Express law No. 307

Implications

The High Court’s decision overturns the decision of the Full Court of the Federal Court of Australia, which sought to introduce a ‘notion of proportionality’ so that the statutory maximum penalty could in effect only be imposed for contravening conduct which could itself be seen to be in the ‘worst category’ of such contraventions.

The decision has important implications for all Commonwealth regulators in civil penalty proceedings. It confirms that it may be open to a Court to impose the maximum penalty where that is necessary to secure compliance with the relevant statutory regime, even if the conduct in question was not in the most serious examples of misconduct.

Background

In 2018, the first respondent, Mr Pattinson, was a delegate of the second respondent, the Union. Mr Pattinson represented to 2 workers at a building site in Frankston, Victoria that they could not work on the site unless they became members of the Union, consistent with the Union’s ‘no ticket, no start’ policy. The conduct contravened s 349(1)(a) of the Fair Work Act 2009 (Cth) (FW Act). The respondents both admitted liability and the matter progressed to a contested hearing on the appropriate penalties to be imposed on the respondents under s 546 of the FW Act.

At first instance, the Federal Court imposed the maximum penalty available for a single contravention against the Union.¹ The primary judge had regard to the fact that the Union was a large and well‑resourced organisation and that by 2019 the Union had been found to have contravened civil penalty provisions on more than 150 occasions. The primary judge considered that the Union regarded the penalties previously imposed on it as ‘an acceptable cost of the way it conducts its affairs’, including its preferred ‘no ticket, no start’ policy. The primary judge found that a penalty at or near the statutory maximum could be imposed if necessary to achieve deterrence, saying that if such a penalty was ‘the only way to deter even the most objectively innocent conduct... the imposition of anything less would necessarily result in a failure to achieve the only object to which the imposition of penalties is directed.’²

The Full Court allowed an appeal by the respondents.³ The Full Court analysed the criminal sentencing ‘principle of proportionality’, which prevents a court from imposing a sentence greater than the offender deserves by way of retribution. Drawing from that case law, the Full Court held that the statutory maximum operated as a statutory ‘yardstick’ against which the acts and circumstances that made up the contravention needed to be assessed, and that there is ‘notion of proportionality’ within the task of determining an appropriate penalty under s 546 of the FW Act. This ‘notion’ required that the penalty imposed be ‘proportionate’ to the nature, gravity and seriousness of the actual conduct which comprised the contraventions.

High Court’s Reasoning

A majority of the High Court (Kiefel CJ, Gageler, Keane, Gordon, Steward, and Gleeson JJ) allowed the appeal from the Full Court. The majority determined that nothing in the text, context or purpose of s 546 of the FW Act suggests that a ‘notion of proportionality’, derived from criminal sentencing, was inherent in the Court’s task of fixing an appropriate civil penalty. The High Court reiterated that the purpose of civil penalties is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the legislation. Accordingly, limitations which might arise from conceptions of retributive proportionality’ had no part to play in controlling the imposition of an appropriate civil penalty.

The majority further held that the maximum penalty, while operating as a statutory ‘cap’, does not otherwise constrain the exercise of the Court’s discretion to impose a penalty appropriate to securing deterrence. Accordingly, it was not necessary to conclude that a contravention was in the ‘worst case’ before imposing the maximum penalty. While ordinarily there should be ‘some reasonable relationship between the theoretical maximum and the final penalty imposed’, that relationship will be established where the penalty does not exceed what is reasonably necessary to deter future contraventions of a like kind. And if, in a particular case, no penalty less than the maximum would be appropriate to secure deterrence, the maximum penalty may be imposed.

The majority emphasised that its decision did not detract from the use of certain other principles drawn from the criminal sentencing context, including the course of conduct and totality principles because, unlike ‘proportionality’, these were not retributive concepts but were simply analytical tools which were compatible with a civil penalty regime focussed on deterrence. Their Honours also made a range of important observations about the various penalty factors and how they are to be approached.

In the result, the majority held that it was open to the primary judge to impose the maximum penalty for a single contravention of the FW Act. The Union’s past history of contraventions showed that lesser penalties would not be adequate to deter it. Accordingly, the penalties imposed by the primary judge were ‘appropriate’ because they were no more than what was reasonably necessary to deter further contraventions.

Text of the decision is available at:  https://eresources.hcourt.gov.au/downloadPdf/2022/HCA/13

The Commonwealth Solicitor-General, Tim Begbie QC (AGS) and Julia Watson appeared for the ABCC in the High Court appeal.

¹ Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654.

² Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654 at [72].

³ Pattinson v Australian Building and Construction Commissioner [2020] FCAFC 177.