PENALTIES - GENERAL PRINCIPLES & AGREEMENT
27 The source of statutory power to impose a penalty is to be found in s 546 of the Fair Work Act. That section provides, in relevant part, as follows:
Pecuniary penalty orders
(1) The Federal Court, the Federal Circuit Court or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.
Determining amount of pecuniary penalty
(2) The pecuniary penalty must not be more than:
(a) if the person is an individual - the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2); or
(b) if the person is a body corporate - 5 times the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2).
…
(note omitted)
In the present case, the maximum penalty that may be imposed upon an individual for a contravention of s 417 is $12,600; in the case of a body corporate, the maximum penalty is $63,000.
28 Although there is agreement between the parties as to the general principles to be applied in the present case, three matters should be briefly addressed.
29 First, a primary purpose in imposing penalties is deterrence: Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 at [55], (2015) 258 CLR 482 at 506 per French CJ, Kiefel, Bell, Nettle and Gordon JJ ("Director, Fair Work Building Industry Inspectorate"). See also: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [98] to [99], (2017) 254 FCR 68 at 88 per Dowsett, Greenwood and Wigney JJ.
30 Second, the process of quantifying an appropriate penalty is not an "exact science" but rather a process of "instinctive synthesis": Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [27] to [28], [55] and [78]; (2008) 165 FCR 560 at 567 to 568 per Gray J, 572 and 577 per Graham J. It nevertheless remains a process guided by a consideration of a number of well-accepted factors. In Kelly v Fitzpatrick [2007] FCA 1080 at [14], (2007) 166 IR 14 at 18 to 19, Tracey J was called upon to quantify penalties for admitted contraventions of the Transport Workers Award 1998 and in doing so adopted the following as a "non-exhaustive range of considerations" to be taken into account:
the nature and extent of the conduct which led to the breaches;
the circumstances in which that conduct took place;
the nature and extent of any loss or damage sustained as a result of the breaches;
whether there had been similar previous conduct by the respondent;
whether the breaches were properly distinct or arose out of the one course of conduct;
the size of the business enterprise involved;
whether or not the breaches were deliberate;
whether senior management was involved in the breaches;
whether the party committing the breach had exhibited contrition;
whether the party committing the breach had taken corrective action;
whether the party committing the breach had cooperated with the enforcement authorities;
the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
the need for specific and general deterrence.
These factors have since been cited in other decisions of this Court: e.g., Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union [2008] FCAFC 170 at [57] to [58], (2008) 171 FCR 357 at 374 to 376 per Branson and Lander JJ; Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd (No 4) [2017] FCA 580 at [47] to [48] per Gilmour J; Registered Organisations Commission v Mijatov [2018] FCA 939 at [45] per Bromwich J.
31 Third, in circumstances where the parties have reached agreement as to the facts and further reached agreement as to the appropriate quantum of penalty, this Court can act upon that agreement if it is "appropriate" to do so: Ministry for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at [51], (2004) ATPR 41-993 ("Mobil Oil"). Branson, Sackville and Gyles JJ were there considering this issue by reason of an admitted contravention by Mobil of s 10 of the Petroleum Retail Marketing Sites Act 1980 (Cth). Their Honours referred to the earlier decision of the Full Court of this Court in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 ("NW Frozen Foods") and continued:
[51] The following propositions emerge from the reasoning in NW Frozen Foods:
(i) It is the responsibility of the Court to determine the appropriate penalty to be imposed under s 76 of the [Trade Practices] Act in respect of a contravention of the [Trade Practices] Act.
(ii) Determining the quantum of a penalty is not an exact science. Within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another.
(iii) There is a public interest in promoting settlement of litigation, particularly where it is likely to be lengthy. Accordingly, when the regulator and contravenor have reached agreement, they may present to the Court a statement of facts and opinions as to the effect of those facts, together with joint submissions as to the appropriate penalty to be imposed.
(iv) The view of the regulator, as a specialist body, is a relevant, but not determinative consideration on the question of penalty. In particular, the views of the regulator on matters within its expertise (such as the ACCC's views as to the deterrent effect of a proposed penalty in a given market) will usually be given greater weight than its views on more "subjective" matters.
(v) In determining whether the proposed penalty is appropriate, the Court examines all the circumstances of the case. Where the parties have put forward an agreed statement of facts, the Court may act on that statement if it is appropriate to do so.
(vi) Where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure is, in the Court's view, appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if within the permissible range.
The same approach has been adopted when considering the imposition of penalties to be imposed under the Fair Work Act: DP World Sydney Ltd v Maritime Union of Australia (No 2) [2014] FCA 596 at [20] to [22], (2014) 318 ALR 22 at 27 to 29 per Flick J.
32 As recognised by Gageler J in Director, Fair Work Building Industry Inspectorate [2015] HCA 46 at [68], (2015) 258 CLR at 511 the "the principles applicable to agreed penalty submissions in a civil penalty proceeding remain those articulated in NW Frozen Foods … and Mobil Oil…".