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  HCA 46
On 9 December 2015, the High Court of Australia unanimously held that courts may receive and, if appropriate, act upon a submission as to penalties (or range of penalties) by parties in civil penalty proceedings.
Regulators, such as the Australian Competition and Consumer Commission (ACCC), can now continue the important and established practice of negotiating settlements with respondents before making submissions to the court as to agreed penalties, or nominating specific penalties (or a range of penalties).
The practice was previously called into question following the Full Federal Court's finding that it was impermissible for parties to make joint submissions to a court seeking the imposition of a penalty.
The decision should also be welcomed by businesses and individuals in restoring the incentive to cooperate at an early stage with regulators.
What decision was overturned?
CMFEU had alleged that two unions had contravened the Building and Construction Industry Improvement Act 2005 (Cth) and sought civil pecuniary penalties and declaratory relief from the Full Federal Court. Penalties had been agreed between CFMEU and the Unions.
Rejecting submissions that penalty proceedings were distinct from criminal sentencing proceedings, the Full Federal Court's found that the High Court's decision in Barbaro v The Queen (2014) 253 CLR 57 ("Barbaro") applied to civil penalty proceedings. In Barbaro, the High Court considered that it was inappropriate for parties to submit on sentencing ranges in criminal penalty proceedings.
Subsequently, while parties were allowed to propose agreed facts to the court, the Full Federal Court held that a regulator's submissions should only address evidence and the law.
What was the High Court's decision?
The High Court found that the continued practice of agreed penalty submissions in civil penalty proceedings is appropriate, and its decision Barbaro applies only to criminal proceedings.
In setting out its findings, the High Court considered the strong public policy benefits in protecting the predictability of outcomes in civil proceedings, and in the practice of receiving and accepting agreed penalty submissions. The Court also recognised the benefits of non-contested hearings, reducing both time and costs for courts, regulatory officers and respondents.
The key role of regulators in civil penalty proceedings was also recognised by the High Court, noting that the regulators take an active role in civil penalty proceedings due to their unique position to advise the court on the effect of the contravention on the industry, along with the necessary penalty to achieve compliance.
Importantly, while the High Court recognised that courts may be guided by submissions as to penalties by the parties or regulators, it was emphasised that all submissions will still be considered by the court on merit and subject to findings of fact, rather than opinion. Courts are not bound to impose an agreed penalty, but will examine "whether their proposal can be accepted as fixing an appropriate amount".
Parties will also not be precluded from making submissions to court as to penalties, even without an express statutory right to do so. The relevant legislation in this case did not expressly provide for the regulator to make submissions to the court as to penalties, however the High Court noted that it will be presumed that Parliament intended that civil penalty provisions in legislation to be applied in accordance with "the long established general system of law".
What this means
The decision provides certainty that courts will have regard to agreed penalties put forward by the parties as a result of cooperation with regulators.
This will encourage companies and individuals the subject of investigations to take advantage of the benefits of early cooperation and negotiated settlements with regulators. For example, the ACCC offers a Cooperation Policy for Enforcement Matters, which allows the regulator to reach an agreement with parties about joint submissions to be placed before the court if it is satisfied that a corporation or individual has cooperated with it in a substantive way.
Regulators can now also continue the established practice of making submissions to the Court regarding agreed penalties, nominating specific penalties or identifying a range of penalties to be imposed following negotiated settlement of civil penalties. It also reduces the pressure on regulators to run litigation matters to a resolution at hearing, avoiding the increased costs, time and stress of a contested hearing.