Quantification of Penalty: Principles To Be Applied
29 Clause 4 of sch 2 of the 1991 Act confers both a discretion to impose a penalty and further provides that any such penalty "must not exceed the amount stated in the table to be the maximum penalty". But there the guidance provided by the legislature both begins and ends. The criteria by reference to which the discretion is to be exercised are left unspecified.
30 Schedule 2 to the Occupational Health and Safety Act provides another example of the recourse by the Commonwealth legislature to civil penalties as a means of regulation. As stated at [1.181] of the Explanatory Memorandum to the Occupational Health and Safety (Commonwealth Employment) Amendment (Employee Involvement and Compliance) Bill 2002 (Cth):
New Schedule 2 is modelled in large part on the enforcement approach of the Commonwealth Authorities and Companies Act 1997, which is in turn modelled on the Corporation Law.
The Explanatory Memorandum also refers to:
… the additional flexibility given to employers to develop appropriate arrangements at the workplace level is balanced by a strong, effective and responsive enforcement regime by:
…
Providing for civil penalties as far as possible, reserving criminal penalties for more serious breaches of the Act where there has been a death or serious bodily harm. Criminal penalties are also being retained for offences which are more appropriately dealt with in the criminal justice system, such as contempt of the Commission or failing to attend before the Commission as a witness…
Although the present proceeding involved the death of Mr Lapidario, it should be noted that cl 18(1)(c) to sch 2 of the Act confines criminal prosecutions to those cases where death or serious bodily injury was the result of either negligence or recklessness. There was no suggestion that the death of Mr Lapidario was the result of either negligence or recklessness. Consideration can thus presently be confined to the discretion relevant to civil proceedings.
31 Having set the maximum penalty that may be imposed, the discretion as to that which is otherwise considered to be the appropriate penalty is one which must necessarily be informed by reference to the balance of the statutory scheme, including most relevantly the objects sought to be achieved. Those objects are specified in s 3 of the 1991 Act as follows:
Objects
The objects of this Act are:
(a) to secure the health, safety and welfare at work of employees of the Commonwealth, of Commonwealth authorities and of non Commonwealth licensees; and
(b) to protect persons at or near workplaces from risks to health and safety arising out of the activities of such employees at work; and
(c) to ensure that expert advice is available on occupational health and safety matters affecting employers, employees and contractors; and
(d) to promote an occupational environment for such employees at work that is adapted to their needs relating to health and safety; and
(e) to foster a co operative consultative relationship between employers and employees on the health, safety and welfare of such employees at work; and
(f) to encourage and assist employers, employees and other persons on whom obligations are imposed under the Act to observe those obligations; and
(g) to provide for effective remedies if obligations are not met, through the use of civil remedies and, in serious cases, criminal sanctions.
The statutory scheme also relevantly includes Part 2 as it applies to s 16 and the duty of an employer to "take all reasonably practicable steps to protect the health and safety at work of the employer's employees". Such a duty must be regarded as fundamental.
32 In the statutory context of the present legislation, Madgwick J has focussed attention upon those considerations relevant to the imposition of a penalty in Comcare v Commonwealth [2007] FCA 662, 163 FCR 207. A member of the Australian Defence Force had there died in November 1994 as a result of heat stress sustained during an army training exercise. His Honour there observed:
[120] Decisions under the cognate New South Wales Act refer to the following considerations among others:
(i) the penalty must be such as to compel attention to occupational health and safety generally, to ensure that workers whilst at work will not be exposed to risks to their health and safety;
(ii) it is a significant aggravating factor that the risk of injury was foreseeable even if the precise cause or circumstances of exposure to the risk were not foreseeable;
(iii) the offence may be further aggravated if the risk of injury is not only foreseeable but actually foreseen and an adequate response to that risk is not taken by the employer;
(iv) the gravity of the consequences of an accident does not of itself dictate the seriousness of the offence or the amount of penalty. However the occurrence of death or serious injury may manifest the degree of the seriousness of the relevant detriment to safety;
(v) a systemic failure by an employer to appropriately address a known or foreseeable risk is likely to be viewed more seriously than a risk to which an employee was exposed because of a combination of inadvertence on the part of an employee and a momentary lapse of supervision;
(vi) general deterrence and specific deterrence are particularly relevant factors in light of the objects and terms of the Act;
(vii) employers are required to take all practicable precautions to ensure safety in the workplace. This implies constant vigilance. Employers must adopt an approach to safety which is proactive and not merely reactive. In view of the scope of those obligations, in most cases it will be necessary to have regard to the need to encourage a sufficient level of diligence by the employer in the future. This is particularly so where the employer conducts a large enterprise which involves inherent risks to safety;
(viii) regard should be had to the levels of maximum penalty set by the legislature as indicative of the seriousness of the breach under consideration;
(xi) the neglect of simple, well-known precautions to deal with an evident and great risk of injury, take a matter towards the worst case category;
(x) the objective seriousness of the offence, without more may call for the imposition of a very substantial penalty to vindicate the social and industrial policies of the legislation and its regime of penalties.
These considerations, it was concluded, "provide[d] useful, analogical, general guidance as to the approach to be taken in consideration of penalties under the Commonwealth Act". His Honour noted that the maximum penalty was 2,200 penalty units, a penalty of less than $250,000. The maximum penalty would be appropriate where there had been a "conscious decision to flout the law". A penalty of 1,800 penalty units ($198,000) was ordered. His Honour found that there had been "systemic failures of the most serious kind": at [125].
33 In Comcare v National Gallery of Australia [2007] FCA 1548, 98 ALD 67 a penalty of $20,000 had been agreed between the parties and ordered by the Court. Whilst not downplaying the serious risks involved, the injuries sustained by the workers were relatively mild. Gyles J there further observed:
[8] All things considered, I am satisfied that the pecuniary penalty proposed is appropriate. As the cases indicate, it is not so much a question of me deciding what figure I would independently propose and then seeing whether it accords with the figure proposed. A commonsense approach is to take the agreed figure and give consideration to whether it is within the range of appropriate figures. In my opinion it is. I make the orders set out in the draft order which I have initialled and placed with the papers.
34 Although the particular legislative regime which is being enforced must always remain the source whereby considerations relevant to the imposition of a penalty are to be discerned, there nevertheless remain some more general considerations that inform the discretion being exercised.
35 Many other Commonwealth Acts provide for a regulator to approach this Court seeking an order for the imposition of a pecuniary penalty as a means of securing compliance with legislative provisions. A degree of learning has emerged from those authorities dealing with those other legislative provisions as to the matters to be taken into account when assessing a penalty.
36 In the statutory context of the Trade Practices Act 1974 (Cth), French J (as he then was) has attempted to summarise some of these considerations: Trade Practices Commission v CSR Ltd (1991) ATPR 41-076. When assessing the penalty to be imposed pursuant to s 76(1) of the 1974 Act His Honour observed (at 52,152-52,153):
The assessment of a penalty of appropriate deterrent value will have regard to a number of factors which have been canvassed in the cases. These include the following:
1. The nature and extent of the contravening conduct.
2. The amount of loss or damage caused.
3. The circumstances in which the conduct took place.
4. The size of the contravening company.
5. The degree of power it has, as evidenced by its market share and ease of entry into the market.
6. The deliberateness of the contravention and the period over which it extended.
7. Whether the contravention arose out of the conduct of senior management or at a lower level.
8. 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.
9. Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention.
These considerations have since been applied to other legislative contexts: eg, Minister for the Environment and Heritage v Greentree (No 3) [2004] FCA 1317 at [51], 136 LGERA 89; Australian Prudential Regulation Authority v Derstepanian [2005] FCA 1121 at [30]; Secretary, Department of Health & Ageing v Pagasa Australia Pty Ltd [2008] FCA 1545 at [24].
37 These considerations may also be applied to the task of assessing the penalty to be imposed under the current legislation. To some extent the considerations set forth by Madgwick J overlap with those set forth by French J; to some extent they do not.
38 Care must be taken to ensure that any listing of potentially relevant considerations do not themselves become an impermissible substitute for considering the terms of the legislation in issue or an unnecessary constraint upon a discretion conferred in otherwise unconfined terms. But the attempts that have been made by both Madgwick and French JJ (in particular) provide a useful touchstone of those matters that may be taken into account when assessing the penalty to be imposed. Those considerations set forth by Madgwick J are obviously more directed to the specific statutory context of ensuring the health and safety of workers than the more generally expressed considerations set forth by French J. But both, it is considered, are relevant to the present assessment of penalty.
39 A final matter of principle should also be noted. It is inappropriate to fix a penalty simply by reference to the quantum of a penalty imposed in another case. It was thus understood to be common ground between the parties to the present proceeding that it was not appropriate to regard (in particular) the penalty of $198,000 in Comcare v Commonwealth as itself fixing a "benchmark" against which other penalties are to be determined in cases involving death. In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285, Burchett and Kiefel JJ observed (at 295):
A hallmark of justice is equality before the law, and, other things being equal, corporations guilty of similar contraventions should incur similar penalties: Trade Practices Commission v Axive Pty Ltd [(1994) ATPR 41-368] (at 42,795). There should not be such an inequality as would suggest that the treatment meted out has not been even-handed: cf the criminal law case Lowe v The Queen (1984) 154 CLR 606. However, other things are rarely equal where contraventions of the Trade Practices Act are concerned. In the present case, differing circumstances, size, market power and responsibility for the contraventions, as well as other factors, complicate any attempt to compare the penalties imposed on the appellant with those imposed on the other corporations.
Another form of comparison is not appropriate. The facts of the instant case should not be compared with a particular reported case in order to derive therefrom the amount of the penalty to be fixed. Cases are authorities for matters of principle; but the penalty found to be appropriate, as a matter of fact, in the circumstances of one case cannot dictate the appropriate penalty in the different circumstances of another case. The point was well made by Spender J in Trade Practices Commission v Annand and Thompson Pty Ltd [(1987) ATPR 40-772] (at 48,394) when he said:
"Each case must, of course, be viewed on its own facts and facts may be infinite in their variety."
It follows, as his Honour also said, that "[t]he quantum of penalties imposed in other cases can seldom be of very much direct assistance".
A comparison of the facts in Comcare v Commonwealth and the facts in the present proceeding only serves to underline the point there being made by Burchett and Kiefell JJ (and by Spender J) - namely that the facts and circumstances of individual cases are infinitely diverse. The quantum of any penalty to be imposed must necessarily be fixed by reference to the peculiar facts arising in each case as and when they arise.