FEDERAL COURT OF AUSTRALIA

Registered Organisations Commissioner v Australian Workers’ Union (No 2) [2020] FCA 1148

ORDERS

THE COURT ORDERS THAT:

1.    The first respondent pay pecuniary penalties totalling $148,100.00.

2.    The penalties referred to above be paid to the Commonwealth within 28 days.

3.    There be no order as to costs.

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

REASONS FOR JUDGMENT

SNADEN J:

1    The Fair Work (Registered Organisations) Act 2009 (Cth) (hereafter, the “FW(RO) Act”) regulates the creation and management of industrial organisations that operate within the landscape of federal industrial law. Amongst other things, it imposes a number of administrative obligations with which such organisations must comply. Broadly speaking, the applicant (hereafter, the “Commissioner”)—the holder of a statutory office established by s 329AA of the FW(RO) Act—is charged with ensuring that compliance.

2    The obligations so conferred require (amongst other things) the preparation and circulation of audited financial information and, relevantly for present purposes, the creation and maintenance of accurate membership records. Sections 172 and 230 of the FW(RO) Act, in particular, require that organisations maintain up-to-date and accurate records of their members’ details. The FW(RO) Act’s legislative predecessors conferred equivalent obligations (the particulars of which are explored below).

3    In the present case, the first respondent—a large and well-known employee organisation (hereafter, the “AWU”)—stands accused of having failed to comply with those obligations over the period spanning January 2008 to March 2013. At the core of that accusation are arrangements that the AWU struck with seven entities: Cleanevent Australia Pty Ltd, Winslow Contractors Pty Ltd, BMD Constructions Pty Ltd, the Australian Jockeys’ Association, the Victorian Jockeys’ Association, the Australian Netball Players’ Association and Geotechnical Engineering Pty Ltd. Principally, those arrangements were struck via the agency of its former Victorian branch secretary, the second respondent, Mr Cesar Melhem. The details of those arrangements are explored below but, in essence, they were to this effect: each of the six entities (the Australian Jockeys’ Association and the Victorian Jockeys’ Association were, in effect, treated as a single body) agreed to pay to the AWU certain sums of money that, in each case, the AWU accounted for internally as membership revenue, specifically in respect of certain employees or members of those entities. Details of those employees or members were then entered into the AWU’s own membership records. Effectively, the AWU admitted to the ranks of its membership persons who had not applied to become members and did not know (at least not directly on account of anything that the AWU told them) that they were such. Those people became unwitting subjects through whom the AWU (or its Victorian branch) artificially inflated its membership levels over a period of many years.

4    In some cases (as the analysis below lays bare), the moneys that were paid to the AWU, despite being received and accounted for internally as membership revenue, were paid in satisfaction of invoices that the AWU falsely rendered for “training” or other services that were never provided. It appears in some (and perhaps many) cases that the AWU engaged internal protocols to ensure that those who were unwittingly added to its membership register in consequence of those apparently fraudulent endeavours were not, thereafter, alerted to that fact.

5    The Commissioner alleges that, by admitting to its membership ranks the employees (or, in some cases, members) of the entities with which it struck the arrangements that are central presently, the AWU contravened the requirements of s 230 of the FW(RO) Act (and its legislative predecessors). 11 such contraventions (the details of which are set out below) are alleged and the AWU concedes them all.

6    Additionally, the Commissioner alleges that the AWU failed to remove from its membership register the details of 1,022 individuals whose memberships had lapsed. By those failures, he alleges that the AWU contravened the requirements of s 172 of the FW(RO) Act. Again, the AWU concedes what is alleged.

7    At issue presently is the relief that this court should impose in respect of those conceded contraventions. The Commissioner seeks relief in the nature of declarations and pecuniary penalties totalling $244,900.00. The AWU does not oppose the granting of declaratory relief but submits that penalties should be set at $131,600.

8    For the reasons that follow, I am satisfied that the contraventions that the Commissioner alleges against the AWU occurred and that it is appropriate to impose pecuniary penalties against the AWU in respect of them. I have resolved to impose pecuniary penalties totalling $148,100.00. I do not consider it appropriate to (and will not) grant declaratory relief.

The proceeding

9    The contraventions that the Commissioner alleges against the AWU are set out in his statement of claim dated 16 May 2018. That pleading also alleges related contraventions of ss 285 and 286 of the FW(RO) Act against the second respondent, Mr Melhem. Upon (or not long after) its commencement, the matter was allocated to the docket of Mortimer J. It was scheduled to proceed to trial in September 2019.

10    In August 2019, the Commissioner and the AWU struck an accord regarding the latter’s liability for the contraventions alleged against it. Thereafter, the matter was bifurcated: Mortimer J retained so much of it as concerned Mr Melhem’s liability; and the question of what, if any, relief should issue in respect of the AWU’s by-then-agreed liability was allocated to me.

11    As events transpired, the Commissioner and Mr Melham also reached agreement regarding Mr Melhem’s liability for the contraventions that were alleged against him. The trial that was to take place before Mortimer J was vacated and her Honour later proceeded to hear evidence and submissions directed to the question of relief specific to Mr Melhem. By judgment pronounced on 12 November 2019—Registered Organisations Commissioner v Australian Workers’ Union [2019] FCA 1852 (hereafter, the “Melham Judgment”; Mortimer J)—her Honour granted declaratory relief recording that, by his conduct (much of which assumes significance in the present matter), Mr Melhem contravened ss 285(1) and 286(1)(a) of the FW(RO) Act, and equivalent provisions of its legislative predecessors. Her Honour imposed upon Mr Melhem pecuniary penalties totalling $20,590.00.

12    The accord struck between the Commissioner and the AWU has led to the preparation (and consensual adduction into evidence) of a comprehensive statement of agreed facts (hereafter, the “SOAF”), the key aspects of which are explored below. The parties (which is to say the Commissioner and the AWU) are agreed that the 11 conceded contraventions of s 230 of the FW(RO) Act condense into six discrete courses of conduct—one for each of the six entities with which the AWU struck the arrangements that presently assume prominence—to which it is agreed that regard should be had when fashioning appropriate pecuniary penalties.

13    Two affidavits affirmed by Mr Benedict (Ben) Mathias Davis—one dated 28 November 2019, the other 11 December 2019—were read without objection. Mr Davis succeeded Mr Melhem in 2013 as the secretary of the AWU’s Victorian branch. His evidence is summarised below.

Background facts

14    The following facts—the existence of all of which I accept—emerge without controversy from the SOAF.

The parties and the AWU’s rules

15    The Commissioner has standing under s 310(1) of the FW(RO) Act to apply for the relief that is sought. The AWU is and, at all material times, was an organisation registered pursuant to the FW(RO) Act and its legislative predecessors. Prior to the enactment of the FW(RO) Act, the registration and governance of industrial organisations were regulated by sch 1 to the Workplace Relations Act 1996 (Cth) (hereafter, the “RAO Schedule”).

16    The AWU, like all registered organisations, operates pursuant to rules made under (and given force by) the FW(RO) Act. At all times material to this matter, those rules provided for the affairs of the AWU to be divided amongst branches (one of which being the Victorian branch of which Mr Melhem was the secretary) and administered (at least to an extent) by a national executive. That national executive consisted of a number of office bearers, as well as delegates appointed by each of the AWU’s branches. Above the national executive in the AWU’s administrative hierarchy sat a body that was convened only occasionally and known as the national conference.

17    From August 2006 until May 2013, Mr Melhem was the secretary of the AWU’s Victorian branch. As the secretary of the AWU’s Victorian branch, Mr Melhem was an officer of the AWU (within the meaning attributed to that term by s 6 of the FW(RO) Act and the equivalent provisions of its legislative predecessors). He was also the recognised head of the AWU in Victoria and was a member of the AWU’s national executive.

18    Over the relevant period, the influence that each branch of the AWU wielded within the AWU’s national executive and national conference was, at least to some degree, a function of the number of delegates that it could appoint to each body. That, in turn, was a function of how many members each branch boasted. Moreover, the voting power of each such branch delegate (within both the national executive and the national conference) was not uniform: the number of votes exercisable by each such delegate was dependent upon the size of his or her branch’s membership. Delegates from branches with large membership bases exercised more votes (at each forum) than delegates from branches with small membership bases. In short, then, the more members a branch had, the more power it brandished within the AWU’s national executive and national conference assemblies.

19    At all times, admission to membership of the AWU required at least three things. First, an aspiring applicant needed to complete a form (the design of which was approved, from time to time, by the AWU’s national executive). Second, the aspiring applicant needed to satisfy the eligibility requirements for which the AWU’s rules made provision (for example, by being employed within a particular industry or calling). Third, the aspiring applicant needed to pay to the AWU the membership subscription prescribed under the AWU’s rules (or otherwise make arrangement for such payment by means of payroll deduction or direct debit payments).

20    The AWU’s rules required, at all material times, that aspiring members be advised in writing (presumably immediately before, or at the time of, their admission to membership or the receipt of their application to that end) of the circumstances and manner in which they could resign their membership.

21    The AWU’s annual membership subscriptions varied from time to time and according to the various membership types for which provision was made. The following table summarises the relevant amounts as set at various times over the period to which this proceeding relates.

22    At all material times, the AWU maintained a register that recorded (amongst other things) the name and postal address of each of its members. It would appear (although does not much matter) that that register (hereafter, the “Membership Register”) was maintained electronically.

Admission of “company paid” members

23    The following analysis concerns the arrangements into which the AWU entered over the relevant period with the six organisations that assume present significance. Each is described in turn.

Cleanevent Australia Pty Ltd

24    At times relevant to this matter, Cleanevent Australia Pty Ltd (hereafter, “Cleanevent”) operated a cleaning business. It employed a number of people in connection with that business, many of whom were or were eligible to be members of the AWU.

25    From approximately December 2006, the terms and conditions of Cleanevent’s cleaning employees were covered by a workplace agreement known as the Cleanevent Australia Pty Ltd AWU Agreement 2006. That agreement (hereafter, the “2006 Workplace Agreement”) was made under (and had force by reason of) the Workplace Relations Act 1996 (Cth). The AWU was a party to it.

26    In November 2009, the AWU sought to commence bargaining with Cleanevent for a new instrument to replace the 2006 Workplace Agreement. On 13 October 2010, Cleanevent (via its General Manager Human Resources, Mr Michael Robinson) and the AWU (via its organiser, Mr John-Paul Blandthorn) exchanged two documents: a memorandum of understanding (hereafter, the “MOU”) and a letter (hereafter, the “Side Arrangement”).

27    The MOU recorded Cleanevent’s commitment to preserving the employment conditions for which the 2006 Workplace Agreement provided, save that Cleanevent would honour a new raft of agreed pay scales (which the MOU separately recorded). Also recorded was the AWU’s undertaking not to take any steps to commence bargaining for a new collective agreement (then, as now, known as enterprise agreements) or to terminate the 2006 Workplace Agreement. The MOU was confidential, such that neither party was permitted to disclose its content otherwise than for the purposes of enforcement or as required by law.

28    The Side Arrangement assumed the form of a letter from Mr Robinson to Mr Melhem in the following terms:

I am writing to you regarding the implementation of new pay scales and the continuation of the terms and conditions as prescribed in the “Cleanevent Australia Pty Ltd AWU Agreement 2006” (Cleanevent EBA) and the agreements by Cleanevent to pay membership fees on behalf of some employees who wish to join the AWU.

While the MOU is in operation, Cleanevent will pay, on behalf of employees of Cleanevent who are or become members of the AWU, the employees’ union fees up to $25,000 for each financial year up to 30 June 2013. Payments will be made by Cleanevent biannually (December and June) to the AWU on receipt of a list of Cleanevent employees and the associated membership fees that Cleanevent are being requested to pay.

During the period of operation of the MOU it is understood that the AWU will not commence or take any step which may result in the commencement of enterprise bargaining under the Fair Work Act 2009; or seek to terminate (or support or encourage the termination of) the Cleanevent EBA or the aforementioned MOU.

29    The MOU was signed by the AWU’s then national secretary, Mr Paul Howes. Mr Howes was not alerted to the existence of the Side Arrangement.

30    The Side Arrangement purported to make payment of the annual $25,000.00 amount conditional upon the AWU’s identifying “…a list of Cleanevent employees and the associated membership fees that Cleanevent [is] being requested to pay”. History records that the arrangement operated somewhat differently.

31    On or around 16 December 2010, Cleanevent paid the AWU $12,500.00 (inc GST), apparently in part-satisfaction of the obligation for which the Side Arrangement provided. That sum (hereafter, the “First Cleanevent Payment”) was paid electronically. Upon registering (the following morning) that it has been paid, the AWU’s Victorian branch accountant, Ms Mei Lin, sent an email to Mr Melhem, inquiring as to whether the sum should be recorded as “membership”. Later that day (Friday, 17 December 2010), Mr Melhem replied (errors original), “Yes , Ask JP to get them to send us a list”, which Ms Lin duly did. The First Cleanevent Payment was recorded in the AWU’s general ledger as “Membership Income”.

32    On 30 May 2011, Cleanevent’s General Manager, Mr Steven Webber, sent an email to Mr Blandthorn containing “100 names below as requested”. That email proceeded to identify (via an earlier email exchange that Mr Webber had had with another Cleanevent employee) “100 names of our [(Cleanevent’s)] regular cleaners”. On Mr Melhem’s instruction, the First Cleanevent Payment was “allocate[d to the] members listed below” (being the 100 Cleanevent employees that Mr Webber had identified). Apparently to that end, details of 98 of the 100 identified Cleanevent employees were then entered onto the AWU’s Membership Register. Each was recorded as having joined the AWU on 1 January 2011 and as having paid (or caused to be paid) $125—one one-hundredth of the First Cleanevent Payment—for that purpose. The address of each new “member” was recorded as 95 Buckhurst Street, South Melbourne, which was Cleanevent’s address. All of that occurred at Mr Melhem’s direction.

33    A similar process followed in 2012. On 18 April 2012, the AWU issued Cleanevent with a tax invoice for $27,500.00 (inc GST) in respect of “Membership fees for Financial Year 2011-2012”. Later that afternoon, Mr Melhem sent an email to Mr Robinson, in which he explained that the AWU “…[need[ed] an up to date list of employees for the financial year so we can put them on our system”. Two days later, Mr Webber sent an email to Mr Melhem, apparently in answer to Mr Melhem’s request of Mr Robinson. To that email, Mr Webber attached another list of 100 Cleanevent employees. 34 of those 100 employees were already registered as AWU members; 66 were not.

34    Cleanevent paid the 18 April invoice on or around 29 June 2012 (that payment is referred to, hereafter, as the “Second Cleanevent Payment”). The 66 Cleanevent employees named in Mr Webber’s 20 April 2012 email whose names did not already appear on the AWU’s Membership Register were admitted as members. Again, the address of each was recorded as 95 Buckhurst Street, South Melbourne (which was Cleanevent’s address). $416.67—or one sixty-sixth of the Second Cleanevent Payment—was accounted for as membership fees received in respect of each of those 66 people. All of those 66 people were “placed on…mail suspend”—a circumstance to which I shall later return. Again, all of that occurred at Mr Melhem’s direction.

35    The cycle continued in 2013. On 4 March 2013, the AWU issued Cleanevent with a tax invoice for $27,500.00 (inc GST) in respect of “Membership Fees for Financial Year 2012-2013”. Cleanevent paid that invoice on or around 27 March 2013 (that payment is referred to, hereafter, as the “Third Cleanevent Payment”). No new “members” were identified—instead, $416.67—or one sixty-sixth of the Third Cleanevent Payment—was accounted for as membership fees received in respect of each of the 66 people referred to in the preceding paragraph.

36    The 164 Cleanevent employees that the AWU admitted to the ranks of its membership in 2011 and 2012 were not, in fact, AWU members. None of them applied to the AWU for membership, none was provided with an AWU membership card, none was told that he or she was an AWU member (at least not by or on behalf of the AWU), none was advised in writing of the circumstances or manner in which he or she could resign his or her membership, and the amount paid (and accounted for as a membership subscription) in respect of each of those individuals was materially less than what membership under the AWU’s rules required. The parties are agreed that the details of each were added to the AWU’s Membership Register in contravention of s 230 of the FW(RO) Act.

Winslow Contractors Pty Ltd

37    At times relevant to this matter, Winslow Constructors Pty Ltd (hereafter, “Winslow”) operated a civil construction business. Between March 2008 and April 2013—and, indeed, for a substantial period preceding those dates—Winslow and the AWU were party to an arrangement pursuant to which Winslow paid sums of money to the AWU in respect of memberships fees for certain of its permanent employees. Of present relevance is the manner in which that arrangement played out during the period March 2008 to April 2013.

38    On or about 19 March 2008, the AWU issued Winslow with a tax invoice for $9,945 (inc GST) in respect of “oh&s training & workplace inspections” for the period “1 January to 30 June 2008”. That amount was calculated as $117 multiplied by “85 members”. Winslow paid that sum to the AWU by cheque dated that same date, 19 March 2008 (that payment is referred to, hereafter, as the “First Winslow Payment”). The AWU did not provide the OH&S training or workplace inspections to which its 19 March 2008 invoice referred. Upon receiving the First Winslow Payment, the AWU accounted $117.00 as membership income received in respect of 85 Winslow employees. All of that occurred on Mr Melhem’s instruction.

39    A similar process played out in 2009. On or about 1 June 2009, the AWU issued Winslow with a tax invoice for $43,650 (inc GST) in respect of “oh&s training & workplace inspections” for the period “1 July 2008 to 30 June 2009”. That amount was calculated as $450 multiplied by “97 members”. Concurrently, the AWU requested that Winslow, upon payment of that invoice, also furnish it with “…a list of members[’] names and addresses”. Winslow paid the invoiced sum by cheque dated 3 June 2009 (that payment is referred to, hereafter, as the “Second Winslow Payment”). Again, the AWU did not provide the OH&S training or workplace inspections to which its 1 June 2009 invoice referred. Upon receiving the Second Winslow Payment, the AWU accounted $450.00 as membership income received in respect of 97 Winslow employees. Again, all of that occurred at Mr Melhem’s direction.

40    The process repeated in January 2010. On or about 21 January 2010, the AWU issued Winslow with a tax invoice for $23,166.00 (inc GST) in respect of “Red Card Training and OHS Training in 2009”. No such training was provided. Nonetheless, Winslow paid the amount by cheque dated 29 January 2010 (the “Third Winslow Payment”), whereupon the AWU accounted $234.00 as membership income received in respect of 99 Winslow employees (totalling $23,166.00). Again, Mr Melhem was the architect behind that sequence of events.

41    Then, again, on or about 29 June 2010, the AWU issued Winslow with a tax invoice for $44,401.50 (inc GST) in respect of “OHS Training in Financial Year 2009/2010”. Again, no such training was provided. The amount was paid by cheque dated 25 August 2010 (the “Fourth Winslow Payment”), whereupon the AWU accounted $379.50 as membership income received in respect of 117 Winslow employees (totalling $44,401.50). Mr Melhem was, again, the architect of those events.

42    That scenario played out again in 2011, albeit with minor variations. On 7 April 2011, Mr Melhem sent an email to Winslow’s Industrial Relations Manager, Mr Peter Smoljko, requesting “…an up to date employees list for Winslow Constructors for 2010 /2011 financial year so we can send an invoice re training cost, as discussed”. On or about 12 May 2011, the AWU issued Winslow with two tax invoices, each for $38,857.50 (inc GST). One of those invoices purported to be for “Providing Red Card Training in Financial Year 2010/2011”, the other for “Providing OHS Training in Financial Year 2010/2011”. Again, no such training (of either hue) was provided. Both amounts were paid by cheque dated 5 July 2011 (the “Fifth Winslow Payment”). The AWU accounted for those funds by attributing them toward the membership subscriptions of 237 Winslow employees. Again, all of that transpired according to Mr Melhem’s design.

43    In 2012, the process occurred again. On or about 14 May 2012, the AWU issued Winslow with a tax invoice in the amount of $81,640 (inc GST) for “Providing OHS Training in Financial Year 2011/2012”. It was provided by means of an email that Ms Lin (for the AWU) sent to Mr Smoljko. By that email, Ms Lin described the invoice as being for “union dues 2011/2012”. In any event, the AWU did not provide the training to which the invoice referred. Winslow paid the amount by cheque dated 12 June 2012 (the “Sixth Winslow Payment”). Again, the AWU accounted for those funds by attributing them toward the membership subscriptions of 192 Winslow employees. Again, that all occurred pursuant to Mr Melhem’s direction.

44    As might now be anticipated, similar events occurred in 2013. On or about 6 March 2013—or, possibly, 16 April 2013—the AWU issued Winslow with a tax invoice in the amount of $85,280 (inc GST) for “Providing OH&S and EEO training at Winslow Construction site”. On that latter date, Ms Lin sent an email to Mr Smoljko, attaching that invoice and requesting that he provide “…the membership listing so [that the AWU could] update in our system”. The AWU did not provide the training to which the invoice referred. Winslow paid the amount by cheque dated 27 April 2013 (the “Seventh Winslow Payment”). Again, the AWU accounted for those funds as “Membership Income”—specifically, $451.22 was accounted for against the membership subscription of each of 189 Winslow employees. Again, all of that transpired according to Mr Melhem’s design.

45    Over the period 1 January 2008 to 31 December 2012, the names of 401 Winslow employees were added to the AWU’s Membership Register: 43 in 2008, 58 in 2009, 169 in 2010, 15 in 2011 and 116 in 2012. Funds from the First Winslow Payment, the Second Winslow Payment, the Third Winslow Payment, the Fourth Winslow Payment, the Fifth Winslow Payment, the Sixth Winslow Payment and the Seventh Winslow Payment were allocated as membership subscriptions pertaining to those employees (or various of them) over that period. None of them was, in truth, a member of the AWU (for much the same reasons that the same conclusion arises in respect of the Cleanevent employees—see above, [36]). The parties are agreed that the details of each of those persons were added to the AWU’s Membership Register in contravention of s 230 of the FW(RO) Act (or its legislative predecessor). It is said that five such contraventions occurred—one in respect of each of the calendar years over which the arrangements were effected—and that they properly condense into a single course of conduct for the purposes of assessing an appropriate penalty. For my own part, it seems more likely that there were, in fact, 401 such contraventions; but, no matter what the number, I accept (as outlined below) that they should be treated as a single course of conduct for the purposes of assessing appropriate penalties.

BMD Constructions Pty Ltd

46    At times relevant to this matter, BMD Constructions Pty Ltd (hereafter, “BMD”) operated a civil construction business.

47    On or around 28 November 2007, the AWU issued BMD with a tax invoice for $14,300 (inc GST) for “OH&S inspection at various work sites in Victoria”. BMD paid that sum to the AWU on or around 18 December 2007. The inspection or inspections in respect of which the invoice was said to have been issued was or were not carried out. The AWU accounted for the funds instead as “Membership Income”. In early January 2008, the names of 45 BMD employees were added to the AWU’s Membership Register. Those events all took place at Mr Melhem’s direction.

48    On or around 10 June 2010, the AWU issued BMD with a tax invoice for $19,800 (inc GST) for “Providing OHS Training and carrying Safety Audit for various work sites in Victoria”. BMD paid that sum to the AWU on or around 31 August 2010. The training and safety audit (or audits) to which it referred were not undertaken. At (or not long after) the time that the 10 June 2010 invoice was issued, BMD provided to Mr Melhem a list of 41 names of the employees then constituting its “current labour force here in Vic[toria]”. The AWU accounted for the $19,800.00 that it received from BMD as membership subscriptions—each in the amount of $450.00—attributed to 40 of BMD’s employees. It appears (although the evidence does not clearly establish) that all 40 were already on the AWU’s Membership Register. Again, Mr Melhem directed those events.

49    The 45 BMD employees that the AWU admitted to the ranks of its membership in January 2008 were not, in fact, AWU members. The parties are agreed that the details of each were added to the AWU’s Membership Register in contravention of s 230 of the FW(RO) Act (or, more accurately, its legislative predecessor).

Australian Jockeys’ Association/Victorian Jockeys’ Association

50    The Australian Jockeys’ Association (hereafter, the “AJA”) is an association that represents jockeys throughout Australia. The Victorian Jockeys’ Association (hereafter, the “VJA”) is its equivalent in Victoria.

51    The minutes of the AJA’s 2009 annual general meeting record as follows (amongst other things):

Paul proposed that the AJA to show its good faith in the AWU in each of the states make a contribution for their support in the past and particularly with industrial matters that might occur in the future. Paul advised that in the budget he had allocated approx. $30,000 per annum to the AWU which would be on a state by state basis depending on the number of jockeys in that state. All agreed that the payment would be a service payment, not membership."

Although nothing turns on it, the reference to “Paul” appears to be a reference to Mr Paul Innes OAM, the AJA’s then chief executive.

52    On 16 June 2010, the AWU issued the VJA a tax invoice in the sum of $7,500 (inc GST) for “Consultancy on Riding Fee Negotiations”. That sum was paid on or around 22 June 2010, whereupon it was accounted for as “Membership Income”. That occurred with Mr Melhem’s approval, if not at his direction.

53    On 30 May 2011, the AWU issued the AJA a tax invoice in the sum of $7,500.00 (inc GST) for “Services provided to Victorian Jockeys throughout racing season 2011/12”. That sum was paid on or about 8 June 2011. Again, the AWU accounted for it as “Membership Income” (specifically, in the sum of approximately $61 for each of 122 jockeys whose names appeared on the AWU’s Membership Register). Again, that occurred with Mr Melhem’s approval, if not at his direction.

54    On 16 April 2012, the AWU issued the AJA a tax invoice in the sum of $8,250 (inc GST) for “Services provided to Victorian Jockeys”. That sum was paid on or around 1 May 2012. The AWU accounted for it as “Membership Income”—specifically, a membership contribution of approximately $67 received in respect of 117 jockeys. Once more, that occurred with Mr Melhem’s approval or at his instruction.

55    None of the jockeys to whose “membership” the AWU allocated the payments that it received from the AJA and the VJA (as above) were, in truth, AWU members. The parties are agreed that 156 such jockeys were, in December 2008, added to the AWU’s Membership Register in contravention of s 230 of the FW(RO) Act (or, more accurately, its legislative predecessor).

Australian Netball Players’ Association

56    The Australian Netball Players’ Association (hereafter, the “ANPA”) is an incorporated association that, as its name suggests, represents netball players. Between 2010 and 2013, the AWU and the ANPA were party to an arrangement not materially dissimilar to those described above.

57    On or about 7 June 2010, the AWU issued the ANPA a tax invoice for the sum of $9,000.00 for “Membership Fees for Financial Year 2009/2010”. That sum was paid on or around 28 June 2010. The AWU accounted for it as amounts received for various netball players’ AWU memberships. Mr Melhem approved or instructed those measures.

58    On or around 16 May 2012, the AWU issued the ANPA a tax invoice for the sum of $14,300.00 (inc GST) for “Membership Fees for Financial Years 2010/2011 and 2011/2012”. The invoice recorded that $7,700 (inc GST) of that amount was for memberships for “2011/2012”; the remainder was for memberships for “2010/2011”. In August 2012, the ANPA paid the AWU $7,700 in respect of memberships for the financial year 2011/2012. The AWU accounted for that sum as membership income—in particular, as AWU membership subscriptions of approximately $100 for each of 77 ANPA members. That all occurred at Mr Melhem’s instruction or with his approval.

59    On or around 15 April 2013, the AWU issued the ANPA a tax invoice for the sum of $12,000.00 (inc GST) for “Membership Fees for Financial Year 2012/2013”. The ANPA paid half of that amount—$6,000.00 (inc GST)—on or around 24 September 2013. The AWU accounted for those funds as membership income—in particular, as AWU membership subscriptions of approximately $103 for each of 58 ANPA members. Mr Melhem instructed or approved of what occurred.

60    In consequence of the payments that the ANPA made to the AWU over the period summarised above, the details of a number of ANPA members—at least 77, it would appear—were entered into the AWU’s Membership Register. That occurred in the period 1 January 2008 through to 6 January 2009. None of the people whose details were so entered were, in truth, AWU members. The parties are agreed that, by adding those details to its Membership Register, the AWU contravened s 230 of the FW(RO) Act (or its legislative predecessor). They jointly submit that the addition of those “members” should qualify as a single statutory contravention.

Geotechnical Engineering Pty Ltd

61    On or about 5 March 2013, the AWU issued Geotechnical Engineering Pty Ltd (hereafter, “Geotech”) a tax invoice for $17,160.00 for “EEO Training for Geotech Employees at the ESSO Gasplant Gippsland”. The training to which that invoice pertained was provided on 20 March 2013. It was attended by 18 Geotech employees. It would appear that, in addition to providing the training in question, the AWU used that occasion as an opportunity to attract new members—it made membership application forms available to at least some of those Geotech employees and some appear to have taken them.

62    On 22 March 2013, Geotech paid the sum for which it had been invoiced. The AWU accounted for it as “Membership Income”. The names of the 18 Geotech employees who had attended the 20 March 2013 training were then added to the AWU’s Membership Register. That occurred despite their not, in truth, being AWU members.

63    Again, all of that transpired within Mr Melhem’s knowledge and/or on his instruction. The parties are agreed that the addition of the Geotech employees to the AWU’s Membership Register occurred in contravention of s 230 of the FW(RO) Act. Again, a single contravention is agreed. Again, I confess some uncertainty as to how that might be so; but, again, it is appropriate to treat the addition of those names as a single course of conduct, which reflects what the parties submitted.

“Company paid” members generally

64    On 21 June 2012, Ms Angela Leo, an Administration Support Officer in the AWU’s Victorian Branch office, sent a memorandum to Mr Melhem headed “Company Paid organisation’s [sic]”. That memo was in the following terms:

Dear Cesar,

As part of our ongoing maintenance in membership, our next project is to clean up all company paid. I am seeking confirmation regarding actions for these shops.

The current companies are on our system as company paid:

•    Winslow Constructors (sub-division)

•    Cleanevent

•    Jockeys’

•    Netball Players Association

As a standing rule, all members under company paid:

•    Should not receive any union correspondence. Therefore, we are seeking authority to change all company paid members to mail suspend. This will help alleviate any mail-out errors in the future.

•    Any member card mail-outs will be sent directly to the company and are only by consultation between yourself and Jelica.

In addition the following criteria should apply

Winslow:

Any company paid members that are not on Peter Smoljko’s list are to be:

•    Transferred to WINSLOW VARIOUS SITES

•    Be put on SUSPEND

•    And all outstanding dues to be zero’d.

Cleanevent:

•    Those members who are making regular payroll payments will remain on payroll deduction as temporary casuals

•    Any additional members who come on via the company paid listing be added on as a new member and listed as company paid

•    Any person who does not fall into either of these categories will be placed on suspend and their account zero’d.

Jockeys’

Update list and payment occurs randomly every year. Payment is divided up based on people on the list. Members not on the list are put to suspend and their accounts zero’d.

Netball Players Association

Update list and payment occurs randomly every year. Payment is divided up based on people on the list. Members not on the list are put to suspend and their accounts zero’d.

Any problems please feel free to contact me on ext. 883.

Regards,

Angela Leo

65    It appears from that memorandum that the AWU protocol with respect to “members” whose subscriptions were paid by the organisations with which they were affiliated (rather than from their own funds) was to exclude them from the receipt of “union correspondence”, or to otherwise “suspend” mail-based communications. The extent to which that occurred (if at all) in the case of any of the people from the six organisations who were wrongly admitted to AWU membership over the relevant period is unknown.

Non-removal of stale memberships

66    It is common ground between the parties that:

(1)    as at 30 June 2012, the AWU’s Membership Register included 1,022 entries that pertained to members whose membership contributions had last been paid more than three years prior to that date (hereafter, the “Stale Members”);

(2)    the AWU’s failure to remove the Stale Members’ details from its Membership Register was, in each case, a contravention of s 172(1) of the FW(RO) Act; and

(3)    those 1,022 contraventions should, for the purposes of assessing appropriate penalties, be treated as a single course of conduct.

Measures adopted by the AWU

67    By his two affidavits, Mr Davis set out to explain some measures that the AWU put in place after Mr Melhem’s term as secretary of the AWU’s Victorian branch ended. The following facts emerge from those affidavits.

68    Upon his succession of Mr Melhem as secretary of the AWU’s Victorian Branch, Mr Davis set about implementing measures to ensure that the AWU’s Membership Register was and remained up-to-date. Amongst other things, he directed a computer expert, Mr Mark Treloar, to carry out a bulk expunging of lapsed or “non-financial” members. Systems were put in place to prompt the archiving of such memberships on a quarterly basis.

69    In May 2015, the AWU adopted a process whereby membership forms pertaining to members whose employers paid for their membership subscriptions were more closely scrutinised. “Company paid” members were identified and, if a membership form could not be found for them, they were either asked to fill one out or their details were removed from the Membership Register. That has resulted in the position today being that, as Mr Davis put it, “[t]he Victorian Branch no longer accepts as members anyone who has not submitted a membership application form as required by the AWU Rules”.

70    In 2018, the branch commissioned a new computer system, “Netsuite”, which automatically “archives unfinancial members monthly”. In June 2018, the AWU adopted a policy “…specifically directed at improving the maintenance of its membership register”. Not long after he became the secretary of the AWU’s Victorian branch, Mr Davis implemented a system whereby invoices pertaining to the provision of training were no longer issued without supporting documentation.

71    Mr Davis also terminated the MOU and Side Arrangement that the AWU had with Cleanevent. Cleanevent’s 2006 Workplace Agreement was later terminated at the AWU’s initiative.

The statutory framework

72    Two provisions of the FW(RO) Act assume primary significance in this matter. Section 230 provides (and, at all times since 1 July 2009, provided) as follows:

230 Records to be kept and lodged by organisations

    (1)    An organisation must keep the following records:

(a)    a register of its members, showing the name and postal address of each member and showing whether the member became a member under an agreement entered into under rules made under subsection 151(1);

…

Note:    This subsection is a civil penalty provision (see section 305).

    (2)    An organisation must:

(a)    enter in the register of its members the name and postal address of each person who becomes a member, within 28 days after the person becomes a member;

(b)    remove from that register the name and postal address of each person who ceases to be a member under section 171A, or under the rules of the organisation, within 28 days after the person ceases to be a member; and

(c)    enter in that register any change in the particulars shown on the register, within 28 days after the matters necessitating the change become known to the organisation.

Note:    This subsection is a civil penalty provision (see section 305).

Note:    An organisation may also be required to make alterations to the register of its members under other provisions of this Act (see, for example, sections 170 and 172).

73    It is common ground that s 230(1) serves to prohibit the addition to an organisation’s register of members the details of persons who are not members. Although the section does not say so in terms, I accept that it should be construed in that way. A membership register that records the details of persons who are not members of the organisation by which it is maintained is not a register of the kind whose maintenance s 230(1)(a) mandates.

74    Section 172(1) of the FW Act provides as follows:

172 Non-financial members to be removed from the register

    (1)    If:

(a)    the rules of an organisation require a member to pay dues in relation to the person’s membership of the organisation; and

(b)    the member has not paid the amount; and

(c)    a continuous period of 24 months has elapsed since the amount became payable; and

(d)    the member’s name has not been removed from the register kept by the organisation under paragraph 230(1)(a);

the organisation must remove the name and postal address of the member from the register within 12 months after the end of the 24 month period.

Note:    This subsection is a civil penalty provision (see section 305).

…

75    There is no dispute that the AWU is an “organisation” for the purposes of the FW(RO) Act.

76    Sections 230(1) and 172(1) are both “civil penalty provisions”: FW(RO) Act, s 305(1). The court is empowered to impose pecuniary penalty orders upon those who contravene those provisions. In the case of corporate contraveners such as the AWU, the maximum penalty that the court may impose in consequence of breaches of ss 230(1) and 172(1) of the FW(RO) Act is now 300 penalty units: FW(RO) Act, s 306(1). Prior to 29 June 2012 (including when the RAO Schedule applied), the maximum penalty that could be imposed was 100 penalty units.

77    The FW(RO) Act commenced operation on 1 July 2009. Prior to that date, provisions equivalent to ss 172 and 230 of the FW(RO) Act were contained within the RAO Schedule: see (conveniently) ss172 and 230. Those provisions had statutory force equivalent to what the contemporary provisions of the FW(RO) Act now enjoy: Workplace Relations Act 1996 (Cth), s 8 (as in force prior to 1 July 2009).

78    Over the period presently relevant, the value of a penalty unit was increased from $110.00 to $170.00. That change took effect from 28 December 2012.

Findings

79    On the strength of the facts identified above, the AWU is properly understood to have committed the following statutory contraventions, namely:

(1)    by its admission to membership of the 164 Cleanevent employees referred to above (at [32] and [34]), the AWU contravened s 230(1) of the FW(RO) Act;

(2)    by its admission to membership of the 401 Winslow employees referred to above (at [45]), the AWU contravened s 230(1) of the FW(RO) Act (or, in respect of those admitted to membership prior to the advent of that Act, its legislative predecessor, as set out above);

(3)    by its admission to membership of the 45 BMD employees referred to above (at [49]), the AWU contravened s 230(1) of the FW(RO) Act (or, in respect of those admitted to membership prior to the advent of that Act, its legislative predecessor, as set out above);

(4)    by its admission to membership of the 156 jockeys referred to above (at [55]), the AWU contravened s 230(1) of the RAO Schedule;

(5)    by its admission to membership of the 77 (and potentially more) netballers referred to above (at [60]), the AWU contravened s 230(1) of the FW(RO) Act (or, in respect of those admitted to membership prior to the advent of that Act, its legislative predecessor, as set out above);

(6)    by its admission to membership of the 18 Geotech employees referred to above (at [62]), the AWU contravened s 230(1) of the FW(RO) Act; and

(7)    by its failure to remove each of the Stale Members’ details from its membership register, the AWU contravened s 172(1) of the FW(RO) Act.

80    The parties jointly contended that, by the contraventions listed at (1) to (6) above, the AWU committed 11 contraventions of s 230(1) of the FW(RO) Act (or its predecessor): two in respect of Cleanevent (reflecting the two groups of Cleanevent employees that the AWU admitted to membership—see above, [32] and [34]), five in respect of Winslow (reflecting the groups of Winslow employees that the AWU admitted to membership over five consecutive calendar years 2008-2012—see above, [45]), and one each in respect of BMD, the AJA and VJA, the ANPA, and Geotech. With some hesitation, I accept that joint submission and find that those 11 contraventions (hereafter, the “Agreed s 230 Contraventions”) occurred. There is a strong argument that the relevant statutory injunctions were contravened on each occasion that a “member” was wrongly added to the AWU’s Membership Register. Nonetheless, the parties’ contention does not strike me as obviously wrong and I should not wish to interfere with it. Particularly is that so given that the end point—namely, the consideration of penalties appropriate in respect of six discrete courses of conduct—would very likely be the same either way.

81    The parties are agreed that the Agreed s 230 Contraventions should be treated as having arisen from six discrete courses of conduct; that is, as one contravention in respect of each of the organisations from which members (or “members”) were sourced. For reasons that are explored further below, I accept that that is appropriate.

82    The contraventions listed at [79(7)] above are not in dispute. It is agreed—and I accept—that the AWU contravened s 172(1) of the FW(RO) Act 1,022 times (those contraventions are referred to, hereafter and collectively, as the “Agreed s172 Contraventions”).

Pecuniary enalties

General principles

83    It is common ground that the court should impose pecuniary penalties upon the AWU in respect of the Agreed s 230 Contraventions and the Agreed s 172 Contraventions (hereafter and collectively, the “Agreed Contraventions”). As summarised above (at [7]), there are diverging views as to what pecuniary penalties are appropriate.

84    I recently had occasion to survey the authorities relevant to the setting of pecuniary penalties. In Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (The College Crescent Case) [2020] FCA 757, I made the following observations, which I adopt for present purposes:

In determining what penalties are appropriate in the present case, the court’s discretion is very broad: A & L Silvestri Pty Limited v Construction, Forestry, Mining and Energy Union [2008] FCA 466, [6] (Gyles J). The task of assessing what amount to impose is one of “instinctive synthesis” that involves the selection of a figure that takes due account of all factors relevant to the particular case: Wong v The Queen (2001) 207 CLR 584, 611 [75] (Gaudron, Gummow and Hayne JJ); Markarian v The Queen (2005) 228 CLR 357, 373-375 [37] (Gleeson CJ, Gummow, Hayne and Callinan JJ); Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) (2018) 260 FCR 68, 84 [55] (Allsop CJ, Davies and Wigney JJ); Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25, 36 [44] (Jagot, Yates and Bromwich JJ).

What those factors are will be case-specific, although the authorities are replete with recurring examples of matters to which regard has properly been had in the exercise of the broad discretion at play. In Australian Ophthalmic Supplies v McAlary-Smith (2008) 165 FCR 560, 580 [91] Buchanan J (with whom, in the result, Gray and Graham JJ agreed), considered those recurring factors and what was, at the time, an emerging tendency to treat them as “checklists”. His Honour noted:

Checklists of this kind can be useful providing they do not become transformed into a rigid catalogue of matters for attention. At the end of the day the task of the Court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations.

The sole object to which the court must give effect in setting an appropriate penalty is to deter repetition of the conduct in respect of which it is imposed: Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) (2018) 264 FCR 155, 167 [19] (Allsop CJ, White and O’Callaghan JJ; the “NIPP Case”). That requires that the court should strive to “…put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene”: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68, 88 [98] (Dowsett, Greenwood and Wigney JJ); Trade Practices Commission v CSR Ltd (1991) ATPR ¶41-076, 52,152 (French J). In the NIPP Case, the full court set the task in the following terms (at 167-168):

19    It is unnecessary to engage in any extended discussion of principle. Of particular significance is the recognition that deterrence (general and specific) is the principal and indeed only object of the imposition of a penalty — to put a price on contravention that is sufficiently high to deter repetition by the contravener and others who might be tempted to contravene the Act: French J in Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076 at 52,152, cited by the plurality in Commonwealth v Director of the Fair Work Building Industry Inspectorate (Civil Penalties Case) [2015] HCA 46; (2015) 258 CLR 482 at [55]. Retribution, denunciation and rehabilitation have no part to play.

20    Relevant factors in the overall assessment of penalty were helpfully listed by French J in CSR. They have been adopted in many cases. For present purposes, they can be restated as follows: the nature, character and seriousness of the conduct; the loss and damage caused; the circumstances in which the conduct took place; the size of the contravener and its degree of power; the deliberateness of the conduct and the time over which it occurred; the degree of involvement of senior officials or management; the culture of the organisation as to compliance or contravention; and, any co-operation with the regulator and contrition.

21    The seriousness of the contravention and other features of the conduct which may be seen as relevant to it…find their place in understanding the degree of deterrence that is necessary to be reflected in the size of the penalty: Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53; 260 FCR 68 at [71].

22    The overwhelming importance of deterrence as the protective purpose of the penalty does not exclude the need to determine a penalty which is proportionate to the contravening conduct. The history of contravention is to be taken into account in fixing the proper level of penalty for the proportionate response to the contravention in question. Proportionality has within it the need to characterise the seriousness of the contravention. Proportionality of penal response to a contravention assessed by reference to its seriousness and gravity is an essential characteristic of the application of the statute. The penal response is for that contravention, not earlier contraventions: Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465 at 477-478. Prior contraventions may reveal an apparent disregard for the Act and the need for deterrence by a penalty at a level appropriate to achieve that objective. It is to be borne in mind, however, that it is for the conduct in question that the penalty is imposed, not for prior conduct.

Realising the sole objective to which its imposition is directed requires that a pecuniary penalty “…must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business”: Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249, 265 [62]-[63] (Keane CJ, Finn and Gilmour JJ); Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640, 659 [66] (French CJ, Crennan, Bell and Keane JJ); Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 249 FCR 458, 481 [101] (Dowsett and Rares JJ, North J dissenting; the “Perth Airport Case”).

85    I turn, then, to consider the matters by which the penalties to be imposed should relevantly be informed.

Applicable maximum penalties

86    The parties helpfully agreed upon the maximum penalties that the court is empowered to impose in respect of the Agreed Contraventions.

87    Insofar as concerns the 1,022 Agreed s 172 Contraventions, the court is empowered to impose penalties of up to $33,000.00 each—that is, 300 penalty units multiplied by $110, which was the value of a penalty unit in June 2012—or a total of $33,726,000.

88    Insofar as concerns the 11 Agreed s 230 Contraventions, the Commissioner appended to his written submissions the following helpful table, with which the AWU took no issue:

89    The penalties that will be imposed in the present case will be imposed with those maximums in mind.

The parity principle

90    The AWU submits that the penalties to be imposed presently should take account of the penalties that Mortimer J imposed upon Mr Melhem by means of the Melhem Judgment (see above, [11]). In that regard, the AWU submitted:

…that the Court should pay close regard to what Mortimer J has said in the Melhem Judgment, because the AWU’s contraventions flowed from the conduct engaged in by Melhem for which he has been subjected to pecuniary penalties. To avoid unwarranted inconsistency, and thus to uphold the administration of justice, this Court should take into account what Mortimer J has said about Melham’s contravening conduct and its connection to the AWU’s contraventions.

…

What that means for practical purposes is this. If there is reason based on the material before this Court that was not before her Honour to reach some different factual or evaluative conclusion, then this Court may properly do so. But if not, then the Court should determine the appropriate penalty for the AWU paying due regard to how Mortimer J analysed and evaluated Melhem’s conduct so far as that sheds light on the appropriate penalty here.

91    Broadly, I accept those submissions. In Green v The Queen (2011) 244 CLR 462, French CJ, Crennan and Kiefel JJ considered the so-called “parity principle”: that “like cases be treated alike”. Their Honours observed (at 474 [30]):

…The foundation of the parity principle in the norm of equality before the law requires that its application be governed by consideration of substance rather than form. Formal identity of charges against the offenders whose sentences are compared is not a necessary condition of its application.

92    The Commissioner submits that the contraventions in respect of which Mr Melhem was penalised are not the same as the Agreed Contraventions. In overseeing the arrangements that are at the core of the Agreed Contraventions in this case (or most of them), Mr Melhem was found to have conducted himself otherwise than:

(1)    with the degree of care and diligence that the FW(RO) Act required of him; and

(2)    in good faith and for a proper purpose, in what he believed were the AWU’s best interests.

The Commissioner maintains that those contraventions are different, by nature, to those of which the AWU now stands accused. As much may be accepted; although it must be remembered that the conduct by which Mr Melhem was found to have contravened statutorily-required standards of behaviour was largely and effectively the same conduct that occasioned or materially resulted in the present Agreed Contraventions.

93    It is appropriate for the court to take account of the penalties that were imposed upon Mr Melhem when considering the penalties that should be imposed presently. As it happens, my own assessment of what penalties are appropriate in this case materially aligns with what Mortimer J considered to be appropriate in the Melhem Judgment. That being so, it is unnecessary to devote further analysis to the so-called parity principle.

Nature of the contravening conduct

94    The nature of the conduct constituting the Agreed Contraventions is apparent from the factual summary set out above. Over a period of many years, the Victorian branch of the AWU dishonestly employed the concept of “company paid” membership to artificially inflate its membership ranks. As Mortimer J was at pains to point out in the Melhem Judgment (at, for example, [129], [138] and [140]), the evidence does not permit a finding as to why that process of artificial inflation was pursued. It seems sufficiently uncontroversial to observe that there must have been some benefit—either to the branch or, perhaps, to Mr Melhem himself—in doing so. Why, one might ask rhetorically, would that process otherwise be carried out? The capacity to wield greater influence within the AWU’s administrative structures (see above, [18]) would seem to be one possible (if not obvious) explanation.

95    It is unnecessary that the court should—and I do not attempt to—identify a motive for the conduct that sits at the heart of the Agreed Contraventions. It suffices to note that that conduct constitutes a serious departure from the important record-keeping standards with which the FW(RO) Act requires that all organisations comply. In a number of respects, it qualifies as more serious still in light of the apparently fraudulent documentation that the AWU supplied to many of the entities from which the “company paid” members (or “members”) were sourced and the communication protocols—more accurately, the non-communication protocols—that the evidence suggests were engaged in respect of at least some of those individuals.

96    In Transport Workers’ Union of Australia v Registered Organisations Commissioner (No 2) (2018) 267 FCR 40 (Allsop CJ, Collier and Rangiah JJ), this court made the following observations (at 66 [130]-[131]), which I respectfully adopt:

As the objects set out in s 5 of the [FW(RO) Act] make clear, registration confers rights, privileges and protections upon registered organisations. However, those advantages come with serious obligations, including obligations to keep accurate records about their membership. It is important that registered organisations should understand that those obligations must be complied with and that non-compliance will attract substantial penalties.

…

Registered organisations should have it made clear to them the importance of record-keeping of members.

97    Those observations apply as much to the Agreed s 230 Contraventions as to the Agreed s 172 Contraventions. The latter, it hardly needs to be said, were also very serious, in that they resulted in a large number of people remaining on the AWU’s Membership Register when they ought not to have.

98    It is important that the court should strive to fashion penalties in respect of the AWU’s conduct in the present case that might serve to deter similar conduct in the future, on the part of both the AWU and other organisations that might be minded to replicate it.

Deliberateness and involvement of senior management

99    As the factual summary above lays bare, the Agreed s 230 Contraventions were all effected with Mr Melhem’s knowledge, if not at his direction. The Commissioner submits that that is a circumstance to which the court should have regard in setting appropriate penalties. Generally speaking, corporate conduct that is engaged in contravention of a statutory injunction will be considered more egregious—and, therefore, more deserving of sterner penalty—if it is engaged in by or with the imprimatur of the corporation’s senior management.

100    The AWU submits that the involvement of Mr Melhem in the present case should count in its favour. It submits, in effect, that it is the victim of his malfeasance: that Mr Melhem, having admitted (and having been penalised on account of) conduct in which he deliberately engaged contrary to the AWU’s interests, was the fons et origo of the conduct that stands here to be penalised; and that he, rather than the AWU, should bear the bulk of the court’s opprobrium.

101    I do not accept that contention. The AWU cannot escape sanction for the manner in which it was mismanaged, nor have the sanction that might otherwise be appropriate reduced, simply by pointing out that it was somebody else who was charged with managing it. That is always so in the case of corporate contraveners. Contraventions that are committed through, or with the knowledge or approval of, a corporation’s management are more serious than those effected by agents lower in the chain of command because they tend to reflect managerial complacency or, in the worst cases (as this one is undoubtedly an example), complicity. The absence of systemic oversight or accountability—that is to say, systems or processes that guard against incompetence or impropriety—warrant the imposition of penalties more severe than might otherwise apply in respect of the conduct of subordinate agents.

102    It is, then, appropriate that the court should have regard to the fact that the conduct that gave rise to the Agreed Contraventions (or, perhaps more accurately, the Agreed s 230 Contraventions) was conduct that was engaged in deliberately and at the upper echelons of the AWU’s Victorian branch.

Cooperation and contrition

103    The AWU submits that the penalties that the court should impose in respect of the Agreed Contraventions should reflect the fact that it has cooperated with the Commission (principally by admitting that it committed the contraventions in question), has taken steps to ensure that its contravening conduct is not repeated, and has expressed appropriate and genuine contrition for its behaviour.

104    The Commissioner accepts that those considerations are apt to be taken into account in the setting of appropriate penalties. Nonetheless, he submits that the AWU’s degree of cooperation should not be overstated, in that it defended the proceeding until the proverbial last minute, thus putting the Commissioner—which is to say, the taxpayer—to the expense of substantial trial preparations.

105    The AWU’s decision not to contest the charges that constitute the Agreed Contraventions is to its credit, no matter the late stage at which it was made; although, plainly, that credit would have been all the greater had concessions been made earlier. Likewise, there is little doubt that the AWU has accepted a need to implement measures to avoid similar mismanagement in the future, and that it has expressed genuine contrition in respect of the conduct that assumes present relevance. All of those are factors properly to be taken in to account in the setting of pecuniary penalties—all inform how largely the need for specific deterrence looms.

Profits and losses

106    The Commissioner submitted that the conduct to which these reasons are directed “…very significantly undermined the integrity of the AWU’s Register of Members”. The AWU, by contrast, submits that “…there is no evidence that the inaccurate Register had any material detriment for anyone…or that the integrity of the Register was thereby ‘significantly undermined’”.

107    Both contentions are accepted. The undermining of the AWU’s Membership Register was significant because it was effected over a long period of time and involved many hundreds of people. That notwithstanding, there is no suggestion that, by artificially inflating its membership numbers, Mr Melhem or the Victorian branch of the AWU were able to obtain outcomes that they would not otherwise have been able to obtain, nor to visit any adverse outcome upon anybody that wouldn’t otherwise have been visited. There is no evidence, for example, of the Victorian branch wielding greater influence within the AWU’s national executive or national conference than it otherwise would have (and, thereby, effecting some kind of industrial or management program that was to its benefit or any other person’s detriment).

108    The penalties that are to be imposed in respect of the conduct by which the Agreed Contraventions were constituted will reflect those realities.

Double punishment

109    The parties are agreed that the 11 Agreed s 230 Contraventions should condense into six discrete courses of conduct: one for each of the six entities from which the AWU sourced its “company paid” members (or “members”). They are also agreed that the 1,022 Agreed s 172 Contraventions should be treated as a single course of conduct for the purposes of assessing appropriate penalties.

110    In both cases, I consider it appropriate to treat the AWU’s wrongdoing in the way that has been agreed. In the absence of contest, it is unnecessary that I should explore in detail why it is that I consider it appropriate to group the AWU’s conduct in that way. I recently had occasion to recite relevant points of principle (which I adopt for present purposes): Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654, [106]-[108] (Snaden J). I accept that the conduct by which the AWU wrongly admitted to the ranks of membership the employees or members of the six entities described throughout these reasons was, in each case, engaged in as part of a single course of conduct. Further, I accept that its failure to remove from its Membership Register the details of the each of 1,022 Stale Members was, in each case, engaged in as part of a single course of conduct. The penalties to be imposed in respect of the Agreed Contraventions will reflect those conclusions.

Application in the present case

111    In light of what is said above, I consider it appropriate to impose upon the AWU twelve pecuniary penalties: eleven in respect of the Agreed s 230 Contraventions and one in respect of the discrete course of conduct that underlies the Agreed s 172 Contraventions.

112    There is a tension in the authorities as to whether a single penalty can be imposed in respect of multiple contraventions that arise from the same course of conduct: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68, 99-100 [148]-[149] (Dowsett, Greenwood and Wigney JJ); Transport Workers Union of Australia v Registered Organisations Commissioner (No 2) (2018) 267 FCR 40, 58 [90] (Allsop CJ, Collier and Rangiah JJ). In the case of the relevant courses of conduct that concern the Agreed s 230 Contraventions, I am content to impose separate penalties in respect of the constituent contraventions (in each case, set at levels that take account of the fact that they arose out of a single course of conduct, as the parties are agreed). In the case of the Agreed s 172 Contraventions, it is not practical to impose separate penalties for each of the 1,022 relevant contraventions. Instead, it is appropriate to impose a single penalty set at a level that takes account of the single course of conduct from which they all arose: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68, [149] (Dowsett, Greenwood and Wigney JJ).

113    The parties are agreed that the total of the penalties that the court should impose in respect of the Agreed s 230 Contraventions should fall between 60% and 90% of the maximum (that is to say, between $96,600.00 and $144,900.00. I do not consider that the circumstances here prevailing warrant, in respect of those contraventions, penalties outside of that range; although I do consider it to represent the higher end of what is appropriate. The Agreed s 230 Contraventions are serious, particularly given the sums of money and number of “members” that they involved, and the period of time over which they spanned; but, against that, it should be recalled that the AWU has taken appropriate steps to address what occurred and has shown genuine contrition for it. The circumstances warrant penalties as follows, namely:

(1)    in respect of the Agreed s 230 Contraventions relating to Cleanevent, $15,400.00—comprising:

(a)    $8,000.00 in respect of the addition to the Membership Register of the 98 Cleanevent employees referred to at [32] above; and

(b)    $7,400 in respect of the addition to the Membership Register of the 66 Cleanevent employees referred to at [34] above,

               (which, in total, represents 70 per cent of the total available maximum);

(2)    in respect of the Agreed s 230 Contraventions relating to Winslow, $33,000.00—comprising:

(a)    $5,650.00 in respect of the addition to the Membership Register of the 43 Winslow that the AWU admitted as members in 2008 (above, [45]);

(b)    $5,700.00 in respect of the addition to the Membership Register of the 58 Winslow that the AWU admitted as members in 2008 (above, [45]);

(c)    $8,700.00 in respect of the addition to the Membership Register of the 169 Winslow that the AWU admitted as members in 2008 (above, [45]);

(d)    $4,750.00 in respect of the addition to the Membership Register of the 15 Winslow that the AWU admitted as members in 2008 (above, [45]); and

(e)    $8,200.00 in respect of the addition to the Membership Register of the 116 Winslow that the AWU admitted as members in 2008 (above, [45]),

               (which, in total, represents 60 per cent of the total available maximum);

(3)    in respect of the Agreed s 230 Contravention relating to BMD, $7,425.00 (which represents 67.5 per cent of the available maximum);

(4)    in respect of the Agreed s 230 Contravention relating to the AJA and VJA, $8,250.00 (which represents 75 per cent of the available maximum);

(5)    in respect of the Agreed s 230 Contravention relating to the ANPA, 7,425.00 (which represents 67.5 per cent of the available maximum); and

(6)    in respect of the Agreed s 230 Contravention relating to Geotech, 25,500.00 (which represents 50 per cent of the available maximum).

114    Those penalties total $97,000.00, which is a little over 60 per cent of the total maximum available (and, thus, is within the range that the parties have agreed). Penalties totalling that amount (and penalties in the constituent amounts summarised above) are appropriate to deter repetition of the offending conduct, both by the AWU and by other organisations that might be minded to engage in similar attempts to artificially inflate their membership numbers. I am conscious that the total penalties to be imposed in respect of the courses of conduct pertaining to Cleanevent and Winslow exceed (in each case) the maximum penalty available for a single contravention. Penalties imposed at those levels are necessary to reflect the seriousness of those contraventions: Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (The Nine Brisbane Sites Appeal) (2019) 269 FCR 262, 266 [12] (Allsop CJ), 287-288 [124] (Rangiah J, with whom Griffiths J agreed).

115    Insofar as concerns the Agreed s 172 Contraventions, I am minded to impose penalties totalling $51,100.00 (or $50 for each of the Stale Members whose details the AWU wrongly failed to remove from its Membership Register). That amount is, of course, well below the total maximum available for those contraventions, although still above the maximum that would be available for a single contravention. Again, penalties totalling that amount reflect the seriousness of the AWU’s contraventions.

116    Having considered them in their totality (as I must), I am satisfied that penalties totalling $148,100 are a proportionate response to the AWU’s wrongdoing and represent an appropriate deterrent against its repetition, both by the AWU and by other organisations.

Declaratory relief

117    In addition to the imposition of pecuniary penalties, the Commissioner moves the court for declaratory relief to “record” that the AWU committed each of the Agreed Contraventions. The AWU agrees that such relief is appropriate.

118    The Commissioner advances three bases upon which it is said that declaratory relief in this case is appropriate. He contends, first, that it would serve the purpose of general deterrence; second, that it is appropriate given that the facts material to the court’s findings are the subject of admission; and, third, that the AWU consents to that course. There is, perhaps, a fourth—and, respectfully, more compelling—basis, which is that Mortimer J agreed to grant equivalent relief in the Melhem Judgment.

119    I have recently had occasion to consider the court’s power to grant declaratory relief that does no more than record that a respondent’s conduct was engaged in in contravention of a statute: Construction, Forestry, Maritime, Mining and Energy Union v Milin Builders Pty Ltd [2019] FCA 1070, [73]-[98] (Snaden J); Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654, [119]-[127] (Snaden J); Fair Work Ombudsman v Australian Workers’ Union [2020] FCA 60, [71]-[80] (Snaden J); Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (The College Crescent Case) [2020] FCA 757, [111]-[115] (Snaden J). I do not here repeat what I said on those occasions, save for this central observation: declaratory relief ought not to be granted unless there is some utility in doing so. In my view, there is no such utility in this case.

120    Contrary to the Commissioner’s contention, it is not at all apparent how the granting of declaratory relief might realise any relevant deterrent effect. That submission did not rise beyond assertion. It suffices that I should say that I am anything but convinced that there are any organisations—or any officials or, indeed, any people—that might be any more persuaded to do or refrain from doing something on account of declaratory relief than they would otherwise be on account of the pecuniary penalties that I will order. I do not accept that declaratory relief would serve any educative or deterrent effect not already served by these reasons and/or the other relief that will be granted in consequence of them (see, in that vein, the observations that I made in Fair Work Ombudsman v Australian Workers’ Union [2020] FCA 60, [75]-[76] (Snaden J)).

121    Likewise, the fact that the AWU has made admissions in this case is of no moment. These reasons identify the conduct by which the Agreed Contraventions were constituted. There is nothing about the fact that that conduct was the subject of admissions that gives rise to any utility in granting declaratory relief. Nor does any such utility exist by reason of the AWU’s concession that it is appropriate.

122    I am conscious that Mortimer J granted declaratory relief in the Melhem Judgment. Her Honour noted that there was, before her, “…no dispute between the parties about the grant of declaratory relief” (Melhem Judgment, [3] (Mortimer J)), and agreed “…that declaratory relief is appropriate” (Melhem Judgment, [243] (Mortimer J)). Those observations indicate that her Honour was satisfied that the grant of declaratory relief would serve some relevant utility, as the authorities require. There is, however, no identification within the Melhem Judgment of what that utility was; a reality that surely reflects that the point wasn’t controversial.

123    That her Honour was (as I would readily infer) minded to accept that there was utility in granting declaratory relief in that case gives me pause to consider that there might be equivalent utility in doing so here. If there is, I am unable to see it. Whatever might have been the utility attaching to declaratory relief in the Melhem Judgment, I am not persuaded that there is equivalent utility in the present case.

124    It follows that no declaratory relief will be granted.

Conclusion

125    Pursuant to s 306(1) of the FW(RO) Act, the court will order that the AWU pay pecuniary penalties totalling $148,100.00, comprising:

(1)    penalties totalling $15,400.00—and comprising:

(a)    $8,000.00 in respect of the addition to the Membership Register of the 98 Cleanevent employees referred to at [32] above; and

(b)    $7,400 in respect of the addition to the Membership Register of the 66 Cleanevent employees referred to at [34] above—

              for the two Agreed s 230 Contraventions that relate to Cleanevent (above, [32], [34], [36] and [80]);

(2)    Penalties totalling $33,000.00—and comprising:

(a)    $5,650.00 in respect of the addition to the Membership Register of the 43 Winslow that the AWU admitted as members in 2008 (above, [45]);

(b)    $5,700.00 in respect of the addition to the Membership Register of the 58 Winslow that the AWU admitted as members in 2008 (above, [45]);

(c)    $8,700.00 in respect of the addition to the Membership Register of the 169 Winslow that the AWU admitted as members in 2008 (above, [45]);

(d)    $4,750.00 in respect of the addition to the Membership Register of the 15 Winslow that the AWU admitted as members in 2008 (above, [45]); and

(e)    $8,200.00 in respect of the addition to the Membership Register of the 116 Winslow that the AWU admitted as members in 2008 (above, [45])—

              for the five Agreed s 230 Contraventions that relate to Winslow (above, [45] and [80]);

(3)    a penalty of $7,425.00 for the Agreed s 230 Contravention that relates to BMD (above, [49] and [80]);

(4)    a penalty of $8,250.00 for the Agreed s 230 Contravention that relates to the AJA and VJA (above, [55] and [80]);

(5)    a penalty of $7,425.00 for the Agreed s 230 Contravention that relates to the ANPA (above, [60] and [80]);

(6)    a penalty of $25,500.00 for the Agreed s 230 Contravention that relates to Geotech (above, [62]-[63] and [80]);

(7)    a penalty of $51,100.00 for the Agreed s 172 Contraventions (above, [66] and [81]).

126    Those penalties will, in each case, be payable to the Commonwealth (FW(RO) Act, s 306(2)) within 28 days. Presumably conscious of the effect of s 329(1) of the FW(RO) Act, the Commissioner does not seek an order for costs and none will be made.

Associate:

Dated:    12 August 2020