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Update: Please note that on 20 May 2014, Davies J handed down her decision in Tax Practitioners Board v Dedic [2014] FCA 511. Her Honour cited with approval the reasoning of Middleton J in EnergyAustralia, and held that it was permissible for the Board to make submissions on the appropriate range of penalties (at [3]).

In addition, by way of clarification, the proceeding in which the implications of Barbaro will be considered by the Full Court is Director Fair Work Building and Industry Inspectorate v Construction, Forestry, Mining and Energy Union QUD 257 of 2014. The proceeding of Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2014] FCA 160 before White J has been finalised.

16 May 2014

SUBMISSIONS ON PENALTY POST BARBARO – UPDATE FOR CIVIL REGULATORS

Since the publication of our 11 March 2014 Express Law about the implications for civil regulators of the High Court's decision in Barbaro v The Queen; Zirilli v The Queen [2014] HCA 2; (2014) 305 ALR 323 (Barbaro), 2 Federal Court decisions have held that Barbaro does not overrule the long-standing practice of civil regulators making submissions on penalty.

The implications of Barbaro will soon be determined by the Full Court of the Federal Court of Australia.

Summary

In ACCC v Energy Australia Pty Ltd [2014] FCA 336 (Energy Australia), handed down on 4 April 2014, Middleton J held that Barbaro does not preclude parties to civil penalty proceedings from making submissions as to penalty amounts. The approach taken by Middleton J in Energy Australia has been subsequently endorsed by McKerracher J in ACCC v Mandurvit Pty Ltd [2014] FCA 464.

Consideration of Barbaro in Energy Australia

Energy Australia was a decision on penalty for contraventions of the Australian Consumer Law arising from door-to-door sales activities conducted on behalf of Energy Australia Pty Ltd. The matter proceeded by way of agreed facts and joint submissions on appropriate penalty.

Justice Middleton imposed the penalties sought and in so doing took into account the joint submissions of the parties. In this regard, His Honour closely considered the High Court's decision in Barbaro and concluded that it did not go so far as to preclude taking into account joint submissions on appropriate penalty in civil penalty proceedings or that it implicitly overruled Full Court authority supporting this practice.

In reaching this conclusion, his Honour observed that:

  • in Barbaro, the High Court was only concerned with the practice that had developed in Victoria following R v MacNeil-Brown (2008) 20 VR 677 and the refusal of the trial judge to receive a statement from the prosecution about the range of sentences in accordance with this practice. It was this practice which the High Court disapproved but in doing so it had made no statements about how this principle might apply in a civil penalty context (at [122], [128])
  • the material before the judge in agreed civil penalty cases is different from the absence of supporting material which was criticised in Barbaro. In this case his Honour had before him submissions of law and an agreed statement of facts which went beyond the mere bare expression of opinion by a prosecutor (at [130])
  • there are relevant differences between the role of a prosecutor in a criminal proceeding and the role of a civil regulator in a civil penalty proceeding: "it is the very nature of a civil regulatory proceeding that a regulator contends for a particular outcome" (at [142]) 
  • the principal object of imposing a pecuniary penalty, in the context of a specific legislative scheme, is deterrence. Deterrence is improved through the acceptance of agreed penalty amounts (so long as the Court performs its duty of fixing the appropriate amount) by way of increased certainty, implementation of corrective action and the freeing up of a regulator's resources (at [144] to [149])
  • there is still binding Full Court authority in the civil penalty context (NW Frozen Foods Pty Ltd v ACCC (1996) 71 FCR 285 and Minister for Industry, Tourism and Resources v Mobil Oil Australia Ltd (2004) ATPR 41-993) which supports the practice of civil regulators making submissions as to penalty amount, based on agreed statements of fact and joint legal submissions from the parties indicating an 'agreed' penalty
  • the approach taken in other cases where Barbaro had been applied was irrelevant to this case: in ACCC v Flight Centre Limited (No. 3) [2014] FCA 292 Barbaro was applied without the benefit of submissions on the issue and Grocon v Construction, Forestry, Mining and Energy Union (No. 2) [2014] VSC 134 was primarily concerned with the imposition of penalties for criminal contempt (at [151], [152]).

On 12 May 2014, the approach taken by Middleton J in Energy Australia was endorsed by McKerracher J in ACCC v Mandurvit Pty Ltd [2014] FCA 464.

Comment on Energy Australia

Justice Middleton's decision should be treated as outlining the better approach to Barbaro in the civil penalty context. It also provides a good basis for arguing against its application in a number of other contexts. For civil penalty practitioners the decision is also a helpful precedent to argue against the all too common confusion about civil penalty cases and criminal sentencing.

Full Federal Court consideration of Barbaro

We can expect the Full Federal Court's views on the application of Barbaro in the near future.

In the 11 March 2014 Express Law we referred to the decision of White J in Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2014] FCA 160 (Construction, Forestry, Mining and Energy Union) in which his Honour noted, without deciding, that Barbaro may require the Federal Court to review the approach taken in civil penalty cases. On 10 April 2014, the Chief Justice directed that the Full Federal Court exercise the Court's jurisdiction in the penalty hearing for Construction, Forestry, Mining and Energy Union, in order to consider the implications of Barbaro.

AGS, acting for the Commonwealth, has applied to intervene in the matter to make submissions on application of Barbaro.

 

For further information please contact:

Tim Begbie
Senior General Counsel
T 02 6253 7521 
M 0438 181 382
Tim.Begbie@ags.gov.au

David Ablett
Senior Executive Lawyer
T 03 9242 1247 
David.Ablett@ags.gov.au

Jodi Ross
Senior Lawyer
T 08 8205 4218
Jodi.Ross@ags.gov.au

Important: The material in Express law is provided to clients as an early, interim view for general information only, and further analysis on the matter may be prepared by AGS. The material should not be relied upon for the purpose of a particular matter. Please contact AGS before any action or decision is taken on the basis of any of the material in this message.