Relevant statutory and legal principles
4 ASIC seeks pecuniary penalties against Dover and Mr McMaster under s 12GBA of the ASIC Act as in force during the relevant period (the section was subsequently amended). Relevantly, that section provided as follows:
12GBA Pecuniary penalties
(1) If the Court is satisfied that a person:
(a) has contravened a provision of Subdivision C, D or GC (other than section 12DA); or
(b) has attempted to contravene such a provision; or
(c) has aided, abetted, counselled or procured a person to contravene such a provision; or
(d) has induced, or attempted to induce, a person, whether by threats or promises or otherwise, to contravene such a provision; or
(e) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or
(f) has conspired with others to contravene such a provision;
the Court may order the person to pay to the Commonwealth such pecuniary penalty, in respect of each act or omission by the person to which this section applies, as the Court determines to be appropriate.
(2) In determining the appropriate pecuniary penalty, the Court must have regard to all relevant matters including:
(a) the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission; and
(b) the circumstances in which the act or omission took place; and
(c) whether the person has previously been found by the Court in proceedings under this Subdivision to have engaged in any similar conduct.
5 Subsection 12GBA(3) stipulated the maximum penalty to be imposed "for each act or omission to which the section applies". In relation to contraventions of s 12DB, s 12GBA(3) stipulated that the maximum penalty for a body corporate was 10,000 penalty units and for an individual was 2,000 penalty units. The Commonwealth penalty unit was $180 during the period between 25 September 2015 and 30 June 2017 and was $210.26 during the period between 1 July 2017 and 30 March 2018. ASIC submitted that, in the interests of simplifying and moderating its proposed approach to penalties, it was content to rely on the penalty units which applied up to 30 June 2017 in respect of all of Dover's contraventions and Mr McMaster's knowing involvement in those contraventions. On that basis, ASIC's submissions proceeded on the basis that each act of contravention by Dover of s 12DB(1)(i) attracted a maximum penalty of $1.8 million and each act by Mr McMaster of being knowingly concerned Dover's contravention of s 12DB(1)(i) attracted a maximum penalty of $360,000.
6 The terms of s 12GBA of the ASIC Act are similar in form to civil penalty provisions in the Competition and Consumer Act 2010 (Cth) (s 76) and the Australian Consumer Law (being Schedule 2 to the Competition and Consumer Act 2010 (Cth)) (s 224). The provisions have been construed in a similar manner and the applicable principles are well known. The following is a summary of those principles.
7 First, the Court may impose a penalty in respect of each act or omission that constitutes a contravention, subject to the maximum penalty which is stated to apply to each act or omission.
8 Second, the penalty to be imposed is a penalty that the Court considers appropriate.
9 Third, s 12GBA(2) of the ASIC Act, as in force during the relevant period, requires the Court, in determining the appropriate penalty, to take into account four specific matters and all other relevant matters. The four specific matters are: (i) the nature and extent of the act or omission; (ii) any loss or damage suffered as a result of the act or omission; (iii) the circumstances in which the act or omission took place; and (iv) whether the person has previously been found by a court, in proceedings under Subdivision G, Division 2, Part 2 of the ASIC Act, to have engaged in any similar conduct.
10 In Trade Practices Commission v CSR Limited [1990] FCA 762; (1991) ATPR 41-076, in the context of a contravention of provisions of Part IV of the Trade Practices Act 1974 (Cth) (since renamed the Competition and Consumer Act 2010 (Cth)), French J listed a number of matters potentially relevant to the assessment of penalty under s 76. Those factors have become known as the 'French factors' and have been referred to on many occasions in the assessment of civil penalties including under the ASIC Act: see Australian Securities and Investments Commission v GE Capital Finance Australia, in the matter of GE Capital Finance Australia [2014] FCA 701 at [70]; Re HIH Insurance Ltd (in prov liq) and HIH Casualty and General Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler [2002] NSWSC 483; 42 ACSR 80 at [125]-[126]. The factors are:
(a) the size of the contravening company;
(b) the deliberateness of the contravention and the period over which it extended;
(c) whether the contravention arose out of the conduct of senior management or at a lower level;
(d) whether the company has a corporate culture conducive to compliance with the Act as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention;
(e) whether the company has shown a disposition to cooperate with the authorities responsible for the enforcement of the Act in relation to the contravention;
(f) whether the contravener has engaged in similar conduct in the past; and
(g) the financial position of the contravener.
11 The French factors are neither exhaustive of potentially relevant matters to be considered nor "a rigid catalogue or checklist of matters to be applied in each case": Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68 (ABCC v CFMEU) at [101].
12 Fourth, in considering the sufficiency of a proposed civil penalty, regard must ordinarily be had to the maximum penalty for the reasons stated (in a criminal sentencing context) in Markarian v The Queen (2005) 228 CLR 357 at [31]: first, because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all other relevant factors, a yardstick. However, as stated by the Full Federal Court in Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; 340 ALR 25 (Reckitt Benckiser) 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. In that case, the Full Court observed (at [157]) that the theoretical maximum penalty on the facts of that case was in the trillions of dollars (some 5.9 million contraventions at $1.1 million per contravention) and that it followed that the appropriate range for penalty in the circumstances of that case was best assessed by reference to other factors, as there was no meaningful overall maximum penalty given the very large number of contraventions over a long period of time.
13 In determining the appropriate penalty for a multiplicity of civil penalty contraventions, the Court may have regard to two common law principles that originate in criminal sentencing: the "course of conduct" principle and the "totality" principle: Australian Competition and Consumer Commission v Yazaki Corporation (2018) 262 FCR 243 (Yazaki Corporation) at [226]. Under the "course of conduct" principle, the Court considers whether the contravening acts or omissions arise out of the same course of conduct or the one transaction, to determine whether it is appropriate that a "concurrent" or single penalty should be imposed for the contraventions: Yazaki Corporation at [234]. The principle guards against the risk that the respondent is punished twice in respect of multiple contravening acts or omissions that should be evaluated, for the purposes of assessing an appropriate penalty, as a lesser number of acts of wrongdoing: Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; 269 ALR 1 at [39], per Middleton and Gordon JJ. However, as noted by the Full Court in Yazaki Corporation (at [227]), it is not appropriate or permissible to treat multiple contravening acts or omissions as just one contravention for the purposes of determining the maximum limit dictated by the relevant legislation. Accordingly, the maximum penalty for the course of conduct is not restricted to the prescribed statutory maximum penalty for each contravening act or omission: Reckitt Benckiser at [141]; Yazaki Corporation at [229]-[235]. The "totality" principle operates as a "final check" to ensure that the penalties to be imposed on a wrongdoer, considered as a whole, are just and appropriate and that the total penalty for related offences does not exceed what is proper for the entire contravening conduct in question: Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR 41-375 at 40,169; Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 145 ALR 36 at 53; Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 at [132].
14 Fifth, the principal object of imposing a pecuniary penalty is deterrence; both the need to deter repetition of the contravening conduct by the contravener (specific deterrence) and to deter others who might be tempted to engage in similar contraventions (general deterrence): Singtel Optus Pty Ltd v ACCC [2012] FCAFC 20; 287 ALR 249 (Singtel Optus) at [62]-[63]; Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 (TPG Internet) at [65] per French CJ, Crennan, Bell and Keane JJ; Commonwealth v Director, FWBII (2015) 258 CLR 482 (FWBII) at [55] per French CJ, Kiefel, Bell, Nettle and Gordon JJ and [110] per Keane J. In FWBII, the plurality (at [55]) confirmed that notions of punishment or retribution, applied in the criminal law, are not engaged in the imposition of a civil penalty, stating (citations omitted):
No less importantly, whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:
"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 Pt IV [of the Trade Practices Act] … The principal, and I think probably the only, object of the penalties imposed by s 76 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."
15 Sixth, in common with criminal sentencing, determining a civil penalty usually involves multi-factorial decision-making, identifying and balancing all the factors relevant to the contravention, and where the result is arrived at by a process of "instinctive synthesis" of the relevant factors: Reckitt Benckiser at [44]. It necessarily follows that the penalties imposed in other cases can only be of limited analogical value: Singtel Optus at [60] citing Australian Competition and Consumer Commission v Telstra Corporation Ltd (2010) 188 FCR 238 at [215].
16 In addition to the above principles, ASIC submitted that where there are numerous contraventions arising from separate acts, the starting point is that each contravention should attract a separate penalty arising from that contravention. In support of that submission, ASIC relied principally on the decision of the Full Court of the Federal Court in ABCC v CFMEU. However, ASIC's submission involved a misstatement of the principles explained by the Full Court in ABCC v CFMEU. The case concerned the imposition of pecuniary penalties upon two unions for taking unlawful industrial action in contravention of s 38 of the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act). The original jurisdiction of the Court was exercised by the Full Court. The unions admitted the contraventions and did not dispute that penalties should be imposed. The parties applied to the Court for the imposition of a penalty on each union within an agreed proposed range based on agreed facts and joint submissions. However, neither the pleadings nor the agreed facts identified the number of contraventions of the law for which the unions were to be penalised. After determining the number of contraventions, the Full Court considered the submission of the parties that it was open to the Court under s 49 of the BCII Act to impose a single penalty in respect of multiple contraventions of s 38. The Full Court rejected the submission and concluded as follows (at [148]):
The important point to emphasise is that, contrary to the Commissioner's submission, neither the course of conduct principle nor the totality principle, properly considered and applied, permit, let alone require, the Court to impose a single penalty in respect of multiple contraventions of a pecuniary penalty provision. There is no doubt that, in an appropriate case involving multiple contraventions, the Court should consider whether the multiple contraventions arose from a course or separate courses of conduct. If the contraventions arose out of a course of conduct, the penalties imposed in relation to the contraventions should generally reflect that fact, otherwise there is a risk that the respondent will be doubly punished in respect of the relevant acts or omissions that make up the multiple contraventions. That is not to say that the Court can impose a single penalty in respect of each course of conduct. Likewise, there is no doubt that in an appropriate case involving multiple contraventions, the Court should, after fixing separate penalties for the contraventions, consider whether the aggregate penalty is excessive. If the aggregate is found to be excessive, the penalties should be adjusted so as to avoid that outcome. That is not to say that the Court can fix a single penalty for the multiple contraventions.
17 The Full Court's reasons recognise two important qualifications to the conclusion that the statutory power to impose a penalty (in that case, s 49 of the BCII Act) did not permit the imposition of a single penalty for multiple contraventions. The first qualification is that such a course is permissible if agreed by the parties or the number of contraventions is so large that precise measurement is not possible. The Full Court explained (at [149]):
In an appropriate case, however, the Court may impose a single penalty for multiple contraventions where that course is agreed or accepted as being appropriate by the parties. It may be appropriate for the Court to impose a single penalty in such circumstances, for example, where the pleadings and facts reveal that the contraventions arose from a course of conduct and the precise number of contraventions cannot be ascertained, or the number of contraventions is so large that the fixing of separate penalties is not feasible, or there are a large number of relatively minor related contraventions that are most sensibly considered compendiously. As revealed generally by the reasoning in Commonwealth v Director, FWBII, there is considerably greater scope for agreement on facts and orders in civil proceedings than there is in criminal sentence proceedings. As with agreed penalties generally, however, the Court is not compelled to accept such a proposal and should only do so if it is considered appropriate in all the circumstances. It is also at the very least doubtful that such an approach can be taken if it is opposed or the proceedings are defended.
18 The permissibility of this approach to the imposition of a pecuniary penalty was also approved by the Full Court of the Federal Court in Transport Workers' Union of Australia v Registered Organisations Commissioner (No 2) (2018) 267 FCR 40 at [90].
19 The second qualification is that the Full Court in ABCC v CFMEU implicitly approved an approach whereby multiple penalties imposed in respect of multiple contraventions may be expressed in a single order for the payment of the aggregate penalty. After considering the appropriate penalty to be imposed for each contravention, the Full Court concluded that (at [183]):
An order imposing a pecuniary penalty of $300,000 on the CFMEU in respect of its contraventions will be made. An order imposing a pecuniary penalty of $130,000 on the CEPU in respect of its contraventions will also be made.
20 As recognised by the Full Court in ABCC v CFMEU, there have been many cases in which a single pecuniary penalty has been imposed on a respondent in respect of multiple contraventions of the relevant law, including by the High Court in TPG Internet. It may be that many of those cases fall within the two qualifications identified by the Full Court, recognising that a single penalty that is imposed by an order of the court may implicitly be the sum of the individual penalties for many contraventions. Subsequent to ABCC v CFMEU, the Full Court in Yazaki Corporation imposed an aggregate single penalty for five contraventions of the Competition and Consumer Act 2010 (Cth), but articulated the individual penalty for each contravention.
21 The conclusion that a statutory power to impose a pecuniary penalty does not permit the imposition of a single penalty for multiple contraventions is a different principle to that propounded by ASIC: that where there are numerous contraventions arising from separate acts, the starting point is that each contravention should attract a separate penalty arising from that contravention. There is no such "starting point". The statutory task requires the court to consider whether it is appropriate to impose a penalty for every contravening act or omission. Applying the course of conduct principle, a court may conclude that it is not appropriate. That was expressly recognised by the Full Court in ABCC v CFMEU. In discussing the penalty imposed in the earlier decision of Stuart v Construction, Forestry, Mining and Energy Union (2010) 185 FCR 308, the Full Court observed (at [135]):
In Stuart, it was relevantly alleged that the union contravened ss 38 and 44(1) of the BCII Act. The Full Court found that the primary judge erred in fixing the penalties for those contraventions. In considering what penalties should be imposed, the Court found (at [84]) that the unlawful conduct constituting the contravention of s 38 was "entirely subsumed in the conduct constituting the contravention of s 44 of the BCII Act". Applying the course of conduct principle, the Court imposed a significant penalty for the s 44 contravention and did not impose a separate penalty for the s 38 contravention. That unremarkable application of the course of conduct principle is quite different to what the Commissioner proposes in this matter. In a sense, the Court did impose a penalty for each contravention, but having regard to the course of conduct principle, it determined that the penalty for the s 38 contravention should be zero because the union had already effectively been punished for the conduct constituting that contravention by the penalty imposed in respect of the s 44 contravention. There is a clear distinction between that methodology and the imposition of a single penalty in respect of both contraventions.
22 The point emphasised by the Full Court in ABCC v CFMEU is the importance, in exercising the statutory power to impose a pecuniary penalty, to identify the number of contraventions that have occurred and relevant differences between the contraventions. Unless the number of contraventions is identified, at least to the extent of identifying a minimum number of contraventions, it is not possible to determine whether the aggregate penalty to be imposed is within the statutory maximum, and it is not possible to assess whether the penalty is appropriate taking into account the statutory maximum.