The High Court has overturned a decision of the Federal Court of Australia and ruled that the Barbaro principle does not apply to civil penalty proceedings in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 (Commonwealth of Australia v Director). 

HIGH COURT CONTAINS THE BARBARO PRINCIPLE

Prior to 2013, it was standard practice for criminal prosecutors in Queensland and Victoria to make submissions on sentence ranges to a Court where guilt of a defendant was proven. This practice ended with the High Court of Australia’s decision in Barbaro v The Queen; Zirilli v The Queen [2013] HCA 2 (Barbaro) where the Court found that submissions on penalty are “inadmissible opinion” that a sentencing judge cannot properly take into account . The question then became whether this principle would be carried across in to civil pecuniary penalty proceedings, which, until Barbaro, had utilised a widespread practice of the parties (that is the regulator and defendant) making submissions about agreed facts and appropriate penalties.

Earlier this year, the Full Federal Court in Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59 (CFMEU) held that the Barbaro principles did apply to civil penalty proceedings, making it impermissible for parties to make, and the Court to consider, submissions about agreed penalty or range of penalties in these cases. Commonwealth of Australia v Director overturned this and contained the Barbaro principle to criminal prosecutions.

CIVIL PENALTY DEEMED CIVIL, NOT CRIMINAL

The Barbaro decision sent shockwaves and uncertainty through the legal areas which involved regulation or prosecution with personal, professional or pecuniary penalty outcomes.  Following the Barbaro decision, it became commonplace for a Court to request submissions on the applicability of the Barbaro principle on sentence or sanction in criminal, disciplinary and civil penalty matters.

This is aptly demonstrated in the decision which Commonwealth of Australia v Director overturned. In considering the applicability of the Barbaro principles to civil penalty matters, the Federal Court decided that the Barbaro principles were also applicable to civil prosecutions for fixing a monetary penalty for conduct in CFMEU. The matter was appealed to the High Court because among other things, in so deciding, the Federal Court overturned common practice in civil penalty suits such as those brought by a regulator and broadened the applicability of the Barbaro principle.

In coming to its decision in Commonwealth of Australia v Director, the High Court identified various distinctions between criminal and civil penalty proceedings. In short, these are as follows:

  1. Criminal proceedings are accusatorial and involve a prosecutor who has the burden of proving matters against a defendant to establish guilt beyond a reasonable doubt. The defendant cannot be required to assist the prosecution in this process.[1] In criminal law the Court sentences a defendant based on a uniquely judicial exercise of balancing and apportioning weight to a range of factors according to established sentencing principles.[2]  
  2. Civil penalty proceedings are adversarial and involve issues and relief that may largely be chosen by the parties to prove conduct against the defendant on the balance of probabilities. [3] There is therefore scope for the parties to agree on the facts, and the penalty outcomes applicable to the conduct.[4]

The following policy considerations were also considered by the Court:

  1. It is in the public interest that civil penalty cases are predictable for regulators and wrongdoers to encourage wrongdoing corporations to acknowledge and take responsibility for their contraventions of the law.[5]
  2. This predictability and accountability in turn reduces the amount of complex litigation run in defense of civil penalty cases which enables the Courts more freedom to deal with other matters and investigators to more profitably utilize their time.[6]

There is a large public policy impetus for the Barbaro case to be confined to criminal prosecutions. The High Court curtailed these statements by reiterating that the power to sentence still rested with the Court.  

IN PRACTICE…

Importantly for parties to these types of prosecutions, the High Court has affirmed the standard practice in this area, which will remain unchanged. This means that in civil penalty proceedings the parties may still agree to facts and penalty to be imposed provided the Court is sufficiently persuaded of the accuracy of the parties’ agreements on facts and penalty.

In the case of such agreement, the Court will then analyse the agreed facts and penalty, and ask itself at sentence whether the proposal of the regulator and defendant can be accepted as appropriate in the circumstances.[7]

The decision will likely continue to encourage defendants to engage with the regulator in these cases and thereby assist with the ongoing maintenance of standards in these industries.

[1]     Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate[2015] HCA 46, at [52].

[2]     Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate[2015] HCA 46, at [56]. The sentencing principles have been called an ‘instinctive synthesis” or a “staged process”, see: Markarian v the Queen [2005] HCA 25 at [35] to [39].

[3]     Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate[2015] HCA 46, at [53].

[4]     Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate[2015] HCA 46, at [57].

[5]     Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate[2015] HCA 46, at [46].

[6]     Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate[2015] HCA 46, at [46].

[7]     Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate[2015] HCA 46, at [48].