices are foreign to the workplace relations of civilised societies, as distinct from undemocratic and authoritarian states. 41 In the course of argument I asked senior counsel for the inspector why an inspector would seek documents other than for a particular purpose. The answer only needs to be set out to demonstrate its failure to grapple with the question. In response counsel said: "You would do it if you were an inspector and you wanted to look generally at particular observance. You might not have a suspicion of anything. You might have a slight suspicion that there might be some generalised non-compliance, but what is important is that the statute doesn't require you to have a specific provisional purpose in mind." 42 Counsel for the inspector sought to contrast the requirements of s 86 with those set out in s 285B. Counsel contended that s 285B required more specificity. He referred to the need for a person purporting to rely on s 285B to suspect that a breach was occurring. Counsel also referred to the requirement that there must be a purpose to investigate that breach. Section 285B is a provision of a vastly different character to s 86. The people seeking documents under s 285B are employees or officers of registered organisations who are permitted to do so by a Registrar. They do not have coercive powers of inspectors. Those who do not co-operate with them are subject only to civil proceedings for a monetary penalty and there is no abrogation of the privilege against self-exposure to a penalty. To construe s 86 by reference to s 285B would be to err in one's construction of s 86. 43 Counsel drew the Court's attention to cases dealing with notices issued under income taxation legislation such as Federal Commissioner of Taxation v Australian and New Zealand Banking Group Ltd (1979) 143 CLR 499. 44 Cases such as the ANZ case deal with a statutory regime so far removed from what is provided for by the Act and s 86 in particular, to be of no assistance in the resolution of the current issue before the Court. As counsel for the inspector said: "...we accept that the ANZ case was a different statutory regime and I suppose this discussion illustrates the dangers in travelling outside the regime into general observations in other contexts."

Conclusions 45 For the foregoing reasons, in my opinion, the notice purportedly issued by the inspector on 7 June 2004 is invalid on its face. In summary, it failed to set out the purpose the inspector had in mind, that is, the purpose of ascertaining whether the requirements of s 187AA had been observed. In so doing, it failed to give the recipient an opportunity to consider whether what it was required to produce was referable to any specific purpose. This occurred in circumstances where draconian penalties and abrogation of a right to protect oneself against self-incrimination potentially flowed from the purported exercise of power.

Remedy 46 Counsel agreed that in the event that the applicants' submissions were accepted by the Court it was appropriate to make the following declaration: "The Notice purportedly issued pursuant to s 86(1A)(c) of the Workplace Relations Act 1996 addressed to the second respondent for the attention of Simon Gray and dated 7 June 2004 is invalid and of no effect."

I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall.

Counsel for the Applicants: Mr P Hanks QC with Mr C Dowling

Counsel for the 1st Respondent: Mr J Beach QC with Mr P Gray

Solicitor for the 1st Respondent: Australian Government Solicitor

Date of Hearing: 6 September 2004

Workplace Relations Act 1996(Cth)

Workplace Relations Amendment (Improved Protection for Victorian Workers) Act 2003(Cth)

Conciliation and Arbitration Act 1904(Cth)

Industrial Relations Act 1988(Cth)

Judiciary Act 1903(Cth)s 39B(1A)

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