Parties Determine Appropriate Penalty for Contravention of Statute

Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 (13 April 2022)

The first respondent union officer and second respondent union each contravened s 349(1) of The Fair Work Act twice.  The parties are in dispute over the determination of the appropriate penalty.  The Court, in resolving this dispute, assessed whether discretion under s 546 of Act constrained by notion of proportionality drawn from criminal law.

Facts:

A building site in Frankston, Victoria was occupied by Multiplex Constructions Pty Ltd, the principal contractor.  The first respondent ("Mr Pattinson") was an employee of Multiplex.  He was also an officer of the second respondent union ("the CFMMEU") and was the union delegate on site.  A subcontractor was engaged to install solar panels at the site.  Two employees of the subcontractor arrived at the site to carry out that work and attended an induction conducted by Mr Pattinson.

During the induction, Mr Pattinson enquired whether the two employees were "union" and whether they had a "ticket".  This enquiry alluded to the CFMMEU's long standing "no ticket, no start" policy, pursuant to which all workers are required to hold union membership in order to work on construction sites where the CFMMEU has a presence.  Since at least the advent of the Workplace Relations Act 1996 (Cth), the implementation of such a policy has been unlawful.  Neither employee was a member of the CFMMEU and they told Mr Pattinson as much.

As a result of the misrepresentations, the two employees were prevented from performing any work on the site that day.  In civil penalty proceedings brought by the Australian Building and Construction Commissioner ("the Commissioner") in the Federal Court of Australia, it was accepted that, by the misrepresentations, Mr Pattinson twice contravened s 349(1) of the Act, in that he knowingly or recklessly made a false or misleading representation about the supposed obligation of the two employees to become members of an industrial association.  It was also accepted that Mr Pattinson, in making the misrepresentations, acted in his capacity as a delegate of the CFMMEU, and therefore his action was attributable to the CFMMEU pursuant to s 363 of the Act.  It followed that the CFMMEU itself also contravened s 349(1).

The primary judge (Snaden J) imposed civil pecuniary penalties in the amounts of $6,000 in respect of Mr Pattinson ($3,000 for each contravention) and $63,000 in respect of the CFMMEU ($31,500 for each contravention).  His Honour was minded to fix the penalty for the CFMMEU at the statutory maximum of $63,000 for each contravention, having regard to the CFMMEU's longstanding history of contraventions of the Act in furtherance of its "no ticket, no start" policy.  However, because both contraventions occurred in the course of a single episode, the primary judge reduced each penalty by half, so that their total reflected a single maximum penalty.  On appeal, the Full Court of the Federal Court of Australia (Allsop CJ, Besanko, White, Wigney and Bromwich JJ) held that the history of the CFMMEU's prior contraventions and the deterrent purpose of s 546 did not warrant the imposition of a penalty that was disproportionate to the nature, gravity and seriousness of the circumstances of the instant contraventions.

The Full Court set aside the penalties imposed by the primary judge and, exercising afresh the discretion conferred by s 546, proceeded to impose penalties in the lesser amounts of $4,500 in respect of Mr Pattinson ($4,000 and $500) and $40,000 in respect of the CFMMEU ($38,000 and $2,000).  The Commissioner appealed to this Court, contending that the Full Court made two related errors: first, in regarding the discretion under s 546 of the Act as constrained by a "notion of proportionality"; and secondly, in regarding the statutory maximum civil penalty as providing a "yardstick" according to which the maximum may be imposed only in a case involving the worst category of contravening conduct.

Issues:

I. Whether or not the discretion under s 546 of Act is constrained by the notion of proportionality which is drawn from criminal law.

II. Whether or not the statutory maximum penalty for a civil remedy provision may be imposed only for the worst category of a contravening conduct.

Applicable law:

Pattinson v Australian Building and Construction Commissioner [2020] FCAFC 177 - where the Full Court of the Federal Court of Australia (Allsop CJ, Besanko, White, Wigney and Bromwich JJ) held that the history of the CFMMEU's prior contraventions and the deterrent purpose of s 546 did not warrant the imposition of a penalty that was disproportionate to the nature, gravity and seriousness of the circumstances of the instant contraventions.

Australian Building and Construction Commissioner v Pattinson (2019) 291 IR 286 at 291‑292 [3]‑[9] - relied upon in holding that since at least the advent of the Workplace Relations Act 1996 (Cth), the implementation of such a policy has been unlawful.

Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25 at 63 [156] - provides that what is required is that there be "some reasonable relationship between the theoretical maximum and the final penalty imposed. 

NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285 at 293 - provides that reasonable relationship is established where the maximum penalty does not exceed what is reasonably necessary to achieve the purpose of s 546: the deterrence of future contraventions of a like kind by the contravenor and by others.

Gapes v Commercial Bank of Australia Ltd (1979) 27 ALR 87 at 90 - provides that criminal penalties import notions of retribution.  

Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) 229 FCR 331 at 357-358 [65]-[67] - held that 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.

Broadway on Ann [2018] FCAFC 126; (2018) 265 FCR 208 at 231 [93] - where it was said that a history of prior contraventions, while relevant, could not lead to the imposition of a penalty that was disproportionate to the gravity of the instant contraventions.

Bendigo Theatre Case [No 2] [2018] FCA 1211 - Tracey J said that "the maximum penalty prescribed for an offence is intended for cases falling within the worst category of cases for which that penalty is [prescribed]". 

Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [No 2] [2015] FCA 1462 - held that the gravity of the offending, in such cases, is to be assessed by reference to the nature and the quality of the recidivism rather than by comparison of individual instances of offending.

Comcare v Banerji [2019] HCA 23 - provides that the discretion conferred by s 546 is, like any discretionary power conferred by statute on a court, to be exercised judicially, that is, fairly and reasonably. 

Agreed Penalties Case [2015] HCA 46 - held that the CFMMEU's continuing defiance of s 349(1) indicates that it regards the penalties previously imposed as an "acceptable cost of doing business".

Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2017] FCAFC 159 - provides that proportionality in this context has a normative character foreign to the purpose of the power, whereas concepts such as totality, parity and course of conduct are analytical tools which assist in the determination of a reasonable application of the law.

Pearce v The Queen [1998] HCA 57 - where it does not follow, as the Full Court suggested and as the CFMMEU argued in this Court, from the rejection of the Full Court's "notion of proportionality" that s 546 must be taken to require the imposition of a penalty approaching the maximum in relation to any and every contravention by a recidivist offender.

Analysis:

The penalties fixed by the primary judge were no more than might be considered to be reasonably necessary to deter further contraventions of a like kind by Mr Pattinson, the CFMMEU or others. They represented a reasonable assessment of what was necessary to make the continuation of the CFMMEU's non‑compliance with the law, amply demonstrated by the history of its contraventions, too expensive to maintain.  Under the civil penalty regime provided by the Act, the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the Act by the deterrence of further contraventions of the Act.  The power conferred by s 546 of the Act is not subject to constraints drawn from the criminal law and there is no place for a "notion of proportionality", in the sense in which the Full Court used that term, in a civil penalty regime.

Further, and relatedly, their Honours were misled by the view that the Act required that the maximum penalty be reserved for only the most serious examples of the offending comprehended by s 349(1), and that this principle could prevent the court from imposing the maximum penalty even though a penalty in that amount might reasonably be considered to be necessary to deter future contraventions of a like kind.  The Full Court erred in treating the statutory maximum as implicitly requiring that contraventions be graded on a scale of increasing seriousness, with the maximum to be reserved exclusively for the worst category of contravening conduct.  Nothing in the text of s 546, or its broader context, requires that the maximum constrain the statutory discretion in this way.

Conclusion:

The appeal is allowed and the orders of the Full Court of the Federal Court of Australia made on 16 October 2020 are set aside.