Bills Digest No. 45,
2017–18
PDF version [878KB]
Jaan Murphy
Law and Bills Digest Section
17
October 2017
Contents
Purpose of the Bill
Structure of the Bill
Background
Royal Commission into Trade Union
Governance and Corruption recommendations
Amending definition of ‘prescribed
offence’ for the purposes of the disqualification regime
New criminal offence for holding
office whilst disqualified
New disqualification regime
Committee consideration
Senate Education and Employment
Legislation Committee
Senate Standing Committee for the
Scrutiny of Bills
Policy position of non-government
parties/independents
Position of major interest groups
Position of trade unions
Position of non-union organisations
Financial implications
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Key issues and provisions:
disqualification of officials
Disqualifying directors of companies
Automatic disqualification
Disqualification by court order
Contraventions of civil penalty
provisions contained within the Corporations Act
Repeated involvement in corporate
insolvencies is insolvent and non-payment of debts
Repeated contraventions of the
Corporations Act
Disqualification under a law of a
foreign jurisdiction
Disqualification by ASIC
Disqualifying officials of registered
organisations
Designated findings
Designated laws
Wider criminal findings
Automatic disqualification of
officials
Disqualification orders
When can a disqualification order be
made?
Differences between the Corporations
Act and the Bill’s disqualification regime
Summary of grounds for
disqualification
A designated finding is made against
the person
A wider criminal finding is made
against the person
Multiple failures to prevent
contraventions by the organisation
Breaches of directors duties and the
Corporations Act
The person is not a fit and proper
person to hold office in an organisation
Offences related to disqualified
officials
Definition of disqualified official
Offences related to disqualified
officials
Application of amendments
Human rights issues raised by the
proposed disqualification regime
Is there a legitimate objective?
Is the disqualification regime
rationally connected to the legitimate objective?
Is the disqualification regime and
proportionate way to achieve the legitimate objective?
Summary of human rights concerns
regarding the disqualification regime
Key issues and provisions:
deregistration of organisations
Grounds for cancelling the
registration of an organisation
Applications to cancel the
registration of an organisation
Grounds for cancelling registration
or making alternative orders
Corrupt conduct of officials
Abuse of position
Conduct that perverted the course of
justice
Corruption of any other kind
Acting contrary to the interests of
the members of the organisation
Conducting affairs of the
organisation in an inappropriate manner
Evidence that can be used to
establish corrupt conduct
Multiple findings against an
organisation
Serious offence committed by an
organisation
Multiple findings against members
Non-compliance with orders or
injunctions
Obstructive industrial action
Justifying non-deregistration of the
organisation
Other powers related to
deregistration
Alternatives to deregistration
When can alternative orders be made?
Disqualifying officers responsible
for conduct justifying deregistration
Altering membership rules
Excluding certain members
Suspension of rights and privileges
Human rights concerns raised by the
alternative orders regime
Key issues and provisions:
administration of dysfunctional organisations
Administrator
Books
Financial misconduct
Part of an organisation
Who can apply to have an
administrator appointed?
Circumstances that can lead to an
administrator being appointed
The organisation or a part of it has
ceased to function effectively
One or more officers of an
organisation or part have engaged in financial misconduct
A substantial number of the officers
have acted in their own interests
Oppressive conduct contrary to the
interests of the members of the organisation
Vacant office or position and no
effective means of filling it
Differences between appointing
administrators under the Corporations Act and Bill
Appointing administrators of
companies
Court orders to deal with
dysfunctional companies
Summary of differences between
administration under the Bill and Corporations Act
Process to appoint an administrator
Functions and powers of
administrators
Offences related to administrators
Human rights issues raised by the
proposed administration regime
Key issues and provisions: public
interest test for amalgamations
Summary of comparative regulation of
company and registered organisation ‘mergers’
Summary of current law in relation to
amalgamations of registered organisations
Relevance of fiduciary duties of
union officials
Application for amalgamation and role
of FWC
Importance of a Community of Interest
Declaration
Standing of other persons
Standing of the Minister and related
powers
Members approval of the amalgamation
Summary of current law in relation to
company ‘mergers’ and takeovers
Regulatory framework regarding
corporate takeovers
Policy underpinning takeover rules in
the Corporations Act
Takeover structures
Takeover bids
Schemes of arrangement
No public interest test
Company takeover regulators
ASIC
Takeovers panel
Australian Competition and Consumer
Commission
Competition test
Conduct of merger parties
Summary of ACCC merger clearance
Foreign Investment Review Board
Triggers for the exercise of the
Treasurer’s powers under the FATA
Character of the investor
Summary table
Table 1: summary of registered
organisation and company merger processes and issues
Key issue: new amalgamation regime
for registered organisations
Overview of proposed changes
The public interest test in other
industrial relations contexts
Standings of persons to make
submissions
Bill provides standing to a wider
range of persons than other regimes
Human rights concerns raised by the
proposed public interest test
When is the public interest test
applied?
Elements of the public interest test
Record of compliance with the law
Compliance record events
Other matters of public interest
What happens when the public interest
test is failed?
Changes apply to amalgamations
commenced before amendments commenced
Exercise of amalgamation powers only
by Full Bench of FWC
Changes to when amalgamation can take
effect
Appendix : Differences between the
disqualification regimes proposed by RCTUGC and the Bill 63
Table 2: Differences between the
disqualification regimes proposed by the RCTUGC and the Bill 63
Date introduced: 16
August 2017
House: House of
Representatives
Portfolio: Employment
Commencement: the
day after Royal Assent
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent,
they become Acts, which can be found at the Federal Register of Legislation
website.
All hyperlinks in this Bills Digest are correct as
at October 2017.
Purpose of
the Bill
The purpose of the Fair Work (Registered Organisations)
Amendment (Ensuring Integrity) Bill 2017 (the Bill) is to respond to certain
recommendations made by the Royal Commission into Trade Union Governance and
Corruption (RCTUGC), implement the Government’s election commitment to ‘effectively
deal with registered organisations that are dysfunctional or not serving the
interests of their members’ and subject proposed amalgamations of registered
organisations to a public interest test by amending the Fair Work
(Registered Organisations) Act 2009 (the FWRO Act) to:
- include
serious criminal offences punishable by five or more years’ imprisonment as a
new category of ‘prescribed offence’ for the purposes of the automatic
disqualification regime which prohibits a person from acting as an official of
a registered organisation
- allow
the Federal Court to prohibit officials from holding office where they have:
- contravened
a range of industrial and other relevant laws
- are
found in contempt of court
- repeatedly
fail to stop their organisation from breaking the law or
- are
otherwise not a fit and proper person to hold office in a registered
organisation
- make
it an offence for a person to continue to act as an official or in a way that
influences the affairs of an organisation once disqualified
- allow
the Federal Court to cancel the registration of an organisation on a range of
grounds including:
- corrupt
conduct by officials
- repeated
breaches of a range of industrial and other laws by the organisation or its
members and
- the
taking of obstructive unprotected industrial action by a substantial number of
members
- allow
applications to be made to the Federal Court for other orders, including suspending
the rights and privileges of:
- an
organisation
- an
individual or
- a
branch or division of an organisation
where its officers or members
are acting in a manner that is inconsistent with the rights and privileges of
registration
- expand
the grounds on which the Federal Court may order remedial action to deal with
governance issues in an organisation and expressly provide that the Federal
Court may appoint an administrator to an organisation or part of an
organisation as part of a remedial scheme and
- introduce
a public interest test for amalgamations of registered organisations, which
will allow relevant matters to be taken into account, such as each
organisation’s record of compliance with industrial laws.[1]
Structure
of the Bill
The Bill is divided into five Schedules:
- Schedule
1 deals with disqualifying people from holding office in a registered
organisation
- Schedule
2 deals with the deregistration of registered organisations and related
matters
- Schedule
3 deals with the administration of dysfunctional registered organisations
- Schedule
4 proposes a public interest test for amalgamations of registered
organisations and
- Schedule
5 contains minor and technical amendments.
Background
Organisations registered under the FWRO Act have
certain rights under the Fair Work Act 2009
(FW Act) and other legislation, including in relation to
bargaining for enterprise agreements. Registered organisations that represent
the interests of employees include trade unions and professional associations,
whilst registered organisations that represent the interests of employers or an
industry are referred to as employer organisations.
Registered organisations (organisations) occupy a unique
position within Australia's workplace relations system. Whilst they represent
the interests of their members, organisations also seek to advance their own
interests, and can have a significant impact on the economy (or segments of
it).
There are differing views about appropriate governance
structures and standards for organisations.[2]
One view is that organisations are more akin to incorporated associations then
corporations, and therefore the regulation of organisations should be more like
that imposed on incorporated associations.[3]
Another view is that organisations are more like
companies, and therefore should be regulated in a manner similar to how
corporations are regulated.[4]
This was the view accepted by the RCTUGC which concluded:
An approach that denies the equivalence of unions and
companies and concludes therefore there should be no changes to statutory
duties imposed on officers is an illogical and unthinking approach.[5]
The Bill responds to the recommendations made by the RCTUGC
in relation to the integrity of organisations and their officials,
responsiveness to members interests and the deregistration of organisations in
certain circumstances.[6]
The Bill also seeks to give effect to the Government's election commitment to ‘effectively
deal with’ organisations that are dysfunctional or not serving the interests of
its members and to provide that amalgamations between organisations are subject
to a ‘public interest’ test.[7]
Royal
Commission into Trade Union Governance and Corruption recommendations
The RCTUGC made a number of recommendations that the Bill
seeks to implement. Specifically those recommendations are 36, 37 and 38. These
are briefly discussed below.
Amending
definition of ‘prescribed offence’ for the purposes of the disqualification
regime
Recommendation 36 of the RCTUGC was:
The definition of ‘prescribed offence’ in s 212 of the Fair
Work (Registered Organisations) Act 2009 (Cth) be amended to include an
offence under a law of the Commonwealth, a State or Territory, or another
country, which is punishable on conviction by a maximum penalty of imprisonment
for life or 5 years or more.[8]
Proposed paragraph 212(aa) of the FWRO Act,
at item 6 of Schedule 1 to the Bill is consistent with this
recommendation.
New
criminal offence for holding office whilst disqualified
Recommendation 37 of the RCTUGC was:
The Fair Work (Registered Organisations) Act 2009 (Cth)
be amended to make it a criminal offence for a person who is disqualified from
holding office in a registered organisation to continue to hold an office. The
offence should be an offence of strict liability with a maximum penalty of 100
penalty units or imprisonment for two years, or both.[9]
Whilst proposed section 226 of the FWRO Act,
at item 9 of Schedule 1 to the Bill is consistent with this
recommendation, the quantum of the penalty is inconsistent with principles guiding
the creation of strict liability offences set out in the Guide
To Framing Commonwealth Offences, Infringement Notices And Enforcement Powers, which
provides that:
- a
strict liability offence will generally only be considered appropriate where it
is punishable by a fine of up to 60 penalty units for an
individual and
- is
not punishable by imprisonment.[10]
The Senate Standing Committee for the Scrutiny of Bills
raised concerns about the imposition of strict liability (discussed below).[11]
In addition, a number of stakeholders noted the proposed penalty – whilst
consistent with the RCTUGC recommendation – is double the comparable offence
applicable to directors under the Corporations Act.[12]
New
disqualification regime
Recommendation 38 of the RCTUGC was:
The Fair Work (Registered Organisations) Act 2009
(Cth) be amended by inserting a new provision giving the Federal Court
jurisdiction, upon the application of the registered organisations regulator,
to disqualify a person from holding any office in a registered organisation for
a period of time the court considers appropriate. The court should be permitted
to make such an order if the conditions set out in paragraph 190 are
satisfied.[13]
(Emphasis added)
The regime proposed by the Bill differs from the above
recommendation in a number of ways, as discussed in detail below in the Key
Issues and provisions part of this Digest.
Committee
consideration
Senate
Education and Employment Legislation Committee
The Bill has been referred to the Senate Education and
Employment Legislation Committee for inquiry and report by 9 October 2017.
Details of the inquiry are on the inquiry
homepage.
The majority of the Committee recommended that the Bill be
passed.[14]
Labor and the Greens both issued dissenting reports, recommending that the
Senate reject the Bill.[15]
Labor considers the Bill to be a ‘politically driven attack on the democratic
functioning of unions’.[16]
The Greens described the Bill as ‘politically motivated’ and ‘reflective of the
Coalition’s continued efforts to reduce workers’ rights and undermine unions’.[17]
Both Labor and the Greens were concerned with the perceived lack of
consultation on the Bill.[18]
Senate
Standing Committee for the Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills
raised a number of concerns about the Bill including:
- that
the proposed disqualification powers were insufficiently defined
- the
inclusion of strict liability offences and the quantum of the penalties
associated with those offences
- the
reversal of the evidential burden of proof in some circumstances and
- the
proposed immunity from civil liability for administrators of organisations.[19]
These concerns are explored in detail below in the Key
Issues and provisions part of this Digest.
Policy
position of non-government parties/independents
As discussed above, both Labor and the Greens issued
dissenting reports on the Senate Education and Employment Legislation Committee
inquiry into the Bill, recommending that the Senate reject the Bill.[20]
Before the release of the Committee’s report, media
reports had foreshadowed the opposition to the Bill by these parties.[21]
Position of
major interest groups
The Senate Education and Employment Legislation Committee
inquiry into the Bill attracted 36 submissions, the majority of which were from
trade unions.
Position of
trade unions
Trade unions oppose the Bill for a number of reasons,
including:
- the
Bill is politically motivated[22]
- the
Bill contains measures that go beyond the recommendations of the RCTUGC[23]
- the
Bill is inconsistent with international law and the stated intention in
enacting the FWRO Act, particularly in respect of organisational
autonomy[24]
- the
Bill would allow excessive political, corporate and regulatory interference in
the democratic functioning and control of organisations through expanded standing
provisions and grounds for court orders[25]
- the
disqualification regime is unsupported by policy and goes beyond the equivalent
provisions applicable to corporations or incorporated associations[26]
- the
cancellation regime proposed by the Bill is unsupported by policy and is not
genuinely equivalent to the regulation of corporations[27]
- the
administration regime for dysfunctional organisations is unsupported by policy,
not based on any recommendations of the RCTUGC and is not genuinely equivalent
to corporate regulation in this area[28]
- the
proposed changes to amalgamation processes (including the ‘public interest’
test) is unsupported by policy and it not based on any recommendations of
RCTUGC.[29]
Further:
- the
amendments would impose additional requirements (including the consideration of
political and corporate interests) that are irrelevant to the merits of the
proposed amalgamation from the perspective of the organisations’ memberships
and their interests and/or are not comparable to the requirements imposed on
companies seeking to merge[30]
- the
proposed ‘public interest test’ is not a true public interest consideration,
rather it is predominately focused on economic considerations and the
commercial interests of industry and employers.[31]
Position of
non-union organisations
Master Builders Australia (MBA), the Australian Industry
Group (AIG), Australian Mines and Minerals Association (AMMA), Housing Industry
Australia (HIA) and the Australian Chamber of Commerce and Industry (ACCI) all
supported the Bill in its current form.[32]
Professor Bradon Ellem, the Australian Conservation
Foundation, Australian Youth Climate Coalition, Friends of the Earth Australia,
Getup!, Greenpeace Australia, Nature Conservation Council of Australia and
Solar Citizens oppose the Bill.[33]
Financial
implications
The Explanatory Memorandum states that the Bill will have
no financial impact on the Commonwealth.[34]
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. Whilst the
Government considers that the Bill is compatible,[35]
the Parliamentary Joint Committee on Human Rights (PJCHR) raised concerns about
the Bill’s compatibility with a number of human rights, as discussed below.
Parliamentary
Joint Committee on Human Rights
The PJCHR considered the Bill in its ninth report of 2017.[36]
The PJCHR noted that the measures proposed by the Bill will impact on a number
of recognised human rights, including the right to freedom of association, and
the right to just and favourable conditions of work. The PJCHR noted that those
rights are informed by various International Labour Organization (ILO) treaties
to which Australia is a signatory. Further, those ILO treaties also provide
additional rights including:
- the
right of workers to autonomy of union processes (including electing their own
representatives in full freedom)
- organising
their administration and activities without interference and
- formulating
their own programs without interference.[37]
Various ILO treaties also protecting unions from being
dissolved, suspended or de-registered and protect the rights of workers to form
organisations of their own choosing.[38]
The PJCHR noted that various measures contained in the Bill would limit the
ability of unions to govern their internal processes and therefore engage and
limit those rights.
The specific issues raised by various provisions contained
in the Bill, are discussed below.
Key issues
and provisions: disqualification of officials
As noted above, the RCTUGC formed the view that the
governance requirements of organisations should be more like those imposed on corporations
than incorporated associations. As such, to give context to the proposed
amendments a brief outline of the disqualification regime applicable to
directors of companies provided by the Corporations Act
2001 is provided below.
Disqualifying
directors of companies
The Corporations Act contains a number of provisions
which provide for the disqualification of directors. This includes:
- automatic
disqualification
- disqualification
by court processes and
- disqualification
by the regulator (the Australian Securities and Investments Commission (ASIC))
in limited circumstances.
Importantly however, none of the processes as described
below allow the Minister, shareholders or other stakeholders in the corporation
to seek to have directors disqualified. Only ASIC has this power.
In contrast, the regime proposed by Schedule 1 of the Bill
will enable the Registered Organisations Commissioner (ROC), the Minister or ‘a
person with sufficient interest’ to seek a court order disqualifying a person
from being an official of a registered organisation.[39]
Automatic disqualification
Section 206B of the Corporations Act automatically
disqualifies a person from being a director of a corporation, if they are
convicted of serious criminal offences or are an undischarged bankrupt.[40]
Section 206B provides that a person is automatically disqualified from being a
director of a company if:
- they
are convicted (by either an Australian or foreign court) of an offence that concerns
the making, or participation in the making, of decisions that affect the whole
or a substantial part of the business of the company, or concerns an act that
has the capacity to significantly affect the corporation's financial standing
- they
are convicted for a contravention of the Corporations Act punishable by
imprisonment for a period of greater than 12 months
- they
are convicted of either an Australian or foreign offence that involves
dishonesty and is punishable by imprisonment for a period of at least three
months
- they
are convicted by a foreign court of an offence punishable by imprisonment for a
period of greater than 12 months.
Disqualification
by court order
Part 2D.6 of the Corporations Act provides the court with
power to disqualify directors in a range of circumstances, including:
- where
a director has contravened certain civil penalty provisions in the Corporations
Act (section 206C)
- where
a director is involved in repeated corporate insolvencies and non-payment of
debts (section 206D)
- where
a director has repeatedly been involved in contraventions of the Corporations
Act, and failed to take reasonable steps to prevent the contraventions (section
206E)
- to
give effect to a disqualification order made under the Competition and
Consumer Act 2010 (CCA) or the Australian
Securities and Investments Commission Act 2001 (ASIC Act) (sections
206EA and 206EB) and
- where
a person has been disqualified from being a director of, or being concerned in
the management of, a foreign company under a law of a foreign jurisdiction (section
206EAA).
The grounds of disqualification most relevant to the regime
proposed by the Bill are briefly examined below.
Contraventions
of civil penalty provisions contained within the Corporations Act
Section 206C gives the court the power to disqualify a
director for any period it consider appropriate where the director breached
various civil penalty provisions contained within the Corporations Act
and the court is satisfied that the disqualification is justified. Such
proceedings can only be commenced by ASIC – not by other stakeholders (such as
shareholders or creditors) or the Minister.
Repeated
involvement in corporate insolvencies is insolvent and non-payment of debts
Section 206D gives the court the power to disqualify a director
for up to 20 years if:
- within
the last seven years, the director was an officer of two or more failed
companies and
- the
court is satisfied that the manner in which the corporation was managed was
wholly or partly responsible for the corporation failing and
- the
disqualification is justified.
Importantly however, applications for a disqualification
order under section 206D can only be made by ASIC, not by other stakeholders
(such a creditors or shareholders) or the Minister.
Repeated
contraventions of the Corporations Act
Section 206E provides the court with power to disqualify a
director for any period it consider appropriate where:
- the
director has at least twice been an officer of a company that contravened the Corporations
Act and the director failed to take reasonable steps to prevent a
contravention or
- the
director contravened the Corporations Act at least twice while they were
director of the company
- the
director was an officer of a body corporate and did something that would have
contravened subsection 180(1) or section 181 (which require directors of
corporations to exercise their powers and discharge their duties with care,
diligence, good faith and for a proper purpose) if the body corporate had been
a corporation and
- the
court is satisfied that the disqualification is justified.
Again however, applications for disqualification under
section 206E can only be made by ASIC, and not by the Minister, shareholders,
creditors or other stakeholders.
Disqualification
under a law of a foreign jurisdiction
Section 206EAA provides the court the power to disqualify a
director for any period it consider appropriate where the person is
disqualified under the law of a foreign jurisdiction from:
- being
a director of, or being concerned in the management of, a foreign company (or
carrying on substantially similar activities) and
- the
Court is satisfied that the disqualification under this subsection is justified.
Again however, applications seeking disqualification under
section 206EAA can only be made by ASIC, and not by the Minister, shareholders,
creditors or other stakeholders.
Disqualification
by ASIC
Section 206F gives ASIC the power to disqualify a director
for up to five years. ASIC may give notice to a director under section 206F if:
- within
the last seven years they were an officer of two or more companies that were
wound up (liquidated)
- the
person was an officer, or within 12 months after the person ceased to be an
officer of those corporations, each of the corporations was wound up and
- the
liquidators lodged reports under section 533(1) about the inability of the
company to pay its debts.[41]
The notice gives the person an opportunity to demonstrate
why they should not be disqualified as a director, and to be heard on the
question.[42]
Once ASIC has considered the director’s response to its
notice, it can disqualify the director for up to five years. Importantly, ASIC
can disqualify a director under section 206F without the need to show breaches
of commercial morality or gross incompetence. It is sufficient that the
director was the subject of two or more reports that were lodged by liquidator
under section 533 of the Corporations Act.[43]
Disqualifying
officials of registered organisations
Key
concepts and definitions
The disqualification regime proposed by the Bill is
underpinned by three key concepts. Those are: designated findings, designated
laws, and wider criminal findings.[44]
Importantly however, the above three concepts are also
relevant to other aspects of the Bill such as the proposed cancelation,
administration and amalgamation regimes. To aid readers, the concepts are
briefly outlined below.
Designated
findings
Proposed subsection 9C(1) of the FWRO Act,
at item 2 of Schedule 1 to the Bill, defines a designated finding
as a finding in criminal proceedings that a person has committed an
offence under a designated law, or in any civil proceedings,
that the person has contravened, or been involved in a contravention of:
- a
civil penalty provision of the FWRO Act
- a
civil remedy provision of the FW Act
- a
civil remedy provision of the Building and
Construction Industry (Improving Productivity) Act 2016 (BCI
Act) or its predecessor (as in force at any time before its repeal)[45]
- a
provision of Part IV of the Competition and Consumer Act 2010 (CCA)
(which deals with anti-competitive conduct) or a related state or territory
law
- a
Work Health and Safety (WHS) civil penalty provision of the Work Health and
Safety Act 2011 (WHS Act) or a related state or territory Occupational
Health and Safety (OHS) law within the meaning of the FW Act.
Designated laws
Proposed subsection 9C(2) provides a list of designated
laws:
- the FWRO Act and FW Act
- the BCI Act or its predecessor (as in force at any time before its repeal)[46]
- Part
IV of the CCA or a related state or territory law
- the WHS Act and each related a state or territory OHS law within the
meaning of the FW Act and
- Part
7.8 of the Criminal
Code Act 1995 and any other provision of the Code so far as it
applies in relation to that Part (Part 7.8 deals with causing harm to, and
impersonation and obstruction of, Commonwealth public officials).
Wider
criminal findings
A wider criminal finding is a finding (other than
a designated finding) in any other criminal proceeding against
the person that the person committed an offence against any law of the
Commonwealth, a state or territory.
|
Automatic
disqualification of officials
Currently Chapter 7, Part 4, Division 2 of the FWRO Act
deals with the automatic disqualification of officials. In simple terms, if
an official has been convicted of a prescribed offence, they are
automatically disqualified from holding office in a registered organisation for
a certain period of time.
Currently sections 213 and 215 of the FWRO Act provide
that a person convicted of one of the prescribed offences set out in
section 212 is automatically disqualified from holding office. Those offences
include:
- an
offence under a law of the Commonwealth, a state or territory, or another
country, involving fraud or dishonesty and punishable on conviction by
imprisonment for a period of three months or more
- an
offence under the FWRO Act related to registered organisation elections,
criminal breaches of an official’s duties of good faith, use of position and
information, and criminal offences related to reprisals against whistleblowers
- any
other offence in relation to the formation, registration or management of an
association or organisation or
- any
other offence under a law of the Commonwealth, a state or territory, or another
country, involving the intentional use of violence towards another person, the
intentional causing of death or injury to another person or the intentional
damaging or destruction of property.[47]
Proposed paragraph 212(aa), at item 6 of Schedule
1 to the Bill, will expand the definition of prescribed offence in section
212 to include an offence under a law of the Commonwealth, a state or territory,
or another country, punishable upon conviction by imprisonment for life or a
period of five years or more. This is consistent with recommendation 36 of the
RCTUGC.[48]
Item 15(1) of Schedule 1 provides that automatic
disqualification will not apply to a conviction for an offence of the type
listed in new paragraph 212(aa) if the conviction occurred before commencement
of Schedule 1. This means proposed paragraph 212(aa) will not operate
retrospectively in that respect. However, a person convicted after commencement
for an offence committed before commencement will be subject to automatic
disqualification under proposed paragraph 212(aa).
It is worth noting that directors of companies can be
disqualified for up to five years where they are convicted of an offence against
the law of a foreign country or an offence under the Corporations Act punishable
by imprisonment for a period of greater than 12 months.[49]
In contrast, the Bill proposes that an official will only be disqualified where
they are convicted of an offence (other than the specific types of offences
discussed above) punishable by imprisonment for a period of greater than five
years.[50]
However, both directors of companies and officials of
registered organisations can be disqualified where they are convicted of an
offence that involves dishonesty that is punishable by imprisonment for at
least three months.[51]
Further, both the automatic disqualification regimes provided by the Corporations
Act and the FWRO Act provide for automatic disqualification where a
director or official is convicted of an offence that involves the management of
the entity concerned.[52]
Disqualification
orders
The Bill proposes to introduce a significantly revised
disqualification order regime. Currently the FWRO Act does not provide a
comprehensive mechanism by which the regulator or other persons can apply to
have an official disqualified. In contrast the Corporations Act allows
the regulator (ASIC) to apply for an order to disqualify a director. The regime
proposed by the Bill will enable the ROC, the Minister, or any other person
with ‘sufficient interest’ to apply to the court for an order to disqualify an
official of a registered organisation.[53]
The Explanatory Memorandum notes that ‘sufficient interest’
has been interpreted as ‘an interest beyond that of an ordinary person and
includes those whose rights, interests or legitimate expectations would be
affected by the decision’.[54]
This would appear to allow members of registered organisations, and potentially
parties affected by the actions of those organisations (for example, employers)
to apply for orders to disqualify an official. In this regard, the regime proposed
by the Bill differs substantially from the current regulatory regime imposed on
corporations. Further, the Bill differs from recommendation 38 of the RCTUGC,
which recommended:
The Fair Work (Registered Organisations) Act 2009
(Cth) be amended by inserting a new provision giving the Federal Court
jurisdiction, upon the application of the registered organisations regulator,
to disqualify a person from holding any office in a registered organisation for
a period of time the court considers appropriate. The court should be permitted
to make such an order if the conditions set out in paragraph 190 are
satisfied.[55]
(Emphasis added)
To illustrate the differences between the model
recommended by the RCTUGC and that proposed by the Bill, the table in the Appendix
to this Digest sets out in detail the conditions proposed by the RCTUGC and
those proposed by the Bill, and their differences.
When can a
disqualification order be made?
In relation to disqualification orders, the RCTUGC noted:
Subject to specific situations where the registered organisations
regulator should be entitled to disqualify an officer because of certain easily
verifiable objective matters, it is preferable that the power to ban be
conferred on a court.
First, any decision by the regulator would be subject to
judicial review and the reviewing court would be able to review the
jurisdictional facts supporting the regulator’s decision. In practice, this
would often lead to increased delays, cost and expense. Secondly, the judicial
process provides a greater safeguard against the possibility of the power being
misused. Thirdly, ASIC only has the power to issue a banning notice in limited
circumstances.[56]
The RCTUGC noted that ‘having regard to the problems
identified by the Commission, the Federal Court should be permitted to make an order
disqualifying a person from holding an office within a registered organisation
or branch’[57]
where:
- a
ground for disqualification is made out (discussed below) and
- the
Court is satisfied that the disqualification is justified.[58]
The Appendix to this Digest sets out in detail the
grounds justifying disqualification proposed by the RCTUGC and those proposed
by the Bill, and their differences. However, in contrast to the RCTUGC’s
recommendation, proposed subsection 222(2) of the FWRO Act, at item
9 of Schedule 1 to the Bill, provides that a disqualification order
can be made where a ground is made out and the court does not consider that it
would be unjust to disqualify the person, having regard to:
- the
nature of the matters constituting the ground (noting that these will have had to
occur after the commencement of the amendments in the schedule)
- the
circumstances and the nature of the person’s involvement in the matters
constituting the ground and
- any
other matter that the court considers relevant.
The grounds for disqualification proposed by the Bill
(discussed below) are more expansive than that proposed by the RCTUGC. Further,
Professionals Australia argued that the difference in the drafting between the
Bill and that recommended by the RCTUGC ‘has the practical effect of
effectively shifting the onus onto the defendant to satisfy the Court why the
order is unjust if a ground is made out’ rather than the applicant satisfying
the court that because a ground is made out, disqualification is justified.[59]
Differences
between the Corporations Act and the Bill’s disqualification regime
The differences between the disqualification regime proposed
by the Bill and that contained in the Corporations Act can be briefly
summarised. First, the disqualification regime proposed by the Bill is more
expansive in its application than that contained in the Corporations Act
because:
- it
proposes that not being a ‘fit and proper person’ (the proposed test that takes
into account certain civil and criminal findings and ‘any other event the Court
considers relevant’)[60]
be a ground for disqualification – the Corporations Act applies no
equivalent test
- the
range of persons who can seek to apply to have an official disqualified
includes the Commission, the Minister and any person with a ‘sufficient
interest’ – the Corporations Act only provides standing to ASIC, not the
Minister, directors, shareholders or creditors (all persons roughly analogous
to a person with a ‘sufficient interest’ in a registered organisation) and
- the
Bill does not contain any provisions that prevent frivolous or vexatious
applications to disqualify officials – the Corporations Act does contain
provisions that operate to prevent certain frivolous or vexatious applications
(but not in relation to disqualification or directors, as standing is reserved
for ASIC alone).[61]
Summary of
grounds for disqualification
Proposed section 223 of the FWRO Act, at item
9 of Schedule 1 to the Bill sets out the grounds for
disqualification. They are:
- a designated finding is made against the person or the person is found to
be in contempt of court in relation to an order or injunction made under a designated
law
- a wider criminal finding is made against the person
- the
person was involved in multiple failures to prevent contraventions by the
organisation
- the
person committed an offence related to directors duties or was disqualified
from managing a corporation under Part 2D.6 of the Corporations Act or
- the
person is not a fit and proper person to hold office in an organisation.
These are briefly discussed below. The Appendix to
this Digest sets out in detail the differences between these grounds for
disqualification and those originally proposed by the RCTUGC. As noted above,
the grounds for disqualification proposed by the Bill are more expansive than
that proposed by the RCTUGC.
A
designated finding is made against the person
A ground for disqualification is that a designated
finding is made against the person (or the person is found to be in
contempt of court in relation to an order or injunction made under a designated
law).[62]
The PJCHR noted that the effect of the broad definitions
of designated finding and designated law means that the range of
conduct that could result in the disqualification of an official is extremely
broad. This is because a 'designated finding’ includes a contravention of
various industrial laws, and therefore includes contraventions that are
potentially of a less serious nature (including the taking of unprotected
industrial action).[63]
The PJCHR noted that the right to strike is an aspect of
the right to freedom of association– and that the right to strike is
specifically protected and permitted under international law.[64]
Further, the PJCHR noted that the existing restrictions on taking industrial
action under Australian law (that is the framework in relation to ‘protected’ and
'unprotected' industrial action) have been ‘consistently criticised by
international supervising mechanisms as going beyond what is permissible’.[65]
The PJCHR concluded that because of the broad application of
the concept of a ‘designated finding’, union officials could be disqualified
for conduct that may be protected under international law.[66]
As such, it noted that the disqualification regime appears to limit the right
to strike (and the breadth of conduct captured by a ‘designated finding’ (including
non-serious matters) raises questions about the rational connection of this
aspect of the disqualification regime to the stated objective of protecting the
interests of members of unions, where those members may be of the view that
taking particular forms of industrial action (such as unprotected industrial
action) are in their interests.[67]
A wider
criminal finding is made against the person
A ground for disqualification is that a wider criminal
finding is made against the person and the person engaged in the
conduct to which the wider criminal finding relates in the course of (or
purportedly in the course of) performing functions in relation to any
organisation.[68]
For example, this means that a person with a wider
criminal finding made in relation to their conduct whilst performing
functions as an official for organisation ‘A’ and who subsequently left that
organisation, could nonetheless be disqualified from being an official for
organisation ‘B’.
In addition, a further ground for disqualification is where
a person is found in contempt of court in relation to an order or injunction
made under any law of the Commonwealth, a state or territory and the
person engaged in the conduct to which the contempt of court finding relates in
the course of (or purportedly in the course of) performing functions in
relation to any organisation.[69]
Multiple
failures to prevent contraventions by the organisation
A ground for disqualification is where two of the following
findings are made against any organisation in relation to conduct
engaged in whilst the person is an officer of the organisation:
- a designated finding
- a wider criminal finding or
- a
finding that the organisation is in contempt of court in relation to an order
or injunction made under any law of the Commonwealth, a state or territory.[70]
Importantly however this ground of disqualification only
applies where the official failed to take reasonable steps to prevent the
conduct in each of the two findings.[71]
In relation to the requirement that this ground for disqualification will only
apply if the person has 'failed to take reasonable steps to prevent the conduct’,
the Scrutiny Committee noted:
Given that disqualification may have a significant impact on
an affected individual, it is of concern that the bill does not provide more
specificity about the actions it is expected an individual officer would need
to take to avoid bearing consequences of a finding which relates to an
organisation, rather than to the individual themselves.[72]
The Scrutiny Committee therefore requested that the
Minister provide:
... advice as to the appropriateness of including specific
guidance in the primary legislation as to the type of reasonable steps that
must be undertaken in order to avoid disqualification under this provision.[73]
In addition to concerns about the ‘insufficiently defined’
aspects of this ground for disqualification expressed by the Scrutiny Committee,
the PJCHR noted that because of the breadth of the concept of a ‘designated
finding’, this ground of the disqualification regime means it is possible that
where a union has engaged in two or more such contraventions (which may be
minor in nature) the entire elected leadership of a union could be subject to disqualification.[74]
The PJCHR specifically noted that this could occur regardless of whether or not
the union members in question had agreed to participate in the conduct which
led to the 'designated findings’ and whether they considered the relevant
conduct to be in their best interests.[75]
Breaches of
directors duties and the Corporations Act
A ground for disqualification is where a person is found in
any criminal or civil proceedings, to have committed an offence against, or
contravened a provision of, Division 1 of Part 2D.1 of the Corporations Act
(this relates to directors duties) or the person is disqualified from managing
a corporation under the Corporations Act.[76]
This will ensure that where a person commits certain criminal
offences or breaches of directors duties that are similar in nature to those
imposed on officials of organisations, they can be disqualified. The
Explanatory Memorandum argues:
A finding that a person has previously contravened their
duties as an officer in relation to a corporation may be indicative that the
person is not a suitable person to hold office in an organisation or branch of
an organisation.[77]
Likewise, where a person is disqualified as a director proposed
subsection 223(4) will allow the person to be disqualified from acting as
an official. The Explanatory Memorandum notes that ‘the types of conduct that
form the grounds for disqualification under Part 2D.6 of the Corporations
Act’ mean where a person is disqualified as a director, the ‘suitability of
the person to hold office in an organisation’ comes into question, and hence ‘such
disqualification should properly be a ground for disqualification of an
official’.[78]
The person
is not a fit and proper person to hold office in an organisation
The final ground for the disqualification of an official is
where, after having regard to certain events, that person is not a fit and
proper person to be an official in a registered organisation.[79]
Proposed subsection 223(6) sets out the events that are indicative of
not being a fit and proper person to be an official in a registered
organisation. The events are:
- the
person is refused an entry permit, or an entry permit held by the person is
revoked or suspended under the FW Act
- a
person is refused a WHS entry permit, or a WHS entry permit held by the person
is revoked or suspended under the WHS Act (or under a state or territory
OHS law)
- in
any criminal or civil proceedings against the person, or any action against the
person by an agency of the Commonwealth, state, or territory, the person is
found to have engaged in conduct involving fraud, dishonesty, misrepresentation,
concealment or material facts, or a breach of duty
- in
any criminal proceedings against the person, the person is found to have engaged
in conduct involving the intentional use of violence towards another person,
the intentional causing of death or injury to another person or the intentional
damaging or destruction of property and
- any
other event the court considers relevant.
The Explanatory Memorandum notes that various rights of
entry provisions in the FW Act and WHS legislation that grant
significant rights and privileges to permit holders to access premises are
subject to the permit holder being a fit and proper person.[80]
The Government argues that these rights should only be exercisable by persons who
demonstrate appropriate regard for the law.[81]
The Government argues that the types of conduct covered by the events above include
behaviours that may indicate that a person is neither fit nor proper to hold
office in a registered organisation.[82]
The Government notes the FWRO Act places duties on
officials of registered organisations including to act with appropriate care
and diligence, to act in good faith and not to misuse their position or
information gained as a result of holding office. As such, it argues that an official
who has been found in any relevant proceedings to engage in conduct involving
fraud, dishonesty, misrepresentation, concealing material facts or a breach of those
duties may be a person who cannot uphold the duties imposed on an official, and
is therefore not a suitable person to hold office in a registered organisation.[83]
In this regard, there appears to be a degree of overlap
with existing sections 212 and 215 of the FWRO Act. This is because
under these provisions a person is automatically disqualified from being an
official if they are convicted of an offence involving fraud or dishonesty
punishable by imprisonment for a period of three months or more – that is,
conduct involving fraud, dishonesty, misrepresentation, concealing material
facts and so forth. However, whilst there is a degree of overlap, nonetheless
the proposed amendment would allow persons with the requisite standing to seek
the disqualification of an official in circumstances where (for whatever
reason) automatic disqualification had not occurred.
Finally, the Government notes that where a person has been
convicted of an offence involving the intentional use of violence towards
another person, the intentional causing of death or injury of another person or
the intentional damaging or destruction of property, such findings may indicate
that the person is not suitable to be an official in a registered organisation.
This is ‘due to significant and important functions and powers that exercisable
by officers’.[84]
A number of stakeholders were critical of the inclusion of
the proposed ‘not a fit and proper’ person test as a ground for
disqualification.[85]
The ACTU argued:
No equivalent test is imposed on company directors or
officers of incorporated associations under state legislative regimes. The
expansive range of grounds is a significant overreach and invites undue
political, corporate and regulatory interference in the democratic and
autonomous functioning and control of registered organisations.[86]
(Emphasis added)
Offences
related to disqualified officials
Proposed Division 4 of Part 4 of Chapter 7 of the FWRO
Act contains amendments that provide that a person disqualified from being
an official in an organisation may commit an offence if they are a candidate
for office, hold office, or act as if they hold office, in an organisation.[87]
Definition
of disqualified official
Proposed section 225 defines a person disqualified
from holding office in an organisation as:
- a
person who is not eligible to be a candidate for election to, or to hold, an office
in an organisation under subsection 215(1) as amended by item 7
of Schedule 1 (that is, a person who has been convicted of a prescribed
offence as defined in section 212, discussed above under the heading ‘Automatic disqualification’)
- a
person disqualified from holding office in an organisation under an order made
under proposed section 28N, at item 4 of Schedule 2
to the Bill, or proposed section 222. (Proposed section 28N
allows the Federal Court to disqualify a person from holding office in an
organisation when an application has been made under proposed sections 28
or 28A seeking the cancellation of a registered organisation's
registration or alternative orders and the Court determines that a ground set
out in the application is established wholly or mainly because of the conduct
of the person.)[88]
The note to proposed section 225 states that a person
disqualified from holding office in an organisation is also disqualified from
holding office in a branch of an organisation.
Offences
related to disqualified officials
Proposed section 226 contains three offences, all of
which are punishable by a fine of up to 100 penalty units ($21,000),
imprisonment for up to two years, or both.[89]
The first offence is where a person is a candidate for
election to an office in an organisation and the person is disqualified from
holding office in an organisation. The second offence is where the person holds
office while disqualified. If the person is disqualified because they
committed a prescribed offence and were in office at the time of the
conviction, they will commit the second offence if they continue to hold office
in an organisation or a branch of the organisation either 28 days after their
conviction or when the Federal Court refuses their application for leave to
hold office despite the prescribed offence (see subsections 215(2) and (3),
216(3) and 217(3) of the FWRO Act for details).
The third offence is where a person is disqualified from
holding office in an organisation and the person acts as if the person holds
office. Proposed subsection 226(3) has a number of elements that are
required to be met to prove that a disqualified person is acting as an
official. The first element is that the person is disqualified from holding
office in a registered organisation. In addition the person must also:
- exercise
the capacity to significantly affect the financial standing or other affairs of
an organisation or part of an organisation (for example a branch) or
- gives
directions (not including advice given by the person in the proper performance
of functions that relate to the person's professional capacity) to the
management committee of an organisation or part of an organisation.[90]
In the case of a person giving directions to the management
committee of an organisation or part of an organisation, proposed paragraph
226(3)(c) provides that the person must know that the committee of
management is accustomed to act in accordance with the person's directions or
intends that it will do so.
Proposed subsection 226(4) provides that strict liability
applies to the physical element of the offences; that is that the person is
disqualified from holding office in a registered organisation, if the person is
disqualified under an order made by the Federal Court under proposed
sections 28N or 222 of the FWRO Act (discussed above). The
Explanatory Memorandum notes that section 206A of the Corporations Act
provides a comparable offence in relation to disqualified directors that also
applies strict liability to the circumstance of whether or not a person is
disqualified from being a director.[91]
The Government argues that as with the Corporations Act
offence, strict liability is appropriate in the circumstances as the Federal Court
will have made an order disqualifying a person from holding office under proposed
sections 28P or 222. The Government argues that applying a fault
element, whether intention, knowledge, recklessness or negligence, would
unnecessarily weaken the deterrent effect of proposed sections 28P and 222
because a person who has been disqualified by Federal Court order will be
aware that they have been disqualified.[92]
Importantly however, the imposition of strict liability does
not apply to disqualification under section 215 of the FWRO Act (automatic
disqualification). The Government notes that this is appropriate as there may
be questions as to whether a person was aware of the automatic
disqualification, in the absence of court order.[93]
The Scrutiny Committee noted that the penalties proposed for
the offences in proposed section 226 (100 penalty units or imprisonment for two
years, or both) are double that in existing section 206A of the Corporations
Act.[94]
The Scrutiny Committee also reiterated its long-standing view that ‘it is
inappropriate to apply strict liability in circumstances where a period of
imprisonment may be imposed’.[95]
A number of stakeholders also raised concerns about the penalty for continuing
to hold office when disqualified being higher than that imposed by the Corporations
Act.[96]
Application
of amendments
Item 15 of Schedule 1 to the Bill deals with how the
proposed amendments to the disqualification regime will apply. Generally, the
amendments will apply upon commencement of the provisions in the schedule.
However, subitem 15(1) has the effect of providing that the
disqualification regime will only offences of the type listed in proposed
paragraph 212(aa) if the conviction occurred after the commencement
of the amendments contained in Schedule 1. The only exception to this will be
where the offence covered by proposed paragraph 212(aa) was already covered by
existing section 212.
This will ensure that the changes to the automatic disqualification
regime will not apply retrospectively (noting however, that is possible that a
person may be convicted of an offence that relates to conduct that occurred
before the commencement of the amendments to the disqualification regime).
Item 15(2) relates to the disqualification regime
contained in proposed section 222. It provides which conduct or events
the court may consider when determining whether any of the grounds for
disqualification under proposed section 223 apply to an official.
Generally, the effect of item 15(2) is that grounds for disqualification
can only be established by conduct or events that occurred after the
commencement of the amendments (in other words the amendments will not operate
retrospectively).
However there is an important qualification to the operation
of item 15(2). Item 15(3) provides the court may have
regard to matters that occurred before the commencement of the amendments for
the purposes of proposed paragraph 222(2)(b); that is, in determining
whether it would be unjust to disqualify the person, having regard to:
- the
nature of the matters constituting the ground
- the
circumstances and the nature of the person’s involvement in the matters
constituting the ground, and
- any
other matter that the court considers relevant.
As such item 15(3) will allow the court to consider
any relevant convictions, breaches of civil penalty provisions and related
conduct when determining whether it would be unjust to disqualify the person
from acting as an official of an organisation.[97]
Human
rights issues raised by the proposed disqualification regime
In addition to the concerns regarding the strict liability
offences already discussed above, the PJCHR noted that as the Bill expands the
circumstances in which officials of unions can be disqualified, it engages the
rights to freedom of association and to just and favourable conditions at work,
both of which also encompass the right to form and join trade unions.[98]
The PJCHR noted that the interpretation of the right to
freedom of association and to just and favourable conditions at work is
informed by various ILO treaties to which Australia is a signatory. As such,
workers have the right to autonomy of union processes which includes:
- selecting
their own representatives without interference
- freedom
to organise their administration and activities without interference and
- formulating
their own programs without interference.[99]
Further, various ILO conventions also protect unions from
being dissolved, suspended or de-registered and protect the rights of workers
to form organisations of their own choosing.[100]
The PJCHR referred to comments from international supervisory mechanisms of the
ILO in relation to the human rights engaged by the disqualification regime:
The right of workers' organizations to elect their own
representatives freely is an indispensable condition for them to be able to act
in full freedom and to promote effectively the interests of their members. For
this right to be fully acknowledged, it is essential that the public authorities
refrain from any intervention which might impair the exercise of this right,
whether it be in determining the conditions of eligibility of leaders or in the
conduct of the elections themselves.[101]
The PJCHR noted that the right to freedom of association
may be subject to permissible limitations, provided certain conditions are met.
Generally a justifiable limitation on the right in question (in this case, to
freedom of association) must:
- address
a legitimate objective
- be
rationally connected to that legitimate objective and
- be
a proportionate way to achieve the legitimate objective.[102]
The PJCHR specifically noted that Article 22(3) of the International
Covenant on Civil and Political Rights (ICCPR) and Article
8 of the International Covenant on Economic, Social and Cultural Rights (ICESCR)
expressly provide that ‘no limitations are permissible’ on the right to freedom
of association if they are inconsistent with the guarantees of freedom of
association and the right to collectively organise contained in ILO Convention
No. 87, to which Australia is a signatory.[103]
Is there a
legitimate objective?
The PJCHR noted that the objective of the measures
identified in the Statement of Compatibility with Human Rights contained in the
Explanatory Memorandum is ‘improving the governance of registered organisations
and protecting the interests of members’ and argued that by ensuring the
leadership of unions act lawfully, the measure addresses the objectives of
improving governance and protecting the interests of members of organisations.[104]
On the basis of this explanation, the PJCHR concluded that
the measure is likely to constitute a legitimate objective for the purposes of
international human rights law.[105]
Is the
disqualification regime rationally connected to the legitimate objective?
The PJCHR noted that it was unclear from information
provided in statement of compatibility contained in Explanatory Memorandum, how
the breadth and impact of the disqualification regime is rationally connected
to the stated objectives of improving the governance of organisations and
protecting the interests of members. Further, the PJCHR questioned whether the
measure was the least rights restrictive way of achieving the objectives as
required in order to be a proportionate limitation on the rights in question (discussed
below).[106]
Is the
disqualification regime and proportionate way to achieve the legitimate
objective?
As noted above, an aspect of the right to freedom of
association includes the right to strike – a right specifically acknowledged, protected
and permitted under international law. Further, the PJCHR noted that the
existing restrictions on taking industrial action under Australian law (that is
the framework in relation to ‘protected’ and 'unprotected' industrial action)
have been criticised by various international oversight organisations.[107]
The PJCHR noted that because the proposed disqualification
regime as provided for in the Bill could lead to union officials being
disqualified for conduct that may be protected under international law, it further
limits the right to strike and accordingly the right to freedom of association.
Further, the PJCHR noted the breadth of conduct (including non-serious matters)
that could potentially lead to a union official being disqualified raises
questions about the rational connection of the disqualification regime to the
stated objective of protecting the interests of members of unions, where those
members may be of the view that taking particular forms of industrial action
(such as unprotected industrial action) are in their best interests.[108]
The PJCHR concluded:
It is unclear from the information provided in the statement
of compatibility how the breadth and impact of this measure is rationally
connected to the stated objective of 'improving the governance of registered
organisations and protecting the interests of members' and whether the measure
is the least rights restrictive way of achieving this objective as required in
order to be a proportionate limitation on human rights.[109]
Summary of
human rights concerns regarding the disqualification regime
The PJCHR concluded that the disqualification regime
proposed by the Bill may not be compatible with the relevant rights for the
reasons discussed above and sought further information from the Minister
regarding:
- how
the measure is rationally connected to its stated objective and
- whether
the limitation is a reasonable and proportionate measure to achieve the stated
objective (in particular, whether the measure is the least rights restrictive
way of achieving its stated objective; the extent of the limitation including
in respect of the right to strike, noting previous concerns raised by
international supervisory mechanisms; and the existence of relevant
safeguards).[110]
At the time of writing this Digest, a response from the
Minister has not been published.
The Senate Standing Committee Scrutiny of Bills (Scrutiny
Committee) also raised concerns about the proposed disqualification regime,
noting:
Given that disqualification may have a significant impact on
an affected individual, it is of concern that the Bill does not provide more
specificity about the actions it is expected an individual officer would need
to take to avoid bearing consequences of a finding which relates to an
organisation, rather than to the individual themselves... The Explanatory Memorandum
suggests that the Final Report of the Royal Commission into Trade Union
Governance and Corruption recommended this ground of disqualification on the
basis of a similar ground for disqualifying a person from managing a
corporation provided for in subsection 206E(1) of the Corporations Act 2001.
While the Committee notes this recommendation, the fact that a provision exists
in other legislative schemes does not, of itself, address the Committee's
scrutiny concerns.[111]
As a result, the Scrutiny Committee requested advice from
the Minister as to the appropriateness of including specific guidance in the Bill
‘as to the type of reasonable steps that must be undertaken in order to avoid
disqualification under this provision’.[112]
At the time of writing this Digest, a response from the
Minister has not been published.
Key issues
and provisions: deregistration of organisations
Currently Chapter 2, Part 3 of the FWRO Act deals
with the cancellation of registration of organisations. Schedule 2 of the Bill
contains a number of amendments to the existing regime in the FWRO Act
that are intended to expand the grounds for, and streamline the processes
related to, the cancellation of registration of organisations by the Federal Court.
In addition, the amendments contained in Schedule 2 will
provide that the Court can, instead of cancelling the registration of an
organisation, make various alternative orders where the grounds for cancellation
have been made out because of the conduct of the officials or members of a
particular part of an organisation. In other words, the Court will have a range
of options available to it from the disqualification of officials through to
cancellation of registration of a registered organisation.[113]
Grounds for
cancelling the registration of an organisation
The effect of the amendments proposed by Schedule 2 is that
the Federal Court can cancel the registration of an organisation when certain
grounds are established. Broadly speaking, those grounds relate to what would
be colloquially understood as corrupt or unlawful conduct by the organisation,
its officials, or members. Those same grounds may also form the basis for
alternative orders – such as disqualifying particular officials, altering
eligibility rules to exclude certain members, and suspension of rights and
privileges of the organisation and its members.[114]
Applications
to cancel the registration of an organisation
As with the proposed disqualification regime, proposed
sections 28 and 28A of the FWRO Act, at item 4 of Schedule
2 to the Bill, provide that any of the following persons may apply
to the court for an order cancelling the registration of an organisation or
alternative orders:
- the
Commissioner
- the
Minister or
- a
person with a ‘sufficient interest’.
Unlike companies formed under the Corporations Act,
the separate legal personality of registered organisations is not solely
dependent upon registration under the FWRO Act. This because registered
organisations are formed as separate legal entities under other legislation
prior to registration under the FWRO Act (for example, incorporated
associations). As such, the cancellation of registration of an organisation
does not end the existence of the organisation as a separate legal entity in
the same way that liquidation under the Corporations Act does in
relation to companies formed under that Act.[115]
Those differences aside, the proposed amendments provide
standing to a range of person who might seek to have the registration of the organisation
cancelled. Whilst there are similarities between the range of persons with
standing to deregister an organisation and those with standing to wind up a
company, there are also differences.
The Corporations Act provides standing to a range
of persons (shareholders, liquidators, creditors and ASIC) seeking to have a
company liquidated, who must have a degree of interest in the affairs of the
entity.[116]
The Bill allows a range of persons to apply to have an organisation
deregistered. It is expected that some of these are analogous to the range of
persons with standing to apply to have a company wound up, for example:
- the
Commissioner (equivalent to ASIC)
- an
official (equivalent to a director)
- member
(equivalent to a shareholder) or
- an
administrator of the organisation (analogous to a liquidator in some
circumstances)
as they are likely to be persons with a ‘sufficient
interest’. Other persons that may have standing to apply to have the organisation
deregistered arguably have no analogy under the Corporations Act, including:
- another
registered organisation (for example another union or an employer organisation)[117]
- an
employer that is a party to an enterprise agreement negotiated with the
organisation or
- the
Minister.
In noting these differences, Professionals Australia
expressed the view:
... the regime for the cancellation of registration of an
organisation contained in the Bill is far more expansive than the regime for
the winding up of companies in the Corporations Act. Further, the amendments
regarding cancellation of registration were not recommended by the Heydon
Report. There is no policy explanation for why they are appropriate or evidence
of any extant policy issue that they address.[118]
Grounds for
cancelling registration or making alternative orders
The grounds the cancelling the registration of a registered
organisation, or making alternative orders are:
- corrupt
conduct of officials
- multiple
findings against an organisation
- a
serious offence committed by an organisation
- multiple
findings against members
- non-compliance
with orders or injunctions and
- obstructive
industrial action.[119]
These are discussed below.
Corrupt
conduct of officials
Proposed section 28C provides that a ground to cancel
the registration of an organisation or to make alternative orders is the
corrupt conduct of officers of the organisation. For corrupt conduct of
officers to exist a substantial number of the officers of the organisation or
part of the organisation, or two or more senior officers of the organisation or
part of the organisation must have engaged in corrupt conduct as defined in
proposed paragraphs 28C(a) to (e).
Abuse of
position
Proposed paragraph 28C(1)(a) provides that corrupt
conduct includes where officers have engaged in conduct that involved, or was
engaged in for the purposes of, abusing their position as officers of the
organisation or part of the organisation.
Whilst not stated in the Explanatory Memorandum, it would
appear likely that determining whether officials had abused their position
would involve considering the conduct of the officials in light of their
statutory and fiduciary duties to both the organisation and its members. This
is because, as noted by the RCTUGC, one aspect of the fiduciary duties of
organisation officials is to avoid a conflict between their personal interests and
any duties they have to the organisation or its members, not to make any secret
profit from their position, to exercise their powers bona fides and for a
proper purpose, and to exercise their powers for purposes honestly and
reasonably believed to be in the best interests of the members of an
organisation as a whole.[120]
This would appear to suggest that where officers of an
organisation had breached their fiduciary duties or related statutory duties,
and those breaches reflect a conscious abuse of their position (for example by
profiting from their position as officers) this finding is likely to be
established.
The Explanatory Memorandum notes that this definition of
corrupt conduct is adapted from the definition of 'engages in corrupt conduct'
contained in subsection 6(1) of the Law Enforcement
Integrity Commissioner Act 2006 (LEIC Act). As such, it would
appear that case law decided under that Act or similar state or territory based
legislation may be useful in interpreting the provision in any future cases.
Conduct
that perverted the course of justice
Proposed paragraph 28C(1)(b) provides that corrupt
conduct includes where officers have engaged in conduct that perverted, or was
engaged in for the purposes of perverting, the course of justice. As noted
above this ground of corrupt conduct is modelled off a provision contained in
the LEIC Act.
Corruption
of any other kind
Proposed paragraph 28C(1)(c) provides that corrupt
conduct includes where officers have engaged in conduct that, having regard to
their duties and powers as officers, involved, or was engaged in for the
purposes of, corruption or any other kind. It would appear that the reference
to having regard to duties and powers of the officers will turn attention to
the compatibility of the conduct with their fiduciary and statutory duties.
Given that officers owe their fiduciary duties to the organisation itself and
in some circumstances also to members, it would suggest that this ground is
likely to be established in circumstances where the 'corruption of any other
kind' involved conduct that was incompatible with those duties.
As noted above this ground of corrupt conduct is modelled
off a provision contained in the LEIC Act.
Acting
contrary to the interests of the members of the organisation
Proposed paragraph 28C(1)(d) provides that corrupt
conduct includes where officers, as part of their actions in affairs of the
organisation or a part of the organisation, act in their own interests rather
than in the interests of the members of the organisation or part of the
organisation, as a whole. The Explanatory Memorandum notes proposed
paragraph 28C(1)(d) is adapted from paragraph 461(1)(e) of the Corporations
Act, which deals with grounds for winding up a company on the basis ‘of the
prejudicial manner in which directors are running the affairs of the company’.[121]
This ground of corruption reflects the fiduciary duties of
officials of registered organisations to avoid a conflict of interest between
their personal interests and any duties they have to the organisation or its
members discussed previously.[122]
Conducting
affairs of the organisation in an inappropriate manner
Proposed paragraph 28C(1)(e) provides that corrupt
conduct includes where officers conducted affairs of the organisation or a part
of the organisation in a manner that is:
- oppressive
or unfairly prejudicial to, or unfairly discriminatory against, a member or a
class of members (proposed paragraph 28C(1)(e)(i)) or
- contrary
to the interests of the members of the organisation or part as a whole (proposed
paragraph 28C(1)(e)(ii)).
Both grounds provided are broadly consistent with section
461 of the Corporations Act (which the Explanatory Memorandum notes proposed
paragraph 28C(1)(e) is adapted from).[123]
However, as noted by the RCTUGC whilst generally officials of registered
organisation owe their fiduciary duties to the entity itself (rather than the
members as a whole) there are also circumstances where officials owe fiduciary duties
to the members as a whole in addition to, or instead of, the organisation as a
separate entity.[124]
This is also the case for directors of companies.
As such, there can be instances where the interests of the
members of the organisation as a whole (or a part of it) and that of the entity
itself do not align or even conflict. The same is true for companies. For
example, it has been held that directors may act in what they consider to be
the best interests of the company as a separate entity from its members
(shareholders) even though this may not be in the (short-term) best interests
of shareholders.[125]
However, in most situations the interests of the company
as a separate entity from its owners (the shareholders) will coincide because
‘the company as a whole’ does not necessarily mean the company as a separate
legal entity distinct from its owners.[126]
Further, at least in relation to companies, generally the interests of shareholders
are paramount.[127]
Put simply, as long as the company is solvent, then as a general proposition
the interest of the company are the same interests of shareholders.[128]
That said, courts have also acknowledged that there may potentially be
situations where what is in the best interests of the company may differ from
what is in the best interests of the members as a whole, particular classes of
members or individual shareholders,[129]
but in such circumstances the duty is to act fairly between different classes
of members.[130]
It appears that the Government intends for the Bill to
shift the balance of the statutory duties of registered organisation
officials in a way that gives greater weight to the interests of the members as
a whole over the interests of the organisation as a separate entity[131]
(noting that as discussed above, generally the interests of the
organisation as a separate entity will align with the interests of the
members).
This means that in relation to the measures proposed by
the Bill, it is at least theoretically possible that an official could be
acting in the best interests of the registered organisation as a separate
entity from the members as whole for an honest, bona fide purpose – but those
actions may not necessarily be in the (short term) interests of the membership
as a whole, or part of the membership. The CFMEU noted:
The idea that it is necessarily ‘corrupt’ or improper for a
union or official to elevate the interests of one group of members over another
is a nonsense. Trade union affairs involve balancing what are often complex and
competing needs and interests of a diverse membership group. Officials are
called on to make decisions about pursuing certain claims on behalf of members,
including unmeritorious ones, about prioritising scarce union resources and
about general policy positions. Not all decisions will satisfy every member or
group of members. That does not make those decisions ‘corrupt’ or even
‘oppressive’ or ‘unfairly prejudicial’. By joining a union, most members accept
that the merit of union decision making is best judged at the ballot box, not
through complex and costly court processes.[132]
Unions NSW argued that ‘the nature of unions requires them
to balance the needs and interests of individuals against those of the broader
collective’ and that therefore ‘it is impossible to simultaneously meet the
interests or members collectively and individually’.[133]
The ACTU made a similar point:
For most widely representative unions, it is almost a daily
duty to conduct affairs in a manner that may arguably discriminate unfairly
between classes of members or part of the organisation. For example, a decision
whether to press for and accept a flat rate pay increase instead of a percentage
pay increase involves discrimination in favour of the lower-paid members.
Almost every contested negotiation – be it about a pay structure, about a
redundancy selection process, about conditions or employment or trade-offs –
involves the sometimes difficult elevation of the interests of one group of
members over those of another.[134]
In such circumstances the Bill may allow either the
organisation to be deregistered, or the officials in question to be
disqualified despite the fact that they may have made a genuine judgement as to
how to fairly balance the types of conflicting interests noted by the CFMEU and
ACTU at that point in time and had determined that it was preferable to act in
the interests of the organisation as separate entity (as their duties requires
them to do) or in the interests of one class of members over another. This is
because as drafted the Bill does not provide that acting fairly between
different classes of members or parts of the organisation in such circumstances
is permitted—as courts have held can, in some circumstances, be the case for
directors of companies.[135]
Evidence
that can be used to establish corrupt conduct
Proposed subsection 28C(2) provides that a finding of
fact in proceedings before any court (this would not include Fair Work
Commission decisions, as it is a tribunal, not a court) relating to the grounds
for cancelling registration or alternative orders set out in proposed
section 28C (such as disqualification of officers), are admissible as prima
facie evidence of that fact that the relevant ground occurred.
This means proposed subsection 28C(2) operates to
allow an applicant to use a finding of fact in another proceeding as evidence
of the fact that a ground for disqualification occurred. However, it will not
prevent the respondent from establishing the contrary by leading their own
evidence. The Explanatory Memorandum notes the purpose of proposed section
28C(2) is ‘to expedite’ applications made under proposed sections 28
and 28A where ‘relevant factual findings have been made in other
proceedings’.[136]
Multiple
findings against an organisation
Proposed section 28D provides that a ground to cancel
the registration of an organisation or to make alternative orders exists when
in relation to an organisation any two of the following have been made against
it:
- a designated finding or
- a wider criminal finding.
As noted earlier, a designated finding can relate
to less serious contraventions of industrial laws or to taking unprotected
industrial action. The PJCHR expressed concern about this ground, noting that
where deregistration related to designated findings of a less serious nature,
or to taking unprotected industrial action:
it is unclear how the cancellation of union registration
would necessarily be in the interests of members or would guarantee the
democratic functioning of the organisation. For example, union members may have
democratically decided to take unprotected industrial action and hold the view
it is in their best interests.[137]
The PJCHR also noted that the existing restrictions on
taking industrial action in Australian domestic law have been subject to ‘serious
criticisms’ by international treaty monitoring bodies that concluded that they
go beyond the permissible limitations on the right to strike as an aspect of
the right to freedom of association.[138]
The PJCHR concluded that cancelling the registration of a
registered organisation for undertaking conduct captured by designated findings
(especially in relation to less serious contraventions of industrial law or
taking unprotected industrial action) would further limit the right to freedom
of association. The PJCHR also noted that as a potential alternative order to
deregistration is excluding particular members from membership of the organisation,
such orders would ‘appear to undermine’ the rights of those individuals ‘to be
part of a union of their choosing’.[139]
The PJCHR also noted that the breadth of the proposed power to deregister an organisation
'raises specific questions about whether it is sufficiently circumscribed with respect
to the stated objectives '.[140]
The PJCHR noted that the statement of compatibility with
human rights contained in the Explanatory Memorandum 'provides some arguments
about the proportionality of the measure’ including the ‘availability of
certain safeguards’ including that:
1. deregistration orders may be limited to a part of an organisation that
is undertaking the relevant conduct justifying deregistration and
2. workers will still be entitled to be represented by a union.[141]
However, the PJCHR concluded ‘these do not appear
sufficient to ensure that the limitation is the least rights restrictive way to
achieving its stated objectives, in view of the breadth of the grounds for
cancellation of union registration set out above'.[142]
The concerns expressed by the PJCHR were echoed by some
stakeholders. The ACTU argued that ‘there are no equivalent provisions’ in the Corporations
Act that ‘allow for companies to be wound up due to a history of
non-compliance with law by the company, its directors or the members (ie
shareholders)’ and as a result ‘a company can repeatedly rip off consumers, put
workers lives at risk, illegally dump toxic chemicals or produce dangerous
products and not be wound up’ but the amendments would allow a union to ‘have
its registration cancelled if a small group of members take unprotected
industrial action’.[143]
The ACTU also argued:
These amendments allow the actions of what may be a very
small part of an organisation or its membership to be sheeted home to the whole
of the organisation with orders for deregistration or the suspension of rights
and privileges etc. It is difficult to conceptualise any way in which such an
outcome could be fair to, or properly serve the interests of, members who may
find themselves denied certain or all of the benefits of representation by a
registered organisation because of conduct in which they had no involvement.[144]
Serious
offence committed by an organisation
Proposed section 28E provides a ground to cancel the
registration of a registered organisation or to make alternative orders exists where
the organisation is found, in criminal proceedings against it, to:
- have
committed an offence against a law of the Commonwealth or a state or territory
and
- the
offence is punishable upon conviction by a penalty for a body corporate of (or
equivalent to) at least 1,500 penalty units ($315,000).
The Explanatory Memorandum notes that the threshold quantum
of penalty units (1,500) establishes ‘the gravity of the offence for a body
corporate’ as it ‘equivalent to 5 years imprisonment for a natural person’.[145]
Further, the Explanatory Memorandum notes the use of the words ‘or equivalent
to’ in proposed section 28E(b) are necessary as:
... not all States and Territories utilise the concept of
penalty units and some instead express penalties as fixed amounts. In such a
case where the fixed amount is equivalent to the monetary value of at least
1,500 penalty units, it will be sufficient to provide a ground for
cancellation.[146]
Multiple
findings against members
Proposed section 28F provides a ground to cancel the
registration of a registered organisation or to make alternative orders exists
where designated findings have been made against a substantial number of
members of:
- the
organisation
- a
part of the organisation or
- a
class of members of the organisation.
The phrase ‘substantial number’ is not defined in the
Bill, nor does the Explanatory Memorandum provide any guidance as it its
meaning. Despite this, it would appear reasonable, based on its ordinary
meaning and case law in other areas of law, to conclude that a 'substantial
number 'of members of the organisation will be a number that is ‘considerable’
and more than ‘significant’.[147]
As such, what constitutes a ‘substantial number’ of members against which
designated findings have been made will turn on a case-by-case basis, and will be
based on various facts such as the total number of members in the organisation,
part of the organisation or class of members of the organisation compared to
the number of members against which relevant designated findings have been
made.
As noted above in relation to proposed section 28D,
the ACTU expressed concern that the effect of proposed section 28F would
be that ‘the actions of what may be a very small part of an organisation or its
membership’ (because designated findings may be made against a substantial
number of members of a small part of the organisation or a class of members
that are a very small proportion of the overall membership of the organisation)
may be used as a basis for orders for deregistration or the suspension of
rights and privileges.[148]
Non-compliance
with orders or injunctions
Proposed section 28G provides a ground to cancel the
registration of a registered organisation or to make alternative orders exists
where the organisation has failed to comply with an order or injunction made
under any law of the Commonwealth or a state or territory; or a substantial
number of members of:
- the
organisation
- a
part of the organisation or
- a
class of members of the organisation
have failed to comply with an order or injunction made
under a designated law (the definition of which is discussed above under
the heading ‘Designated laws’).
This means that in effect proposed section 28G
provides two grounds for cancelling the registration of a registered
organisation, or making alternative orders.
The first is where the organisation itself has failed to
comply with any order or injunction made under any law of the Commonwealth, a state
or territory.
The second ground is where a substantial number of members
of the organisation, a part of the organisation, or a class of members of the
organisation, have failed to comply with an order or injunction made under a designated
law. This second round is narrower than the first for two reasons. First, the
definition of designated law essentially captures industrial, work
health and safety and competition laws (as well as criminal conduct related to
causing harm to, and impersonating or obstructing, officials), rather than
failure to comply with an order or injunction made against ‘any’ law of the
Commonwealth, a state or territory. Second, this ground only applies to such
breaches by a ‘substantial number’ of members of the organisation, a part of it
or a class of members (noting the criticism of the ACTU that this could still
potentially mean that ‘the actions of what may be a very small part of an
organisation or its membership’ may have repercussions for the broader
membership who were not involved in the relevant breaches).[149]
As discussed above what constitutes a 'substantial number
'of members that failed to comply with an order or injunction made under a
designated law will turn on a case-by-case basis.
Proposed subsection 28G(2) provides that a finding of
fact in proceedings before any court (this would not include FWC decisions, as
it is a tribunal, not a court) relating to the grounds for cancelling
registration or alternative orders set out in proposed section 28G is
admissible as prima facie evidence of the fact that the relevant ground
occurred. This means proposed subsection 28G(2) operates to allow an
applicant to use a finding of fact in another proceeding as evidence of the fact
that a ground for disqualification has occurred. However, it will not prevent
the respondent from establishing the contrary by leading their own evidence.
Obstructive
industrial action
Proposed section 28H provides a ground to cancel the
registration of a registered organisation or to make alternative orders exists
where the organisation or a substantial number of members of:
- the
organisation
- a
part of the organisation or
- a
class of members of the organisation
engaged in certain types of industrial action. Proposed
subsection 28H(2) effectively provides that obstructive industrial
action is any industrial action (other than protected industrial action)[150]
that prevented, hindered or interfered with:
- the
activities of a federal system employer
- the
provision of any public service by the Commonwealth or a state or territory or
an authority of the Commonwealth or a state or territory or
- that
had, or is having or is likely to have, a substantial adverse effect on the
safety, health or welfare of the community or a part of the community.
Proposed subsection 28H(3) provides that a finding
of fact in proceedings before any court (this would not include FWC decisions,
as it is a tribunal, not a court) relating to the grounds for cancelling
registration or alternative orders set out in proposed section 28H is
admissible as prima facie evidence of that fact that the relevant ground
occurred.
This means proposed subsection 28G(3) operates to
allow an applicant to use a finding of fact in another proceeding as evidence
of the fact a ground for disqualification has occurred. However, it will not
prevent the respondent from establishing the contrary by leading their own
evidence. Likewise it will not prevent an applicant from leading evidence that
the organisation, a part of it, or its members engaged in obstructive
industrial action, even if there has been no judicial finding to that effect.
This means that evidence from FWC proceedings or other evidence could be used
to establish this ground, albeit such evidence would not be prima facie
evidence of the fact that obstructive industrial action had occurred. The PJCHR
noted:
... restrictions on taking industrial action in Australian
domestic law have been subject to serious criticisms by international treaty
monitoring bodies as going beyond permissible limitations on the right to
strike as an aspect of the right to freedom of association.[151]
Therefore the PJCHR concluded that cancelling the
registration of registered organisations for obstructive industrial action
‘further limits the right to freedom of association’.[152]
The ACTU was also critical of proposed section 28H on the basis that ‘a
union could have its registration cancelled if a small group of members take
unprotected industrial action’.[153]
Justifying
non-deregistration of the organisation
Under proposed section 28K, if the court finds that
one of the above grounds is established it must deregister the organisation
unless the organisation can satisfy the court that it would be unjust to
cancel its registration having regard to:
- the
nature of the matters constituting that ground
- the
action (if any) that has been taken by or against the organisation or its members
or officers in relation to those matters
- the
best interests of the members of the organisation as a whole and
- any
other matters the court considers relevant.
Proposed subsection 28K(2) specifically provides
that the organisation must be given an opportunity to be heard by the court. In
its submission to the Senate Education and Employment Legislation Committee,
Professionals Australia noted that proposed section 28K does not impose
a ‘requirement to hear from or take into consideration the views of the
membership’ as a whole and argued that as such the deregistration regime
proposed by the Bill ‘potentially contravene[s] Article 3 of ILO Convention 87’
as it:
... impact[s] significantly on the right of organisations and
their members to self-determination and to manage their own affairs without
political or industry interference.[154]
Unions NSW also criticised proposed section 28K:
In this instance, if grounds have been established against a
union, it must stand before the Court and justify its very existence. In
considering if the deregistration is unjust, the Court must have regard to the
best interests of the members as a whole. The idea that a court would decide
what is in the best interests of union members, when considering whether or not
to effectively abolish a union, is offensive and misplaced. Unions are
democratic organisations whose membership hold the leadership accountable
through elections and internal union structures.[155]
Other
powers related to deregistration
The Bill provides a range of additional orders that can be
made alongside an order to cancel the registration of a registered organisation
under proposed section 28K.
Proposed paragraph 28L(a) allows the court to
direct that an application by the de-registered organisation for registration
as an organisation is not to be dealt with before the end of a specified
period. The purpose of this section is to ensure that de-registration of an
organisation is effective, and cannot be undermined by the re-registration of
the organisation within a short period of time after deregistration is ordered.[156]
Proposed paragraph 28L(b) allows the court to
direct that an application for the registration of an organisation whose officers
are the same, or substantially the same, as officers of the deregistered
organisation is not to be dealt with before the end of a specified period. The
purpose of this section is to ensure that the deregistration of an organisation
is effective and cannot be undermined by the re-registration of an organisation
that has the same, or substantially the same officers as those in the
organisation that was deregistered.[157]
Alternatives
to deregistration
The Bill proposes that a court can, as an alternative to
ordering deregistration, make various other orders where a ground to
deregistration has been established and the court is satisfied that it
would be unjust to cancel the registration of the organisation.
When can
alternative orders be made?
Proposed section 28M provides that before the court
makes an order under proposed sections 28N (disqualification of
officers) or 28P (exclusion of certain members), or exercises power
under proposed paragraph 28Q(1)(a) (suspension of rights, privileges or
capacity) in relation to only part of an organisation (for example, a branch) or
only some of its members (for example, those involved in the conduct that led
to the relevant ground for deregistration being established) the Court must be
satisfied that the relevant ground justifying deregistration of the
organisation or making alternative orders was established wholly or mainly
because of the conduct of:
- officers
of a particular part of the organisation or
- members
of a particular class of members or of a particular part of the organisation.[158]
However, proposed paragraph 28M(2)(b) and subsection
28M(3) provide that before making an order to disqualify an officer,
exclude certain members or suspend rights, privileges or capacity the court
must:
- after
having regard to the circumstances and nature of the officers’ or members’
involvement in the matters constituting the ground and any other matters the
Court considers relevant
- be
satisfied that it would not be unjust to make the order or exercise the power.
Proposed subsection 28M(4) specifically provides
that the organisation must be given an opportunity to be heard by the court. Professionals
Australia criticised this aspect of the Bill on the basis that a court should
not determine what is in the best interests of an organisations members ‘with
no requirement to hear from or take into consideration’ their views.[159]
Likewise United Voice argued:
Workers decide what is in their collective interest - there
is no place for an external determination of this interest. It is both
paternalistic and an undue interference in the internal affairs of workers’
organisations.[160]
Disqualifying
officers responsible for conduct justifying deregistration
Proposed section 28N provides that the Court may make
an order disqualifying officers mentioned in proposed paragraph 28M(2)(a)(i)
(that is, officers of a certain part of the organisation wholly or mainly
responsible for the conduct establishing the ground for deregistration) from
holding office in an organisation, for a period the Court considers
appropriate. As noted above, the effect of proposed subsection 28M(2) is
that an order under proposed section 28N can only be made where the Court
is satisfied of the relevant matters in that section.
Further, proposed subsection 28N(2) provides that if
the Court does make an order disqualifying the officer, the officer is also disqualified
from holding office in a branch of an organisation.
Altering
membership rules
Currently subsection 28(4) of the FWRO Act allows
the Court to alter the eligibility rules of the organisation to exclude certain
members, despite the effect of any membership agreement made under section 151
of the FWRO Act. Section 151 of the FWRO Act allows the rules of
an organisation to authorise the organisation to enter into agreements with
unions registered under state legislation to allow certain members of the state
union who are ineligible to be members of that union, to become members of the
registered organisation.
Excluding
certain members
Proposed section 28P provides that where the Court
is satisfied of the relevant matters in proposed section 28M it may make
an order altering the eligibility rules of an organisation so as to exclude
from eligibility for membership of the organisation persons belonging to the
part of the organisation, or the class of members, mentioned in proposed subparagraph
28M(2)(a)(ii) (that is, members of a certain part of the organisation
wholly or mainly responsible for the conduct establishing the ground for
deregistration). The Court can make an order excluding people belonging to such
a part or class of the membership despite any membership agreement made under
existing section 151 of the FWRO Act.
Where an order is made to alter the rules of
eligibility, those changes take place on the date of the order or a date
specified in the order.[161]
Proposed subsection 28P(3) provides that where the
Court makes an order to alter the eligibility rules to exclude certain members it
may make an additional order prohibiting an organisation, for a specified
period of time, from seeking consent under section 158 of the FWRO Act to
alter the organisation’s eligibility rules in such a manner as to have the
effect of restoring eligibility to the persons who were excluded by the order.
Suspension
of rights and privileges
Section 29 of the FWRO Act deals with making
alternative orders where deregistration of an organisation is deferred. Currently
subsection 29(2) of the FWRO Act allows the Court to make orders
suspending the rights, privileges or capacities of the organisation or a part
of the organisation, or of all or any of its members under various legislation
(or order made under such legislation), an enterprise agreement or modern
award. Further, the Court may also:
- give
directions as to the exercise of any rights, privileges or capacities that have
been suspended and
- make
orders that restrict the use of the funds or property of the organisation or a
part of the organisation, and orders for the control of the funds or property
for the purpose of ensuring observance of the restrictions.
Proposed subsection 28Q(1) is consistent with the
above.
As with current subsection 29(4), proposed subsection
28Q(2) provides that an order under proposed section 28Q will have
effect despite anything in the rules of the organisation, or part of the
organisation, concerned. Likewise as provided for in current subsection 29(5), proposed
subsection 28Q(3) provides that any orders made under proposed section
28Q:
- may
be revoked by an order of the Court upon the application of a party to the
proceedings or
- expire
on the date specified in the order.
Currently subsection 29(3) of the FWRO Act provides
that the court must reconsider the question of whether to deregister an
organisation once the relevant alternative orders (such as disqualifying
officials or excluding members) cease to operate, or upon application of a
party to the proceedings (whichever is earlier).
Proposed subsection 28Q(4) is largely consistent with
existing subsection 29(3), as it provides that the Court must reconsider an
application to deregister an organisation once either:
- any
orders made under proposed section 28Q cease to be in force or
- one
of the existing parties makes an application requesting that the Court consider
whether it is just to determine the substantive issues in the application
having regard to the evidence given in relation to compliance with any orders
made under proposed section 28Q or any other relevant circumstances.
However, unlike existing subsection 29(3), proposed subsection
28Q(4) also applies to applications for alternative orders to deregistration
made under proposed section 28A.
Human
rights concerns raised by the alternative orders regime
The PJCHR expressed a number of concerns about aspects of
the alternative orders regime proposed by the Bill.
First it noted that empowering the court to exclude
particular members from union membership (as an alternative to deregistration)
'appeared to undermine the capacity to be part of the union of their choosing'.[162]
Second, it noted that whilst deregistration orders may be
limited to the part of an organisation that had been undertaking the conduct
justifying the deregistration, employees 'will still be entitled to be
represented by union' as a matter of international law and therefore it appears
that the alternative orders may not be the least rights restrictive way to
achieve the Bill’s stated objectives (this is because of the breadth of the
grounds justifying the deregistration of an organisation).[163]
Key issues
and provisions: administration of dysfunctional organisations
Currently section 323 of the FWRO Act provides for
applications to be made to the Court for a declaration in relation to an
organisation or any part of it. If a declaration is made, the Court may approve
a scheme for the taking of action to resolve the matters to which the declaration
relates, which could include appointing an administrator for a period of time.
Item 4 of Schedule 3 to the Bill repeals
existing section 323 of the FWRO Act and replaces it with proposed
Part 2A, which deals with the administration of dysfunctional
organisations.
Key
concepts and definitions
The administration regime proposed by the Bill is
underpinned by a number of key concepts set out in item 1 of Schedule
3 (which amends section 6 of the FWRO Act). These are outlined below.
Administrator
The definition of ‘administrator’ includes a person
appointed as an administrator or interim administrator under proposed
section 323A.
Books
The definition of books is expansive and includes a
register, any other record of information, financial reports or financial
records, however compiled, recorded or stored and documents.
Financial
misconduct
The definition of financial misconduct is defined as
including (and is therefore not limited to):
- a
contravention of a provision of Division 2 of Part 2 of Chapter 9 of the FWRO
Act (dealing with duties of officers in relation to the financial
management of organisations)
- misuse
of funds or false accounting and
- failure
to fulfil duties in relation to financial reports.
The Explanatory Memorandum notes that whether other
conduct not specified in the list above constitutes financial misconduct will
turn on the facts of each case.[164]
What constitutes a ‘misuse of funds’ is not defined, but would appear to
capture a range of conduct including using funds in circumstances where the
approval of the expenditure or the expenditure itself results in an officer
breaching their fiduciary or statutory duties.
Part of
an organisation
The definition of a part of an organisation is
consistent with current paragraph 323(1)(a) of the FWRO Act and hence
includes:
- a
branch or part of a branch of the organisation and
- a
collective body of the organisation or a branch of the organisation.
|
Who can
apply to have an administrator appointed?
Proposed subsection 323(1) enables the Commissioner, Minister,
organisation, a member of the organisation and ‘any other person having a
sufficient interest’ to seek a court order under proposed subsection 323(3) (discussed
below).[165]
Proposed subsection 323(1) provides standing to a wider range of persons
seeking to have an organisation or part placed under administration in a wider
range of circumstances compared to the Corporations Act.
Circumstances
that can lead to an administrator being appointed
Proposed subsection 323(3) provides that the
circumstances that can lead to an administrator being appointed include where
the court is satisfied:
- that
an organisation or part of an organisation has ceased to function effectively
- one
or more officers of an organisation or part of an organisation have engaged in
financial misconduct
- a
substantial number of the officers of an organisation or part have acted in
their own interests rather than in the interests of members of the organisation
or a part as a whole
- that
affairs of an organisation or part are being conducted in a manner that is:
- oppressive
or unfairly prejudicial to, or unfairly discriminatory against, a member or
class of members or
- in
a manner that is contrary to the interests of the members of the organisation
or part as a whole or
- that
an office or position in an organisation or part of an organisation is vacant
and there is no effective means under the organisation or part’s rules to fill it.
These are briefly examined below.
The organisation
or a part of it has ceased to function effectively
Proposed paragraph 323(3)(a) provides that
circumstances that can lead an administrator being appointed include where the
court is satisfied that an organisation or part of it has ceased to function
effectively and there are no effective means under the rules of the organisation
or part by which the organisation or part can be reconstituted or enabled to
function effectively.
The Explanatory Memorandum notes that proposed paragraph
323(3)(a) is ‘modelled on existing paragraph 323(1)(a)’ of the FWRO Act.[166]
Proposed subsection 323(4) provides that an organisation or a part is taken
to have ceased to function effectively where the court is satisfied officers of
the organisation or part have:
- on
multiple occasions, contravened designated laws
- misappropriated
funds of the organisation or part or
- otherwise
repeatedly failed to fulfil their duties as officers of the organisation or
part of the organisation.
However, this list is indicative only—it does not limit the
circumstances in which an organisation or part ceases to function effectively. Due
to the breadth of the definition of designated laws an administrator
could be appointed where officers have engaged in conduct leading to minor contraventions
of designated laws, a point raised by the PJCHR.[167]
One or more
officers of an organisation or part have engaged in financial misconduct
Proposed paragraph 323(3)(b) provides that
circumstances that can lead to an administrator being appointed include where
the court is satisfied that one or more officers of an organisation or part
have engaged in financial misconduct in relation to carrying out their
functions or in relation to the organisation or part (that is breaching various
financial management duties under the FWRO Act, false accounting or
misusing funds).
A
substantial number of the officers have acted in their own interests
Proposed paragraph 323(3)(c) provides that
circumstances that can lead to an administrator being appointed include where
the court is satisfied that a ‘substantial number’ of the officers of an
organisation or part have, in affairs of the organisation or part, acted in
their own interests rather than in the interests of members of the organisation
or part as a whole.
The Explanatory Memorandum notes that proposed
paragraph 323(3)(c) is ‘adapted from paragraph 461(1)(e) of the Corporations
Act’.[168]
However that paragraph deals with applications to have a company wound up (that
is, liquidated) rather than appointing an administrator.
That said, section 232 and paragraph 233(1)(c) of the Corporations
Act provides that where the conduct of the company’s affairs are contrary
to the interests of the members as a whole or oppressive to, unfairly
prejudicial to, or unfairly discriminatory against, a member or members whether
in that capacity or in any other capacity, members or former members of a
company (or persons ASIC thinks appropriate)[169]
to apply to the court for an order regulating the conduct of affairs of the
company in the future, which can include replacing the existing board of a
listed company with a board chosen by the court[170]
(although this is very rare).
Oppressive
conduct contrary to the interests of the members of the organisation
Proposed paragraph 323(3)(d) provides that
circumstances that can lead to an administrator being appointed include where
the court is satisfied that the affairs of an organisation or part are being
conducted in a manner that is:
- oppressive
or unfairly prejudicial to, or unfairly discriminatory against, a member or
members or
- contrary
to the interests of the members of the organisation or part as a whole.
The Explanatory Memorandum states that proposed paragraph
323(3)(d) is ‘adapted from paragraph 461(1)(f) of the Corporations Act’.[171]
However that paragraph deals with applications to have a company wound up (that
is, liquidated) rather than appointing an administrator.
That said, section 232 and paragraph 233(1)(c) of the Corporations
Act, as described earlier, allow a court to appoint a new board where the
conduct of the company’s affairs are contrary to the interests of the members
as a whole or oppressive to, unfairly prejudicial to, or unfairly
discriminatory against, a member or types of members.[172]
Vacant
office or position and no effective means of filling it
Proposed paragraph 323(3)(e) provides that
circumstances that can lead to an administrator being appointed include where
the court is satisfied that:
- an
office or position in an organisation or part is vacant and
- there
is no effective means under the organisation or part’s rules to fill the office
or position.
Proposed paragraph 323(3)(e) reflects existing paragraph
323(1)(b) of the FWRO Act.
Differences
between appointing administrators under the Corporations Act and Bill
As noted above, the RCTUGC formed the view that the
governance requirements of registered organisations were more like corporations
than incorporated associations. However the RCTUGC did not make any
recommendations nor provide any detailed commentary on the appointment of
administrators to oversee dysfunctional organisations. The Explanatory
Memorandum states that the amendments in relation to placing organisations
under administration are:
modelled and adapted from broadly equivalent provisions of
the Corporations Act, [to] ensure that governance issues within an
organisation, or individual branches or divisions, can be addressed promptly
and transparently to ensure that the interests of members are protected.[173]
To give context to the proposed amendments a brief outline
of the regime applicable to the appointment of administrators of companies under
the Corporations Act is provided below.
Appointing
administrators of companies
Voluntary administration involves the appointment of an
independent, registered insolvency practitioner (an ‘administrator’) to take
control of a company that the Board thinks is insolvent or is likely to become
insolvent, for a relatively short period of time.[174]
As not all corporate insolvencies are caused by dysfunctional administration
this means that voluntary administration only deals with insolvency or
potential insolvency, rather than dysfunctional corporate governance generally.
Directors may appoint an administrator where the directors
believe that the company is insolvent or is likely to become insolvent at a
future time.[175]
In most cases the decision to place a company into voluntary administration is
made by the directors, and does not require approval of the shareholders,
creditors, ASIC or the court. However, the Corporations Act also
provides that a company may be placed under voluntary administration by a
liquidator or a creditor who has a charge over the whole or substantially the whole
of the company's property.[176]
The aim of voluntary administration is to maximise the
chances of the company and its business remaining in existence and, failing
that, to achieve a better return to creditors than the immediate winding up of
the company would achieve.[177]
Directors of financially troubled or insolvent companies are able to initiate
voluntary administration (and certain other forms of external administration).[178]
There are a number of reasons why they may do so, such as:
- to
achieve a better outcome for shareholders and creditors than maintaining the
status quo or
- because
they are ‘encouraged’ to take such action by ‘a number of legislative
incentives’.[179]
As noted above, once appointed an administrator takes
complete control of the company. Further, the directors lose their power to
manage the affairs of the company, even though they retain their office.[180]
The Corporations Act imposes a number of requirements in relation to
administrators including:
- they
must be registered liquidators and
- they
must also be independent of the company, its officers, its creditors and the
company's auditor.[181]
One of the key duties of an administrator is to investigate
the financial position and circumstances of the company. The administrator must
form an opinion as to whether it would be in the creditors’ interests for the
company:
- to
enter into a deed of company arrangement
- end
the administration or
- wind
up the company.[182]
Court
orders to deal with dysfunctional companies
The Corporations Act contains mechanisms outside the
appointment of a voluntary administrator by which certain persons can seek
court orders to deal with dysfunctional management of a company (noting this
does not automatically correlate to actual or likely insolvency – a dysfunctional
company can be solvent, and not every insolvent or potentially insolvent
company is managed in a dysfunctional manner).
As discussed above, sections 232, 234 and paragraph
233(1)(c) of the Corporations Act effectively provide that where the
conduct of the company’s affairs is contrary to the interests of the members as
a whole, or oppressive to, unfairly prejudicial to, or unfairly discriminatory
against, a member or class of members, or former members of a company (or
persons ASIC thinks appropriate)[183]
may apply to the court for an order regulating the conduct of the affairs of
the company in the future. This can include replacing the existing board of a
company with a board chosen by the court.
In essence, this means that in certain situations the
administration of a company can be directed or supervised by the court, or the
court can (in effect) appoint such persons as it sees fit to manage the
corporation. Technically however, this is not voluntary administration per
se.
Summary of
differences between administration under the Bill and Corporations Act
From the above it can be seen that the range of persons with
the power to place a company into voluntary administration is limited to
directors and in some (limited) situations, a liquidator or a creditor. Further,
voluntary administration deals with insolvency or potential insolvency, rather
than dysfunctional management per se.
Importantly, under the Corporations Act neither ASIC,
the Minister nor shareholders have standing to initiate proceedings to place a
company into voluntary administration. In contrast, the regime proposed by
Schedule 3 of the Bill will enable:
- the
Commissioner, Minister and the organisation
- a
member of the organisation and
- ‘any
other person having a sufficient interest’
to seek a court order to place the organisation or a part
of it under administration.[184]
Whilst the Corporations Act does provide an alternative mechanism that
could be used to deal with dysfunctional corporate management, it is rarely
used, is not voluntary administration per se and standing to bring such
applications is effectively limited to members and former members of the
company or persons ASIC thinks appropriate.[185]
As such, whilst the Explanatory Memorandum notes that the
administration regime is modelled off that contained in the Corporations Act,
the provisions referred to in the Explanatory Memorandum relate to voluntary
administration (which deals with insolvency) rather than court orders to deal
with dysfunctional management in and of itself (which is distinct and separate
from insolvency). Hence the analogy between the processes proposed by the Bill
and those referred to in the Explanatory Memorandum appears somewhat inapt.
This is because the Bill provides:
- standing
to apply to the court for a declaration that may result in an administrator being
appointed to an organisation or part of an organisation to a wider range of
persons than the Corporations Act provides standing to, to appoint
either a voluntary administrator or to seek court orders to deal with
dysfunctional corporate management
- a
wider range of circumstances that may lead to appointing an administrator than
the appointment of a voluntary administrator under the Corporations Act
or court orders dealing with dysfunctional management and
- a
wider range of purposes and objectives for the appointment of an administrator
than that provided for the appointment of a voluntary administrator under the Corporations
Act.
Process to
appoint an administrator
The process for appointing an administrator is as follows:
- a
person with the requisite standing applies to the court for a declaration
that the circumstances discussed above exist in relation to the organisation or
a part of it[186]
- the
court then determines whether to make the declaration.[187]
If it does make a declaration then the court must not make an order unless it
is satisfied that the order(s) would ‘not do substantial injustice to the
organisation or any member of the organisation’[188]
- if
the court determines it is appropriate to make an order, it may make any
such orders as it sees fit including:
- the
appointment of an administrator for the organisation or part of it
- types
of reports to be given to the Court under the scheme
- when
the scheme begins and ends and
- when
elections (if any) are to be held under the scheme.[189]
Proposed section 323B provides that such orders made
by the Court (and any action taken by an administrator or other person in
accordance with them) overrides anything in the FWRO Act or the rules of
the organisation or part to which it relates, as well as any previous direction
or exemption made under the FWRO Act. However, there are limitations to the
operation of orders made under proposed section 323A including:
- if
a scheme provides for its own end, the Court may only approve it where it provides
that it does not end unless the Court is satisfied that the circumstances it
aims to deal with have been resolved or no longer exist and
- if
a scheme provides for an election for an office, the Court may only approve it if
it provides for the election to be conducted by the Australian Electoral
Commission (AEC) in accordance with Chapter 7 of the FWRO Act.[190]
Proposed section 323D provides that administrators
must advise the court in writing of any interest that could conflict with the
proper performance of their duties as an administrator within 21 days of
acquiring or becoming aware of the interest.
Proposed section 323E provides that the court may
terminate the appointment of the administrator at any time, including where the
administrator has notified the court of a conflict of interest under proposed
section 323D.
Functions
and powers of administrators
Once appointed by the Court proposed section 323F provides
the administrator has the power to:
- control
the property and affairs of the organisation or part and manage that property
and those affairs
- dispose
of any of that property and
- perform
any function, and exercise any power, that the organisation or part, or any
officers, could perform or exercise if it were not under administration.
In addition, proposed subsection 323G(2) provides
the administrator with the power to require a person to attend on the
administrator at such times and to give them any information about the
business, property, affairs and financial circumstances of the organisation or
part as reasonably required. In addition, proposed subsection 323H(3) provides
the administrator with the power to require a person by written notice to
deliver any books specified in the notice that the person possesses.
Finally, proposed section 323K provides that an
administrator or person acting under the direction of the administrator, is not
liable in any action or proceedings in relation to:
- an
act done, or omitted be done
- in
good faith
- in
the performance or exercise, or purported performance exercise
- of
any function or power of the administrator as an administrator under proposed
part 2A.
Offences
related to administrators
As noted above, administrators have the power to require
certain persons (for example, officers or employees of the organisation or
part, or a person who has possession of books related to an organisation or
part) to provide information, books or attend on the administrator as reasonably
required.[191]
Where a person does not comply with those requirements to assist an
administrator, the person commits an offence punishable by penalty of up to 50
penalty units, imprisonment for up to 12 months, or both.[192]
Further, those offences are strict liability offences.[193]
In a criminal law offence the proof of fault (for example,
intent) is usually a basic requirement. However, offences of strict liability
remove the fault (mental) element that would otherwise apply.[194]
In relation to the offence of failing to help an
administrator, it is a defence if the person has a reasonable excuse, proposed
subsection 323G(5) provides that it is a reasonable excuse for a person to
refuse or fail to give information on the ground that to do so might tend to incriminate
the person or expose them to a penalty. As such, the Bill preserves the
privilege against self-incrimination. Further, proposed subsection 323G(6)
also preserves legal professional privilege. However, in relation to the
offence of failing to provide the books of the organisation or part (or
allowing the administrator to inspect and make copies of such books) no such
exceptions are provided. (Although the defence of mistake of fact is available
for both offences under sections 6.1 and 9.2 of the Criminal Code.)
The Scrutiny Committee raised concerns about the strict
liability offences including:
- it
is not evident that the strict liability elements are 'clear and straightforward'
(as claimed in the Explanatory Memorandum to the Bill) because the requirements
are framed by reference to what the 'administrator reasonably requires'
- the Guide
To Framing Commonwealth Offences, Infringement Notices And Enforcement Powers
states that strict liability is only considered appropriate where the offence
is not punishable by imprisonment and only punishable by a fine of up to 60 penalty
units for an individual, whereas the strict liability offences in question are
subject to up to 12 months imprisonment.[195]
As a result the Scrutiny Committee reiterated ‘its
long-standing scrutiny view’ that it ‘is inappropriate to apply strict
liability in circumstances where a period of imprisonment may be imposed’.[196]
Human
rights issues raised by the proposed administration regime
In addition to the concerns regarding the proposed strict
liability offences raised by the Scrutiny Committee, the PJCHR noted that by
allowing for unions to be placed into administration, the proposed
administration regime engages and limits the right to freedom of association
and in particular ‘the right of unions to organise their internal
administration and activities and to formulate their own programs without
interference’.[197]
The PJCHR stated that international supervisory mechanisms have noted:
'[t]he placing of trade union organisations under control
involves a serious danger of restricting the rights of workers' organizations
to elect their representatives in full freedom and to organise their
administration and activities'.[198]
The PJCHR noted that the statement of compatibility in the
Explanatory Memorandum states that the measure has:
...the sole objective of protecting the interests of members
and guaranteeing the democratic functioning of organisations under the stewardship
of officials and a membership that respects the law and thus maintains public
order.[199]
The PJCHR noted that this objective is the same as that used
to justify the measures pertaining to the deregistration of unions[200]
and further that as the statement of compatibility ‘appears to identify
multiple objectives’ it is unclear ‘whether each of these objectives addresses
a substantial and pressing concern as required under international human rights
law’.[201]
The PJCHR noted that matters identified in the statement of
compatibility do not address the proportionality of the measure ‘but rather
address the aims or goals’ of the proposed administration regime.[202]
The PJCHR noted that the test of proportionality is:
...concerned with whether a measure is sufficiently
circumscribed in relation to its stated objective, including the existence of
effective safeguards.[203]
In this respect, the PJCHR expressed concerns regarding the
scope of conduct that may lead a union to be placed into administration. This
was because ‘the potential breadth of the definition of 'designated laws'’ meant
that the proposed administration regime makes it possible for unions to be
placed into administration (or other orders made) because of less serious
breaches of industrial law or for taking unprotected industrial action.[204]
The PJCHR concluded that placing a union under administration ‘may have
significant consequences in terms of the representational rights of employees and
any current campaigns or disputes’ and therefore sought further advice from the
Minister regarding whether the limitation is a reasonable and proportionate
measure aimed at achieving the stated objective (and in particular, whether the
grounds for placing unions under administration are sufficiently
circumscribed).[205]
Key issues
and provisions: public interest test for amalgamations
In the second reading speech for the Bill the Minister
stated:
...the Bill will create a public interest test to be applied by
the Fair Work Commission when unions or employer associations seek to merge. When
companies seek to merge, they must first satisfy a regulator—the [Australian
Competition and Consumer Commission] ACCC—such a merger won't substantially
lessen competition. This competition test is like a public interest test for
companies seeking to merge. By comparison, unions and employer associations
face no similar test. Currently, the Fair Work Commission has very limited
ability to do anything other than effectively rubber stamp a merger approved by
just a bare majority of members. There are no general public interest
considerations and there is very limited scope for affected parties to raise
any concerns about a proposed merger of registered organisations... So this Bill
introduces a new public interest test... which will take account of the broader
impact of a proposed merger and also the record of the organisations in
complying with the law.[206]
(emphasis added)
As the Government appears to infer that the proposed
public interest test is modelled (at least in part) off the competition test
regulating company ‘mergers’, to give context to the proposed reforms a brief
background to the current laws pertaining to registered organisation and
company ‘mergers’ as well as the current interpretation of the ‘public
interest’ within the industrial relations context is provided below.
Currently, Chapter 3 of the FWRO Act deals with the
amalgamation of registered organisations. Whilst the term ‘amalgamation’ has no
definite legal meaning, it implies the combination of separate things into a
homogenous whole.[207]
However, this is somewhat of a misnomer as the process of amalgamation under
the FWRO Act involves at least one registered organisation being
de-registered and ceasing to exist. Whilst it is true that its assets,
liabilities and (often) members will ‘merge’ with another registered
organisation, in reality one entity remains (often re-named) and the others
cease to exist.
Likewise, whilst in Australia, the terms ‘takeover’ and
‘merger’ are used somewhat interchangeably to refer to the acquisition of
control of one company by another, the use of the word ‘merger’ is also somewhat
of a misnomer—one company acquires the other company itself (and hence control
of it) and therefore acquires its assets, liabilities and business. Whilst
sometimes the ‘target’ company may cease to exist after a takeover or ‘merger’,
unlike the case with union amalgamations, this is not a requirement for the
takeover or merger to succeed. The text box below provides a brief summary of
the comparative regulation of company and registered organisation ‘mergers’.
Summary of
comparative regulation of company and registered organisation ‘mergers’
Currently companies and registered organisations that seek
to ‘merge’ are not automatically subject to a ‘public interest’ test
or ‘history of lawlessness test’.
Instead, where a company or registered organisation meets
the criteria set out in the relevant legislation the ‘merger’ will ordinarily
be approved provided the directors/officers and shareholders/members agree to
the ‘merger’. However, in the case of companies if the ‘merger’:
- raises
competition issues: the test to be applied is whether or not the ‘merger’
would have the effect, or likely effect, of a substantial lessening of
competition in a market in Australia (the ‘competition test’)[208]
- is
disputed by one of the merger parties, ASIC or a person who interests may be
affected: the Takeovers Panel can choose to make (or decline to make) a
declaration of ‘unacceptable circumstances’ (which can lead to the ‘merger’
being blocked) where it ‘is not against the public interest’ to do so[209]
or
- involves
a foreign investor: the Treasurer, on advice from the Foreign Investment
Review Board (FIRB) can block the ‘merger’ where it is contrary to
Australia’s ‘national interest’ (this requires consideration of whether the
investor complies with Australia’s laws—which may include consideration of
any ‘history of lawlessness’ of the investor).[210]
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Summary of
current law in relation to amalgamations of registered organisations
The amalgamation process involves:
- internal actions and decisions by the management committees of
the organisations concerned (thereby enlivening the fiduciary duties
of the officers concerned)
- an application to the FWC and
-
a vote of the affected members.[211]
Relevance
of fiduciary duties of union officials
Putting aside specific statutory duties imposed by the FWRO
Act,[212]
at equity officers of a registered organisation (such as a trade union) have,
as noted by the RCTUGC, been recognised by the courts to be fiduciaries and
therefore have fiduciary duties.[213]
Fiduciary duties are obligations of trust and confidence
which equity will attach to one party in certain relationships whereby the
party owing the duty, the fiduciary, is bound to place the interest of his
principal ahead of his own.[214]
The gist of the fiduciary relationship is that equity will not allow the
fiduciary to enter into any engagement in which he has, or could have, a
personal interest conflicting with that of his principal.[215]
Nor will it allow the fiduciary to retain any benefit or gain obtained or
received by reason of his fiduciary position or through some opportunity or
knowledge resulting from it.[216]
Importantly (and as noted previously) as with company directors, union
officials owe their fiduciary duties to the registered organisation directly.[217]
Because union officials are fiduciaries, an officer of an
organisation owes a number of important duties to the organisation. Most
importantly the common law also imposed a duty to act in good faith and
for a proper purpose. However, in addition to those common law duties
the FWRO Act imposes the following duties on union officials, but
only in relation to the financial management of the organisation:
- to discharge their duties and exercise their powers:
- with
care and diligence[218]
- in
good faith and ‘in what he or she believes to be’ the best interest of the
organisation[219]
and
- for
a proper purpose[220]
- not improperly use his or her position or information obtained
because they are or were an officer or employee of the union (or a branch) to:
- gain
an advantage for himself, herself or someone else or
- cause
detriment to the organisation or to another person[221]
Further, officials are also bound by the rules of the
organisation of which they are a member.
Essentially this means that whether under the common law,
equity or the FWRO Act, officials must exercise their powers bona fide
for the benefit of the organisation (or what they believe to be the best
interests of the organisation) rather than for personal gain.
In relation to amalgamation, because there will be a transfer
of assets from one organisation to another (including for example, membership
fee income streams) union officials must be satisfied that it is in the best
interests of the organisation to proceed with the amalgamation. Further, they
must not proceed with the amalgamation for reasons primarily related to person
gain – the amalgamation must be in the best interests of the
organisation. No requirement that the amalgamation must also be in the broader
public interest is currently imposed under equity, the common law or the FWRO
Act.
Application
for amalgamation and role of FWC
Once the organisations have resolved to amalgamate, an
application must be lodged with the FWC. The application must contain:
- a joint application in writing[222]
- resolutions of each Committee of Management in favour of the
proposed amalgamation[223]
- a scheme for amalgamation[224]
and
- an outline of the scheme which contains sufficient information to
allow members of the organisations in question to make an informed decision.[225]
The organisations may also lodge:
- an application for exemption from a ballot which, if successful,
would mean that only the members of the smaller organisation would participate
in the vote[226]
- an application for a ‘Community of Interest Declaration’ (CID)
which, if successful, lowers the number of votes which have to be cast in
favour of amalgamation before the amalgamation is approved[227]
and
- Yes and No statements in relation to the amalgamation.[228]
If the FWC approves the application, a ballot of affected
members will be conducted by the Australian Electoral Commission.[229]
This will typically be a secret postal ballot and the ballot paper will be
accompanied by the outline of the scheme of amalgamation and any Yes or No
statements.[230]
Importance
of a Community of Interest Declaration
The organisations seeking to amalgamate may apply to the FWC
for a CID under section 43 of the FWRO Act.[231]
When determining whether to make the CID, the FWC must be
satisfied that ‘there is a community of interest between the existing organisations
of employees in relation to their industrial interests’[232]
which in turn occurs where the FWC is satisfied that ‘a substantial number of
members of one of the organisations’ are:
- eligible to become members of the other organisation or each of
the other organisations
- engaged in the same work or in aspects of the same or similar
work as members of the other organisation(s)
- covered by the same modern awards as members of the other
organisation(s)
- employed in the same or similar work by employers engaged in the
same industry as members of the other organisation(s)
- engaged in work, or in industries, in relation to which there is
a community of interest with members of the other organisation(s)[233]
or
- there are other circumstances that satisfy the FWC ‘that there is
a community of interest between organisations in relation to their industrial
interests’.[234]
The effect of the FWC making a CID is that it lowers the
number of votes which have to be cast in favour of amalgamation before an amalgamation
can be approved to ‘more than 50%’ (that is, 50 per cent plus one vote) of
formal votes cast in the ballot, rather than the usual two-step test:
- 25% of eligible voters vote and
- 50% of those votes are in favour of the amalgamation.[235]
This means that having the amalgamation approved becomes an
easier task where a CID is in force.
Standing of
other persons
Submissions under the CID process may be made by a person
other than the applicants only with the leave of the FWC and only in relation
to any proposed alteration to the name or eligibility rules of an organisation involved
in the proposed amalgamation (subsection 54(3) of the FWRO Act and regulation
44 of the Fair Work
(Registered Organisations) Regulations 2009).
Standing of
the Minister and related powers
Section 351A of the FWRO Act allows the Minister to
intervene in ‘proceedings before a court’ in relation to matters
arising the FWRO Act (including union amalgamations) if ‘the Minister
believes it is in the public interest to do so’. It should be noted however,
that this is only standing to intervene and make submissions. Although these
may be framed in terms of the broader effect of the amalgamation on the
community, the Minister’s standing does not of itself impose a ‘public
interest’ test on the proposed amalgamation.
However, the Minister has other powers that may allow them
to intervene in amalgamation cases. For example, section 604 of the Fair Work Act 2009
allows a ‘person aggrieved by a decision’ made by the FWC (other than a Full
Bench or Expert Panel decision) or the General Manager under the FWRO Act
to appeal that decision, with permission from the FWC.
Importantly, the phrase ‘a person aggrieved’ has been
broadly defined to extend to people beyond those who have a legal interest at
stake in the matter.[236]
This means that the Minister may be able to appeal any decision to approve an
amalgamation between two registered organisations, on the basis that they are a
‘person aggrieved by a decision’, provided the FWC grants permission.
Section 605 of the Fair Work Act also allows the Minister to
apply to the FWC for a review to be conducted by the FWC of a decision, other
than that of a Full Bench or Expert Panel, if the Minister believes the
decision is ‘contrary to the public interest’. Subsection 605(3) allows the
Minister to make submissions to such a review. Again however, this is only
standing to request a review and then make submissions. Importantly, this does
not, of itself, impose a ‘public interest’ test on the proposed amalgamation.
Despite this however, the grounds for arguing against an
amalgamation are currently limited, and the range of matters and issues that
can be raised in submissions from persons given leave (including the Minister)
are substantially narrower than those proposed by the Bill.
Members
approval of the amalgamation
Assuming the members approve the amalgamation, after
consultation with the organisations, the FWC will fix ‘an amalgamation day’. On
that day:
- all but one of the amalgamating organisations are de-registered
- the eligibility rules of the amalgamating organisations are
merged and any rule changes set out in the scheme of amalgamation take effect
- any change of name of the amalgamated organisation takes effect
- members of a de-registered organisation become members of the
amalgamated organisation
- all assets and liabilities of a de-registered organisation become
assets and liabilities of the amalgamated organisation and
- all pending proceedings involving a de-registered organisation
are deemed to instead involve the amalgamated organisation.[237]
It is the responsibility of the amalgamated organisation to
take such steps as are necessary to ensure that the amalgamation is fully
effective. The Federal Court can resolve any difficulties which arise.[238]
Summary of
current law in relation to company ‘mergers’ and takeovers
In Australia, the term ‘takeover’ is often used to refer
generically to the acquisition of control of a publicly listed company.
However, the takeover rules apply to acquisitions of ASX-listed Australian
companies, ASX-listed Australian managed investment schemes (being investment
trusts), and also unlisted Australian companies with more than 50 shareholders.
Usually control of a company is obtained upon ownership of
more than half of a company’s voting shares. However, in some cases, control
can be obtained at a lower shareholding interest if, as a practical matter, a
person can determine the composition of a company’s board of directors.
Sometimes, the term ‘merger’ is used in lieu of ‘takeover’.
In Australia the term ‘merger’ is a commercial concept used to describe an
agreed acquisition of one company by another where the two companies are of
similar size. Unlike other jurisdictions (such as the United States), there is
no stand-alone process in Australia to effect a true merger which
results in the target company (as a separate legal entity) being subsumed into
the bidder company and the target company ceasing to exist. Instead, following
the transfer of assets and so forth to the bidder company, the target company is
wound up – but that process is separate to the takeover process itself (which
is about purchasing the target company, or enough of it, to gain control over
it).
In other words, the use of the word ‘merger’ is somewhat is
a misnomer – one company takes over the other, and acquires its assets,
liabilities and business.
Regulatory
framework regarding corporate takeovers
Takeovers in Australia are regulated by a combination of legislation
(Part 5.1 and Chapter 6 of the Corporations Act
2001) governmental policy (developed by the ASIC and the Takeovers
Panel, a specialist tribunal which resolves takeover disputes), and to a lesser
extent, the listing rules of the ASX. In addition, Australia has anti-trust
rules set out in the Competition
and Consumer Act 2010 (CCA) which are administered by the ACCC, foreign
investment rules set out in the Foreign
Acquisitions and Takeovers Act 1975 (FATA) and accompanying Regulations,
where proposed acquisitions requiring approval are examined by the FIRB, and other
rules specific to an industry (such as banking, broadcasting, aviation and
gaming) which may regulate or otherwise control ‘merger’ transactions are
applied.
The focus of this digest, however, is on the rules in the Corporations
Act, CCA and FATA as they pertain to company ‘mergers’.
Importantly however, currently company mergers are not automatically
subject to review unless the proposed merger:
- is
disputed by one of the parties or certain other persons
- raises
competition issues or
- involves
a foreign investor acquiring an Australian company.
In contrast Schedule 4 of the Bill proposes for automatic
review of all proposed amalgamations of organisations.
Policy
underpinning takeover rules in the Corporations Act
The takeovers rules in respect of corporate entities reflect
policies that:
- the acquisition of control of companies takes place in an
efficient, competitive and informed market
- target shareholders have a reasonable time to consider a proposed
acquisition and are given enough information to enable them to assess the
merits of the proposal and
- target shareholders have an equal opportunity to participate in
the benefits of a change of control of a company (referred to as a control
transaction).[239]
There is no policy of automatically reviewing company take
overs / mergers or applying a public interest test to company takeovers in the Corporations
Act.
Takeover
structures
The most commonly used takeover structures are an off-market
takeover bid (for either a friendly or hostile deal), or a scheme
of arrangement (for a friendly deal only).[240]
The majority of friendly deals are affected via a scheme of arrangement
(largely because of their ‘all-or-nothing’ outcome).[241]
Takeover
bids
In simple terms, a typical takeover bid involves the making
of individual offers to purchase target securities (for example shares) at a
specified bid price. There are two types of takeover bid: an off-market bid and
a market bid. Virtually all takeover bids are off-market bids, because of the
ability to include conditions. Takeover bids are subject to various rules. [242]
When those rules are compared to the amalgamation process
for registered organisations, there are some similarities. For example, both
require a scheme/bid to be developed and information about the proposed
‘merger’ to be provided to members/shareholders.[243]
Importantly however, unlike the amalgamation of
organisations, where the takeover bid is not disputed by the parties, does not raise
any competition issues and does not involve foreign investment and the process
has complied with the relevant laws, the default position is that
takeover is approved without applying a public interest test. Further,
the ability of interested persons to prevent the merger from proceeding are
limited (discussed below).
Schemes of
arrangement
A scheme of arrangement can be used only for a friendly
acquisition of a company, and is frequently used to effect 100% acquisitions. A
scheme of arrangement is a shareholder and court-approved statutory arrangement
between a company and its shareholders that becomes binding on all shareholders
by operation of law.[244]
Schemes are subject to fewer prescriptive rules than
takeover bids and therefore can be more flexible, but are supervised by ASIC
and the courts. A standard scheme involves various steps, and overall has some
features in common with amalgamations of organisations: various matters are
agreed between the two entities, information is provided to the regulator for
review and also provided to shareholders/members, meetings are held and the
‘merger’ then proceeds.[245]
As with takeovers, the ability of interested persons to
prevent the scheme of arrangement proceeding and the resulting merger from
eventuating are limited to seeking declarations or orders from the Takeovers
Panel (discussed below).
No public
interest test
From the above it can be seen that at no stage of a company takeover/merger—be
it by a takeover bid or a scheme of arrangement—is any form of ‘public
interest’ test automatically applied. Rather the only automatic test
that is applied is derived from the duties of the directors: the takeover is in
the best interests of the company.
However, certain types of ‘mergers’ may have other tests
applied by takeover regulators themselves, or by the regulators as a result of
applications by certain persons, as discussed below.
Company takeover
regulators
The key takeover regulators are ASIC, the Takeovers Panel,
the ACCC and the FIRB.
ASIC
ASIC has general supervision of the Corporations Act
including the takeover rules, and has the power to modify and grant
relief from the Corporations
Act takeover rules (but not retrospectively).[246]
ASIC’s regulatory role in the administration and conduct of company takeovers
primarily involves:
- reviewing
and monitoring of documentation, disclosures and conduct in relation to bids to
ensure compliance with the takeover provisions and the purposes underlying
Chapter 6 of the Corporations Act
- providing
regulatory guidance and relief that improves commercial certainty and balances
the protections of Chapter 6 of the Corporations Act with the objective
of facilitating company takeover transactions and
- in
certain cases, taking enforcement action to protect the interests of investors
and promote their confident and informed participation in the takeover process
and financial markets generally.[247]
ASIC also has standing to apply to the Takeovers Panel for a
declaration of unacceptable circumstances or an order under section 657D or
657E of the Corporations Act (that is, to have the ‘merger’ blocked).
Takeovers
panel
The Takeovers Panel is established by Part 10 of the Australian
Securities and Investments Commission Act 2001 (ASIC Act) with
the powers conferred on it by the Corporations Act. The Takeovers Panel is
the primary forum for resolving disputes regarding company takeovers or
‘mergers’. It has the power to declare circumstances unacceptable (even if they
do not involve a breach of law) and to make remedial orders. In effect, the
takeovers panel can block a ‘merger’.
Subsection 657C(2) of the Corporations Act provides
that the bidder, target, ASIC or ‘any other person whose interests are affected
by the relevant circumstances’ may apply to the Panel for a declaration of
unacceptable circumstances under section 657A or an order under section 657D or
657E (that is, seek to have the ‘merger’ blocked). In turn, section 657A of
the Corporations Act provides that the Takeovers Panel can choose to
make, or decline to make, a declaration of unacceptable circumstances
where it ‘is not against the public interest after taking
into account any policy considerations that the Panel considers relevant’ to do
so.[248]
There is no definition of the term unacceptable
circumstances in the Corporations Act. Instead, the Takeovers Panel
is directed to use section 602, Chapter 6 of the Corporations Act and
the public interest as reference points to determine when circumstances are
unacceptable. Parliament considered that black letter law would be insufficient
to deal with all the possible circumstances that might defeat the policy of
section 602. Accordingly, it empowered the Takeovers Panel, as an expert body,
to address the issues by considering whether circumstances are unacceptable in
terms of those reference points.[249]
The Takeovers Panel is required to take the public interest
into account when considering whether or not to make a declaration of
unacceptable circumstances. Whilst ‘public interest’ is a difficult term to
define, the Panel takes its significance to mean that the Panel should not
merely consider the commercial interests and convenience of the parties and
their shareholders directly involved in a dispute before the Panel. Rather, the
Panel should consider wider issues such as: what signals its decision to make,
or not make, a declaration of unacceptable circumstances in an individual case,
will send to:
- the market and
- the wider investing community.
If such signals may improve the standards in the market and
the future efficiency of the market for control of companies in Australia,
consideration of the public interest in sending such signals may add weight to
the choice of making, or not making, a declaration of unacceptable
circumstances. Indeed, in some cases, it may sway an otherwise on-balance
decision definitely one way or another.[250]
Importantly however, declaration of unacceptable
circumstances blocking a merger will only be made by the Takeovers Panel when
it is not against the public interest. This means that a disputed merger
does not have to be in the public interest to be approved, only that it can be
blocked where it is against the public interest.
Australian Competition
and Consumer Commission
Section 50 of the CCA prohibits any direct or
indirect acquisition of shares or assets that would have the effect, or likely
effect, of ‘substantially lessening competition’ in a market in Australia (the
‘competition test’).
There are no mandatory pre-merger notification requirements
in the CCA. However, in practice, parties are encouraged to—and do—notify
the ACCC about proposed company mergers which may raise competition concerns. In
practice, the ACCC can conduct both informal
and formal
merger review processes.[251]
It has been suggested:
The ability of the ACCC to investigate any transaction and
the risks of court action to prevent a transaction from closing (or
post-closing court action for divestiture, declaration that a transaction is
void or penalties) have resulted in the practice in Australia of seeking
‘informal clearance’ from the ACCC where a proposed merger may raise
competition concerns. [252]
However, in regards to the informal clearance process it
does not provide assurances against subsequent third party litigation. Regardless
of the process used however, the parties to a merger are able (in some
circumstances) to have decisions relating to merger authorisations made by the
ACCC reviewed by the Australian
Competition Tribunal (ACT).[253]
However, this digest does not consider the role of the ACT in detail.
Competition
test
The factors to be taken into account in making a decision
about whether a proposed merger has, or is likely to have, the effect of
substantially lessening competition make the process an extremely complex one.
Readers are referred to the ACCC’s Merger Guidelines[254]
and to the Bills Digest for the Competition and Consumer Amendment (Misuse of
Market Power) Bill 2016 for further information about the competition test.[255]
Whilst competition in the market is often cited as a factor
considered when determining the public interest, this does not mean that the
test applied by the ACCC to a particular ‘merger’ is a ‘public interest’ test per
se – it is not. Rather it is whether the ‘merger’ would have the effect, or
likely effect, of a substantial lessening of competition in a market in
Australia. This is a narrower test than the public interest, as competition is
only one aspect of the public interest.
Conduct of
merger parties
The ACCC does not appear to apply a ‘history of lawlessness’
test per se when evaluating proposed mergers. However the ACCC’s merger
guidelines note that when applying the competition test it does consider the
conduct of the merger parties, especially in relation to prior coordinated
conduct between ‘merging’ businesses (that is, anti-competitive conduct and/or
breaches of the CCA) and:
Given the potential complexity of the assessment required, evidence
of prior coordinated conduct between firms in the relevant market may be highly
relevant, particularly if the merger is likely to reduce the number of
participants without undermining the conditions that facilitate coordinated
conduct.[256]
(Emphasis added).
This would appear to suggest that where one or both of the
‘merger’ parties has a prior history of breaching the CCA or there is
evidence of prior coordinated conduct between the merger parties that was
anti-competitive (but not tested in court) that factor is given substantial
weight within the competition test.
Summary of
ACCC merger clearance
Whilst competition can be viewed as a part of the public
interest, the competition test itself is not equivalent to a broader public
interest test. However, the ACCC does appear to apply a ‘history of potential
or actual anti-competitive coordinated conduct’ test when assessing company ‘merger’
proposals, as part of the competition test.
In summary, the competition test applied by the ACCC,
whilst not automatically applied to every company merger and narrower than a
public interest test per se, nonetheless shares some similarities with proposed
subsections 72D(1) (record of compliance with the law) and 72D(3)
(impact of the merger on employers and employees in the industry or industries
concerned) of the FWRO Act, at item 7 of Schedule 4 to the
Bill, in terms of considering the issues of legal compliance and the economic
impact of the proposed merger on the industry, sector or economy.
Foreign Investment
Review Board
Australia’s foreign investment review framework consists of
the FATA, the Register
of Foreign Ownership of Water or Agricultural Land Act 2015 and their
associated Regulations, and Australia’s Foreign Investment Policy (the Policy).[257]
Triggers
for the exercise of the Treasurer’s powers under the FATA
The FATA provides a legislative framework that requires
certain acquisitions proposed by foreign investors (such as purchasing an
Australian company) to be reviewed by the Treasurer (who receives advice from
the FIRB). The FATA also provides the Treasurer with a range of powers,
including the ability to order divestment of assets, to block proposals, or to apply
conditions to proposals, to ensure that they are not contrary to Australia’s ‘national
interest’.[258]
The national interest, and hence what might be contrary to
it, is not defined in the FATA. The FATA confers upon the
Treasurer the power to decide in each case whether a particular proposal would
be contrary to the national interest. The Government’s foreign investment policy
statements set out guidelines on national interest matters in relation to
foreign acquisitions (such as the purchase of a controlling stake in an
Australian company).[259]
Ordinarily a proposal that does not meet the requirements set out in the policy
would be regarded as being, prima facie, contrary to the national interest and
hence subject to rejection.
Whilst there are some similarities between the factors
considered in the ‘national interest’ test applied by the FIRB such as the
‘character of the investor’, competition and impact on the economy and the
community, and those factors are generally considered when determining the
‘public interest’, the two tests are not entirely the same and vary according
to the context in which they are used. This is because the public interest can
be viewed as domestically focused, whilst the national interest has
international aspects.[260]
Character
of the investor
The FIRB policy document notes:
The Government considers whether the investor complies
with Australia’s laws, including following both the spirit and the letter
of Australian law, and acting in good faith in complying with any conditions
imposed by the Government.[261]
This includes, to use the Bill’s terminology, a ‘record of
compliance with the law’ aspect: a foreign investor with a history of breaching
Australian laws is likely to have their investment either rejected or subject
to stringent conditions. For example, the FIRB’s guidance note
on tax notes that ‘it is considered contrary to the national interest if
foreign investors operating in Australia do not meet their obligations imposed
under the tax laws’ and ‘compliance with Australia’s tax laws would be
determined by applying the usual legal principles and processes, including
reliance on objection or appeal rights by affected entities’.[262]
This means that being involved in disputes with the ATO
would not, of itself, lead to the national interest test being failed and the
investment being blocked – but failure to comply with the laws and failure to
comply with court orders once disputes are resolved would.
As such, it would appear that whilst the term ‘a history of
lawlessness’ is not specifically used, compliance with Australian laws is a
significant factor applied by the FIRB when determining if an acquisition is in
the ‘national interest’ (which as noted above, despite some differences,
overlaps at least in part with the ‘pubic interest’).
Summary
table
The table below summarises the similarities and differences
between the current regime regulating the amalgamations of registered
organisations and those regulating company ‘mergers’.
Table 1: summary of registered organisation and
company merger processes and issues
Stage
|
Registered organisation |
Company |
Straight takeover (no competition
or foreign investment issues or disputes) |
Competition issues |
Dispute: takeover panel involved |
FIRB clearance required |
Directors/Officers developing a ‘merger’ proposal
|
Directors and officials must act in best interests of the
company/organisation and therefore any actions to facilitate the merger must
be in the best interests of the company/organisation.
|
N/A if foreign company is developing proposal.
|
Directors/Officer considering a ‘merger’ proposal
|
Directors and officials must act in best interests of the
company/organisation and therefore any actions related to the consideration
of a merger proposal must be in the best interests of the company/organisation.
|
Regulator consideration or approval
|
Are the various matters set out in the FWRO Act
met?
Do the members approve the merger?
No public interest test applied
|
Are the various matters set out in the Corporations Act
met?
Do the shareholders approve the takeover/scheme/sell the
required number of securities?
No public interest test applied.
|
Only applies where the merger raises competition issues.
Would the merger have the effect, or likely effect, of
substantially lessening competition in a market in Australia?
This involves considering any ‘history of potential or
actual anti-competitive coordinated conduct’.
No broader public interest test applied.
|
Only applies where there is a dispute between the takeover
parties.
Are there unacceptable circumstances?
This requires the panel to take the public interest into
account.
|
Only applies if merger involves foreign investor.
Is the transaction in the ‘national interest?’
This requires consideration of the ‘character’ of the
investor, including whether the investor complies with Australia’s laws.
|
Appeal of decisions / persons with standing to contest
decisions or approvals
|
Limited – but can extend to a ‘person aggrieved’ by the
decision’.[263]
|
Limited, but a ‘person whose interests are affected’ by
the relevant circumstances of the takeover can seek to have the merger
blocked by the Takeovers Panel.[264]
|
|
The Takeovers Panel is the main forum to resolve disputes
about company takeovers until the bid period has ended.[265]
Appeal rights are generally limited to the parties to the
takeover, ASIC and persons whose ‘interests are affected by’ the relevant
circumstances.[266]
ASIC, the Minister and certain other public office holders
and entities may commence court proceedings before the end of the bid period.[267]
|
No appeals or reviews are possible.
|
Key issue:
new amalgamation regime for registered organisations
Overview of
proposed changes
The RCTUGC made no recommendations regarding amending the FWRO
Act in relation to the amalgamation of organisations. However, the
imposition of a public interest test on ‘mergers of registered organisations’
that would ‘allow relevant matters to be taken into account, such as the
organisations’ history of compliance with workplace laws’ was a Liberal Party
2016 election commitment.[268]
Item 2 of Schedule 4 to the Bill and proposed
section 72A of the FWRO Act, at item 7 of Schedule 4,
require that the Full Bench of the FWC determine whether a proposed
amalgamation of two or more registered organisations is in the public interest,
before approving the amalgamation. Importantly, the application of the public
interest test is – unlike the case for most company mergers – automatic and
mandatory for all proposed amalgamations between organisations.
To give context to the proposed public interest test, a
brief overview of the interpretation of other public interest tests in
industrial relations legislation is provided below.
The public
interest test in other industrial relations contexts
Various parts of the FW Act require the FWC to apply
a public interest test. For example, subsection 189(2) of the FW Act
allows the FWC to approve an enterprise agreement that does not pass the better
off overall test if there are exceptional circumstances and doing so would not
be ‘contrary to the public interest’. It has been noted that whilst ‘is not
contrary to the public interest’ is a lower test than ‘in the public interest’[269]
the approach to determining both is the same.[270]
Further, when determining whether to terminate an enterprise agreement, section
226 of the FW Act provides that the FWC must be satisfied that the
proposed termination ‘is not contrary to the public interest’. In these (and
other) regards it has been held that in terms of the application of the FW
Act:
- the
expression ‘in the public interest’, when used in legislation, should be
treated as a term of art[271]
and is to be determined by making a discretionary value judgement on the
relevant facts that involves a balancing of interests including competing
public interests in a manner constrained only by the subject matter and the
scope and purpose of the legislation[272]
- the
public interest is broader than and distinct from the interests or views of parties
or persons directly affected (although there may be overlap between the public
interest and the interests of the parties) and refers to matters that might
affect the public as a whole[273]
- whilst
there is some overlap, the public interest does not embrace considerations
which are essentially derivative from the individual interests of the employer,
or employees. That is not to deny an individual interest may have an overlapping
public interest dimension, such as individual interests in freedom of association
or in freedom from certain kinds of discrimination[274]
- in
the context of enterprise agreements, the public interest may include ‘consideration
in maintaining a level playing field among employees in a particular industry
or sector’[275]
and in other contexts includes that the interests of employees are safeguarded,
ensuring that the businesses are able to efficiently operate without
unnecessary complications in their employment arrangements and facilitating
arrangements that permit and encourage the maintenance of employment in company
merger situations[276]
- the
public interest refers to matters that might affect the public more broadly as
a whole, such as the attainment of the objects of the relevant Act,[277]
the pursuit of desirable economic outcomes, or the maintenance of appropriate
industrial standards[278]
- consideration
of the public interest might involve balancing countervailing public interests[279]
that can include factors such as inflation, employment levels and maintenance
of proper industrial standards[280]
- all
of the relevant circumstances should be taken into account in considering what
is in the public interest, but the FWC should be guided by the likely
foreseeable consequences, rather than being guided by speculation about
possible consequences.[281]
Perhaps one of the best summaries of the notion of the
‘public interest’ within an industrial relations context (under the FW Act)
is provided in GlaxoSmithKline Australia Pty Ltd v Colin Makin:
The expression ‘in the public interest’, when used in a
statute, classically imports a discretionary value judgment to be made by
reference to undefined factual matters, confined only by the objects of the
legislation in question.[282]
As such it can be seen that the public interest test
applied on other contexts under the FW Act’s board, confers wide
discretion on decision makes and involves considering various (sometimes
competing) factors. This is consistent with a definition of ‘public interest’
provided in a legal dictionary:
A concern common to the public at large, or a significant
portion of the public, which may or may not involve the personal or proprietary
rights of individual people.[283]
Importantly however, the public interest is generally
broader than the issues of parties to a matter under the FW Act, although
there can be a degree of overlap. Hence in relation to the Bill it could be
argued that the impact of a proposed amalgamation on employees or employers in
a particular industry (for example) is both an example of a public interest
consideration but is also a consideration that may go to the individual
interests of affected persons (for example, the unions seeking to merge, employers
that may be impacted by the merger and the employees of companies in the
industry as a whole).
Standings
of persons to make submissions
Proposed section 72B of the FWRO Act, at item
7 of Schedule 4, provides that the FWC must hold a hearing into the
proposed amalgamation and:
- it
must receive submissions in relation to the record of compliance with the law
of the organisations seeking to amalgamate and
- where
an amalgamation is not automatically blocked due to the history of
non-compliance with the law of the organisations seeking to amalgamate, the FWC
must receive submissions in relation to whether the amalgamation is in the
public interest.
Proposed subsection 72C(1) provides the following
persons and entities with standing at the hearings in relation to the record of
compliance with the law of the organisations seeking to amalgamate:
- the
existing organisations
- any
other organisation that represents the industrial interests of employers or
employees in the industry or industries concerned or that may otherwise be
affected by the amalgamation
- a
body other than an organisation that represents the interests of employers or
employees in the industry or industries concerned
- the
Commissioner
- the
Minister and a Minister of a referring state (within the meaning of the FW Act),
or of a territory, who has responsibility for workplace relations matters in
the state or territory and
- any
other person with a sufficient interest in the amalgamation.
Where an amalgamation is not automatically blocked due to
the history of non-compliance with the law of the organisations seeking to
amalgamate, standing is granted to the above persons and entities in relation to
whether the amalgamation is in the public interest.
Bill provides
standing to a wider range of persons than other regimes
Compared to the application of the competition test by the
ACCC in relation to company mergers that pose potential competition issues and
the range of persons with standing to commence proceedings with the Takeovers
Panel, the Bill explicitly confers standing on a wider range of persons.
The Corporations Act allows persons whose ‘interests
are affected by’ the relevant circumstances of the takeover to seek a
declaration of unacceptable circumstances and/or orders that would prevent the
company takeover in question from proceeding. Persons whose ‘interests are
affected by’ the relevant circumstances of the takeover could encompass the
parties to the proposed company merger, other companies, registered
organisations (both employee and employer) associated with the industry or
industries impacted by the proposed company merger, and potentially the
Minister. As a result, they are comparable to the range of persons and entities
granted standing in proposed subsection 72C(1).
This means that the standing provisions in relation to
matters before the Takeovers Panel and that proposed by the Bill are roughly
analogous. However, the merger regime overseen by the ACCC (which the Second
Reading Speech refers to[284])
as noted above, confers standing on a much narrower range of persons. Further, the
merger clearance processes imposed by the CCA are not, unlike the regime
proposed by the Bill, automatic and mandatory processes that are applied to every
proposed company merger – they only apply where the takeover in question raises
competition issues. The same is true for the FIRB clearance process – it only
applies where a company acquisition involves a foreign investor and then only
involves the Minister and relevant parties – no standing to make submissions is
granted to any other persons.
Human
rights concerns raised by the proposed public interest test
The PJCHR noted that the proposed public interest test
engages and limits the right to freedom of association, and ‘particularly the
right to form associations of one's own choosing’.[285]
Further the PJCHR stated:
International supervisory mechanisms have noted concerns with
measures that limit the ability of unions to amalgamate stating that '[t]rade
union unity voluntarily achieved should not be prohibited and should be
respected by the public authorities'.[286]
After considering the justification for the inclusion of a
public interest test, the PJCHR concluded that there were ‘questions as to
whether the measure is compatible with the right to freedom of association and
the right to just and favourable conditions at work’ and sought further
information from the Minister.[287]
In addition, some stakeholders raised concerns about the
imposition of a public interest test on amalgamations of registered
organisations. For example, in its submission to the Committee Inquiry, the
ACTU argued:
The current amalgamation regime is consistent with the
emphasis in international law on the self-determination of industrial
organisations and the intention of the [FW]RO Act to provide for their
democratic functioning and control. The amendments in Schedule 4 are an
egregious interference in the internal affairs of industrial organisations.[288]
Further, the ACTU argued that the proposed public interest
test ‘is far broader than the competition test’ imposed by the CCA and
that under the regimes applicable to company mergers:
Corporations can have an extensive record of not complying
with the law, including tax avoidance and wage theft, and not be prevented from
merging.[289]
Whilst that is true to a certain extent, as noted above the
history of a company complying with various laws is a factor considered by the
ACCC when applying the competition test, and by the FIRB when applying the
national interest test. Further, it is conceivable that – given the breadth of
factors that the Takeovers Panel can consider – that the history of a company
complying with various laws may be a factor considered by the Takeovers Panel
when determining whether to make a declaration of unacceptable circumstances or
to make various orders, which may have the effect of blocking a merger.
When is the
public interest test applied?
Proposed subsection 72A(2) allows the FWC to
determine whether a proposed amalgamation is in the public interest ‘any time
after an application’ for amalgamation is lodged with the FWC. Further, the
effect of item 13 of Schedule 4 to the Bill is that the
amendments will apply to proposed amalgamations already being dealt with by the
FWC prior to the amendments commencing. The ACTU argued:
... the public interest test can be applied at any time after
the application is made, including before, during or after the ballot of the
organisations’ respective memberships. This drafting is nonsensical, because
the public resources expended by the AEC and the resources expended by the
organisations in the preparation and conduct of the ballot are wasted if the
amalgamation then fails the public interest test.[290]
Whilst theoretically correct, it would appear unlikely that
– at least in relation to applications for amalgamation received after the
amendments commence – that the FWC would allow a ballot to proceed prior to
determining whether the amalgamation is in the public interest. However, such
an outcome could occur under the Bill.
Elements of
the public interest test
Proposed section 72D sets out the public interest
test. The public interest test contains two elements:
- the
record of compliance with the law of the organisations seeking to amalgamate
- other
matters of public interest.
These are outlined below.
Record of
compliance with the law
Proposed subsection 72D(1) provides that the FWC must
have regard to any compliance record events that have occurred in each of the
existing organisations that seek to amalgamate. Proposed subsection 72D(2)
provides that if:
- after
having regard to the incidence and age of compliance record events in relation
to each of the amalgamating organisations the FWC considers that the
organisation has a record of not complying with the law then
- the
FWC must determine that the amalgamation is not in the public interest
(therefore preventing the amalgamation from proceeding).
Proposed subsection 72D(2) provides that the FWC is
to have regard to 'the incidence and age’ of compliance record events when
determining whether the organisation has a record of not complying with the
law. Whilst the Explanatory Memorandum is silent on the matter, the ACTU argues
that the FWC is:
not permitted to consider the nature or seriousness of the
'compliance record events' (only the 'incidence and age'), let alone the
relevance of the events (if any) to the merits of the proposed amalgamation.[291]
An alternative interpretation could be that the phrase
'having regard to' does not restrict the FWC from considering other factors
such as those mentioned by the ACTU. It could be argued that the phrase simply
requires that the FWC considers the number and age of compliance record events
as part of the overall process of determining whether the organisations seeking
to amalgamate have a record of compliance with the law.
Compliance
record events
Proposed section 72E defines what constitutes a compliance
record event. A compliance record event includes where:
- designated
findings or wider criminal findings are made against the organisation
- findings
of contempt of court are made against the organisation relating to an order or
injunction or
- the
organisation, part of the organisation or a class of members of the organisation
organised or engaged in obstructive industrial action as defined in proposed
subsection 28H(2), at item 4 of Schedule 2 to the Bill.[292]
A compliance record event also includes where:
- a designated finding is made against a person who was an officer of the
organisation at the time of the conduct to which the finding relates
- a wider criminal finding is made against a person who:
- was
an officer of the organisation at the time of the conduct to which the finding
relates and
- the
conduct was in the course of, or purportedly in the course of, performing
functions in relation to the organisation
- a
finding of contempt of court is made against a person in relation to an order
or injunction where:
- the
person was an officer of the organisation at the time of the conduct to which
the finding relates and
- the
conduct was in the course of, or purportedly in the course of, performing
functions in relation to the organisation
- a
person is disqualified from holding office in an organisation while an officer
in the organisation.[293]
The definitions of ‘officer’ and ‘office’ in sections 6 and
9 of the FWRO Act respectively mean that references to officers of an
organisation includes officers of branches of organisations. As noted by the
Explanatory Memorandum this means:
...a finding that an officer of a particular branch of an
organisation organised or engaged in obstructive industrial action is a
compliance record event relevant to the FWC’s overall decision about an
organisation’s compliance record.[294]
The effect of linking the definition of a compliance
record event to designated findings and wider criminal findings
is to capture a wide array of conduct, including conduct that has not
necessarily attracted a court imposed penalty, or a criminal conviction.
Further a compliance record event can occur when a substantial number of
members engage in the relevant conduct and also where only a small part of the
organisation or a small class of members organises or engages in 'obstructive
industrial action'.
Other
matters of public interest
Proposed subsection 72D(3) provides that where an
amalgamation is not blocked on the basis of the record of non-compliance with
the law of one or more of the amalgamating organisations, the FWC must have
regard to whether the amalgamation is otherwise in the public interest. In
making this determination, the FWC is to have regard to the impact the
amalgamation is likely to have on:
- employees
in the industry or industries concerned and
- employers
in the industry or industries concerned.
Proposed subsection 72D(4) then provides that the F
WC may have regard to 'any other matters it considers relevant'. The ACTU
argues that as drafted the public interest test is 'focused on economic
considerations and the commercial interests of industry and employers'.[295]
However, proposed subsection 72D(3) also imposes a requirement on the
FWC to consider the economic and commercial interests of employees in the
industry or industries concerned, not just employers. Further, whilst the Explanatory
Memorandum suggests that under proposed subsection 72D(4) other relevant
matters could include the 'likely impact upon the industry or industries
concerned or the economy or an important part of it',[296]
it confers on the FWC wide discretion to consider a range of matters, which, as
discussed above, is a common feature of a public interest test.
What
happens when the public interest test is failed?
Proposed section 72F provides that where the FWC
decides that an amalgamation is not in the public interest:
- the
FWC must not fix an amalgamation day for the amalgamation and
- the
amalgamation does not take effect.
Further, proposed subsection 72F(2) provides that
where the FWC decides that an amalgamation is not in the public interest the
FWC must not approve the submission of the proposed amalgamation to a ballot of
the members of the organisations in question.
Changes
apply to amalgamations commenced before amendments commenced
The effect of item 13 is that the amendments
contained in Schedule 4 of the Bill will apply to a proposed amalgamation
already being dealt with by the FWC prior to the amendments commencing.
Further, item 13 also provides that a reference to a compliance event
includes events that occurred before the commencement of the Bill.
Whilst this means that when applying the public interest
test, the FWC will be required to consider compliance events that occurred
before the amendments took effect, it would appear that the effect of the
requirement imposed by proposed subsection 72D(2) to consider the age of
the compliance record events would allow the FWC some discretion when
considering the weight to give compliance events that occurred before the
amendments commenced.
Exercise of
amalgamation powers only by Full Bench of FWC
Item 4 of Schedule 4 repeals and replaces section 37
of the FWRO Act. Proposed subsection 37(1) provides that the
powers of the FWC in relation to the amalgamation of organisations are
exercisable only by a Presidential Member of the FWC (that is, the President, a
Vice President or Deputy President). However, proposed subsection 37(2)
provides that the public interest test for amalgamations function of the FWC is
exercisable only by a Full Bench of the FWC.
The Explanatory Memorandum notes that the effect of requiring
that the public interest test be applied only by a Full Bench of the FWC is
that a decision of a Full Bench on the question of the public interest of a
proposed amalgamation is not subject to merits review.[297]
The Government states:
The intent is not to restrict the right of organisations
affected by a decision to fair decision-making about whether an amalgamation is
in the public interest. Rather, the requirement for a Full Bench protects the
integrity of the decision-making process by ensuring that a decision on the
question of an amalgamation is made by a number of senior members of the FWC. This
would not be a new exclusion from merits review, rather, decisions on the
public interest test for amalgamations would simply fall into the existing
exclusion from merits review that applies to all decisions of the Full Bench of
the FWC under the Act and the [Fair Work] Act.[298]
Further, the Explanatory Memorandum notes that the changes
contained in proposed section 37 do not exclude a right of judicial
review to the Federal Court or High Court, and hence decisions by a Full Bench
of the FWC will remain reviewable by the High Court under section 75(v) of the Constitution
or the Federal Court under section 39B of the Judiciary Act 1903.[299]
The ACTU was critical of the changes proposed by item 4,
arguing that other provisions in the FWRO Act ‘ensure that the powers
are exercised by a senior member of the FWC’ whilst still allowing parties
access to merits review ‘by way of an appeal to the Full Bench’ and:
It would be preferable and in the interests of access to
justice if s 37 did not distinguish powers in relation to applying the public
interest test and all FWC powers under Chapter 3, Part 2 of the [FW]RO Act
were exercisable only by a presidential member.[300]
This was because, the ACTU argued, judicial review is
‘expensive, time consuming and only available on limited grounds’.[301]
Changes to
when amalgamation can take effect
Currently section 73 of the FWRO Act provides that where
the FWC is satisfied that the members have approved the proposed amalgamation and
satisfied about certain matters, it must fix an amalgamation day (in effect,
the day the amalgamation occurs). Paragraph 73(2)(c) provides that one of the current
matters that the FWC must be satisfied about before fixing an amalgamation day
is that:
c) there
are no proceedings (other than civil proceedings) pending against any of the
existing organisations concerned in the amalgamation in relation to:
(i) contraventions of this
Act, the Fair Work Act or other Commonwealth laws; or
(ii) breaches of modern awards
or enterprise agreements; or
(iii) breaches of orders made
under this Act, the Fair Work Act or other Commonwealth laws
The drafting of the current paragraph 73(2)(c) is somewhat
internally inconsistent.[302]
It requires that there are not any proceedings ‘other than civil proceedings’
pending against the organisations under various laws. In other words, there are
no criminal proceedings pending against the organisations seeking to
amalgamate. Importantly however, breaches of modern awards or enterprise
agreements do not currently attract criminal penalties – they only attract
civil penalties (in earlier laws breaches of what are now termed modern awards
or enterprise agreements did attract criminal penalties).[303]
As such the internal inconsistency is between an apparent purpose of only
considering criminal proceedings, whilst specifically including certain
proceedings that are civil proceedings only in paragraph 73(2)(c)(ii).
Proposed paragraph 73(2)(c), at item 10 of Schedule
4, provides that one of the matters that the FWC must be satisfied
about before fixing an amalgamation day is that ‘there are no proceedings of
the kind’ contained in proposed subsection 73(2A) against the
organisations seeking to amalgamate. Proposed subsection 73(2A), at item
12 of Schedule 4, then provides that the relevant types of proceedings
are:
- criminal
proceedings in relation to contraventions of the FWRO Act, the Fair
Work Act or any other law of the Commonwealth
- breaches
of orders related to criminal proceedings for contraventions of the FWRO Act,
the Fair Work Act or any other law of the Commonwealth and
- civil
proceedings for a contravention of a provision mentioned in a subparagraph of
paragraph (b) of the definition of a designated finding in proposed subsection
9C(1) (at item 2 of Schedule 1). The relevant provisions are:
a civil penalty provision of the FWRO Act, FW Act, Building
and Construction Industry (Improving Productivity) Act 2016 or its
predecessor (as in force at any time before its repeal), Part IV of the CCA
(which deals with anti-competitive conduct) or a related state and territory
law, a WHS civil penalty provision of the Work Health and Safety Act 2011
or a related a state or territory Occupational Health and Safety (OHS) law
within the meaning of the FW Act.
The Government argues that amendments made by item 12
to section 73 of the FWRO Act are:
required to clarify the scope of pending proceedings against
organisations which the FWC is satisfied of in determining whether to fix an
amalgamation day.[304]
However, after setting out the legislative history of section
73 of the FWRO Act the ACTU argued:
the provision’s original intention, and the evident intention
of the existing provision, was to include only criminal proceedings and to
exclude civil proceedings.[305]
The ACTU argued that the amendment proposed by item 12
‘fundamentally alters the provision by extending its scope to civil
proceedings’ in a way that ‘is not even limited to breaches of awards or
enterprise agreements’ and therefore ‘significantly expands the scope of s
73(2)(c)’.[306]
Appendix: Differences between the disqualification regimes
proposed by RCTUGC and the Bill
Table 2: Differences between the disqualification
regimes proposed by the RCTUGC and the Bill
RCTUGC model
|
The Bill’s model
|
Notes
|
Paragraph 190(a)(i):
- the
person has or has been found to have contravened a civil remedy provision of
the FW Act, or a civil penalty provision of the FW(RO) Act or
the Work Health and Safety Act 2011 (Cth), and
- the
Court is satisfied that the disqualification is justified.
|
Proposed paragraph 223(1)(a) and 222(2)(b):
- a
designated finding is made against the person, and
- the
Court does not consider that it would be unjust to disqualify the person.
|
Definition of designated finding means the Bill’s
model applies to a broader range of conduct than that proposed by the RCTUGC.
Bill provides that the court must be satisfied that it
would not be unjust to disqualify the person, arguably a lower
threshold than disqualification being justified.
|
Paragraph 190(a)(ii):
- the
person has been found liable for contempt, and
- the
Court is satisfied that the disqualification is justified.
|
Proposed paragraph 223(1)(b) and 222(2)(b):
- the
person is found to be in contempt of court in relation to an order or
injunction made under a designated law, and
- the
Court does not consider that it would be unjust to disqualify the person.
|
Broadly comparable, however the Bill provides that the
court must be satisfied that it would not be unjust to disqualify the
person, arguably a lower threshold than disqualification being justified.
|
Paragraph 190(a)(iii):
- the
person has been at least twice an officer of a registered organisation that
has, or has been found to have, contravened a provision of the FW Act
or the FW(RO) Act or
- has
been found liable for contempt while the person was an officer and
- each
time the person failed to take reasonable steps to prevent the contravention
or the contempt, and
- the
Court is satisfied that the disqualification is justified.
|
Proposed subsection 223(3) and 222(2)(b):
- Two
of any of the following findings are made against any organisation in
relation to conduct engaged in while the person is an officer of the
organisation:
- a wider
criminal finding
- a finding
that the organisation is in contempt of court in relation to an order or
injunction made under any law of the Commonwealth or a State or Territory and
- the
person failed to take reasonable steps to prevent the conduct, and
- the
Court does not consider that it would be unjust to disqualify the person.
|
Definitions of designated finding and wider
criminal finding means the Bill’s model applies to a broader range of
conduct than that proposed by the RCTUGC.
Bill provides that the court must be satisfied that it
would not be unjust to disqualify the person, arguably a lower
threshold than disqualification being justified.
|
Paragraph 190(a)(iv):
- the
person has, or has been found to have, at least twice contravened a provision
of the FW Act or the FW(RO) Act, and
- the
Court is satisfied that the disqualification is justified.
|
Proposed paragraph 223(1)(a) and 222(2)(b):
- a
designated finding is made against the person, and
- the
Court does not consider that it would be unjust to disqualify the person.
|
Definition of designated finding and the
requirement that only one designated finding is required to trigger this
ground (compared to two contraventions required in the model proposed by the
RCTUGC) means the Bill’s model applies to a broader range of circumstances
than that proposed by the RCTUGC.
Bill provides that the court must be satisfied that it
would not be unjust to disqualify the person, arguably a lower
threshold than disqualification being justified.
|
Paragraph 190(a)(v):
- the
person is otherwise not a fit and proper person to hold office within a
registered organisation or branch, and
- the
Court is satisfied that the disqualification is justified.
|
Proposed subsections 223(5) and (6), paragraph
222(2)(b):
- having
regard to any events mentioned in subsection (6),[307]
the person is not a fit and proper person to hold office in an organisation,
and
- the
Court does not consider that it would be unjust to disqualify the person.
|
Whilst somewhat more directive than the model proposed by
the RCTUGC, the models are broadly comparable other than the fact that the
Bill provides that the court must be satisfied that it would not be unjust
to disqualify the person, arguably a lower threshold than disqualification
being justified.
|
Source: RCTUGC, Final
report, vol. 5, op. cit., para 190 (pp. 3396–3397) and Recommendation
38 (p. 3397); proposed sections 222 and 223 of the FWRO Act,
at item 9 of Schedule 1 to the Bill.
[1]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, pp. ii; Liberal Party of Australia, The
Coalition's commitment to fairness and transparency in workplaces, 17
June 2016, p. 2.
[2]. Royal
Commission into Trade Union Governance and Corruption (RCTUGC), Final
report, vol. 5, Chapter 3, B–Duties of union officers to their union, RCTUGC,
Canberra, 28 December 2015, pp. 3318–3340. [Note, in the hard copy of Volume 5
of the RCTUGC’s Final report, this information is at pages 157–179].
[3]. Ibid.,
pp. 3318–3327.
[4]. Ibid.,
pp. 3324–3330.
[5]. Ibid.,
p. 3327.
[6]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, pp. iii.
[7]. The
Coalition's commitment to fairness and transparency in workplaces, op.
cit., p. 2.
[8]. RCTUGC,
Final
report, vol. 5, op. cit., p. 3397.
[9]. RCTUGC,
Final
report, vol. 5, op. cit., pp. 3388, 3397.
[10]. Attorney
General’s Department (AGD),
A guide to framing Commonwealth offences, infringement notices and enforcement
powers, AGD, Canberra, September 2011, pp. 8, 22–23.
[11]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
digest, 10, 2017, The Senate, 6 September 2017, pp. 14–16.
[12]. Section
206A of the Corporations
Act 2001. For comment see, for example: Electrical Trades Union (ETU), Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], 6 September 2017, p. 5; Australian Council of Trade
Unions (ACTU), Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], 8 September 2017, pp. 12–13.
[13]. RCTUGC,
Final
report, vol. 5, op. cit., p. 3397.
[14]. Senate
Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], The Senate, Canberra, October 2017, p. 32.
[15]. Ibid.,
pp. 33–36.
[16]. Ibid.,
p. 33.
[17]. Ibid.,
p. 35.
[18]. Ibid.,
pp. 33–36.
[19]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
digest, 10, 2017, The Senate, 6 September 2017, pp. 13–18.
[20]. Senate
Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], op. cit., pp. 33–36.
[21]. J
Massola, ‘”Union-basher
bill” under fire’, The Sydney Morning Herald, 13 September 2017, p.
6: ‘The laws will be debated in the Senate in October at the earliest, and the
three votes of the Nick Xenophon Team could prove crucial to deciding the fate
of the bill, with Labor and the Greens likely to vote against it’ and ‘Labor workplace
spokesman Brendan O’Connor said the bill was another salvo in the Turnbull
government’s ‘‘relentless assault on workers and their unions’’. ‘‘. . . it is
beyond comprehension that this government would want to further undermine
workers and their unions, which is what this bill does,’’ Mr O’Connor said.’; B
O’Connor, (Shadow Minister for Employment and Workplace Relations), ABS
labour force figures, transcript, 15 December 2016, pp. 4–5: ‘Entirely
up to democratically elected registered organisations what they do. If they
choose to stay as an entity or they choose to look to merge, I think that's
really up to them. We're a democratic society. We should not impede the rights
of workers to organise and be parts of unions. That's their fundamental human
right. And for those organisations that are democratically structured, it is
for the members of that organisation to make that decision. Their destiny is in
their hands as it should be ... And really, the idea that the Government should
intervene and try and attack the rights of workers to democratically decide on
the future of their union says everything about the Government. They are obsessed
with attacking unions.’
[22]. See
the submissions
from: ACTU, p. 4; Professionals Australia (PA), p. 1; United Voice (UV), p. 3; Flight
Attendants’ Association of Australia, International Division (FAAAID), p. 6; SA
Unions (SAU) p. 2; Community and Public Sector Union (CPSU), pp. 1–2; The
Australasian Meat Industry Employees’ Union (AMIEU), pp. 4–5; Unions Tasmania
(UTAS), p. 1; ETU, p. 10; Construction, Forestry, Mining and Energy Union
(CFMEU), pp. 2–3; Unions NSW (UNSW), p. 10; Queensland Council of Unions (QCU),
p. 5; Maritime Union of Australia (MUA), pp. 3–4, 10; Australian Nursing &
Midwifery Federation (ANMF), pp. 3–4; The Australian Workers Union (AWU), p. 4;
Textile, Clothing & Footwear Union of Australia (TCFUA), p. 2.
[23]. See
the submissions
from: Unions ACT (UACT), p. 1; AWU, pp. 4, 6; ANMF, pp. 8, 13; MUA, pp. 10, 12;
CFMEU, pp. 3, 6; ETU, pp. 3, 4–5; UTAS, p. 1; SAU, p. 2; National Tertiary
Education Union (NTEU), p. 2; UV, p. 11; PA, pp. 3–6; ACTU, pp. 4, 5, 8, 9–10,
14, 19, 24–25, 27.
[24]. See
the submissions
from: NTEU, pp. 2–5; Victorian Trades Hall Council (VTHC), p. 1; Financial
Sector Union (FSU), p. 2; Queensland Nurse & Midwives’ Union (QNMU), p. 1; National
Union of Workers (NUW), p. 2–3; Unions WA (UWA), p. 2; Australian Education
Union (AEU), p. 2; Community and Public Sector Union SPSF (CPSU-SPSF), n.d.,
pp. 5–6.
[25]. See
the submissions
from: TCFUA, pp. 3, 12, 15; NUW, pp. 4–6; ANMF, p. 13, 16; QCU, pp. 2–4;
CPSU-SPSF, pp. 3, 11–15; AEU, pp. 1–2; MUA, p. 12; UNSW, pp. 2, 7, 10; CFMEU,
pp. 2–3, 5; UWA, p. 2; NUW, pp. 4–6; UTAS, p. 1; AMIEU, p. 6; CPSU, pp. 2–3;
SAU, p. 3; FSU, pp. 2–3; NTEU, pp. 2–5; UV, pp. 3, 6–11; PA, pp. 1–2, 4–5, 7;
ACTU, pp. 4–5, 10, 12, 18–24, 26, 29–31, 34.
[26]. See
the submissions
from: CFMEU, pp. 7–8; ETU, pp. 4–5; UWA p. 1; FSU, p. 3; NTEU, pp. 2–3; UV, p.
6; PA, pp. 3–4; ACTU, pp. 14–17; QCU, pp. 1–3; ANMF, p. 15; AWU, p. 5; TCFUA,
p. 6; Health Services Union (HSU), pp. 2–3.
[27]. See
the submissions
from: ACTU pp. 19–26; AWU, p. 6; ANMF, pp. 7–8, 13; PA, pp. 6–7; FSU, p. 3;
UWA, p. 1; ETU, pp. 5–6; CFMEU, pp. 8–9.
[28]. See
the submissions
from: ETU, pp. 6–7; PA, p. 7; ACTU, pp. 27–29; AWU, p. 6; CPSU, p. 4.
[29]. See
the submissions
from: AWU, p. 6; ACTU, p. 30; CFMEU, p. 3.
[30]. See
the submissions
from: ACTU, pp. 5–6, 31–36; CFMEU, p. 6; ETU, p. 8; UWA, p. 1; UV, p. 9; PA,
pp. 7–8; UNSW, p. 10; AEU, p. 3; AWU, p. 3; NUW, p. 3; CPSU, p. 4.
[31]. See
the submissions
from: ACTU, pp. 32–33; TCFUA, pp. 11–12; MUA, pp. 9–10; UNSW, p. 10; PA, pp.
7–8; UV, p. 9; FSU, p. 3; ETU, p. 8; CFMEU, pp. 6–7.
[32]. Housing
Industry Association (HIA), Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], 8 September 2017, p. 1; Australian Mines and Minerals
Association (AMMA), Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], September 2017, p. 2; Australian Chamber of Commerce
and Industry (ACCI), Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], 8 September 2017, pp. 1, 8, 15-16, 18, 21; Australian
Industry Group (AIG), Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], 8 September 2017, p. 1 and Master Builders Australia
(MBA), Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], 8 September 2017, pp. 2–3.
[33]. Professor
Bradon Ellem, Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], n.d., p. 1; GetUp, Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], 8 September 2017, p. 2; Joint submission from Australian
Conservation Foundation, Australian Youth Climate Coalition, Friends of the
Earth Australia, Getup!, Greenpeace Australia, Nature Conservation Council of
Australia and Solar Citizens, Joint
Submission to the Senate Education and Employment Legislation Committee, Fair Work (Registered Organisations) Amendment (Ensuring Integrity)
Bill 2017 [provisions], 8 September 2017, p. 2.
[34]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. iii.
[35]. The
Statement of Compatibility with Human Rights can be found at pages v to xiii of
the Explanatory Memorandum to the Bill.
[36]. Parliamentary
Joint Committee on Human Rights (PJCHR), Report,
9, 2017, 5 September 2017, pp. 13–24.
[37]. Ibid.,
p. 13.
[38]. Ibid.,
pp. 13–14.
[39]. Proposed
subsection 222(1) of the FWRO Act, at item 9 of Schedule 1
to the Bill.
[40]. Corporations
Act 2001, subsections 206B(1), (3).
[41]. Ibid,
paragraph 206F(1)(a).
[42]. Ibid,
paragraph 206F(1)(b).
[43]. Laycock
v Forbes (1997)
150 ALR 186; (1997) 25 ACSR 659; (1997) 15 ACLC 1814.
[44]. Proposed
section 9C of the FWRO Act at item 2 of Schedule 1 to
the Bill.
[45]. Fair Work (Building
Industry) Act 2012.
[46]. Ibid.
[47]. Fair
Work (Registered Organisations) Act 2009, section 212.
[48]. RCTUGC,
Final
report, vol. 5, op. cit., p. 3397.
[49]. Corporations
Act 2001, subsection 206B(1).
[50]. Proposed
paragraph 212(aa) of the FWRO Act, at
item 6 of Schedule 1 to the Bill.
[51]. Corporations
Act 2001, subparagraph 206B(1)(b)(ii); Fair Work (Registered
Organisations) Act 2009, paragraph 212(a), section 215.
[52]. Corporations
Act 2001, paragraph 206B(1)(a); Fair Work (Registered Organisations) Act
2009, paragraph 212(c), section 215.
[53]. Proposed
subsection 222(1) of the FWRO Act,
at item 9 of Schedule 1 to the Bill.
[54]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 6.
[55]. RCTUGC,
Final
report, vol. 5, op. cit., p. 3397.
[56]. RCTUGC,
Final
report, vol. 5, op. cit., pp. 3395–3396.
[57]. RCTUGC,
Final
report, vol. 5, op. cit., p. 3396.
[58]. RCTUGC,
Final
report, vol. 5, op. cit., pp. 3396–3397.
[59]. Professionals
Australia, Submission
to the Senate Education and Employment Legislation Committee, inquiry into
the Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill
2017 [provisions], n.d., p. 3.
[60]. Proposed
paragraph 223(6)(f) of the FWRO Act, at item 9 of Schedule
1.
[61]. Section
236 of the Corporations Act 2001 permits a member (shareholder) or
director of a company to bring proceedings on behalf of the company, or
intervene in any proceedings to which the company is a party, for the purpose
of taking responsibility on behalf of the company for those proceedings. The
criteria for the operation of this section are provided in section 237: it must
be probable that the company will not itself bring proceedings; the applicant
must be acting in good faith; it must be in the best interests of the company
that the applicant be granted leave; there must be a serious question to be
tried and written notice must be provided to the company of the intent to
apply. In essence, sections 236 and 237 allow the shareholders and directors
who are in a minority position on the Board to usurp the authority that the
corporate entity has vested in the board of directors as a whole by allowing
them to ‘act as some form of corporate watchdog, to pursue an action against a
wrongdoer, when the board refuses to act’: L Griggs, ‘A
statutory derivative action: lessons that may be learnt from its past’, University
of Western Sydney Law Review, 6(1), 2002 at [1.1].
[62]. Proposed
subsection 222(1) of the FWRO Act, at item 9 of Schedule 1
to the Bill.
[63]. PJCHR,
Report,
9, 5 September 2017, p. 16.
[64]. Ibid.
[65]. Ibid.
[66]. Ibid.
[67]. Ibid.
[68]. Proposed
subsection 223(2) of the FWRO Act,
at item 9 of Schedule 1 to the Bill.
[69]. Ibid.
[70]. Proposed
paragraph 223(3)(a) of the FWRO Act, at item 9 of Schedule
1 to the Bill.
[71]. Proposed
paragraph 223(3)(b) of the FWRO
Act, at item 9 of Schedule 1 to the Bill.
[72]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
digest, 10, 2017, The Senate, 6 September 2017, p. 14.
[73]. Ibid.
[74]. PJCHR,
Report,
9, 2017, op. cit., p. 17.
[75]. Ibid.
[76]. Proposed
subsection 223(4) of the FWRO Act, at item 9 of Schedule 1
to the Bill.
[77]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 8.
[78]. Ibid..
[79]. Proposed
subsection 223(5) of the FWRO Act, at item 9 of Schedule 1
to the Bill .
[80]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 9.
[81]. Ibid.
[82]. Ibid.
[83]. Ibid.,
pp. 9–10.
[84]. Ibid.,
p. 10.
[85]. See
Submissions
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], from: ACTU, p. 16; TCFUA, p. 6; PA, p. 6; CFMEU, p. 8.
[86]. ACTU,
Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], 8 September 2017, p. 16.
[87]. Proposed
section 224 of the FWRO Act, at item 9 of Schedule 1
to the Bill.
[88]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 10.
[89]. Section
4AA of the Crimes
Act 1914 (Cth) provides that a penalty unit is equal to $210.
[90]. Proposed
subsection 226(3) of the FWRO Act, at item 9 of Schedule 1
to the Bill.
[91]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring Integrity)
Bill 2017, p. 11.
[92]. Ibid.
[93]. Ibid.
[94]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
digest, 10, 2017,op. cit., p. 15.
[95]. Ibid.,
p. 16.
[96]. See
for example: ETU, Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], 6 September 2017, p. 5; UV, Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], nd, p. 6; Australian Conservation Foundation,
Australian Youth Climate Coalition, Friends of the Earth Australia, Getup!,
Greenpeace Australia, Nature Conservation Council of Australia and Solar
Citizens, Joint
Submission to the Senate Education and Employment Legislation Committee, Fair Work (Registered Organisations) Amendment (Ensuring Integrity)
Bill 2017 [provisions], 8 September 2017, p. 2; PA, Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], n.d., pp. 3–4.
[97]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 14.
[98]. PJCHR,
Report,
9, op. cit., pp. 13, 15.
[99]. Ibid.,
p. 13.
[100]. Ibid.,
pp. 13–14.
[101]. Ibid.,
p. 15.
[102]. Ibid.
[103]. Ibid.;
ILO
Convention (No. 87) Concerning Freedom of Association and Protection of the
Right to Organise, done in San Francisco on 9 July 1948, [1974] ATS 31
(entered into force for Australia 28 February 1974).
[104]. PJCHR,
Report,
9, op. cit., p. 15.
[105]. Ibid.
[106]. Ibid.,
p. 17.
[107]. Ibid.,
p. 16.
[108]. Ibid.,
p. 17.
[109]. Ibid.,
p. 17.
[110]. Ibid.
[111]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
digest, 10, 2017, op. cit., p. 14.
[112]. Ibid.
[113]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 15.
[114]. Proposed
section 27A of the FWRO Act, at item 4 of Schedule 2
to the Bill.
[115]. Corporations
Act 2001, sections 601AA, 601AB, 601AC and 601AD (see for example
subsection 601AD(1): ‘A company ceases to exist on deregistration’).
[116]. Corporations
Act 2001, section 459P.
[117]. Professionals
Australia, Submission
to the Senate Education and Employment Legislation Committee, inquiry into
the Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill
2017 [provisions], n.d., p. 7.
[118]. Ibid.,
p. 6.
[119]. Proposed
sections 28C to 28H of the FWRO Act, at item 4 of Schedule
2 to the Bill .
[120]. RCTUGC,
Final
report, vol. 5, op. cit., pp. 3320–3321, 3379.
[121]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 17.
[122]. This
includes not to make any secret profit from their position, to exercise their
powers bona fides and for a proper purpose, and to exercise their powers for
purposes honestly and reasonably believed to be in the best interests of the
members of an organisation as a whole: RCTUGC, Final
report, vol. 5, op. cit., pp. 3320-3321, 3379.
[123]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 17.
[124]. RCTUGC,
Final
report, vol. 5, op. cit., pp. 3320–3321, 3379.
[125]. Darvall
v North Sydney Brick & Tile Co Ltd (1988)
6 ACLC 154 .
[126]. Ngurli
Ltd v McCann (1953) 90 CLR 425 at 438, [1953]
HCA 39.
[127]. Darvall
v North Sydney Brick & Tile Co Ltd [No. 2]
(1989)
7 ACLC 659 as per Hodgson J.
[128]. Greenhalgh
v Arderne Cinemas Ltd [1951] Ch 286 as per Evershed MR.
[129]. Percival
v Wright [1902] 2 Ch 421 (where it was held that directors only owe
fiduciary duties to the company as a whole and not individual shareholders); Brunninghausen
v Glavanics (1999)
17 ACLC 1,247 (where it was held that whilst a director’s fiduciary duties
are generally owed to the company, there may be special circumstances where
directors must act in the best interests of particular shareholders).
[130]. Allen
v Townsend (1977)
16 ALR 301 as per Evatt and Northrop JJ; Mills v Mills (1938) 60 CLR
150, as per Latham J at 164, [1938]
HCA 4.
[131]. See
for example: pages i, ii, vi, viii-x, 4, 17, 20, and 25 of the Explanatory
Memorandum, where references are made to ensuring ‘the integrity of registered
organisations and their officials, for the benefit of members’; issues
raised by organisations and officials ‘not serving the interests of members’,
the desirability of promoting ‘democratic governance in the interest of
members’ and ‘improving the governance of registered organisations and protecting
the interests of members’ (emphasis added); expanding ‘the grounds for a
remedial scheme to be approved by the Federal Court, including the appointment
of an administrator, when officers of an organisation or branch are no
longer serving members’ interests’; that organisations and officers that do
not comply with work-place relations obligations ‘cannot be considered to be
lawfully and effectively representing the interests of organisation members
as a whole’; ‘each of the grounds for cancelling an organisation’s
registration set out in new Division 3 relates to an organisation that has
ceased to function in the best interests of members as a whole’, and the
desirability of ensuring ‘governance issues within an organisation, or
individual branches or divisions, can be addressed promptly and transparently to
ensure that the interests of members are protected’.
[132]. CFMEU,
Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], September 2017, p. 9.
[133]. UNSW,
Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], 12 September 2017, p. 7.
[134]. ACTU,
Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], 8 September 2017, p. 23.
[135]. Allen
v Townsend (1977) 31 FLR 431 as per Evatt and Northrop JJ; Mills v Mills
(1938) 60 CLR 150 as per Latham J at 164, [1938]
HCA 4.
[136]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 17.
[137]. PJCHR,
Report,
9, 2017, op. cit., p. 20.
[138]. Ibid.
[139]. Ibid.
[140]. Ibid.
[141]. Ibid.
[142]. Ibid.
[143]. ACTU,
Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], 8 September 2017, p. 24.Ibid.
[144]. Ibid.
[145]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 17.
[146]. Ibid.
[147]. Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd (1982)
44 ALR 557 (`substantially lessening competition'), [1982] FCA 206; Dowling v Dalgety Australia
Ltd (1992) 34 FCR 109 (`substantial degree of power'), [1992] FCR 35; Macquarie
Dictionary, online, ‘substantial’, n.d.
[148]. ACTU,
Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], 8 September 2017, p. 24.
[149]. Ibid.
[150]. Section
408 of the Fair Work Act 2009 defines ‘protected
industrial action’ in such a way as to limit it to industrial action
taken in relation to a proposed enterprise agreement (see also section 413 of
the Fair Work Act 2009). It is called ‘protected’ industrial action
because a limited immunity applies, meaning that remedies that might otherwise
be sought by (usually) the employer in relation to the industrial activity are
generally not available (see section 415 of the Fair Work Act 2009).
[151]. PJCHR,
Report,
9, op. cit., p. 20.
[152]. Ibid.
[153]. ACTU,
Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], 8 September 2017, p. 24.
[154]. Professionals
Australia, Submission
to the Senate Education and Employment Legislation Committee, inquiry into
the Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill
2017 [provisions], nd, p. 4.
[155]. UNSW,
Submission
to the Senate Education and Employment Legislation Committee, Fair
Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
[provisions], 12 September 2017, p. 9.
[156]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 20.
[157]. Ibid.
[158]. Proposed
paragraph 28M(2)(a) of the FWRO Act, at item 4 of Schedule
2 to the Bill.
[159]. Professionals
Australia, Submission
to the Senate Education and Employment Legislation Committee, inquiry into
the Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill
2017 [provisions], n.d., p. 4.
[160]. United
Voice, Submission
to the Senate Education and Employment Legislation Committee, inquiry into
the Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill
2017 [provisions], n.d., p. 7.
[161]. Proposed
subsection 28P(2) of the FWRO Act, at item 4 of Schedule 2
to the Bill.
[162]. PJCHR,
Report,
9, op. cit., p. 20.
[163]. PJCHR,
Report,
9, op. cit., p. 20–21.
[164]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 25.
[165]. Proposed
subsection 323(1) of the FWRO Act, at item 4 of Schedule 3
to the Bill.
[166]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 26.
[167]. PJCHR,
Report,
9, op. cit., p. 22.
[168]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 26.
[169]. Corporations
Act 2001, section 234.
[170]. See,
for example, Re Spargos Mining NL (1990)
8 ACLC 1,218 where Justice Murray of the Supreme Court of Western Australia
ordered the appointment of a new board, the amendment of the company’s constitution
and for the new board to report to the court every three months.
[171]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 27.
[172]. See
footnote 172.
[173]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 25.
[174]. Corporations
Act, Part 5.3A.
[175]. Corporations
Act 2001, subsection 436A(1).
[176]. Corporations
Act 2001, sections 436B and 436C.
[177]. Australian
Securities and Investments Commission (ASIC), ‘Creditors:
voluntary administration’, ASIC website, 1 September 2017.
[178]. Lipton,
Herzberg and Welsh, Understanding company law, op. cit., pp. 620–626.
[179]. Ibid.,
p. 626.
[180]. Corporations
Act 2001, sections 437A and 437B.
[181]. Corporations
Act 2001, sections 448B, 448C.
[182]. Corporations
Act 2001, section 438A.
[183]. Corporations
Act 2001, section 234.
[184]. Proposed
subsection 323(1) of the FWRO Act, at item 4 of Schedule 3
to the Bill.
[185]. Corporations
Act 2001, section 234.
[186]. Proposed
section 323 of the FWRO Act, at item 4 of Schedule 3
to the Bill.
[187]. Proposed
subsection 323(2) of the FWRO Act, at item 4 of Schedule 3
to the Bill.
[188]. Proposed
subsection 323A(3) of the FWRO Act, at item 4 of Schedule
3 to the Bill.
[189]. Proposed
subsection 323A(2) of the FWRO Act, at item 4 of Schedule
3 to the Bill.
[190]. Proposed
subsection 323A(4) and (5) of the FWRO Act, at item 4
of Schedule 3 to the Bill.
[191]. Proposed
subsections 323G(1), (2) and 323H(3) of the FWRO Act, at item
4 of Schedule 3 to the Bill.
[192]. Proposed
subsections 323G(3) and 323H(5) of the FWRO Act, at item 4
of Schedule 3 to the Bill.
[193]. Ibid.
[194]. Australian
Law Reform Commission (ALRC), Traditional
rights and freedoms—encroachments by Commonwealth laws, Report, 129,
2 March 2016, pp. 285–289.
[195]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
digest, 10, 2017, The Senate, 6 September 2017, p. 16; Attorney
General’s Department (AGD),
A guide to framing Commonwealth offences, infringement notices and enforcement
powers, op. cit., p. 23.
[196]. Ibid.
[197]. PJCHR,
Report,
9, 5 September 2017, p. 21.
[198]. Ibid.,
pp. 21–22.
[199]. Ibid.,
p. 22.
[200]. Ibid.
[201]. Ibid.
[202]. Ibid.
[203]. Ibid.
[204]. Ibid.
[205]. Ibid.
[206]. C
Pyne, ‘Second
reading speech: Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017’, House of Representatives, Debates, 16 August
2017, p. 8607.
[207]. J
Catanzariti et. al, Annotated
Fair Work Act and related legislation , 2017 edn, LexisNexis,
Chatswood, NSW, 2017, p. 1604.
[208]. Competition and
Consumer Act 2010, section 50. See also Australian Competition
and Consumer Commission (ACCC) Merger guidelines,
ACCC website.
[209]. Takeovers
Panel, Summary
of Takeover provisions in Australia, Takeovers Panel website. Corporations Act
2001, section 657A.
[210]. Foreign
Acquisitions and Takeovers Act 1975, subsection 67(1). See also Foreign
Investment Review Board, National interest test
[211]. FWRO
Act, Chapter 3, Part 2, Division 5 generally and sections 42 and 44.
[212]. FWRO
Act, sections 285 and 286 impose statutory duties on officers of an
organisation in relation to the financial management of the organisation.
[213]. RCTUGC,
Final
report, vol. 5, op. cit., pp. 3320-3321, 3379; Allen v Townsend (1977)
31 FLR 431, 483; Ludwig v Harris (1991) 30 FCR 377, 379 (FC).
[214]. M
Evans, Outline of equity and trusts, Butterworths, Sydney, 1988, p. 75.
[215]. Hospital
Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, [1984] HCA 64.
[216]. Chan
v Zacharia (1984) 154 CLR 178, [1984] HCA 36.
[217]. Scott
v Jess (1984) 3 FCR 263, 287, [1984]
FCA 289.
[218]. FWRO
Act, subsection 285(1).
[219]. FWRO
Act, subsection 286(1), 290A(1).
[220]. Ibid.
[221]. FWRO
Act, sections 287, 288, subsections 290A(2), (3).
[222]. FWRO
Act, section 44.
[223]. FWRO
Act, section 42.
[224]. FWRO
Act, section 40.
[225]. FWRO
Act, subsection 44(3).
[226]. FWRO
Act, section 63.
[227]. FWRO
Act, section 43.
[228]. FWRO
Act, subsection 44(3), sections 48, 60.
[229]. FWRO
Act, Chapter 3, Part 2, Division 4 generally.
[230]. Ibid.
[231]. FWRO
Act, subsection 43(1).
[232]. FWRO
Act, subsection 43(5).
[233]. FWRO
Act, subsection 43(5).
[234]. FWRO
Act, subsection 43(7).
[235]. FWRO
Act, section 66.
[236]. See:
Tweed Valley Fruit Processors Pty Ltd v Ross and Others [1996] IRCA
407; Australian Industry Group and Pacific Brands Limited t/a Dunlop
Foams [2010] FWAFB 4337.
[237]. FWRO
Act, sections 73, 74, 81 and Chapter 3, Part 2, Division 6 generally.
[238]. FWRO
Act, sections 81, 87.
[239]. Corporations
Act 2001, section 602.
[240]. Australian
Securitites and Investments Commission (ASIC), Schemes
of arrangement, Regulatory Guide 60, 22 September 2011.
[241]. Other,
less commonly used takeover structures include: a selective capital reduction
or a security holder-approved transaction.
[242]. Those
rules include: all offers must be the same; the bid price cannot be lower than
the price which the bidder paid for a target security within the previous four
months; the offer period to be no less than one month and no more than 12
months; there are no special deals for individual target security holders;
there are no self-triggering bid conditions (for off-market bids); the bidder
must issue a ‘bidder’s statement’ containing the offer terms and other
information; the target must issue a ‘target’s statement’ containing the target
board’s recommendation; and the bidder is entitled to compulsory acquisition if
it obtains a relevant interest in at least 90% of the target securities (and
has acquired at least 75% of the securities it offered to acquire): Allens
Linklaters, The
Allens handbook on takeovers in Australia, 27 April 2017, p. 7.
[243]. Section
638 of the Corporations Act provides that the target’s statement must
include: (1) all the information that shareholders and their professional
advisers would reasonably require to make an informed assessment whether to
accept the takeover bid, (2) a recommendation by each of the of
company’s directors that the takeover bid should or should not be accepted and
the reasons for that recommendation, and, if the bidder is connected with the
target company (3) an expert report: section 640 of the Corporations Act
provides that this must include a statement as to whether the independent
expert is of the view that the takeover offer is ‘fair and reasonable’ and the
reasons for that opinion. The inclusion of the recommendations by each and
every director links back to the duties of company directors and registered
organisation officials discussed earlier in this digest: they must believe the
takeover or amalgamation is in the best interests of the company or
organisation, and when making the recommendation to proceed, they must do so in
good faith and for a proper purpose (that is, for the benefit of the
organisation).
[244]. Allens
Linklaters, The
Allens handbook on takeovers in Australia, op. cit., p. 7.
[245]. Those
steps are: developing a scheme implementation agreement between the bidder and
the target; the preparation by the target, with input from the bidder, of a
draft ‘scheme booklet’ which is given to ASIC for review; the target seeking
court approval for the despatch of the scheme booklet to target shareholders
and court orders for the convening of the shareholders’ meeting to vote on the
scheme (that is, the scheme meeting); holding the scheme meeting; the target
seeking court approval for the implementation of the scheme; implementing the
scheme; and de-listing the target from ASX: Allens Linklaters, The
Allens handbook on takeovers in Australia, 27 April 2017, p. 7.
[246]. ASIC,
‘Apply
for relief’, ASIC website.
[247]. ASIC,
Takeover
bids, Regulatory guide, 9, December 2016, pp. 6–8.
[248]. Takeovers
Panel, Unacceptable
circumstances, Guidance note, 1, 5th issue, 21 September 2010.
[249]. Takeovers
Panel, Unacceptable
circumstances, Guidance note, 1, Draft guidance note, 4th issue, 18
April 2008.
[250]. Takeovers
Panel, Unacceptable
circumstances, Guidance note, 1, 5th issue, 21 September 2010.
[251]. Australian
Competition and Consumer Commission (ACCC), Informal
merger review process guidelines 2013, Canberra, 26 September 2013;
ACCC, Merger
guidelines, Canberra, 21 November 2008.
[252]. P
Armitage, A Tesvic and R Zaurrini, ‘Australia’, in IK Gotts (ed), The merger
control review, 4th edition, Law Business Research, United Kingdom, July
2013, pp. 1-16, pp. 2, 4, 7-8.
[253]. Australian
Competition Tribunal (ACT), ‘About the Tribunal’, ACT
website.
[254]. Australian
Competition and Consumer Commission (ACCC), Merger
guidelines, ACCC, Canberra, November 2008.
[255]. P
Davidson, Competition and Consumer Amendment (Misuse of Market Power) Bill
2016, Bills digest, 87, 2016–17, 29 March 2017.
[256]. ACCC,
Merger guidelines,
op. cit., p. 34.
[257]. Foreign Acquisitions
and Takeovers Regulation 2015; Register of Foreign
Ownership of Water or Agricultural Land Rules 2017; Foreign
Investment Review Board (FIRB), ‘Policy’, FIRB
website.
[258]. Foreign
Acquisitions and Takeovers Act 1975, section 3 and Part 3 generally.
Specifically the FATA empowers the Treasurer to examine proposals by
foreign persons that are a significant action or a notifiable action
(noting that notifiable actions are, in effect, a sub-set of significant
actions). See also: Foreign Investment Review Board, Significant actions and
notifiable actions, Guidance Note 35, 1 November 2015: ‘Some
significant actions, called notifiable actions, must also be notified to the
Treasurer before the actions can be taken ... If the significant action is also a
notifiable action, the Treasurer must be notified before the actions can be
taken.’
[259]. Foreign
Investment Review Board (FIRB), ‘Policy documents’,
FIRB website.
[260]. The
overlap between ‘national interest’ and ‘public interest’ and the differences
between them have been noted in a variety of different contexts. See: J Kinslor
and J English, ‘Decision-making
in the national interest’, AIAL Forum, 79, January 2015, pp. 35–51;
V Bath, ‘Foreign
investment, the national interest and national security — foreign direct
investment in Australia and China’, Sydney Law Review, 34(1),
March 2012, pp. 5–34; M Penny, ‘Defining
and refining the concept of practising in “the public interest”’, Alternative
Law Journal, 28(1), February 2003, pp. 3–12, which argued that the term
‘public interest’ is indeterminate, but also noted that ‘public interest’ can
be viewed domestically whilst ‘national interest’ has international aspects.
[261]. Treasurer,
‘Australia’s
foreign investment policy’, 1 July 2017, p. 9.
[262]. Foreign
Investment Review Board (FIRB), Tax conditions,
Guidance note, 47, 24 November 2016, Attachment B, ‘Additional information on
the tax conditions’.
[263]. Section
604 of the Fair
Work Act 2009 allows a ‘person aggrieved by a decision’ made by the FWC
(other than a Full Bench or Expert Panel decision) or the General Manager under
the FWRO Act to appeal that decision, with permission from the FWC. In
addition, section 56 of the FWRO Act provides limited grounds for a
person to object to an amalgamation involving the extension of eligibility
rules.
[264]. Subsection
657C(2) of the Corporations Act provides that the bidder, target, ASIC
or ‘any other person whose interests are affected by the relevant circumstances’
my apply to the Panel for a declaration of unacceptable circumstances under
section 657A or an order under section 657D or 657E (that is, seek to have the
‘merger’ blocked).
[265]. Corporations
Act 2001, section 659AA.
[266]. Section
657EA of the Corporations Act 2001 provides that standing to have a
Takeover Panel decision reviewed is confined to ASIC and ‘party to the
proceedings in which the decision was made’ (inferring a person who applied
under section 657E may also have standing).
[267]. Corporations
Act 2001, section 659B.
[268]. Liberal
Part of Australia, The
Coalition’s commitment to fairness and transparency in workplaces, media
release, 17 June 2016.
[269]. Top
End Consulting Pty Ltd re Top End Consulting Enterprise Agreement 2010 [2010]
FWA 6442 as per DP Bartel at [46].
[270]. Ibid.,
at [44].
[271]. Joy
Manufacturing Co Pty Ltd - re Joy Mining Machinery (Moss Vale Site) Certified
Agreement 1998 - T1133 [2000]
AIRC 335 at [34].
[272]. Top
End Consulting Pty Ltd re Top End Consulting Enterprise Agreement 2010 [2010]
FWA 6442 as per DP Bartel at [44]; Application by Agri Labour Australia Pty
Ltd [2015]
FWC 5332 as per DP Bartel at [24]; Stratco (NSW) Pty Ltd re Hunter
Timber and Building Supplies Pty Ltd Collective Agreement 2008 [2010]
FWA 7036 at [42].
[273]. Top
End Consulting Pty Ltd re Top End Consulting Enterprise Agreement 2010 [2010]
FWA 6442 as per DP Bartel at [45]; Application by Agri Labour Australia
Pty Ltd [2015]
FWC 5332 as per DP Bartel at [24]; Re Kellogg Brown and
Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 [2005]
AIRC 72 ; Application by Aurizon Operations
Limited & Aurizon Network Pty Ltd and Another [2015] FWCFB 540 at [131] (affirmed in Communications,
Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied
Services Union of Australia v Aurizon Operations Ltd [2015]
FCAFC 126, (2015)
233 FCR 301.
[274]. Joy
Manufacturing Co Pty Ltd - re Joy Mining Machinery (Moss Vale Site) Certified
Agreement 1998 - T1133 [2000]
AIRC 335 at [34].
[275]. Agnew
Legal Pty Ltd re CLB No. 1 Pty Ltd - Enterprise Agreement 2012 [2012]
FWA 10861 as per C Asbury at [12].
[276]. Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore
Facilities Certified Agreement 2000 [2005]
AIRC 72 at [23]-[26].
[277]. Stratco
(NSW) Pty Ltd re Hunter Timber and Building Supplies Pty Ltd Collective
Agreement 2008 [2010]
FWA 7036 at [42].
[278]. The
Australian Workers' Union [2015]
FWCA 3956 as per C Gregory at [12].
[279]. Ibid.,
at [13].
[280]. Re
Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities
Certified Agreement 2000 [2005]
AIRC 72at [23]-[26].
[281]. The
Australian Workers' Union [2015]
FWCA 3956 as per C Gregory at [14].
[282]. GlaxoSmithKline
Australia Pty Ltd v Colin Makin [2010]
FWAFB 5343 at [26]; citing Comalco v O’Connor (1995) 131 AR 657 at p. 681 per Wilcox CJ &
Keely J; and O’Sullivan v Farrer; (1989) 168 CLR 210, [1989]
HCA 61.
[283].
Encyclopaedic Australian legal dictionary, ‘public
interest’, as at 8 October 2017.
[284]. C
Pyne, ‘Second
reading speech: Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017’, House of Representatives, Debates, 16 August
2017, p. 8607.
[285]. PJCHR,
Report,
9, 5 September 2017, p. 23.
[286]. Ibid.
[287]. Ibid.,
p. 24.
[288]. ACTU,
Submission
to the Senate Education and Employment Legislation Committee, op. cit., pp.
29–30.
[289]. Ibid.,
p. 31.
[290]. Ibid.,
p. 36.
[291]. ACTU,
Submission
to the Senate Education and Employment Legislation Committee, op. cit., p. 33.
[292]. Proposed
subsection 72E(1) of the FWRO Act, at item 7 of Schedule 4
to the Bill.
[293]. Proposed
subsection 72E(2) of the FWRO Act, at item 7 of Schedule 4
to the Bill.
[294]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 37.
[295]. ACTU,
Submission
to the Senate Education and Employment Legislation Committee, op. cit., p. 33.
[296]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 36.
[297]. Ibid.,
p. 33.
[298]. Ibid.
[299]. Ibid.
[300]. ACTU,
Submission
to the Senate Education and Employment Legislation Committee, op. cit., p. 32.
[301]. Ibid.
[302]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 38.
[303]. Ibid.
[304]. Explanatory
Memorandum, Fair Work (Registered Organisations) Amendment (Ensuring
Integrity) Bill 2017, p. 38.
[305]. ACTU,
Submission
to the Senate Education and Employment Legislation Committee, op. cit., p. 35.
[306]. Ibid.
[307]. Proposed
subsection 223(6) of the FWRO Act, at item 9 of Schedule 1
to the Bill provides that those events are: (a) the person is refused an entry
permit, or an entry permit held by the person is revoked or suspended, under
Part 3-4 of the Fair Work Act; (b) the person is refused a WHS entry
permit, or a WHS entry permit held by the person is revoked or suspended, under
Part 7 of the Work Health and Safety Act 2011; (c) the person is refused
an entry permit (however described), or any such permit held by the person is
revoked or suspended, under a State or Territory OHS law (within the meaning of
the Fair Work Act); (d) in any criminal or civil proceedings against the
person, or in any action against the person by an agency of the Commonwealth or
a State or Territory, the person is found to have engaged in conduct involving
fraud, dishonesty, misrepresentation, concealment of material facts or a breach
of duty; (e) in any criminal proceedings against the person, the person is
found to have engaged in conduct involving the intentional use of violence
towards another person, the intentional causing of death or injury to another
person or the intentional damaging or destruction of property; and (f) any
other event the Court considers relevant.
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