HJ (a pseudonym) v Ibac
[2022] VSCA 282
•15 December 2022
| SUPREME COURT OF VICTORIA COURT OF APPEAL |
| S EAPCI 2022 0052 |
| NOTE: | This is a redacted version of the judgment that was published to the parties on a confidential basis. |
| HJ (a pseudonym) and another according to the attached schedule | Applicants |
| v | |
| INDEPENDENT BROAD-BASED ANTI-CORRUPTION COMMISSION | Respondent |
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| JUDGES: | EMERTON P, BEACH and MACAULAY JJA |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 10 November 2022 |
| DATE OF JUDGMENT: | 15 December 2022 |
| MEDIUM NEUTRAL CITATION: | [2022] VSCA 282 |
| JUDGMENT APPEALED FROM: | [2022] VSC 248R (Ginnane J) |
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CONSTITUTIONAL LAW – Investigation into corrupt conduct connected with enterprise agreements – Enterprise agreement scheme under Fair Work Act 2009 (Cth) (‘FWA’) – Independent Broad-based Anti-corruption Commission Act 2011 conferred powers on IBAC to investigate corrupt conduct – Whether judge erred in failing to find Commonwealth law covered field of enterprise bargaining – Whether judge erred in finding no inconsistency between Commonwealth and State law – Whether FWA covering field of enterprise bargaining offended Melbourne Corporation principle – Leave to appeal refused.
Fair Work Act 2009 (Cth) pts 2–4, 3–1; Independent Broad-based Anti-corruption Commission Act 2011 (Vic) s 60; Commonwealth Constitution s 109.
Clarke v Federal Commissioner of Taxation (2009) 240 CLR 272; Melbourne Corporation v The Commonwealth (1947) 74 CLR 31; Work Health Authority v Outback Ballooning Pty Ltd (2019) 266 CLR 428, discussed; United Firefighters’ Union of Australia v Country Fire Authority (2015) 228 FCR 497, distinguished.
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| Counsel | |||
| Applicants: | Mr H Borenstein KC with Mr B Bromberg | ||
| Respondent: | Mr P Hanks KC with Mr J Maxwell | ||
Solicitors | |||
| Applicants: | Slater and Gordon | ||
| Respondent: | Independent Broad-based Anti-corruption Commission | ||
EMERTON P
BEACH JA
MACAULAY JA:
Introduction
1The first applicant is [redacted]; the second applicant is [redacted]. The respondent is the Independent Broad-based Anti-corruption Commission (‘IBAC’), established by s 12(1) of the Independent Broad-based Anti-corruption Commission Act 2011 (Vic) (‘IBAC Act’).
2On 8 November 2018, IBAC commenced an investigation (‘Investigation’) on its own motion[1] concerning the conduct of, and conduct in relation to, various members of the Victorian government and executive, including [redacted] all of which are either ‘public officers’ or ‘public bodies’ for the purposes of s 6 of the IBAC Act.[2] The Investigation concerns whether conduct by public officers or public bodies qualifies as ‘corrupt conduct’ as defined in s 4(1) of the IBAC Act.
[1]Pursuant to s 60(1)(c) of the IBAC Act.
[2]IBAC has jurisdiction over public officers pursuant to ss 60(1) and (3) of the IBAC Act.
3The subject matter of the Investigation was more specifically described in affidavit material filed in the proceeding below in the following terms:
The Investigation included an investigation into whether various public bodies and public officers … may have engaged in alleged corrupt conduct … and whether other entities may have engaged in alleged corrupt conduct in relation to those public bodies and public officers, during the negotiation, agreement and implementation of Enterprise Bargaining Agreements (EBAs) between the [first applicant] and [redacted].
As part of this investigation, IBAC has also investigated the negotiations that may have occurred between the [first and second applicants], the Victorian Government, [redacted] and members of Parliament in order to establish [redacted].
4[Redacted].
5[Redacted]. The Investigation has not concluded.
Judicial review proceeding
6On 30 August 2019, the first applicant commenced a proceeding against IBAC seeking prerogative and declaratory relief in respect of the Investigation [redacted]. On 6 July 2020, the first applicant filed an amended originating motion, joining the second applicant as a plaintiff in that proceeding. The applicants sought an injunction to restrain IBAC from continuing the Investigation until the final determination of that proceeding, [redacted].
7On 22 February 2021, the applicants filed a further amended originating motion seeking, relevantly, the following relief:
(a)an order in the nature of certiorari quashing the decision of IBAC to conduct the Investigation, including in respect of all or any of the following:
(i) the negotiations of, or agreement to, any enterprise agreement between the first applicant and [redacted] from November 2014 to the date the proceeding was commenced; and
(ii) any subject matter substantially similar to that;
(b)a declaration that the Investigation is ultra vires and void, invalid and of no effect; and
(c)an order restraining IBAC from continuing the Investigation or any investigation substantially similar to the Investigation.
8The applicants’ case, as set out in the first ground for review in the further amended originating motion, was that the Fair Work Act 2009 (Cth) (‘FWA’) precluded IBAC from conducting investigations into the negotiation of enterprise agreements made under pt 2–4 of the FWA. The applicants contended, in substance, that pts 2–4 (enterprise agreements) and 3–1 (rights and responsibilities — general protections) of the FWA were intended to ‘cover the field’, for the purposes of s 109 of the Commonwealth Constitution, of the negotiation and making of enterprise agreements (which, we shall refer to simply as ‘enterprise bargaining’). The applicants argued that the IBAC Act, to the extent that it authorised the Investigation, was inconsistent with the FWA. As a result, they said, IBAC had no statutory basis for the conduct of the Investigation and it was ultra vires.
9In response, IBAC argued that there was no relevant inconsistency between the FWA and the IBAC Act. On its proper construction, the FWA was intended to operate within a framework of other laws, including State and Commonwealth criminal laws, and laws that empower investigative agencies to investigate allegedly criminal conduct, such as corrupt conduct. Were the Court to hold that the FWA created an inconsistency preventing the exercise of powers under the IBAC Act, there would be an impermissible interference by the Commonwealth Parliament in the exercise of the State’s constitutional power, as described by the High Court in Melbourne Corporation v The Commonwealth (‘Melbourne Corporation principle’).[3]
[3](1947) 74 CLR 31 (‘Melbourne Corporation’); [1947] HCA 26.
10The application for judicial review was heard by the primary judge over two days on 23 and 24 November 2021, and dismissed by his Honour on 18 May 2022.[4]
[4]Pursuant to orders made on 3 June 2022.
11The reasons of the primary judge are comprehensive.[5] Having carried out a detailed review of the relevant parts of the FWA, the primary judge concluded that the FWA did not contain an ‘implicit negative proposition’ that nothing other than what the FWA provided with respect to the conduct of enterprise bargaining was to be the subject of legislation.[6] While accepting that the FWA covered in detail the subject matter of enterprise agreements, the primary judge held that the detailed enterprise agreement scheme in the FWA did not exclude laws concerning the identification, exposure and investigation of corrupt conduct by public officers and public bodies in that context.[7] The corrupt conduct which IBAC is empowered to investigate is the subject of a State law, which deals with conduct irrespective of there being an employment relationship and without regulating any industry.[8] Accordingly, there was no inconsistency between the FWA and the IBAC Act.[9]
[5]HJ v Independent Broad-based Anti-corruption Commission [2022] VSC 248R (‘Reasons’).
[6]Reasons, [88], [96].
[7]Reasons, [103].
[8]Reasons, [92].
[9]Reasons, [106].
12Although it was unnecessary to decide, the primary judge also expressed his opinion on the application of the Melbourne Corporation principle, stating that, were he to accept the applicants’ interpretation of the effect of the enterprise agreement scheme in the FWA, that would be to recognise a power available to the Commonwealth Parliament that was in excess of the power conferred on it by the Commonwealth Constitution. In this respect, his Honour said:
Protecting the State from corruption of its public bodies and public officers is an essential task of the State and it is entitled to use the means it thinks appropriate. Bodies similar to the IBAC are widely, although not universally, deployed by governments to rid themselves of corruption. The integrity of officers of the State, particularly at a senior level, who it might be thought would be involved in advising the government about enterprise agreements, is essential to the functioning of the State. The making of enterprise agreements involving emergency workers is an aspect ‘of a State’s functions which are critical to its capacity to function as a government’. The acceptance of the [applicants’] submissions would in a significant manner curtail or interfere with the exercise of the State’s constitutional power.[10]
[10]Reasons, [114] (citations omitted).
Proposed grounds of appeal
13The applicants’ proposed grounds of appeal are as follows:
1. The learned primary judge erred in that he did not find, but should have found, that:
a.Parts 2–4 and 3–1 of the [FWA] are intended to cover the field of the negotiation and making of enterprise agreements; with the result that there is an inconsistency between the IBAC Act and the [FWA] to such an extent as to render the IBAC Act inoperative to the extent of the inconsistency.
b.IBAC’s investigation intrudes into that field or subject matter; and
2.The learned primary judge erred in finding that, if the [FWA] did cover the field or subject matter as contended by the Applicants, then it would transgress the principle in Melbourne Corporation v The Commonwealth (1947) 74 CLR 31.
14The applicants seek orders that the decision and orders of the primary judge be set aside and, in lieu, that there be orders quashing the decision to conduct the Investigation and restraining IBAC from continuing the Investigation (or any investigation or investigations substantially similar to the Investigation). They also seek a declaration that the Investigation is ultra vires, void, invalid and of no effect.
15For the reasons that follow, leave to appeal will be refused.
Section 109 of the Commonwealth Constitution
16Section 109 of the Commonwealth Constitution provides:
When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.
17The applicable legal principles are uncontroversial.
18For the purposes of s 109, inconsistency may be direct or indirect.[11] The applicants’ case is one of indirect inconsistency. An indirect inconsistency may arise where the Commonwealth law contains an ‘implicit negative proposition that nothing other than what it provides with respect to a particular subject matter is to be the subject of legislation’.[12]
[11]Victoria v Commonwealth (1937) 58 CLR 618, 630 (Dixon J); [1937] HCA 82.
[12]Work Health Authority v Outback Ballooning (2019) 266 CLR 428, 447 [35] (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ); [1937] HCA 82 (‘Outback Ballooning’). This is to be contrasted with a direct inconsistency which occurs where a State law alters, impairs or detracts from the operation of the Commonwealth law: see ibid 447 [32] (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ).
19It is common ground that the starting point for determining whether there is an inconsistency is to construe the laws in question.[13] In the case of indirect inconsistency (as here), that analysis begins with the Commonwealth law, before turning to the State or Territory law.[14] It is first necessary to identify the subject matter that is governed by the Commonwealth law. Then, the subject matter of the Commonwealth law having been identified, it is necessary to determine, through a process of statutory construction, whether the Commonwealth law is intended to be a complete, exhaustive or exclusive statement of the law governing the subject matter.[15] If it is, the final step involves determining whether the State law deals with, enters into or intrudes upon the subject matter of the Commonwealth law.[16]
[13]Bell Group NV (in liq) v Western Australia (2016) 260 CLR 500, 521–2 [52] (French CJ, Kiefel, Bell, Keane, Nettle and Gordon JJ); [2016] HCA 21.
[14]Outback Ballooning (2019) 266 CLR 428, 447 [34] (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ). In the case of a direct inconsistency, regard is to be had to both the Commonwealth and State law, and their operation: ibid.
[15]Ibid 447 [34]–[35] (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ).
[16]Momcilovic v The Queen (2011) 245 CLR 1, 116 [261] (Gummow J); [2011] HCA 34.
Fair Work Act
20The FWA is a sprawling Act of the Commonwealth Parliament covering a range of employment and industrial matters. It is necessary to focus only on parts of it relied on by the parties for the purpose of this appeal, although, as the High Court said in Outback Ballooning, when considering whether a Commonwealth law is intended to be exhaustive or exclusive with respect to an identified subject matter, any provision which throws light on the intention to make exhaustive or exclusive provision on the subject matter with which it deals is to be considered.[17]
[17](2019) 266 CLR 428, 447–8 [35] (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ), citing R v Credit Tribunal; Ex parte General Motors Acceptance Corporation (1977) 137 CLR 545, 563–4; [1977] HCA 34.
21In this case, the ‘EA scheme’ said by the applicants to ‘cover the field’ of enterprise bargaining so as to preclude an investigation under the IBAC Act into the conduct of public officers and public bodies engaging in enterprise bargaining is, according to the applicants, limited to pts 2–4 and 3–1 of the FWA.
22Pt 2–4 governs enterprise agreements and the process for making them. It makes provision for the negotiation and approval of enterprise agreements, along with their contents.
23The objects of pt 2–4 are to provide ‘a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits’, and to enable the Fair Work Commission to ‘facilitate good faith bargaining’ in the making of enterprise agreements, including through making bargaining orders, dealing with disputes where the bargaining representatives request assistance, and ensuring that applications to the Fair Work Commission for approval of enterprise agreements are dealt with without delay.[18] Thus, div 8 of pt 2–4 provides for the Fair Work Commission to facilitate bargaining by making bargaining orders, serious breach declarations, majority support determinations and scope orders. It also permits bargaining representatives to apply for the Fair Work Commission to deal with bargaining disputes.
[18]FWA s 171.
24Part 3–1 provides for general workplace protections, creating workplace rights and protecting the exercise of those rights. It contains provisions protecting freedom of association and involvement in lawful industrial activities, as well as protection from discrimination. In so doing, pt 3–1 protects against ‘adverse action’, being (broadly speaking) the engaging in, organising or threatening to take actions negatively impacting the relationship between an employer and employee.[19] Such action may include discrimination, dismissal, a refusal to perform, or the alteration of terms and conditions, among others.
[19]Ibid s 342. The definition of ‘adverse action’ extends to actions taken by an industrial association, or an officer or member of an industrial association against a person, and actions by an independent contractor (as the case may be).
25Specifically, s 343 protects against ‘coercion’ in the following terms:
(1)A person must not organise or take, or threaten to organise or take, any
action against another person with intent to coerce the other person, or a third person, to:(a) exercise or not exercise, or propose to exercise or not exercise, a workplace right; or
(b) exercise, or propose to exercise, a workplace right in a particular way.
Note: This subsection is a civil remedy provision (see Part 4‑1).
(2) Subsection (1) does not apply to protected industrial action.
26Neither of pts 2–4 or 3–1 impose criminal sanctions for breaches of any requirements or prohibitions.
27The respondent, in disputing that pts 2–4 and 3–1 constitute a ‘stand-alone’ ‘EA scheme’, relies on pts 3–3 and 3–7, which it says shed light on whether pts 2–4 or 3–1 are to be construed as dealing exclusively and exhaustively with the subject-matter of enterprise bargaining.
28Part 3–3 regulates the conduct of persons engaged in enterprise bargaining by, among other things, providing for those persons to engage in ‘protected industrial action’ regarding a proposed enterprise agreement. It sets out when industrial action for a proposed enterprise agreement is protected industrial action, and provides that no action lies under any law in force in a State or Territory in relation to protected industrial action except in certain circumstances.
29Part 3–7 prohibits the provision, receipt or soliciting of ‘corrupting benefits’ in relation to employee organisations or officers and employees of organisations registered under the Fair Work (Registered Organisations) Act 2009 (Cth).[20] It prohibits and imposes criminal sanction for the payment of benefits intended to influence an officer or employee of such an organisation, and employers providing cash or in kind payments to employee organisations and related entities.
[20]Ibid ss 536D–536G.
30Section 536D creates an offence for the giving, receiving or soliciting a corrupting benefit. It relevantly provides:
Giving a corrupting benefit
(1) A person (the defendant) commits an offence if:
(a) the defendant dishonestly:
(i) provides a benefit to another person; or
(ii) causes a benefit to be provided to another person; or
(iii) offers to provide, or promises to provide, a benefit to another person; or
(iv) causes an offer of the provision of a benefit, or a promise of the provision of a benefit, to be made to another person; and
(b) the defendant does so with the intention of influencing a registered organisations officer or employee (who may be the other person):
(i) in the performance of his or her duties or functions as such an officer or employee; or
(ii) in the exercise of his or her powers or performance of his or her functions under this Act or the Registered Organisations Act; or
(iii) to give an advantage of any kind in connection with the relevant affairs, which would not be legitimately due, to the defendant, a spouse (within the meaning of the Registered Organisations Act) or associated entity of the defendant, or a person who has a prescribed connection with the defendant.
Penalty:
(a) for an individual—imprisonment for 10 years or 5,000 penalty units, or both; or
(b) for a body corporate—25,000 penalty units.
Section 536D(2) is in similar terms and prohibits the receiving or soliciting of a corrupting benefit. It imposes the same penalties as s 536D(1).
Section 536C makes express the concurrent operation of State and Territory laws in relation to the subject matter of pt 3–7:
(1)This Part does not exclude or limit the operation of a law of a State or Territory that is capable of operating concurrently with this Part.
(2)Without limiting subsection (1), this Part does not exclude or limit the concurrent operation of a law of a State or Territory to the extent that:
(a) the law makes an act or omission:
(i)an offence; or
(ii)subject to a civil penalty; and
(b)that (or any similar) act or omission is also an offence against a provision of this Part.
(3) Subsection (2) applies even if the law of the State or Territory does any one or more of the following, in relation to the offence or civil penalty:
(a)provides for a penalty that differs from the penalty provided for in this Part;
(b)provides for fault elements that differ from the fault elements applicable to the offence created by this Part;
(c)provides for defences or exceptions that differ from the defences or exceptions applicable to the offence created by this Part.
33In addition to s 536C, there are a number of express statements of intention in div 2 of pt 1–3 of the FWA as to how the FWA is to interact with State and Territory legislation. Section 26 states that the FWA is intended to apply to the exclusion of all State or Territory ‘industrial laws’. It is not contended that the IBAC Act is an ‘industrial law’ that is excluded by the FWA. Section 27(1A) sets out a list of State and Territory laws which are not excluded by the operation of s 26, and s 28 enables the legislature to prescribe further State or Territory laws which are to be excluded. The IBAC Act is not covered by either of these provisions.
34Section 30 states that div 2 of pt 1–3 is not intended to be an exhaustive statement of the State or Territory laws that Parliament intended to exclude.
IBAC Act
35The objects of the IBAC Act include: to provide for the identification, investigation and exposure of corrupt conduct; to assist in the prevention of corrupt conduct; to assist in improving the capacity of the public sector to prevent corrupt conduct; and to facilitate the education of the public sector and the community about the detrimental effects of corrupt conduct on public administration and the ways in which corrupt conduct can be prevented.[21]
[21]IBAC Act s 8.
36Again, only a limited number of provisions of the IBAC Act are relevant for present purposes.
37Section 60 permits IBAC to conduct an investigation in accordance with its ‘corrupt conduct investigative functions’ on a complaint made to it,[22] on a notification to it,[23] or on its own motion. However, it must suspect on reasonable grounds that the conduct in question constitutes ‘corrupt conduct’.[24]
[22]Under s 51 of the IBAC Act.
[23]Under s 57(1) of the IBAC Act.
[24]IBAC Act s 60(2).
38‘Corrupt conduct’ is defined, relevantly, as follows:
(1) For the purposes of this Act, corrupt conduct means conduct—
(a) of any person that adversely affects the honest performance by a public officer or public body of his or her or its functions as a public officer or public body; or
(b)of a public officer or public body that constitutes or involves the dishonest performance of his or her or its functions as a public officer or public body; or
(c) of a public officer or public body that constitutes or involves knowingly or recklessly breaching public trust; or
(d) of a public officer or a public body that involves the misuse of information or material acquired in the course of the performance of his or her or its functions as a public officer or public body, whether or not for the benefit of the public officer or public body or any other person; or
(da) of a person (the first person) intended to adversely affect the effective performance or exercise by a public officer or public body of the functions or powers of the public officer or public body and result in the first person or an associate of the first person obtaining—
(e) that could constitute a conspiracy or an attempt to engage in any conduct referred to in paragraph (a), (b), (c), (d) or (da)—
(i) a licence, permit, approval, authority or other entitlement under any Act or subordinate instrument; or
(ii) an appointment to a statutory office or as a member of the board of any public body under any Act or subordinate instrument; or
(iii) a financial benefit or real or personal property; or
(iv) any other direct or indirect monetary or proprietary gain— that they would not have otherwise obtained; or
being conduct that would constitute a relevant offence.
39Picking up the important qualification contained in the last line of that definition, a ‘relevant offence’ means:[25]
(a) an indictable offence against an Act; or
(b) any of the following common law offences committed in Victoria—
(i) attempt to pervert the course of justice;
(ii) bribery of a public official;
(iii) perverting the course of justice;
(iv) misconduct in public office;
[25]Ibid s 3(1) (definition of ‘relevant offence’).
40The investigative powers conferred on the IBAC are far-reaching and include powers of entry, search and seizure,[26] and the power to conduct examinations in both public and private.[27]
[26]See, e.g, ibid pt 3 divs 3–4.
[27]See, e.g, ibid pt 6 div 1.
41The possible outcomes of an IBAC investigation are set out in s 164 of the IBAC Act. Those outcomes include the referral of persons or matters to prosecutorial bodies and recommendations as to actions that should be taken to the principal officer of a relevant public body, a responsible Minister or the Premier.
Applicants’ submissions
42The applicants contend that a component of the FWA, which they describe as ‘the EA scheme’, covers the field in respect of the regulation of enterprise agreements and the conduct of persons involved in the process of negotiating them. The so-called ‘EA scheme’ comprises pts 2–4 and 3–1 of the FWA. According to the applicants, the EA scheme is properly to be seen as a comprehensive, uniquely tailored regime which is designed to regulate every facet of the enterprise bargaining process. They submit that the EA scheme provides a prescriptive and comprehensive regime, regulating the content of enterprise agreements, the process of agreement making and the conduct of persons engaged in enterprise bargaining, and that it contains robust and detailed mechanisms to enforce the regime. From that, the applicants submit, it can be discerned that the FWA contains an implicit negative proposition that nothing other than what is provided in the EA scheme is to be the subject of legislation by the States and Territories.
43According to the applicants, the fact that the making of industrial agreements by enterprise bargaining is a construct of Commonwealth law and that enterprise bargaining is a creature of statute, supports the proposition that enterprise bargaining in Australia is intended to exclusively be conducted under, and regulated by, Commonwealth law, through the EA scheme. Moreover, the referral of power by the Fair Work (Commonwealth Powers) Act 2009 to the Commonwealth to legislate upon matters covered by the FWA, demonstrates, in the applicants’ submission, that the Victorian Parliament intended to ‘vacate the field’ in relation to workplace relations (or, at the very least, in relation to the EA scheme), an area in which it had previously competed with the Commonwealth.
44More specifically, the applicants submit that, contrary to the findings of the primary judge, the EA scheme seeks to regulate corrupt conduct in enterprise bargaining, and it does so by the prescriptions in the FWA for ‘genuine bargaining’. That the FWA seeks to regulate corrupt conduct in bargaining differently from the way corrupt conduct is investigated and dealt with in the IBAC Act is not determinative, as there is no requirement for the Commonwealth Act to replicate all the features of the State law in order to cover the field.
45The applicants submit that the EA scheme sets out the mechanics of enterprise bargaining, regulating every step of the process from its initiation, to the appointment of bargaining representatives, to negotiations, and finally, the approval process.[28] The EA scheme also regulates the contents of enterprise agreements[29] and the conduct of persons involved in bargaining.
[28]FWA ss 173–178B.
[29]Ibid ss 172, 193–195A, 202–5, 206.
46The applicants submit that the conduct of persons involved in enterprise bargaining is regulated in two ways. First, there is a framework for good faith bargaining. Section 228 of the FWA prescribes standards of appropriate behaviour for bargaining representatives, including prohibiting capricious or unfair conduct that undermines collective bargaining. These measures are supported by sanctions (including civil penalties) for non-compliance.[30] Secondly, illegitimate or unlawful conduct is addressed in pt 3–1, which identifies a broad range of conduct which is prohibited.
[30]Ibid ss 228, 230(3).
47As to the operation of pt 3–1 specifically, the applicants submit that the ‘adverse action’ protections that it provides for are a unique set of protections, prohibiting adverse treatment of a person who has or has not exercised a workplace right, which includes enterprise bargaining.[31] Unlawful and illegitimate conduct is also dealt with in pt 3–1 in a series of provisions which contain protections against coercion and misrepresentation, including in the bargaining process. The operation of the ancillary provisions and accessorial liability provisions in the EA scheme work to ensure it has broad reach.[32]
[31]Ibid ss 340–2.
[32]Ibid ss 362, 550.
48In addition, the applicants point out that the Fair Work Commission has jurisdiction to administer the enterprise agreement process and is empowered to act as umpire ‘in the cut and thrust of bargaining’.[33] Where the conduct of those involved in bargaining strays into actions which are prohibited under the EA scheme, enforcement proceedings are available in the Federal Court.
[33]Ibid ss 187(2), 188, 230(3), 231(2), 233–5.
49While conceding that they are not in the nature of the coercive powers enjoyed by IBAC, the applicants also point to the investigative powers of the Fair Work Ombudsman, which include monitoring compliance with the FWA and enquiring into and investigating any act or practice that may be contrary to the FWA, a Fair Work Instrument or a safety net entitlement. The Ombudsman may commence proceedings in a court, make applications to the Fair Work Commission and refer matters to relevant authorities.
50According to the applicants, pt 3–7, which criminalises offering, providing, soliciting or receiving ‘corrupting benefits’, has no application to enterprise bargaining. They rely on the fact that pt 3–7 makes no reference to enterprise bargaining. That is significant, they say, because when pt 3–7 was introduced, ss 179 and 179A were also inserted into pt 2–4 requiring the disclosure of benefits derived as a result of an enterprise agreement. According to the applicants, the legislature turned its mind to corruption, and at the same time to enterprise bargaining, and the only thing it did in relation to enterprise bargaining was to insert the provisions requiring disclosure of benefits derived from enterprise agreements. It is to be inferred, the applicants submit, that this is how the legislature intended to deal with corrupt benefits in the context of enterprise bargaining.
51If it is accepted that the FWA covers the field of enterprise bargaining, the applicants assert that the provisions of the IBAC Act conferring investigatory powers on IBAC, including with respect to conducting the Investigation, intrude into the subject-matter of the Commonwealth law. To that extent, the State law must be read down pursuant to s 109 of the Commonwealth Constitution.
Respondent’s submissions
52The respondent submits that there is no real conflict between the FWA and the IBAC Act. Neither statute is intended to be an exclusive statement of the law on enterprise agreements or the conduct of persons engaged in enterprise bargaining. Indeed, the IBAC Act covers the distinct subject matter of identifying, exposing and investigating ‘corrupt conduct’ (as defined). Moreover, on the proper construction of the FWA, the ‘EA scheme’ contained within it is intended to operate within the setting of other Commonwealth or State laws, including criminal laws and laws empowering agencies to investigate crime or corruption.
53Senior counsel for the respondent commenced his oral submissions on ground 1 (inconsistency) by referring to the subject matter of ground 2, the application of the Melbourne Corporation principle. He submitted that the FWA must be construed so that it does not ‘overreach’ and remains constitutionally valid. Section 15A of the Acts Interpretation Act1901 (Cth) requires every Act to be read and construed subject to the Constitution and so as not to exceed the legislative power of the Commonwealth. The Melbourne Corporation principle constrains the Commonwealth’s legislative power. If the Court finds, as the applicants have submitted it should, in various provisions scattered throughout the FWA an intention to exclude the operation of the IBAC Act, the Court would be placing the FWA outside the legislative power of the Commonwealth.
54The respondent submits that s 60 of the IBAC Act is a provision by which the Victorian Parliament has empowered IBAC to conduct an investigation for particular purposes: first, to ensure that the members of Parliament and public officers and bodies are answerable for their acts; and, secondly, to protect the State and its bodies and officers from conduct that adversely affects the honest performance of their public functions. The dual function of promoting accountability and providing protection is fundamental to the continued existence and effective functioning of the State as an autonomous polity within the Australian federation. The IBAC Act is the means that the State of Victoria has chosen to protect that effective functioning.
55According to the respondent, this is relevant when considering whether the FWA should be read as expressing an intention to cover the field and thereby to exclude the operation of an Act such as the IBAC Act. The argument put on behalf of the applicants means that the State cannot investigate alleged corrupt conduct that might adversely affect the performance of functions by a public officer or a public body where that conduct has occurred, allegedly, in the course of making an enterprise agreement.
56The respondent submits that, in fact, the FWA does not infringe the Melbourne Corporation principle and avoids overreach by revealing an intention to operate within the framework of other laws, including State and Commonwealth criminal laws that empower investigative agencies to investigate allegedly criminal conduct. An investigation into corrupt conduct answers that description precisely. The FWA reveals no intention on the part of the Commonwealth Parliament that persons involved in enterprise bargaining are to be immune from those investigations.
57According to the respondent, it would be an error to consider whether the so-called EA scheme ‘covers the field’ of enterprise bargaining by reading pts 2–4 and 3–1 in isolation from the balance of the Act. That would be contrary to what the plurality said in Outback Ballooning to the effect that any provision in the Commonwealth law which throws light on the intention to make exhaustive or exclusive provision for an identified subject matter must be considered.[34]
[34]Outback Ballooning (2019) 266 CLR 428, 447–8 [35] (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ).
58The respondent submits that it is clear that pts 2–4 and 3–1 (the so-called ‘EA scheme’) are intended to operate in the context of the FWA as a whole. Hence, pt 3–3 regulates the conduct of persons engaged in enterprise bargaining by, among other things, providing for persons who are engaging in enterprise bargaining to engage in protected industrial action. Section 415 of the FWA then provides that no action lies under any law in force in a State or Territory in relation to protected industrial action, except in certain circumstances. There is, therefore, a substantial protection against any action under State or Territory law in relation to ‘protected industrial action’, with the stated exceptions. At this point, the FWA expressly addresses the relationship between the FWA and State laws. Furthermore, it is clear that pt 3–3 operates on the ‘EA scheme’ and affects the conduct of enterprise bargaining.
59Contrary to the position advanced by the applicants, the respondent submits that pt 3–7 of the FWA, which deals with the issue of ‘corrupting benefits’ by imposing criminal and civil sanctions, also captures conduct that may occur in the context enterprise bargaining. Section 536D makes it an offence to dishonestly provide a benefit to another person, with the intention of influencing a registered organisation officer. In this context, s 536C contains an absolutely unequivocal statement of intention not to cover the field. This makes it quite clear that the Commonwealth legislature did not intend to exclude or limit the implementation of state law in relation to the subject matter of dishonestly providing benefits within the intention of influencing a registered organisation officer in the context of enterprise bargaining.
60The respondent also points to a number of omissions from the FWA which, it argues, indicate that the Commonwealth Parliament did not intend the FWA to be a comprehensive regime. For example, the FWA does not contain any proscription or punishment for a person who commits an assault in the course of enterprise bargaining or engages in blackmail. As the primary judge found, it would be odd if serious offences like these could only be dealt with as breaches of good faith bargaining and the offenders were only subject to compensation orders or civil penalties.
61The respondent submits that the FWA makes very little provision for the investigation of corrupt conduct in enterprise bargaining. The Fair Work Ombudsman has some functions, as set out in s 682 of the FWA. However, those functions do not extend to the investigation of criminal or corrupt conduct as defined in the IBAC Act.
62Moreover, the FWA actively contemplates that a person may face criminal proceedings (whether under Commonwealth or State law) for conduct which is substantially covered by its civil remedy provisions. Sections 553 and 554 actively contemplate the commencement of criminal proceedings for conduct which is substantially the same as conduct constituting contravention for the purpose of the civil remedy provisions.
63The express statements of intention found in ss 26, 28 and 30 of the FWA do not assist in one way or the other.
64The respondent submits that the fact that enterprise agreements and enterprise bargaining are creatures of Commonwealth law does not imply that they are exclusively governed by Commonwealth law. Moreover, the fact that the objects and purposes of the FWA include the regulation of the conduct of the parties to enterprise bargaining does not make it an object of the FWA to exclusively regulate that conduct.
65The respondent submits that the subject matters of the FWA and the IBAC Act are essentially disparate, although they may apply to the same facts from time to time. The relationship between the FWA and the IBAC Act is described as the intermeshing of laws. Each legislature has confined itself to those aspects of a particular situation appropriate to its own particular role in the federal compact.[35]
[35]Ansett Transport Industries (Operations) Pty Ltd v Wardley (1980) 142 CLR 237, 250 (‘Wardley’); [1980] HCA 8.
66Finally, the respondent submits that the fact of the referral of powers by Victoria to the Commonwealth is a distraction. The amenability of one of the public bodies in question to the operation of FWA does not rely on the referral. More importantly, whether the Commonwealth intended to ‘cover the field’ is not elucidated by anything the State of Victoria may have done. The Commonwealth’s intention is to be discerned from its own legislation.
Discussion
67In the case of indirect inconsistency, it is well-established that consideration of whether a State Act, such as the IBAC Act, is inconsistent with a Commonwealth law begins with the identification of the subject matter of the Commonwealth law. In this case, the relevant subject matter of the FWA is conduct involving the negotiation and conclusion of enterprise agreements (enterprise bargaining). It is then necessary to determine whether the Commonwealth law — the FWA to the extent that it provides for and regulates enterprise bargaining — was intended to be a complete, exhaustive or exclusive statement of the law governing that subject matter.
68We agree with the parties that the specific provisions in pt 1–3 concerning the application of State laws are of no assistance. We also accept the respondent’s submission that pts 2–4 and 3–1 do not stand alone, and are to be read in the context of, and subject to, other parts of the FWA.
69As the respondent submitted, it is plain that pt 2–4 is to be read in the context of, and subject to, the provisions of pt 3–3 concerning ‘protected industrial action’. Part 3–3 makes specific provision for ‘protected industrial action’ to occur in the context of enterprise bargaining. Section 408 provides that industrial action is protected industrial action ‘for a proposed enterprise agreement’ if it is action of a particular type concerning the negotiation of an enterprise agreement. Section 415 then provides:
(1)No action lies under any law (whether written or unwritten) in force in a State or Territory in relation to any industrial action that is protected industrial action unless the industrial action has involved or is likely to involve:
(a) personal injury; or
(b) wilful or reckless destruction of, or damage to, property; or
(c) the unlawful taking, keeping or use of property.
(2)However, subsection (1) does not prevent an action for defamation being brought in relation to anything that occurred in the course of industrial action.
70Thus, pt 3–3 makes specific provision to exclude the operation of State laws in relation to protected industrial action, including where it occurs in the context of enterprise bargaining. Such a provision would be unnecessary if the ‘EA scheme’ in pts 2–4 and 3–1 of the FWA wholly excluded State and Territory laws. The existence of the exclusion in pt 3–3 is a clear sign that it does not.
71Furthermore, we accept that the provisions of pt 3–7 concerning corrupting benefits apply to the negotiation and conclusion of enterprise agreements, and pt 3–7 expressly preserves the concurrent operation of State and Territory laws. As the primary judge found, there is no reason why the provisions of pt 3–7 should be construed as not applying to conduct forming part of the enterprise bargaining scheme contained in pts 2–4 and 3–1. The provisions of pt 3–7 are directed at the actions of officers and employees of registered organisations in whatever circumstances those actions may occur.[36]
[36]Reasons, [102].
72The extraneous materials to which we were referred support this construction.
73Part 3–7 was introduced by the Fair Work Amendment (Corrupting Benefits) Bill 2017 (‘Bill’) which amended the FWA to respond to recommendations of the Final Report of the Royal Commission into Trade Union Governance and Corruption (‘Heydon report’) to promote the better governance of registered organisations. The Bill was expressed to respond to the Heydon report by amending the FWA to make it a criminal offence to give a registered organisation, or a person associated with a registered organisation, a corrupting benefit and to make it a criminal offence to receive or solicit a corrupting benefit.
74The explanatory memorandum to the Bill explains the operation of s 536D as follows:
New section 536D makes it an offence to give, receive or solicit corrupting benefits.
The offences created in Division 2 are designed to address scenarios that were frequently raised in the case law that was examined by the Royal Commission. These scenarios typically involved an employer making, offering to make or agreeing to provide a payment or other benefit to a registered organisation or an officer in order to achieve ‘industrial peace’, avoid threatened conduct that would be detrimental to the employer or obtain a benefit at the expense of the employer’s employees or competitors.
…
New subsection 536D(1) will make it an offence, for example, for an employer or their representative to offer to make a payment to a registered organisation or its officer on the proviso that the organisation and its officers attempt to convince their members to accept lesser terms and conditions of employment in an enterprise agreement than the organisation would otherwise have advocated for. Further, a person who pays money to an officer of a registered organisation on the understanding that the officer will cause their organisation not to bargain for an enterprise agreement with any businesses owned or controlled by the person would also commit an offence under this provision.[37]
[37]Explanatory Memorandum, Fair Work Amendment (Corrupting Benefits) Bill 2017 (Vic) 3 [19]–[20], 4 [23] (emphasis added).
75This puts beyond doubt the legislature’s intention that the sanctions in pt 3–7 should apply to the provision of corrupt benefits in the course of enterprise bargaining.
76Section 536C is explicit about the concurrent operation of state and territory laws with pt 3–7. The explanatory memorandum to the Bill explains the operation of s 536C as follows:
… New subsection 536C(1) provides that part 3–7 does not operate to exclude or limit the operation of any State or Territory laws that are capable of operating concurrently with the Part.
…
Subsection 536C(2) provides that part 3–7 is not intended to exclude the concurrent operation of State laws imposing offences or civil penalties, where the same or similar conduct is also an offence under this Part. Under subsection 536(3) and subsection 536(2) applies even if the penalty, fault elements, defences or exceptions that apply to the offence under the State or Territory law are different to those contained in part 3–7.
Relevant State or Territory laws in this context could include laws criminalising secret or corrupt commissions, corrupt benefits or rewards and bribes.[38]
[38]Ibid 3 [12], [16]–[17].
77The applicants submit that the words of a Royal Commissioner and/or those appearing in extrinsic material cannot be used to replace the words in a statute. Part 3–7 makes no reference to enterprise bargaining, and it is not permissible to draw on the words in an explanatory memorandum to introduce new words into the part.
78We reject this submission. There has been no introduction of ‘new words’ into pt 3–7. It is simply the case that pt 3–7 applies to conduct that falls within its terms, regardless of whether that conduct occurs in the context of enterprise bargaining or in some other context.
79We also decline to infer from the fact that ss 179 and 179A were enacted at the same time as pt 3–7 that the legislature, having turned its mind simultaneously to both corrupting conduct and enterprise bargaining, did not intend for the corrupting conduct provisions to apply to enterprise bargaining. The disclosure requirements in ss 179 and 179A are quite different in kind from the ‘corrupt benefits’ provisions in pt 3–7.
80Accordingly, we reject the argument advanced by the applicants that pt 3–7 stands apart from and has no work to do in relation to the negotiation of enterprise agreements under pt 2–4. The conduct criminalised by pt 3–7 is conduct that may be undertaken in the course of negotiating enterprise agreements. That conduct may also be the subject of State and Territory laws.
81More generally, the compliance and enforcement provisions of the FWA make it clear that the provision of civil remedies does not exclude the operation of the criminal law. Division 4 of pt 4–1 contains general provisions relating to civil remedies and specific provisions about the interaction between civil penalty provisions and the criminal law. For example, s 552 provides:
A court must not make a pecuniary penalty order against a person for a contravention of a civil remedy provision if the person has been convicted of an offence constituted by conduct that is substantially the same as the conduct constituting the contravention.
82Likewise, s 554 provides:
Criminal proceedings may be commenced against a person for conduct that is substantially the same as conduct constituting a contravention of a civil remedy provision regardless of whether an order has been made against the person under Division 2.
83Aside from the conclusions drawn from the textual analysis of the FWA that we have undertaken, we consider it to be highly improbable that the legislature intended that conduct by a party negotiating an enterprise agreement that is clearly unlawful, such as committing an assault, can only be dealt with using the civil penalty mechanisms available under pts 2–4 and 3–1. The clear legislative intention revealed in the text of the FWA (including in its lacunae), as well as in the relevant extrinsic materials, is that pts 2–4 and 3–1 operate within the setting of other Commonwealth and State laws, including criminal laws and laws that empower investigative agencies to investigate criminal or corrupt conduct.[39]
[39]Wardley (1980) 142 CLR 237, 246–53 (Stephen J), 261–5 (Mason J), 266–7 (Murphy J), 286–90 (Wilson J).
84It follows that ground 1 is not made out.
85Having regard to the conclusion that we have reached concerning ground 1, it is unnecessary to consider ground 2. Ground 2 invited the Court to determine whether the Melbourne Corporation principle would be offended if the FWA purported to ‘cover the field’ of enterprise bargaining and thereby invalidate the IBAC Act to the extent that it empowered IBAC to investigate corrupt conduct in the context of enterprise bargaining.
86However, as the respondent submitted, the Melbourne Corporation principle is relevant to the construction of the FWA, and therefore also to ground 1. Consequently, we shall express our opinion, albeit briefly, on the application of the Melbourne Corporation principle to the construction issue raised by ground 1.
87The Melbourne Corporation principle protects the States from Commonwealth interference that threatens their ‘continued existence as independent entities’.[40] The Commonwealth cannot legislate to impede the States in the performance of the ‘normal and essential functions of government’.[41]
[40]Melbourne Corporation (1947) 74 CLR 31, 82 (Dixon J).
[41]Ibid 66 (Rich J).
88On this question, the applicants submit[42] that the exclusion by the EA scheme of some of the powers conferred by the IBAC Act would not affect the capacity of the State of Victoria to function as a government. Rather, it might affect the performance of a function which the State government might undertake. This is underscored by the fact that the IBAC Act was only enacted in 2011, and the State was well able to function as a government before then.
[42]When making submissions on ground 2.
89Relying on United Firefighters’ Union of Australia v Country Fire Authority,[43] the applicants further submit that the State cannot claim impairment where it has voluntarily submitted to the enterprise bargaining process. The Victorian government’s referral to the Commonwealth of industrial powers, which encompassed the power to regulate enterprise bargaining, including with public bodies, is an express acknowledgment that the State’s ability to function as a government is not prejudiced by the operation of exclusive enterprise bargaining arrangements. Furthermore, the public bodies involved in enterprise bargaining themselves submitted to and engaged in the enterprise bargaining process without demur. The State cannot now complain about a process that it voluntarily submitted to.
[43](2015) 228 FCR 497; [2015] FCAFC 1 (‘UFUA v CFA’).
90The principal authorities on the Melbourne Corporation principle are concerned with a State’s capacity to determine the number, and the terms and conditions, of those engaged ‘at the higher levels of government’, including ‘Ministers, ministerial assistants and advisers, heads of departments and high level statutory office holders, parliamentary officers and judges’.[44] However, in Clarke, a case concerning the provision of pensions for members of parliament, Hayne J emphasised the significance of restrictions on legislative choice to the functioning of State governments. His Honour said:
The legislation imposing the surcharge in issue in this matter impairs the capacity of a State to choose between these various forms of remuneration of its parliamentarians in one particular but important respect: the State has no real choice but to adopt a method of providing retirement benefits that will enable parliamentarians to meet the tax liability specially imposed on them.
That a State may have made particular choices about these matters in the past, and the effect of the surcharge on the arrangements chosen, is not to the point.[45]
[44]Re Australian Education Union; Ex parte Victoria (1995) 184 CLR 188, 233 (Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ) (‘Re AEU’); [1995] HCA 71; Austin v Commonwealth (2003) 215 CLR 185, 263 [162] (Gaudron, Gummow and Hayne JJ); [2003] HCA 3; Clarke v Federal Commissioner of Taxation (2009) 240 CLR 272, 305 [62] (Gummow, Heydon, Kiefel and Bell JJ) (‘Clarke’); [2009] HCA 33.
[45]Clarke (2009) 240 CLR 272, 316 [101]–[102] (Hayne J).
91In our view, the purported curtailment of the exercise of legislative choice to secure the investigation and exposure of corrupt conduct by public officers and public bodies in Victoria is important in the present context. We consider that any threat to, or limitation on, the system that the State has chosen to protect its agencies from corrupt conduct, will have significant effect on the capacity of the State to function as an independent and effective government. The importance of the measures in the IBAC Act can be seen by looking at the definition of corrupt conduct in s 4, being any conduct that adversely affects the honest performance by a public officer or public body of his or her or its functions as a public officer or a public body. Activities falling within the definition of ‘corrupt conduct’ have in common that they threaten the continued existence of the State. High standards of probity are essential to good government.
92The effects of a Commonwealth law upon a State’s capacity to function is to be judged qualitatively and not only by practical effects.[46] The State of Victoria has created a system to protect its integrity and efficacy, and to ensure the honest behaviour of those on whom the State depends. The FWA is to be construed consistently with the protection of the State’s choice as to how this should be effected.
[46]Ibid 298 [33] (French CJ).
93It is not to the point that the IBAC Act has only been in force for 11 years, and that the State apparently functioned perfectly well before that. The State has taken particular steps to secure its continued effective functioning as a government. It created IBAC and conferred on it the powers in the IBAC Act to protect the State’s integrity and efficacy, and promote the honest behaviour of those on whom the State depends. This involved a legislative choice that the State was well entitled to make.
94Finally, we reject the submission that UFUA v CFA is authority for the proposition that there can be no impairment by the Commonwealth of the capacity of the State to function as a government where the source of impairment lies in the voluntary agreement of the State to submit to Commonwealth law. In UFUA v CFA, the Full Court of the Federal Court held that the enforcement of the enterprise agreement by the Commonwealth would not offend the Melbourne Corporation principle in circumstances where the State had voluntarily entered into the agreement.[47] The court found that the concern of the plurality in Re AEU was directed to the ability for the State to exercise legislative choice. This, it said, suggested that the implied limitation is not applicable to statutory ‘provisions which operated by reference to the State or its agencies having voluntarily entered into an agreement which was then given statutory force’.[48]
[47](2015) 228 FCR 497, 545 [207] (Perram, Robertson and Griffiths JJ).
[48]Ibid 541 [193] (Perram, Robertson and Griffiths JJ).
95The simple answer to this proposition is that the State of Victoria did not enter into an agreement to refer powers to investigate corrupt conduct involving its public officers or public bodies. Rather, the referral concerned a distinct subject matter, being industrial powers. It cannot be said that the State, through the referral, voluntarily submitted to an impairment of its ability to take steps to protect its public bodies from corruption.
96For the reasons we have given, we consider that the ability to put in place measures to promote the integrity of government decision-making goes to the heart of the State’s ability to function as a constituent member of the Commonwealth compact.
97We therefore consider that the construction of the FWA advanced by the applicants is not consistent with the Melbourne Corporation principle. It would result in an impermissible overreach by the Commonwealth. Conversely, the construction advanced by the respondent, and accepted by the primary judge, is consistent with the Melbourne Corporation principle.
Disposition
98Ground 1 is not made out. It is unnecessary to consider ground 2.
99Leave to appeal will be refused.
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SCHEDULE OF PARTIES
| HJ (a pseudonym) | First applicant |
| PQ (a pseudonym) | Second applicant |
| and | |
| INDEPENDENT BROAD-BASED ANTI-CORRUPTION COMMISSION | Respondent |
0
16
0