Corporations Amendment (Strengthening Protections for Employee Entitlements) Bill 2018 [2018] AUSStaCSBSD 224 (17 October 2018)

1.1 The committee seeks a response or further information from the relevant minister or sponsor of the bill with respect to the following bills.

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Corporations Amendment (Strengthening Protections for Employee Entitlements) Bill 2018

Purpose	This bill seeks to amend the Corporations Act 2001 to increase enforcement and recovery options relating to unpaid employee entitlements when a corporate employer becomes insolvent
Portfolio	Treasury
Introduced	House of Representatives on 20 September 2018

Reversal of the evidential burden of proof^[1]

1.1 Item 8 of the bill seeks to repeal and replace subsection 596AB(1) and (2) of the Corporations Act 2001 (Corporations Act) with new subsections 596AB(1), (1A), (1B) and (1C), which seek to make it an offence for a person to enter into, or cause a company to enter into, a relevant agreement or a transaction, intending that, or reckless as to whether, the agreement or transaction will avoid or prevent the recovery of employee entitlements or significantly reduce the entitlements that can be recovered.

1.2 Proposed section 596AB(2B) seeks to create an offence-specific defence to the above offences which provides that the offences do not apply if the relevant agreement or the transaction is entered into under:

1.3 Proposed subsection 596AB(2C) creates a second defence to the offences in proposed subsection 596AB(1A) and (1C), which provides that the offences do not apply if a liquidator or provisional liquidator causes the relevant agreement or the transaction to be entered into in the course of winding up the company.^[2]

1.4 Subsection 13.3(3) of the Criminal Code Act 1995 provides that a defendant who wishes to rely on any exception, exemption, excuse, qualification or justification bears an evidential burden in relation to that matter.

1.5 At common law, it is ordinarily the duty of the prosecution to prove all elements of an offence. This is an important aspect of the right to be presumed innocent until proven guilty. Provisions that reverse the burden of proof and require a defendant to disprove, or to raise evidence to disprove, one or more elements of an offence, interfere with this common law right.

1.6 While in this instance the defendant bears an evidential burden (requiring the defendant to raise evidence about the matter), rather than a legal burden (requiring the defendant to positively prove the matter), the committee expects any such reversal of the evidential burden of proof to be justified.

1.7 The committee also notes that the Guide to Framing Commonwealth Offences^[3] provides that a matter should only be included in an offence-specific defence (as opposed to being specified as an element of the offence), where:

1.8 In relation to the defences in proposed subsection 596AB(2B), the explanatory memorandum states that it is appropriate for the defendant to bear the evidential burden, because the matters in that subsection would be peculiarly within the knowledge of the defendant. The explanatory memorandum states that this is because the defendant would almost always be company officers or persons with a strong connection to the company, be involved in court processes related to the relevant compromise or arrangement, be parties to a DOCA, or have access to relevant company records and documents. It further states that it would be significantly more difficult and costly for the prosecution to disprove the matters in proposed subsection 596AB(2B) than for the defendant to establish those matters.^[4]

1.9 In relation to the defences in proposed subsection 596AB(2C), the explanatory memorandum states that it is appropriate for the defendant to bear the evidential burden. The explanatory memorandum states that this is because it would be peculiarly within the defendant’s knowledge as to why and when a relevant agreement or transaction was entered into in the course of the company’s winding up. It further states that it would be significantly more difficult and costly for the prosecution to disprove these matters.^[5]

1.10 However, while the committee acknowledges that the defendants may be able to raise evidence in relation to the matters in proposed subsections 596AB(2B) and (2C) (such as whether a compromise or agreement was approved by a court, entered into under a DOCA or in the course of winding up), it is unclear that those matters would be peculiarly within the defendants’ knowledge, such as to make it appropriate to reverse the burden of proof.

1.11 The committee draws its scrutiny concerns to the attention of senators, and leaves to the Senate as a whole the appropriateness of reversing the evidential burden of proof in proposed subsections 596AB(2B) and (2C), in circumstances where the matters do not appear to be peculiarly in the defendants' knowledge.

[1] Schedule 1, item 8, proposed subsections 596AB(2B) and (2C). The committee draws senators’ attention to these provisions pursuant to Senate Standing Order 24(1)(a)(i).

[2] Proposed paragraphs 596AC(7)(a) and (b) set out identical defences to the civil penalty provisions in proposed subsection 596AC(1), (2), (3) and (4).

[3] Attorney-General’s Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, pp. 50-52.

Australian Senate Standing Committee for the Scrutiny of Bills - Scrutiny Digests