7.1 Legal principles: penalty
41 I have already adverted to the task of the Court in cases where the parties have reached agreement as to the making of orders under the ACL: see above at [5]-[7]. It is important however to emphasise that the judicial restraint in scrutinising proposed settlements of controversies under the ALC and its predecessor, the Trade Practices Act 1974 (Cth), means that the Court will not substitute its own view of the orders or undertakings if the agreed orders, including penalties, fall with the range of an appropriate disposition of the case: Australian Competition and Consumer Commission v Real Estate Institute of Western Australia (1999) 161 ALR 79 at [20]-[23] (French J (as his Honour then was)). As Burchett and Kiefel JJ observed in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 (NW Frozen Foods) at 291:
There is an important public policy involved. When corporations acknowledge contraventions, very lengthy and complex litigation is frequently avoided, freeing the courts to deal with other matters, and investigating officers of the Australian Competition and Consumer Commission to turn to other areas of the economy that await their attention. At the same time, a negotiated resolution in the instant case may be expected to include measures designed to promote, for the future, vigorous competition in the particular market concerned. These beneficial consequences would be jeopardised if corporations were to conclude that proper settlements were clouded by unpredictable risks. 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.
(emphasis added)
42 Thus the High Court in Director, Fair Work Building Industry Inspectorate at [57] considered that it was open to the Court to receive submissions, including joint submissions, as to an appropriate penalty, and noted there was generally considerable scope given to parties to agree on an appropriate remedy.
43 The principles governing the imposition of a penalty were not in dispute. Under s 224 of the ACL, the Court is empowered to order a person to pay to, relevantly, the Commonwealth "such pecuniary penalty, in respect of each act or omission by the person to which [s 224] applies, as the court determines to be appropriate". That provision applies relevantly only to the contraventions of s 29 of the ACL which is located within Part 3-1 of the ACL. Section 224 has no application to the contraventions of s 18.
44 Subsection 224(2) provides that in determining the appropriate pecuniary penalty, the Court must have regard to all relevant matters including (but not limited to):
(1) the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission;
(2) the circumstances in which the act or omission took place; and
(3) whether the person has previously been found by a court in proceedings under Chapter 4 or Part 5-2 of the ACL to have engaged in any similar conduct.
45 Otherwise, potentially relevant factors include:
(1) the size of the contravening company;
(2) the degree of power of the contravener, as evidenced by its market share and ease of entry into the market;
(3) the deliberateness of the contravention and the period over which it extended;
(4) whether the contravention arose out of the conduct of senior management of the contravener or at some lower level;
(5) whether the contravener has a corporate culture conducive to compliance with the ACL as evidenced, for example, by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention;
(6) whether the contravener has shown a disposition to cooperate with the authorities responsible for the enforcement of the ACL in relation to the contravention;
(7) the effect of the conduct on the functioning of the markets and other economic effects;
(8) the financial position of the contravener;
(9) whether the contravening conduct was systematic, deliberate or covert.
See: Trade Practices Commission v CSR Limited (1991) 13 ATPR ¶41-076 at [52152] (French J (as his Honour then was)); NW Frozen Foods at 290 (Burchett and Kiefel JJ); Australian Competition and Consumer Commission v Singtel Optus Pty Ltd (No 4) [2011] FCA 761; (2011) 282 ALR 246 at [11] (Perram J) (reversed on appeal in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 (Singtel Optus (FCAFC)), but not in a relevant respect).
46 However, this list is not exhaustive and should not be approached in a regimental or formulaic way as "[t]o do that would impermissibly constrain or formalise what is, at the end of the day, a broad evaluative judgment", as Wigney J observed in Australian Competition and Consumer Commission v Visa Inc [2015] FCA 1020 (ACCC v Visa) at [81]-[83]. Thus, as I explained in Australian Competition and Consumer Commission v Homeopathy Plus! Australia Pty Ltd (No 2) [2015] FCA 1090 (Homeopathy Plus!):
23. The process of arriving at the appropriate sentence for a criminal offence involves an intuitive or instinctive synthesis of all of the relevant factors: Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357… at 373-374 [35]-[37] (Gleeson CJ, Gummow, Hayne and Callinan JJ). The same approach has been held to apply to civil penalties under the ACL and its predecessor provision in the Trade Practices Act 1974 (Cth): TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 190; (2012) 210 FCR 227 at 294 [145] (the Court); Australian Competition and Consumer Commission v EnergyAustralia Pty Ltd [2015] FCA 274 at [103] (Gordon J); Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2015] FCA 330 (ACCC v Coles) at [6] (Allsop CJ). Instinctive synthesis was helpfully described by McHugh J in Markarian as meaning "the method of sentencing by which the judge identifies all the factors that are relevant to the sentence, discusses their significance and then makes a value judgment as to what is the appropriate sentence given all the factors of the case" (at 378 [51]). In short, as Gaudron, Gummow and Hayne JJ explained in Wong v The Queen [2001] HCA 64; (2001) 207 CLR 584 at 611 [75] (in a passage approved in Markarian at 374 [37]), "the task of the sentencer is to take account of all of the relevant factors and to arrive at a single result which takes due account of them all" (emphasis in original).
See also by analogy Barbaro v The Queen [2014] HCA 2; (2014) 253 CLR 58 (Barbaro) at [34]-[35] (French CJ, Hayne, Kiefel and Bell JJ).
47 A primary object of the Court in assessing an appropriate penalty where commercial profit is the driver of the contravening conduct is general and specific deterrence: TPG Internet at [65]. Thus, as the Full Court of the Federal Court said in a passage approved in TPG Internet at [66], "in relation to offences of calculation by a corporation where the only punishment is a fine, the punishment must be fixed with a view to ensuring that the penalty is not such as to be regarded by that offender or others as an acceptable cost of doing business": Singtel Optus (FCAFC) at [62].
48 In considering the appropriate penalty to secure deterrence, some consideration must also be given to the size and financial position of the contravener. The sum required to achieve that object will be larger where the company has vast resources than in the case of a small company: NW Frozen Foods at 293 (Burchett and Kiefel JJ); ACCC v Visa at [96] (Wigney J); Australian Competition and Consumer Commission v Pental Limited [2018] FCA 491 at [48] (Lee J).
49 In undertaking this process, as I explained in Homeopathy Plus! at [27]:
… careful attention to maximum penalties will always be required because the legislature has legislated for them, they invite comparison between the case before the court and the worst possible case, and they provide, taken and balanced with all of the other relevant factors, a yardstick: [Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357] at [31] (Gleeson CJ, Gummow, Hayne and Callinan JJ). However, even where the maximum penalty is high and the amount necessary to provide effective deterrence is large, the amount of the penalty cannot be so high as to be oppressive. As Burchett and Kiefel JJ explained in NW Frozen Foods, "[p]lainly, if deterrence is the object, the penalty should not be greater than is necessary to achieve this object; severity beyond that would be oppression" (at 293).
50 Further, as I held in Homeopathy Plus! at [28], the Court may in some cases derive assistance from penalties imposed previously in comparable cases, particularly where those cases establish a pattern or range of penalties imposed for like contraventions.
51 Finally, the totality and course of conduct principles are also relevant to an assessment of pecuniary penalties. As the parties submit, the former requires the Court to consider all of the contravening conduct and to determine whether the total penalty for each offence aggregated together exceeds what is proper for the entire contravening conduct involved (the totality principle): Mill v The Queen (1988) 166 CLR 59 at 63 (Wilson, Deane, Dawson, Toohey, Gaudron JJ) (by analogy). The totality principle operates as a final check. As Goldberg J explained in Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 145 ALR 36 at 53:
The totality principle is designed to ensure that overall an appropriate sentence or penalty is [imposed] and that the sum of the penalties imposed for several contraventions does not result in the total of the penalties exceeding what is proper having regard to the totality of the contravening conduct involved.
52 The latter principle recognises, as the parties submit, the commonality of legal and factual matters between two or more contraventions, and that a contravening party should not be punished twice for common contraventions. As Middleton and Gordon JJ explained in Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; (2010) 269 ALR 1:
39. … The principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality. That requires careful identification of what is "the same criminality" and that is necessarily a factually specific enquiry.
53 Their Honours then further explained that:
41. … where two offences arise as a result of the same or related conduct that is not a disentitling factor to the application of the single course of conduct principle but a reason why a Court may have regard to that principle, as one of the applicable sentencing principles, to guide it in the exercise of the sentencing discretion: Johnson v R (2004) 205 ALR 346; [2004] HCA 15 at [3] - [4] and [34] and Attorney-General v Tichy (1982) 30 SASR 84 at 92 - 3... It is a tool of analysis (Tichy at 93) which a Court is not compelled to utilise: Royer v Western Australia [2009] WASCA 139 at [21]-[34] and [153]-[156] (Royer).
(emphasis in the original)