Australia: High Court confirms that courts can consider penalty agreements in civil penalty proceedings

Penalty agreements between prosecutors and defendants in civil penalty proceedings are not prohibited. This means prosecutors - including WHS Regulators, the FWBC, the Fair Work Ombudsman, the ACCC, ASIC and the ATO - can enter into penalty agreements with parties who have breached civil penalty provisions, and those agreements can be produced for the consideration of the court.

This was confirmed yesterday by the High Court, which unanimously held that, in civil penalty proceedings, courts are not precluded from considering and, if appropriate, imposing penalties that are agreed between the parties.¹

Yesterday's decision overturned a controversial Full Federal Court decision² that parties' agreements on penalties are inadmissible in civil penalty proceedings. It confirms that the principle in Pasquale Barbaro v The Queen, Saverio Zirilli v The Queen (Barbaro) does not apply to civil penalty proceedings.

THE FULL FEDERAL COURT'S DECISION³

On 1 May 2015, the Full Federal Court held that penalties agreed upon between the Fair Work Building Industry Inspectorate and the CFMEU and CEPU (together, the Unions) in respect of the Unions' breaches of the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act), were inadmissible.

The Full Federal Court's decision was based on the High Court's decision in Barbaro. In Barbaro, the High Court held that criminal prosecutors are not permitted to make submissions to a sentencing judge on the range of penalties the prosecution considers to be open.

The Full Federal Court held that the principle in Barbaro also applied to civil penalty proceedings brought under the BCII Act, with the result that the Federal Court could not consider joint submissions from the parties regarding the agreed penalties.

WHAT HAS CHANGED?

Today's decision confirms that the principles in Barbaro do not apply to civil penalty proceedings. This means courts can receive and consider agreements on penalty for breaches of civil penalty provisions.

The High Court confirmed that courts are not bound to accept an agreed penalty if it does not consider it appropriate. The task of a court is to determine whether, in all the circumstances, the agreed penalty is appropriate.

WHY IS THIS DECISION IMPORTANT?

The decision is important for federal regulators - like the FWBC, the Fair Work Ombudsman, the ACCC, ASIC and ATO – as it means they can enter into agreements on appropriate penalties with parties who have breached civil penalty provisions.

Similarly, the decision is relevant to work health and safety (WHS) Regulators and people charged with breaches of civil penalty provisions under WHS laws (for example, the civil penalty provisions relating to discriminatory or coercive conduct and workplace entry by WHS entry permit holders).

In our view, the decision is likely to encourage parties to seek to resolve, rather than contest, civil penalty proceedings.

Footnotes

¹ Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate & Ors; CFMEU & Anor v Director, Fair Work Building Inspectorate & Anor [2015] HCA 46 (9 December 2015).

²Director, Fair Work Building Industry Inspectorate v CFMEU [2015] FCAFC 59 (1 May 2015).

³ See Corrs' further discussion of the Full Federal Court's decision and its implications here.

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