High Court decision in Barbaro
38 I sought submissions from the parties as to whether the High Court decision in Barbaro should bear upon the approach this Court should take in relation to agreed penalty submissions. Those submissions have been supplied and as I am satisfied that they are both helpful and largely correct I propose to adopt them in substantial measure. (I have indicated where I would depart from the submissions.)
39 In Barbaro the High Court dismissed two appeals from the Victorian Court of Appeal on sentences imposed on Barbaro and Zirilli who had both pleaded guilty to serious drug offences and were sentenced to life and 26 years imprisonment respectively. The appellants argued they had been denied procedural fairness as the sentencing judge refused to hear the prosecution's submissions on the appropriate sentencing range. Her Honour imposed sentences that were higher than those recommended by the prosecution. The Court of Appeal rejected that argument as did the High Court.
40 The High Court rejected the arguments that the prosecution is permitted or required to make any submission on sentencing ranges. It held that such submissions are not submissions of law, but merely a statement of opinion, which the sentencing judge may or may not take into account in deciding on the appropriate sentence. A refusal to hear the prosecution on the available sentencing ranges did not amount to a failure to take account of a material consideration in fixing the sentences.
41 The ACCC and Mandurvit submit that:
(a) the approach the Court should take in relation to joint submissions on the quantum of civil pecuniary penalties is relevantly distinguishable from the approach which should be taken in relation to criminal penalties and sentencing; and
(b) in this case, the Court is bound to follow the approach taken by the Full Court in NW Frozen Foods Pty Ltd v Australian Competition & Consumer Commission (1996) 71 FCR 285, a decision that was further considered and affirmed in Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 and has been consistently applied in a succession of subsequent cases in this Court. Under that approach:
(i) the parties to proceedings under the TPA and its successor legislation may make submissions as to the quantum of pecuniary penalty that the parties agree is appropriate in the circumstances of their case; and
(ii) the Court recognises that, provided that it considers the proposed amount is appropriate, there is a strong public interest in ordering that amount, even if the Court may have otherwise ordered a different amount: NW Frozen Foods (at 290-291 and 298).
42 While the plurality judgment in Barbaro contains statements of principle that are potentially applicable beyond the facts of that case, ACCC and Mandurvit contend that those statements, which were made in the particular context concerning a specific criminal prosecutorial practice, and were not expressed to apply beyond that context, should not be applied broadly, particularly where the effect of such a reading would be to overrule well-established appeal court authority.
43 The ACCC and Mandurvit argue that the reasoning in Barbaro is specific to the particular facts of that case. They contend that the plurality judgment in Barbaro addresses the appropriateness of a particular practice of criminal prosecutors in Victoria. That practice arose after the Victorian Court of Appeal held in R v MacNeil-Brown (2008) 20 VR 677 that, subject to certain conditions, criminal prosecutors may make submissions in relation to the 'available range' within which a sentence should be fixed in order to promote consistency of sentencing and to reduce the risk of appealable error (MacNeil-Brown (at [4]) per Maxwell P, Vincent and Redlich JJA).
44 I do not consider that Barbaro is so confined. While the reasoning in Barbaro is directed to that particular prosecutorial practice, there are statements of principle in the plurality judgment that are more broadly applicable.
45 The plurality judgment in Barbaro states (at [7]):
The prosecution's statement of what are the bounds of the available range of sentences is a statement of opinion. Its expression advances no proposition of law or fact which a sentencing judge may properly take into account in finding the relevant facts, deciding the applicable principles of law or applying those principles to the facts to yield the sentence to be imposed. That being so, the prosecution is not required, and should not be permitted, to make such a statement of bounds to a sentencing judge.
46 This statement of principle is potentially capable of broad application.
47 However, statements of principle in judgments should not be applied as if they were the words of a statute. Rather, such statements should be applied with the benefit of careful reading of the reasoning relevant to the making of the statement. This is the process recently described by the High Court in Comcare v PVYW [2013] HCA 41 (at [12]-[16]).
48 The complete reasoning expressed in the plurality judgment does not indicate that application of this principle to civil pecuniary penalty cases was an intended consequence of the statement. In particular, paras 20 to 28 of the judgment contain reasoning that directly addresses the practice of offering a 'sentencing range' that was in issue in Barbaro, and the reasons why that practice was 'wrong in principle'.
49 Those paragraphs address the tendency of 'available range' submissions to convey, or purport to convey, the boundaries between sentences that are manifestly inadequate or excessive.
50 ACCC and Mandurvit contend that it is unlikely that the High Court intended such a broad application of its reasoning in Barbaro, given that:
(a) the plurality in Barbaro included:
(i) French CJ, who as a member of the Federal Court, delivered several judgements following NW Frozen Foods (see, for example, Australian Competition & Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 95 FCR 114 and Australian Competition & Consumer Commission v Econovite Pty Ltd [2003] FCA 964 (at [11])), including Australian Competition & Consumer Commission v Real Estate Institute of Western Australia Inc, in which his Honour stated (at 131):
It is not the function of the Court to impede settlements between parties legally represented and able to understand and evaluate the desirability of agreeing to a settlement nor to refuse to give effect to terms of settlement by refusing to make orders or to accept undertakings where they are within the Court's jurisdiction and are otherwise unobjectionable.
(ii) Kiefel J, who was a member of the majority in NW Frozen Foods; and
(b) the High Court has had recent opportunity to express concern or opposition to the practice of regulators making submissions as to the appropriate quantum of a civil pecuniary penalty, but has not done so. ln Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; at first instance Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2) [2012] FCA 629 (at [57]), the ACCC made submissions to the trial judge as to the appropriate quantum of penalty if TPG was found liable. That submission expressed the appropriate penalty as a range. The High Court did not express any concern or opposition to the practice.
51 While I note these observations, as to (a), it would be wrong in principle to assume that every view expressed by a judge while sitting as a single judge in one court will necessarily be replicated when sitting as one of a number of other judges in a higher court at a later date in different circumstances. So far as I am aware, the issue considered by the High Court in Barbaro had not previously arisen in that Court. Secondly, as to (b), the fact that an opportunity arose to say something in another case is not the same as the issue being squarely raised for determination.
52 More specifically, ACCC and Mandurvit agree that I am, as a single judge, bound by NW Frozen Foods, a Full Court authority directly on this specific issue.
53 In NW Frozen Foods, the ACCC had reached agreement with the respondent regarding the relevant facts and the parties made joint penalty submissions in support of a stated quantum of penalty.
54 The Full Court held that the proposed penalty was reasonable. Burchett and Kiefel JJ stated that (at 290-291):
Because the fixing of the quantum of a penalty cannot be an exact science, the Court, in such a case, does not ask whether it would without the aid of the parties have arrived at the precise figure they have proposed, but rather whether their proposal can be accepted as fixing an appropriate amount...
A proper figure is one within the permissible range in all the circumstances. The Court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case.
55 The reasoning in NW Frozen Goods included consideration of:
(a) the policy consideration that, typically, when corporations acknowledge contraventions of consumer protection legislation, it frequently enables lengthy and complex litigation to be avoided; and
(b) the distinction between the role of the Court and the role of a regulator, noting that the Court will accept the assistance of the regulator (in this case, the ACCC in its role as the competition regulator).
56 The joint judgment of Kiefel and Burchett JJ in NW Frozen Foods contains a review of the relevant authorities, and concludes that the practice of parties providing submissions on the quantum of penalty in settled cases has received unanimous support in both Australia and New Zealand courts. The joint judgment includes reasons why the practice performs a valuable function in the administration of justice.
57 In Mobil Oil, the Full Court considered the reasoning in NW Frozen Foods in light of criticisms of that approach. The Full Court did not consider that the criticisms of NW Frozen Foods warranted a departure from the principles set out in that case. It was satisfied that a court has adequate powers to ensure that it discharges its statutory responsibilities appropriately in civil penalty proceedings involving agreed penalties (at [79]).
58 However, in Australian Securities and Investments Commission v Ingleby [2013] VSCA 49, the Victorian Court of Appeal (Weinberg and Harper JJA and Hargrave AJA) held that the approach to considering whether pecuniary penalty orders should be made following agreement between the parties adopted by the Full Court in NW Frozen Foods and Mobil Oil was incorrect.
59 Notwithstanding Ingleby, the reasoning of the Full Court in NW Frozen Foods and Mobil Oil continues to be applied in the Federal Court in relation to civil pecuniary penalties for contraventions of the CCA (see, for example, Australian Competition and Consumer Commission v Hewlett-Packard Australia Pty Ltd [2013] FCA 653; Australian Competition and Consumer Commission v HP Superstore Pty Ltd [2013] FCA 1317; and Australian Competition and Consumer Commission v AGL Sales Pty Ltd [2013] FCA 1030). Recently in AGL Sales, Middleton J held that he was bound by the Full Court reasoning in NW Frozen Foods and Mobil Oil but went further to state (at [42]):
No one suggests a court at first instance in determining a penalty is to undertake an "appellate function" upon being given a range or agreed figure. I accept that there is a danger this may occur if the court becomes blinkered by approaching the determination by reference to an agreed position or agreed penalty. However, provided the Court has, as it should, an overall view of the considerations relevant to the making of appropriate orders, being given any indication of an agreed position on penalty can be of assistance. This assistance could be given preferably by the providing of an 'agreed range', or by separate submission of the parties. In asking whether an agreed figure falls within the range of penalties reasonably available does not mean the court does not need to consider independently the appropriate penalty. It must do so in order to determine whether the range is in fact appropriate. As no one precise penalty figure is necessarily the only appropriate figure, the court will often consider the matter in terms of a permissible range in arriving at a final penalty. Of course, no agreed position, whether it be to a range or agreed figure, can be binding on the court.
60 I respectfully agree with these views.
61 ACCC and Mandurvit contend further that submissions as to the appropriate penalty differ from submissions as to the 'available range'.
62 Unlike the practice that attracted the Court's concern in Barbaro, the submission of the ACCC and Mandurvit in this case does not purport to define the 'available range' of the penalty. Rather, the submission of the ACCC and Mandurvit in this case, and of the ACCC and respondents in other pecuniary penalty cases before the Federal Court, states the parties' agreed position as to a quantum of penalty that has an appropriate deterrent effect. Further, it involves the ACCC, as the specialist regulator, explaining why a proposed penalty amount would have the necessary deterrent effect within the relevant industry. It does not involve the ACCC stepping into the shoes of the Judge to identify the outer limits of a permissible penalty.
63 The parties submit that:
(a) this is an important distinction because a substantial portion of the High Court's reasoning in Barbaro concerns an aspect of 'available range' submissions that is not present in the parties' joint submission in this case; and
(b) the 'error of principle' that is the focus of the reasoning in paras 20-28 of Barbaro arises because an 'available range' purports to define the boundaries within which a sentence is neither manifestly excessive nor manifestly inadequate. The plurality judgment in Barbaro makes clear that these are considerations for an appeal court, not for a prosecutor. As noted by the plurality (at [27]):
… the essentially negative proposition that a sentence is so wrong that there must have been some misapplication of principle in fixing it cannot safely be transformed into any positive statement of the upper and lower limits within which a sentence could properly have been imposed.
64 In short, a submission as to an appropriate quantum of penalty does not carry a suggestion of the appeal concepts of manifest excess or inadequacy. It states the remedy sought by the parties, acknowledging that determining the quantum of penalty is a matter for the Court.
65 A further contention for ACCC and Mandurvit is that criminal law principles should not be applied automatically to civil pecuniary penalty cases. While principles may properly be drawn from criminal law sentencing, there are important and relevant differences between:
(a) the respective objects of civil and criminal penalties; and
(b) the respective roles of criminal prosecutors and regulators seeking civil remedies.
66 The joint judgment in Barbaro (at [38]) refers to 'carrying out the sentencing task in accordance with proper principle' (emphasis added). Among the authorities cited in relation to this task is Markarian v The Queen (2005) 228 CLR 357 (at 373-375).
67 The process endorsed in Markarian has been consistently applied by this Court to the assessment of pecuniary penalties under s 76 and s 76E of the former TPA and the equivalent provisions of the CCA and the ACL: Australian Competition & Consumer Commission v Liquorland (Australia) Pty Ltd (2005) ATPR 42-070; Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No 2) (2011) 279 ALR 609 per Perram J (at [73]); Australian Competition & Consumer Commission v Gullyside Pty Ltd [2005] FCA 1727 per Kiefel J (at [32]); Australian Competition & Consumer Commission v Marksun Australia Pty Ltd [2011] FCA 695 per Gilmour J (at [90]-[91]); Australian Competition and Consumer Commission v Dimmeys Stores Pty Ltd [2011] FCA 372 per Gordon J (at [36]); Australian Competition and Consumer Commission v Kingisland Meatworks & Cellars Pty Ltd (2013) 99 IPR 548 (at 554); Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) (2011) 195 FCR 1 per Gordon J (at 28-29).
68 However, differences in approach as well as similarities were highlighted recently by Lander J in Australian Competition and Consumer Commission v Jewellery Group Pty Limited (No 2) [2013] FCA 14 his Honour stated (at [39] to [41]):
39 In ACCC v Liquorland (Australia) Pty Ltd (ACN 007 512 419) [2005] ATPR 42-070 at [68], Gyles J, and in Australian Competition and Consumer Commission v Dimmeys Stores Pty Ltd [2011] FCA 372 at [36], Gordon J, and more recently in Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2) [2012] FCA 629 at 140, Murphy J, said that in considering a pecuniary penalty the Court should proceed in accordance with the principles identified in Markarian v The Queen (2005) 228 CLR 357.
40 I do not disagree with that proposition but, of course, it must be remembered that Markarian v The Queen involved an accused who had pleaded guilty to knowingly taking part in the supply of a commercial quantity of heroin, which was an offence that attracted a maximum period of imprisonment of 20 years. There are elements of a sentence in the criminal law which are not relevant to the appropriate assessment of a pecuniary penalty; for example, retribution.
41 However, I do not disagree that a Court in assessing a pecuniary penalty can determine that penalty by proceeding in a similar manner to that suggested by the High Court for a sentence in the criminal law.
69 French J (as his Honour then was), made the following observations in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076, in relation to the differences between proceedings for civil penalties for contraventions of Pt IV TPA and criminal prosecutions:
Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Part IV. Nor, if it be necessary to say so, is there any compensatory element in the penalty fixing process - Trade Practices Commission v Mobil Oil Australia Ltd (1984) 4 FCR 296 at 298 (Toohey J). The principal, and I think probably the only, object of the penalties imposed by s76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.
70 The parties' joint submission on the quantum of penalty addresses this particular primary object of civil penalties under the ACL. The parties have informed the Court of the penalty that they regard as having appropriate deterrent effect, and the reasons for that conclusion.
71 The parties jointly contend that the relevant differences between the ACCC's role as a civil litigant and the role of a criminal prosecutor include:
(a) the provisions of the CCA and the ACL confer on the ACCC a range of administrative, advisory, investigative and enforcement powers and functions. Many of these powers and functions are of a different character, purpose and scope than the powers and functions of a prosecutor. For example, criminal prosecutors perform no function that is analogous to the ACCC's power to accept court enforceable undertakings under s 87B CCA. The ACCC's role requires it to engage with, educate, research and consult with market participants in accordance with the specific objects of the CCA and ACL. The ACCC's civil enforcement role is closely related to these other functions. The ACCC generally investigates the conduct that gives rise to the proceedings. It may have conducted that investigation, and commenced proceedings according to its own enforcement priorities, which may be affected by its analysis of particular market conduct or function. Those enforcement priorities may cause it to settle proceedings on a compromise basis rather than proceed to trial. The outcome of enforcement actions has an impact on the ACCC's other roles and vice versa. This gives the ACCC a particular interest as a party to civil enforcement proceedings, particularly in relation to the quantum of penalty, because the deterrent effect of a penalty is a powerful tool in securing the regulator's goal of compliance. By contrast, a criminal prosecutor representing the State in a criminal trial must act with fairness and detachment being concerned with the attainment of justice, not the securing of convictions: Whitehorn v The Queen (1983) 152 CLR 657 (at 663-664) per Deane J and McCullough v The Queen (1982) 6 A Crim R 274 (at 285);
(b) both the nature of the relief sought and the litigant's role in seeking it are relevantly and materially different in the criminal and civil penalty spheres. The ACCC must choose to plead and pursue the particular relief (including pecuniary penalties) it seeks in the application. By contrast, the prosecutor does not seek a sentence as the relief to which it, as a party, claims to be entitled. Rather, the prosecution presents the case that may result in a conviction, and the Court passes sentence as a consequence of that outcome. Thus, the ACCC has a more engaged role in relation to the pecuniary penalty than a prosecutor has in relation to a sentence. This should afford a different approach in relation to the submissions that address that relief.
72 While I largely accept these contentions, it is not to be forgotten that just as a prosecutor has well-established duties, the ACCC is also expected to function as a 'model litigant' even though it is involved in civil litigation by which it seeks to advance and discharge its statutory function. With that qualification, I accept that this particular role as an industry regulator was expressly relevant to the decision in NW Frozen Foods (per Burchett and Kiefel JJ (at 298)).
73 That said, this has not apparently been the universal view. In Australian Competition and Consumer Commission v Flight Centre Limited (No 3) [2014] FCA 292 Logan J referred to Barbaro and declined (as he was entitled to do) to accept the parties' submissions as to the appropriate range within which a penalty should be ordered. His Honour stated (at [56]):
Both the Commission and Flight Centre proffered, by reference to the numerous earlier cases in which penalties had been imposed in respect of contraventions of Pt IV of the TPA, what they submitted was the applicable range within which penalty should be imposed. Flight Centre's submission was made in the alternative and on the assumption that its primary submission that it was neither necessary nor appropriate to impose any penalty was not accepted. These submissions were made prior to the disapproval by the High Court, in Barbaro v The Queen (2014) 88 ALJR 372, of such a practice in respect of criminal cases. Here, too, in my view, there is a relevant analogy to be drawn from the practice in the criminal jurisdiction in a civil proceeding for the recovery of a pecuniary penalty. The imposition and assessment of a penalty involves the exercise of a discretion by a judge, not the parties. I have not therefore taken into account the ranges respectively submitted.
74 This aspect of his Honour's decision appears to have been made without the benefit of argument from the parties. It follows that if the issue was argued or more fully considered in another case in which a contrary conclusion was reached, I should give greater weight to the latter until appellate authority directs otherwise: CSR Ltd v Eddy (2005) 226 CLR 1 (at [13]-[14]). (In saying that, I also note that I have not had the benefit of a contradictor).
75 Two other decisions in relation to civil pecuniary penalty submissions, delivered since Barbaro, have considered the application of Barbaro to civil pecuniary penalty cases, but concluded that it was not necessary to decide the issue in the circumstances of the case: Commissioner for Consumer Protection v Susilo [2014] WASC 50 and Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2014] FCA 160.
76 On 31 March 2014, in Grocon v Construction, Forestry, Mining and Energy Union (No 2) [2014] VSC 134, the Victorian Supreme Court considered the application of Barbaro to fines for contempt of court. In submissions, the parties agreed with Cavanough J's preliminary conclusion that Barbaro requires the Court to disregard completely all submissions that suggested particular figures or ranges for the penalty to be imposed. His Honour decided in accordance with that agreed position (at [70]). However, the ACCC and Mandurvit contend and I accept that the approach taken in that case should not be applied here because:
(a) the decision concerned penalties for contempt of court (largely criminal contempt), which requires consideration of principles that are more closely related to the criminal law than conduct in contravention of the ACL;
(b) this Court in this case is bound to follow the Full Court authority of NW Frozen Foods, unless it has been, in effect, displaced by Barbaro.
77 On 4 April 2014, in Australian Competition and Consumer Commission v Energy Australia Pty Ltd [2014] FCA 336, Middleton J considered the potential application of the principles in Barbaro to civil pecuniary penalties and held that:
(a) Barbaro does not implicitly overrule the Full Court authority of NW Frozen Foods and the cases that have followed it (at [115]);
(b) he was bound by the principles propounded by the Full Court in NW Frozen Foods and Mobil Oil (at [152]).
78 His Honour accordingly received the parties' submissions as to penalty, and made orders in accordance with the 'agreed penalties' set out by the parties in their joint submissions. In reaching that conclusion, his Honour provided detailed reasons in which he:
(a) examined the statements of principle in Barbaro in the context of the particular circumstances of that proceeding and observed that, in that case, the High Court was only concerned with the refusal of the trial judge to receive a statement from the prosecution about the range of sentences thought by the prosecution to be appropriate (at [122]);
(b) observed that, unlike the situation in Barbaro, where the judge was provided with a 'bare' statement as to the penalty, he had the benefit of the parties' submissions of law and a statement of agreed facts (at [130]);
(c) observed that there are differences between a criminal prosecution and a civil penalty proceeding brought by a civil regulator which need to be considered, and which necessarily impact upon the appropriate processes and practices to adopt in each respective jurisdiction (at [138]);
(d) held that he did not need to follow the approach taken by Logan J in Flight Centre (at [151]); and
(e) held that the approach taken by Cavanough J in Grocon did not relevantly touch upon the correct approach to undertake in the case before his Honour (at [152]).
79 Once again, I would respectfully agree with this approach.