The High Court has re-established the long-standing practice of regulators (such as the ACCC, ASIC and ATO) and respondents negotiating and submitting to the court “agreed penalties” in civil penalty proceedings.1
What does this mean for you?
The decision is positive for respondents because it:
- significantly reduces the uncertainty of what quantum of penalty could be determined by the court in circumstances where “agreed penalties” are advanced to the court (in this respect prior uncontested agreed penalty decisions will provide some guidance in advising on future penalty decisions);
- gives respondents a sense of what might otherwise happen if the matter proceeded to a full trial;
- creates an incentive to avoid contested proceedings in which claims against respondents are publically aired and which incur substantial legal costs; and
- is likely to result in regulators taking into account early cooperation as a mitigating factor when considering the appropriateness of the penalty amount suggested by the regulator (which will include a penalty “discount” on account of the respondent’s cooperation - for example, under the ACCC Immunity and Cooperation Policy for Cartel Conduct).
Key aspects of the decision
The High Court emphasised that it is an important public policy to promote predictability of outcome in civil penalty proceedings and that the “agreed penalties” practice increases the predictability of outcome which encourages wrongdoers to acknowledge contraventions. This in turn, assists in avoiding lengthy and complex litigation and freeing courts and investigating officers to deal with other matters.
Contrary to the Full Court’s reasoning, the High Court found fundamental differences between civil penalty proceedings and a criminal prosecution. On that basis, the High Court was satisfied that regulators should be allowed to suggest an appropriate penalty to the court in civil penalty proceedings, whereas a prosecutor is prevented from doing so in a criminal prosecution following the High Court’s decision in Barbaro v The Queen (2014).
The High Court confirmed that the court is not bound by the penalty figure suggested by the parties and that the relevant question for the court is whether or not the suggested penalty can be accepted as fixing an “appropriate” amount.