Relevant statutory provisions
40 The express object of the Act is to provide an improved workplace relations framework for building work in Australia: s 3(1) of the Act. The legislation seeks to ensure that building work is carried out 'fairly, efficiently and productively' without distinction between interests of industry participants so as to benefit the Australian economy as a whole. The means by which the Act aims to achieve that object include 'promoting respect for the rule of law' and 'ensuring that building industry participants are accountable for their unlawful conduct': s 3(2). The inclusion by Parliament of express statements of this kind indicate that part of the mischief being addressed by the Act as a whole is a lack of respect for the rule of law and a lack of accountability for unlawful conduct within the building industry to the detriment of the Australian economy.
41 The Act provides for the imposition of pecuniary penalties where there has been a contravention. The level of penalty is graded. Where, as in this case, the penalty attracts a Grade A penalty, the maximum at the relevant time was $210,000 for a respondent that is a body corporate and otherwise is $42,000.
42 The nature of provisions in the Act, such as s 46, is that they may be contravened by conduct which may fall within a relatively wide spectrum of seriousness measured by reference to the character and quality of the conduct. The nature, quality and extent of conduct that may amount to unlawful industrial action and its consequences may be quite varied.
43 As to the considerations to which there must be regard in determining an appropriate penalty, s 81(6) of the Act expressly provides:
In determining a pecuniary penalty under paragraph (1)(a), the court must take into account all relevant matters, including:
(a) the nature and extent of the contravention; and
(b) the nature and extent of any loss or damage suffered because of the contravention; and
(c) the circumstances in which the contravention took place; and
(d) whether the person has previously been found by a court (including a court in a foreign country) to have engaged in any similar conduct.
44 Other penalty provisions, such as those to be found in the provisions of the Fair Work Act under consideration in Pattinson are expressed in general terms. The relevant provision in the Fair Work Act states that the Court 'may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate': s 546(1). It then specifies a maximum.
45 As was made plain by the High Court in the Agreed Penalties Case (HC) (approving French J in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 at 52,152): 'whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in … CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance': at [55] (footnotes omitted). The Agreed Penalties Case (HC) was concerned with a contravention of the former Building and Construction Industry Improvement Act 2005 (Cth) (which contained equivalent language to s 81(6) of the Act).
46 The overall structure of s 81(6) in requiring the Court to take into account all relevant matters and then specifying expressly certain matters as being included in that general requirement is familiar. It is the form adopted in the Australian Consumer Law (which forms Schedule 2 to the Competition and Consumer Act 2010 (Cth)). However, the express requirement in s 81(6)(d) of the Act is not to be found in the Australian Consumer Law. The additional language appears to reflect the concerns stated in the express legislative object.
47 Nevertheless, it is important to observe that s 81(6)(d) is not the only consideration to be taken into account. Also, just as is the case under the Australian Consumer Law and in the more general provision in the Fair Work Act the task is to determine an appropriate penalty that is guided by all relevant matters. It is a task that is to be undertaken within the context of an application to the Court that concerns a particular contravention. None of the provisions confer a general jurisdiction on the Court to impose a penalty based solely on a history of past contraventions directed to encouraging future compliance. Rather, a penalty is only to be imposed in the context of an allegation of a specific contravention. Therefore, its quantum must be a response that will promote the public interest in compliance in cases of that kind. It must deal with the type of case at hand. That is fundamental to the nature of the task entrusted to the Court where a civil penalty is to be assessed for a contravention. The task is one of determining an appropriate remedy in the circumstances of the contravening conduct.
48 In order to give effect to a statutory provision of that kind, the penalty must fit the purpose of promoting compliance with the legislation in cases where the nature of the contravening conduct is akin to the case at hand. In order to undertake that task, the relevant considerations are confined to those that pertain to the instant contravention. However, unless a particular consideration is identified by the legislation as requiring particular or great weight or significance in the task of assessment, all must be synthesised in assessing the penalty that fits the purpose of ensuring compliance in cases where the contravening conduct is of the same kind.
49 As has been observed, it is well established that there must be due regard to the maximum penalty in fixing a penalty. It provides a yardstick which invites comparison with the case where the maximum is justified. However, that is not to say that the penalty for a contravention where the objective circumstances that amount to the contravening conduct might be described as in the mid-range for seriousness will attract a penalty within the middle of the range between no penalty and the maximum. There will be cases where other relevant considerations mean that a penalty that is greater or less than the range of penalties that might be applied if viewed solely through the prism of seriousness is the appropriate penalty in the particular case. As was said in Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181 at [156]:
Care must be taken to ensure that the maximum penalty is not applied mechanically, instead of it being treated as one of a number of relevant factors, albeit an important one. Put another way, a contravention that is objectively in the mid-range of objective seriousness may not, for that reason alone, transpose into a penalty range somewhere in the middle between zero and the maximum penalty. Similarly, just because a contravention is towards either end of the spectrum of contraventions of its kind does not mean that the penalty must be towards the bottom or top of the range respectively. However, ordinarily there must be some reasonable relationship between the theoretical maximum and the final penalty imposed.
50 In view of what has been said in Pattinson, may be taken perhaps with separately identifying the nature of the contravening conduct as being in the mid-range when the task requires a synthesis of all factors. However, I take the point to be simply that penalties must reflect, amongst other things, the differences between the types of conduct that may amount to a contravention of the relevant provision. There is a spectrum which requires the evaluation of a matrix of relevant considerations one of which is the nature of the objective circumstances comprising the contravention. It is the evaluation of where the case falls within that spectrum that indicates where the penalty should lie given that Parliament has specified a maximum penalty (not a fixed penalty). It is not a gradation by reference only to the history of past contravening behaviour. Nor is it a gradation solely by reference to an assessment of the risk of future contravention such that both a minor or technical contravention and contravening conduct of the most serious character could attract a similar penalty if the risk of repetition in each case was assessed as being extremely likely. Parliament has set the yardstick. It is a yardstick where the quantum of the overall penalty must reflect all circumstances including the nature and quality of the objective circumstances comprising the contravention and the extent to which past contravention indicates a need for a higher penalty than might otherwise be the case due to the interests of specific deterrence.
51 The point was articulated in the following terms by the plurality in Pattinson at [195]-[201]:
The error of the primary judge here, being the error of the majority in Broadway on Ann [Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner [2018] FCAFC 126; (2018) 265 FCR 208], was that in the name of utilising a notion of recidivism of the union it was seen as in accordance with principle to impose a penalty at the highest level because of the number of prior contraventions, in what was said to be the demonstrated intention of promoting a no-ticket no-start policy, but without any real evaluation of, or weight being given to, the objective characteristics of what occurred as part of the assessment of what was the subject contravention of the penalty to be imposed. Thus, the penalty for the instant contravention became subsumed by a proposition that the time had come, once the perceived threshold level of prior contravening was reached, that henceforth all contraventions would be treated as of the worst category or warranting the maximum penalty, irrespective of the nature and the character of the human conduct that constituted the contravention in question. This can be seen in the approach of the primary judge at [71], [72], [83] and [84] set out above. The past has been used beyond the point of characterising the nature of the contravening (which is the subject of the imposition of the penalty) and has become the reason for the maximum penalty irrespective of the nature and seriousness of the instant contravening. To ask the rhetorical question in the last sentence of [72] of the primary judge's reasons as a supporting proposition is to raise the object of the imposition of the penalty to a justification for ignoring the nature of the contravening, and so to impose the penalty because of, and framed by, only the past. This is not to use, but to jettison, a notion of proportionality by setting to one side the nature of the conduct that comprised the contravention. The penalty becomes imposed not for the instant contravention but, to some degree, for the past, again. This approach elevated past offending to be the defining consideration of the character or gravity of the contravening, irrespective of the actual reality of what constituted the contravention. It was not an assessment of the gravity of the circumstances, including (but not limited to or defined by) what could be drawn legitimately and contextually as to the instant contravention from past contraventions; rather, it was to draw from the past a conclusion that, regardless of how objectively serious or not the conduct in question was otherwise, the maximum penalty should henceforth be imposed.
In the approach we have taken, the notice of contention does not strictly arise in that we do not accept that the assessment of the gravity of the contravention is undertaken divorced entirely from what can be legitimately drawn about the instant contravention from prior contraventions. Nevertheless the notice of contention was important to frame and direct the argument on proportionality and upon the statutory task involved in applying s 546. The notice of contention was in the following form:
1. The criminal law sentencing principle of 'proportionality' is not a relevant consideration for the fixing of a pecuniary penalty for a contravention of a civil remedy provision of the Fair Work Act 2009 (Cth) (FW Act).
2. In the alternative to Ground 1, it is not mandatory to apply the criminal law sentencing principle of 'proportionality' when undertaking the function of fixing a pecuniary penalty for a contravention of a civil remedy provision of the FW Act but, in the Court's discretion, a court may have regard to that principle if it will assist the Court in the discharge of its function.
3. In the alternative to Ground 1 and further to Ground 2, if the criminal law sentencing principle of 'proportionality' is a mandatory consideration or is otherwise a relevant consideration, nevertheless, such principle does not act as a fetter or a ceiling so as to restrict or constrain the level of penalties that a court may impose so as to meet the predominant, if not the only, object of fixing pecuniary penalties for contraventions of civil remedy provisions of the FW Act, namely, deterrence (both general and specific).
For the reasons that we have already set out, the notion of proportionality inheres in the task of imposition of an appropriate penalty in aid of the object of deterrence. It is not a free-standing principle to be seen as based on retribution, as the principle of proportionality in sentencing for crime can be (at least historically). Rather, the relevance of the notion of proportionality inheres in the statutory task of the imposition of a reasonably appropriate penalty for the contravention before the court to deter such or like contraventions, and a rejection of the double imposition of penalty consequences.
In a clear, frank and open submission, senior counsel for the Commissioner recognised that, to support the notice of contention, and, really, to support the primary judge's approach (as discussed above), he must support the contention that deterrence, as the sole object of the imposition of the penalty, and the terms of s 546, together, entitled the court, because of past contraventions, to impose a penalty more than once for the same contravention or to a level that bore no real relationship to the facts and circumstances of the instant contravention: That once the past contraventions reached a certain point, it could be appropriate to deter any contravention, whatever its seriousness otherwise, by the maximum penalty, irrespective of the acts and circumstances that otherwise made up the contravention.
That was, in effect, the approach of the primary judge, which needed the notice of contention and the approach within it, to support it.
Notwithstanding our view that the primary focus of the second appellant's submission that the prior contraventions cannot be relevant to the assessment of the gravity of the contravention is wrong, we would nevertheless, for the above reasons, uphold grounds 1.6 and 1.7 of the appeal and dismiss the notice of contention.
The assessment of what is an appropriate penalty is informed by a reasonable appreciation of all the circumstances that rationally go to an assessment of the gravity and seriousness of the contravention before the court, including (but not limited to) what can be drawn from past conduct as to the instant contravention, and that rationally go to an assessment of what is reasonably necessary, and thus appropriate, to deter such or like contravention in the future by the contravenor or by others. If a grave contravention and a much less serious contravention (thus analysed in the same context) are both said to require the imposition of the maximum penalty, it is difficult to conclude otherwise than that in respect of the latter contravention, the less serious, the penalty is being imposed for both the present contravention and for the past contraventions: a conclusion that was frankly recognised in the argument on the notice of contention. That is also why we consider the approach of the majority in Broadway on Ann to award the maximum penalty for each and every contravention to have been a misapplication of principle.
52 The same issue was addressed by Besanko and Bromwich JJ in the following way at [227]-[230]:
The possible approaches that could be taken to the role of prior contraventions in the task of imposing a civil penalty for a further contravention may be summarised as follows:
(1) Prior history is not relevant to the characterisation of the seriousness or gravity of the instant contravening conduct and only plays a role in deciding where in the range of already appropriate penalties that conduct falls. This is the argument advanced by the appellants, and rejected by the Chief Justice, White and Wigney JJ, and by us.
(2) Prior history can inform the seriousness of the instant contravening conduct to the extent of justifying the imposition of the maximum penalty for conduct that is not of itself of that character, because of the primacy of the role of deterrence. This is the approach urged upon us by the respondent's notice of contention, being in substance what the primary judge in fact did despite his Honour's comments perhaps suggesting the contrary. This unavoidably entails putting the principle of proportionality identified in Veen v The Queen (No 2) [1988] HCA 14; 164 CLR 465 (Veen No 2) to one side. It is an approach that is contrary to any persuasive authority or the proper understanding of the relevant principles of civil penalty imposition derived from criminal sentencing, and is also rejected by the Chief Justice, White and Wigney JJ, and by us.
(3) Prior history may be relevant to an assessment of the seriousness or gravity of the instant contravening conduct, but neither that history, nor the object of deterrence, can result in a penalty that is disproportionate to the contravening conduct itself, having regard to the maximum penalty provided. This is directly supported by the principles stated in Veen No 2, especially at 477-8, as analysed by the Chief Justice, White and Wigney JJ. This is the correct approach.
There was no material difference in the expression of the principles concerning the role of prior contraventions in fixing a civil penalty by the majority as compared to Bromwich J in Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (Broadway on Ann) [2018] FCAFC 126; 265 FCR 208 and in our joint judgment in Parker v Australian Building and Construction Commissioner [2019] FCAFC 56; 270 FCR 39, which accord with (3) above. The difference was in the application of those principles. The application of those principles by the majority in Broadway on Ann, and by the primary judge in this case, was plainly wrong for the reasons identified by the Chief Justice, White and Wigney JJ. The approach taken by the primary judge was also contrary to the weight of appellate and single judge authority in this Court. It was contrary to the manner in which the principles in those decisions are to be applied having regard to the principle of proportionality derived by close analogy with the approach to criminal sentencing taken in Veen No 2. His Honour was not at liberty to disregard that lineage of decisions, nor to misapply them. We agree with what the Chief Justice, White and Wigney JJ say about that matter (at [187]-[188]).
The primary judge at [53] correctly identified the similarity between the judgment of Bromwich J in Broadway on Ann and our judgment in Parker in relation to the application of the principles based on Veen No 2. However, in the primary judgment his Honour erroneously attributed to us in Parker (at [53], [63] and [67]), and to Bromwich J in Broadway on Ann (at [46]) a view that prior contravening history is never relevant either to the assessment of the seriousness of a contravention, or to the determination of the range within which a penalty may properly fall. That interpretation would also be to reject, rather than to apply, Veen No 2.
Rather, as we endeavoured to explain in Parker at [341]-[342] and [348], and as Wheelahan J correctly recognised in Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (Syme Library Case) (No 2) [2019] FCA 1555 at [96], in properly applying Veen No 2, prior contravening history may be able to be demonstrated to be relevant to an assessment of the seriousness or gravity of the instant contravening conduct. However, neither that history, nor the object of deterrence, can result in a penalty that is disproportionate to contravening conduct itself, having regard to the maximum penalty. That is, prior contraventions may be illuminating in properly characterising what has happened, including the extent of the need for deterrence. This may in turn assist in determining both the appropriate range within which a penalty may be imposed, and in determining where within that range the penalty to be imposed should fall.
53 Fundamentally, what is required is a characterisation of the seriousness or gravity of 'what actually happened to constitute the instant contravention' (at [202]) or the 'instant contravening conduct' (at [230]). The penalty must be proportionate to the task of ensuring future compliance with the law in future instances where there might otherwise be the risk of such conduct happening. What has happened may include the fact that the contravening conduct has been engaged in by a person with a history of similar contraventions or an indifference to the requirements of the Act in general. If a willingness to contravene to be inferred from that history can be shown to form part of the operative circumstances that formed part of the conduct that happened then it should be brought to account in assessing a penalty to promote future compliance by the contravenor and others who might otherwise breach the law in like circumstances.
54 However, as was emphasised by the plurality in Pattinson, the overall penalty must not become untethered from the seriousness or gravity of the contravening conduct. Pattinson makes clear that an approach to penalty that is guided only by a past history of contravening conduct of a kind that manifests a disregard, even a serious disregard, for compliance with the relevant legislation is not authorised because it results in a penalty that is a consequence only of that disregard. The penalty must be proportional to the purpose of deterring conduct of the kind under consideration in the instant case.
55 Significantly, in assessing civil penalties under provisions of the kind expressed in s 81 of the Act, the Court does not engage in a two-step process in which the objective character or quality of the contravening acts themselves are evaluated to establish a range of penalties for seriousness and then the character and quality of the contravenor and other matters bearing upon the risk of future contravention are brought to account to determine where within that range the penalty should be assessed. There is but one process. It brings together all aspects of what happened to bring about the contravention. It results in a penalty for the contravention that fulfils the purpose of ensuring future compliance with the law in respect of instances where conduct of the kind in the present case might otherwise occur.
56 It was submitted for the ABCC that the express reference to antecedents in s 81(6)(d) meant that a different approach was required in assessing a penalty under the Act than would be the case for a contravention of the Fair Work Act. The submission was expressed in the following terms in supplementary written submissions from the ABCC (paras 10-13):
10. Neither the text, context or purpose otherwise invite the introduction of further unexpressed criteria that will fetter the discretion, such as a mandatory application of a notion of proportionality. The discretion in s.86(1) can be rationally and reasonably carried out without subjecting that discretion to a notion of proportionality.
11. Further, the specific matters listed in sub-sections (a), (b) and (c) deal with matters that might be ordinarily considered when applying the common law principle of 'proportionality'. This sounds distinctly against the principle of proportionality also entering and controlling the penalty fixing task independently of taking into account those specified matters.
12 Section 81(6)(d) specifically deals with antecedents . That specification reveals a legislative intention that this is to be a discrete consideration when the Court is fixing a penalty under the BCIIP Act. Having regard to this distinct matter only insofar as it plays a role in applying a proportionality notion or principle in accordance with the approach in Pattinson FCAFC (an approach developed in the context of the differently constructed s.546 of the FW Act) would depart from this legislative intention.
13. Moreover, s 81 establishes no hierarchy of those mandatory considerations. Nothing in the provision suggests consideration of antecedents (s.81(6)(d)) cannot lead to a penalty which, under a penalty regime governed by different principles or approach, might be characterised as not conforming to a notion or principle of proportionality.
(original emphasis, footnote omitted)
57 I do not accept that the language used in s 81(6) manifests an intention to require an approach to assessment of penalty that is different in character to that articulated in Pattinson. That approach derives from what was said in the Agreed Penalties Case (HC), a case concerned with legislation which, like the Act, was concerned with regulating industrial relations in the construction industry and which contained a provision allowing for the imposition of pecuniary penalties in the advancement of equivalent statutory objects. It did not contain a list of factors to be taken into account. However, the list that is to be found in s 81(6) does not indicate any primacy or singularity when it comes to the matters to be taken into account. Importantly it requires the nature and extent of the contravention, the loss or damage suffered, the circumstances of the contravention and antecedents to be taken into account. At most, it requires the synthesis to reflect all those factors, not that one of them (previous findings that the respondent has engaged in similar conduct) to predominate. That was the nature of the conclusion reached in Pattinson.
58 The decision in the Agreed Penalties Case (HC) preceded the enactment of the Act. It formed part of the existing law as to pecuniary penalties that provided the context in which the Act was to be construed: Alphapharm Pty Ltd v H Lundbeck A/S [2014] HCA 42; (2014) 254 CLR 247 at [42]. It was in that context that the matters in s 81(6) were listed without differentiation as to the manner in which they are to be taken into account.
59 A provision which authorised the Court to impose a higher penalty by reason of past contraventions in a manner that was not tethered to the task of assessing the appropriate penalty to deter future conduct of the kind in the instant case would be a serious and fundamental departure from principles that apply not only as to civil penalties but also as to criminal sentencing. In both contexts, it is fundamental that there must be proportionality between the penalty or sentence and the circumstances of the particular case. The penalty or sentence must fit what happened in the particular instance under consideration. It must not take the form of imposing part or all of the penalty or sentence for the reason that there has been similar antecedent conduct. The past conduct must be relevant to future compliance (in the case of a pecuniary penalty) or to an assessment of the extent of moral culpability for the instant offence (in the case of a criminal sentence). The penalty for past conduct is complete and is not to be revisited. The penalty for the instant conduct must be proportionate to that conduct (which may include the fact that it was undertaken in the context of the antecedents where they bear on the nature of the current task of assessing a civil penalty or sentence). In those circumstances, it is to be expected that a departure from those principles of the kind contended for by the ABCC would have been expressly stated if it was intended that regard for one of the matters listed in s 81(6) could predominate in the fixing of the penalty.
60 Therefore, in my view, the words in s 81(6)(d) serve to ensure that in fixing a penalty that is proportionate to the purpose of promoting future compliance with the legislation in cases of the kind under consideration the Court takes into account the antecedents as being indicative of a disregard for compliance by the contravenor at the time of the instant contravention and into the future. However, the penalty must still be tethered to circumstances of the particular case and must be directed towards promoting compliance with the requirements of the Act concerning conduct of that quality and degree.
61 The contentions advanced for the ABCC would mean that the assessment of the pecuniary penalty would no longer be protective in promoting the public interest in compliance. Instead it would become retributive by imposing a greater penalty by reason of the antecedents which would reflect a view that the contravenor bore a greater degree of moral culpability because of past contraventions. It would see penalties at or near the maximum irrespective in cases where all other relevant considerations did not indicate the maximum. Further, in my view, such a conclusion would be contrary to the view expressed in the Agreed Penalties Case (HC) and, for that reason, is a step that I could not be persuaded to take. It would also be contrary to the reasoning in Pattinson which is also binding because it would impose a penalty that was greater than that which was appropriate to promote the public interest in compliance. In that regard I note that the ABCC formally maintained the submissions that it advanced in Pattinson that were not upheld in that decision.
62 It follows, in my view, the maximum penalty is for cases where, in all the circumstances, including antecedents, the character, quality and circumstances of the contravening conduct and its consequences the contravention is of the most serious kind and the concern that a penalty is needed to ensure future compliance by the contravenor and others is high, that is to say where regard to all considerations leads to the conclusion that the maximum should be imposed. To impose the maximum in other cases not of that kind would be to ignore the yardstick indicated by the maximum which is intended to apply in a graduated manner to a range of objective circumstances that might amount to a contravention (in this case a range of unlawful industrial action). It is a yardstick that encompasses the possibility that a range of considerations will affect whether a penalty at or near the maximum is appropriate. To allow one factor (the extent of past contravention) to lead to a conclusion that the maximum should be imposed in cases where another important factor (seriousness of the conduct or the financial resources of the contravenor did not support a penalty at or near the maximum) would be to ignore the statutory intention that the overall penalty should bring to account all relevant matters.
63 The penalty must be a proportionate response taking account of all considerations that bear upon an assessment of what is required for the penalty to fit the purpose of specific and general deterrence. Whether the maximum is for a case where all the considerations listed in s 81(6) may be characterised as serious need not be determined.
64 In that context, all members of the Court in Pattinson viewed the overall task to be undertaken in fixing a pecuniary penalty under the Fair Work Act as requiring an assessment of the nature and gravity of the contravention which includes the degree and strength of the demonstrated willingness of the contravenor to disobey the law: at [108], [162] (Allsop CJ, White and Wigney JJ), [230] (Bensanko and Bromwich JJ).
65 The fixing of penalties requires a contextual consideration of matters that are relevant to the assessment of penalty that are of particular significance for the case at hand in order to arrive at a single result by a process of instinctive synthesis: Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20 at [54] (Keane CJ, Finn and Gilmour JJ). It requires the identification of those factors that are of significance and the reflection of them all in an appropriately calibrated penalty. The required process of assessment is evaluative, not mathematical: Director of Consumer Affairs Victoria v Alpha Flight Services Pty Ltd [2015] FCAFC 118. Factors that may be relevant have been listed in the decided cases, but such lists should not be approached as a checklist.
66 Recognising that the overall nature of the task requires a single overall amount to be evaluated, I now turn to consider the matters that were highlighted by the parties as being relevant to the assessment of penalty in this case.