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Federal Court: increased penalties under the Fair Work (Registered Organisations) Act 2009 (Cth) do not apply retrospectively

Federal Court: increased penalties under the Fair Work (Registered Organisations) Act 2009 (Cth) do not apply retrospectively

Published on October 25, 2019 by Wing Ho | 何宛穎律師Wing Ho | 何宛穎律師

Case citation: Registered Organisations Commissioner v Australian Hotels Association [2019] FCA 1516

Introduction

The Federal Court recently handed down a decision in proceedings instituted by the Registered Organisations Commissioner (the Commissioner) against the Australian Hotels Association (the AHA) for various contraventions of the Fair Work (Registered Organisations) Act 2009 (Cth) (and its predecessor, the Registration and Accountability of Organisations Schedule of the Workplace Relations Act 1996 (Cth)) (the FWRO Act).  The contraventions were in relation to obligations to lodge prescribed information in relation to elections, keep records of office holders and notify the regulator of changes in office holding.  The decision is significant for two reasons:

  1. It demonstrates that Federal registered organisations, whether of employees or employers, now face significant penalties (and associated costs of litigation) where they contravene any of the many and varied compliance requirements imposed by the FWRO Act on such organisations; and
  2. It confirms that the presumption against statutes having retrospective effect applies to increased pecuniary penalties imposed under the FWRO Act from June 2012, notwithstanding the words of a transitional provision in the amending legislation. The presumption is a well-known maxim of statutory interpretation but has never been tested in the field of registered organisations legislation.

Facts

The AHA is an employer body registered under the FWRO Act.  It was formed to represent employers in the licensed hotels and accommodation industries throughout Australia. 

The contravening conduct in question occurred within the Queensland Branch of the AHA. 

In summary, the alleged contraventions fell into three broad categories:

  1. Failing to lodge with the Commissioner the prescribed information in relation to elections for officers of the AHA on 16 occasions between 2003 and 2016 (election notification contraventions);
  2. Failing to update its list of names, postal addresses and occupations of the office holders within the organisation, upon changes to the identity of these office holders on 17 occasions between 2005 and 2016 (record keeping contraventions); and
  3. Failing to notify the Commissioner of changes made to the list described in point 2 above, on 17 occasions between 2006 and 2017 (change notification contraventions).

In relation to the election notification contraventions, the Queensland Branch had chosen not to hold elections because of real and perceived difficulties in attracting nominations for the many offices within the Branch. The Branch’s Rules reflected an outmoded governance structure which needed to be changed. The Branch decided that to avoid further difficulties, it would move to alter its Rules and hold off conducting elections until the alterations were approved by  the regulator under the FWRO Act. The regulator’s name changed over these years and ultimately was replaced by the Commissioner in May 2017.  Thus, the Queensland Branch did not lodge the prescribed information with the relevant regulator at the time, and therefore steps under the FWRO Act (or its predecessors) could not be taken for elections to be conducted by the Australian Electoral Commission.

In relation to the record keeping contraventions, instead of immediately changing the record as soon as the change of office holder occurred (whether by way of casual vacancy or election), the Queensland Branch updated the list of its officers when they were preparing their annual return of information for filing with the Commissioner (the filing of annual returns of information being a separate statutory obligation under the FWRO Act).

Regarding the change notification contraventions, the Queensland Branch mistakenly assumed that providing an updated list of its officers in their annual returns of information amounted to adequate notification.  Apparently this was not the case.

The AHA admitted liability for all contraventions.

Applicable legislation

The FWRO Act regulates the administration of employer and employee organisations registered under the Act (registered organisations), with a view to achieving several objects:

  1. Ensuring that registered organisations are representative of and accountable to their members;
  2. Encouraging members of registered organisations to participate in the affairs of organisations to which they belong;
  3. Encouraging efficient management of registered organisations and high standards of accountability to their members; and
  4. Facilitate the democratic functioning and control of registered organisations.[1]

Section 189 of the FWRO Act requires that an organisation or branch of an organisation lodge with the regulator (currently the Commissioner), before a prescribed day, the prescribed information in relation to an election that is to be conducted by the Australian Electoral Commission.  Over the years, the identity of the regulator has changed, but otherwise the substance of the obligation has remained the same.  The penalty for failing to comply is 60 penalty units.

Section 230 of the FWRO Act requires an organisation to keep records of, among other things, a list of the names, postal addresses and occupations of the persons holding offices.  This obligation to “keep” a list has now been held by the Federal Court to mean that an organisation is required to change the list at or about the time there is any change to the identity of any office holder.

Section 233 of the FWRO Act requires an organisation to lodge, within the prescribed period, notification with the Commissioner of any change made to the records required to be kept under s 230.  The prescribed period is currently 35 days.

By virtue of s 305 of the FWRO Act, ss 189, 230 and 233 are civil penalty provisions. 

Section 306(1) of the FWRO Act deals with pecuniary penalty orders that the Federal Court can impose on the person or organisation that contravened a civil penalty provision.  Between 2005 and 2017, the location of this provision within the statute has changed, and its terms have been amended.

At all relevant times up to 28 June 2012, s 306(1) provided:

In respect of conduct in contravention of a civil penalty provision, the Federal Court may make an order imposing on the person or organisation whose conduct contravened the civil penalty provision a pecuniary penalty of not more than:

(a) in the case of a body corporate – 100 penalty units; or

(b) in any other case – 20 penalty units.

The penalties in s 306(1) were subsequently increased through the enactment of the Fair Work (Registered Organisations) Amendment Act 2012 (the 2012 Amending Act). The transitional provision which applied to that amendment provides that the new maximum penalty applies to any pecuniary penalty orders “made on or after” the date on which the amendment commenced.[2]

Therefore, at all relevant times between 29 June 2012 and 1 May 2017, s 306(1) provided:

In respect of conduct in contravention of a civil penalty provision, the Federal Court may make an order imposing on the person or organisation whose conduct contravened the civil penalty provision a pecuniary penalty of not more than:

(a) in the case of a body corporate – 300 penalty units; or

(b) in any other case – 60 penalty units.

Section 306(1) was again amended with effect from 2 May 2017, but this was not material to the Court’s determination of penalties.

The dollar value of a penalty unit has changed three times between 2003 and 2017, but this is not necessary to set out in detail for the purposes of this article.

Retrospectivity – can increased penalties apply to earlier contraventions?

The parties were mostly in agreement, except on the key issue of whether the increased penalties under the FWRO Act apply to contraventions that occurred before 29 June 2012.  There was no dispute over the value of a penalty unit, only whether the increased number of penalty units can apply retrospectively.

The Commissioner argued that the words of the transitional provision should be read literally.  That is to say, the new maximum penalty should apply to any pecuniary penalty orders “made on or after” 29 June 2012, irrespective of when the contravention occurred.  This submission was rejected.[3]

On the other hand, the AHA submitted that the transitional provision cannot be read to operate retrospectively.  The AHA argued that the words of transitional provision are not sufficiently clear to displace the fundamental common law presumption against retrospectivity.  It also submitted that the FWRO Act attaches liability to the contravention, and not to the fact of the Court coming to the requisite state of satisfaction.  The judge (O’Callaghan J) accepted the AHA’s submission, saying, “Parliament is not to be taken to have put to one side the fundamental principles… merely by the use of words of the transitional provision.”[4]

Conclusion – key take away points

  1. Under the FWRO Act, penalties that are increased via the number of penalty units cannot apply to historical contraventions, because the language of the transitional provision in the 2012 amending legislation was not sufficiently clear to indicate that Parliament intended such a result. There may be implications for other statutes that seek to increase penalties in a similar way.
  2. Registered organisations must have effective systems in place to ensure compliance with the very many requirements that the FWRO Act imposes on them in relation to their internal affairs, particularly record keeping and reporting, with significant failure in that regard likely to result in substantial penalties (and associated legal costs).
  3. Officers of registered organisations are encouraged to make themselves familiar with their obligations under the FWRO Act and to seek specialist legal advice to ensure that the actions being taken to comply with such obligations are in fact adequate in the eyes of the law.

There have been no appeals from this decision, so it now constitutes the settled law on the issues with which it dealt.

If you would like to have more information about this topic, please contact any of our industrial organisations experts.

Note: We acted for the AHA in these proceedings.

 


[1] Fair Work (Registered Organisations) Act 2009 (Cth) s 5(3).

[2] Fair Work (Registered Organisations) Amendment Act 2012 (Cth), Item 10 of Schedule 1.

[3] Registered Organisations Commissioner v Australian Hotels Association [2019] FCA 1516, [98]

[4] Registered Organisations Commissioner v Australian Hotels Association [2019] FCA 1516, [97]

 

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