Hindu Society Of Victoria (Australia) Inc v Fair Work Ombudsman
[2016] FCCA 221
•11 February 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HINDU SOCIETY OF VICTORIA (AUSTRALIA) INC v FAIR WORK OMBUDSMAN | [2016] FCCA 221 |
| Catchwords: INDUSTRIAL LAW – Application under Fair Work Act. |
| Legislation: Fair Work Act 2009, ss.512, 549, 551, 558, 682, 700, 716, 717 Drugs, Poisons and Controlled Substances Act 1981 |
| Fair Work Ombudsman v Extrados Solutions Pty Ltd [2014] FCCA 815 Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58 |
| Applicant: | HINDU SOCIETY OF VICTORIA (AUSTRALIA) INC |
| Respondent: | FAIR WORK OMBUDSMAN |
| File Number: | MLG 2645 of 2014 |
| Judgment of: | Judge Riethmuller |
| Hearing date: | 28 August 2015 |
| Date of Last Submission: | 28 August 2015 |
| Delivered at: | Melbourne |
| Delivered on: | 11 February 2016 |
REPRESENTATION
| Counsel for the Applicant: | Ms Fitzgerald |
| Solicitors for the Applicant: | Ravi James |
| Counsel for the Respondent: | Ms Dowsett |
| Solicitors for the Respondent: | Office of the Fair Work Ombudsman |
ORDERS
It is declared that the applicant bears the onus of proving the matters relied upon by the applicant in an application under s.717 of the Fair Work Act, 2009.
That the application be adjourned to a 26 August 2016 for Final Hearing.
That the parties be at liberty to provide agreed directions to chambers, within 21 Days, failing which the matter be listed for a Directions Hearing.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 2645 of 2014
| HINDU SOCIETY OF VICTORIA (AUSTRALIA) INC |
Applicant
And
| FAIR WORK OMBUDSMAN |
Respondent
REASONS FOR JUDGMENT
The applicant applies for a declaration that it has not committed contraventions alleged in a Compliance Notice issued by the respondent pursuant to s.716 of the Fair Work Act 2009.
The Compliance Notice was issued on 19 November 2014 alleging various contraventions by the applicant and requiring the payment of $77,754.76 as a result of alleged underpayments to an employee. The particulars are set out in detail in the compliance notice (see paragraphs 10 to 34).
The compliance notice system is contained within Division 3 of Part 5-2 of Chapter 5 of the Fair Work Act 2009. The relevant provision provides:
716.[Compliance notices]
Application of this section
(1) This section applies if an inspector reasonably believes that a person has contravened one or more of the following:
(a) a provision of the National Employment Standards;
(b) a term of a modern award;
(c) a term of an enterprise agreement;
(d) a term of a workplace determination;
(e) a term of a national minimum wage order;
(f) a term of an equal remuneration order.
Giving a notice
(2) The inspector may, except as provided by subsection (4), give the person a notice requiring the person to do either or both of the following within such reasonable time as is specified in the notice:
(a) take specified action to remedy the direct effects of the contravention referred to in subsection (1);
(b) produce reasonable evidence of the person’s compliance with the notice.
(3) The notice must also:
(a) set out the name of the person to whom the notice is given; and
(b) set out the name of the inspector who gave the notice; and
(c) set out brief details of the contravention; and
(d) explain that a failure to comply with the notice may contravene a civil remedy provision; and
(e) explain that the person may apply to the Federal Court, the Federal Magistrates Court or an eligible State or Territory Court for a review of the notice on either or both of the following grounds:
(i) the person has not committed a contravention set out in the notice;
(ii) the notice does not comply with subsection (2) or this subsection; and
(f) set out any other matters prescribed by the regulations.
Relationship with enforceable undertakings
(4) An inspector must not give a person a notice in relation to a contravention if:
(a) the person has given an undertaking under section 715 in relation to the contravention; and
(b) the undertaking has not been withdrawn.
Relationship with civil remedy provisions
(4A) An inspector must not apply for an order under Division 2 of Part 4‑1 in relation to a contravention of a civil remedy provision by a person if:
(a) the inspector has given the person a notice in relation to the contravention; and
(b) either of the following subparagraphs applies:
(i) the notice has not been withdrawn, and the person has complied with the notice;
(ii) the person has made an application under section 717 in relation to the notice that has not been completely dealt with.
Note: A person other than an inspector who is otherwise entitled to apply for an order in relation to the contravention may do so.
(4B) A person who complies with a notice in relation to a contravention of a civil remedy provision is not taken:
(a) to have admitted to contravening the provision; or
(b) to have been found to have contravened the provision.
Person must not fail to comply with notice
(5) A person must not fail to comply with a notice given under this section.
Note: This subsection is a civil remedy provision (see Part 4‑1).
(6) Subsection (5) does not apply if the person has a reasonable excuse.
The section that provides jurisdiction to this court to review a Compliance Notice on application by the recipient of the notice is s.717, which states:
717.[Review of compliance notices] (1) A person who has been given a notice under section 716 may apply to the Federal Court, the Federal Magistrates Court or an eligible State or Territory Court for a review of the notice on either or both of the following grounds:
(a) the person has not committed a contravention set out in the notice;
(b) the notice does not comply with subsection 716(2) or (3).
(2) At any time after the application has been made, the court may stay the operation of the notice on the terms and conditions that the court considers appropriate.
(3) The court may confirm, cancel or vary the notice after reviewing it.
The issue that arises for determination at this point is whether the applicant bears the onus of proof under s.717. The effect would be that a compliance notice would be create a presumption that the applicant has committed the contraventions alleged therein. Therefore the applicant would carry the burden of proving that it has not, in fact, contravened the Act. The applicant argues that, on a review application, it is for the respondent to establish the contraventions relied upon as the basis for the compliance notice.
It is important to start with a brief overview of the operation of the legislative provisions. The objects of the Act are set out in s.3, one of which is to ensure that a guaranteed safety net of “fair, relevant and enforceable minimum terms and conditions” is available. To this end there are various awards, including the award that would apply in this case.
Chapter 4 of the Act provides for the imposition of civil penalties for contraventions of the Act. The various provisions set out who may apply for orders, the penalties that may be imposed and the orders that a court may make.
In Division 4 of Chapter 4, Part 4-1, s.549 makes clear that a civil remedy provision is not an offence, and s.551 requires the court to apply the rules of evidence and procedure for civil matters when hearing proceedings relating to a contravention.
Section 558 contemplates regulations with respect to infringement notices, stating:
558.[Regulations dealing with infringement notices] (1) The regulations may provide for a person who is alleged to have contravened a civil remedy provision to pay a penalty to the Commonwealth as an alternative to civil proceedings.
(2) The penalty must not exceed one‑tenth of the maximum penalty that a court could have ordered the person to pay under section 546 if the court was satisfied that the person had contravened that provision.
Importantly, s.512 sets out that a court may not order a person to serve a sentence of imprisonment for failing to pay a pecuniary penalty under the Act.
Chapter 5 establishes the Fair Work Commission and the Commission’s jurisdiction. In Part 5-2 of Chapter 5, the Office of the Fair Work Ombudsman is established, the functions of which are set out in s.682 as follows:
682.[Functions of the Fair Work Ombudsman] (1) The Fair Work Ombudsman has the following functions:
(a) to promote:
(i) harmonious, productive and cooperative workplace relations; and
(ii) compliance with this Act and fair work instruments;
including by providing education, assistance and advice to employees, employers, outworkers, outworker entities and organisations and producing best practice guides to workplace relations or workplace practices;
(b) to monitor compliance with this Act and fair work instruments;
(c) to inquire into, and investigate, any act or practice that may be contrary to this Act, a fair work instrument or a safety net contractual entitlement;
(d) to commence proceedings in a court, or to make applications to FWA, to enforce this Act, fair work instruments and safety net contractual entitlements;
(e) to refer matters to relevant authorities;
(f) to represent employees or outworkers who are, or may become, a party to proceedings in a court, or a party to a matter before FWA, under this Act or a fair work instrument, if the Fair Work Ombudsman considers that representing the employees or outworkers will promote compliance with this Act or the fair work instrument;
(g) any other functions conferred on the Fair Work Ombudsman by any Act.
Note 1: The Fair Work Ombudsman also has the functions of an inspector (see section 701).
Note 2: In performing functions under paragraph (a), the Fair Work Ombudsman might, for example, produce a best practice guide to achieving productivity through bargaining.
(2) The Fair Work Ombudsman must consult with FWA in producing guidance material that relates to the functions of FWA.
The Fair Work Ombudsman may appoint Fair Work inspectors under s.700, with the important restriction in s.700(2) that “set out the contents of s.700(2).
700. [Appointment of Fair Work Inspectors]
…
(2) The Fair Work Ombudsman may appoint a person as a Fair Work Inspector only if the Fair Work Ombudsman is satisfied that the person is of good character.
Section 706 provides:
706. [ Purpose for which powers of inspectors may be exercised] (1) An inspector may exercise compliance powers (other than a power under section 715 or 716) for one or more of the following purposes (compliance purposes):
(a) determining whether this Act or a fair work instrument is being, or has been, complied with;
(b) subject to subsection (2), determining whether a safety net contractual entitlement is being, or has been, contravened by a person;
(c) the purposes of a provision of the regulations that confers functions or powers on inspectors;
(d) the purposes of a provision of another Act that confers functions or powers on inspectors.
Note: The powers in sections 715 (which deals with enforceable undertakings) and 716 (which deals with compliance notices) may be exercised for the purpose of remedying the effects of certain contraventions.
(2) An inspector may exercise compliance powers for the purpose referred to in paragraph (1)(b) only if the inspector reasonably believes that the person has contravened one or more of the following:
(a) a provision of the National Employment Standards;
(b) a term of a modern award;
(c) a term of an enterprise agreement;
(d) a term of a workplace determination;
(e) a term of a national minimum wage order;
(f) a term of an equal remuneration order.
It is clear from the terms of s.706(1)(a) that the legislature contemplated that an inspector would make a determination whether there has been compliance with the Act or a Fair Work Instrument (such as an award in this case).
The inspectors are given a range of investigatory powers, including the power to compel a person to produce records or documents and the power to enter premises and to make inspections.
Division 3 contemplates administrative processes in lieu of proceedings under the Act if the Fair Work Ombudsman thinks it appropriate. Section 715 provides for enforceable undertakings to be given relating to contraventions of the civil remedy provisions in the following terms:
715. [Enforceable undertakings relating to contraventions of civil remedy provisions]
Application of this section
(1) This section applies if the Fair Work Ombudsman reasonably believes that a person has contravened a civil remedy provision.
Accepting an undertaking
(2) The Fair Work Ombudsman may accept a written undertaking given by the person in relation to the contravention, except as provided by subsection (5).
Withdrawing or varying an undertaking
(3) The person may withdraw or vary the undertaking at any time, but only with the Fair Work Ombudsman’s consent.
Relationship with orders in relation to contraventions of civil remedy provisions
(4) An inspector must not apply for an order under Division 2 of Part 4‑1 in relation to a contravention of a civil remedy provision by a person if an undertaking given by the person under this section in relation to the contravention has not been withdrawn.
Note: A person other than an inspector who is otherwise entitled to apply for an order in relation to the contravention may do so.
Relationship with compliance notices
(5) The Fair Work Ombudsman must not accept an undertaking in relation to a contravention if the person has been given a notice in relation to the contravention under section 716.
Enforcement of undertakings
(6) If the Fair Work Ombudsman considers that the person who gave the undertaking has contravened any of its terms, the Fair Work Ombudsman may apply to the Federal Court, the Federal Magistrates Court or an eligible State or Territory Court for an order under subsection (7).
(7) If the court is satisfied that the person has contravened a term of the undertaking, the court may make one or more of the following orders:
(a) an order directing the person to comply with the term of the undertaking;
(b) an order awarding compensation for loss that a person has suffered because of the contravention;
(c) any other order that the court considers appropriate.
It appears that the legislature intended that there be mechanisms open to the Fair Work Ombudsman that did not involve bringing contravention proceedings in the court in order to deal with less serious breaches of the Act. The undertaking provision provides a simple mechanism in this regard, as does the compliance notices provision.
The benefits to the recipients of the preparedness of the Fair Work Ombudsman to accept an undertaking is the avoidance of the considerable costs involved in court proceedings and the avoidance of the payment of a penalty. With respect to compliance notices, is that compliance with the notice (in this case payment of the alleged underpayments for wages and benefits) prevents the inspector from applying to the court for the imposition of the penalty or bringing proceedings under the civil remedy provisions. It appears clear that the notice can be withdrawn prior to a person complying with it, unless they bring an application under s.717 as occurred in this case. At further benefit of compliance with the notice is that it is not taken to be an admission nor the basis of a finding of contravention (see s.716(4B)).
The failure to comply with a notice is itself a breach of the Act and gives rise to a civil remedy provision, unless a person has a ‘reasonable excuse’ for non-compliance. Item 33 of s.539(2) provides for only a modest penalty with a maximum of 30 penalty units for failing to comply with a civil penalty notice.
The context in which a determination must be made as to who bears the onus of proof in proceedings under s.717 for a review of the notice is as follows:
a)the issuing of compliance notices is a simple form of administrative process to enforce compliance with workplace obligations;
b)the notice can only be issued upon an inspector reasonably believing that a person has contravened a relevant provision;
c)compliance with a notice does not result in any form of admission or finding of contravention;
d)non-compliance with the notice is itself an offence; and
e)a person receiving the notice has a right to apply to the court for a review of the notice.
The administrative processes that have led to the issue of the notice include a finding by an inspector that they reasonably believe that a contravention has occurred, for without such a finding a notice could not issue. Whilst the reasonable belief of the inspector is not necessarily inconsistent with the applicant not having committed the contravention, at least until such time as a court makes findings of fact which could then be used to inform an inspector’s reasonable belief after judgment, it represents an administrative finding against the applicant.
The applicant argues that if the onus of proof is on the applicant it would always be easier for the Fair Work Ombudsman to issue a penalty notice than to prosecute a civil action for contravention of the provisions of the Act. This, in its simple form, is correct. However, the notice does not result in the imposition of penalties, only the requirement to comply with the relevant employer obligations that fall within s.716(1).
Effectively, the use of the notice provision does not impose a penalty. It prohibits the Fair Work Ombudsman from suing for the imposition of a penalty. It does, however, provide a simple mechanism for requiring compliance by an employer in order to protect an employee’s rights. On the argument of the respondent, the provision provides a reasonable balance between employer rights and administrative efficiency of the respondent. In that if an inspector holds the relevant belief, then for minor breaches simple mechanism is available which alleviates the employer of the potential imposition of a penalty and alleviates the Fair Work Ombudsman of having to formally approve the case.
The practical bases for compliance notices were identified by Judge Hartnett in Fair Work Ombudsman v Darna Pty Ltd and Another [2015] FCCA 709, where Her Honour said at paragraph 11:
[11] The Explanatory Memorandum to the Fair Work Bill 2008(Cth) provides that compliance notices were designed to be another option to deal with non-compliance instead of pursuing court proceedings.1 It was to be a less costly and less time consuming procedure. Section 716 of the FW Act allows a person to whom a compliance notice is issued an opportunity to rectify an under payment without being subject to civil remedy provisions. The First Respondent’s failure to comply with the Compliance Notice issued has, in these proceedings, caused the Applicant and the Court to spend time and public funds in dealing with civil remedy proceedings which would not have been necessary had compliance occurred.
From another important practical consequence is that identified by the respondent in their written outline:
The utility of the compliance notice mechanism as described in the EM and recognised by this Court, would be diminished if the Court adopts the Applicant’s interpretation of section 717. Under the Applicant’s interpretation, the Respondent would be required to conduct every review proceeding as if it were a substantive civil penalty proceeding in respect of the relevant underlying contraventions. Should the recipient’s review be unsuccessful, (that is, if the Respondent proves all of the underlying contraventions to the satisfaction of the Court), the result would be that the recipient could then elect to pay the amount required by the compliance notice without the imposition of any penalties for the underlying contraventions, or any requirement to pay interest on any underpayments.
In Fair Work Ombudsman v Extrados Solutions Pty Ltd [2014] FCCA 815, Judge Jarrett said that a breach of s.716(5) is established by proof of the giving of a relevant notice and the non‑compliance with it, without proof of the underlying breaches of the Act. The penalty that was imposed was informed, at least in part, by the nature of the breaches that are alleged in the notice.
The applicant refers to other examples where the onus of proof is reversed, such as s.5 of the Drugs, Poisons and Controlled Substances Act, 1981 and s.14ZZO of the Taxation Administration Act 1953, both of which expressly set out that the person the subject of the claim or notice must satisfy the court to the contrary or has the burden of proving the contrary.
When reading s.717 as a whole one must consider s.717(1)(b) which provides for a right to apply to the court for a review of the notice on the basis that ‘the notice does not comply with s.716(2) or (3). It would be remarkable if the applicant did not bear the onus of demonstrating the non-compliance of the notice in this respect. It seems validity that this provision would lead to two different onuses of proof depending on which subsection was the review ground.
As the respondent argues, the review under s.717 is not as to whether or not the inspector “reasonably believed” that the relevant contraventions had occurred, but whether or not a person has not, in fact, committed those contraventions. The respondent argues that the usual principle of “the party who asserts must prove” should apply, relying upon Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58 at 26. Clearly the applicant is the party seeking relief under s.717.
I reject the proposition that the compliance notice is a de facto punishment in that the compliance notice only requires the payments necessary to comply with the relevant statutory provisions. It does not result in a penalty unless the compliance notice is not complied with. In this case, no penalties could be imposed if the compliance notice was complied with. The penalty for failure to comply with the compliance notice has a maximum of $25,500, and the maximum penalty that could be imposed if all of the contraventions identified in the compliance notice were subject to proceedings under the Act would be in the order of $297,000.
In substance the compliance notice does no more than reverse the onus for a civil claim and should be seen as a purely civil law process.
In this context the employer is uniquely positioned with respect to the production of evidence to demonstrate that the allegations in the compliance notice are not correct. A review of the nature of the allegations demonstrates the nature of the issues that would arise, namely the correct award or industrial instrument that governs the relationship, and thereafter a simple calculation of the pay rates and the allowances based upon the work performed by the particular employee. In the event that the employer is keeping records as required under the regulations, one would expect that these would be relatively easy matters to improve.
Ultimately it appears to me that in the general scheme of the legislation, it is likely that it was intended that the applicant bear the onus of proof in applications under s.717.
When reading s.717 on its own clear terms the section literally provides for the applicant to have a right to apply to the court for a review of the notice on one of two grounds. Ordinarily the applicant must prove matters that are the grounds provided for in the legislation. On a literal reading of the provision it appears to me that it provides for the applicant to bear the onus of proof of the facts and circumstances necessary to establish the ground that an applicant relies upon when seeking that the court cancel or vary the notice.
In these circumstances I therefore make a declaration that the applicant bears the onus of proving the matters relied upon pursuant to s.717 on the Fair Work Act. In these circumstances it is appropriate that the applicant file and serve its affidavit material first, and present its case prior to the respondent at trial.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Judge Riethmuller
Date: 11 February 2016
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