Throwing the book at a serial offender: the primacy of deterrence in fixing civil penalties
Australian Building and Construction Commissioner v Pattinson & Anor  HCA 13
In Australian Building and Construction Commissioner v Pattinson & Anor  HCA 13, a 6-judge majority of the High Court have reiterated the primacy of deterrence in determining civil penalties. Overturning a decision of the Full Court of the Federal Court, the High Court reinstated an order by the trial judge imposing the maximum penalty available against a serial offender, for deliberate and systematic contraventions. In doing so, the majority held that the purpose of deterrence was not constrained by notions of proportionality, that might otherwise be drawn from the criminal law.
This case concerned contraventions of civil penalty provisions within the Fair Work Act 2009 (Cth) (the Act).
The contraventions occurred on a construction site in Frankston, Victoria, where Multiplex Constructions was the principal contractor. The first respondent, Mr Pattinson, was an employee of Multiplex, and a union delegate for the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) – the second respondent. A subcontractor had been engaged to install solar panels. In inducting its employees to the site, Mr Pattinson asked whether they were members of a union – they were not. Mr Pattinson then told them they would need to join a union before being permitted to work on the site.
Mr Pattinson’s enquiry was consistent with a longstanding “no ticket, no start” policy held by the CFMMEU, requiring all workers on sites where the CFMMEU had a presence to hold a union membership. It was not in dispute that the enforcement of that policy has been unlawful since at least the introduction of the Workplace Relations Act 1996 (Cth). Accordingly, the Commissioner brought proceedings for civil penalties against both Mr Pattinson and the CFMMEU itself. Each of Mr Pattinson and the CFMMEU admitted the contraventions in question.
The penalty at trial
In respect of the CFMMEU, Snaden J of the Federal Court imposed the maximum penalty of $63,000 under s 546 of the Act. In doing so, Snaden J had regard to the CFMMEU’s longstanding history of contraventions in furtherance of its “no ticket, no start” policy. In particular, the trial judge had held that the CFMMEU was notoriously a serial offender, had acted historically in disregard of the law, and appeared to treat the imposition of civil penalties as “little more than the cost of its preferred business model”.
In respect of Mr Pattinson, Snaden J imposed a penalty of $6,000.
Appeal to the Full Federal Court
On appeal, the Full Court of the Federal Court held that the history of the prior contraventions, and the deterrent purpose of s 546 of the Act did not warrant the imposition of a penalty that was disproportionate to the nature, gravity and seriousness of the contraventions in question. Rather, the Full Court considered the maximum penalty should be reserved for only the most serious of contraventions. They set aside the original penalties, and imposed a penalty of $4,500 in respect of Mr Pattinson, and $40,000 for the CFMMEU.
The Commissioner appealed to the High Court.
High Court – majority of Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ
In the High Court, the majority accepted that the Full Court had made two errors:
- Firstly, it had erred in considering that a penalty must be proportionate to the seriousness of the conduct in question: . Rather, the primary consideration was deterrence.
- Secondly, it had erred in its view that the maximum penalty must be reserved for only the most serious examples of contraventions, and that this might prevent the imposition of the maximum penalty even where necessary to prevent future contraventions. Rather, there need only be a “reasonable relationship” between the theoretical maximum and the penalty that was finally imposed. That relationship was established where the maximum penalty did not exceed what was reasonably necessary to achieve the purpose of deterrence: .
Purpose of civil penalties
The majority affirmed that civil penalty provisions have the “statutory function of securing compliance with provisions of the [statutory] regime”: . Although the courts may adapt principles from the law of criminal sentencing, there were basic differences between the two: . Most importantly, where criminal sentencing imports notions of retribution and rehabilitation, civil penalties are imposed primarily, if not solely, for the purpose of deterrence: . The majority concluded that this was consistent with previous key cases on civil penalties:  – .
Proportionality (in a retributive sense) does not apply
Accordingly, the majority concluded that the notion of proportionality was so closely connected to the central role of retribution in criminal sentencing that it could not be translated coherently into the context of civil penalties: . In a criminal context, it acted to constrain the sentencing discretion, by requiring that the punishment fit the crime, and be no greater retribution than the offender deserves. In a civil penalty context, retribution has no part to play: .
Rather, the majority held instead that the penalty discretion must be exercised fairly and reasonably, having regard to the subject matter, scope and purpose of the legislation. If the term “proportionality” was to be used at all, it was merely to strike a balance between the purpose of deterrence, and oppressive severity: -.
In this case, the use of “proportionality” to reduce the severity of the penalties imposed on the CFMMEU was to fail to have a proper regard for deterrence. The majority concluded that the CFMMEU’s repeated and historic contraventions of the Act were a compelling indication that the penalties imposed previously had not been sufficient, but rather were regarded as an “acceptable cost of doing business”: .
Other concepts from criminal sentencing: totality, parity, course of conduct
The majority sought to distinguish their views on the non-application of the principle of proportionality, with other principles that are borrowed from the criminal law and regularly applied in the context of civil penalties: totality, parity, and the penalising of a course of conduct. In the view of the majority, each of those principles were analytical tools, which assisted in determining a reasonable penalty. In contrast, the principle of proportionality was normative in character, developed in the context of retributive punishment: .
Dealing with recidivists and serial offenders
Although restoring the maximum penalty in this instance, the majority cautioned that a similar approach would not necessarily be warranted in every case of recidivist contraventions: . For example, it would not be warranted if the repeat offending was inadvertent, or based on mere ignorance, or had been met with an internal response – ie discipline for the officer in question, or some act of public remorse: .
Aggravating factors and the relevance of other laws
The majority warned against making too much of the fact that the contraventions were not accompanied by violent or intimidatory behaviour, in terms of assessing the seriousness of the contravention. The contravention in question was concerned with protecting rights of association in the workplace, not matters of that nature. If aggravating circumstances of that nature should arise in the context of a different contravention, they might well engage other laws, and attract a separate sanction in their own right: .
Outcome and conclusion
In conclusion, the majority stated that the theory of imposing a civil penalty was that the penalty is intended to encourage compliance with the law (and to deter non-compliance), by ensuring that contraventions are viewed by the contravener (and other potential contraveners) as an economically irrational choice: . Accordingly, where it is evident that a contravention has occurred as a matter of deliberate industrial strategy, and without regard for the law, a court may reasonably conclude that no penalty short of the maximum will be appropriate: .
Accordingly, the majority restored the original penalties set by the trial judge, including the maximum as ordered against the CFMMEU.
Justice Edelman’s dissent
In a dissenting judgment, Edelman J forcefully disagreed with the favouring of deterrence as the primary criterion of justice in determining civil penalties, over principles of “just dessert”: . Edelman J stated further (again disagreeing with the majority’s analysis) that the focus on “just dessert” was already reflected in the three critical principles that were regularly applied in a penalty context:
- totality (ie that cumulative penalties should not be incommensurate with the whole of the contravening conduct): ;
- consistency (ie that similar conduct should attract a similar penalty): ; and
- the course of conduct principle (ie that penalties for multiple offences, forming part of a single course of conduct, should be penalised based on the entirety of that conduct): .
Although in the minority, Edelman J’s dissent raises practical issues and issues of principle that may be grappled with further in subsequent cases.
 Following Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 (the Agreed Penalties Case)
 Eg the Agreed Penalties Case; ACCC v TPG Internet (2013) 250 CLR 640; Trade Practices Commission v CSR Ltd  ATPR 41-076; ASIC v Adler (2002) 42 ACSR 80; Kelly v Fitzpatrick (2007) 166 IR 14.