Civil Penatlies: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 (9 December 2015)

The High Court of Australia has ruled that courts may consider civil penalties that have been agreed and proposed by parties.

Regulators in this case sought penalties of up to $150,000 from two unions following breaches of the Building and Construction Industry Improvement Act 2005 (Cth).  The Full Federal Court had applied the High Court’s decision in Barbara v The Queen, in ruling that the penalty must be fixed by the court, without the assistance of a range of penalties agreed or put forward by the parties.

The High Court examined the applicability of its own ruling in Barbara, which concerned criminal sentencing, and held that different public policy considerations applied in respect of civil penalty proceedings.  The ruling in Barbara was not overruled, but identified as being ‘grounded’ in the special nature of criminal proceedings as they have developed historically.

The purpose of criminal punishment consists of three elements: deterrence, both general and individual, retribution and rehabilitation.  Balancing these elements in a criminal proceeding was a uniquely judicial function.  In contrast, civil penalties are a method of economic regulation of business activity.  They are not concerned with retribution or rehabilitation.

In contrast, allowing parties to agree to a range of penalties offered a greater level of predictability of outcome for litigants. This would encourage corporations to acknowledge contraventions and cooperate with regulators, which in turn assists in avoiding lengthy and complex litigation.  This frees the courts to deal with other matters, and the investigation officers to turn to other areas of investigation.

In the civil context, the High Court held that the parties were free to propose a penalty, but the court must satisfy itself as to whether the amount submitted was appropriate.

Read the full decision here