Regulators' practice of agreeing pecuniary penalties with
businesses has been dealt a serious blow by the Full Bench of the
Federal Court (Director, Fair Work Building Industry Inspectorate v
Construction, Forestry, Mining and Energy Union  FCAFC
Although the decision was based on the Building and Construction
Industry Improvement Act 2005 (Cth), the decision will affect
various Commonwealth regulators (and possibly state regulators),
such as the Fair Work Ombudsman, the ACCC, ASIC, the ATO, ACMA, and
Agreed pecuniary penalties – regulators' current
Going to court is expensive for all parties, so regulators will
often, in appropriate cases, try to limit the amount of court days
by negotiating agreed sets of facts and penalties, including
pecuniary penalties, which are then presented to the court in joint
For example, the ACCC has described joint submissions as to
penalty as, "critical to its capacity to conduct effective
negotiations with the parties and to efficiently resolve
enforcement proceedings". It considers that if it could not
make joint submissions "the majority of matters would be
likely to proceed to a contested hearing, at least in relation to
penalty, and in many cases, flowing over to a contest in relation
to liability (in full or in part) and other relief".
Pecuniary penalties are similar to criminal punishment
Although they are civil penalties, pecuniary penalties share
many characteristics with criminal penalties, including their use
as a way to punish, and to deter, using the coercive power of the
In 2014, the High Court held that agreed penalties in criminal
cases should not be submitted to the court, because:
the expression of an identified range (as opposed to sentencing
statistics and information concerning sentences imposed in other,
more or less comparable cases) can never be more than an
a sentencing judge need not, and should not take such an
opinion into account
notwithstanding any plea agreement (or "settlement")
it remains the prosecutor's duty to decide upon the charge to
it is for the accused alone to decide whether to plead guilty
to a preferred charge, which decision will be made without
knowledge of the sentence which will be imposed; and
it is for the judge, alone, to fix the sentence (Barbaro v The
Queen  HCA 2).
The Full Federal Court held that the same considerations apply
to pecuniary penalties under the Building and Construction Industry
Improvement Act. Anything else would limit the Court's
discretion in applying the appropriate sentence, and the Act did
not expressly allow that.
How regulators and businesses can make submissions on pecuniary
While this is a decision under the Building and Construction
Industry Improvement Act, it will affect other regulators who have
a similar practice, such as the ACCC, ASIC, the ATO, and Fair Work
As a result, they cannot submit a suggested range of pecuniary
penalties to the court, or an agreed figure, other than to the
extent that the agreement demonstrates a degree of remorse and/or
co-operation on the part of each respondent.
They can, however, make submissions on:
the relative seriousness of the misconduct;
the relevant sentencing principles; and
any comparable decisions.
Ultimately, however, the court must make its own decision on the
appropriate pecuniary penalty for each breach, and then consider,
and, if necessary, adjust the overall amount.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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