Regulators and the businesses they regulate can avoid lengthy
court proceedings and negotiate an agreed set of facts and a
proposed penalty, following a decision by the High Court this
morning (Commonwealth of Australia v Director, Fair Work Building
Industry Inspectorate  HCA 46).
Going to court is expensive for all parties, so regulators have
often, in appropriate cases, tried to limit the amount of court
days by negotiating agreed sets of facts and penalties, including
pecuniary penalties, with the business. These agreed facts and
penalties were, until the case in the Federal Court last year
presented to the court in joint submissions. The court does not
accept these blindly; it considers them, but is free to reject them
and set its own penalty.
In Barbaro, the High Court had previously held that in criminal
proceedings prosecutors and the accused could not agree upon
sentences to present to the court. Did this mean in civil
proceedings regulators and companies couldn't agree upon
suggested penalties? V The Full Federal Court thought so, saying in
May that agreed penalties limit the Court's discretion in
applying the appropriate sentence.
This meant that both regulators and businesses lost a
powerful incentive to negotiate and avoid a full trial on all the
The High Court's decision today overturned the Full Federal
Court, and reinstated the previous settlement process, saying that
civil penalty proceedings and criminal proceedings have different
goals. The regulator in a civil penalty case is trying to protect
the public and therefore wants to achieve compliance, prevention
and, possibly, compensation. In criminal cases, sentencing has
those aims, but in addition it must deal with the accused's
retribution and rehabilitation.
In this case, the Building and Construction Industry Improvement
Act does not expressly rule out agreed penalties: in fact, "by
providing for civil penalty proceedings, it implicitly assumes the
application of the general practice and procedure regarding civil
proceedings and eschews the application of criminal practice and
Agreeing facts and pecuniary penalties with
Although the decision was based on the Building and Construction
Industry Improvement Act 2005 (Cth), the decision affects various
Commonwealth regulators (and possibly state regulators), such as
the ACCC the Fair Work Ombudsman, ASIC, the ATO, ACMA, and
For businesses which want to avoid lengthy court hearings to
establish facts, liability, and any penalty, this decision is good
news. The basic settlement process is:
The regulator and the business will be able to negotiate and
come to an agreed set of facts and suggested penalty.
The court will need to be persuaded that this agreement is
accurate and that the penalty which the parties propose is an
appropriate remedy in the circumstances. It does not have to be the
penalty the court itself would have imposed, as long as it is not
an inappropriate one, in the context of previous decisions.
If the court considers the agreed penalty is not appropriate,
it can give the parties an opportunity to withdraw their consent or
otherwise be heard.
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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