ASIC v Ingleby [2013] VSCA 49

ASIC v Ingleby [2013] VSCA 49 - VSCA 2013 case summary — Zoe

[27]

I cannot leave this matter without commenting briefly upon what I consider to be the somewhat undesirable practice on the part of the ACCC in presenting this Court with a specific figure as an 'agreed pecuniary penalty'. I acknowledge that both the ACCC and Colgate have accepted that the figure proposed is in no way binding upon the Court. However, when pressed to point to a single instance when the Court has not, in the past, endorsed such a figure, counsel found it difficult to do so.

It is difficult to imagine that the parties would propose a pecuniary penalty that is so clearly beyond the permissible range that the Court would depart from it. As the authorities presently stand, the Court is bound to impose an agreed pecuniary penalty, save in such circumstances. I acknowledge that a contravention of s 48 is not a criminal offence. The liability is civil only. I also acknowledge the importance of the principles enunciated in NW Frozen Foods v Australian Competition and Consumer Commission, and in particular the need for corporations to have certainty of outcome if they are to be encouraged to engage in negotiated settlements. I am bound by these principles, and a well established line of authority, to accept that the Court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure.

However, there are dangers associated with this approach. The Court may be seen, perhaps not altogether incorrectly, to act as a "rubber stamp" in simply approving a decision taken at an executive level by a body charged with investigating and prosecuting contraventions of the Act, but having no role in actually imposing particular sanctions for those contraventions. Negotiated settlements are an important vehicle for resolving complex matters such as those involved in the present case. It must be borne in mind, however, that there is a public interest in ensuring that corporations that engage in behaviour of the kind that occurred in this case are dealt with appropriately, and that proper recognition is given to the need for specific and general deterrence. There are important parallels between the fixing of a pecuniary penalty under s 76, and the ordinary sentencing process which is quintessentially a matter for the courts: Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited at pars 4-6 per Finkelstein J.

I should emphasise that nothing that I have said should be regarded as a criticism of a joint submission being received regarding what might be the appropriate range of pecuniary penalties to be imposed. A submission couched in those terms can assist in achieving a measure of certainty, and consistency of treatment with other like cases. At the same time, unlike what seems to have emerged as the more usual practice, namely putting forward an 'agreed penalty', the suggestions of an appropriate range of pecuniary penalties allows for the proper exercise of judicial discretion in what is fundamentally a matter for the courts to determine.[19]

[30]

The position of the Court where prosecution and defence agree on the appropriate sentence, as laid down in R v Gallagher, has similarities to the position where regulator and contravenor jointly submit that a particular penalty should be imposed in a civil penalty case. Just as the criminal court will take into account the prosecution's views on the appropriate sentence, so the court in the civil penalty case, as NW Frozen Foods explained, will take account of the regulator's position. But in neither case is the court relieved from the responsibility of exercising its own judgment as to the appropriate sentence (in criminal cases), or whether the proposed penalty is within the appropriate range for the contravention (in civil penalty cases). In each case, the Court should be satisfied that it is being given accurate, reliable and complete information on critical questions. If not satisfied that it has sufficient information to support the "agreed" approach, the Court can request the parties to provide additional evidence or information. If that information or evidence is not provided, the Court might well decide that it should impose a different sentence or penalty from that proposed by the prosecution or regulator (as the case may be). And, whatever the position in criminal cases, in a civil penalty case where there is no contradictor, the Court may request assistance from an amicus curiae or a potential intervenor pursuant to FCR, O 6 r 17.

Finally, in our view, there would be little advantage to the parties in a civil penalty case limiting themselves to a joint submission on a range of pecuniary penalties, as distinct from a precise figure. The former is likely to be less helpful to the court than the latter. Weinberg J appears to have in mind that a range of penalties would allow for the "proper exercise of judicial discretion" (at [35]). A rather better way of reinforcing the Court's responsibility to determine penalty is for the Court to scrutinise the material presented to it carefully, and satisfy itself that the information is sufficient to determine whether the proposed penalty is appropriate.

For these reasons, we do not think that the criticisms made of NW Frozen Foods warrant departing from the principles stated in that case, even if it were open to this Court to do so. ... The Court has adequate powers to ensure that it discharges its statutory responsibilities appropriately.[23]

[33]

In Australian Competition & Consumer Commission v Colgate-Palmolive Pty Ltd, I followed the reasoning of Burchett and Kiefel JJ in NW Frozen Foods, as I was bound to do. It is fair to say that I did so somewhat reluctantly. Other judges at first instance had expressed similar reservations. In Mobil Oil, the Full Court clarified the position to some degree by emphasising that NW Frozen Foods did not require the court to fix the penalty proposed by the parties. However, it was acknowledged that there was a public interest in promoting settlement of litigation, and thus in encouraging parties to reach agreed penalties. In that context, the views of the particular regulator were a relevant, though not determinative, consideration. Nonetheless, such criticisms as had been made of the reasoning NW Frozen Foods did not warrant the reconsideration of the principles stated in that case.

With great respect to those who think differently, I remain of the view that the approach taken in NW Frozen Foods is misconceived, and contrary to principle. As I have previously said, it endorses the "somewhat undesirable practice" of the particular regulator presenting to a court an agreed pecuniary penalty, which it will normally simply "rubber stamp". Platitudes such as those adopted in Mobil Oil, which allow for some latitude on the part of a court, but only in circumstances where the figure agreed upon is "clearly out of bounds", impose an unwarranted constraint upon the broad discretion that the legislature has vested in judges charged with the task of imposing proper penalties. The prospect that a judge will depart from an agreed penalty, given the criteria that must be satisfied before he or she will do so, is likely to be more apparent than real.

It must be remembered that the imposition of a civil penalty for a statutory contravention is intended to achieve many of the same objectives as the fixing of a fine for a criminal offence. These include deterrence, both specific and general, denunciation, and, importantly, punishment. The only difference of any consequence is that there may be an element of additional stigma associated with a criminal conviction.

It is a truism that sentencing is often a complex and difficult task. It has been described as an art, and not a science. There is no one correct penalty in any given case. In criminal cases, it is regarded as quite wrong, and unacceptable for the prosecution and the defence to present the judge with an agreed sentence, stated in terms of the exact amount of time to be served, or the precise amount of any fine to be levied. There is no reason why the principle should be any different in civil cases. If the parties are agreed upon an exact amount that should be fixed as a civil penalty, that submission should be treated no differently to any other submission. In particular, it should not be regarded as presumptively one that the court must adopt, unless it is outside the "permissible range". No criminal court would ever contemplate the fettering of a sentencing discretion in that way. Nor should a court exercising civil jurisdiction.

Despite my strongly held views on this subject, I am bound to follow both the NW Frozen Foods and Mobil Oil decisions. Accordingly, I must ask myself whether the agreed penalties in this case, of $100,000 for the first respondent, and nothing for the second respondent, are within "the permissible range" for the serious breaches of the SIS Act that have been admitted.[25]

[35]

There is a public interest in the settlement of cases brought under the TPA and the Code. Such settlement avoids lengthy and complex litigation, with attendant savings of costs. It also leaves the Court free to deal with other urgent matters, and relieves the ACCC of the burden of conducting the litigation, freeing up investigating officers to deal with other matters.

The Court must ensure that any consent orders sought as part of the settlement of a proceeding which alleges breaches of the TPA are within power, and otherwise appropriate. However, it should not refuse to give effect to a proposed settlement merely because it would have made different orders had the matter not been resolved. There is no doubt in this case that the declarations sought are within the power of this Court, and are otherwise appropriate.

The real question is whether the pecuniary penalties which are now sought, and which have been agreed by the respondents, should be approved. In answering that question it must be emphasised that, in the final analysis, it is for the Court, and not the parties, to determine the amount of any pecuniary penalty. The Court is not to be regarded as a "rubber stamp". See generally NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission; and Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd.

Nonetheless, it is a fact that in the vast majority of cases where pecuniary penalties have been agreed the Court has approved those penalties. That is because the Court is concerned only with whether the agreed penalties are within what is described as the "permissible range". Because the determination of a penalty is not an exact science, that range may be quite broad. If an agreed penalty is "within the range" the Court will generally give it effect.

In determining whether or not an agreed penalty is "within the range" the Court will have regard to various matters. These include pecuniary penalties imposed in other cases, particularly those imposed in like circumstances. Questions of parity will also be important. The Court will accord particular weight to the view of the regulator, as representing the public interest, that the penalty is adequate in all the circumstances.[27]

At a glance

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Judgment (173 paragraphs)

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Legislation Cited (2)

Cases Cited (5)