Fair Work Ombudsman v Nerd Group Australia Pty Ltd and Anor (No.2)
[2012] FMCA 6
•11 May 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v NERD GROUP AUSTRALIA PTY LTD & ANOR (No.2) | [2012] FMCA 6 |
| INDUSTRIAL LAW – Notice to produce employment records – failure to produce employment records – whether reasonable excuse for failure – whether Commonwealth privacy and taxation laws constitute reasonable excuse for failure to produce. |
| PRIVACY – Whether disclosure of personal information required by or under law. |
| TAXATION – Whether person performs services for the Commonwealth. |
| PRACTICE AND PROCEDURE – Effect of a non-admission. |
| EVIDENCE – Objections – exclusions to hearsay rule – admissions – statements contemporaneous with admission – contemporaneous statement of intention. |
| WORDS AND PHRASES – “made by” – “Commonwealth entity” – “Commonwealth record” –“reasonable excuse” – “ensure” – “personal information” – “performs services” – “not prevented – “prevent”. |
| Australian Securities Commission Act 1989 (Cth), s.70 Constitution, s.73 Corporations Act 2001 (Cth), ss.109X(1)(a) Crimes Act 1914 (Cth), s.86(1)(b) Customs Act 1901 (Cth) Evidence Act 1995 (Cth), ss.5, 59(1), 66A, 69, 81, 87, 88, 170, 171(1), 172, 173, 182(1), Dictionary Fair Work Act 2009 (Cth), ss.3, 12, 14, 15, 456(1), 539(1) and (2), 545(1), 546, 550, 570, 681, 682, 687(1), 696(1), 700(1)(a), 701, 703, 706, 712, 713, Part 5-2, Division 3, Subdivision D Fair Work Bill 2008 (Cth), Explanatory Memorandum Federal Magistrates Act 1999 (Cth), s.16 Income Tax Assessment Act 1936 (Cth), ss.16(2), 202 Income Tax Assessment Act 1997 (Cth), s.396.95 Judiciary Act 1903 (Cth), s.39B Migration Act1958 (Cth) Privacy Act 1988 (Cth), ss.6, 6A, 6C(1), 6D(1), 16A, Schedule 3, cl.2.1(g) Tax Laws Amendment (Confidentiality of Taxpayer Information) Act 2010 (Cth), s.2, Schedule 2, Part 1, cll.32, 110 Taxation Administration Act1953 (Cth), ss.3C-3H, 8WA, 8WB, Schedule 1, Part 2-1, Division 6-1, Part 2-5, Division 10-5, Item 1 Workplace Relations Act 1996 (Cth), s.167(2)(a), Part 7 Workplace Relations Regulations 2006 (Cth), Parts 19, 19B |
| AF Textile Printers Pty Ltd v Thalut Nominees Pty Ltd & Ors (2007) 17 VR 334; [2007] VSC 73 Antoniadis v TCN Channel Nine Pty Ltd (Unreported, Supreme Court of New South Wales, 12 March 1997, Nos 11047 of 1990 and 14914 of 1991) Australian Competition and Consumer Commission v Advance Medical Institute Pty Ltd & Ors (2005) 147 FCR 235; [2005] FCA 1357 |
| The Shorter Oxford English Dictionary on Historical Principles, Volumes I and II (Oxford: Clarendon Press, 1973) |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | NERD GROUP AUSTRALIA PTY LTD |
| Second Respondent: | JACK CRAIG GARBER |
| File Number: | PEG 38 of 2010 |
| Judgment of: | Lucev FM |
| Hearing date: | 15 November 2010 |
| Date of Last Submission: | 15 November 2010 |
| Delivered at: | Perth |
| Delivered on: | 11 May 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr R L Hooker |
| Solicitors for the Applicant: | Australian Government Solicitor |
| Counsel for the First and Second Respondents: | Mr C P Stokes |
| Solicitors for the First and Second Respondent: | Chris Stokes & Associates |
DECLARATIONS AND ORDERS
THE COURT DECLARES THAT:
The first respondent, by failing to comply with a Notice to Produce Records or Documents dated 9 November 2009 issued pursuant to s.712 of the Fair Work Act 2009 (Cth) to make available copies of the following records in relation to Tingka Lin:
(a)all time and wage records, including timesheets and pay slips;
(b)any documents relating to employment classification, job description, duties and employment status;
(c)documents relating to commencement date and termination details;
(d)signed Tax File Declaration Form; and
(e)contract of employment,
contravened s.712(3) of the Fair Work Act 2009 (Cth).
The second respondent has, in respect of the contravention of the Fair Work Act 2009 (Cth) referred to in paragraph (1) above:
(a)aided, abetted, counselled or procured the first respondent to engage in the contraventions; and
(b)was directly or indirectly, knowingly concerned in, or party to the contraventions;
for the purposes of s.550 of the Fair Work Act 2009 (Cth), and has therefore contravened s.712(3) of the Fair Work Act 2009 (Cth).
The first respondent, by failing to comply with a Notice to Produce Records or Documents dated 30 March 2010 issued pursuant to s.712 of the Fair Work Act 2009 (Cth) to make available copies of the following records in relation to Craig Blackie:
(a)all time and wage records, including timesheets and pay slips;
(b)any documents relating to employment classification, job description, duties and employment status;
(c)documents relating to commencement date and termination details;
(d)signed Tax File Declaration Form; and
(e)contract of employment,
contravened s.712(3) of the Fair Work Act 2009 (Cth).
The second respondent has, in respect of the contravention of the Fair Work Act 2009 (Cth) referred to in paragraph (3) above:
(a)aided, abetted, counselled or procured the first respondent to engage in the contraventions; and
(b)was directly or indirectly, knowingly concerned in, or party to the contraventions,
for the purposes of s.550 of the Fair Work Act 2009 (Cth), and has therefore contravened s.712(3) of the Fair Work Act 2009 (Cth).
THE COURT ORDERS THAT:
The matter be adjourned to a directions hearing at 4.15pm on 21 May 2012.
Costs, if any, be reserved.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 38 of 2010
| FAIR WORK OMBUDSMAN |
Applicant
And
| NERD GROUP AUSTRALIA PTY LTD |
First Respondent
| JACK CRAIG GARBER |
Second Respondent
REASONS FOR JUDGMENT
Introduction
The Fair Work Ombudsman[1] has applied to the Court under the Fair Work Act 2009 (Cth)[2] for orders, declarations and penalties against:
a)the first respondent, Nerd Group Australia Pty Ltd;[3] and
b)the second respondent, Nerd Group’s sole director and secretary, Jack Craig Garber,[4]
with respect to the alleged failure of Nerd Group to comply with notices to produce employment records and documents issued by a Fair Work Inspector,[5] Mr Scott Stuart Sutherland,[6] on 2 November 2009[7] and 30 March 2010,[8] and the accessorial liability of Mr Garber.
[1] “FW Ombudsman”.
[2] “FW Act”.
[3] “Nerd Group”.
[4] “Mr Garber”.
[5] “FW Inspector”.
[6] “Mr Sutherland”. The Court finds, at para.63 below, that Mr Sutherland is a FW Inspector.
[7] “November 2009 NTP”.
[8] “March 2010 NTP”.
Nerd Group and Mr Garber oppose the granting of the relief sought by the FW Ombudsman. Nerd Group contends that it had a reasonable excuse for failing to comply with:
a)the November 2009 NTP; and
b)the March 2010 NTP.
In a Response filed on 21 April 2010 Nerd Group and Mr Garber assert that:
… pursuant to section 712(4) of the Fair Works Act, a reasonable excuse for not complying with any Notice issued by the Applicant pursuant to section 712(1) of the Fair Works Act, namely that the Applicant failed to provide satisfactory evidence to the first respondent that the provision of such information to the Fair Work Ombudsman would not constitute a breach by the first respondent of the Privacy Act the Tax Administration Act and/or the Income Tax Assessment Act[9]
[9] Response, Grounds of opposition or further orders, para.1. Transcribed without amendment from the original.
In Particulars of Defence filed on 25 August 2010 Nerd Group and Mr Garber asserted that they had a reasonable excuse not to comply with the November 2009 NTP and the March 2010 NTP by reason of matters set out in a letter dated 22 September 2009,[10] on the letterhead of “Nerd Shop” and under the hand of Mr Garber as “Managing Director Nerd Group Australia Pty Ltd” which was given to Mr Sutherland.[11] The 22 September 2009 Letter asserts that records and documents that the November 2009 NTP and March 2010 NTP seek to have produced “fall within privacy provision of the Tax Administration Act 1953, the Privacy Act, Income Tax Assessment Act and others”.
[10] Affidavit of Scott Stuart Sutherland, affirmed 24 September 2010 (“Mr Sutherland’s Affidavit”), Annexure I (“22 September 2009 Letter”).
[11] Mr Sutherland’s Affidavit, paras.18 and 19.
The employment records requested relate to two employees of Nerd Group:
a)Ms Tingka Lin;[12] and
b)Mr Craig Blackie.[13]
Section 712 of the FW Act
[12] “Ms Lin”.
[13] “Mr Blackie”.
Central to these proceedings is s.712 of the FW Act which provides as follows:
(1) An inspector may require a person, by notice, to produce a record or document to the inspector.
(2) The notice must:
(a) be in writing; and
(b) be served on the person; and
(c) require the person to produce the record or document at a specified place within a specified period of at least 14 days.
The notice may be served by sending the notice to the person's fax number.
(3) A person who is served with a notice to produce must not fail to comply with the notice.
Note: This subsection is a civil remedy provision (see Part 4-1).
(4) Subsection (3) does not apply if the person has a reasonable excuse.
Formal matters admitted
A number of formal matters are admitted by Nerd Group and Mr Garber. They are:
a)that the FW Ombudsman:
i)is established by s.681 of the FW Act and appointed by the Governor-General under s.687(1) of the FW Act;
ii)is a FW Inspector by force of s.701 of the FW Act; and
iii)is entitled under s.539(2) of the FW Act to apply to this Court for an order that Nerd Group and Mr Garber pay a pecuniary penalty, and for other remedies for failure to make available employment records which were the subject of a written request;
b)that a FW Inspector is entitled to exercise the compliance powers in Subdivision D of Division 3 of Part 5-2 of the FW Act for compliance purposes;
c)that Nerd Group is and was at all relevant times:
i)a constitutional corporation within the meaning of s.12 of the FW Act;
ii)a company incorporated under the provisions of the Corporations Act 2001 (Cth);
iii)an employer within the meaning of ss.14 and 15 of the FW Act; and
iv)carries on, or carried on, the business of a computer repair and retail business trading under the name of “Nerd Shop” and engages, or engaged, employees;
d)Mr Garber is and was at all relevant times:
i)sole director and secretary of Nerd Group;
ii)aware of the day-to-day activities, and was the effective controller, of Nerd Group; and
iii)the person chiefly responsible for the management and control of any employees of Nerd Group.
Formal matters not admitted
A formal matter not admitted by Nerd Group and Mr Garber is that Mr Sutherland is and was a FW Inspector appointed by the FW Ombudsman under s.700 of the FW Act. A non-admission constitutes a traverse and operates as a denial of the claim made.[14]
Evidence
[14] Australian Licensed Aircraft Engineers Association v Glyndale Pty Ltd (2009) 179 IR 102 at 106 per Lucev FM; [2009] FMCA 188 at para.20 per Lucev FM. See also Warner v Sampson & Anor [1959] 1 QB 297 at 319 per Hodson LJ (“there is no effective line to be drawn between non-admission … and denial”) and 324 per Ormerod LJ (the two forms – denial and non-admission – have “a similar effect”); Re RGP Constructions Pty Ltd (In Liquidation) (1982) 31 SASR 170 at 171 per Walters J (“there is no difference in effect between denying and not admitting an allegation”).
Mr Sutherland’s evidence
The FW Ombudsman relied upon Mr Sutherland’s Affidavit, and oral evidence from Mr Sutherland at hearing.
Objections to Mr Sutherland’s evidence
Objections
At hearing Mr Sutherland’s Affidavit was the subject of certain objections by Nerd Group and Mr Garber which were not upheld, and in respect of which the Court indicated that it would provide more detailed reasons in its written Reasons for Judgment.[15] Those reasons are set out hereunder.
[15] Transcript, page 15.
Paragraph 8
The first objection was to paragraph 8 of Mr Sutherland’s Affidavit which provides as follows:
8. The First Complaint was made by Ms Tingka Lin (Lin). Lin alleged that she had been employed by Nerd Group from 21 July 2008 to 10 March 2009 and that she had not been paid for the last three weeks of her employment. Annexed to this affidavit and marked “C” is a copy of Lin’s Wages and Conditions Complaint Form dated 6 May 2009.[16]
[16] “Ms Lin’s Complaint Form”.
The objection was that paragraph 8 of Mr Sutherland’s Affidavit, and Ms Lin’s Complaint Form, were entirely hearsay.[17] Further, it was said that paragraph 8 of Mr Sutherland’s Affidavit was not necessary as a foundation for the steps subsequently taken by Mr Sutherland to issue the notices because paragraph 7 of Mr Sutherland’s Affidavit referred to the fact that he had been allocated Ms Lin’s Complaint Form. It was also argued that there should be no admission into evidence of Ms Lin’s Complaint Form because there was no admissible evidence about the employment status of Ms Lin, and it was therefore unnecessary.
[17] Evidence Act 1995 (Cth), s.59(1) (“Evidence Act”).
In response it was argued that the evidence was not being led for its narrative content, but rather for the truth of the fact that the statements were made, and provided a foundation for Mr Sutherland to act as he did in the course of his duties as a FW Inspector, so that he was giving evidence that he had been told something, and that in response that he did certain things. That was not hearsay but relevant evidence in relation to the fact that the statements were made. It was also submitted that absence of necessity was not a ground of objection.
Legislation relevant to this objection
A number of sections of the Evidence Act relevant to this objection are set out hereunder.
Section 182(1) of the Evidence Act provides as follows:
(1) Subject to this section, the provisions of this Act referred to in the following Table apply in relation to documents that:
(a) are, or form part of, Commonwealth records; or
(b) at the time they were produced were, or formed part of, Commonwealth records;
as if those sections applied to the extent provided for in section 5.
TABLE
Provisions of this Act
Subject matter
Section 69
Hearsay exception for business records
...
…
Division 2 of Part 4.6
Proof of certain matters by affidavit or written statements
Section 183
Inferences about documents etc.
Section 5 of the Evidence Act provides as follows:
The provisions of this Act referred to in the Table apply to all proceedings in an Australian court, …:
…
TABLE
Provisions of this Act
Subject matter
Section 182
Commonwealth records, postal articles sent by Commonwealth agencies and certain Commonwealth documents
Section 69 of the Evidence Act provides as follows:
(1) This section applies to a document that:
(a) either:
(i) is or forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business; or
(ii) at any time was or formed part of such a record; and
(b) contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business.
(2) The hearsay rule does not apply to the document (so far as it contains the representation) if the representation was made:
(a) by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact; or
(b) on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact.
(3) Subsection (2) does not apply if the representation:
(a) was prepared or obtained for the purpose of conducting, or for or in contemplation of or in connection with, an Australian or overseas proceeding; or
(b) was made in connection with an investigation relating or leading to a criminal proceeding.
(4) …
(5) For the purposes of this section, a person is taken to have had personal knowledge of a fact if the person's knowledge of the fact was or might reasonably be supposed to have been based on what the person saw, heard or otherwise perceived (other than a previous representation made by a person about the fact).
The term “Commonwealth record” is defined in the Dictionary to the Evidence Act to mean:
Commonwealth record means a record made by:
(a) an Agency within the meaning of the Public Service Act 1999; or
(b) …
(c) a person or body other than a Legislative Assembly holding office, or exercising power, under or because of the Constitution or a law of the Commonwealth; or
(d) a body or organisation other than a Legislative Assembly, whether incorporated or unincorporated, established for a public purpose:
(i) by or under a law of the Commonwealth or of a Territory (other than the Australian Capital Territory, the Northern Territory or Norfolk Island); or
(ii) …
(iii) …; or
(e) …;
and kept or maintained by a person, body or organisation of a kind referred to in paragraph (a), (b), (c), (d) or (e), but does not include a record made by a person or body holding office, or exercising power, under or because of the Constitution or a law of the Commonwealth if the record was not made in connection with holding the office concerned, or exercising the power concerned.
Section 170 of the Evidence Act provides as follows:
(1) Evidence of a fact that is, because of a provision of this Act referred to in the Table, to be proved in relation to a document or thing may be given by a person permitted under section 171 to give such evidence.
TABLE
Provisions of this Act
Subject matter
Section 69
Hearsay exception for business records
…
…
Section 182
Commonwealth records
(2) Evidence may be given by affidavit or, if the evidence relates to a public document, by a written statement.
Section 171(1) of the Evidence Act provides as follows:
(1) Such evidence may be given by:
(a) a person who, at the relevant time or afterwards, had a position of responsibility in relation to making or keeping the document or thing; or
(b) ….
Section 172 of the Evidence Act provides as follows:
(1) Despite Chapter 3, the evidence may include evidence based on the knowledge and belief of the person who gives it, or on information that that person has.
(2) An affidavit or statement that includes evidence based on knowledge, information or belief must set out the source of the knowledge or information or the basis of the belief.
Section 173 of the Evidence Act provides as follows:
(1) A copy of the affidavit or statement must be served on each party a reasonable time before the hearing of the proceeding.
(2) The party who tenders the affidavit or statement must, if another party so requests, call the deponent or person who made the statement to give evidence but need not otherwise do so.
There is no dispute that Mr Sutherland’s Affidavit was served on Nerd Group and Mr Garber a reasonable time before the hearing, and further, that he was called to give evidence, and was cross-examined by Counsel for Nerd Group and Mr Garber in relation to his affidavit, so that the requirements of s.173 of the Evidence Act are met.
The source of the information, namely Ms Lin and Ms Lin’s Complaint Form, is identified and set out in paragraph 8 of Mr Sutherland’s Affidavit, so that the requirements of s.172(2) of the Evidence Act are met.
Documents need not emanate from the Commonwealth entity to form part of the Commonwealth’s business records. The definition of “Commonwealth record” is wide enough to cover a Commonwealth form completed by a complainant, or a complaint received by a Commonwealth body or organisation. That conclusion is supported by Antoniadis v TCN Channel Nine Pty Ltd,[18] where the Supreme Court of New South Wales rejected an objection to the tender of an application for the grant of resident status in Australia, the basis for that objection being that the application was not “made by” the Commonwealth. The Supreme Court of New South Wales, having regard to the terms of s.182 of the Evidence Act, and particularly the reference to the documents forming “part of” the relevant records in s.69(1)(a)(i) of the Evidence Act, held that a realistic and sensible construction of those provisions led to the view that the documents were Commonwealth records.[19]
[18] Unreported, Supreme Court of New South Wales, 12 March 1997, Nos 11047 of 1990 and 14914 of 1991 (“Antionadis”).
[19] Antionadis at page 2 per Levine J.
Ms Lin’s Complaint Form contains no direct indication that it is a form generated by the FW Ombudsman for the purpose of facilitating a complaint. The headings in Ms Lin’s Complaint Form are however as follows:
a)“1 Your Details”;
b)“2 Your Employers’ Details”;
c)“3 Claim Information”;
d)“4 Your Job and Pay Details”;
e)“5 Important Information Relating To Your Claim”; and
f)“6 Confidentiality”.
Under each of the first five headings in Ms Lin’s Complaint Form are a series of questions directed to eliciting information concerning Ms Lin’s employment, many of which have as their subject “You” or “Your” followed by a description of employment-related subject matter.
Part 6 of Ms Lin’s Complaint Form is a good, and also relevant, example given its subject matter, and it provides as follows:
6.1If there is a reason why your employment records cannot be specifically requested please give reasons.
6.2You authorise the WO to reveal, subject to any response in 6.1, your identity and any information in relation to your complaint, to person(s), including the relevant employer who they consider may have information and knowledge that may assist with the investigation of your claim.
It can readily be inferred from:
a)the form of Ms Lin’s Complaint Form;
b)the context of Ms Lin’s Complaint Form;
c)the use of an acronym (“WO”) descriptive of the Workplace Ombudsman, an office which preceded the FW Ombudsman; and
d)Mr Sutherland’s evidence that this is Ms Lin’s Complaint Form received by the FW Ombudsman,
that Ms Lin’s Complaint Form is a document generated, or made by, the Office of the FW Ombudsman, and made available to potential complainants to complete. Ms Lin’s Complaint Form is therefore, at least in part, “made by” the FW Ombudsman. The fact that it is completed, or in part also “made by” Ms Lin, does not derogate from it being a Commonwealth record. Nothing in the Evidence Act definition of “Commonwealth record” requires that a document be “made by” the Commonwealth exclusively. If such were the case, the absurd position would arise where a multitude of Commonwealth forms might not be admissible in evidence. Furthermore, the fact that Ms Lin’s Complaint Form was kept and maintained by the Commonwealth is an indication that it is a Commonwealth record, when taken together with its nature and the manner in which it was generated. Finally, if the Parliament had intended that a “Commonwealth record” be one exclusively “made by” the Commonwealth it might easily have so provided in the Evidence Act, but has not done so.
Ms Lin’s complaint form is therefore a Commonwealth record, and evidence of a fact that is to be proved in relation to the complaint may be given by a person who had a position of responsibility in relation to making or keeping the complaint.[20] That evidence may be given on affidavit.[21] The evidence may include evidence based on information provided to that person, provided the source of information is set out,[22] which it is, as indicated above.[23] In this case Mr Sutherland is a person with a position of responsibility in relation to the keeping or making of Ms Lin’s Complaint Form. That is by reason of Mr Sutherland holding the office of FW Inspector with a responsibility to exercise compliance powers for compliance purposes. Mr Sutherland’s responsibilities as a FW Inspector therefore include determining whether complaints allocated to him, such as that in Ms Lin’s Complaint Form resulted from non-compliance with the FW Act or a fair work instrument.[24]
[20] Evidence Act, s.171(1) and 170(1).
[21] Evidence Act, s.170(2)
[22] Evidence Act, s.172.
[23] See para.24 above.
[24] Evidence Act, s.171(1)(a); Mr Sutherland’s Affidavit, paras.6 and 7; FW Act, ss.703 and 706.
The Office of the FW Ombudsman is established under s.696(1) of the FW Act, and includes FW Inspectors, such as Mr Sutherland, appointed under s.700 of the FW Act. The functions of the FW Ombudsman are set out at s.682 of the FW Act and include public purpose functions such as:
a)promoting compliance with the FW Act and fair work instruments;[25]
b)monitoring compliance with the FW Act and fair work instruments;[26]
c)inquiring into and investigating any act or practice that may be contrary to the FW Act, a fair work instrument or a safety net contractual entitlement;[27] and
d)commencing proceedings in a court to enforce the FW Act, fair work instruments and safety net contractual entitlements, including the representation of employees who are or may become a party to such proceedings.[28]
The Office of the FW Ombudsman is therefore a “Commonwealth entity”, being a “body or organisation”, “established for a public purpose”, “by or under a law of the Commonwealth”.[29] The Office of the FW Ombudsman is also a body or organisation established for the same purpose under a law of the Commonwealth in the definition of “Commonwealth record”.[30]
[25] FW Act, s.682(1)(a)(ii).
[26] FW Act, s.682(1)(b).
[27] FW Act, s.682(1)(c).
[28] FW Act, s.682(1)(d) and (f).
[29] Evidence Act, Dictionary, Part 1 – definition of “Commonwealth entity” – para (d).
[30] Evidence Act, Dictionary, Part 1 – definition of “Commonwealth record” – para (d).
The admissibility of Mr Sutherland’s evidence, and in particular, Ms Lin’s Complaint Form, is not precluded by s.69(3) of the Evidence Act because:
a)Ms Lin’s Complaint Form was not prepared or obtained for the purpose of conducting, or in contemplation or in connection with, this proceeding, but is rather a document brought into existence to facilitate a complaint made to the FW Ombudsman being investigated;[31] and
b)the possibility that legal proceedings might emanate from the complaint is not sufficient to preclude the hearsay evidence: proceedings must be likely or reasonably probable, and not merely one possibility.[32] There is no contemporaneous evidence to indicate that as a result of Ms Lin’s Complaint Form it was then likely or reasonably probable that there would be proceedings.
[31] State of New South Wales v Mannall [2005] NSWCA 367 at para.141 per Mason P.
[32] Australian Competition and Consumer Commission v Advance Medical Institute Pty Ltd & Ors (2005) 147 FCR 235 at 241 per Lindgren J; [2005] FCA 1357 at para.43 per Lindgren J; and see Nikolaidis v Legal Services Commissioner [2007] NSWCA 130 at para.61 per Beazley JA.
Paragraph 8 of Mr Sutherland’s Affidavit is admissible because Ms Lin’s Complaint Form is a Commonwealth record because it is a business record of the Commonwealth containing information which Mr Sutherland, a person with a position and responsibility in relation to the making or keeping of Ms Lin’s Complaint Form, is entitled to give affidavit evidence about, notwithstanding that that evidence is hearsay.
The evident good sense of the admissibility of a complaint form such as Ms Lin’s Complaint Form can be seen in the practical consequences of its admissibility. First, it might establish a reasonable excuse if the records or documents requested to be produced are, wholly or in part, unrelated to the subject matter of the complaint. Second, the exclusion of a complaint form on the basis that there is no admissible evidence about the employee’s employment status might preclude:
a)evidence of the basis for the exercise of the FW Inspector’s compliance powers for compliance purposes. In cases such as this the complaint form forms and evidences the basis for the exercise of compliance powers by a FW Inspector. The assertion by a person in a complaint form that there is an employer provides a legitimate basis for the exercise of compliance functions and powers by a FW Inspector; and
b)the only available evidence of an employee’s employment status, where an employer refuses to produce any documents in response to a notice to produce under s.712 of the FW Act.
The objection to paragraph 8 is therefore not made out and is dismissed.
Paragraph 26
The second objection is to part of paragraph 26 of Mr Sutherland’s Affidavit. That paragraph provides as follows:
The same day, I attended the Registered Office with my colleague, Fair Work Inspector David Warner to serve the First NTP. I spoke with an adult male at the premises. I said to him, “We are Inspectors from the Fair Work Ombudsman”, and presented my FWO identification card. I asked him his name. He said, “Kelvin Westaway”. I asked, “Are you able to accept documents on behalf of Nerd Group Australia Pty Ltd?”. He replied “Yes”. I handed him the First NTP.
The objection is to that part of the paragraph from the reply to Mr Sutherland’s request for the person’s name, to the end of the paragraph. The objection is that the evidence is hearsay and not admissible.[33]
[33] Evidence Act, s.59(1).
In response to the objection it is said that there is both a non-hearsay and hearsay purpose for leading the evidence. The non-hearsay purpose is said to be that the evidence of what Mr Westaway purportedly said is in response to something that was done, which then caused Mr Sutherland to hand the November 2009 NTP to Mr Westaway. The hearsay purpose is that the narrative content of the statement, whilst hearsay, is an admissible exception to the hearsay rule under s.87 of the Evidence Act. The FW Ombudsman says that s.87(1) of the Evidence Act:
a)requires the Court to admit the representation if it is reasonably open to find that the hearsay evidence expresses an authority to act and relates to a matter within the scope of the person’s authority; and
b)must be read together with s.88 of the Evidence Act, under which the Court is said to be required to find that the admission is made if it is reasonably open to find that the person concerned made the admission.
The FW Ombudsman says that Mr Sutherland undertook a corporate search which revealed that the registered office of Nerd Group was at K Westaway & Associates, Suite 7, 29 Hood Street, Subiaco.[34] Mr Sutherland went to the Nerd Group registered office with the purpose of serving the November 2009 NTP. Having identified himself, and his colleague, as FW Inspectors, and having asked the person to whom they showed their identification cards as FW Inspectors to identify himself, the person said that he was “Kelvin Westaway”. That was a name consistent with the name of the registered office, and Mr Westaway was asked whether he was able to accept documents on behalf of Nerd Group. Mr Westaway responded affirmatively.
[34] Mr Sutherland’s Affidavit, para.9 and Annexure D.
Sections 81, 87 and 88 of the Evidence Act provide as follows:
81 (1) The hearsay rule and the opinion rule do not apply to evidence of an admission.
(2) The hearsay rule and the opinion rule do not apply to evidence of a previous representation:
(a) that was made in relation to an admission at the time the admission was made, or shortly before or after that time; and
(b) to which it is reasonably necessary to refer in order to understand the admission.
87(1) For the purpose of determining whether a previous representation made by a person is also taken to be an admission by a party, the court is to admit the representation if it is reasonably open to find that:
(a) when the representation was made, the person had authority to make statements on behalf of the party in relation to the matter with respect to which the representation was made; or
(b) when the representation was made, the person was an employee of the party, or had authority otherwise to act for the party, and the representation related to a matter within the scope of the person's employment or authority; or
(c) …
(2) For the purposes of this section, the hearsay rule does not apply to a previous representation made by a person that tends to prove:
(a) that the person had authority to make statements on behalf of another person in relation to a matter; or
(b) that the person was an employee of another person or had authority otherwise to act for another person; or
(c) the scope of the person's employment or authority.
88 For the purpose of determining whether evidence of an admission is admissible, the court is to find that a particular person made the admission if it is reasonably open to find that he or she made the admission.
In Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd[35] the Federal Court said that a representation must be admitted in circumstances where it is reasonably open to find that when the representation was made the person had authority to make statements on behalf of the party in relation to the matter with respect to which the representation was made.[36] Further, the Federal Court adverted to s.88 of the Evidence Act, which provides that the Court is to find that a particular person made the admission if it is reasonably open to find that that person made the admission.[37]
[35] (2008) 167 FCR 314; [2008] FCA 369 (“Hoy Mobile”).
[36] Hoy Mobile FCR at 318 per Rares J; FCA at para.14 per Rares J.
[37] Hoy Mobile FCR at 318 per Rares J; FCA at para.14 per Rares J.
Section 81 is relevant to previous representations made in relation to the admission and therefore necessary to understand the admission, thus, for example, the admission concerning acceptance of documents is made sensible when it is understood that it is Mr Westaway that is accepting documents.
The FW Ombudsman relies specifically upon s.87(1)(b) of the Evidence Act in relation to the admissibility of paragraph 26 of Mr Sutherland’s Affidavit. The FW Ombudsman argues that, having regard to:
a)the details of the registered office of Nerd Group;
b)the commonality between the name of the registered office and Mr Westaway’s name; and
c)Mr Westaway’s name being admissible under s.81(2) of the Evidence Act as evidence which was made in relation to an admission shortly before the time at which the admission was made, and which it is reasonably necessary to refer to in order to understand the admission,
the admission that Mr Westaway was able to accept service on behalf of the Nerd Group is admissible under s.87(1)(b) of the Evidence Act as evidence that Mr Westaway had the authority to act for Nerd Group (by accepting service) and that the representation related to a matter within the scope of his authority (that is, to accept service).
In the circumstances of this case it is, on the evidence, reasonably open to find that Mr Westaway:
a)made the admission (which is admissible in evidence as an exclusion to the hearsay rule under s.81(1) of the Evidence Act); and
b)had authority to act for Nerd Group in relation to a matter within the scope of his authority.
Therefore, the representation made by Mr Westaway is taken to be an admission by Nerd Group admissible in evidence as an exclusion to the hearsay rule under s.87(1)(b) of the Evidence Act.
The objection to paragraph 26 of Mr Sutherland’s Affidavit is therefore not made out, and is dismissed.
Paragraph 30
The third objection is to paragraph 30 of Mr Sutherland’s Affidavit which provides as follows:
30. On 18 November 2009, I attended the Registered Office with Fair Work Inspector Scott Clarke. I spoke to Kelvin Westaway again and handed him a letter from me addressed to Garber in his capacity as director of Nerd Group, titled “Failure to Comply with a Notice to Produce Records or Documents”. Annexed to this affidavit and marked “L” is a copy of this letter. Mr Westaway said to me words to the effect, “I will pass this on to Jack Garber”.
Nerd Group objects to:
a)the identification of Mr Westaway on the basis that it can only arise from the hearsay evidence previously led; and
b)the final words attributed to Mr Westaway indicating that he would pass on the letter concerning the failure to comply with the November 2009 NTP.
The FW Ombudsman’s response to this objection is that:
a)there is an admission that Mr Westaway intended to pass the document, which was a notice of failure to comply with the November 2009 NTP, to Mr Garber, which falls within the exclusion to the hearsay rule under s.87(1)(b) of the Evidence Act; and
b)this was a contemporaneous representation concerning Mr Westaway’s intention, and therefore excluded from the application of the hearsay rule under s.66A of the Evidence Act.
For the same reasons as are set out above with respect to paragraph 26, there is an admission in paragraph 30 by Mr Westaway which is admissible in evidence as an exclusion to the hearsay rule under s.87(1)(b) of the Evidence Act.
Section 66A of the Evidence Act provides as follows:
The hearsay rule does not apply to evidence of a previous representation made by a person if the representation was a contemporaneous representation about the person's health, feelings, sensations, intention, knowledge or state of mind.
The statement made by Mr Westaway was a contemporaneous representation about his intention to pass on the letter to Mr Garber, and as such is admissible as an exclusion to the hearsay rule under s.66A of the Evidence Act.
The objection to paragraph 30 of Mr Sutherland’s Affidavit is therefore not made out, and is dismissed.
Paragraph 32
The fourth objection is to paragraph 32 of Mr Sutherland’s Affidavit, which provides as follows:
32. The Second Complaint was made by Mr Craig Blackie (Blackie), who alleged that he had been employed by Nerd Group in June 2009, and that he had not been paid for the last week he worked. Annexed to this affidavit and marked “M” is a copy of Blackie’s Wages and Conditions Claim Form.
Mr Blackie’s Complaint differs from Ms Lin’s Complaint in that the complaint form is identifiably a FW Ombudsman form, bearing:
a)a banner header, reading “Fair Work Ombudsman”;
b)a minor header, reading “Australian Government”;
c)the coat of arms of the Commonwealth of Australia; and
d)the FW Ombudsman’s ABN,
on each page.
The content of Mr Blackie’s complaint form, whilst not identical to that of Ms Lin’s complaint form, is largely the same. Notably, Part 6 – Confidentiality and Part 7 – Privacy, are different and provide as follows:
6. Confidentiality*
xI consent to the Fair Work Ombudsman contacting and disclosing to the employer (or any other relevant person) information in this complaint form, including my identity, for the purpose of investigating my complaint.
¨I do not consent to the Fair Work Ombudsman disclosing to the employer (or any other relevant person) my identity, or any information in this complaint form that may identify me, for the purpose of investigating my complaint. In withholding my consent, I acknowledge that confidential complaints can be more difficult, and take longer, for the Fair Work Ombudsman to investigate or in some cases may not be able to be investigated at all.
Please give reason/s for confidentiality in the space below.
Please Note: If you are no longer working for the employer or, if to assess your complaint we need to ask the employer specific questions about you, we may not be able to investigate your complaint confidentially. In these circumstances, we will let you know. Please contact our office on 131394 if you would like to discuss your circumstances.
7. Your Privacy
The FW Ombudsman manages personal information in accordance with the Privacy Act 1988. Information in your complaint form will be used for the purpose of determining, and where applicable recovering, your entitlements.
The objection to this paragraph, and the response to the objection, are on the same grounds as the objection and response to paragraph 8, save that they relate to Mr Blackie’s Complaint rather than Ms Lin’s Complaint.
For the same reasons as set out above with respect to paragraph 8, the objection to paragraph 32 is not made out, and is dismissed.
Paragraph 36
The final objection is to paragraph 36 of Mr Sutherland’s Affidavit, which provides as follows:
36. The same day, I attended the Registered Office with Fair Work Inspector Karen Heal to serve the Second NTP. There was a woman behind the reception desk. On the wall behind the reception desk was a sign for K Westaway & Associates. I asked if I could speak to Mr Westaway. The woman said that Mr Westaway was not available. I showed the woman my FWO identification card and said “We are inspectors from the Fair Work Ombudsman”. I asked her “Are you able to accept documents on behalf of Nerd Group Australia Pty Ltd instead of Mr Westaway?”. She said, “Yes”. I asked the woman her name. She said, “Rita Fabbro”. I handed Ms Fabbro the Second NTP.
The objection is to the hearsay statements by the woman ultimately identifying herself as Ms Fabbro.[38]
[38] Evidence Act, s.59(1).
The FW Ombudsman’s response with respect to this objection was the same as the response with respect to paragraph 26.
Having regard to:
a)the fact that Mr Sutherland was attending the registered office of Nerd Group for a second time;
b)Mr Sutherland saw the sign for “K Westaway & Associates”, the name of which appears in the address for the registered office;
c)that Mr Sutherland was told that Ms Fabbro was able to accept service of documents, and
d)that Ms Fabbro identified herself,
exactly the same considerations arise as arose with respect to the objections to paragraph 26. It follows from the considerations with respect to paragraph 26, and the Court’s conclusion with respect to them, that the objection to paragraph 36 is not made out, and is dismissed.
Conclusion and order
It was for the above reasons that the Court concluded at the hearing of this matter that the objections by Nerd Group and Mr Garber to paragraphs 8, 26, 30, 32 and 36 of Mr Sutherland’s Affidavit were not made out, and those objections were dismissed.
Factual background
Mr Sutherland’s appointment
Mr Sutherland gave evidence, in relation to which he was not challenged, that he was a Fair Work Inspector appointed under s.700(1)(a) of the FW Act on 6 July 2009.[39] Previously, Mr Sutherland had been appointed a Workplace Inspector under s.167(2)(a) of the Workplace Relations Act 1996 (Cth).[40] Again, his evidence in that respect was unchallenged.[41] Mr Sutherland was therefore a Fair Work Inspector at all material times.
[39] Mr Sutherland’s Affidavit, para.6 and Annexure B; Transcript, pages 16-17.
[40] “WR Act”.
[41] Mr Sutherland’s Affidavit, para.3 and Annexure A.
The Notices to Produce
Both the November 2009 NTP and the March 2010 NTP were issued to Nerd Group under s.712(1) of the FW Act.
The November 2009 NTP and the March 2010 NTP requested that the following documents be produced:
§ All time and wage records, including timesheets and pay slips;
§ any documents relating to employment classification, job description, duties and employment status;
§ any documents relating to commencement date and termination details;
§ signed Tax File Declaration form; and
§ contract of employment.
Both the November 2009 NTP and the March 2010 NTP requested documents for the purpose of determining whether:
a)Part 7, the Australian Fair Pay and Conditions Standard, of the WR Act, and
b)Part 19, dealing with records relating to employees and payslips, of the Workplace Relations Regulations 2006 (Cth),[42]
had been complied with.[43] Compliance with these matters is a valid compliance purpose for the issuance of a notice to produce.[44]
[42] “WR Regulations”.
[43] Mr Sutherland’s Affidavit, paras.25 and 35 and Annexures K and N.
[44] FW Act, s.706.
The November 2009 NTP was served on Nerd Group at its registered office on 2 November 2009.[45] Nerd Group was therefore required to produce the documents by 17 November 2009.[46]
[45] Mr Sutherland’s Affidavit, para.26 and Annexure D.
[46] FW Act, s.712(2)(c).
Nerd Group was served with the March 2010 NTP at its registered office on 30 March 2010.[47] Nerd Group was therefore required to produce the documents requested in the March 2010 NTP by 14 April 2010.[48]
[47] Mr Sutherland’s Affidavit, para.36 and Annexure D.
[48] FW Act, s.712(2)(c).
Nerd Group has not produced the documents requested in either the November 2009 NTP or the March 2010 NTP.[49]
[49] Mr Sutherland’s Affidavit, paras.28 and 39.
Earlier requests and responses
There had been earlier formal requests by Mr Sutherland for Nerd Group to produce certain employment records, which had been responded to in the 22 September 2009 Letter. It is necessary to set out the full terms of the 22 September 2009 Letter, which were as follows:
Dear Mr Sutherland
In reference to your notice dated 8th September 2009 we reply as follows:
Your notice purports to be issued pursuant to section 700 of the Fair Work Act 2009 (thy Act). There under subsection 712(4) provides a person served is not required to comply with a notice if the person has a reasonable excuse. We hereby assert a reasonable excuse as reason not to comply with your notice.
To that end, we have reviewed the Act and fail to see any provision that reconcile the fact records sought within your notice fall within privacy provision of the Tax Administration Act 1953, the Privacy Act, Income Tax Assessment Act and others, to wit:
All time and wage records, including timesheets and pay slips, and any documents relating to employment classification, commencement date and termination details for Tingka Lin …
Accordingly, until such time as a reconciliation of the various privacy issues can be satisfactorily provided to the undersigned, we will not be complying with your notice.
Further, we wish to advise you to be very certain and cautious in how you choose to proceed in this matter. We are informed and believe, and thereupon allege your complaining witness has perjured herself in an employment declaration. Therefore, any statements made by this individual should be viewed as not credible and her prior misrepresentations maybe used to impeach any and all statements made in this matter. A word to the wise, be certain this is the case you elect to die on your sword. We will challenge the validity of your enabling Act to the full extent of the law.
Please advise us of your intentions as soon as piratical. If you decide to continue this matter we will seek further protection, on an interlocutory basis, from either the Federal Courts or the Administrative Appeals Tribunal whichever is applicable under the situation.
Jack C Garber
Managing DirectorNerd Group Australia Pty Ltd[50]
[50] Transcribed from the original copy without amendment.
On 6 October 2009 Mr Sutherland, on behalf of the FW Ombudsman, responded to the 22 September 2009 Letter.[51] The 6 October 2009 Letter relevantly responded as follows:
[51] Mr Sutherland’s Affidavit, para.22 and Annexure J (“6 October 2009 Letter”).
Dear Mr Garber
…
In your correspondence you state that you have not complied with the Notice to Produce as the requested information is subject to privacy laws prohibiting its production.
I draw your attention to the ‘Guidelines to the National Privacy Principles’ (National Privacy Principles’) prepared by the office of the Federal Privacy Commissioner (attached). The Privacy Act 1988 limits when an employer can disclose personal information that they hold about an individual. However, National Privacy Principle 2.1(1)(g) states that information, as described above, may be disclosed when it is required or authorised by or under law.
Pursuant to section 712 of the Act you were required to provide the information requested in the Notice to Produce, dated 8 September 2009. The disclosure of the requested information is required by law. Failing to comply with the Notice to Produce due to privacy laws is not a reasonable excuse.
On this basis it is the view of the Fair Work Ombudsman that you have failed to comply with a Notice to Produce issued on 8 September 2009. Failing to comply with a Notice to Produce is a contravention of subsection 712(3) of the Act and may attract a maximum penalty of $33,000 in respect of a body corporate or $6,600 in respect of an individual.
Please find attached to this letter a further Notice to Produce. In order to avoid any penalty please ensure that you comply with this notice.
In your correspondence, dated 22 September 2009, you claim that Miss Lin has made a misrepresentation of fact. I have attempted to contact you on several occasions to discuss this claim and your failure to comply with the Notice to Produce, without success. Should you wish to discuss this claim, the Notice to Produce, Miss Lin’s allegations, or any other aspect of our investigation in Miss Lin’s complaint please contact me and I will arrange a time to conduct a meeting with you.
Should you wish to discuss this matter please contact me by telephone, on [phone number], by post at the above address, or by email, at [email address].
Yours sincerely
Scott Sutherland
Fair Work InspectorFair Work Ombudsman
The 6 October 2009 Letter was signed by Mr Sutherland in his capacity as a Fair Work Inspector.
There was no response to the 6 October 2009 Letter from Nerd Group or Mr Garber.[52]
[52] Mr Sutherland’s Affidavit, para.31.
It is relevant to observe that:
a)the notices to produce issued and referred to in the 22 September 2009 Letter and the 6 October 2009 Letter; and
b)the further notice to produce to be issued, and referred to in the 6 October 2009 Letter,
are not the notices to produce the subject of the present application. It is further relevant to observe that the 6 October 2009 Letter addressed only the objections to production relevant to the Privacy Act, and not those relevant to other legislation referred to in the 22 September 2009 Letter.
Mr Sutherland was cross-examined and re-examined about the communications and notices to produce issued to Nerd Group prior to the issuance of the November 2009 NTP. Relevantly, Mr Sutherland gave evidence that:
a)an infringement notice issued on 29 June 2009 had been withdrawn;[53]
b)the 6 October 2009 Letter did not refer to the TA Act or the IT Act 1936 or the IT Act 1997,[54] and gave no guidance to Nerd Group about the effect of that legislation;[55]
c)it was the role of an employer to keep records of employees, and to withhold tax and pay that tax to the Commonwealth government;[56]
d)that:
i)he had advised other employers to “blank out” parts of records requested which related to employees who were not the subject of the request;[57]
ii)he had never advised Mr Garber to blank out employment records relating to the taxation information of either Ms Lin or Mr Blackie, or employment details of other employees;[58]
iii)Mr Garber did not seek his advice as to whether or not he should “blank out” the abovementioned information;[59] and
e)on 6 October 2009 he had a telephone conversation with Mr Garber in which Mr Garber had raised issues related to the legality of the actions of the FW Ombudsman or the request to produce documents then being made.[60]
[53] Transcript, page 20. As to infringement notices as at June 2009 see WR Regulations, Part 19B. Neither an infringement notice which is paid, nor an infringement notice which is withdrawn and the penalty consequently refunded by the Commonwealth, constitute a prior contravention of workplace relations laws, especially for the purposes of assessment of penalty: Olsen v Sterling Crown Pty Ltd (2008) 177 IR 337 at 349 per Lucev FM; [2008] FMCA 1392 at para.44 per Lucev FM; Workplace Ombudsman v SRS Investments (WA) Pty Ltd (2009) 191 IR 426 at 438 per Lucev FM; [2009] FMCA 1132 at para.65 per Lucev FM.
[54] Transcript, page 21.
[55] Transcript, page 22.
[56] Transcript, page 22.
[57] Transcript, page 24.
[58] Transcript, page 24.
[59] Transcript, page 35.
[60] Transcript, pages 28-29.
Otherwise, save for the 22 September 2009 Letter, the terms of which are specifically relied upon by Nerd Group and Mr Garber as a reasonable excuse for non-compliance with the November 2009 NTP and the March 2010 NTP, and the 6 October 2009 Letter, the terms of which the FW Ombudsman relies on, what occurred prior to the November 2009 NTP issuing is largely irrelevant because:
a)there was no contemporaneous response to either the November 2009 NTP or the March 2010 NTP by either Nerd Group or Mr Garber;
b)the November 2009 NTP and the March 2010 NTP are self-explanatory documents; and
c)there are Particulars of Defence, and more particularly oral submissions, which do not include, or rely upon, other events prior to the issuing of the November 2009 NTP.
No evidence from Nerd Group or Mr Garber
Nerd Group and Mr Garber elected to lead no evidence.[61]
[61] Transcript, page 36.
Standing and enforcement
Mr Sutherland has standing to bring the current proceedings for contravention of s.712(3) of the FW Act as he is a Fair Work Inspector.[62]
[62] FW Act, s.701 and see also FW Act, s.539(2), Item 32 and para.7 above.
In the event that it becomes necessary, the Court has the power to:
a)make the:
i)declarations sought in relation to the contraventions by Nerd Group and Mr Garber;[63] and
ii)orders sought in respect of production of documents; and
b)impose a penalty on Nerd Group and Mr Garber for failing to comply with the November 2009 NTP and the March 2010 NTP.[64]
[63] Federal Magistrates Act 1999 (Cth), s.16.
[64] FW Act, ss.545(1), 546(1), 539(1) and (2).
Liability
Requirements of s.712 of the FW Act
Section 712(2) of the FW Act provides that a notice to produce must:
a)be in writing;
b)be served on the person; and
c)require production by the person at a specified place within a specified period of at least 14 days.
In relation to both the November 2009 NTP and the March 2010 NTP there is no dispute that they:
a)are in writing; and
b)required production at a specified place within a specified period of at least 14 days.
Although not raised in the Response there was an issue at hearing as to whether or not service of the November 2009 NTP and March 2010 NTP had been proven.[65]
[65] Transcript, page 9.
Service
The evidence indicates that both the November 2009 NTP and the March 2010 NTP:
a)were taken to the registered office of Nerd Group by Mr Sutherland; and
b)were given to a person who said they had authority to accept service on behalf of Nerd Group.[66]
The Court accepts this evidence, and notes that there was no evidence to the contrary.[67]
[66] Mr Sutherland’s Affidavit, paras.26 and 36.
[67] Transcript, page 36.
Service by leaving the November 2009 NTP and March 2010 NTP at the registered office of Nerd Group is effective service on Nerd Group.[68]
[68] Corporations Act 2001 (Cth), s.109X(1)(a).
The Court is therefore satisfied that service of the November 2009 NTP and March 2010 NTP was effected by leaving each of those NTPs at the registered office of Nerd Group.
Requirements of s.712 of the FW Act met subject to defence of reasonable excuse
The requirements of s.712 of the FW Act for the notice to be in writing, to be served and for it to specify a place at which the documents are to be produced within 14 days of the date of notice have all been met. On the face of it, given that there is no dispute that the documents requested to be produced have not been produced, liability under s.712(3) of the FW Act for failure to comply with each of the November 2009 NTP and the March 2010 NTP by Nerd Group has been established. That liability is, however, subject to a defence of reasonable excuse which was raised by Nerd Group.
Reasonable excuse
Law
What constitutes a “reasonable excuse” under s.712(4) of the FW Act so as to result in the non-application of s.712(3) of the FW Act which provides that a person served with a notice to produce must not fail to comply with that notice?
For relevant purposes the scope of “reasonable excuse” as a ground of exculpation from the operation of a statutory prescription is set out in Australian Securities and Investments Commission v Albarran.[69] In Albarran, adopting the analysis in Bank of Valetta PLC v National Crime Authority & Anor,[70] three propositions are said to be able to be “gleaned” from Bank of Valetta,[71] as follows:
81 First, the question of what constitutes "reasonable excuse" is to be determined from the terms and structure of the particular statute and the circumstances of each particular case: Valletta at [39], [47].
82 Second, reasonable excuse is not confined to physical or practical difficulties in complying with the statutory prescription. It includes any excuse which would be accepted by a reasonable person as sufficient to justify non-compliance, but it is necessary to bear in mind the importance of the particular statutory prescription to the overall statutory regime: Valletta at [42].
83 Third, the question of what constitutes reasonable excuse involves an objective determination in all the circumstances. These include the adverse consequences to an individual of being compelled to answer and the adverse consequences to an inquiry if the questions are not answered: Valletta at [44], [47].[72]
[69] (2008) 169 FCR 448; [2008] FCA 147 (“Albarran”).
[70] (1999) 164 ALR 45; [1999] FCA 791 (“Bank of Valetta”).
[71] Albarran FCR at 462 per Jacobson J; FCA at para.80 per Jacobson J.
[72] Albarran FCR at 463 per Jacobson J; FCA at paras.81-83 per Jacobson J.
In Albarran, applying the above principles, it was said that reliance on legal advice was not a ground of reasonable excuse for a failure to answer questions as a witness appearing at a disciplinary hearing conducted by a statutory board established under the Corporations Act.[73]
[73] Albarran FCR at 463 per Jacobson J; FCA at para.84 per Jacobson J.
In Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs[74] the High Court found, on the construction of the relevant sections of a State securities industry code, that a defence of reasonable excuse did not include the privilege against self-incrimination so far as production of books was concerned, but was directed to other matters, “such as the physical and practical difficulties which may be involved in their production.”[75]
[74] (1985) 156 CLR 385 (“Controlled Consultants”).
[75] Controlled Consultants at 392 per Gibbs CJ, Mason and Dawson JJ.
In MacDonald & Anor v Australian Securities Commission (No 2)[76] s.70 of the Australian Securities Commission Act 1989 (Cth)[77] provided that where the Australian Securities Commission was satisfied that a person had, without reasonable excuse, failed to comply with a requirement made under the ASC Act, in that case to produce books within a specified time, the Australian Securities Commission could certify the failure in writing to the court. The court was then entitled to inquire into the case, and order compliance with the requirement to produce. It was argued that whilst litigation, namely an application for judicial review, was pending that there was a reasonable excuse for non-compliance with the requirement to produce. The Federal Court held that the mere fact that litigation was current did not constitute a reasonable excuse.[78]
[76] (1994) 48 FCR 210 (“MacDonald”).
[77] “ASC Act”.
[78] MacDonald at 220 per Hill J.
In Clough v Leahy[79] the High Court found that there was nothing unlawful in the appointment of a Royal Commission in New South Wales to inquire into certain matters associated with an industrial union registered under New South Wales industrial arbitration legislation.[80] The Royal Commission not being unlawful, the High Court found that the secretary of the affected union, who had been summoned to appear before the Royal Commission to give evidence, but who refused to be sworn or to give evidence, had no reasonable excuse for refusing to be sworn, “the Commission having been issued for purposes not unlawful”.[81] Thus, alleged unlawfulness which is determined not to be so, does not constitute a reasonable excuse for non-compliance with a statutory prescription.[82]
[79] (1904) 2 CLR 139 (“Clough”).
[80] Clough at 162 per Griffiths CJ (with whom Barton and O’Connor JJ concurred at 163).
[81] Clough at 162 per Griffiths CJ (with whom Barton and O’Connor JJ concurred at 163).
[82] See also the observation of the Federal Court in MacDonald, where having held that current litigation did not constitute a reasonable excuse, the Federal Court went on to observe that: “this must be particularly so where the grounds for that litigation have now been found … to be ill-founded.”: MacDonald at 220 per Hill J.
In Von Doussa v Owens (No 1)[83] the Full Court of the Supreme Court of South Australia was dealing with the failure of a person to answer questions by an inspector appointed under securities industry legislation, and relevant provisions of a securities industry code. The person concerned refused to answer questions as to the identity of a person with whom he had had overseas telephone conversations and the names of two overseas companies on whose behalf a company of which he was managing director had purchased shares. Essentially, the respondent argued that:
a)he had virtually given an undertaking not to disclose the identity of the two overseas companies;
b)the two overseas companies were likely to be future investors in Australia and wished to enter with a clean record, unencumbered by any difficulties associated with this particular transaction; and
c)a failure to honour the undertaking would affect the commercial reputation of not only himself, but also the companies in which he was involved, to their detriment.
[83] (1982) 30 SASR 367 (“Owens (No 1)”).
The commercial dealings involved an intention to acquire half of the issued share capital of Elder Smith Goldsborough Mort Limited by Bell Group Limited of Western Australia. The respondent was the managing director of Advertiser Newspapers Ltd and chairman of directors of Television Broadcasters Ltd, and it was the latter which made the purchases through its share brokers, at the direction of the respondent, on behalf of the two overseas corporations which desired to remain anonymous.
The lead judgment in the Full Court of the Supreme Court of South Australia observed as follows:
In my opinion, the reasons advanced by the respondent do not constitute a reasonable excuse for the failure to answer questions. To find otherwise would be to say that the obligation to answer questions could be negated by an undertaking given in advance that, if such questions were asked, they would not be answered. … The fact that the corporations, if they exist as the respondent says they do, would by virtue of having given to the respondent the instructions which the respondent says that they gave not have a “clean record” if they desired to enter into business in Australia in the future cannot provide a reasonable excuse. If their record is rendered less than clean then surely that fact should be known in Australia. The giving of an assurance which the respondent was not entitled to give could not amount to a reasonable excuse for his failure to answer questions, nor could the hope that the Advertiser or some other company with which he is associated might otherwise do business with the corporations in the future. If the respondent were to suffer personal detriment in the community then that detriment would be of his own making and not one which, in my opinion, would constitute a reasonable excuse for his failure to answer the questions put to him.[84]
[84] Owens (No 1) at 381 per Mitchell J.
It was also observed by another member of the Full Court of the Supreme Court of South Australia in Owens (No 1) that:
The questions were certainly relevant to matters that the applicant had under investigation. If it could not get the information he sought from the respondent, he could not get it from anyone.[85]
[85] Owens (No 1) at 390 per Cox J.
In Mark & Ors v Henshaw[86] the four appellants had entered the premises of a battery hen farming operation without permission. They asserted that they had a reasonable excuse to enter because they wished to voice their concerns about battery hen farming operations conducted on the premises, and because they were concerned about sick, injured and distressed birds in the premises. A magistrate found that the appellants held genuine beliefs on reasonable grounds which constituted a reasonable excuse for what would otherwise have been a breach of a criminal trespass law.[87] The Full Court of the Federal Court said that in determining whether a reasonable excuse existed:
a)the appellant’s belief or state of mind was relevant and may afford some assistance to a trier of fact;[88] and
b)but that “the final answer will always come from an objective assessment of the particular facts of each case; that assessment requires a consideration of not merely the trespassers’ beliefs and state of mind: it requires the application of community standards. In particular, it requires the trier of fact to determine whether the trespassers’ conduct is acceptable to the community.”[89]
[86] (1998) 85 FCR 555 (“Mark”).
[87] Mark at 556-557 per Gallop, O’Loughlin and Finn JJ.
[88] Mark at 558 per Gallop, O’Loughlin and Finn JJ.
[89] Mark at 558 per Gallop, O’Loughlin and Finn JJ.
The Full Court of the Federal Court in Mark found that the dominant purpose of the entry to the battery hen farming operation was to maximise publicity for the anti-battery hen farming cause.[90] Ultimately, the Full Court of the Federal Court said that:
We do not accept that it is reasonable to enter as a demonstrator, upon the premise of another, when the occupant is carrying on a lawful activity of which the trespasser disapproves. To find otherwise would mean that the citizen would not receive the protection of the law to which he or she is entitled. It would mean that any dissident might be at liberty to enter his or her opponent’s premises in pursuit of a cause.[91]
[90] Mark at 559 per Gallop, O’Loughlin and Finn JJ.
[91] Mark at 559 per Gallop, O’Loughlin and Finn JJ.
In Taikato v The Queen[92] the majority of the High Court observed that:
But decisions on other statutes provide no guidance because what is a reasonable excuse depends not only on the circumstances of the individual case but also on the purpose of the provision to which the defence of “reasonable excuse” is an exception.[93]
[92] (1996) 186 CLR 454 (“Taikato”).
[93] Taikato at 464 per Brennan CJ, Toohey, McHugh and Gummow JJ.
The modern approach is to consider the concept of reasonable excuse having regard to statutory objects and purposes, as well as the particular factual circumstances of the case.[94] Making a judgment on what constitutes a reasonable excuse may not be easy,[95] and minds may differ upon the ultimate answer.[96]
[94] Albarran FCR at 463 per Jacobson J; FCA at paras.81-83 per Jacobson J.
[95] Taikato at 464 per Brennan CJ, Toohey, McHugh and Gummow J.
[96] Taikato at 470 per Dawson J.
Nerd Group and Mr Garber’s submissions re reasonable excuse
Nerd Group and Mr Garber failed to file submissions in accordance with the Court’s orders of 20 August 2010. It is therefore necessary to resort to the Response and the Particulars of Defence, plus the oral submissions made by Counsel for Nerd Group and Mr Garber, to elicit their submissions with respect to reasonable excuse.
The essence of the position of Nerd Group and Mr Garber, with respect to reasonable excuse appeared to be that certain provisions of the:
a)Privacy Act 1988 (Cth);[97]
b)Tax Administration Act 1953 (Cth);[98]
c)Income Tax Assessment Act 1936 (Cth);[99] and
d)Income Tax Assessment Act 1997 (Cth),[100]
constituted a “reasonable excuse” for non-compliance with the November 2009 NTP and the March 2010 NTP because:
e)they preclude Nerd Group from producing the records requested in the November 2009 NTP and March 2010 NTP or, at least, disclosing certain of the information in the records requested to be produced, and would have exposed Nerd Group and Mr Garber to a penalty; and
f)in any event, the FW Ombudsman had to provide to Nerd Group satisfactory evidence that there was no breach of relevant privacy provisions in the above Acts before the documents were produced.
[97] “Privacy Act”.
[98] “TA Act”.
[99] “ITA Act 1936”.
[100] “ITA Act 1997”.
Precisely which provisions of the above Acts were relied upon by Nerd Group were not identified or particularised in the Response or Particulars of Defence. It was not until final submissions, and seemingly only following a question from the Court,[101] that Nerd Group and Mr Garber provided some particularisation of provisions of some of the Acts said to constitute a reasonable excuse for the non-compliance with the November 2009 NTP and March 2010 NTP. What was then asserted was that:
a)by reason of s.3C(1A) of the TA Act Nerd Group “perform[ed] services” for the Commonwealth by withholding PAYG payments and keeping records for taxation purposes, and that it was therefore precluded from disclosing information acquired in the performance of those services for the Commonwealth;[102]
b)section 8WA(1) of the TA Act precluded Nerd Group from complying with the November 2009 NTP and March 2010 NTP because they required Nerd Group to produce all the documents requested, and not just some of them, and in particular, a complete and unexpurgated copy of Ms Lin and Mr Blackie’s tax file declaration forms, which would include the tax file number for each of Ms Lin and Mr Blackie.[103] Counsel for Nerd Group and Mr Garber conceded that the November 2009 NTP and March 2010 NTP did not ask Nerd Group “to quote” the tax file number;[104]
c)the FW Ombudsman failed in the 6 October 2009 Letter to respond to the TA Act, IT Act 1936 and IT Act 1997 privacy issues raised by Nerd Group in the 22 September 2009 Letter, and that, taken with the issue of prior notices and discussions involving Mr Garber and Mr Sutherland, Nerd Group had therefore raised reasonable concerns which constituted a reasonable excuse for non-compliance with the November 2009 NTP and March 2010 NTP;[105]
d)the November 2009 NTP and March 2010 NTP requested production of various categories of documents, and that the production was “conjunctive”, such that if there was a reasonable excuse not to comply with one category of documents, it was not necessary to comply with the remainder of the requests for other categories of documents;[106]
e)the FW Ombudsman did not at any stage raise with Nerd Group the possibility of redacting the tax file number on any of the documents, and in particular, on the tax file declaration forms;[107] and
f)whilst conceding that the FW Ombudsman was under no obligation to give advice to Nerd Group concerning the issues raised in the 22 September 2009 Letter,[108] it was nevertheless submitted that there was not, by Nerd Group, “a refusal outright”[109] to provide the requested documents, but rather no “reconciliation tendered or attempted”[110] by the FW Ombudsman with respect to the privacy issues raised in the 22 September 2009 Letter, and that that constituted reasonable reasons, and therefore a reasonable excuse, for not producing the documents.[111]
[101] Transcript, page 48.
[102] Transcript, pages 48-49.
[103] Transcript, page 49.
[104] Transcript, page 50.
[105] Transcript, pages 51-52 and 56.
[106] Transcript, pages 52-54.
[107] Transcript, page 51.
[108] Transcript, page 57.
[109] Transcript, page 57.
[110] Transcript, page 57.
[111] Transcript, pages 56-57.
The submissions for Nerd Group did not address the Privacy Act issue raised in the 22 September 2009 Letter, and there was only the briefest, and unexplained, of passing references to “the Income Tax Assessment Act”.[112]
[112] Transcript, page 56.
FW Ombudsman’s submissions re reasonable excuse
The FW Ombudsman submits that:
a)the asserted “reasonable excuse” in these proceedings remains tied to what was said by Nerd Group in the 22 September 2009 Letter;[113]
b)having previously been advised that the reasons put forward by it did not constitute a reasonable excuse for complying with an earlier request for the production of records, Nerd Group had no basis to claim that it had a reasonable excuse for non-compliance with the November 2009 NTP and the March 2010 NTP;
c)the 6 October 2009 Letter addressed the concerns of Nerd Group and Mr Garber about disclosure of information on privacy grounds, and provided the requested reconciliation;
d)if the excuse put forward by Nerd Group and Mr Garber had ever been reasonable it ceased to be so upon provision of the explanation in the 6 October 2009 Letter;
e)Nerd Group and Mr Garber have provided no evidence (for example, legal advice) for the basis upon which they have maintained their belief as to the reasonableness of their excuse that the privacy provisions cited in the 22 September 2009 Letter prevented Nerd Group from producing documents in compliance with the November 2009 NTP and the March 2010 NTP;
f)there is nothing in the various Acts referred to by Nerd Group and Mr Garber which prevents disclosure of the information requested in the November 2009 NTP or the March 2010 NTP;
g)Nerd Group has not led any evidence to show that the Privacy Act applies to Nerd Group, as the Privacy Act does not apply to small businesses, defined as businesses with an annual turnover of less than $3 million;[114]
h)even if the Privacy Act does apply to Nerd Group what is prohibited by the Privacy Act is an act or practice which breaches an approved privacy code or a National Privacy Principle,[115] and because disclosure of the documents is required by law there can be no reasonable excuse for the failure to produce;[116] and
i)to the extent that the November 2009 NTP and the March 2010 NTP required Nerd Group to produce signed tax file number declaration forms, Nerd Group would have been able to do so lawfully by blacking out or redacting the actual tax file number from those documents, thereby complying with both s.8WA of the TA Act and the November 2009 NTP and March 2010 NTP.
[113] See Particulars of Defence and paras.3-4 above.
[114] Privacy Act, ss.6C(1) and 6D(1).
[115] Privacy Act, s.16A.
[116] National Privacy Principle 2, cl.2.1(g).
The FW Ombudsman argues that the remainder of the privacy provisions in the tax legislation cited by Nerd Group and Mr Garber prevent disclosure of information by Commonwealth officials generally and legal practitioners defending a person in relation to a tax related offence.[117] The FW Ombudsman says that these provisions do not apply to Nerd Group in relation to these proceedings.
[117] Citing TA Act, ss.3C-3H; ITA Act 1936 (Cth), s.16(2); ITA Act 1997 (Cth), s.396.95, all of which have been repealed since the hearing of this matter: see Tax Laws Amendment (Confidentiality of Taxpayer Information) Act 2010 (Cth), s.2, Schedule 2, Part 1, cll.32 (ITA Act 1936, s.16), 38 (ITA Act 1997, s.396.95) and 110 (TA Act, ss.3C-3H) (“TLA Act”). The relevance of, and why the FW Ombudsman raised, s.396.95 of the ITA Act 1997 is not apparent. That section, although dealing with the provision of information, did so in relation to specialist taxation liability rules for land transport facilities borrowings.
The FW Ombudsman therefore says that no law of the Commonwealth prevented Nerd Group from complying with the November 2009 NTP or the March 2010 NTP, and consequently Nerd Group did not have a reasonable excuse for failing to comply with the November 2009 NTP or the March 2010 NTP.
Consideration – reasonable excuse
General issues/principles
Statutory objects may be relevant to the proper construction of an Act.[118] At the outset consideration must be given to the legislative objects of the FW Act. Section 3 of the FW Act provides that:
[118] Tickner v Bropho (1993) 40 FCR 183 at 192-193 per Black CJ; and 208-209 per Lockhart J; Re Yanner (2000) 100 FCR 551 at 586-587 per Dowsett J; [2000] FCA 975 at para.97 per Dowsett J.
The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:
(a) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia's future economic prosperity and take into account Australia's international labour obligations; and
(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and
(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and
(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and
(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and
(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and
(g) acknowledging the special circumstances of small and medium-sized businesses.
The Federal Court observed that s.16 of the ITA Act 1936 ensured the observance of secrecy by an “officer” with respect to any information respecting the affairs of another person, acquired by the officer by reason of their appointment or employment by the Commonwealth, or in the course of that employment.[143] The Federal Court noted that similar obligations were imposed under other Commonwealth legislation such as s.3C of the TA Act, and that there were other provisions in the TA Act prohibiting persons requesting the tax file numbers of other persons and recording or using or divulging or communicating the tax file numbers of other persons, except for certain specified purposes.[144]
[143] Consolidated Press Holding at 350-351 per Lockhart J.
[144] Consolidated Press Holding at 351-352 per Lockhart J, referring to the TA Act, ss.8WA and 8WB.
The Federal Court went on to observe that the central feature of s.16 of the ITA Act 1936 was the imposition of duties of secrecy on “officers”.[145]
[145] Consolidated Press Holding at 353 per Lockhart J.
The Federal Court next turned its attention to the extended definition of “officer” under s.16(1A) of the ITA Act 1936, and in a passage critical to the argument in this case, observed as follows:
Subsection (1A) is a recognition by the Parliament of the changing role of the Australian Tax Office and its need to engage the services of persons who are not necessarily appointed or employed by the Commonwealth, but who perform services for the Commonwealth in the course of which they may acquire confidential information about taxpayers. The Parliament recognised that the ATO increasingly may call for the engagement by the Commissioner from time to time of persons, who are not officers of the Commonwealth, to perform duties for the Commissioner and who may be engaged ad hoc for that purpose.[146]
[146] Consolidated Press Holding at 353 per Lockhart J.
The Federal Court went on to observe that the Commissioner of Taxation “may need to have access to specialist expertise which is not available at the time within the Australian Tax Office itself.”[147]
[147] Consolidated Press Holding at 354 per Lockhart J.
It is evident from Consolidated Press Holding that the purpose of provisions such as s.3C(1A) of the TA Act and s.16(1A) of the ITA Act 1936 was to extend the definition of “officer” so as to include persons specifically engaged by the Commissioner of Taxation, from time to time, for the performance of particular services for the Commonwealth. Those services might include, as in Consolidated Press Holding, the provision of specialist legal and accounting expertise, either not available to, or designed to supplement expertise available to, the Commissioner of Taxation from within the Australian Taxation Office. The purpose of provisions such as s.3C(1A) of the TA Act and s.16(1A) of the ITA Act 1936 is thus quite narrow. The purpose of such provisions was not to designate every individual person (for only individuals can be an “officer”), who pursuant to a statutory obligation to do so, collected and remitted PAYG tax (or any other tax for that matter) to the Commonwealth, into an “officer” of the Commonwealth within the extended definitions in s.3C(1) of the TA Act and s.16(1A) of the ITA Act 1936.
Other cases within which the phrases “performs services” or “services” have been critically considered are not of direct assistance, because each of them, like this case, depends upon its particular statutory, and often factual, context.[148]
[148] See for example Rainsford v Victoria (2007) 167 FCR 1; [2007] FCA 1059 where the provision of prisoner transport was held not to be the provision of a service for the purposes of anti-discrimination laws. See also Secretary to Department of Justice & Industrial Relations v Anti-Discrimination Commissioner [2003] TASSC 27 where conduct by the Director of Public Prosecutions relating to the institution of proceedings was held not to be conduct which amounted to the provision of services. See also, in the context of anti-discrimination and planning laws, IW v The City of Perth & Ors (1997) 191 CLR 1 where two members of the High Court found that the City of Perth did not provide a service of giving planning approvals as the term service was not capable of including a refusal to exercise a statutory discretion: at 11 per Brennan CJ and McHugh J. The other five members of the High Court found that a service was provided, but for different reasons. Two members found that the relevant service was the exercise of a discretion whether to grant or withhold planning approval: at 23-24 per Dawson and Gaudron JJ. The other three members found that the “consideration and disposition” of an application for planning approval was the provision of service: at 28 per Toohey J; dealing with an application for approval was a service: at 44-45 per Gummow J; and that services included the provision by a council of a planning decision: at 72 per Kirby J.
Some assistance can be derived from R vSung Bo Kim.[149] The Operations Manager of a transport company managed and had general superintendence of premises which included a base for the examination of goods on landing. The base was appointed for that purpose under the provisions of the Customs Act 1901 (Cth). The Manager understood:
a)it was his duty to ensure that imported goods were not released until they had been cleared by customs; and
b)that he was responsible for the security of those goods until customs requirements had been met.
On the evidence, the Tasmanian Court of Criminal Appeal held that there was no evidence that the Manager’s services were provided or performed for and on behalf of the Commonwealth. It was said by the Tasmanian Court of Criminal Appeal that the services provided by the Manager were performed as incidents of the performance of his contract of employment, and that the employer was not in receipt of any form of delegated power or authority from the Commonwealth. Further, the employer’s obligation not to breach the Customs Act by allowing the release of goods prior to inspection was one imposed upon all citizens and corporations, and there was no evidence that the employer did anything as the auxiliary or representative of the Customs Service.[150]
[149] (1993) 65 A Crim R 278 (“Kim”).
[150] Kim at 288-289 per Zeeman J.
Remitting PAYG tax
Section 3AA of the TA Act gives effect to Schedule 1 to the TA Act which deals with the collection and recovery of income tax and other liabilities.
In order to assist taxpayers to meet their annual income tax liability, taxpayers are required to pay amounts of their income at regular intervals as it is earned during the year. The system for collecting these amounts is called “Pay As You Go”, and commonly abbreviated to “PAYG”.[151] This system is known as the PAYG withholding system, and the amounts are collected in respect of particular kinds of payments or transactions, such as salary or wages. The person making a payment to the taxpayer is required to withhold an amount from that payment, and pay the amount withheld from the taxpayer to the Commissioner of Taxation.[152] The payment of the amount withheld is described as an “obligation”, and is imposed on the entity making the withholding payment.[153]
[151] TA Act, Schedule 1, Part 2-1, Division 6-1.
[152] TA Act, Schedule 1, Part 2-1, Division 6-1 and Part 2-5, Division 10-5, Item 1.
[153] TA Act, Schedule 1, Part 2-1, Division 6-1 and Part 2-5, Division 10-5, Item 1.
Finally, the Court observes that s.713 of the FW Act does not assist Nerd Group’s argument as it indicates that the possibility that a person might be exposed to a penalty by reason of having to produce a record or document under a notice issued pursuant to s.712(1) of the FW Act, does not excuse non-production. That is a very recent statement of positive Parliamentary intention which seeks to allow the provisions of s.712(1) of the FW Act to operate so as to have records or documents produced, notwithstanding that a person might otherwise have been exposed to a penalty.
Conclusion – performs services
In the Court’s view the correct characterisation of the obligation to withhold part of a payment and remit it as PAYG withholding payments to the Commissioner of Taxation, is that it is the making of a payment pursuant to a statutory obligation to do so imposed on every citizen, individual or corporate, who makes a relevant payment. As such, it is not the performance of services for the Commonwealth. In particular, it is not the performance of services for the Commonwealth for the purposes of s.3C of the TA Act and s.16 of the ITA Act 1936 which, as outlined above,[154] relate to the performance of particular services for the Commonwealth by persons specifically engaged by the Commissioner of Taxation to perform those services.
[154] See para.138 above.
The requirement imposed upon Nerd Group to withhold PAYG tax, and to pay the sum withheld to the Commonwealth is the performance of an obligation imposed by statute to collect and remit PAYG taxation to the Commonwealth. It is not the performance of services for the Commonwealth by a person meeting the extended definition of “officer” under both the TA Act and the ITA Act 1936 in ss.3C(1A) and 16(1A) respectively. Therefore, in this regard, no obligation of secrecy is imposed upon Nerd Group (or any of its employees) in relation to the request to produce records or documents under the November 2009 NTP or the March 2010 NTP, and ss.3C(1A) of the TA Act and 16(1A) of the ITA Act 1936 therefore to provide no reasonable excuse to Nerd Group for non-compliance with the November 2009 NTP and the March 2010 NTP.
Removing tax file numbers
Section 8WA of the TA Act relevantly provides as follows:
(1) A person must not require or request another person to quote the other person's tax file number.
Penalty: 100 penalty units or imprisonment for 2 years, or both.
(1AA) …
(1A) …
(2) Nothing in subsection (1) shall be read as prohibiting a person from requesting the production of a document, or a copy of a document, on which another person's tax file number is recorded if the other person is not prevented from removing the tax file number from the document.
Note: A defendant bears an evidential burden in relation to the matters in subsection (2), see subsection 13.3(3) of the Criminal Code.
(3) For the purposes of this section, a person who makes to another person a statement that the other person could reasonably understand to mean that the other person is required or requested to quote the other person's tax file number shall be taken to require or request the other person to quote the number.
(4) Nothing in this section shall be read as imposing on a person an obligation to require another person to quote a tax file number.
The offence under s.8WA(1) of the TA Act of requiring or requesting another person to quote the other person’s tax file number, has specifically excluded from its application a request for production of a document (or a copy of a document), on which the person’s tax file number is recorded, “if the other person is not prevented from removing the tax file number from the document”.[155]
[155] TA Act, s.8WA(2).
What is meant by “not prevented”? The word “not” is “the ordinary adverb of negation used to express negation, prohibition, denial or refusal”.[156] The word “prevented” is the past participle of “prevent” of which the relevant ordinary meaning is “to stop, keep, or hinder from doing something”[157].
[156] Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 47 per Hayne, Heydon, Crennan and Kiefel JJ; [2009] HCA 41 at para.48 per Hayne, Heydon, Crennan and Kiefel JJ.
[157] Oxford English Dictionary, Volume II, page 1666.
The ordinary meaning of “prevent” set out above is consistent with authority. In Smith Kline & French Laboratories (Australia) Ltd & Ors v The Commonwealth of Australia & Ors[158] the High Court of Australia held that the legislative imposition of a requirement of special leave to appeal did not “prevent” the High Court from hearing and determining any appeal which lay to the Court under s.73 of the Constitution. The conditions and restrictions on appeal imposed by way of the requirement for special leave were “regulation” and not an “exception” or “prevention” for the purposes of s.73 of the Constitution.[159] Rather, the imposition of regulation allowed the Court the liberty to hear and determine such appeals as it considered appropriate in accordance with the criteria or consideration relevant to the grant or refusal of special leave.[160]
[158] (1991) 173 CLR 194 (“Smith Kline”).
[159] Smith Kline at 213-214 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron, McHugh JJ.
[160] Smith Kline at 217 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron, McHugh JJ.
In Kunakool v Boys & Ors[161] the applicant had been charged under s.86(1)(b) of the Crimes Act 1914 (Cth)[162] with the offence of conspiring to prevent or defeat the execution or enforcement of the Migration Act1958 (Cth). The Federal Court, dealing with the meaning of s.86(1)(b) of the Crimes Act, said that:
To “prevent” a course of conduct by someone is to “stop, keep or hinder” that person from doing the thing in question.
Where the proposed conduct is the execution of a law by the exercise of a discretion it will be prevented if the discretion is not exercised.[163]
[161] (1987) 14 FCR 489 (“Kunakool”).
[162] “Crimes Act”.
[163] Kunakool at 501 per French J.
In Seat Ads (WA) Pty Ltd v Commissioner of Main Roads [No. 2][164] the Supreme Court of Western Australia dealing with regulations controlling the usage of advertising signs in proximity to highways held that the expression “preventing” was equivalent to “prohibiting”.[165]
[164] (1985) 63 LGRA 85 (“Seat Ads [No. 2]”).
[165] Seat Ads [No. 2] at 92 per Kennedy J.
On the evidence there is nothing to indicate that Nerd Group was prevented from removing the tax file number of Ms Lin or Mr Blackie[166] from any tax file number declaration form. It was argued that Nerd Group did not provide the requested documents pending a so-called “reconciliation” of the issues raised by the 22 September 2009 Letter. There is however no evidence to indicate what Nerd Group decided to do in response to either the November 2009 NTP or the March 2010 NTP. Thus, there is no evidence to prove that Nerd Group was not prevented from removing the TFNs from any of the requested documents, and in particular the tax file number declaration form.
[166] “the TFNs”.
It cannot be inferred, from any of the evidence, and is not asserted in the Particulars of Defence, or the 22 September 2009 Letter to which the Particulars of Defence refers, that Nerd Group was ever prevented from removing the TFNs from the documents requested in the November 2009 NTP or the March 2010 NTP. Nor was it put in cross-examination to Mr Sutherland that the FW Ombudsman actually prevented Nerd Group from removing the TFNs, as opposed to merely not advising Nerd Group that it could remove the TFNs. If anything, the evidence demonstrates that Nerd Group chose not to provide the documents, pending the reconciliation requested by them of the issues in the 22 September 2009 Letter. Even if correctly characterised as not “a refusal outright” by Nerd Group to provide the requested documents and records, it still does not demonstrate that Nerd Group was prevented from removing the TFNs. Nor can that be demonstrated by pointing to the failure of the FW Ombudsman to advise Nerd Group that it could remove the TFNs. As Counsel for Nerd Group and Mr Garber conceded there was no obligation on the FW Ombudsman to provide the requested reconciliation of the issues in the 22 September 2009 Letter, or to give any explanation or advice to Nerd Group concerning these issues, and hence no obligation to advise concerning the possibility that the TFNs might be removed.[167]
[167] Transcript, page 57.
The mere fact that Mr Sutherland did not inform Nerd Group that it might remove the TFNs, as he had done with other employers,[168] does not prove, or provide a basis for inferring, that Nerd Group was prevented from removing the TFNs.
[168] Transcript, page 24.
Because of its specific nature, s.712(1) of the FW Act prevails over the more general provisions of s.8WA of the TA Act, and therefore precludes the latter from providing a reasonable excuse for non-compliance with s.712(1) of the FW Act.[169]
[169] Whittaker v Child Support Registrar [2009] FCA 188 at para.103 where Lindgren J said that the “general prohibition of s 8WB of the TA Act … [does] not impinge on the specific powers given to the Registrar by s 16C of the Collection Act and s 150D of the Assessment Act.”
In the circumstances, Nerd Group has not proven that it was prevented from removing the TFNs from any document the subject of the November 2009 NTP or the March 2010 NTP. There was nothing preventing Nerd Group from removing the TFNs. Section 8WA(1) of the TA Act does not therefore apply to the November 2009 NTP and March 2010 NTP. As it did not apply, it did not provide any excuse, let alone a reasonable excuse, to Nerd Group for failure to comply with the November 2009 NTP and March 2010 NTP.
ITA Act 1997
Nerd Group made various references to the “Income Tax Assessment Act” or “Income Tax Assessment Acts” without ever being specific as to what provisions were actually relied upon, and it was the FW Ombudsman who raised and dealt with s.16(2) of the ITA Act 1936.
Nerd Group did not raise, nor did it deal with, any provision of the ITA Act 1997, either specifically or generally. Indeed, such references as Nerd Group made to the ITA Act were devoid of reference to the year of the relevant ITA Act, or any section of the ITA Act, or the particulars of any provision which might have provided a reasonable excuse for non-compliance with the November 2009 NTP and March 2010 NTP.
In the above circumstances, it is not the task of the Court to trawl through the ITA Act 1997 to see if any of its several hundred pages of text contain any provision which might apply in the circumstances of this case. Rather, from the failure by Nerd Group to refer to any particular provision, either in the Particulars of Defence (incorporated in the 22 September 2009 Letter) or its oral submissions, the Court is entitled to infer that no particular provision of the ITA Act 1997 was in fact relied upon by Nerd Group. Therefore, nothing in the ITA Act 1997 gave rise to a reasonable excuse for non-compliance by Nerd Group with the November 2009 NTP and March 2010 NTP.
Conjunctive terms of the November 2009 NTP and March 2010 NTP
There was a submission by Nerd Group that, because of the use of the conjunctive “and” at the end of each description of a record or document in each of the November 2009 NTP and March 2010 NTP, there was a reasonable excuse for non-compliance if one of the documents was not able to be produced by reason of a reasonable excuse in relation to that particular record or document, because it was then not possible to totally comply with the relevant NTP. On the facts, the issue does not arise for determination by the Court.
Conclusion – reasonable excuse
Ultimately, Nerd Group did not establish any physical or practical difficulties leading to a reasonable excuse for non-compliance with the November 2009 NTP and March 2010 NTP. Only legal issues, none of which were established, were put as a reasonable excuse. For the reasons set out in detail above, the Court has therefore concluded that no reasonable excuse for non-compliance with the November 2009 NTP or the March 2010 NTP has been established by Nerd Group.
Liability – Nerd Group
As the Court has observed above,[170] the requirements of s.712 of the FW Act establishing liability for failure to comply with each of the November 2009 NTP and March 2010 NTP are established, subject to the asserted defence of reasonable excuse raised by Nerd Group. That defence not having been established, the Court concludes that Nerd Group has failed to comply with each of the November 2009 NTP and March 2010 NTP, and as such has contravened the civil penalty provision contained in s.712(3) of the FW Act with respect to each of the November 2009 NTP and the March 2010 NTP.
[170] See para.85 above.
Liability – Mr Garber
Mr Garber admits that he was at all relevant times:
a)sole director and secretary of Nerd Group;
b)aware of the day-to-day activities of Nerd Group;
c)effective controller of Nerd Group; and
d)the person chiefly responsible for the management and control of any employees of Nerd Group.
There is no evidence that Nerd Group’s omissions in contravention of s.712(3) of the FW Act occurred other than directly through the agency of Mr Garber. The only relevant correspondence to and from, and contact between, Nerd Group and the FW Ombudsman, is through the agency of Mr Garber.
On the evidence, the Court concludes that Mr Garber:
a)aided and abetted Nerd Group’s contravention of s.712(3) of the FW Act by not producing the records or documents requested in the November 2009 NTP and the March 2010 NTP; and
b)was knowingly concerned in Nerd Group’s contraventions of s.712(3) of the FW Act.
From the above conclusion it follows that Mr Garber was involved in Nerd Group’s contraventions of s.712(3) of the FW Act. Under s.550 of the FW Act, Mr Garber is therefore taken to have also contravened s.712(3) of the FW Act.
Conclusion – liability
The Court has found that:
a)the evidence establishes that the November 2009 NTP and the March 2010 NTP were both served on Nerd Group by the FW Ombudsman;
b)in contravention of s.712(3) of the FW Act, Nerd Group did not produce the records or documents requested in the November 2009 NTP or the March 2010 NTP within the required time period, or at all;
c)Nerd Group did not have a reasonable excuse under s.712(4) of the FW Act for not complying with the November 2009 NTP or the March 2010 NTP; and
d)Mr Garber was involved in Nerd Group’s contraventions of s.712(3) of the FW Act, and is therefore taken to have also contravened s.712(3) of the FW Act.
The Court will:
a)make declarations of contravention by Nerd Group and Mr Garber in accordance with the above findings;
b)order that the proceedings be adjourned to a directions hearing at 4.15pm on 21 May 2012, to set the matter down for hearing as to penalty. Any further issues or orders required, or arising from these Reasons for Judgment, can be addressed at that directions hearing, unless the parties agree consent orders in the meantime; and
c)order that costs, if any,[171] be reserved.
[171] FW Act, s.570.
I certify that the preceding one hundred and sixty-eight (168) paragraphs are a true copy of the reasons for judgment of Lucev FM
Date: 11 May 2012
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