HJ v IBAC
[2022] VSC 248
•18 May 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2019 03955
| HJ (a pseudonym) | First Plaintiff |
| PQ (a pseudonym) | Second Plaintiff |
| v | |
| INDEPENDENT BROAD-BASED ANTI-CORRUPTION COMMISSION | Defendant |
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JUDGE: | Ginnane J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 23-24 November 2021 |
DATE OF JUDGMENT: | 18 May 2022 (redacted judgment published 11 July 2022) |
CASE MAY BE CITED AS: | HJ v IBAC |
MEDIUM NEUTRAL CITATION: | [2022] VSC 248* |
*This is a redacted version of the judgment that was published to the parties on a confidential basis.
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JUDICIAL REVIEW – IBAC investigation into corrupt conduct connected with enterprise agreements – Enterprise agreements made under Fair Work Act 2009 (Cth) – Whether the IBAC’s powers inconsistent with the enterprise agreement scheme under the Fair Work Act – Melbourne Corporation principle – Commonwealth Constitution s 109; Fair Work Act 2009 (Cth) ss 3, 26-30, 179, 179A, 187, 188, 228, 231, 235, 269, 340, 341, 343-345, 348, 415, 460, 536A, 536C, 536D, 536F, 539, 701; Fair Work (Commonwealth Powers) Act 2009 (Vic) ss 4, 5, 30B, 30C, 30D; Independent Broad-based Anti-corruption Commission Act 2011 (Vic) ss 3, 4, 15, 60.
CONSTITUTIONAL LAW – Enterprise agreement made under the Fair Work Act 2009 (Cth) – Whether inconsistency between Commonwealth law and State law – Commonwealth Constitution s 109.
INDUSTRIAL LAW – Enterprise agreement scheme under the Fair Work Act 2009 (Cth) – Whether Commonwealth law inconsistent with State law conferring powers on IBAC concerning corrupt conduct – Fair Work Act 2009 (Cth) ss 3, 26-30, 179, 179A, 187, 188, 228, 231, 235, 269, 340, 341, 343-345, 348, 415, 460, 536A, 536C, 536D, 536F; 539, 701 Fair Work (Commonwealth Powers) Act 2009 (Vic) ss 4, 5, 30B, 30C, 30D; Independent Broad-based Anti-corruption Commission Act 2011 (Vic) ss 3, 4, 15, 60.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr H. Borenstein QC | Slater and Gordon Lawyers |
| Mr B. Bromberg | ||
| For the Defendant | Mr P. Hanks QC Ms K. O’Gorman | Solicitor for the Independent Broad-based Anti-corruption Commission |
TABLE OF CONTENTS
Background......................................................................................................................................... 1
Grounds Relied Upon....................................................................................................................... 3
Legislation........................................................................................................................................... 4
The Commonwealth Constitution.............................................................................................. 4
Independent Broad-based Anti-corruption Commission Act 2011....................................... 4
Fair Work Act 2009 (Cth)............................................................................................................. 9
Referral of powers legislation – Fair Work (Commonwealth Powers) Act 2009 (Vic)..... 20
Principles for the application of s 109 of the Commonwealth Constitution to State and Territory laws...................................................................................................................................... 22
Does s 109 of the CommonwealthConstitution render the Independent Broad-based Anti-corruption Commission Act 2011, or the powers contained in s 60, inoperative because of their inconsistency with the Fair Work Act 2009 (Cth)?............................................................... 23
The plaintiffs’ submissions........................................................................................................ 23
The IBAC’s submissions............................................................................................................. 27
Analysis.............................................................................................................................................. 30
The Melbourne Corporation principle..................................................................................... 38
Conclusion......................................................................................................................................... 40
HIS HONOUR:
Background
This proceeding concerns the extent of the Independent Broad-based Anti-corruption Commission’s (‘the IBAC’) powers to investigate conduct occurring in the making of enterprise agreements made under the Fair Work Act 2009 (Cth) (‘Fair Work Act’) and the application of s 109 of the Commonwealth Constitution to such powers. The plaintiffs contend that the IBAC’s powers are inconsistent with the enterprise agreement scheme contained in the Fair Work Act and to that extent are invalid.
As the case raised a question under the Commonwealth Constitution or involving its interpretation, notices were served on the Attorney-Generals under s 78B(1) of the Judiciary Act 1903 (Cth), but none intervened.
On 8 November 2018, the IBAC commenced an investigation (the ‘Investigation’) on its own motion pursuant to s 60(1)(c) of the Independent Broad-based Anti-corruption Commission Act 2011 (the ‘IBAC Act’). The Investigation concerns 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 [redacted].[1] The Investigation is investigating the conduct of, and conduct in relation to, various members of the Victorian Government and the Executive, [redacted] all of whom are ‘public bodies’ for the purposes of s 6 of the IBAC Act and over which the IBAC has jurisdiction pursuant to s 60(3) of the IBAC Act.
[1]The description of the Investigation was taken from the affidavit of Rhiannon Griffiths dated 14 October 2021, [5]-[7].
There is a second stream of the Investigation which is examining the conduct of parties concerning [redacted].
[Redacted].
The first plaintiff is [redacted]. The second plaintiff is [redacted].
[Redacted].[2]
[2]Defendant’s Outline of Submissions dated 14 October 2021, [20]-[23] (‘Defendant’s Submissions’).
[Redacted].
[Redacted].
By their Further Amended Originating Motion for judicial review, the plaintiffs seek:
(a) an order in the nature of certiorari quashing the decision of the defendant or its delegates to conduct the Investigation [redacted] under s 60(1) of the Independent Broad-based Anti-corruption Commission Act 2011, including in respect of any and all of the following:
(i) the negotiations of, or agreement to, any enterprise agreement between [redacted]; and
(ii) any subject matter substantially similar to the above.
(b) a declaration that the Investigation is ultra vires and void, invalid and of no effect;
(c) an order restraining the defendant from continuing the Investigation or any investigation substantially similar to the Investigation;
(d) an order directing the defendant to deliver up to the plaintiffs all documents, devices and other materials seized from the first plaintiff and its employees [redacted]; and
(e) an order that the defendant, at the same time that it delivers to the plaintiffs the documents, devices and other material in compliance with the previous subparagraph, by its duly authorised office swear an affidavit deposing that it has delivered to the plaintiffs all the documents, devices and other materials it seized from the first plaintiff and has kept no copies of any such material or delivered any such copies to any other person.
The parties did not address the orders sought in paragraphs (d) and (e) above. Rather, they postponed any such submissions until after the delivery of judgment.
Grounds Relied Upon
The plaintiffs’ case, on which its claim for remedies (a) to (c) is based. were contained in the first ground of its further amended originating motion. This was that the IBAC had acted outside of its power in conducting the Investigation as matters pertaining to the conduct of parties with respect to the negotiation of, or agreement to, an enterprise agreement were subject to the provisions of the Fair Work Act. The particulars to the first ground stated that Part 2-4 of the Fair Work Act:
i.asserts, in its terms, to cover the field in respect of the negotiation of, or agreement to, an Enterprise Agreement, and pursuant to s 30 of the [Fair Work Act], it is clearly intended to apply to the exclusion of, or prevail over, laws of the States and Territories or instruments made under those laws;
ii.[assign] jurisdiction over matters concerning the conduct of parties with respect to negotiation of, or agreement to, an Enterprise Agreement to the Fair Work Commission.
The plaintiffs’ case raised the following legal issues:
(a) whether Parts 2-4 and 3-1 of the Fair Work Act 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 Fair Work Act to such an extent as to render the IBAC Act inoperative to the extent of the inconsistency;
(b) whether the Investigation intrudes into that field or subject matter;
(c) whether, having regard to the proper construction of the Fair Work Act, if it did cover the field or subject matter relied on, whether that it would transgress the principle in Melbourne Corporation v The Commonwealth,[3] (the ‘Melbourne Corporation principle’).
[3](1947) 74 CLR 31 (the ‘Melbourne Corporation Case’).
Legislation
The Commonwealth Constitution
Section 109 of the Commonwealth Constitution provides that:
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.
Independent Broad-based Anti-corruption Commission Act 2011
The IBAC Act establishes and describes the constitution and rules of the IBAC. The functions of the IBAC are set out in s 15 of the Act, which includes any functions conferred on the IBAC under the IBAC Act, or any other Act, and without limiting that generality: [4]
(a) to identify, expose and investigate corrupt conduct;
(b) to identify, expose and investigate police personnel misconduct;
(c) to assess police personnel conduct.
[4]IBAC Act (Vic) s 15(1), (2).
In more detail, the IBAC Act provides:
3 Definitions
(1) In this Act—
…
relevant offence means—
(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;
…
4 Corrupt conduct
(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—
(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
(e) that could constitute a conspiracy or an attempt to engage in any conduct referred to in paragraph (a), (b), (c), (d) or (da)—
being conduct that would constitute a relevant offence.
(1A)For the purposes of this Act, in determining whether conduct would constitute a relevant offence, the IBAC may assume that the required state of mind to commit the relevant offence can be proven.
(2) Conduct may be corrupt conduct for the purposes of this Act if—
(a)all or any part of the conduct occurs outside Victoria, including outside Australia; and
(b) the conduct would be corrupt conduct if it occurred in Victoria.
(2A)For the purposes of section 4(1)(da), the effective performance or exercise by a public officer or public body of the functions or powers of the public officer or public body may be adversely affected notwithstanding that the public officer or public body does not engage in any corrupt conduct or other misconduct in performing or exercising those functions or powers.
(2B)For the purposes of section 4(1)(da), an associate of a first person is—
(a)a person or entity who has an agreement, arrangement or understanding with the first person or holds any relevant financial interest in any business of the first person;
(b)if the first person is a natural person, a person who is a relative of the first person;
(c) if the first person is a body corporate—
(i)an entity of whom the first person is an associate within the meaning of section 11 of the Corporations Act; or
(ii)an employee or officer of a related body corporate within the meaning of the Corporations Act to the first person.
…
15 Functions of the IBAC
(1)The IBAC has the functions conferred on the IBAC under this Act or any other Act.
(1A)In performing its functions, the IBAC must prioritise its attention to the investigation and exposure of corrupt conduct which the IBAC considers may constitute serious corrupt conduct or systemic corrupt conduct.
(1B)Subsection (1A) does not restrict the IBAC's discretion to determine to investigate any matter that the IBAC considers may constitute corrupt conduct.
(2)Without limiting the generality of subsection (1), the IBAC has the following functions—
(a) to identify, expose and investigate corrupt conduct;
(b)to identify, expose and investigate police personnel misconduct;
(c) to assess police personnel conduct.
(3)Without limiting the generality of subsection (2), the IBAC has the following functions under subsection (2)—
(a)to receive complaints and notifications to the IBAC in relation to corrupt conduct;
(b)in relation to police personnel conduct—
(i)to receive police personnel conduct complaints and notifications to the IBAC;
(ii)to ensure that the highest ethical and professional standards are maintained by police officers and protective services officers;
(iii) to ensure that police officers and protective services officers have regard to the human rights set out in the Charter of Human Rights and Responsibilities Act 2006;
(ba) to conduct preliminary inquiries;
(c) to hold examinations;
(d) to make referrals to other persons or bodies.
(4)Without limiting subsections (2) and (3), the IBAC has the following functions in relation to public interest complaints—
(a)to investigate any of those complaints that it may investigate in accordance with—
(i) its corrupt conduct investigative functions; or
(ii)its police personnel conduct investigative functions;
(b)to refer the complaints to other persons or bodies to investigate;
(c) to dismiss the complaints.
(5)The IBAC has education and prevention functions for the purpose of achieving the objects of this Act.
(6)Without limiting the generality of subsection (5), the IBAC has the following functions under subsection (5)-
…
(7)For the purpose of achieving the objects of this Act, the IBAC has the following functions—
(a) to receive information, conduct research and collect intelligence, and to use that information, research and intelligence in support of investigations;
(b)to report on, and make recommendations as a result of, the performance of its duties and functions.
Section 60 states:
Conducting investigations about corrupt conduct
(1)Subject to subsection (2), the IBAC may conduct an investigation in accordance with its corrupt conduct investigative functions –
(a) on a complaint made to it under section 51; or
(b) on a notification made to it under section 57(1); or
(c) on its own motion.
(2)The IBAC must not conduct an investigation under subsection (1) unless the IBAC suspects on reasonable grounds that the conduct constitutes corrupt conduct.
(3)The IBAC may conduct an investigation under subsection (1) in relation to conduct of, or in relation to—
(a)a person who was a public officer at the time of the conduct even if that person is no longer a public officer;
(b)a body that was a public body at the time of the conduct even if that body is no longer a public body or has ceased to exist as a body or as a public body;
(c)a person referred to in section 4(1)(a) which is, or was, a corporation even if that corporation has been deregistered under the Corporations Act.
(4)The IBAC must not conduct an investigation under subsection (1) in relation to conduct which occurred entirely before the commencement of section 11 if the IBAC considers that –
(a)the conduct is trivial or unrelated to the functions of the IBAC; or
(b) the complaint or notification is frivolous or vexatious; or
(c) the complaint or notification lacks substance or credibility; or
(d)the conduct occurred at too remote a time to justify investigation; or
(e) the complaint or notification was not made genuinely or was made primarily for a mischievous purpose.
(5)The IBAC must not conduct an investigation under subsection (1) in relation to conduct which occurred entirely before the commencement of section 11 unless the IBAC is reasonably satisfied that—
(a)it is in the public interest for the IBAC to investigate that conduct; and
(b)subject to subsection (4), in all the circumstances it is appropriate for the IBAC to investigate that conduct, having regard to the IBAC’s functions of identifying and exposing corrupt conduct; and
(c)in the case of conduct that another investigatory body has already investigated or decided not to investigate—
(i)there is reliable, substantial and highly probative evidence that was not considered by the investigatory body; or
(ii)there is reliable, substantial and highly probative evidence that the investigation or decision not to investigate was materially affected by error.
(6) In this section –
investigatory body means –
(a) an integrity body; or
(b)any other person or body (whether or not still in existence) with the power to require the production of documents or the answering of questions.
Fair Work Act 2009 (Cth)
The Fair Work Act contains the current Commonwealth system of regulating industrial relations and employer and employee relations. It sets up a range of mechanisms for the regulation of conditions of employment and provides for national employment standards. Until the late 1980s the Commonwealth industrial relations system was based on conciliation and arbitration, often resulting in industry wide awards. The enactment of the Industrial Relations Act 1988 (Cth) and its later amendments introduced a system of certified agreements based on enterprise bargaining. In the 1990s and 2000s, a system of workplace agreements was introduced by the Workplace Relations Act 1996 (Cth) and the Workplace Relations Amendment (Work Choices) Act 2005 (Cth), which survived challenges to its validity in New South Wales v The Commonwealth (‘Work Choices Case’).[5] In 2009, the Fair Work Act was enacted, containing the detailed provisions for enterprise bargaining which are central to this proceeding.
[5]New South Wales v The Commonwealth (2006) 229 CLR 1.
This proceeding arises from the negotiating, making and implementation of enterprise agreements. It is therefore necessary to refer to many provisions of the Fair Work Act, commencing with one of its objects:[6]
(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.
[6]Fair Work Act s 3(f).
Part 1-3 deals with the ‘Application of [the Fair Work Act]’ and Division 2 explains how the Act affects the operation of certain State or Territory laws. Section 26 excludes ‘State or Territory industrial laws’, which term is defined widely and includes an Act of a State or Territory that applies to employment generally and has one of a number of specified purposes as its main, or, one of its main purposes. These are listed in s 26(2) and include:
(b)an Act of a State or Territory that applies to employment generally and has one or more of the following as its main purpose or one or more of its main purposes:
(i) regulating workplace relations (including industrial matters, industrial activity, collective bargaining, industrial disputes and industrial action);
…
(iii) providing for the making and enforcement of agreements (including individual agreements and collective agreements), and other industrial instruments or orders, determining terms and conditions of employment;
…
(vi) providing for rights and remedies connected with conduct that adversely affects an employee in his or her employment; or
…
(h) either of the following:
(i) a law that is a law of a State or Territory;
(ii) an instrument of a legislative character made under such a law;
that is prescribed by the regulations.
Section 27 lists laws that are not excluded by s 26, for example the Equal Opportunity Act 2010 (Vic). The IBAC Act is not listed. Section 27 also lists non-excluded matters such as superannuation, workers compensation, and occupational health and safety.
Section 28 provides that the Act excludes prescribed State and Territory laws. Section 29(1) provides that a modern award or enterprise agreement prevails over a law of a State or Territory, to the extent of any inconsistency. Section 29(2) and (3) contain exceptions to s 29(1).
Section 30, which is headed ‘Act may exclude State and Territory laws etc. in other cases’, states:
This Division is not a complete statement of the circumstances in which this Act and instruments made under it are intended to apply to the exclusion of, or prevail over, laws of the States and Territories or instruments made under those laws.
Enterprise agreements are regulated by Part 2-4, which has the following objects:[7]
[7]Fair Work Act s 171.
(a)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
(b) to enable the FWC to facilitate good faith bargaining and the making of enterprise agreements, including through:
(i) making bargaining orders; and
(ii) dealing with disputes where the bargaining representatives request assistance; and
(iii) ensuring that applications to the FWC for approval of enterprise agreements are dealt with without delay.
Divisions 2 to 7 of Part 2-4 deal with the content of enterprise agreements[8] and the process for making them. They can be made about matters, including those pertaining to the relationship between an employer that will be covered by the agreement and that employer’s employees who will be covered by the agreement.[9] To facilitate bargaining, a bargaining representative may represent employees, with the default bargaining representative being the registered organisation, the union, which has coverage for those employees.[10]
[8]Fair Work Act s 172.
[9]Fair Work Act s 172.
[10]Fair Work Act ss 173-178B.
Sections 179 and 179A provide for the disclosure by organisations and employers of benefits that they will derive from the provisions of the agreement that is being bargained. The plaintiffs submitted that this was a method by which the Fair Work Act deals with corruption.
Bargaining representatives must comply with the following good faith bargaining requirements:[11]
[11]Fair Work Act s 228.
(1)The following are the good faith bargaining requirements that a bargaining representative for a proposed enterprise agreement must meet:
(a) attending, and participating in, meetings at reasonable times;
(b)disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner;
(c)responding to proposals made by other bargaining representatives for the agreement in a timely manner;
(d)giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative’s responses to those proposals;
(e)refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining;
(f)recognising and bargaining with the other bargaining representatives for the agreement.
The Fair Work Commission (the ‘Commission’) has jurisdiction to make bargaining orders when satisfied that the good faith bargaining requirements have not been met or that the bargaining process is not proceeding efficiently or fairly because there are multiple bargaining representatives for the agreement.[12] The Commission can make bargaining orders under s 230 which must specify:
[12]Fair Work Act s 230(3).
What a bargaining order must specify
(1)A bargaining order in relation to a proposed enterprise agreement must specify all or any of the following:
(a)the actions to be taken by, and requirements imposed upon, the bargaining representatives for the agreement, for the purpose of ensuring that they meet the good faith bargaining requirements;
(b)requirements imposed upon those bargaining representatives not to take action that would constitute capricious or unfair conduct that undermines freedom of association or collective bargaining;
(c)the actions to be taken by those bargaining representatives to deal with the effects of such capricious conduct;
(d)such matters, actions or requirements as the FWC considers appropriate, taking into account subparagraph 230(3)(a)(ii) (which deals with multiple bargaining representatives), for the purpose of promoting the efficient or fair conduct of bargaining for the agreement.
When the obstacles to bargaining escalate the Commission can make a serious breach declaration in the following circumstances:[13]
[13]Fair Work Act s 235(2).
(2) The FWC must be satisfied that:
(a)one or more bargaining representatives for the agreement has contravened one or more bargaining orders in relation to the agreement; and
(b) the contravention or contraventions:
(i) are serious and sustained; and
(ii)have significantly undermined bargaining for the agreement; and
(c)the other bargaining representatives for the agreement (the designated bargaining representatives) have exhausted all other reasonable alternatives to reach agreement on the terms that should be included in the agreement; and
(d)agreement on the terms that should be included in the agreement will not be reached in the foreseeable future; and
(e)it is reasonable in all the circumstances to make the declaration, taking into account the views of all the bargaining representatives for the agreement.
After the post-declaration negotiating period ends, if certain other conditions have been met, the Commission under s 269 must make a bargaining related workplace determination of the terms of the agreement for the parties as quickly as possible.[14] Section 269 is contained in Part 2-5 which deals with circumstances in which the Commission can arbitrate the terms of employment for particular groups of employees.
[14]Fair Work Act s 269.
The Fair Work Act provides for mandatory terms that must be included in an enterprise agreement.[15]
[15]Fair Work Act ss 202-205.
The Commission is given power to approve, vary and terminate enterprise agreements. Section 187(2) provides that in approving enterprise agreements:
The FWC must be satisfied that approving the agreement would not be inconsistent with or undermine good faith bargaining by one or more bargaining representatives for a proposed enterprise agreement, or an enterprise agreement, in relation to which a scope order is in operation.
Under s 186, before the Commission is obliged to approve certain enterprise agreements, it must be satisfied that the enterprise agreement has been genuinely agreed to by the employees covered by the agreement by reference to a number of criteria. These criteria are set out in s 188. The Commission must be satisfied that the enterprise agreement passes the better off overall test, unless, because of exceptional circumstances, the approval of the agreement would not be contrary to the public interest.[16] The Commission must be satisfied that the employees have been given a proper opportunity to consider the terms of the enterprise agreement that they are to be asked to approve,[17] and the employees must be given a copy of the proposed agreement.[18] The Commission must be satisfied that the enterprise agreement does not include any unlawful terms.[19] It may refuse to approve the agreement if it considers that compliance with the agreement may result in a person committing an offence against a law of the Commonwealth, or a person being liable to pay a pecuniary penalty in relation to a law of the Commonwealth.[20]
[16]Fair Work Act ss 189 and 193.
[17]Fair Work Act ss 186 and 188(1)(a).
[18]Fair Work Act s 180.
[19]Fair Work Act ss 186(4), 194.
[20]Fair Work Act s 192.
An enterprise agreement is made when a majority of employees who cast a valid vote approve the agreement.[21] A registered organisation which was the bargaining representative for the proposed enterprise agreement can apply to the Commission to be covered by the agreement after it is made.[22]
[21]Fair Work Act s 182(1).
[22]Fair Work Act s 183.
Chapter 3 of the Fair Work Act deals with ‘Rights and responsibilities of employees, employers and organisations’. One workplace right is the making of an enterprise agreement.[23]
[23]Fair Work Act ss 341(1)(b) and 341(2)(e).
Part 3-1 provides for general workplace protections and provides that a person must not take action against another person because the other person has a workplace right.[24] ‘Workplace right’ is defined as follows:[25]
[24]Fair Work Act s 340.
[25]Fair Work Act s 341(1).
Meaning of workplace right
(1) A person has a workplace right if the person:
(a) is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body; or
(b)is able to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument; or
(c) is able to make a complaint or inquiry:
(i) to a person or body having the capacity under a workplace law to seek compliance with that law or a workplace instrument; or
(ii) if the person is an employee – in relation to his or her employment.
Section 340 which is titled ‘Protection’ provides that:
340 Protection
(1) A person must not take adverse action against another person:
(a) because the other person:
(i) has a workplace right; or
(ii) has, or has not, exercised a workplace right; or
(iii)proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or
(b) to prevent the exercise of a workplace right by the other person.
(2) A person must not take adverse action against another person (the second person) because a third person has exercised, or proposes or has at any time proposed to exercise, a workplace right for the second person’s benefit, or for the benefit of a class of persons to which the second person belongs.
Sections 343, 344 and 345 protect workplace rights by prohibiting coercion, undue influence or pressure or misrepresentations in connection with workplace rights.
Part 3-1, Division 4 deals with industrial activities. Section 346, which is a civil remedy provision, provides that a person must not take adverse action against another person because the other person:
(a)is or is not, or was or was not, an officer or a member of an industrial association; or
(b)engages, or has at any time engaged or proposed to engage, in industrial activity within the meaning of paragraph 347(a) or (b); or
(c)does not engage, or has at any time not engaged or proposed to not engage, in industrial activity within the meaning of paragraphs 347(c) to (g).
Section 348 prohibits a person from taking action to coerce another person or a third person to engage in industrial action, while s 349 prohibits a person from knowingly or recklessly making a false or misleading misrepresentation about another person’s obligations to engage in industrial activity or about another person’s obligation to disclose whether he or she, or a third person is or is not or was or was not an officer or member of an industrial association or is or is not engaging or has or has not engaged in industrial activity.
Part 3-3 details when industrial action for a proposed enterprise agreement is protected industrial action. No action lies under any law in force in a State or Territory in relation to protected industrial action except in certain circumstances. Section 415 provides:
415 Immunity provision
(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.
Section 460 provides immunity for persons who act in good faith on protected action ballot results which purport to authorise particular industrial action and who engage in that industrial action.
Part 3-7 is titled ‘Corrupting benefits’. Its introduction in s 536A contains the following ‘Guide to this Part’:
This Part is about corrupting benefits provided to or in relation to organisations.
Division 2 prohibits benefits intended to influence an officer or employee of an organisation.
Division 3 prohibits national system employers providing cash or in kind payments to employee organisations and related persons, other than certain legitimate benefits specified in the Division.
Section 536C explains the concurrent operation of Part 3-7 with State and Territory laws as follows:
536C Concurrent operation of State and Territory laws
(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.
Part 3-7, Division 2 is titled ‘Giving, receiving or soliciting corrupting benefits’. Section 536D provides that a person, the defendant, commits an offence punishable in the case of an individual with maximum penalties of imprisonment for ten years or 5,000 penalty units or both, and in the case of a body corporate 25,000 penalty units if the person, the defendant, dishonestly provides, causes to be provided or causes an offer or promise of the provision of a benefit to be made to another person when the defendant does so with the intention of influencing a registered organisations officer or employee in an organisation:
(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.
Section 536D(2) provides that a person, the defendant, commits an offence if he or she dishonestly requests, whether or not expressly and whether or not by threats; or receives or obtains; or agrees to receive or obtain a benefit from a person (the provider) for the defendant or another person, and the defendant does so with the intention that, or the intention that the provider believes that, the receipt or expectation of the receipt, of the benefit will influence a registered organisations officer or employee (who may be the defendant) in the three areas set out in (i) to (iii) at the end of the last paragraph. Breach of s 536D(2) attracts the same penalties as s 536D(1).
Section 536F prohibits a defendant, being a national system employer other than an employee organisation, providing or offering to provide cash or in kind payments to employee organisations and related persons, other than legitimate benefits, where the defendant, a spouse, or associated entity of the defendant, or a person who has a prescribed connection with the defendant, employs a person who is, or is entitled to be, a member of the organisation and whose industrial interests the organisation is entitled to represent.
Where the Fair Work Act provides a civil penalty for contravention of a provision, the following persons have standing to sue for that penalty: the persons affected by the contraventions, an industrial association, or a Fair Work inspector, which includes the Fair Work Ombudsman.[26] The plaintiffs submitted that the Fair Work Act establishes its own inspectorate in respect of the obligations associated with enterprise bargaining.
[26]Fair Work Act ss 539 and 701.
Referral of powers legislation – Fair Work (Commonwealth Powers) Act 2009 (Vic)
The plaintiffs submitted that Victoria’s referral of power to the Commonwealth for the purposes of the Fair Work Act, in the Fair Work (Commonwealth Powers) Act 2009 (Vic) (the ‘Referral Act’) which commenced on 17 June 2009 was relevant to the construction of the enterprise agreement scheme. The plaintiffs submitted that the intention of the referral of power was to have the Commonwealth Law cover the field.
I will set out some detail of the referral of powers, which I have taken from, or repeat from, the plaintiffs’ submissions on the topic.
The referral of power from the States to the Commonwealth, is facilitated by the passage of State legislation in each referring state. The Fair Work Act is principally underpinned by the Commonwealth corporations power, which does not permit it to extend to employers who are not constitutional corporations, such as the state public services or individual (non-corporate) employers. The referral of power extended the reach of the Fair Work Act to cover such entities.
By operation of s 4 of the Referral Act, the power to legislate in respect of the referred subject matters was referred to the Parliament of the Commonwealth. The referred subject matters are defined under s 3. They include:
(a) Bargaining in relation to terms and conditions of employment;
(b) Compliance with, and enforcement of, the Commonwealth Fair Work Act;
(c) The administration of the Commonwealth Fair Work Act;
(d) The application of the Commonwealth Fair Work Act;
(e) Matters incidental or ancillary to the operation of the Commonwealth Fair Work Act or instruments made or given effect under the Commonwealth Fair Work Act.
The extension of the operation of the Fair Work Act and the enterprise agreement scheme to the Victorian public sector are achieved by Part 1-3, Division 2A of the Fair Work Act, in combination with the Referral Act.
The public sector is defined in the Referral Act, by reference to its meaning under the Public Administration Act 2004 (Vic):
public sector means the sector that compromises-
(a) the public service and
(b) public entities; and
(c) special bodies;
Section 5 of that Act defines ‘public entities’. Both [redacted] are public entities, being bodies that are established under an Act of the Victorian Parliament and which serve a public function.
Section 30B of the Fair Work Act operates to make Victoria a referring State by reason of its referral of the referred subject matters to the Commonwealth under the Referral Act.
Having status as a referring State under the Act means that the extended definitions of ‘national system employee’ and ‘national system employer’ then apply to persons in Victoria in accordance with ss 30C and 30D of the Fair Work Act. This means that all employers in Victoria, [redacted], fall within the jurisdiction of the Fair Work Act.
Principles for the application of s 109 of the Commonwealth Constitution to State and Territory laws
The parties relied on the High Court’s judgment in Work Health Authority v Outback Ballooning Pty Ltd (‘Outback Ballooning’)[27] as stating the principles governing the application of s 109 of the Commonwealth Constitution.
[27](2019) 266 CLR 428 (‘Outback Ballooning’).
It is convenient to again set out s 109 of the Commonwealth Constitution:
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.
The High Court has distinguished direct and indirect inconsistency between Commonwealth and State laws. The differences were explained in Outback Ballooning, in which the plurality stated:[28]
[28][31]-[35]; [39]-[40].
In Victoria v The Commonwealth (“The Kakariki”), Dixon J referred to two approaches which might be taken to the question whether an inconsistency might be said to arise between State and Commonwealth laws. They were subsequently adopted by the Court in Telstra Corporation Ltd v Worthing, Dickson v The Queen and Jemena Asset Management (3) Pty Ltd v Coinvest Ltd.
The first approach has regard to when a State law would “alter, impair or detract from” the operation of the Commonwealth law. This effect is often referred to as a “direct inconsistency”. Notions of “altering”, “impairing” or “detracting from” the operation of a Commonwealth law have in common the idea that a State law may be said to conflict with a Commonwealth law if the State law in its operation and effect would undermine the Commonwealth law.
The second approach is to consider whether a law of the Commonwealth is to be read as expressing an intention to say “completely, exhaustively, or exclusively, what shall be the law governing the particular conduct or matter to which its attention is directed”. This is usually referred to as an “indirect inconsistency”. A Commonwealth law which expresses an intention of this kind is said to “cover the field” or, perhaps more accurately, to “cover the subject matter” with which it deals. A Commonwealth law of this kind leaves no room for the operation of a State or Territory law dealing with the same subject matter. There can be no question of those laws having a concurrent operation with the Commonwealth law.
The question whether a State or Territory law is inconsistent with a Commonwealth law is to be determined as a matter of construction. In a case where it is alleged that a State or Territory law is directly inconsistent with a Commonwealth law it will be necessary to have regard to both laws and their operation. Where an indirect inconsistency is said to arise, the primary focus will be on the Commonwealth law in order to determine whether it is intended to be exhaustive or exclusive with respect to an identified subject matter.
It is not to be expected that a Commonwealth law will usually declare that it has this effect. In some cases the detailed nature or scheme of the law may evince an intention to deal completely and therefore exclusively with the law governing a subject matter. It may state a rule of conduct to be observed, from which the relevant intention may be discerned. 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. A provision which, expressly or impliedly, allows for the operation of other laws may be a strong indication that it is not so intended. The essential notion of indirect inconsistency is that 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.
…
In many areas the [Civil Aviation] Act must operate within the setting of other laws with which aircraft operators and their staff are obliged to comply. Adapting what Dixon J said in Ex parte McLean, the [Civil Aviation] Act was intended to be “supplementary to or cumulative upon” State or Territory law. The example his Honour gave in that case was of a Commonwealth award which expressly prohibited shearers from injuring sheep whilst shearing. It would not reasonably follow, his Honour said, that a shearer who unlawfully and maliciously wounded a sheep that he was shearing could not be prosecuted under the State criminal law.
The fact that a Commonwealth statute makes certain conduct an offence is not conclusive of exclusivity. There is no presumption that a Commonwealth offence excludes the operation of other laws. The Crimes Act 1914 (Cth), in providing that a person cannot be punished twice, recognises this. If there were a rule or standard of conduct imposed by the [Civil Aviation] Act directed at the safety of persons affected by aircraft operations, gross breach of it could result in a conviction for manslaughter. The first respondent concedes as much and accepts that offences of this kind cannot be said to be within the exclusive preserve of the CA Act.[29]
[29]Citations omitted.
Does s 109 of the CommonwealthConstitution render the Independent Broad-based Anti-corruption Commission Act 2011, or the powers contained in s 60, inoperative because of their inconsistency with the Fair Work Act 2009 (Cth)?
The plaintiffs’ submissions
The plaintiffs submitted that the Fair Work Act covers the field or subject matter of enterprise bargaining and, therefore, an indirect inconsistency exists between the Fair Work Act and s 60 of the IBAC Act to the extent that it permits investigations into enterprise bargaining. The Fair Work Act leaves no room for the operation of State or Territory laws dealing with the same subject matter.
The plaintiffs reached this conclusion by the following steps. First, by identifying what they contended was the subject matter of the Commonwealth law, the Fair Work Act. The subject matter was the enterprise agreement scheme. The Fair Work Act ‘comprehensively regulate[d] enterprise bargaining in Australia, including the mechanics of making an agreement, its content, the conduct of persons involved in making the agreement and its enforcement’.[30]
[30]Plaintiffs’ Outline of Submissions dated 21 September 2021, [74] (‘Plaintiffs’ Submissions’).
The plaintiffs’ second step, after the identification of the subject matter of the Commonwealth law, was to determine, by applying principles of statutory construction, whether the Commonwealth law was intended to be a complete, exhaustive or exclusive statement of the law governing that subject matter. If the Commonwealth law did not contain an express provision to that effect, it was necessary to determine whether, properly construed, the Commonwealth law contained an implicit negative proposition that nothing other than what Commonwealth law provides upon a particular subject matter is to be the subject of legislation.[31] It is not necessary in order to establish that the Commonwealth law covers the field that it should provide for every aspect of the subject matter covered by the State law.[32] The mere existence of the two sets of provisions is sufficient.[33]
[31]Outback Ballooning, [35].
[32]Work Choices Case, 166 [370].
[33]Clyde Engineering Co Ltd v Cowburn (1926) 37 CLR 466, 489 -490.
The plaintiffs identified factors relevant to determining the Commonwealth Parliament’s intentions about enterprise bargaining in enacting the Fair Work Act. They were the nature or subject matter of the law; the overall legislative scheme, including its level of detail about enterprise bargaining, its legislative history, and the pre-existing state of the law; the purpose of the law and the mischief it was intended to remedy.
The plaintiffs referred to the provisions of the Fair Work Act on the subject matter of enterprise bargaining in Parts 2-4 and 3-1, and to the Act’s objects which expressed an aim of having simple and clear rules about good faith bargaining obligations and industrial action.
The significant detail in the enterprise bargaining scheme in the Fair Work Act suggests that it is a stand-alone scheme to the exclusion of State and Territory laws. The legislative history of industrial agreements by enterprise bargaining shows that they have always been the subject of Commonwealth law. State legislation has not dealt with that subject matter. Victoria has referred to the Commonwealth its powers over enterprise bargaining and other matters such as compliance with, enforcement of, and the application of the Fair Work Act. While the Fair Work Act did not intend to exhaustively or exclusively govern all the subject matters contained in it, it does so in respect of the enterprise agreement scheme, contained in Parts 2-4 and 3-1. Those Parts show a clear intention to cover the subject matter of enterprise agreements exhaustively and exclusively.
The Fair Work Act does not expressly state that Parliament intended it to be a complete statement on the subject matter of enterprise bargaining, nor does it expressly deal with corrupt conduct concerning enterprise bargaining. However, the Fair Work Act does not have to deal with corruption to indicate that it covers the field on the subject matter of enterprise agreements.
In Part 1-3, the Fair Work Act describes its application and its interaction with State and Territory laws. Section 30 states:
This Division is not a complete statement of the circumstances in which this Act and instruments made under it are intended to apply to the exclusion of, or prevail over, laws of the States and Territories or instruments made under those laws.
The plaintiffs submitted that, in contrast, the enterprise bargaining scheme does not contain any express indication of an intention to operate co-operatively with State and Territory laws. Part 3-7 and s 536C do not demonstrate that intention and the enterprise agreement scheme stands separately from Part 3-7. Rather, Part 3-7 demonstrates that when Parliament wanted the Fair Work Act to operate co-operatively with State and Territory laws, it said so. But, where it did not say so, a contrary intention that no concurrent operation was intended should be inferred. The plaintiffs argued that the ‘Corrupting benefits’ provisions in Part 3-7 stand separately from the enterprise agreement provisions.
The plaintiffs submitted that as the Commonwealth law intended to cover the field or subject matter of enterprise agreements, it was unnecessary to consider in detail the provisions of the IBAC Act.[34] The Investigation focused on conduct occurring during the negotiation of enterprise agreements. It was an investigation into the conduct of persons involved in enterprise agreements, which is conduct regulated by the enterprise agreement provisions of the Fair Work Act. Therefore, the Investigation intruded on the field covered exclusively by the Fair Work Act. The investigatory powers the IBAC sought to exercise were inconsistent with the enterprise agreement scheme contained in the Fair Work Act. Because of that inconsistency, s 109 of the Commonwealth Constitution applied with the effect that the IBAC Act was invalid to the extent that it permitted the IBAC to investigate matters that concern enterprise agreements and enterprise bargaining.
[34]Clyde Engineering Co Ltd v Cowburn (1926) 37 CLR 446, 489.
Sections 415 and 460, which confer immunities, are not part of the enterprise agreement scheme and are not relevant to its analysis. They are contained in Part 3-3 of the Fair Work Act which is concerned with the taking of protected action, which is conduct of a different nature than the conduct regulated by the enterprise agreement scheme.
The referral of power by the State of Victoria to the Commonwealth demonstrates that the Victorian Parliament intended to ‘vacate the field’ of workplace relations, an area in which it had previously competed with the Commonwealth. By contrast, having taken up the power referred by Victoria and legislated on the subject matter of enterprise agreements, the Commonwealth Parliament has shown an intention to fill the void and ‘cover the field’ in relation to those subject matters.
The plaintiffs disputed the IBAC’s contention that, their submission that the effect of the enterprise agreement scheme was inconsistent with its investigative powers, would destroy or curtail the existence of the State or its capacity to function and therefore infringe the Melbourne Corporation principle or doctrine.[35] The IBAC was only created in 2011, and the State of Victoria existed for many years without it. The Melbourne Corporation principle or doctrine will only be infringed where there is a curtailment or interference with the exercise of State constitutional power in a significant manner.[36] The plaintiffs’ submission would only carve a very narrow area out of the IBAC’s broad mandate. The State of Victoria had submitted itself to the process of enterprise bargaining which had resulted in enterprise agreements [redacted]. Therefore, it could not now argue that the process of enterprise bargaining impaired its capacity to function.[37]
[35]Melbourne Corporation v The Commonwealth (1947) 74 CLR 31.
[36]Austin v The Commonwealth a (2003) 215 CLR 185, 265 [168].
[37]United Firefighters’ Union of Australia v Country Fire Authority (2015) 228 FCR 497, 540 [189], 541 [193], 545 [207].
Section 15A of the Acts Interpretation Act 1901 (Cth) does not affect the initial task of the Court in assessing whether there is an indirect inconsistency, but arises after that task is completed. The IBAC Act must be treated as not authorising entry into the enterprise agreement field that is covered by the Fair Work Act. The focus has to be on the ability of the State to function and not whether some function that it undertakes is impaired.
The IBAC’s submissions
The IBAC identified the issue for determination as whether the Commonwealth Parliament intended that the Fair Work Act ‘shall be a complete statement of the law governing a particular relation or thing,’[38] with which s 60(1) of the IBAC Act is concerned, which includes identifying, exposing and investigating corrupt conduct. The relevant subject matter was corrupt conduct that has a potentially damaging effect on public officials and public bodies in the State of Victoria.
[38]Citing Stock Motor Ploughs Ltd v Forsyth (1932) 48 CLR 128, 136.
As no direct inconsistency of the two Acts was alleged, it was necessary to decide whether the Fair Work Act contained a negative proposition that it alone was to empower investigative agencies to investigate the allegedly corrupt ‘conduct of persons involved in enterprise bargaining’, including the conduct of Victorian ‘public bodies’ and ‘public officers’ involved in enterprise bargaining to which conduct s 60(1) of the IBAC Act may also apply.
The IBAC argued that no such negative proposition was contained in the Fair Work Act. Rather, the Act was intended to operate within a framework or setting of State and Commonwealth criminal laws and other laws that allow agencies to investigate allegations of criminal and corrupt conduct. The Act was similar in that respect to the Civil Aviation Act 1988 (Cth) considered in Outback Ballooning. That no such implicit negative proposition was contained in the Fair Work Act was plain from s 536C, which makes clear that State laws concerning corrupt conduct are intended to operate concurrently with Part 3-7 of the Fair Work Act. The Fair Work Act’s exclusion of some State laws does not mean that it excludes all State laws. Section 536C is an ‘acknowledgment’ that persons involved in enterprise bargaining can become subject to investigative and enforcement action by a regulatory authority having responsibility for the administration of another law. The wider the field or subject matter, the less likely the lawmaker intended to cover the field. The effect of the plaintiffs’ submissions would be to impair the capacity of the State of Victoria to function as a government that is capable of keeping its Executive accountable and free of, and protected from, corrupt conduct.
The Fair Work Act does not provide for the investigation of allegedly corrupt conduct in enterprise bargaining and therefore does not exclusively regulate that subject matter. The Fair Work Ombudsman has power to monitor compliance with the Fair Work Act and: [39]
[39]Fair Work Act s 682(1).
(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 make applications to the FWC, to enforce this Act, fair work instruments and safety net contractual entitlements;
(e) to refer matters to relevant authorities.
However, the Fair Work Ombudsman is not given general power to investigate corrupt conduct occurring in connection with industrial matters.
The Fair Work Act, in particular ss 415 and 460, contains the immunities that the Commonwealth Parliament intended to grant to persons involved in matters covered by it. It does not grant any immunity to persons involved in corrupt conduct in enterprise bargaining or in making enterprise agreements. Rather it deals with corrupt conduct in Part 3-7 about ‘Corrupting benefits’ by enacting provisions which are intended to operate concurrently with State Laws.
Section 536C, which allows for the operation of other laws, is be a strong indication that the Commonwealth law was not intended to be the exhaustive and exclusive law on the subject. As Gageler J noted in Outback Ballooning,[40] by reference to Dixon J’s analysis in Stock Motor Ploughs Ltd v Forsyth:[41]
Few Commonwealth laws are framed to operate cumulatively upon the entire corpus of State and Territory laws. Most Commonwealth laws will have a definite area of affirmative operation which will admit of the concurrent operation of some, but not all, State and Territory laws.
[40]Outback Ballooning, 457 [68].
[41](1932) 48 CLR 128.
The IBAC submitted that if the Fair Work Act contained the ‘negative proposition’ for which the plaintiffs contend, the Commonwealth Parliament did not possess legislative powers to empower agencies to investigate the allegedly corrupt conduct of persons involved in enterprise bargaining, or to prevent State governments investigating corruption involving their public bodies or officers. The Commonwealth was prevented from exercising such power by the Melbourne Corporation principle,[42] which Dixon J described as:[43]
The foundation of the Constitution is the conception of a central government and a number of State governments separately organized. The Constitution predicates their continued existence as independent entities.
…
...that, unless a given legislative power appears from its content, context or subject matter so to intend, it should not be understood as authorizing the Commonwealth to make a law aimed at the restriction or control of a State in the exercise of its executive authority.
[42]Melbourne Corporation v The Commonwealth (1947) 74 CLR 31.
[43]Ibid 82-83.
The effect of the Melbourne Corporation principle is that the Fair Work Act cannot operate as a complete or exhaustive statement of the laws that empower agencies to investigate corrupt conduct by Victorian public bodies or public officers engaged in by, or involving, persons in enterprise bargaining or the enterprise agreement scheme.
The protection of State government agencies from corrupt conduct is fundamental to the continued existence and effective functioning of the State. Investigations under s 60(1) of the IBAC Act assist in making Victorian public officers and public bodies accountable, while protecting them from corrupt conduct that would affect the performance of their public functions. Although the IBAC was only created in 2011, it was Victoria’s means of tackling corruption in public life.
Analysis
To decide whether the IBAC has the power to conduct the Investigation the following questions must be answered:
(a) What is the subject matter, contained in the Fair Work Act, that is said to be inconsistent with the investigative powers conferred by the IBAC Act on the IBAC?
(b) Did the Commonwealth Parliament intend the Fair Work Act to be a complete, exhaustive or exclusive statement of the law on the subject matter of enterprise agreements and bargaining, including on corruption occurring in connection with them?
(c) If the Fair Work Act covers that subject matter, does the IBAC’s Investigation intrude upon it?
(d) What effect does the Melbourne Corporation principle have in answering questions (b) and (c)?
Neither the plaintiffs or the defendants submitted that the information before the Court about the IBAC’s Investigation was insufficient to decide these questions.
First, I consider the subject matter that is governed by the Fair Work Act because, as the plurality of the High Court stated in Outback Ballooning:[44]
the primary focus will be on the Commonwealth law in order to determine whether it is intended to be exhaustive or exclusive with respect to an identified subject matter.
[44]Outback Ballooning, 447 [34] (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ).
In answer to the first question stated in [85], the Fair Work Act regulates the conduct of enterprise bargaining, being conduct aimed at achieving an enterprise agreement between employers and employees and their representative organisations. The enterprise agreement scheme sets standards of conduct for the negotiation of enterprise agreements. It prohibits coercion and adverse action and requires good faith bargaining.
But, in my opinion, the enterprise bargaining and agreement scheme does not exclude the law of the land, except where it expressly confers immunity from it. It does not wholly exclude the criminal law and thus, a physical assault occurring in excessively robust bargaining discussions would still be a breach of the ordinary criminal law. The plaintiffs submitted that such conduct could not to be characterised as bargaining. While that is so, in my opinion, of more importance is that the Fair Work Act does not display a general intention to exclude the law of the land except where it expressly does so, for instance, by granting immunities to persons involved in ‘protected industrial action’.[45] The immunity provisions result from a long history of debate about the conduct that should be permitted during industrial disputes.[46] However, in other respects, the Fair Work Act does not confer general immunity on persons involved in negotiating enterprise agreements, or involved in other activities regulated by the Fair Work Act from the operation of the law of the land, including laws concerning corrupt conduct, or its investigation. It would be surprising if it did, because such corrupt conduct is the antithesis of genuine bargaining.
[45]Fair Work Act s 415.
[46]See the cases discussed by Evatt J in McKernan v Fraser (1931) 46 CLR 343, 378ff.
The plaintiffs submitted that the absence of a provision conferring immunity in relation to enterprise bargaining and the enterprise agreement scheme establishes that that scheme was drafted with an intention to cover that subject matter exhaustively and exclusively. But I consider that the Fair Work Act, by conferring particular immunities, indicates that in other respects the ordinary law applies to conduct regulated by it, or at least for present purposes, to corrupt conduct occurring in connection with the enterprise agreement scheme.
The answer to the question of whether the prescription of codes or standards of behaviour in the Fair Work Act, in the absence of an express statement of Parliamentary intention, excludes the ordinary law of the land, depends on the context of that Act. Dixon J discussed a somewhat similar question in Ex parte McLean[47] in the following passage:
On the other hand, the Commonwealth Conciliation and Arbitration Act in giving force and effect to awards necessarily confines their exclusive authority to the regulation of industrial relations and, moreover, to the regulation of industrial relations which are in dispute. It may perhaps follow from this rule that, while the arbitrator can make his award the exclusive measure of industrial rights and duties between the disputants, the laws of a State which do not regulate industry at all are not inconsistent with the exclusive authority which the Commonwealth statute gives to the award merely because they deal with specific conduct which, as between the disputants, is dealt with by the award. For example, if the award in this case expressly forbad shearers to injure sheep when shearing, it would not be a necessary consequence that a shearer who unlawfully and maliciously wounded a sheep he was shearing could not be prosecuted under the State criminal law for unlawfully and maliciously wounding an animal. It is not, however, necessary to determine whether this distinction in the application of the doctrine is valid. It may be assumed that provisions of State law which prohibit acts or omissions irrespective of the relation of employer and employed, and without regard to any other industrial relation or matter, are not superseded under sec. 109 merely because it happens that in their industrial aspect the same acts or omissions by parties to a dispute are forbidden by Federal award and by this means made punishable under the Federal statute. But, in this case, the State law, sec. 4 of the Masters and Servants Act 1902, deals directly with the relation of employer and employed, and in virtue of that industrial relation makes penal the very default which the Federal law punishes somewhat differently in the regulation of the same relation.
The case, therefore, is not one in which conduct made punishable by State law on grounds which do not affect industrial relations is forbidden by an award as a regulation of industry, and thus brought also within the penalties of the Commonwealth Conciliation and Arbitration Act.
[47]Ex parte McLean (1930) 43 CLR 472, 485-486.
In my opinion, the corrupt conduct which the IBAC is permitted to investigate is, to use Dixon J’s words, the subject of a law of the State ‘which does not regulate industry at all’ and deals with ‘acts or omissions irrespective of the relation of employer and employed’. Provisions of the Fair Work Act which deal with certain corrupt or corrupting conduct are tailored to specific situations, whereas the IBAC Act is directed at corrupt conduct in whatever circumstances it occurs in Victorian public bodies or officers. In a similar way Gageler J in Outback Ballooning, in a passage I quote fully later, said that ‘most Commonwealth laws will have a definite area of affirmative operation’.[48]
[48]Outback Ballooning, 457 [68].
The same reasoning that Dixon J’s applied has been used in other contexts. For instance in McWaters v Day,[49] the High Court decided that no inconsistency existed between a State law prohibiting driving under the influence and a Commonwealth law prohibiting a member of the defence force driving under the influence on service land so as to be incapable of having proper control of a vehicle and where both laws provided different penalties. The High Court quoted from another passage in Dixon J’s judgment in Ex parte McLean:[50]
The inconsistency does not lie in the mere coexistence of two laws which are susceptible of simultaneous obedience. It depends upon the intention of the paramount Legislature to express by its enactment, completely, exhaustively, or exclusively, what shall be the law governing the particular conduct or matter to which its attention is directed.
[49](1989) 168 CLR 289.
[50]Ibid 296, quoting (1930) 43 CLR 472, 483.
The High Court emphasised the importance of considering the context of the Commonwealth law stating:[51]
In support of this argument, the respondent points to the decision in Blackrock, where s 29 of the Crimes Act 1914 (Cth), which makes it an offence wilfully and unlawfully to damage Commonwealth property, was held to be exhaustive and so to invalidate, to the extent of the resulting inconsistency, a State law prohibiting wilful and unlawful damage to property generally. For similar reasons, the respondent suggested that s 43(1) of the Discipline Act, dealing with damage to service property, would have the same effect.
The analogy with Blackrock’s Case depends for its force upon the proposition that the relevant sections of the Discipline Act are intended to be exhaustive statements of criminal liability; see Blackrock. The respondent suggests that, just as s 29 of the Crimes Act had as its purpose the protection of Commonwealth property, so s 40 is intended to protect defence property and defence personnel. The respondent also points to the specific and comprehensive wording of the provisions. But common sense and principles of statutory construction demand that the provisions be read in their context: K. & S. Lake City Freighters Pty. Ltd. v. Gordon & Gotch Ltd. That context was recently considered by this Court in Re Tracey.[52]
[51]McWaters v Day (1989) 168 CLR 289, 297 (‘McWaters v Day’).
[52]Citations omitted.
The High Court followed previous authority deciding that the Defence Force Discipline Act 1982 (Cth) was to be interpreted so that the military discipline code it enacted was cumulative upon, and not exclusive of, the ordinary criminal law.[53]
[53]McWaters v Day, 297-298.
The Fair Work Act contains no indication of an intention to permit bargaining for enterprise agreements which may breach criminal laws or which involves corrupt conduct. The conduct that the IBAC is seeking to investigate may be criminal conduct, being a relevant offence. Corrupt conduct prohibited by the laws of the land, or which may be investigated pursuant to such laws, stands outside the enterprise bargaining scheme contained in the Fair Work Act. Enterprise bargaining is a ‘statutory artefact’[54] which has a ‘definite area of affirmative operation’ to use the words of Gageler J in Outback Ballooning.[55] The context of the enterprise agreement scheme is not the eradication of corrupt conduct, even when it occurs in enterprise bargaining.
[54]Toyota Motor Corporation Australia Ltd v Marmara (2014) 222 FCR 152, [90].
[55]Outback Ballooning, [68].
The High Court acknowledged in Outback Ballooning, that, in many areas, a Commonwealth law must operate within the setting of State and other laws.[56] As Gageler J stated: [57]
The reality of Commonwealth legislation is more complex than this conceptual dichotomy admits. Few Commonwealth laws are framed to operate cumulatively upon the entire corpus of State and Territory laws. Most Commonwealth laws will have a definite area of affirmative operation which will admit of the concurrent operation of some, but not all, State and Territory laws.
[56]Ibid, 449 [39].
[57]Ibid, 457 [68].
In Outback Ballooning, the High Court considered that the Civil Aviation Act did not exclude the subject matter of s 28BE of the Work Health and Safety (National Uniform Legislation) Act 2011 (NT). That section required the holder of an Air Operator’s Certificate to take reasonable steps to ensure that every activity covered by the Certificate and everything done in accordance with such an activity, was done with a reasonable degree of care and diligence. The case had one significant distinction from the present, in that the Fair Work Act contains no equivalent of s 28BE(5), which is described in the quotation in the following paragraph.
The High Court concluded that the Civil Aviation Act in relevant respects was designed to operate within the framework of other State, Territory or Commonwealth laws.[58] Gageler J stated:[59]
There is nothing in the argument that the [Civil Aviation] Act does not contemplate the intrusion into aircraft operations of a regulator other than the Civil Aviation Safety Authority (“CASA”) and therefore does not accommodate investigative or enforcement action by the Work Health Authority under the NT WHS Act. Section 28BE(5)’s acknowledgement that the holder of an AOC can be subject to a duty imposed by or under another law carries with it an acknowledgement that the holder can become subject to investigative and enforcement action by a regulatory authority having responsibility for the administration of that other law. To the extent that particular administrative action taken by such a regulator might have the potential to impair or detract from the operation of the [Civil Aviation]Act or action taken by CASA under the [Civil Aviation] Act, the question of whether the action of the regulator might give rise to “operational” inconsistency would appropriately be addressed if and when the question arose. There is no such question in this case. The mere potential for inconsistency to arise in practice as a consequence of the exercise of one or more statutory powers is no reason for holding the statutes conferring those powers to be inconsistent in all of their potential applications.[60]
[58]Ibid, 453 [57].
[59]Ibid, 467 [90].
[60]Citations omitted.
Edelman J, although dissenting in the result of the case, considered that some subject matters were outside the exclusive regime of air safety contained in the Civil Aviation Act. They included the general criminal law, air security and torts to individuals.[61]
[61]Outback Ballooning, 470 [96].
I conclude that the Fair Work Act does not exclude the investigation of corrupt conduct, involving state bodies or officers, by regulators or investigative agencies established by State laws. The IBAC is investigating allegations of corrupt conduct which may constitute criminal conduct. Such conduct can occur in enterprise bargaining just as in other area of human activity.
A second reason for concluding that the Fair Work Act is not an exhaustive or exclusive statement of the law about corruption in respect of any matter concerning enterprise agreements is that Part 3-7 creates the criminal offence and civil penalty provision of corrupting benefits with penalties of up to 10 years imprisonment for individuals. Section 536C makes plain that these provisions are intended to operate concurrently with State laws. They apply to actions of officers or employees of registered organisations in the performance of their duties, including areas which are likely to include bargaining. There is no apparent reason why the provisions of Part 3-7 should be construed as not applying to conduct forming part of the enterprise bargaining scheme contained in Parts 2-4 and 3-1. Those provisions are directed at the actions of officers and employees of registered organisations in whatever circumstances those actions may occur. Section 536D is a general provision applying generally to the performance by a registered organisations officer, a union or employee body’s official or employee.
In the result, I accept that the Fair Work Act covers in detail the subject matter, or field, of enterprise agreements including enterprise bargaining. But in answer to question (b) in [85], the detailed enterprise agreement scheme does not exclude the general law about corrupt conduct, including the IBAC Act which permit identification, exposure and investigation of corrupt conduct.
While the State of Victoria has referred its power over bargaining to the Commonwealth, it has not referred the law dealing with the investigation of corruption. Accepting the plaintiffs’ submission that the referral of power shows an intention by the State of Victoria to vacate the field of workplace relations on the subject matters mentioned, I do not consider that the power to investigate corruption conferred by the IBAC Act has been excluded by that referral or that the referral indicates an intention that the Fair Work Act should cover the field or subject matter of the investigation of corruption in respect of enterprise agreements.
In my opinion, the Fair Work Act does not intend to be exhaustive or exclusive with respect to the identified subject matter,[62] being corrupt conduct, as defined in the IBAC Act, including when it is associated with enterprise bargaining agreements involving Victorian public bodies and public officers.
[62]Ibid, 447 [34].
It follows from that conclusion that the answer to question (c) stated in [85] is that the IBAC’s Investigation does not intrude into the enterprise agreement scheme contained in the Fair Work Act. The IBAC’s investigative powers are not inconsistent, within the meaning of the Commonwealth Constitution, with the enterprise agreement scheme contained in the Fair Work Act.
The Melbourne Corporation principle
Although it is unnecessary, in view of my conclusions, to consider the submissions about the Melbourne Corporation principle or doctrine, I will state my conclusions on this issue which is the subject of question (d) stated in [85].
The IBAC submitted that if the effect of a finding that the Fair Work Act covered the subject matter or field of enterprise agreements was that its investigative powers were, to that extent, rendered invalid then the Commonwealth law would transgress the Melbourne Corporation principle.
The plaintiffs, however, submitted that I should first determine whether the Fair Work Act was intended to exhaustively and exclusively cover the subject matter or field of enterprise bargaining and enterprise agreements. They submitted that s 15A of the Acts Interpretation Act 1901 (Cth) (the ‘Acts Interpretation Act’) did not affect the initial task of the Court in assessing whether there is an indirect inconsistency, but arose for consideration, if at all, only after that task was completed. In addition, in applying the Melbourne Corporation principle, it is necessary to consider the effect of the Commonwealth law on the State’s ability to function as a government, rather whether some function that it undertakes is impaired.
If I had concluded that the IBAC Investigation intruded into the subject matter of enterprise agreements exhaustively and exclusively covered by the Fair Work Act, I would have found that the Act, to that extent, infringed the Melbourne Corporation principle and should be read down to avoid that inconsistency pursuant to s 15A of the Acts Interpretation Act, which states:
15A Construction of Acts to be subject to Constitution
Every Act shall be read and construed subject to the Constitution, and so as not to exceed the legislative power of the Commonwealth, to the intent that where any enactment thereof would, but for this section, have been construed as being in excess of that power, it shall nevertheless be a valid enactment to the extent to which it is not in excess of that power.
In Attorney-General (Vic) v The Commonwealth (‘Pharmaceuticals Benefits Case’), Dixon J stated:[63]
[w]e should give to the powers conferred upon the Parliament as ample an application as the expressed intention and the recognized implications of the Constitution will allow. We should interpret the enactment, so far as its language permits, so as to bring it within the application of those powers and we should not, unless the intention is clear, read it as exceeding them.
[63](1945) 71 CLR 237, 267.
The application of the Melbourne Corporation principle raises a ‘practical question’ as Gaudron, Gummow and Hayne JJ stated in Austin v The Commonwealth:[64]
There then is posed the “practical question” identified by Starke J in Melbourne Corporation. This, in the end, is whether, looking to the substance and operation of the federal laws, there has been, in a significant manner, a curtailment or interference with the exercise of State constitutional power.
[64](2003) 215 CLR 185, 265 [168].
I would not have accepted the plaintiffs’ submission that the enterprise agreement scheme does not impair the capacity of the State of Victoria to function because of the fact that it chose to engage in the enterprise bargaining in which the corruption is said to have arisen. Although, the State of Victoria, through its statutory bodies, may have agreed to the enterprise agreements, the acceptance of the plaintiffs’ inconsistency argument would impair the capacity of the State of Victoria to function. The present case differs from United Firefighters’ Union of Australia v Country Fire Authority[65] upon which the plaintiffs relied, where the State’s function, that was said to be impaired, was its ability to determine the number and identity of employees it could employ or make redundant. Here the State function of investigating corruption is a function of general importance to a State and its Executive.
[65](2015) 228 FCR 497.
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 those 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 [redacted] is an aspect ‘of a State’s functions which are critical to its capacity to function as a government’.[66] The acceptance of the plaintiffs’ submissions would in a significant manner curtail or interfere with the exercise of the State’s constitutional power.[67]
[66]Re Australian Education Union; ex parte Victoria (1995) 184 CLR 188, 232.
[67]Austin v The Commonwealth of Australia (2003) 215 CLR 185, 265 [168].
Therefore, to adopt the plaintiffs’ interpretation of the effect of the Fair Work Act’s enterprise agreement scheme would confer a power on the Commonwealth Parliament that is in excess of the power conferred on it by the Commonwealth Constitution.
Conclusion
The plaintiffs have not established any inconsistency between the enterprise agreement scheme in the Fair Work Act and the IBAC Act or the investigative powers contained in it.
I will give the parties an opportunity to make submissions about the appropriate orders to give effect to this judgment.
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