High Court decides maximum civil penalties are not just for the worst conduct

• Published date: 02 May 2022
• Law Firm: Corrs Chambers Westgarth
• Author: Richard Flitcroft and Steven Rice

In an important decision impacting enforcement actions initiated by regulators seeking civil penalties, the High Court of Australia has held that maximum penalties are not reserved for only the 'worst' category of contravening conduct.

The Court's recent decision in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 will be relevant to enforcement actions brought against organisations or individuals by a range of state and federal regulators, including the ATO, ASIC, APRA, the ACCC, AUSTRAC and the Australian Building and Construction Commissioner (ABCC).

The non-application of 'proportionality' in civil penalty proceedings is something which regulators have argued for in a variety of ways and cases, but the fact is that, ever since courts started trying to apply concepts relevant to criminal penalty analysis in civil penalty proceedings, it has resulted in inconsistent analyses.

The High Court's decision will certainly assist the ABCC in seeking significant penalties against repeat offender unions. The decision will also likely have a flow on effect to other regulatory matters - emboldening regulators such as ASIC, the ACCC, APRA, AUSTRAC and the ATO to push more often for higher penalties - and to give courts the comfort to go there.

Background

The appeal to the High Court in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 arose from the commencement of penalty proceedings against both the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) and one of its officers by the ABCC.

The proceedings concerned misrepresentations made by an officer of the CFMMEU. The officer had visited a construction site, and made misrepresentations to two non- union employees of a subcontractor that they would be required to join the CFMMEU before they would be permitted to work at the site. Those representations were admitted to have contravened section 349 of the Fair Work Act 2009 (Cth) (Act). Section 546 of the Act allowed for a maximum penalty of $3,000 for an individual, and $31,500 for a union for each contravention.

The CFMMEU had a history of prior contraventions of section 349 of the Act, and also with other provisions the Act. Since 2000, the CFMMEU had committed at least seven contraventions of section 349 of the Act, and 150 other contraventions of the Act which attracted civil penalties. The CFMMEU 'had form' in not complying with the Act.

Maximum civil penalty awarded against CFMMEU in Federal Court

At first instance in Australian Building and Construction Commissioner v Pattinson...