Agreed penalties (ok, says the High Court)
High Court unanimously held that "in civil penalty proceedings, courts are not precluded from considering and, if appropriate, imposing penalties that are agreed between the parties" (judgment summary)
In May 2015 the Full Federal Court ruled that joint submissions by parties in relation to pecuniary parties (a long time practice of the ACCC in relation to competition law proceedings) was not permitted. This followed an earlier High Court decision (Barbaro) in which that court held that the prosecution should not nominating a sentencing range in relation to criminal sentencing proceedings.
The key issue on appeal to the High Court was whether or not the reasoning in Barbaro should be applied to civil pecuniary penalties or whether parties could continue to make joint submissions with regulators in relation to an appropriate penalty or penalty range. The High Court unanimously held that the reasoning in Barbaro did not apply to civil pecuniary penalties and that, as a result, parties to civil proceedings can continue to submit agreed penalties to the court (which may or may not be accepted).
In their joint judgment, French CJ, Kiefel, Bell, Nettle and Gordon JJ concluded that 'decision in Barbaro does not apply to civil penalty proceedings and a court is not precluded from receiving and, if appropriate, accepting an agreed or other civil penalty submission.' (para 1). In separate (brief) reasons for judgment, Justice Gageler agreed with the conclusion in the majority reasons that Barbaro does not apply to civil penalty proceedings and joined in the proposed orders. In a separate reasons Justice Keane also agreed that the appeals should be allowed for the reasons given by the majority and made a few additional observations.
Although the proceedings did not involve the ACCC, they had direct implications for the common practice of the ACCC to submit agreed penalties after cooperation and negotiation with parties the subject of civil prosecutions under the CCA.
Timeline and key links
The High Court case page includes transcripts and video of the hearing before the High Court as well as links to judgments, a judgment summary, written submissions and a chronology - a great one stop shop for all the resources relating to this judgment:
- High Court case page: Construction, Forestry, Mining and Energy Union & Anor v. Director, Fair Work Building Industry Inspectorate & Anor (B45/2015)
High Court judgment and related
- The High Court granted special leave to appeal on 6 August 2015
- The High Court appeal was heard on 13 October 2015
- The High Court delivered its judgment and reasons on 9 December 2015
- High Court summary of reasons for judgment
- Judgment on High Court website: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate  HCA 46
- Judgment at AustLII: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate  HCA 46
- Judgment at Jade: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate  HCA 46
Full Federal Court judgment and related
The primary issue dealt with by the Court related to joint submissions as to pecuniary penalties. In Barbaro (Barbaro v The Queen  HCA 2; (2014) 305 ALR 323), the High Court held that in criminal sentencing proceedings, the prosecution should not nominate a sentencing result or range. In this case the Federal Court considered whether or not the decision in Barbaro should be applied regarding the penalties the parties had agreed. The Court concluded the reasoning in Barbaro should apply to this case and that therefore they should not have any regard to the figures agreed by the parties in relation to penalties, 'other than to the extent that the agreement demonstrates a degree of remorse and/or cooperation on the part of the respondent' (para 2).
- Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union  FCAFC 59
Justices Dowsett, Greenwood and Wigney JJ (1 May 2015)
Media and Commentary on High Court ruling
Law firm commentary
Media and Commentary on Federal Court ruling
Law firm commentary
Corrs Chambers Westgarth: Ayman Guirguis, Richard Filtcroft and Asa Lam, 'Where to now for Agreed Civil Penalty Outcomes following the CFMEU and Barbaro Decisions' (Corrs Chambers Westgarth, 'Corrs in Brief', 8 May 2015)
Authors consider that the decision 'creates significant uncertainty for regulators and potential respondents alike' and is 'likely to lead to a significant chilling effect on the preparedness of parties to seek to resolve, rather than to contest, matters'.
Herbert Smith Freehills: Chris Jose, Andrew Eastwood, Paul Hughes, Jeremy Birch and Felicity Lee, 'Federal Court delivers a blow to agreed outcomes in civil penalty proceedings' (Herbert Smith Freehills Legal Briefing, 4 May 2015)
Lander & Rogers: Calum Henderson, Scott Traeger and Caroline Walker, 'Unsettling: Federal Court rejects propriety of agreed civil penalty submissions' (Lander & Rogers, Competition Law update, 12 May 2015)
Julie Clarke, The Federal Court of Australia rules against submissions on agreed penalties (Fair Work Building Industry Inspectorate / Construction, Forestry, Mining and Energy Union), e-Competitions Bulletin June 2015, Art. N° 73596
Images copyright: 'Shaking Hands' image courtesy of Stuart Miles at FreeDigitalPhotos.net.