‘Dysfunctional’ structure leads to 86 breaches of the RO Act

Case Name

Registered Organisations Commissioner v Communications, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2020] FCA 96 external-icon.png (first instance).

Communications, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Registered Organisations Commissioner [2020] FCAFC 232 external-icon.png (on appeal).

What were the issues?

An organisation was found to have had a dysfunctional organisational structure which contributed to breaches of the Fair Work (Registered Organisations) Act 2009 (the RO Act) relating to the failure to keep accurate records of offices and office holders, and failures to notify the regulator about changes to this information. 

What happened?

The Court found that the CEPU breached the RO Act between March 2015 and May 2017: 

  • on four occasions by failing to keep accurate lists of its offices and office holders and 
  • on 82 occasions by failing to lodge notifications of changes of offices and office holders within 35 days.  

The Court found that the breaches were widespread across all three of the CEPU’s Divisions, across six states and one territory and extended over a considerable period of time. On five instances the notifications were more than 100 days late and in nine instances there was no notification of changes made at all prior to the proceedings. 

This was despite the regulators placing information on their websites about what was required to be provided, as well as sending ongoing reminders and warnings to the CEPU, its divisions and branches. 

What can organisations learn from this?

Organisations with complex structures must take greater steps to ensure there are appropriate governance systems for accurate record keeping and compliance with regulatory obligations by their divisions and branches. 

Organisations must keep up-to-date lists of offices and office holders and notify the regulator within 35 days of all changes to these lists. This is important so that members of organisations, the public and the regulator can at any given time identify the offices and office holders in an organisation.

Organisations are encouraged to self-report contraventions of the RO Act and address the reasons for non-compliance as the failure to do so may result in higher penalties.

What did the judge say?

The trial judge (Flick J) said at [56]-[60] that the obligation to lodge with the ROC changes to the records included changes that the branch had made without proper power to do so. He said at [57] any alternative interpretation would:

have the potential to defeat or at least frustrate a presumed legislative intent that … the Commissioner was to be the repository of changes in fact made to offices or office and for those records to be publicly available to those who seek to make inquiries as to what are the offices … and who are the persons who hold such positions…

In relation to the complex structure of the CEPU, operating as it was essentially as three separate unions comprising each of its divisions, the judge found at [97]: 

…the very fact of the Union having what can be described as a “complex structure” should have alerted it to the necessity to take greater steps than it obviously did in the past to ensure compliance with record keeping and reporting obligations…

The Full Court on appeal (Bromberg, Rangiah and Bromwich JJ), emphasised the important nature of the record keeping obligations imposed by the RO Act stating at [147] that:

The record-keeping obligations imposed under the Registered Organisations Act are treated by the legislature as important and serious, and contravention of those obligations are correspondingly serious. 

In considering the numerous reminders sent by the Commissioner to the CEPU about its obligation to notify changes in a timely way, the Full Court found at [167] that:

The Union cannot be said to be unaware of a continuing problem of default. The number of contraventions occurring over an extended time also undermine any suggestion that the continuing contraventions were purely “inadvertent”. 

What was the outcome and the penalty?

The trial judge took into consideration that the CEPU did not admit the contraventions as early as it could and waited more than a year before putting in place its system of compliance. However, the trial judge credited the CEPU and its National Secretary for the reforms and changes ultimately put in place to ensure its reporting was more effective and ordered a total penalty of $445,000.

On appeal by the CEPU, the Full Court identified an error in the trial Judge’s approach to the assessment of penalty and reduced the penalty amount to $200,000.

Court reference

NSD 802 of 2018

 

Disclaimer
This information is of a general nature only and is not legal advice. The case summaries are designed to assist in gaining an understanding of the relevant provisions of the legislation and the work of the Registered Organisations Commission.