FEDERAL COURT OF AUSTRALIA

RSA Express Pty Ltd v Guilfoyle, sued in his capacity as a Work Health and Safety Prosecutor [2019] FCA 1605

ORDERS

THE COURT ORDERS THAT:

1.    The application for an interlocutory injunction be dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

LOGAN J:

1    In or around January 2013 the Applicant, RSA Express Pty Ltd (RSA) became, and it remains to this day, an NVR Registered Training Organisation (RTO) as defined in the National Vocational Education and Training Regulator Act 2011 (Cth) (NVETR Act).

2    Ever since 2013, the business of RSA has been the provision throughout Australia of online training for various accredited courses pursuant to the scope of its registration as an RTO under the NVETR Act and applicable State or Territory legislation.

3    As to the applicable State legislation, s 325 of the Work Health and Safety Regulation 2011 (Qld) (WHS Reg), made under the Work Health and Safety Act 2011 (Qld) (the WHS Act), enables an official of the State of Queensland (the State) within its Office of Industrial Relations (OIR) known as “the Regulator”, appointed under Schedule 2 to the WHS Act to enter into an agreement with an RTO for the exercise by the RTO of the Regulator’s functions and powers under ss 319, 321 and 322 of the WHS Reg. The State and that official are now, as a result of amendment of the originating application, respectively the Second and First Respondents. These functions and powers relate to the issuing, upon application to the Regulator, to a person who has successfully completed general construction induction training in Queensland of what is termed a general construction induction training card (colloquially known as, and hereafter termed a “white card”). In or about September 2017, RSA entered into such an agreement (the 2017 Agreement) with the Regulator.

4    By s 318 of the WHS Reg, a reference to a white card includes a reference to an equivalent card that was issued under a corresponding WHS law. This exemplifies for Queensland a national scheme of mutual recognition of particular such qualifications in the construction industry.

5    The 2017 Agreement permitted RSA to issue a white card to students who had successfully completed construction induction training in the course “CPCCWHS1001 Prepare to work safely in the construction industry” (the Course). Online delivery of this course by RSA was permitted.

6    Clause 16 of the 2017 Agreement provides for non-consensual amendment of the agreement on the initiative of the Regulator:

16.    The RTO acknowledges that the Regulator will notify the RTO, with 21 days prior notice of amendments to the conditions by means of an email to the address provided by the RTO. Continued issue and replacement of cards following such notification will represent agreement by the RTO to be bound by the amended conditions.

7    At the time when the 2017 Agreement was made, and to this day, RSA delivered, and continues to deliver, via online means, materially, the Course. It does so from its premises in New South Wales.

8    Possession of a white card and thus the successful undertaking of training such as the Course is a prerequisite to employment in the construction industry.

9    In December 2018, the Regulator amended the conditions of the 2017 Agreement to provide that RSA could not issue a white card to a person who had been provided construction induction training by way of online delivery unless RSA was based in Queensland and the student also lived in Queensland but more than 100km from any training organisation based in Queensland (the First Amendment). The First Amendment commenced on 1 March 2019.

10    On and from 8 August 2019, after the commencement of these proceedings, the Regulator further amended the 2017 Agreement so as to remove the requirement for RSA to be based in Queensland but otherwise maintained the limitation in relation to online delivery of training (the Second Amendment). The Second Amendment imposed further conditions relating to advertising of the provision of construction induction training.

11    On the evidence, the Regulator and thus the State complied with the process found in cl 16 of the 2017 Agreement for the amendment on the Regulator’s initiative of that agreement.

12    On 22 August 2019, RSA signed and returned to the Regulator under protest the 2017 Agreement as amended by the Second Amendment. It has sought an interlocutory injunction restraining the operation of the amendments, pending the hearing and determination of the substantive proceeding. RSA has, by its counsel, given the usual undertaking as to damages.

13    Between 1 January 2018 and 31 December 2018, RSA issued approximately 124,215 white cards to students under the 2017 Agreement. This resulted in revenue for it of approximately $6,107,897.35 (the 2018 revenue). The breakdown by source State or Territory of the 2018 revenue was as follows:

14    RSA intends to continue to deliver online training, including the Course, albeit only to rural students at least in Queensland. Mr Leigh Csont, the sole director of RSA, has estimated that the combined impact of the First Amendment and the Second Amendment to the 2017 Agreement is that they will result in an estimated reduction of RSA’s annual revenue, when compared with the 2018 revenue, of $5,235,251.11. I infer from the tabulated breakdown and this estimate that RSA’s delivery of the Course and related issuing to successful students of white cards under the WHS Reg has the consequence under mutual recognition legislation of also satisfying site entry requirements in States and Territories other than Queensland. I further so infer that, for this reason, the demand for the Course as delivered online comes, or at least hitherto has come, not just from students in Queensland but also from those in other States and Territories who find it convenient by this means to secure a white card enjoying mutual recognition. Neither party considered it necessary for the purpose of resolving the present application to explore in detail the mutual recognition regime.

15    The reduction in revenue might inferentially be expected to have a correlating impact on the value of RSA’s business. As to this, the evidence discloses that, in 2018, prior to the First Amendment, RSA had received offers which placed a value on its business of about $29,500,000. In contrast, in May 2019, after the First but prior to the Second Amendments, the worth of RSA’s business, according to an appraisal obtained by it, was between $4,000,000 and $6,250,000.

16    RSA identified the following factors as ones which may impact permanently upon the sale value of RSA’s business even were it to succeed in its substantive claims in these proceedings:

(a)    Potential purchasers are now acquainted with how suddenly changes can be made to the conditions by Regulators without any consultation with the RTOs and how damaging the effects of the changes can be;

(b)    Competing businesses will have had time and increased profits with which to grow and capture larger parts of the market thus making them stronger competitors; and

(c)    RSA may also lose significant digital marketing advantages. RSA has invested considerable time, effort and some millions of dollars into its search engine optimisation rankings, industry partnerships and search advertising positioning since registration as an RTO.

17    Ever since the commencement of the First Amendment, RSA has been unable to register any students for its online training and issue of white cards under the WHS Act other than students resident in rural Queensland (more than 100 km away from places of training). Neither amendment would affect its ability to deliver online training under any other State or under Territory regimes which still permit the Course to be delivered by online means.

18    Related to this inability to register students and revenue loss, Mr Csont estimates, and I am asked to, and do, accept for the purposes of the application by RSA for interlocutory injunctive relief, that, unless an interlocutory injunction is granted by about the end of September, RSA will need to consider whether it can afford to continue to employ its current staff. His estimate is that the level of students now able to be trained indicates that RSA would need to terminate approximately 40% of its current staff of 42 persons.

19    It may be that there is a wider impact of the First Amendment and the Second Amendment than just on RSA in that it appears on the evidence (Mr Asnicar of Urban E-Learing Pty Ltd) that like amendments have been made by the Regulator to other persons delivering the Course and that, viewed on a whole of construction industry basis, travel and wages costs associated with attendance for face to face training may amount to many, many millions of dollars.

20    The State operates within Queensland a network of vocational training institutions which deliver technical and further education (TAFE Queensland). The Course is one of those offered at TAFE Queensland. TAFE Queensland is also authorised under the WHS Reg to issue a white card to a student who successfully completes the Course.

21    The evidence also establishes that, prior to the imposition of the First Amendment to the 2017 Agreement, the Regulator consulted with the Queensland Training Authority, the Electrical Trades Union and the Construction Forestry Maritime Mining Energy Union but not more widely either within the construction industry or those persons, RSA included, then providing training to persons employed or who sought to be employed within that industry. The respondents’ evidence read on the hearing of the present application (affidavits of Ms Sutherland and Mr Bick) is to the effect that the face to face training requirement found in the First and Second Amendments is for the purpose of establishing a standard for pre­ construction training in order to ensure better safety on work sites, as well as to reduce the risk of fraud (in the delivery and completion of training and the related issuing of white cards). It is not necessary for present purposes to reach any final conclusion as to purpose, only that this is the avowed purpose of the respondents in relation to the making of these amendments to the 2017 Agreement.

22    Further, because it was mentioned in submissions by RSA, seemingly as a factor adverse to the respondents, I should record that, in itself, consultation by the Regulator or others within the OIR with trade unions on a work health and safety subject is unremarkable. One of the historic and legitimate concerns of trade unions has been the promotion, on behalf of workers, of work health and safety issues. Whether, given such consultation, the Regulator was obliged, for procedural fairness reasons, also to consult with RSA is an issue raised on the pleadings but not one pressed for consideration in relation to whether or not to grant an interlocutory injunction. If continued to be pressed (and assuming the existence of a relevant judicial review jurisdiction by this Court) it would be necessary to consider whether, in light of the contractually ordained process for amendment, apparently followed, any procedural fairness obligation via-a-via RSA arose. It needs to be remembered that, sometimes, the calling to account, in relation to an adverse impact of a government decision reactive to but limited consultation, is a political, not a juridical, one.

23    Though it has pleaded other causes of action as well in its statement of claim (including an alleged denial of procedural fairness), RSA, with commendable forensic discrimination by its counsel, relies only on its allegations that:

(a)    each of the First Amendment, the Second Amendment and s 319 of the WHS Reg breaches s 92 of The Commonwealth Constitution (the Constitution), in that they discriminate in their application between persons in Queensland and persons outside of Queensland; and

(b)    the imposition of the First Amendment and the Second Amendment each constitutes conduct by the State (via the Regulator) which contravenes s 46 of the Competition and Consumer Act 2010 (Cth) (the CCA) in that it is conduct which has lessened, or will substantially lessen, competition in the market for provision of construction induction training and the issue of white cards in circumstances where the State is engaged in the provision of construction induction training and the issue of white cards through TAFE Queensland.

24    As to its allegation of conduct which has lessened, or will substantially lessen, competition in the market for provision of construction induction training and the issue of white cards, RSA’s case also falls for consideration by reference to s 46 in Schedule 1 to the CCA. In Schedule 1, the reference to “corporation” found in s 46 of the CCA is replaced by a reference to “person” but the language of the provisions is otherwise identical.

25    In the course of the hearing of the application, reference was made on behalf of the respondents in their written submissions to s 13 of the Competition Policy Reform (Queensland) Act 1996 (Qld) (CPRQ Act), to which further reference will be made below. It is, though, fair to say that the particular link between the CPRQ Act and Schedule 1 to the CCA was not explored in detail in the submissions of the parties. After judgement was reserved the parties conceived that it was desirable that this particular link be the subject of a joint note for consideration by the Court prior to the delivery of judgement. It is in the interests of justice to take that joint note into account. I express my gratitude to the parties for that joint note.

26     In Queensland, the adoption of what is now Schedule 1 to the CCA was enacted by the CPRQ Act. Pursuant to ss 4, 5 and 6 of that Act, Schedule 1 to the CCA applies as a law of Queensland. Section 4(2)(b) of the CPRQ Act expressly specifies that references to corporations in parts of the CCA other than the schedule version of part IV thereof are to include references to persons who are not corporations. Section 13 is the equivalent of s 2B of the CCA.

27    The CPRQ Act is a Queensland sequel to inter-governmental agreements relating to competition law reform the nature of which is described in the  joint judgment  of  McHugh  A-CJ, Gummow, Callinan and Heydon JJ in NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90 at [14] – [29]. One federal sequel of these agreements was the insertion into what is now the CCA (then the Trade Practices Act 1974 (Cth)) of s 2B; another was what is now Schedule 1 to the CCA.

28    At least for the purposes of determining the present application, the parties are agreed that RSA’s case is not affected by any distinction between s 46 of CCA or s 46 in Schedule 1 to the CCA. Nor, for the purposes of the present application do the respondents submit that there is any distinction except to the favourable extent that s 46 in Schedule 1 to the CCA is not restricted, in its application, merely to corporations.

29    The interlocutory injunctive orders which RSA seeks are that the First Amendment and the Second Amendment of the 2017 Agreement are not to be enforced, and the terms and conditions of the 2017 Agreement as in force prior to the commencement of the First Amendment are to operate between the parties until further order of the Court.

30    It is common ground that the Court has power to grant such interlocutory injunctive relief. As to the cause of action based on s 46 of the CCA, that power is conferred by s 80(2) of that Act (it was not submitted for the respondents that this source of power would be affected if it were s 46 in Schedule 1 to the CCA and the CPRQ Act were the source of any liability of the respondents). As to the constitutionally based cause of action, interlocutory injunctive relief could be granted in the exercise of the general powers conferred on the Court by s 23 of the Federal Court of Australia Act 1976 (Cth).

31    In general, the test for whether to grant an interlocutory injunction entails two considerations:

(a)    whether the applicant, here RSA, has made out a prima facie case; and

(b)    whether the balance of convenience favours the grant of the injunction sought.

32    In Australian Competition and Consumer Commission v Pacific National Pty Ltd [2018] FCA 1221 (ACCC v Pacific National) and by reference to the observations made by Gummow and Hayne JJ in Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 (ABC v O’Neill) at [65] - [72], Beach J, at [7], observed of the prima facie case limb that, “it is necessary to show a sufficient likelihood of success to justify the grant of the injunction, with such sufficiency being dependent upon the nature of the right being asserted and the practical consequences that are likely to flow if an injunction was granted”.

33    The respondents accepted, as do I, that this two-limbed test was applicable in relation to the granting of interlocutory injunctive relief even in case grounded on an alleged contravention of the Constitution. However, they additionally pointed to observations made by Sir Anthony Mason in Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 (Castlemaine Tooheys v South Australia). In that case, though his Honour, at 153, accepted that “principles governing the grant or refusal of interlocutory injunctions in private law litigation have been applied in public law cases, including constitutional cases, notwithstanding that different factors arise for consideration”. He added, at 154, “it may be that in some cases where the public interest would be adversely affected by the grant of an injunction the plaintiff may need to show a probability, even a distinct probability of success, in order to obtain an interlocutory injunction”. In between these two passages in Castlemaine Tooheys v South Australia, his Honour expressed a preference for the “serious question to be tried” rather than the “prima facie case” formulation of the first limb of the applicable test. After ABC v O’Neill, that preference could not be said to command majority support in the High Court. Even so, in my view, public interest, where present, is a factor which intrudes in an assessment of where the balance of convenience lies. An impact adverse to a public interest can constitute one of the “practical consequences” if an interlocutory injunction is granted and so require a demonstrated sufficient prospect of success in the way Beach J explained in ACCC v Pacific National. Truly, the two limbs of the test are interdependent.

34    Materially, s 46 of the CCA (or s 46 in Schedule 1 to that Act) applies to the respondents only insofar as the State carries on a business: s 2B of the CCA or, to no presently material different effect, s 13 of the CPRQ Act. On the evidence to hand, I regard it as a very moot point indeed as to whether, in the operation of TAFE Queensland so as to conduct the Course and, consequentially, issue white cards, the State carries on business. The delivery of education, including technical and further education, looks to me more like the discharge of a function of government than the carrying on of a business. But I am prepared to, and do, assume in favour of RSA that, at least in the conduct of the Course and in the consequential issuing of white cards, the State does, to this extent, carry on a business via TAFE Queensland.

35    Even so, the State, via the Regulator within the OIR, is not shown on the evidence to carry on any business. The relevant distinction was, with respect, pithily put by the Victorian Court of Appeal, in Murphy v Victoria (2014) 45 VR 119 at [46(d)], approving a formulation of the primary judge in that case:

There is a distinction between those functions of a government which are purely governmental or regulatory and those functions which entail the carrying on of business. To carry on some part of “the business of government” is something different from carrying on a business in the relevant sense.

[footnotes omitted]

36    The authorities cited in the passage quoted, JS McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337 at 355 (Emmett J) and Sirway Asia Pacific Pty Ltd v Commonwealth [2002] ATPR (Digest) 46-226 at [53] (Sundberg J) for the first and Markit Pty Ltd v Federal Commissioner of Taxation [2007] 1 Qd R 253 at [32] (Muir J), quoting from Town Investments Ltd v Department of Environment [1978] AC 359 for the second, support, with respect, these propositions. The operation of the OIR is nothing more on the evidence than the undertaking of a function of government quite separate from any business the State may undertake via TAFE Queensland. I therefore accept as correct the submission to this effect made by the respondents.

37    Thus I am not persuaded that the conduct alleged gives rise to a prima facie case in respect of a contravention of s 46 of the CCA (or s 46 of Schedule 1 to the CCA) by the State. That is so even though I accept that, even on the evidence to hand, RSA has established a prima facie case that the imposition of the First Amendment and the Second Amendment will substantially lessen competition in a market within Queensland for the delivery of the Course. At least prima facie, those who seek to deliver the Course via online means have, save at the remote margin, been eliminated from that market.

38    The absence of an evidenced prima facie case in relation to s 46 of the CCA necessarily directs attention to the constitutional cause of action upon which RSA additionally relies for the interlocutory injunctive relief which it claims.

39    In its prescription that, “[T]rade, commerce, and intercourse among the States … shall be absolutely free”, s 92 of the Constitution has been described as a “ ‘little bit of layman’s language’, the responsibility for the introduction of which was substantially borne by Sir Henry Parkes” (The Hon Stephen Gageler, Chapter 1, The Section 92 Revolution” in Encounters with Constitutional Interpretation and Legal Education (2018) James Stellios (ed), p 27, citing, at fn 7, JA La Nauze, ‘A Little Bit of Lawyer’s Language: The History of “Absolutely Free” 1890-19 in AW Martin (ed), Essays in Australian Federation (Melbourne University Press, 1969) 57). Whether the responsibility for its introduction was individual or collective, the result of its inclusion in the Constitution was a plethora of litigation and related controversy as to its meaning for most of the 20th century. However, in 1988, in Cole v Whitfield (1988) 165 CLR 360 at 407, the High Court held that that the effect of s 92 was that interstate trade and commerce was immune only from discriminatory burdens of a protectionist kind.

40    The respondents’ point that “the subject of s 92 is interstate trade, not traders” is well supported by later authority concerning that section: Betfair Pty Ltd v Racing New South Wales (2012) 249 CLR 217, 268 [50]; see also at 268 [46] (French CJ, Gummow, Hayne, Crennan and Bell JJ); see also at 289 [114] (Kiefel J). Thus, in determining whether RSA has, in relation to s 92, established a prima facie case, what is determinative is not is not its individual position but rather the position of the interstate trade in which it participates when compared to intrastate trade.

41    Section 319 of the WHS Reg, which is one provision submitted by RSA to contravene s 92, does no more than provide for the issuing of white cards. It entails no discriminatory burden at all in its operation, let alone one of a protectionist kind. It may be that, as to the WHS Reg, RSA’s intended case is that the agreement making power of the Regulator, found in s 325, must be read down so as not to authorise a contravention of s 92 of the Constitution. In this fashion, cl 15 of the 2017 Agreement might be said not to authorise the imposition of a condition the effect of which would be to contravene s 92. These propositions seem to me to be implicit in the contention that RSA makes that the First Amendment and the Second Amendment contravene s 92 and are void and of no effect.

42    As already noted, the effect of the First Amendment was that RSA could not issue a white card to a person who had been provided construction induction training by way of online delivery unless RSA was based in Queensland and the student also lived in Queensland but more than 100km from any training organisation based in Queensland. Having regard to Betfair Pty Ltd v Western Australia (2008) 234 CLR 418, it seems to me that, prima facie, in its prescription that RSA be based in Queensland and to the extent that it related to the delivery of online training, the First Amendment did impose a discriminatory burden on interstate trade of a protectionist kind. Prima facie, to the extent it operated to protect established deliverers of online training based in Queensland to those students more than 100km away from the competition RSA, which was based in New South Wales, would otherwise present to those Queensland based online training deliverers, it imposed a discriminatory burden. To this extent, the interstate trade prohibited and the intrastate trade protected were of the same kind.

43    What would remain for determination is whether, having regard to its avowed purposes, described above it could be concluded that the First Amendment served legitimate non-protectionist purposes and thus was lawfully authorised by s 325 of the WHS Reg. Given that the First Amendment nonetheless contemplated that online delivery of the Course was not inherently an unsafe practice, because it was permitted in some circumstances, the respondents’ own evidence sounds an interrogative note about its avowed purpose. More fundamentally but in the particular circumstances of those students living more than 100km away, this avowed purpose had no role to play.

44    However this may be, the First Amendment is no longer operative. So even if RSA has established a prima facie case, if only in the particular circumstances mentioned, the First Amendment has been superseded by the Second Amendment. Whatever loss and damage has resulted from the imposition of the First Amendment has thus occurred during a closed period. In my view, an award of damages would be an adequate remedy in respect of any such loss and damage in the event that RSA were to succeed at trial in vindicating this aspect of its s 92 claim.

45    It is the Second Amendment which is operative. As to this amendment, the submission made by the respondents persuades me that RSA has not made out a prima facie case. In its requirement that training be face-to-face and take place in Queensland the Second Amendment is indeed, “neutral as between interstate and intrastate traders”. As a result of the removal of the requirement that an RTO be based in Queensland, it is also neutral as between those who deliver online training (in respect of students who remain permitted to be so trained) be they based in or based outside Queensland.

46    As the respondents submitted:

Any RTO not based in Queensland can deliver face-to-face training in Queensland, either by having a presence in Queensland or by utilising Queensland based agents to deliver the training. Alternatively, any RTO not based in Queensland can issue white cards outside Queensland pursuant to a power bestowed by the Work Health and Safety authorities in its jurisdiction. Such training and white cards are recognised in Queensland. Accordingly, the requirement of face-to-face training is not discriminatory in its legal effect.

Neither, to the extent it remains permitted, is the Second Amendment discriminatory in its legal effect in relation to online training. Any RTO, irrespective of where it is based, can deliver such training online.

47    I accept that, on the evidence, the effect of each of the amendments on RSA has been and is likely to continue to be profound, to say nothing of the likely effect on RSA’s present employees. Viewed in isolation, these effects tend in favour of the granting of an interlocutory injunction on balance of convenience grounds. However, for the reasons given above, I regard an award of damages as an adequate remedy in respect of the effect of the First Amendment on RSA. As to the Second Amendment, I am not satisfied that RSA has made out a prima facie case, let alone one which has a sufficient likelihood of success to justify the grant of the interlocutory injunction sought. In itself, that conclusion dictates that RSA’s application for an interlocutory inunction should be dismissed.

48    In addition, that outcome is supported by taking into account the public interest arising from the avowed purpose of the Second Amendment. While the strength of the avowed purpose is diminished by the fact that online training is still permitted in some circumstances, inferentially on the evidence the permitted circumstances for online delivery of the Course will be at the margin. In most cases, it is likely that the Course will be delivered face to face, thereby serving the avowed purpose. For the reasons already given, RSA does not have a sufficient probability of success which would, because of the evidenced likely effect on it, warrant the granting of an interlocutory injunction even in the face of this public interest.

49    For these reasons, the application for an interlocutory injunction must be dismissed.

Associate:    

Dated:    30 September 2019