Proportionality
84 Before turning to the question of the imposition of a penalty on the individual respondents, I shall consider a question of principle raised by the parties' submissions, which is the proportionality of the penalty to the contravention.
85 In making its assessment of penalty, the Court must determine a penalty that is proportionate to the contravening conduct: The Non-Indemnification Personal Payment Case at [20], [22]. Counsel for the CFMEU respondents submitted that while the primary purpose of imposing civil penalties under the Fair Work Act is specific and general deterrence, a civil penalty should not exceed what is proportionate to the objective seriousness of the contravening conduct, citing (inter alia) Parker v Australian Building and Construction Commissioner [2019] FCAFC 56; 365 ALR 402 at [339] (Besanko and Bromwich JJ, Reeves J agreeing), and Veen v The Queen (No 2) [1988] HCA 14; 164 CLR 465 where Deane J stated at p 491 -
It is only within the outer limit of what represents proportionate punishment for the actual crime that the interplay of other relevant favourable and unfavourable factors - such as good character, previous offences, repentance, restitution, possible rehabilitation and intransigence - will point to what is the appropriate sentence in all the circumstances of the particular case.
86 Earlier in Veen v The Queen (No 2), at p 477-8, Mason CJ, Brennan, Dawson and Toohey JJ stated -
There are two subsidiary principles which should be mentioned. The first is that the antecedent criminal history of an offender is a factor which may be taken into account in determining the sentence to be imposed, but it cannot be given such weight as to lead to the imposition of a penalty which is disproportionate to the gravity of the instant offence. To do so would be to impose a fresh penalty for past offences: Director of Public Prosecutions v. Ottewell ([1970] AC 642 at p 650). The antecedent criminal history is relevant, however, to show whether the instant offence is an uncharacteristic aberration or whether the offender has manifested in his commission of the instant offence a continuing attitude of disobedience of the law. In the latter case, retribution, deterrence and protection of society may all indicate that a more severe penalty is warranted. It is legitimate to take account of the antecedent criminal history when it illuminates the moral culpability of the offender in the instant case, or shows his dangerous propensity or shows a need to impose condign punishment to deter the offender and other offenders from committing further offences of a like kind. Counsel for the applicant submitted that antecedent criminal history was relevant only to a prisoner's claim for leniency. That is not and has never been the approach of the courts in this country and it would be at odds with the community's understanding of what is relevant to the assessment of criminal penalties.
[Emphasis added]
87 In reliance on Veen v The Queen (No 2), counsel for the CFMEU respondents submitted that the prior record of a contravener does not permit the imposition of a penalty that is disproportionate to the offending conduct for which the penalty is to be imposed, and that while a contravener's record is relevant to determining the appropriate penalty to be imposed, the penalty is to be within the range set by the objective seriousness of the contravener's conduct. Counsel submitted that the concept of proportionality, which applies in civil penalty proceedings, fixes the outer limits of a permissible penalty, citing Ryan v The Queen [2001] HCA 21; 206 CLR 267 at [48] (McHugh J), Australian Building and Construction Commissioner v Huddy (No 2) [2017] FCA 1088 at [42] (White J), and Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977; 199 IR 373 at [5] (Barker J). The CFMEU respondents accepted that there was a history of contravening conduct by them. However, they submitted that while that history indicated that considerations of specific deterrence will be important in the exercise of the discretion to impose a penalty, the penalty imposed should not exceed what is appropriate having regard to the objective seriousness demonstrated by the nature and circumstances of the contravening conduct, citing R v McNaughton [2006] NSWCCA 242; 66 NSWLR 566 at [26], and Hoare v The Queen [1989] HCA 33; 167 CLR 348 at p 354.
88 In response, the Commissioner accepted that any penalty imposed on the CFMEU respondents had to be proportionate, citing The Non-Indemnification Personal Payment Case [2018] FCAFC 97; 264 FCR 155 at [22]. The Commissioner submitted that an evaluation of proportionality is to be undertaken by reference to the objective seriousness of the contravention together with the circumstances of the contravener. The Commissioner submitted that the consideration of deterrence is therefore reflected in the assessment of proportionality by taking into consideration the contravener's culture of compliance with the law. Accordingly, where the contravener is a recidivist, very high or maximum penalties may be imposed notwithstanding that the contravention in issue is not of the worst kind. The Commissioner relied on the decisions of the Full Court in Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Broadway on Ann Case) [2018] FCAFC 126 at [14], [24]-[27] (Tracey J) and [66]-[69] (Logan J); Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113; 254 FCR 68 at [100]-[104] (Dowsett, Greenwood and Wigney JJ); and Parker v Australian Building and Construction Commissioner [2019] FCAFC 56; 365 ALR 402 at [341]-[342], [363] (Besanko and Bromwich JJ, Reeves J agreeing). The Commissioner submitted, however, that there were some authorities that appeared to adopt a narrower view of the assessment of proportionality, and that these authorities limited the measurement of proportionality by reference to the objective seriousness of the instant contravention, and cited (inter alia) the dissenting judgment of Bromwich J in The Broadway on Ann Case at [102], and Auimatagi v Australian Building and Construction Commissioner [2018] FCAFC 191; 363 ALR 246 at [176] (Allsop CJ, Collier and Rangiah JJ in obiter).
89 I shall address the inter-relationship between the object of deterrence underpinning the imposition of civil penalties, the relevance of past contraventions, and the application of principles of proportionality, by reference to three recent Full Court decisions where that consideration formed part of the ratio of those decisions. In those circumstances, it is unnecessary that I consider the dissenting reasons of Bromwich J in The Broadway on Ann Case, or the reference to them by the Full Court in Auimatagi v Australian Building and Construction Commissioner at [176], where the appeal was allowed on liability issues and penalty therefore did not arise for decision on appeal: see, Holmes à Court v Papaconstuntinos [2011] NSWCA 59 at [3] (Allsop P), (note that the decision was affirmed on appeal in Papaconstuntinos v Holmes à Court [2012] HCA 53; 249 CLR 534).
90 In the Non-Indemnification Personal Payment Case, the matter came before the Full Court upon a remitter from the High Court for the reimposition of penalties: see, Australian Building and Construction Commissioner v Construction Forestry Mining and Energy Union [2018] HCA 3; 262 CLR 157 at p 206. The following principles were stated at [22] of the reasons for judgment of the Full Court (Allsop CJ, White and O'Callaghan JJ) -
The overwhelming importance of deterrence as the protective purpose of the penalty does not exclude the need to determine a penalty which is proportionate to the contravening conduct. The history of contravention is to be taken into account in fixing the proper level of penalty for the proportionate response to the contravention in question. Proportionality has within it the need to characterise the seriousness of the contravention. Proportionality of penal response to a contravention assessed by reference to its seriousness and gravity is an essential characteristic of the application of the statute. The penal response is for that contravention, not earlier contraventions: Veen v The Queen [No 2] [1988] HCA 14; 164 CLR 465 at 477-478. Prior contraventions may reveal an apparent disregard for the Act and the need for deterrence by a penalty at a level appropriate to achieve that objective. It is to be borne in mind, however, that it is for the conduct in question that the penalty is imposed, not for prior conduct.
91 The above passage was cited by Tracey J in the Broadway on Ann Case at [13], which is the second Full Court case to which I refer. In that case, the Full Court set aside the decision of the primary judge on the ground that there had been an error of principle, and by majority (Tracey J and Logan J, Bromwich J dissenting) the Court refixed the penalties at the maximum available, as the primary judge had done. Tracey J at [27] held that a number of considerations combined to emphasise the objective seriousness of the CFMEU's conduct in that case. His Honour identified those considerations at [25] as follows -
The many decisions of the Court over the past 15 years in which the CFMEU has been found liable and penalised for failures to comply with entry requirements on building sites and for the misconduct of its officials whilst exercising rights of entry on those sites.
The failure of the CFMEU to respond to these repeated findings by acknowledging error and implementing remedial measures.
The absence of any contrition for the earlier offending.
The absence of any contrition for the present offending.
The ongoing willingness of the CFMEU to pay the pecuniary penalties imposed by the Court by drawing on its considerable financial resources.
The fact that it was a State Divisional President of the CFMEU who was found to have engaged in multiple contraventions on the site.
The blatant and public assertion by such a senior official that he would not comply with the notice requirements imposed by the Fair Work Act.
92 Logan J, with whose reasons Tracey J agreed, addressed an argument by the CFMEU with reference to Veen v The Queen (No 2) that prior contraventions cannot lead to the imposition of a penalty that is disproportionate to the gravity of the instant offence. In addressing that argument, Logan at [68] referred to the passage from the reasons of Mason CJ, Brennan, Dawson and Toohey JJ in Veen v The Queen (No 2) that I have set out and emphasised at [86] above and then stated at [69] -
We are bound by [Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate (the Agreed Penalties case) [2015] HCA 46; 258 CLR 482] to recognise and give effect to a civil penalty regime the purpose of which is ensuring compliance with norms of industrial behaviour prescribed by Parliament in the public interest. To view the conduct of the CFMEU on 10 February 2015 in isolation from the past and to penalise on the basis that there have been worse cases is to fail to recognise that the conduct is but a further manifestation of a lengthy and repeated pattern of unrepentant, outlaw behaviour by the CFMEU.
93 Logan J then stated that all of the features of unrepentant, outlaw behaviour were present in the conduct of the CFMEU official, Mr Hanna, on the day in question, which was accepted as giving rise to six separate contraventions. Logan J concluded at [87] -
Approaching the subject of penalisation afresh and for all of the reasons given, I consider that the maximum penalty in respect of each contravention is warranted in the circumstances of this case. Being of this view, I have, in deference to the totality principle, asked myself whether, in total, such an overall penalty would be a disproportionate response in the overall circumstances of the case? So recalcitrant is the contravening conduct charged having regard to the past history in the tabulation and such is the importance of deterrence and compelling conformity with the requirements of the [Fair Work Act] my view is that only the most condign penalisation of a cumulative maximum punishment is warranted in the circumstances of this case. I would impose that so as to bring home emphatically to the CFMEU that, in its internal governance, it must force systemic behavioural change upon its Construction Division. That penalisation is necessary but it can be viewed as a cruel necessity. The cruel element is that there is an opportunity cost in the payment of the total penalty in terms of other activities, beneficial to members, to which the union's funds might otherwise be deployed. It is to be hoped that the realisation of that promotes change in the internal governance of the CFMEU.
94 The third recent Full Court case to which I refer is Parker v Australian Building and Construction Commissioner [2019] FCAFC 56; 365 ALR 402. In that case, Besanko and Bromwich JJ, with whom Reeves J agreed, stated at [339] -
As to the second consideration, being the use that was put by the primary judge to prior contraventions, especially in respect of the CFMEU, a court imposing a civil penalty is entitled to have regard to such prior contraventions in the exercise of the discretion, but that does not permit such a history to be given such weight as to lead to the imposition of a penalty that is disproportionate to the gravity of the contravention that is being considered: Veen (No 2) at 477. That is because a court should impose a penalty that is proportionate to the gravity of the contravention being sanctioned, and no more. This is also supported by s 546(1) of the Act, which expressly provides for what would otherwise likely be implicit, namely, for the Court to fix an "appropriate" penalty for a contravention. A civil penalty that is not proportionate cannot be regarded as appropriate, and therefore cannot meet that statutory requirement.
95 At [340] their Honours cited The Non-Indemnification Personal Payment Case at [22] which I have set out at [90] above, before stating at [341] -
Thus, the role of any past contraventions is to be no more than a prism through which to view the instant contravention. This enables a court to assess whether, for example, the instant contravention is an "uncharacteristic aberration", or whether the contravener has, by the instant conduct, manifested "a continuing attitude of disobedience of the law". If the latter, as is clearly available to be concluded in this case, the heightened need for deterrence may indicate that a more severe penalty is warranted for the instant contravention. Nonetheless, that penalty must still fall within the applicable range that is otherwise considered appropriate for that contravention. If that is not carefully observed, the contravener may suffer the fate of being sanctioned anew for past contraventions, as the above quote from Veen (No 2) makes clear is not permitted.
96 On the issue of the relevance of past contraventions by the CFMEU respondents and proportionality, I shall apply the principles and guidance identified in The Non-Indemnification Personal Payment Case, the Broadway on Ann case, and in Parker in the passages to which I have referred above. I accept the submission made on behalf of the CFMEU respondents that the prior record of a contravener does not permit the imposition of a penalty that is disproportionate to the offending conduct for which the penalty is to be imposed. But Veen v The Queen (No 2), the reasons of Tracey J and Logan J in the Broadway on Ann case, and the reasons of the members of the Court in Parker support the idea that past contraventions may be relevant in assessing the seriousness of the instant contraventions. A history of contraventions may affect a number of features of the instant contraventions, including whether the instant contraventions are a manifestation of a continuing attitude of disobedience to the law. For this reason, and when all the background circumstances and other features of a contravention are considered, what might in isolation and superficially be a minor contravention may take on the complexion of a much more serious contravention. And consistently with deterrence being the principal object of the imposition of civil penalties under the Fair Work Act, a history of contravention may point to a need for a more severe penalty than would otherwise be the case if there was no history of contravention. The significance of a history of contraventions may be compounded by the absence of contrition, and the absence of evidence addressing steps taken to ensure future compliance with the law. For these reasons, a severe penalty may be proportionate to what might in other circumstances be a minor contravention. Overriding these considerations is the care that should be exercised to ensure that any penalties imposed for the instant contraventions do not amount to double punishment for prior contraventions. Care in avoiding double punishment also informs other aspects of the process of fixing penalties, including whether the contraventions are part of a course of conduct, and the totality principle.