Fair Work Act and ignorance of the law pt 1
It would appear that there is a distinction between what is required to prove a contravention of the Fair Work Act by an employer, and the elements required to prove a contravention of the Act as an accessory. This is an important part of the law which apples to the enforcement of the Act, the NES, modern awards and enterprise agreement. Put simply, an employer will be liable for a breach whether or not the employer understands or is aware of the law, whereas accessorial liability requires an element of knowledge; or as lawyers put it “means rea.”
Before a person can be found liable under s 550 of the FW Act for having been “knowingly concerned” in a contravention it must be proved that that person had knowledge of the essential facts constituting the contravention and was an intentional participant in it, the necessary intent being based on knowledge of the essential elements of the contravention: Yorke v Lucas; Australian Competition & Consumer Commission v Giraffe World Australia Pty Ltd (1999) 95 FCR 302; Rural Press Ltd v Australian Competition & Consumer Commission (2002) 118 FCR 236; Heydon v NRMA Ltd (2000) 51 NSWLR 1. The accessory need not know that the conduct constituted a contravention: ACCC v Giraffe World at 346 ; Rural Press v ACCC at 282, 283 , ; Heydon v NRMA at 109 . In Australian Competition & Consumer Commission v IMB Group Pty Ltd  FCAFC 17, speaking of s 550’s equivalent provision in the former Trade Practices Act 1974, the Full Court of the Federal Court said:
It is not necessary to establish any subjective element in relation to a contravention of Pt V of the Act. A contravention may be committed unintentionally. That is to say, a person may contravene a provision of Pt V even though that person does not have knowledge of all of the essential elements that constitute the contravention. However, before any accessorial liability will arise, it is necessary to establish the subjective element of knowledge of each of the essential elements of the contravention. That knowledge may be constructive in the sense that it may be possible to show wilful blindness in relation to the elements of a contravention. However, absent a finding of wilful blindness, it is necessary to establish actual knowledge on the part of a person to whom it is sought to sheet home accessorial liability in respect of a contravention of Pt V. (at )
Similarly, a differently constituted Full Court said in Construction, Forestry, Mining and Energy Union v Clarke (2007) 164 IR 299:
Regardless of the precise words of the accessorial provision, such liability depends upon the accessory associating himself or herself with the contravening conduct – the accessory should be linked in purpose with the perpetrators (per Gibbs CJ in Giorgianni v The Queen (1985) 156 CLR 473 at 479–480; see also Mason J at 493 and Wilson, Deane and Dawson JJ at 500). The words “party to, or concerned in” reflect that concept. The accessory must be implicated or involved in the contravention (Ashbury v Reid  WAR 49 at 51; R v Tannous (1987) 10 NSWLR 303 per Lee J at 307E–308D (agreed with by Street CJ at 304 and Finlay J at 310)) or, as put by Kenny J in Emwest Products Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2002) 117 FCR 588; 112 IR 388 at , must participate in, or assent to, the contravention. (at 308 )
The Full Court’s statement in ACCC v IMB Group in part reflects the conclusion reached by Gibbs CJ in Giorgianni v The Queen at 487-488:
My view of the law may be summed up very shortly. No one may be convicted of aiding, abetting, counselling or procuring the commission of an offence unless, knowing all the essential facts which made what was done a crime, he intentionally aided, abetted, counselled or procured the acts of the principal offender. Wilful blindness, in the sense that I have described, is treated as equivalent to knowledge but neither negligence nor recklessness is sufficient.
It has not been demonstrated that liability as accessory to a breach of s 357 must be approached any differently. It is true, as Mr Shi submitted, that North and Bromberg JJ said in the Full Court of the Federal Court in Quest South Perth Holdings at 404-405  that for a primary contravener to have contravened s 357 it must, first, have made a prohibited representation about the nature of a particular contract and, secondly, have known at the time of making the representation that the contract in question was a contract of employment, rather than a contract for services, or have been reckless as to whether that was so. Their Honours said (at 405 ) that proof that the representation was made presumes the relevant knowledge or recklessness on the part of the primary contravener unless that presumption is displaced in accordance with s 357(2). However, the decision in that case was reversed on appeal in the High Court (Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd (2015) 256 CLR 137) and the reasoning in question, albeit not relevant to the appeal, was not endorsed by the High Court when it endorsed other “uncontroversial conclusions of law” at 142 .
The contravention legislated in s 357(1) involves the comparison of a representation made by an employer with the true nature of an employee’s engagement. Although both parties in this part of the proceeding appeared to accept the proposition that proof of a relevant misrepresentation by a primary contravener implies a presumption of unlawful intent on that person’s part, with great respect to North and Bromberg JJ, I do not agree that that is the proper reading of the section. The question of intent arises out of the defence which is provided in s 357(2), not out of s 357(1) which in its terms is a strict liability provision. It is to be noted that the terms of s 357(1) do not raise questions of motivation for particular conduct, such as were considered in Board of Bendigo Regional Institute of Technical & Further Education v Barclay (2012) 248 CLR 500, and that s.357(2) is not a true analogue of s 361(1), the reverse onus provision.
As motivation or intent is not one of the essential facts constituting the contravention which must be proved when alleging a breach of s 357(1), so liability as an accessory to a principal’s contravention of s 357(1) does not require proof that the purported accessory knew what the principal knew. All that need be shown is that the purported accessory had knowledge of the essential facts which make up the contravention, namely that the primary contravener represented to an employee, or to a potential employee, that a contract of employment was a contract for the provision of his or her services as an independent contractor. As the High Court said in Fair Work Ombudsman v Quest South Perth Holdings:
The prohibition in s 357(1) is against an employer making a particular representation to an employee or prospective employee. The prohibited representation concerns the character of the contract, which exists or would exist between the employer and the employee as a contract of employment, under which the employee performs or would perform work. The content of the prohibited representation is that the contract of employment is or would be a contract for services under which the employee performs or would perform work as an independent contractor. (at 143 )
It was also stated in Giorgianni v The Queen that as ignorance of the law is not a defence, an accessory need not know that particular matters amount to an offence; it is sufficient that the accessory know the essential matters which comprised the offence committed by the principal. In that case the appellant had been charged with being an accessory before the fact to the culpable driving of another in that it was alleged that he had known that the brakes of his truck, which had been given to another to drive, were defective. The brakes failed and a collision causing deaths resulted. The Chief Justice said of the elements of the offence of being an accessory to a principal’s offence:
Russell on Crime … states that “the bare minimum” which is necessary to constitute a person an accessory before the fact is that his conduct should indicate “(a) that he knew that the particular deed was contemplated, and (b) that he approved of or assented to it, and (c) that his attitude in respect of it in fact encouraged the principal offender to perform the deed”. The passage is cited with approval in Attorney-General v. Able. There is a strong body of authority which supports the view that knowledge of the facts is necessary before a person can be made liable as a secondary party for the commission of an offence. In Johnson v. Youden, Lord Goddard C.J. stated the position in relation to aiders and abettors as follows:
Before a person can be convicted of aiding and abetting the commission of an offence he must at least know the essential matters which constitute that offence. He need not actually know that an offence has been committed, because he may not know that the facts constitute an offence and ignorance of the law is not a defence.
(at 481) (references omitted)
In the same case, Mason J also referred to the reasons of Lord Goddard CJ in Johnson v Youden  1 KB 544, noting that the proposition they advanced, that a person cannot be convicted of secondary participation at common law unless he or she knows the facts which must be proved to show that the offence has been committed, had been endorsed by the House of Lords and embraced in Australia. His Honour relevantly relied at 494 on a further passage from Lord Goddard CJ’s reasons for judgment in Johnson v Youden:
If a person knows all the facts and is assisting another person to do certain things, and it turns out that the doing of those things constitutes an offence, the person who is assisting is guilty of aiding and abetting that offence, because to allow him to say, “I knew of all those facts but I did not know that an offence was committed,” would be allowing him to set up ignorance of the law as a defence.
Also in Giorgianni v The Queen, Wilson, Deane and Dawson JJ referred to the culpable driving offences committed by the driver of the truck, saying:
It is those offences which the appellant was alleged to have aided, abetted, counselled or procured. To have done so he must have intentionally participated in the principal offences and so must have had knowledge of the essential matters which went to make up the offences of culpable driving on the occasion in question, whether or not he knew that those matters amounted to a crime … (at 500)
Their Honours further said:
For the purposes of many offences it may be true to say that if an act is done with foresight of its probable consequences, there is sufficient intent in law even if such intent may more properly be described as a form of recklessness. There are, however, offences in which it is not possible to speak of recklessness as constituting a sufficient intent. Attempt is one and conspiracy is another. And we think the offences of aiding and abetting and counselling and procuring are others. Those offences require intentional participation in a crime by lending assistance or encouragement. They do not, of course, require knowledge of the law and it is necessary to distinguish between knowledge of or belief in the existence of facts which constitute a criminal offence and knowledge or belief that those facts are made a criminal offence under the law. The necessary intent is absent if the person alleged to be a secondary participant does not know or believe that what he is assisting or encouraging is something which goes to make up the facts which constitute the commission of the relevant criminal offence. He need not recognize the criminal offence as such, but his participation must be intentionally aimed at the commission of the acts which constitute it. (at 506)
That reasoning was applied in Yorke v Lucas at 677:
As s.75B [of the Trade Practices Act 1974 as it stood at the material time and to which s 550(2) of the FW Act is relevantly identical] transports the criteria of the criminal law into the definition of the parties who are civilly liable for contraventions of Pts IV and V, the criminal law definition of parties to an offence furnishes the definition of those who are civilly liable as a party to a contravention under s 75B(c). The requirement of knowledge under par. (a) is no less stringent under par. (c).
As s 550 of the FW Act is relevantly identical to s.75B of the former Trade Practices Act, it is appropriate to apply the High Court’s reasoning just quoted to s 550. That is to say, s 550 transports the criteria of the criminal law into the definition of the parties who are liable for contraventions of the FW Act’s civil remedy provisions with the result that the criminal law definition of parties to an offence furnishes the definition of those who are civilly liable as a party to a contravention of one or more of those FW Act provisions. As ignorance of the law is not a defence to an allegation that a person was an accessory to an offence, by analogy it is appropriate to infer that ignorance of the law is also not a defence to an allegation that a person was an accessory to a contravention of a civil remedy provision of the FW Act. In that connection, it might be noted that no submission was made that either knowledge or ignorance by Mr Shi of the sham contracting positions of the FW Act would have any bearing on his potential liability as an accessory for Raying Holding’s contraventions of s 357 of that Act.
Although not a statute, an award is part of the law. This occurs by force of its adoption by the FW Act, which makes the directions contained in it binding and enforceable in law: Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 420,421, 425, 455; Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2011) 244 CLR 508 at 516 ; Proprietors of Daily News Ltd v Australian Journalist’ Association (1920) 27 CLR 532 at 537; Clyde Engineering Co Ltd v Cowburn (1926) 37 CLR 466 at 494-496, 499. In Ex parte McLean (1930) 43 CLR 472 it was said:
The award itself is, of course, not law, it is a factum merely. But once it is completely made, its provisions are by the terms of the Act itself brought into force as part of the law of the Commonwealth. In effect, the statute enacts by the prescribed constitutional method the provisions contained in the award. (at 479 per Isaacs CJ and Starke J)
In that early consideration of the operation of s.109 of the Constitution, a State Act was found to be invalid to the extent of its inconsistency with a Federal industrial award. Dixon J said:
… the instrument itself is … not “a law of the Commonwealth” within the meaning of those words in sec. 109. Sec. 109 cannot, therefore, operate directly upon it so as to render a State law invalid because it is inconsistent with the intentions which the arbitrator expresses in the award. But these considerations do not end the matter. They do establish that if State law is superseded it must be upon the ground that the State law thereupon becomes inconsistent with the meaning and effect of the Commonwealth Conciliation and Arbitration Act itself. But the provisions of that Act itself, which establish awards made under its authority, may have a meaning and effect consistently with which State law could not further affect a matter for which such an award completely provides. If the Act means not only to give the determinations of the arbitrator binding force between the disputants but to enable him to prescribe completely or exhaustively what upon any subject in dispute shall be their industrial relations, then sec. 109 would operate to give paramountcy to these provisions of the statute, unless they were ultra vires, and they in turn would give to the award an exclusive operation which might appear equivalent almost to paramountcy. (at 484)
In Clyde Engineering v Cowburn at 495, in a passage later cited in Jemena Asset Management v Coinvest, Isaacs J quoted Lord Alverstone CJ saying in Willingale v Norris  1 KB 57:
If it be said that a regulation is not a provision of an Act, I am of opinion that R. v. Walker is an authority against that proposition. I should certainly have been prepared to hold apart from authority that, where a statute enables an authority to make regulations, a regulation made under the Act becomes for the purpose of obedience or disobedience a provision of the Act. The regulation is only the machinery by which Parliament has determined whether certain things shall or shall not be done. (at 64) (reference omitted)
In Jemena Asset Management v Coinvest the High Court cited the advice of the Privy Council in Co-operative Committee on Japanese Canadians v Attorney-General (Can)  AC 87 that “law”:
… is a general term which includes not only statutes but also orders and regulations made under statutes (at 106)
in support of the following contemporary statement of the relevant law:
The expressions “a law of the State” and “a law of the Commonwealth” in s 109 are sufficiently general for s 109 to be capable of applying to inconsistencies which involve not only a statute or provisions in a statute, but also, as mentioned, an industrial order or award, or other legislative instrument or regulation, made under a statute. (at 523 )
Thus it could be said in Bell v Gillen Motors (1989) 24 FCR 77 at 84 that the making of an award is the product of a legislative function, one which is now exercised by the Fair Work Commission.
It was not expressly contended by Mr Shi but might be inferred from his arguments, in particular the argument based on Potter and Devine Marine concerning whether he had to be aware of the Modern Award or indeed of any award before he could be liable as an accessory for a contravention of it, that his position was that an award is to be treated differently from a statute or regulation and that ignorance of an applicable award is or may be a defence to an allegation of accessorial involvement in its contravention. I observe that nothing was said in this connection concerning whether s 55 of the FW Act was engaged in this case and, if so, how it might operate. As recorded earlier, the Ombudsman’s position was that Potter and Devine Marine were wrongly decided.
The material reasoning in Potter is binding on me, being an appeal from various related decisions of this Court. In that case Cowdroy J held that to have been liable as an accessory to certain alleged underpayment contraventions of a notional agreement preserving a state award (“NAPSA”), the appellant Mrs Potter had to have known that the NAPSA applied to the employees in question. In Potter Cowdroy J held that an alleged accessory must have known not only of the existence of the relevant award but also that it applied to the employees in question. His Honour said:
To be ‘knowingly concerned’ in a contravention, the alleged accessory must have actual knowledge of the essential facts that constitute the contravention: Yorke v Lucas (1985) 158 CLR 661 at 670. The difficulty in the present case is whether Mrs Potter was required to have actual knowledge of, or be wilfully blind to, the fact that Clerical NAPSA applied to the Employees.
The primary submission of the FWO is that Mrs Potter did not need to know that the Clerical NAPSA applied; rather, the only essential fact was that the Employees were not remunerated at the rate set under the provisions of the Clerical NAPSA. This is said to be because it is not necessary that an accessory know that an offence has been committed: Giorgianni v The Queen (1985) 156 CLR 473 at 506.
Knowledge that the Clerical NAPSA applied to the Employees is not identical to knowledge that a failure to pay the Employees in accordance with the Clerical NAPSA constitutes a breach of a civil remedy provision, although it is undeniable that the difference is a small one. The Court finds that, to be an accessory to the underpayment contraventions, Mrs Potter must have known the Clerical NAPSA applied to the Employees. It is not difficult to imagine a situation in which directors of a company honestly but mistakenly arrange for the company’s employees to be paid under an incorrect award. There would be no doubt that the company had underpaid its employees, and by virtue of that fact, contravened the FW Act. If the position were as the FWO submits however, the directors would be liable as accessories to those contraventions simply because they knew how much the employees were being paid and because they had knowledge of the existence of the applicable award, even though they honestly believed that such award did not apply. (at -)
In Devine Marine, White J followed Potter saying:
… Without knowledge that an Award is applicable, it is difficult to see how a finding could be made that the accessory had intentionally participated in the contravention: see Yorke v Lucas at 670.
… knowledge that there is an award which is applicable which prescribes minimum rates or entitlements is a factual element necessary for the establishment of the accessory’s intention. (at -)
As Judge Riley said in Director of the Fair Work Building Industry Inspectorate v Vic Metro Brick and Blocklaying Pty Ltd & Ors  FCCA 2266 when discussing Devine Marine:
The reference to “an Award”, in context, can only mean the particular award. That was the whole point of paragraph 80 of Potter. (at )
I therefore conclude that to be liable as an accessory to Raying Holding’s contraventions of the Modern Award, Mr Shi had to have known at relevant times that the Modern Award was applicable to the Employees’ employment.”
Fair Work Ombudsman v Raying Holding Pty ltd No 2 (2017) FCCA 2148 delivered12 September 2017 per Judge Cameron