FRENCH CJ, KIEFEL, BELL, NETTLE AND GORDON JJ. These are appeals from an order of the Full Court of the Federal Court of Australia (Dowsett, Greenwood and Wigney JJ) adjourning civil penalty proceedings before it under the Building and Construction Industry Improvement Act 2005 (Cth) ("the BCII Act") in which the parties had made submissions to the Court seeking the imposition of agreed penalties. The issue is whether the Full Court erred in adjourning the proceedings on the basis that the decision of this Court in Barbaro v The Queen applies to a civil penalty proceeding brought under Pt 1 of Ch 7 of the BCII Act and in particular whether Barbaro precludes a court from receiving an agreed or other submission as to the amount of a pecuniary penalty to be imposed under s 49 of the BCII Act. For the reasons which follow, the decision in Barbaro does not apply to civil penalty proceedings and a court is not precluded from receiving and, if appropriate, accepting an agreed or other civil penalty submission.
Legislative provisions
Section 9 of the BCII Act established the Australian Building and Construction Commissioner ("the Commissioner") and s 10 provided that the functions of the Commissioner included monitoring and promoting compliance with the BCII Act, the investigation of suspected contraventions of the BCII Act, and instituting or intervening in proceedings and making submissions in accordance with the BCII Act.
Section 38 of the BCII Act provided that "[a] person must not engage in unlawful industrial action". The section was stipulated to be a "Grade A civil penalty provision". "[U]nlawful industrial action" was defined in s 37 of the Act as building industrial action which was industrially-motivated, constitutionally-connected and not excluded action. "[E]xcluded action" was defined as "protected industrial action", which had the same meaning as in the Fair Work Act 2009 (Cth). Section 40 provided that building industrial action in relation to a proposed building enterprise agreement was not protected industrial action if the action was engaged in in concert with one or more persons who were not "protected persons" for the action. The same section provided that the only "protected persons" were an employee organisation that was a bargaining representative for the proposed enterprise agreement, a member of such an organisation, an officer or employee of such an organisation acting in that capacity and an employee who was a bargaining representative for the proposed enterprise agreement.
The practical effect of those provisions was that only industrial action engaged in by employees and unions who were involved in bargaining, or would be covered by a proposed building enterprise agreement, would be "protected industrial action". Therefore, industrially‑motivated action taken in concert with persons not involved in bargaining or who would not be covered by the proposed building enterprise agreement was "unlawful industrial action" within the meaning of ss 37 and 38 of the BCII Act.
Section 48 provided inter alia that, for the purposes of Pt 1 of Ch 7 of the BCII Act, a "person" in relation to the contravention of a civil penalty provision included an industrial association and that a person who was involved in a contravention of a civil penalty provision was to be treated as having contravened that provision.
Section 49(1) provided that, on application by an eligible person, an appropriate court could make one or more of the following orders in relation to a person (the defendant) who had contravened a civil penalty provision:
"(a) an order imposing a pecuniary penalty on the defendant;
(b) an order requiring the defendant to pay a specified amount to another person as compensation for damage suffered by the other person as a result of the contravention;
(c) any other order that the court considers appropriate."
In the case of a Grade A civil penalty provision, the maximum pecuniary penalty was 1,000 penalty units for a body corporate and 200 penalty units for a person other than a body corporate.
Section 49(3) provided that the orders that could be made under s 49(1)(c) included injunctions and any other orders that the court considered necessary to stop the conduct or remedy its effects, including orders for the sequestration of assets. Section 49(5) provided that a pecuniary penalty was payable to the Commonwealth or to some other person if the court so directed, and could be recovered as a debt.
Section 49(6)(a) deemed the Commissioner to be an eligible person. Section 75(7) had the effect that the Federal Court was the only eligible court in relation to an act or omission for which an organisation, or a member of an organisation, was liable to be proceeded against for a pecuniary penalty.
Amendments and transitional provisions applicable to these appeals
By item 1 of Sched 1 to the Building and Construction Industry Improvement Amendment (Transition to Fair Work) Act 2012 (Cth) ("the Transition Act"), the name of the BCII Act was changed to the Fair Work (Building Industry) Act 2012 (Cth) ("the FWBI Act"). Under s 9 of the FWBI Act, there was established the Director of the Fair Work Building Industry Inspectorate ("the Director") and, under s 10, functions broadly similar to those previously performed by the Commissioner were vested in the Director.
At the same time, by item 52 of Sched 1 to the Transition Act, Pt 1 of Ch 7 of the BCII Act was repealed and replaced by Pt 1 of Ch 7 of the FWBI Act with the effect that, thenceforth, all civil penalty provisions were removed from the legislation. Item 1 of Sched 2 to the Transition Act provided, however, for regulations dealing with matters of a transitional, saving or application nature relating to amendments made by that Act; and, by s 2.3 of the Building and Construction Industry Improvement Amendment (Transition to Fair Work) Regulation 2012 ("the Transition Regulation"), it was provided that, if a proceeding could have been started under the BCII Act in relation to conduct that happened before the commencement of the regulation, the BCII Act (other than Divs 1 and 2 of Pt 2 of Ch 7) would continue in force to the extent necessary to allow the proceeding to be started and dealt with. For the purposes of such proceedings, a reference to the Commissioner in the BCII Act is taken to be a reference to the Director under the FWBI Act.
As will be explained, this proceeding concerns conduct that occurred before the Transition Regulation commenced. The effect of the Transition Act and the Transition Regulation, therefore, is that Pt 1 of Ch 7 of the BCII Act applies to this proceeding unaffected by the subsequent amendments.
Procedural history
By originating application dated 23 May 2013, the Director brought civil penalty proceedings in the Federal Court against the Construction, Forestry, Mining and Energy Union ("the CFMEU") and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia ("the CEPU") (together, "the Unions") for contraventions of s 38 of the BCII Act alleged to have been committed in May 2011. The Director sought pecuniary penalties and declarations under s 49 of that Act. Subsequently, the parties filed an agreed statement of facts and submissions ("the Agreed Facts") as to the amounts of civil penalty which they agreed should be imposed. It was agreed that the Unions each contravened s 38 of the BCII Act by virtue of their involvement in contraventions by certain of their officers. The Agreed Facts recorded that the Director and the Unions "consent to and agree to seek from the Court" declarations as to the contraventions and pecuniary penalties of $105,000 against the CFMEU and $45,000 against the CEPU. The Agreed Facts also stated that, "subject to the discretion of the Court to fix an appropriate penalty", those penalty amounts are "satisfactory, appropriate and within the permissible range in all the circumstances".
At a pre-trial directions hearing, the primary judge expressed concern as to the possible application of Barbaro to the proceedings and, as a result, a direction was made under s 20(1A) of the Federal Court of Australia Act 1976 (Cth) that the issue be referred to a Full Court. The Commonwealth was subsequently given leave to intervene. Because the Director, the Unions and the Commonwealth each supported the making of the orders proposed in the Agreed Facts, the Full Court gave leave for separate counsel to appear as contradictors.
On 1 May 2015, the Full Court held that Barbaro does apply to civil penalty proceedings and, consequently, that the parties' agreed penalty submissions could not be received. On that basis the Court adjourned the further hearing of the matter to enable the parties to consider their positions. On 18 June 2015, the Commonwealth was granted special leave to appeal to this Court.
The Commonwealth's appeal is B36 of 2015. The Commonwealth's Notice of Appeal contends in substance that the Full Court erred in ruling that Barbaro applies to civil penalty proceedings under the BCII Act. It seeks an order that the proceeding be remitted to the Federal Court to be determined in accordance with the decision of this Court. The Unions also filed a separate application for special leave to appeal from the orders of the Full Court, which this Court granted on 6 August 2015. The Unions' appeal is B45 of 2015. Their Notice of Appeal seeks, as a preferable alternative to a remitter to the Federal Court, that this Court grant the declarations and orders that were sought in the Agreed Facts. Counsel who appeared as contradictor in the Full Court were given leave to appear in this Court as amici curiae.
The nature of civil penalty regimes
Part 1 of Ch 7 of the BCII Act is typical of civil penalty provisions enacted by the Commonwealth to facilitate the enforcement of various statutory civil regulatory regimes. Section 44 of the Commonwealth Conciliation and Arbitration Act 1904 (Cth) was one of the first such provisions to be enacted. As subsequently re-enacted and amended as s 119 of that Act, it fell for consideration by the Full Court of the Federal Court in Gapes v Commercial Bank of Australia Ltd.
In holding that s 119 created a civil penalty as opposed to criminal liability and, therefore, that the applicable procedure and standard of proof were civil procedure and proof on the balance of probabilities as opposed to criminal procedure and proof beyond reasonable doubt, J B Sweeney J (with whom Smithers, Evatt, Deane and Fisher JJ agreed) observed the clear distinction that had been maintained throughout the history of the Conciliation and Arbitration Act between s 119 (and its predecessors) and other provisions of the Act that imposed criminal liability and criminal penalties of lesser amount. Sweeney J deduced that the legislature had quite consciously adopted the distinction and maintained it for the reason that "[c]onviction always carried a stigma ... [A] conviction and fine even though lesser in amount than a penalty ordered to be paid would be regarded as harsher treatment."
Section 76 of the Trade Practices Act 1974 (Cth), as enacted, was another instance of a civil penalty provision appearing in an Act which maintained a clear distinction between civil penalties and criminal penalties provided for elsewhere in the Act.
Section 76 provided inter alia that, if the court were satisfied that a person had contravened or attempted to contravene a provision of Pt IV of the Act (the restrictive trade practices provisions), the court could order the person to pay to the Commonwealth such pecuniary penalty (not exceeding $250,000 for a body corporate or $50,000 for a person not being a body corporate) as the court determined to be appropriate, having regard to all relevant matters, including the nature and extent of the act or omission, any loss or damage suffered as a result of the act or omission, the circumstances in which the act or omission took place and whether the person had previously been found to have engaged in similar conduct.
Section 78 added that criminal proceedings did not lie against a person for contravention of Pt IV, but s 79 provided that a person who contravened a provision of Pt V of the Act (the consumer protection provisions) other than s 52 was "guilty of an offence punishable on conviction" by a fine not exceeding $10,000 or imprisonment for six months for a person not being a body corporate and by a fine not exceeding $50,000 for a body corporate.
During the Parliamentary debates that preceded the enactment of the Trade Practices Act, the then Attorney‑General of the Commonwealth (Senator Lionel Murphy QC) described the purpose of the Trade Practices Bill 1974 (Cth) in so distinguishing between civil penalties and criminal penalties as follows:
"There is a clear distinction between the trade practices provisions and the consumer protection provisions in the Bill. For the most part, the consumer protection provisions deal with conduct which amounts to a criminal offence. This is in cases where there are false representations or conduct which is obviously of some fraudulent type and which is of a kind ordinarily covered by the criminal law. In the trade practices area, the conduct is more commercial conduct dealing with competitors, driving them out of business and so forth. An endeavour has been made to treat this area in the civil sense. The nature of the penal provisions are such as to create what are called civil offences rather than criminal offences. ...
We think it is important not to import into the trade practices area the notion of criminality as such. ... Inevitably, if the Opposition is successful in its bid to include in the clause the phrase 'beyond reasonable doubt', businessmen who are caught up by these provisions will be treated as criminals."
As will be appreciated, that explanation resonates with the terms of the Full Court's identification in Gapes of the purpose of the distinction between civil penalties and criminal penalties in the Conciliation and Arbitration Act. It is also to be noted that, as history transpired, the opposition were unsuccessful in their bid to include the phrase "beyond reasonable doubt" in cl 76 of the Trade Practices Bill and that, although s 76 as enacted did not state that either standard of proof was applicable, it was later held that it was the civil standard which applied.
Since 1974, the Commonwealth has enacted a considerable number of civil penalty provisions. Some of those provisions are contained in legislation which provides for both civil penalties and criminal penalties, as in the Conciliation and Arbitration Act and the Trade Practices Act previously referred to, while, in other cases, of which the BCII Act was an instance, the legislation provides only for civil penalties. In each case, however, the form of the civil penalty provisions is essentially similar.
In essence, civil penalty provisions are included as part of a statutory regime involving a specialist industry or activity regulator or a department or Minister of State of the Commonwealth ("the regulator") with the statutory function of securing compliance with provisions of the regime that have the statutory purpose of protecting or advancing particular aspects of the public interest. Typically, the legislation provides for a range of enforcement mechanisms, including injunctions, compensation orders, disqualification orders and civil penalties, with or, as in the BCII Act, without criminal offences. That necessitates the regulator choosing the enforcement mechanism or mechanisms which the regulator considers to be most conducive to securing compliance with the regulatory regime. In turn, that requires the regulator to balance the competing considerations of compensation, prevention and deterrence. And, finally, it requires the regulator, having made those choices, to pursue the chosen option or options as a civil litigant in civil proceedings.
Civil penalty procedure
Until the Full Court's decision in this matter, the practice followed in relation to civil penalty proceedings generally accorded with the decisions of the Full Court (Burchett, Carr and Kiefel JJ) in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission and the Full Court (Branson, Sackville and Gyles JJ) in Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd ("Mobil Oil").
NW Frozen Foods was concerned with a civil penalty proceeding brought by the Australian Competition and Consumer Commission ("the ACCC") under s 76 of the Trade Practices Act. As already noted, s 76 provided that, if the court were satisfied that a person had contravened or attempted to contravene a provision in Pt IV of the Act, the court could order the person to pay the Commonwealth a pecuniary penalty not exceeding a specified sum that the court determined to be appropriate having regard to all relevant matters. The provision thus placed responsibility on the shoulders of the court to determine the penalty, having regard to all relevant matters.
The Full Court observed that, because the effects of a contravention on the functioning of markets and other economic consequences were likely to be among the most significant relevant considerations in the determination of penalty, the court would be assisted by the views of the ACCC. Hence, as had earlier been accepted by Sheppard J in Trade Practices Commission v Allied Mills Industries Pty Ltd (No 4) ("Allied Mills"), the Full Court held that it was not inappropriate for the parties to present the facts and analysis of market effects in the form of agreed statements and for the ACCC and the contravener to make joint submissions as to the appropriate level of penalty.
The Full Court further observed that, given the public interest in promoting the negotiated resolution of civil penalty proceedings, and that the fixing of the quantum of penalty is not an exact science, the task of a court in setting a pecuniary penalty was not necessarily to ask itself whether it would independently have come to the precise quantum proposed by the parties. Rather, the court should determine whether the parties' proposal could be accepted as fixing an appropriate penalty. Burchett and Kiefel JJ explained the reasons for that as follows:
"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."
Thereafter, the approach thus sanctioned in NW Frozen Foods was routinely followed until the matter was revisited by the Full Court in Mobil Oil.
As appears from the latter decision, the need for reconsideration of the issue arose from obiter reservations expressed by Finkelstein J and Weinberg J in decisions at first instance. In Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd ("ABB Transmission"), Finkelstein J had observed that consent might be coerced and therefore that the absence of a trial might lead to injustice. He had also posited that, because most matters were resolved without a full hearing on the merits, it was becoming more difficult for a court to determine whether an agreed penalty was appropriate. In Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd ("Colgate"), Weinberg J had stated that agreed submissions as to a specific penalty figure were, in his view, undesirable because he found it difficult to conceive of parties proposing a pecuniary penalty so much beyond the permissible range of penalties that a court would depart from the proposed penalty submission and, hence, that there was a danger of the court being seen to "rubber stamp" decisions taken by the body charged with investigating and prosecuting contraventions. Weinberg J had also suggested that it would be preferable for parties to submit a range of penalties instead of an agreed figure.
In Mobil Oil, the Full Court rejected those concerns as unfounded. Taking them in turn, their Honours observed that when and if a poorly resourced respondent were party to a joint penalty submission, the court should scrutinise the submission and supporting statement of facts with particular care to ensure, so far as possible, that the statement of facts was accurate and the contravener's will had not been overborne. In reality, there was no particular shortage of reported cases in which the question of penalties had been fully agitated in a contested hearing. In any event, each case depended on its own merits and, as NW Frozen Foods demonstrated, if a judge considered that previous cases provided insufficient guidance for the case to be determined, he or she was free to act on that view. Contrary to the supposed improbability of a judge departing from an agreed penalty submission, Wilcox J had only recently done just that in Australian Competition and Consumer Commission v FFE Building Services Ltd: in effect rejecting an agreed penalty submission of $1.5 million and imposing in its place a penalty of more than twice that amount. Contrary, moreover, to the supposed danger of the court being perceived as a "rubber stamp" for agreed penalty submissions, NW Frozen Foods required the court always to form its own view about the appropriate range of penalties. Finally, there would be little advantage in limiting parties to an agreed range as opposed to an agreed figure. A better way of reinforcing the court's responsibility to determine an appropriate penalty was for the court to scrutinise the material presented to it carefully and satisfy itself that it was sufficient to determine whether the agreed penalty was appropriate.
By way of explication, the Full Court added five observations, in substance as follows:
(1) As noted in Allied Mills and NW Frozen Foods, the rationale for giving weight to a joint submission on penalty rests on the saving in resources for the regulator and the court, the likelihood that a negotiated resolution will include measures designed to promote competition and the ability of the regulator to use the savings to increase the likelihood of other contraveners being detected and brought before the courts.
(2) NW Frozen Foods does not mean that a court must commence its reasoning with the penalty proposed by the parties and then limit itself to a consideration of whether the penalty proposed is within the range of permissible penalties. That is one option, but another is to begin with an independent assessment of the appropriate range of penalties and then compare it with the proposed penalty.
(3) The decision in NW Frozen Foods represented a correct application of the approach enunciated by Sheppard J in Allied Mills. As Sheppard J stated, the court is not bound by the figure suggested by the parties. Rather, the court has to satisfy itself that the submitted penalty is appropriate while acknowledging that, uninformed by the agreed penalty submission, the court might have selected a slightly different figure. That approach is correct in principle and it has been cited with approval by the High Court of New Zealand in Commerce Commission v New Zealand Milk Corporation Ltd.
(4) The decision in NW Frozen Foods is consistent with the imperative recognised in Australian Competition and Consumer Commission v Ithaca Ice Works Pty Ltd that the regulator should explain to the court the process of reasoning that justifies a discounted penalty.
(5) The decision in NW Frozen Foods allows for the following possibilities:
(a) if the court is not satisfied that the evidence or information offered in support of an agreed penalty submission is adequate, it may require the provision of additional evidence, information or verification and, if that is not forthcoming, may decline to accept the agreed penalty;
(b) if the absence of a contradictor inhibits the court in the performance of its task of imposing an appropriate penalty, the court may seek the assistance of an amicus curiae or an individual or body prepared to act as an intervener;
(c) if the court is not prepared to impose the penalty proposed by the parties, it may be appropriate to allow the parties to withdraw their consent and for the matter to proceed on a contested basis.
Subsequent criticism of NW Frozen Foods and Mobil Oil
In Australian Securities and Investments Commission v Ingleby ("Ingleby"), the Court of Appeal of the Supreme Court of Victoria refused to follow NW Frozen Foods and Mobil Oil. Weinberg JA, who by that stage had resigned from the Federal Court and been appointed to the Victorian Court of Appeal, delivered the leading judgment. His Honour stated that he regarded NW Frozen Foods and Mobil Oil as "bad law" and "wrongly decided", because:
"they treat the trial judge, who is to impose the pecuniary penalty, as though he or she is exercising an appellate role. Under the approach adopted in those cases, the judge is not independently arriving at the appropriate penalty, but rather asking an entirely different question - whether the agreed figure falls within the range of penalties reasonably available. That is, in substance, an appellate question, and not a first instance question. If the judge is unable to say that the agreed penalty is 'wholly outside' the range, he or she is bound to impose that penalty irrespective of whether it is considered appropriate. That is, in my view, a fundamental departure from the judicial function in relation to sentencing, and one that simply ought not to be countenanced."
As will be seen, the Full Court in this case considered that Weinberg JA thereby substantially anticipated the decision in Barbaro.
Barbaro v The Queen
In Barbaro, a plurality of this Court held that the Victorian and Queensland practice of criminal prosecutors nominating a quantified range of sentences that the Crown considered as open to be imposed in the circumstances of each case ("a MacNeil-Brown range") was wrong in principle and should no longer be followed.
As appears from the reasons of the plurality in Barbaro, that holding was principally informed by three considerations. The first was that it is impossible to define the precise limits of the "available range" of terms of imprisonment that may be imposed on a criminal offender. As McHugh J had observed in Everett v The Queen, the available range is a question on which reasonable minds may differ and therefore it is only when a court of criminal appeal is convinced that a sentence is plainly outside the available range that it is justified in intervening on the ground of manifest excessiveness or manifest inadequacy. It follows that to attempt to predict the "available range" would be to attempt to predict appealable error by means of an impermissible numerical approach to sentencing.
The second reason was that, because it is impossible to define the precise limits of the available range, the essentially negative proposition deriving from House v The King - that a sentence is so far outside the range that it must be the result of a misapplication of principle - cannot safely be transformed into a positive statement of the upper and lower limits within which a sentence may properly be imposed. Since reasonable minds may differ as to the available range - not least because reasonable minds may differ as to the relative weights to be attributed to applicable sentencing considerations - a statement as to the available range of sentences can never be more than an expression of opinion; and, in a criminal proceeding, the Crown's opinion is irrelevant.
Thirdly, it was considered that to permit the Crown to state the bounds of the available range could lead to erroneous views about the importance of such a statement in the sentencing process, with consequent blurring of what should be, and be perceived to be, the sharp distinction between the role of the judge and the role of the prosecutor in the criminal trial process. It was also noted that the supposed usefulness to a sentencing judge of a MacNeil-Brown submission wrongly assumed that the prosecution would act dispassionately in determining the available range.
Subsequent consideration of the application of Barbaro
Several judges at first instance have expressed diverse views as to whether Barbaro applies to civil proceedings. Up to the time of the decision of the Full Court in this case, however, there were only two cases in which judges of the Federal Court undertook a reasoned analysis of the issue. In Australian Competition and Consumer Commission v Energy Australia Pty Ltd ("Energy Australia"), Middleton J held that Barbaro does not preclude agreed penalty submissions in civil penalty proceedings. His Honour emphasised the utility and desirability of agreed penalty submissions as follows:
"The acceptance of agreed penalty amounts (providing always that the Court undertakes its duty to fix the appropriate penalty) increases the certainty of outcome for regulators and wrongdoers. This increases the predictability of outcomes for regulators and respondents and makes it more likely that proceedings will be resolved by agreement in an appropriate way and under the supervision of the Court. This in turn improves deterrence by encouraging the implementation of corrective measures and freeing up the resources of the regulator."
Similarly, in Australian Competition and Consumer Commission v Mandurvit Pty Ltd ("Mandurvit"), McKerracher J concluded that, in the context of the plurality's reasoning as a whole, the holding in Barbaro that the prosecution in a criminal sentencing proceeding should not make a submission as to the bounds of the available range was not intended to apply to civil pecuniary penalty cases. His Honour also endorsed Middleton J's observations as to the utility and propriety of a court receiving and, if appropriate, accepting agreed penalty submissions.
Apart from the Federal Court, the issue also received some reasoned attention in the Victorian Court of Appeal, in Matthews v The Queen, in which a majority concluded that the reasoning in Barbaro is concerned only with the role of the Crown in the sentencing process and therefore does not apply to civil proceedings. The reasoning in Barbaro was subsequently considered by this Court in CMB v Attorney-General (NSW). In that case, it was reaffirmed that in criminal proceedings the determination of the appropriate sentence rests solely with the court, but that the prosecutor remains under a duty to assist the court to avoid appealable error where a sentencing judge indicates the form (as opposed to the duration) of a proposed sentencing order and the prosecutor considers it to be manifestly inadequate.
The decision below
In this matter, the Full Court began their consideration of the issue with what they conceived to be the ratio decidendi of Barbaro. Their Honours identified it correctly, albeit incompletely, as being that "the prosecution's opinion as to sentencing range is irrelevant to the sentencing process". Despite so recognising that Barbaro was confined to criminal proceedings, however, the Full Court also referred to Weinberg JA's criticisms in Ingleby of the approach taken to civil penalty proceedings in NW Frozen Foods and Mobil Oil as having "anticipated at least part of the reasoning of the High Court in Barbaro".
The Full Court specifically rejected Middleton J's analysis in Energy Australia on the basis that the certainty of outcome for regulators and respondents to which Middleton J referred:
"could only be achieved if there were a very high level of expectation that the Court would adopt the agreed outcome. Such an expectation would belie the pious assertion, frequently made, that it is for the Court to make the final decision. It is not clear to us that it is possible to maintain the public perception that the Court imposes the penalty and, at the same time, lead the parties to believe that their agreement will probably be adopted.
With all respect to Middleton J we conclude that his reasons do not offer a viable basis for limiting the applicability of the decision in Barbaro to criminal sentencing."
The Full Court rejected McKerracher J's reasoning in Mandurvit on the basis, they said, that they considered that "[his] Honour seems to have accepted that he was effectively bound by the decision in NW Frozen Foods" and had agreed with the observations of Middleton J.
The Full Court acknowledged that there were "various differences" between the role of the prosecution in a criminal proceeding and the role of a regulator in civil penalty proceedings. But their Honours were of opinion that "none offered a principled basis for declining to apply the reasoning in Barbaro to proceedings for the imposition of a pecuniary penalty" and that, although Barbaro "arose in the context of a misguided assertion as to the prosecution's duty", the plurality's rejection of the proposition that the prosecution had a duty to offer a submission as to the available range "was based upon the view that it would, in any event, be inappropriate for the prosecution to do so". They added that the role of the regulator "would suggest that any view expressed by a regulator is also unlikely to be dispassionate, in the sense in which the High Court used that term", and that a regulator has "neither the history of independence nor detachment from the investigation which are generally characteristics of prosecuting authorities".
The Full Court thus concluded that:
"the public interest in the imposition of pecuniary penalties ... leads to the conclusion that the fixing of the amount of such a penalty is a matter for the Court, and that the parties cannot, by agreement, bind it."
The application of Barbaro
The Full Court's reasoning in this matter should be rejected. Middleton J and McKerracher J were correct in their view that there is an important public policy involved in promoting predictability of outcome in civil penalty proceedings and that the practice of receiving and, if appropriate, accepting agreed penalty submissions increases the predictability of outcome for regulators and wrongdoers. As was recognised in Allied Mills and authoritatively determined in NW Frozen Foods, such predictability of outcome encourages corporations to acknowledge contraventions, which, in turn, assists in avoiding lengthy and complex litigation and thus tends to free the courts to deal with other matters and to free investigating officers to turn to other areas of investigation that await their attention.
Weinberg JA's criticisms in Ingleby of NW Frozen Foods and Mobil Oil did not anticipate the reasoning in Barbaro. As was earlier emphasised, Barbaro was concerned with submissions as to the available range of sentences in criminal proceedings, in the sense described in Everett. That range refers to the spread which notionally separates the indeterminate points beyond which a court of criminal appeal is persuaded that a sentence is so manifestly excessive or inadequate as to be affected by error of principle. In contrast, NW Frozen Foods and Mobil Oil were concerned with the very different conception applicable to civil penalty proceedings that, because fixing the quantum of a civil penalty is not an exact science, there is a permissible range in which "courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another". It is only in that latter sense and only to that extent that the court will not depart from the submitted figure "merely because it might otherwise have been disposed to select some other figure".
NW Frozen Foods and Mobil Oil do not suggest that the task of a judge faced with an agreed civil penalty submission is to determine whether the submitted penalty is "wholly outside" the "range of penalties reasonably available" or that the court is "bound to impose [an agreed] penalty irrespective of whether it is considered appropriate". To the contrary, as was emphasised in Mobil Oil, those cases make plain that the court is not bound by the figure suggested by the parties. The court asks "whether their proposal can be accepted as fixing an appropriate amount" and for that purpose the court must satisfy itself that the submitted penalty is appropriate.
Nor is it "pious" to suppose that judges will do their duty, as they have sworn to do, and therefore reject any agreed penalty submission if not satisfied that what is proposed is appropriate. It would be a travesty of justice if that were not the case. It may be presumed that a judge will do his or her duty according to the oath of office. The public may have confidence that it will be so.
Middleton J and McKerracher J were also correct in their view that what was said in Barbaro applies only to criminal proceedings and, consequently, that nothing said in Barbaro is antithetical to continuing the practice of agreed penalty submissions in civil penalty proceedings.
Contrary to the Full Court's reasoning, there are basic differences between a criminal prosecution and civil penalty proceedings and it is they that provide the "principled basis" for excluding the application of Barbaro from civil penalty proceedings.
A criminal prosecution is an accusatorial proceeding which is governed by the fundamental principle that the burden lies in all things upon the Crown to establish the guilt of the accused beyond reasonable doubt and by the companion rule that the accused cannot be required to assist in proof of the offence charged.
Civil penalty proceedings are civil proceedings and therefore an adversarial contest in which the issues and scope of possible relief are largely framed and limited as the parties may choose, the standard of proof is upon the balance of probabilities and the respondent is denied most of the procedural protections of an accused in criminal proceedings.
Granted, both kinds of proceeding are or may be instituted by an agent of the state in order to establish a contravention of the general law and in order to obtain the imposition of an appropriate penalty. But a criminal prosecution is aimed at securing, and may result in, a criminal conviction. By contrast, a civil penalty proceeding is precisely calculated to avoid the notion of criminality as such.
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."
Moreover, in criminal proceedings the imposition of punishment is a uniquely judicial exercise of intuitive or instinctive synthesis of the sentencing facts as found by the sentencing judge (consistently with the jury's verdict) and the judge's relative weighting and application of relevant sentencing considerations in accordance with established sentencing principle. There is no room in an exercise of that nature for the judge to take account of the Crown's opinion as to an appropriate length of sentence. For the purposes of imposing a criminal sentence, the question is what the judge considers to be the appropriate sentence. Nor can there be any question of a sentencing judge being persuaded by the Crown's opinion as to the range of sentences open to be imposed. As was observed in Barbaro, apart from the conceptually indeterminate boundaries of the available range of sentences and systemic problems which would likely result from a criminal sentencing judge being seen to be influenced by the Crown's opinion as to the available range of sentences, the Crown's opinion would in all probability be informed by an assessment of the facts and relative weighting of pertinent sentencing considerations different from the judge's assessment. That is why it was held in Barbaro that it is inconsistent with the nature of criminal sentencing proceedings for a sentencing judge to receive a submission from the Crown as to the appropriate sentence or even as to the available range of sentences.
In contrast, in civil proceedings there is generally very considerable scope for the parties to agree on the facts and upon consequences. There is also very considerable scope for them to agree upon the appropriate remedy and for the court to be persuaded that it is an appropriate remedy. Accordingly, settlements of civil proceedings are commonplace and orders by consent for the payment of damages and other relief are unremarkable. So are court-approved compromises of proceedings on behalf of infants and persons otherwise lacking capacity, court-approved custody and property settlements, court-approved compromises in group proceedings and court-approved schemes of arrangement. More generally, it is entirely consistent with the nature of civil proceedings for a court to make orders by consent and to approve a compromise of proceedings on terms proposed by the parties, provided the court is persuaded that what is proposed is appropriate.
Possibly, there are exceptions to the general rule. There is, however, no reason in principle or practice why civil penalty proceedings should be treated as an exception. Subject to the court being sufficiently persuaded of the accuracy of the parties' agreement as to facts and consequences, and that the penalty which the parties propose is an appropriate remedy in the circumstances thus revealed, it is consistent with principle and, for the reasons identified in Allied Mills, highly desirable in practice for the court to accept the parties' proposal and therefore impose the proposed penalty. To do so is no different in principle or practice from approving an infant's compromise, a custody or property compromise, a group proceeding settlement or a scheme of arrangement.
It is true that there is a public interest in the imposition of civil penalties as opposed to the purely private interests which are in issue in many civil proceedings. But civil penalty proceedings are by no means the only civil proceedings in which the public interest is involved. Custody disputes involve the public interest. So do group proceedings and schemes of arrangement. So also do taxation, customs and social security appeals, and detention orders; and examples can be multiplied. Yet in each of those cases, it is wholly unexceptionable for a court to accept an agreed submission as to the nature and quantum of relief, provided the court is persuaded that it is an appropriate remedy. Once it is understood that civil penalties are not retributive, but like most other civil remedies essentially deterrent or compensatory and therefore protective, there is nothing odd or exceptionable about a court approving an agreed settlement of a civil proceeding which involves the public interest; provided of course that the court is persuaded that the settlement is appropriate.
It is also true, as the Full Court observed, that the regulator in a civil penalty proceeding is not disinterested. As has been seen, under the BCII Act, the Director's statutory functions include monitoring and promoting appropriate standards of conduct by building industry participants generally. It is, therefore, naturally to be assumed that the Director will fashion penalty submissions with an overall view to achieving that objective and thus perhaps, if not probably, with one eye to considerations beyond the case in hand. That consideration, however, supports, rather than detracts from, the propriety of a court receiving joint (or separate) submissions as to facts and penalty and imposing the proposed penalty if persuaded that it is appropriate. As was emphasised in NW Frozen Foods, it is the function of the relevant regulator to regulate the industry in order to achieve compliance and, accordingly, it is to be expected that the regulator will be in a position to offer informed submissions as to the effects of contravention on the industry and the level of penalty necessary to achieve compliance.
That being said, the submissions of a regulator will be considered on their merits in the same way as the submissions of a respondent and subject to being supported by findings of fact based upon evidence, agreement or concession. As was also said in NW Frozen Foods:
"Courts have learned to be suspicious of claims of secret knowledge; and justice should be done in the light, with the relevant facts exposed to view. It is the Court which bears the responsibility."
But, subject to that imperative, there is no indication in the purpose or text of the BCII Act that the court should be less willing to receive a submission as to the terms and quantum of penalty in a civil penalty proceeding than to receive a submission as to the terms and quantum of relief put up for approval by the court in any other kind of civil proceeding.
The BCII Act expressly provides that the Director's functions include intervening in proceedings and making submissions in accordance with the Act and it does not impose any express limitation or restriction on the evidence, materials or submissions which may be received from the Director. By providing for civil penalty proceedings, it implicitly assumes the application of the general practice and procedure regarding civil proceedings and eschews the application of criminal practice and procedure.
That impression is fortified by the provision made in s 49 of the BCII Act for civil penalty proceedings to be instituted by a range of eligible persons, including persons who are affected by a putative contravention, and for a range of remedies, including an order requiring the defendant to pay a specified amount by way of compensation for damage suffered by another person as a result of the contravention. There can be no question that a person affected by a contravention who brought a civil penalty proceeding under s 49 would be entitled to make submissions to the court as to the terms and quantum of the relief sought, just as there can be no question that the respondent to such a proceeding would be entitled to make submissions as to the terms and quantum of any relief to be granted. And the legislation draws no distinction between the procedure applicable to such a proceeding and the procedure which is to apply to a proceeding instituted by the Director. Rather, by conditioning the court's power to make a civil penalty order on application by an eligible person in a civil proceeding, s 49 appears to contemplate that whoever be the eligible person will identify the relief which is sought, not only in the initiating process but also in final address.
The Full Court considered it to be significant that the BCII Act did not expressly provide for the Director to make submissions as to penalty. But the absence of any express provision of that kind is unremarkable. It is to be presumed that Parliament intended that the civil penalty provisions of the BCII Act would be applied in accordance with the long-established "general system of law". There is nothing in the BCII Act which necessarily implies the exclusion of the prima facie entitlement of the Director as a party to a civil penalty proceeding to make submissions as to the form and quantum of the relief which is sought and, contrary to the Full Court's reasoning, the phenomenon of a regulator making submissions as to the terms and quantum of a civil penalty does not lead to and is not likely to lead to erroneous views about the importance of the regulator's opinion in the setting of appropriate penalties. In contradistinction to the role of the Crown in criminal proceedings, it is consistent with the purposes of civil penalty regimes of which Pt 1 of Ch 7 of the BCII Act is typical, and therefore with the public interest, that the regulator take an active role in attempting to achieve the penalty which the regulator considers to be appropriate and thus that the regulator's submissions as to the terms and quantum of a civil penalty be treated as a relevant consideration.
The Unions' further submissions
The Unions pressed two submissions which went beyond the Commonwealth's submissions. First, it was submitted that, in the absence of an amendment to the regulator's initiating process, a court which rejects an agreed penalty nonetheless may not impose a penalty greater than that sought in the initiating process. Given that these appeals are from a decision of the Full Court adjourning the penalty proceedings and that no penalty orders have in fact been made, that issue is not within the scope of the matter and is therefore inappropriate to decide. It is sufficient to record that, as was said in Mobil Oil, if a court is disposed not to impose the agreed penalty, it may be appropriate to give the parties an opportunity to withdraw their consent or otherwise be heard.
Secondly, it was submitted that the agreed penalty orders sought in the Full Court should be granted by this Court. That submission must be rejected. As the Director points out, the task of determining an appropriate civil penalty is usually performed by a single judge at first instance. That task has not yet been performed in this proceeding and should not be performed for the first time by this Court on appeal.
Conclusion and orders
For these reasons, the appeals should be allowed. The order of the Full Court adjourning the further hearing of the matter should be set aside and the matter should be remitted to the Federal Court for determination according to law.