Commonwealth v Fair Work Building Industry Inspectorate; CFMEU v Fair Work Building Industry Inspectorate [2015] HCA 46: Determination of Penalties
Wednesday 9 December 2015 @ 11.30 a.m. | Crime | Industrial Law | Legal Research
Today (9 December 2015) in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate & Ors; Construction, Forestry, Mining and Energy Union & Anor v Director, Fair Work Building Industry Inspectorate & Anor [2015] HCA 46 the High Court of Australia has in a unanimous decision held that:
“. . . in civil penalty proceedings, courts are not precluded from considering and, if appropriate, imposing penalties that are agreed between the parties.”
As a result, the High Court has allowed two appeals from a decision of the Full Court of the Federal Court of Australia in Director, Fair Work Building Industry Inspectorate v CFMEU [2015] FCAFC 59 (1 May 2015).
Background
In the civil proceedings (see [2015] FCAFC 59 (1 May 2015)) before the Full Federal Court of Australia exercising the Court’s original jurisdiction, the Director of the Fair Work Building Industry Inspectorate (the Director) alleged that the Construction, Forestry, Mining and Energy Union (the CFMEU), along with the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the CEPU) (collectively the Unions) contravened the Building and Construction Industry Improvement Act 2005 (Cth) (the BCII Act).
The Director then sought the appropriate pecuniary penalties and associated declaratory relief against the Unions.
The Commonwealth of Australia (the Commonwealth) intervened in the Federal Court proceedings and was heard on the issue arising from the decision of the High Court in the case of Barbaro v The Queen [2014] HCA 2; (2014) 253 CLR 58; (2014) 305 ALR 323 (Barbaro’s case). The Director and the Unions both supported the Commonwealth’s submissions. Counsel however was briefed by the Commonwealth to appear before the Full Federal Court as a contradictor.
The Federal Court – Key Issue
The key issue before the Full Federal Court was a practice which has become commonplace in proceedings that involve the imposition of civil pecuniary penalties. The practice being, in such cases, to make submissions as separate parties, or jointly, nominating the actual figure to be adopted for such penalties, or the range within which they should fall.
In Barbaro’s case, however, the majority of the High Court (namely, French CJ, Hayne, Kiefel and Bell JJ) held, that in criminal sentencing proceedings, the prosecution should not nominate the specific sentencing result, or the range within which it should fall. In the present case before the Full Federal Court, the parties agreed upon the penalties which they considered to be appropriate. However, on delivering their decision (on 1 May 2015), the members of the Federal Court (Dowsett, Greenwood and Wigney JJ) concluded unanimously that the precedent established in Barbaro’s case should also apply to the current matter which was a civil case and not a criminal case. As result, their Honours held that, they should have no regard to the parties’ agreed figures regarding penalties, other than to the extent that that agreement demonstrated a degree of remorse and/or cooperation on the part of each of the Unions.
Grounds for Appeal
In Commonwealth of Australia v Director, Fair Work Building Inspectorate & Ors B36/2015 (the Commonwealth’s appeal) the Chief Justice granted leave to appear as amicus curiae at the hearing of the appeal and the grounds of appeal include:
"The Full Federal Court erred in ruling that the decision in Barbaro’s case applies to civil pecuniary penalty proceedings under the BCII Act, so as to constrain the making and consideration of submissions as to appropriate penalty amounts, including on an agreed basis."
In Construction, Forestry, Mining And Energy Union & Anor v Director, Fair Work Building Inspectorate & Anor B45/2015 (the Unions’ appeal) the grounds of appeal are:
"That the Full Federal Court erred in:
(a) Holding that evidence and submissions by the parties to the proceedings as to the agreed penalty, and as to the appropriate penalty, were inadmissible and the Court should have no regard to them, save to the extent that the agreement demonstrated a degree of remorse and/or cooperation by each of the Unions.
(b) Declining to grant the orders jointly sought by the parties to the proceedings."
Special leave to appeal to the High Court was granted on 18 June 2015 and 6 August 2015 respectively.
The High Court’s Decision
In its decision, the High Court has held unanimously that the principle in Barbaro’s case does not apply to civil penalty proceedings. It found the job of a court to be to determine:
“. . . whether in all the circumstances, the agreed penalty is an appropriate penalty. The court is not bound to accept the agreed penalty if it does not consider it appropriate.”
At paragraphs 45 and 46 the judgment, the High Court considers the purpose of the practice with respect to agreed penalties in civil matters and why the Full Federal Court's reasoning is rejected [bold emphasis added].
45 The Full Court thus concluded that:
"the public interest in the imposition of pecuniary penalties . . . leads to the conclusion
that the fixing of the amount of such a penalty is a matter for the Court, and that
the parties cannot, by agreement, bind it."
The application of Barbaro
46 The Full Court's reasoning in this matter should be rejected. Middleton J and McKerracher J were correct in their view 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. As was recognised in Allied Mills and authoritatively determined in NW Frozen Foods, such predictability of outcome encourages corporations to acknowledge contraventions, which, in turn, assists in avoiding lengthy and complex litigation and thus tends to free the courts to deal with other matters and to free investigating officers to turn to other areas of investigation that await their attention.
As a result of its finding, the High Court set aside the Full Federal Court's adjournment order and remitted the proceedings to the Federal Court.
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Sources:
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 (9 December 2015 - Matters B36/2015 & B45/2015) including High Court Case Summary and Transcript Reports
Director, Fair Work Building Industry Inspectorate v CFMEU [2015] FCAFC 59 (1 May 2015)
Barbaro v The Queen [2014] HCA 2; (2014) 253 CLR 58; (2014) 305 ALR 323 (Barbaro’s case)
