The High Court has ruled that the decision of Barbaro v The Queen does not apply to civil penalty proceedings and a court is not precluded from receiving and accepting (if appropriate) agreed or other civil penalty submissions. This is an important decision for regulators and offending parties who reach agreements as to appropriate penalties for contraventions.
The case of Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate reached the High Court as a result of an appeal against the decision of the Full Court of the Federal Court.
The background facts of this case involved the Director bringing civil penalty provisions against unions, being the CFMEU and the CEPU. The Director and the unions agreed to seek from the Court declarations as to the contravention and pecuniary penalties of $105,000 against the CFMEU and $45,000 against the CEPU. In the Agreed Facts it was stated that those penalty amounts were “satisfactory, appropriate and within the permissible range in all the circumstances.”
The matter was referred to the Full Court on the basis of the possible application ofBarbaro.
In Barbaro the High Court held that the prosecution cannot nominate an ‘available range’ of sentences that they consider can be imposed in the circumstances of the case, i.e. they cannot proffer an opinion as to the proper sentence as this is an unwarranted intrusion on what is an exclusively judicial task.
In May 2015 the Full Court held that Barbaro did apply to civil penalty proceedings and thus the parties’ agreed penalty submissions could not be received.
This was appealed to the High Court who rejected the Full Court’s reasoning. They found that there is an important public policy involved in promoting predictability of outcome in civil penalty proceedings and that the practice of receiving and, if appropriate, accepting agreed penalty submissions increases the predictability of outcome for regulators and wrongdoers. Such predictability encourages wrongdoers to acknowledge contraventions which also helps avoid lengthy and complex litigations, allowing courts to deal with other matters and regulators to turn their attention to other areas of investigation.
The Court discussed the fact that the Court is not bound by the figure suggested by the parties in an agreed civil penalty submission and must satisfy itself that the submitted penalty is appropriate before accepting it. It was stated that the public may have confidence that a judge will do his or her duty when considering whether an agreed penalty submission is appropriate.
The Court also emphasised the basic differences between a criminal prosecution and civil penalty proceedings. In contrast to criminal prosecutions, in civil proceedings there is generally considerable scope for parties to agree on facts and upon consequences. There is also considerable scope for them to agree to an appropriate remedy and for the court to be persuaded that it is an appropriate remedy.
The High Court stated that it was entirely consistent with the nature of civil proceedings for a court to make orders by consent and to approve a compromise of proceedings on terms proposed by the parties, provided that the court is persuaded that what is proposed is appropriate. The High Court further stated that if the court is satisfied that the proposed penalty is appropriate then it is highly desirable for the court to accept the proposal and impose the proposed penalty.
It was pointed out that regulators have statutory functions that include monitoring and promoting appropriate standards of conduct and by extension it can be assumed that they will approach penalty submissions with an overall view to achieving that objective. Further it is to be expected that regulators will be in a position to offer informed submissions as to the effects of contravention on the industry and the level of penalty necessary to achieve compliance.
The High Court set aside the Full Court’s decision and remitted it to the Federal Court to be determined according to the law.
This decision confirms that regulators can continue to reach agreements with offending parties as to appropriate penalties and present them to the court, and if the court agrees they are appropriate then they will be imposed.
The author wishes to acknowledge Law Clerk Ann-Marie Coleman for her contribution to this article.