Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate & Ors; Construction, Forestry, Mning and Energy Union & Anor v Director, Fair Work Building Industry Inspectorate & Anor [2015] HCATrans 259 (13 October 2015)

Last Updated: 14 October 2015

[2015] HCATrans 259

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Brisbane No B36 of 2015

B e t w e e n -

COMMONWEALTH OF AUSTRALIA

Appellant

and

DIRECTOR, FAIR WORK BUILDING INDUSTRY INSPECTORATE

First Respondent

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION

Second Respondent

COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA

Third Respondent

Office of the Registry
Brisbane No B45 of 2015

B e t w e e n -

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION

First Appellant

COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA

Second Appellant

and

DIRECTOR, FAIR WORK BUILDING INDUSTRY INSPECTORATE

First Respondent

COMMONWEALTH OF AUSTRALIA

Second Respondent

FRENCH CJ
KIEFEL J
BELL J
GAGELER J
KEANE J
NETTLE J
GORDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 13 OCTOBER 2015, AT 10.17 AM

Copyright in the High Court of Australia

____________________

MR J.T. GLEESON, SC, Solicitor-General of the Commonwealth of Australia: May it please the Court, I appear with MR T.M. BEGBIE and MS R.C.A. HIGGINS for the Commonwealth, which is the appellant in the first matter and the second respondent in the second matter. (instructed by Australian Government Solicitor)

MR J.K. KIRK, SC: May it please the Court, I appear with the learned friend, MR E.P. WHITE, for the two Unions, being the second and third respondents in the first matter and the appellants in the second matter. (instructed by Hall Payne Lawyers)

MR C.J. MURDOCH: May it please the Court, I appear for the first respondent in each appeal. (instructed by Norton Rose Fulbright)

MR C.A. MOORE SC: May it please the Court, I appear with my learned friend, MS D.M. TUCKER, as amici curiae in matter B36 only. (instructed by Australian Government Solicitor)

FRENCH CJ: Yes, Mr Solicitor.

MR GLEESON: Your Honours, the Full Court of the Federal Court has overturned law and practice which has existed for 34 years in that court, dating back to Justice Sheppard in Allied Mills and confirmed on at least two occasions by the Full Court of the Federal Court, first in NW Frozen Foods and secondly in Mobil Oil. It is the Commonwealth’s submission that it was an error for the Full Court to overturn the law and practice previously established in the fixing of civil penalties.

The decision before you holds really two things: firstly, neither party in a civil penalty suit can put an ultimate submission as to the quantum of the penalty because it is a mere opinion which would be irrelevant to the court, save in one immaterial respect, namely, as to contrition, and it would distract the court and it would compromise the independence of the court – that is the first thing the decision holds; secondly, more directly, it holds that if the parties agree the penalty, equally the court must disregard that agreement.

It would probably follow from that that such agreement should not even be made between the regulator or the applicant and the respondent because they will be irrelevant to the court and it is wrong for counsel to put such material before the court. Could I just inquire - are your Honours working off the copy of the judgment in the appeal book or in the Federal Court reports where it is now reported at 229 FCR 331?

FRENCH CJ: Speaking for myself, I work off the appeal book.

GAGELER J: If you could give the paragraph numbers, it would be helpful.

MR GLEESON: All right, so I will give paragraph numbers and, where possible, pages in the appeal book. Could I just go first to the part of the rather lengthy judgment which contains the essential ruling that I have identified: page 93 of the appeal book and paragraph 3 of the judgment. Justices Dowsett, Greenwood and Wigney say there that:

For the reasons which appear below, we have concluded that the reasoning -

of this Court –

in Barbaro –

[2014] HCA 2; 253 CLR 58 –

applies to these proceedings, and that we should therefore have no regard to the agreed figures in fixing the amounts of the penalties to be imposed, other than –

and here is the immaterial exception –

to the extent that the agreement demonstrates a degree of remorse and/or cooperation –

So that is the essential ruling and, as we would read it, the Full Court has reasoned that Barbaro requires this result. It is not that this is some form of analogical reasoning or extension from Barbaro. It is that Barbaro requires this result. Then the balance of the paragraph summarises what are the three features that the judgment develops at more length which lead to the conclusion. The first is that there is said to be similarity between the “instinctive synthesis” involved in the sentencing task and the task of fixing a civil penalty. The second is that:

each process involves invocation of the coercive power of the State –

That is the punishment point – and the third is –

the associated public interest and public perceptions as to the judicial process –

and that is the independence of the court point, that for the parties to put this material before the court either in fact or in perception compromises the role of the court. Now, in the course of our submissions we will need to address each of those three matters, but before I come to them could I really come to an earlier methodological point, which is that we submit that the answer to this case lies primarily in a proper construction of the Act.

It is not really a case about simply a common law process of finding similarities and differences with the criminal trial. It is about what this Act requires on a proper construction and, as we would submit in paragraph 3 of the outline, if one engages in the exercise of text, context and purpose of this Act – and the result will probably be the same for all other civil penalty statutes – the correct conclusion is that section 49 does not prevent either party making the types of submissions in issue here, namely submissions as to relief, whether separate or agreed, whether in relation to the quantum of the penalty, or any other relief that might be granted in response to a civil penalty contravention.

Now, I say it is a methodological point because one of the points made by the amici is that the Court should consider what was said by the Court earlier in Labrador about the unstable and slippery distinction between civil and criminal proceedings and that the Court should do a Labrador-type exercise to reach the conclusion they seek, but, of course, Labrador was a case where the statute did not answer the question. The question in Labrador was whether the case had to be proved beyond reasonable doubt and one could not find the answer to that question in the statute.

So the Court reasoned that one went through either the Judiciary Act or a provision of the relevant criminal act to get to the common law and then one came up with a common law conclusion that if a matter is described as an offence and a conviction and so on, that carried with it the common law principle of proof beyond reason doubt.

Now, there is a strain in the amici’s argument and perhaps in this judgment below that all we are dealing with here is the common law. Does the common law permit this sort of submission to be made? Our anterior submission would be that one construes the statute because it answers the question. So, your Honours, that is what I am now going to come to, which is our proffered construction of the statute.

Just before I do that, what we had adverted to in paragraph 2 was that, although there is no absolute divide between civil and criminal litigation, and some civil litigation involves the public law undoubtedly, there are recognisably distinctive features of each form of litigation. That does not mean there are not cases which have a hybrid character to them, but there are distinctive features. One of the most obvious ones is that the civil trial is adversarial but not accusatorial and another obvious feature is the parties join issue on questions of liability and relief and they are the issues which the Court decides.

Now, in an ordinary civil case, submissions on the appropriate terms of relief, including the quantum, as we have described the relief, are relevant and appropriate, we would submit, in the three ways we have identified in paragraph 10 of the written submissions. The first way they are relevant and appropriate is to identify exactly what claim is being made or is being opposed. So, in that sense, it is a contention and it is an essential part of the procedural fairness between the parties and the joinder of issues before the Court, for the Court to know the contentions with as much specificity as is possible and reasonable in the circumstances.

The second way in which a submission as to the terms of relief is relevant and appropriate in a civil trial is to demonstrate the correct, as in contended for application of the law to the facts. Now, that may seem and sound obvious and in a sense it is obvious, but that is what happens every day in a civil trial. One identifies principle, one identifies facts, but at the end of the day, it is conventional to say this is how the law applies to those facts to produce an outcome which is contended for or opposed and one can think of many cases in the civil area which may indeed have public law elements attached to them where, nevertheless, these sorts of submissions are ordinarily made and received.

One might think at the example of a control order as per the legislation considered in Thomas v Mowbray, the moving party would ordinarily be entitled to say this is what the principles are, these are the facts and, in accordance with that, we seek a control order of this length and with these restrictions. Now, that is perfectly conventional in civil litigation and then the judge or court decides between the competing contentions.

The third way in which these submissions can be relevant in an ordinary civil case is where there is agreement between the parties it is a factual matter which is it evidences the basis upon which they are prepared to resolve a dispute. So, in the present case, the question really that was before the Full Court below was, was there something in the statute which prevented those ordinary rules of civil litigation being followed or, indeed, to the contrary, were those ordinary rules picked up and embraced and then can I come to the statute, just looking at it through that perspective - - -

FRENCH CJ: I suppose when one is talking about the ordinary rules of civil litigation, talking about monetary relief ordinarily, you are talking about something which has a compensatory or restitutionary element to it and obviously there are inferences to be drawn from the evidence and submissions that can be made about what is the appropriate measure and what is the correct - there is a correct answer in a sense assumed by the process. We are in a different - even with a control order, I suppose, there would be a question of what is the length necessary to achieve a certain outcome. When one is talking about a pecuniary penalty, it is a slightly different area of discourse, is it not?

MR GLEESON: Well, there may be differences but what is the court ultimately in the end doing? The court is ultimately, first of all, deciding which remedy or remedies to choose from amongst those sought by the applicant. In the present case, the applicant identifies that it seeks declarations and/or injunctions and/or pecuniary penalties and the court has to first make a decision, does the case warrant such a remedy?

If the court thinks it does warrant a pecuniary penalty, the court then instructs itself on the principles which govern pecuniary penalties and that is, we would submit, essentially, going back to what your Honour said in TPC v CSR, that primarily it is about deterrence, it is about specific and general deterrence. What is an amount of money which, in all the circumstances of the contravention, will serve that purpose of deterrence?

So that is the primary objective of the penalty. Then the court has to work out that amount of money. Now, no doubt in deciding the amount of money there is an evaluation going on and there are a range of factors which could pull in different directions. The seriousness of the contravention will point one way, if there is profit from the contraventions that will point one way. The sort of factors your Honour dealt with in TPC, which is one of the leading cases in the area, which are either in the statute or adduced in a Peko-Wallsend sense, they are the factors the court is grappling with.

However, if one thinks of other civil litigation, in the control order case the court is grappling with what meets the needs of necessity to protect the public which has caused the occasion for the control order, and in that it may have to balance restrictions on liberty with protection of the public. Some of the other examples that we put before the Full Court, but they did not attract any interest, as it were, were exemplary damages, for example.

Exemplary damages - if the court decides it is a case for exemplary damages, the amount will involve a synthesis of a range of factors which may pull in different directions but ultimately the court is saying, what is the single number which marks appropriately the displeasure for this contumelious conduct?

NETTLE J: It sounds a bit like sentencing.

MR GLEESON: It sounds like sentencing in some ways in that there are a range of considerations which may pull in different directions which have to be brought together to produce in the end a single number, no doubt about that. Our submission is that that process is seen all across the civil law in a range of contexts small and large.

So, at the simplest and most trivial level, two parties ask for an adjournment. There may be considerations pulling in different directions, the court has to make a decision. There has to be an answer at the end of the day. One moves through to more complicated and complex evaluative exercises. Again, what the court is doing is identifying the relevant factors which pull in different directions perhaps and synthesising them to come up with a result.

Now, in the Victorian decision your Honour Justice Nettle sat on, there was a discussion of the difference between the inputs, as it were, to the process and the reasoning process that is then applied to those inputs. So we would submit that that is of assistance in this type of area. In the sentencing process one needs to identify, consistent with cases such as Veen, what are the inputs that ought to go into the process and one needs to then come up with an acceptable form of reasoning to reduce them to a single answer, because by definition there has to be a single answer at the end of the day.

When your Honour the Chief Justice says there is a correct answer, well, by definition there is a single answer at the end of the process and it is deemed to be the correct answer by application of those principles. But all across the civil law, particularly in the area of remedies and discretions, one sees this balancing of considerations to produce by definition a single answer.

KEANE J: If we are trying to keep it simple, Mr Solicitor, in a civil case, the obvious question that the judge expects an answer to from the plaintiff is “What do you want?” In a criminal case, the question which the judge will not ask, would not be expected to ask, and the prosecution would not be allowed to answer, is “What do you want?”

MR GLEESON: We embrace that, your Honour, and for good reason, that is the difference.

FRENCH CJ: Does the judge really want to hear what the plaintiff wants, or what the plaintiff is entitled to – in the plaintiff’s submission, of course.

MR GLEESON: That is the benefit of simplicity, your Honour. It is attractive. In formal terms, the moving party says this is that which I claim, I am entitled to, by way of establishing liability and then relief – which in constitutional terms may be the identification of the matter, if it is in federal jurisdiction – but at the practical end, it does come down in the end as “What do you say is the order I should make, and why do you say you are entitled to that order?”

What this decision stands for is that in the civil context, in relation to pecuniary penalties and maybe some other cases – it is not clear what the boundary of this principle is – the moving party cannot do that. What is also even more bizarre about it in a civil context is the respondent cannot be heard to say “Judge, you should not go any further than X”. In a civil penalty case, both parties relate to the court essentially with their hands tied behind their back, where the moving party does not say “This is what the amount should be” and the respondent cannot say “Do not go beyond X”. That seems to be a very large departure from the civil procedure and the question is why in this Act would you find the command to do that.

KIEFEL J: In relation to a pecuniary penalty, evidence is often led, is it not - I am thinking in particular of competition law - directly to identify the appropriate penalty?

MR GLEESON: Yes, and in the first of the two earlier Full Court decisions, NW Frozen Foods, reference was made not only to the ability to lead that expert evidence that if this is a market that we are trying to discipline, we are trying to bring back into order, this is what would be the amount which would be necessary in the context of that market.

So (a) that is often led, but (b) a point made in NW Frozen Foods, with support from the other decisions, including the New Zealand decisions, was that – and I do not want to overplay this – the view of the specialist regulator in the particular market is a relevant factor. It in no way binds the court, of course, but it is a relevant factor that if the specialist regulator in the particular market says in order to achieve deterrence, to discipline this market, in these facts the penalty ought to be at least X. A court can take that into account. Now, on the Full Court’s approach here the regulator just cannot be heard to say that and so that source of information for the court is denied to the court.

KIEFEL J: I was thinking of something even more specific in terms of evidence than something indicative of achieving of a regulatory result. For instance, in relation to competition - behaviour in competition, it might be necessary to identify the profit made by wrongful conduct by looking at the books of account. I mean, one can get quite specific about this. So, in that sense, evidence is led directly to the amount to be disgorged by way of penalty, whatever, or by way of compensation. That is not a feature one finds – in sentencing there is evidence about the effects on people about personal circumstances but not directed to penalty itself.

MR GLEESON: We would embrace that, your Honour, and part of the difficulty for the Full Court is, while they do not say in terms you cannot lead expert evidence of that character, there would seem to be a problem because once you go into the books and records and you prove the profit, the ordinary next submission to make based on that is, well, in this case there were three contraventions and this very large corporation made $50 million profit out of those contraventions.

Now, the ordinary submission to follow from that would be that would be a factor pointing towards a penalty at the higher end of the range permitted under the statute. Yet, once one does that, one probably contravenes the Full Court’s mandate because you are compromising the court by, as it were, telling it what the court should do, whereas of course the regulator is doing that for a different reason.

As I keep saying, the respondent has an interest in all this as well. The respondent has an interest in saying to the court, “No, first of all, that calculation of profit is wrong but, secondly, it might be explained away by certain circumstances and you should not give weight to what appears to be a very large profit”. So all of those, as it were, natural submissions which actually really assist the court as to what it is to do with the facts and with the evidence, they all seem to run up against this principle.

Can I just give one other example, as your Honour has raised that aspect of the process. As many of the Judges on the Court who have sat on civil penalties know, one of the thorny problems of fixing the civil penalty is how one deals with multiple contraventions. The statute may say, for instance, the maximum penalty is $1 million for a contravention but one may have a very large number of pieces of conduct, each of which is technically a contravention.

It happens all the time in a misleading and deceptive conduct case where there are many advertisements, each of which is a contravention but, if you were to give $1 million or even half a million dollars for each contravention you would end up with a penalty which would be grossly disproportionate. Indeed, when the Court considered the TPG decision it was an illustration of that problem because there were many contravening advertisements.

What has happened in that field of discourse – and this we submit is the permissible borrowing from the criminal law, not the impermissible constraint from the criminal law – is to look at the tools of analysis which have been developed in the criminal law context for how one analyses a course of conduct and how one applies totality or some principle like totality. What the Court, at least prior to this decision, has ordinarily received from the moving party is a fairly precise submission, which says, “This is how you grapple with the facts of this case.”

So, although there appear to be 150 misleading telephone advertisements, they all essentially bear the same vice, or they bear three vices and so analytically, you should be looking at the possibility of three penalties, not 150 penalties and as to what those three penalties should be, the maximum is a million, weighing up a whole lot of factors, this case calls for perhaps 250,000 applied three times, $750,000 total penalty.

That is the sort of thing, every day of the week, prior to this decision, the applicant has been doing in the Federal Court and in the State courts which have civil penalties and the respondent, when that issue has been joined, has then been able to say to the court, no, that is the wrong analytical framework. In fact, you should treat this as only a single piece of contravening conduct and $100,000 is an adequate deterrent penalty and then what the court has done has looked at those submissions, has weighed them up and has come up with a result, what we are calling the single, correct result, but the result, because you need to have a single result.

Now, this decision prevents that process and that, we would submit, shows the error in the decision, that in a sense what is the court to do? The court can be given some general guidance from principle, that you can draw analogies from the criminal law in terms of course of conduct or totality but we cannot tell you anything more and to come back to your Honour Justice Keane’s more simple way of explaining this than I am even now trying to explain it, the applicant cannot say to the court, “I want in total, $750,000”, as in, I want in a sense that that is the correct legal entitlement and here is why and the respondent cannot say, no, $250,000 or $100,000 would meet the commands of the statute.

Now, in those general submissions I have made, I have not even yet got to the further public policy considerations which lie behind this, which is that it would seem totally at odds with the ordinary modern approach to civil litigation, if the parties cannot put these submissions because, not only will it be the case that matters will have to go to hearing which would otherwise settle and our evidence before the Full Court established that unconventional proposition, although the Full Court dismissed the evidence.

So, there is not only that, but in the course of the civil trial, they will inevitably be far longer, far more complex and far more expensive because both sides are fighting with their hands tied behind their back and the judge is left, or judges are left unassisted, unassisted on the absolutely critical questions in the case. Now, that seems to run totally contrary to the ordinary civil approach which is to try and balance justice with fairness, with efficiency.

BELL J: That ordinary approach is reflected in relation to civil proceedings, including pecuniary penalty proceedings by the provisions of 37M and N of the Federal Court Act for which there is no analogue in criminal proceedings.

MR GLEESON: Yes, your Honour, and those provisions made even more precise and clear the duties which the courts were, in any event, reaching towards in the civil litigation but their critical duties as we know, they are imposed on the parties and on the representatives and some of your Honours know from this type of civil litigation that there can be mediation and settlements in these types of matters.

When those processes occur, 37M and 37N require the parties and their representatives to try and narrow the issues, reach agreement if possible; if they cannot reach agreement, present the smallest range of issues to the court. The court would know that in that mediation and settlement process, the very thing that you would expect to occur prior to this decision is that the moving party would grapple with the sorts of matter I am talking about and say when you apply course of conduct, when you apply totality, when you have regard to profit, when you have regard to all these matters, we contend that a court would impose $750,000 in total - “What do you say?” and the respondent will have the contrary argument.

When these cases come before the court, if they are agreed, it is often through 37M and 37N having put that discipline on the parties, and the parties are then saying to the court we, with our competing positions on this matter, have come to an agreement which we ask you to consider – not that you are bound by it, but we ask you to consider that agreement and decide whether it is an appropriate penalty in the circumstances that we present before the court. Now, that all comes back to 37M and 37N providing a piece of context which, as your Honour puts to me, governs the civil penalty proceeding as much as any other proceeding.

FRENCH CJ: Those provisions are not critical to your argument, are they?

MR GLEESON: They are not critical to the argument, because you get the answer from the statute itself, but they are context.

FRENCH CJ: I suppose the question one asks is why are not all the considerations which you have just urged upon us equally as good for a case in which a company is being prosecuted for a criminal offence punishable by fines?

MR GLEESON: Because – and it comes back to what your Honour Justice Keane put to me – where one has the criminal process engaged, one has the power of the State engaged against a citizen or person seeking the finding of a breach of the criminal law, seeking a conviction, seeking to have that - - -

FRENCH CJ: Well, here we have a regulator exercising the power of the State.

MR GLEESON: Yes, and it is seeking a finding which, by definition, does not carry the sanction of the criminal law. It is that sanction of the criminal law which then requires a range of protections of the accusatorial system. In Labrador itself, after the discussion about the distinction between civil and criminal being unstable, in the end the Court had to decide what is the standard of proof in this case.

The critical factor that inspired Justice Hayne and Justice Gummow, and was agreed in by the other members of the Court, was that this statute said, or at least provided the option, for a proceeding for an offence resulting in a conviction, and thereby breached the criminal law. The Court said that carries with it a number of things, including proof beyond reasonable doubt.

Now, that is a marker. So in the end although Labrador cautions us do not assume everything is neatly divided into two boxes, in the end, Labrador says it is a binary answer to this question which standard of proof you apply, and you apply beyond reasonable doubt because it is a conviction. Now, when Parliament chose not to proceed through the conviction route in this statute, that has to be given significant weight, we submit, as to how the process is to follow.

Your Honours, I have mentioned Labrador [2003] HCA 49; 216 CLR 161. Could I just give the passages that we think are important there – or we submit are. In the Chief Justices judgment at paragraphs 1 and 2, as well as agreeing with Justice Hayne, his Honour made the short but powerful point in paragraph 2 that:

the statutory provisions . . . refer to offences, guilt, conviction and punishment.

That should be taken at “face value”. Accordingly, the common law requires proof “beyond reasonable doubt”. Now, they are the very elements – offence, guilt, conviction and punishment – which are not found in section 49 of the current statute. In Justice Hayne’s judgment – and I do not pass over Justice Gummow’s judgment because it has important statements to like effect, such as paragraph 32, similar to the Chief Justice, but in Justice Hayne’s judgment, after the discussion of the history, including at paragraph 107 on page 195, that these Customs prosecutions go back to the revenue side and have “a unique history” and they are distinctly different:

from proceedings brought in the name of the Crown for punishment of crime, but also from proceedings for the vindication of rights and duties between subjects.

So with that history, there is then the warning by his Honour at paragraph 114 that you cannot resolve these questions at too high a level where you simply say everything has to be civil or criminal. You have to look at it at a lower level, because that would seek “to divide the litigious world into only two parts” when, in fact, it is more complicated. His Honour interestingly at that point adverts to our creature because he says:

There are proceedings with both civil and criminal characteristics: for example, proceedings for a civil penalty under companies and trade practices legislation. The purposes of those proceedings include purposes of deterrence –

which we would agree with –

and the consequences can be large and punishing.

Then in paragraph 115, says but in the end one must come back to the Act. So his Honour there has adverted to our very type of proceeding, treated it as civil but noticed its purposes can include punishment. Then in dealing with the precise issue in the case, in fact comes back to punishment at paragraph 139, which is quite important. His Honour there says, page 206:

But penal consequences (in the form of punitive damages) –

So that is my exemplary damages example –

can follow from proceedings which, in all other respects, would ordinarily be referred to as civil proceedings –

and there is a reference to Gray v Motor Accident Commission (1998) 196 CLR 1, which I will leave to Mr Kirk to deal with –

and it has not hitherto been suggested that proof beyond reasonable doubt is necessary before that kind of relief is ordered. Further, both federal and State companies legislation has provided for recovery of what are described as “civil penalties” on proof of the requisite matter to the civil standard of proof but the operation of those provisions did not, and does not, extend to proceedings for an offence.

So, his Honour there has adverted to the very creature we are dealing with, the civil penalty proceeding, treated it as civil, observed that it does not pick up rules of the criminal process, such as the “beyond reasonable doubt” standard, but nevertheless recognised that there can be punishment amongst the purposes of civil proceedings. So we would submit that Labrador does not take one to the proposition that, whenever you see punishment in a civil matter, you pick up any or all of the rules of a criminal trial.

Your Honours, could I then come to the statute to deal with the point at paragraphs 3 and following of our outline, which is the Building and Construction Industry Improvement Act 2005. Section 38 creates the norm:

A person must not engage in unlawful industrial action.

There are various definitions of that. Then the contravention provisions start at section 48 and go to 49. In section 49 we have a provision which both completes the matter, because it provides the remedy and also it is a provision vesting jurisdiction in a court. It says that:

An appropriate court, on application by an eligible person-

which, under subsection (6), can include both public officials and persons affected by the contravention, that is, private persons, a court –

may make one or more of the following orders in relation to a person . . . who has contravened a civil penalty provision -

Then paragraph (a) is the pecuniary penalty, (b) is a compensatory order and (c) is –

any other order that the court considers appropriate –

and that is further explained in subsection (3). Those orders may include injunctions or other orders which stop the conduct or remedy its effects. That is the core grant of jurisdiction to order these remedies. Now, what does a court do when it is faced with that mandate? Firstly, we would submit it follows from the use of the word “appropriate” in section 49(1)(c) what would otherwise, in any event, be the case that the court first has to decide which remedy or remedies are appropriate in all the circumstances. So appropriateness, unsurprisingly, governs all the remedies.

Then a court has to decide, of the remedies I am going to grant, what are the precise terms of that remedy in order to satisfy the demands of appropriateness in all the circumstances of the case. So for the compensatory remedy the court has to work out how much compensation would be appropriate for the damage. For the injunction remedy, it needs to tailor the injunction to be appropriate to deal with the contravention and, likewise, with every order, including the pecuniary penalty.

So if a court is satisfied that a pecuniary penalty should be awarded, it needs to work out how much is appropriate in all the circumstances of the case. The conventional way to do that would be to receive submissions, including agreed submissions if they are available, as to what the parties ask the court to determine to be appropriate in all the circumstances of the case. Now, a couple of other aspects of the provision, your Honours - your Honours know from subsection (5) that the penalty can be:

payable to the Commonwealth, or to some other person if the court so directs –

When one combines that with subsection (6), the fact that the moving party could be “a person affected”, that means that the pecuniary penalty may have compensatory as well as deterrent purposes. If I am the moving party as the person affected by the unlawful industrial action – this, perhaps, is a variation on your Honour Justice Kiefel’s question – I would be able to try and prove before the court this was the effect on me; I suffered a loss of $1 million in my business because of this unlawful industrial action. There ought to be a penalty, and the penalty should be paid to me, and the penalty should be at least $1 million because that will achieve the compensatory purpose as well as the deterrent purpose. On the Full Court’s approach, none of that can be done other than the person says “I was affected, and I cannot tell you, court, how much I submit I am entitled to in the circumstances of the case.”

FRENCH CJ: A person seeking compensatory relief can specifically claim compensatory relief under (b). A pecuniary penalty payable to a person affected by a contravention would have more than a compensatory function, or would that be a matter limiting the discretion to direct payment?

MR GLEESON: It would be within the discretion to take into account its compensatory effect in making it, and in tailoring the order the court would not double up. The person affected would not get the same amount twice under two heads, and the court would have some choices to which way to do it, but one way to do it would be to say “I will simply order the pecuniary penalty. It will include all necessary compensatory effect, and it will go to you”. That is one way of exercising these powers. There are other ways in which the court could do it, but it serves to highlight - - -

FRENCH CJ: A punitive award could be made within the framework of the statute to a person affected?

MR GLEESON: Yes. I may not have answered your Honour’s question. Such an award need not have a compensatory effect. It may have a purely punitive effect, but depending on the facts, it may have both. The very thing the court would expect to receive, particularly where the applicant is a private applicant, the court would need to first of all be satisfied the person was affected in some way by the contravention, but then the degree of affect may well lead very readily into the quantum of the penalty. That is the very thing where the person might lead evidence, and then say to the court “In the light of that evidence, at least X is what I seek”.

It just sort of illustrates the problem with the Full Court - what the Full Court has assumed is that – I think they have assumed this, that all the other remedies in the “smorgasbord”, to use that term, can be the subject of ordinary submissions. If it is compensation, you can say how much; the injunction, you can say what terms. But the one you cannot do what you would ordinarily do something with is the pecuniary penalty because of its special character and yet the whole provision breaks down once one assumes that sort of division, because the remedies can have these varying, overlapping effects.

FRENCH CJ: The section contemplates the possibility of a private party affected by a contravention claiming, as they might be able to do at common law, according to the circumstances, compensatory and punitive damages.

MR GLEESON: Yes, and yet on the Full Court’s view as to one, you can put the submission as to how much, on the other, you cannot, whereas, in the tort example, where the private party seeks compensatory and punitive damages, the private party would be entitled to put a submission as to how much for each, for each.

Your Honours, the other critical feature of the statute we have drawn attention to is that in sections 50 and 51, the statute is cognisant that there can be criminal proceedings as well as civil proceedings and it treats them as binary. It treats that as a distinction because it recognises if there are criminal proceedings there needs to be an order as to which goes first, namely, the criminal proceedings go first and it indicates what is to happen, depending on the outcome of the criminal proceedings, including in subsection (2) that if the person is not convicted of the offence, proceedings for the order can be resumed.

So, in a somewhat similar manner to the Court saw in ACMA v Today FM with the broadcasting statute, there is a recognition of the fact that the same conduct might lead to civil relief being sought or criminal relief being sought and that choice that is available there is an important one and where it is criminal relief sought, as contemplated by sections 50 or 51, Labrador will apply and one will expect the ordinary criminal processes to apply but the Parliament has quite deliberately provided for the alternative of the civil relief, if that be thought desirable.

So, your Honours, the matters that we had sought to summarise in paragraph 4 of the outline which picks up paragraphs 14 to 22 of our written submissions, leads to the textual submission that the statute has contemplated the parties will take their usual active role in identifying the findings they say the court should make in relation not just to liability but in relation to relief and in relation to each and all of the remedies available under section 49.

To put that in reverse, one cannot detect from the statute an intention that in respect to every other remedy, the usual civil approach will follow but a different approach will follow for pecuniary penalty and yet that is what the Full Court’s decision amounts to. Now, at that first part of our argument we are really focusing on section 49 and its context in relation to sections 50 and 51 and we have not yet left the text of the statute.

The next proposition – and this comes back to what your Honour the Chief Justice put to me as to whether our case depends on provisions like 37M and 37N – it does not depend upon them but as a matter of context, where Parliament has chosen to constitute this as a civil proceeding, that will pick up a range of common law principles and statutory provisions external to the Act, and the fact that those provisions encourage settlement of civil litigation, they encourage the narrowing of issues and they encourage submissions on both liability and relief to be as focused as possible - is an important contextual matter which confirms the conclusion which arises from the text itself and the deliberate decision not to constitute these proceedings as criminal points away from the incorporation of the principles from the criminal justice system.

FRENCH CJ: Incidentally, am I right to say – I am just looking at 75(7) - jurisdiction of the Federal Court on pecuniary penalty matters is exclusive. Is that right?

MR GLEESON: Yes. As Mr Kirk says, where a union is involved, as in an organisation or a member of an organisation, it is exclusive in those cases, which may not exhaust the whole Act.

FRENCH CJ: I see.

MR GLEESON: Yes. So, your Honours, I have said it points away from the incorporation of the criminal law. We do not want to overstate that because in what I have already said, the notion that there might be some permissible borrowing of tools developed within the criminal law system, for example, to deal with synthesis or course of conduct or totality, of course that is permissible within the framework of the Act.

What the Act points against though is incorporation in the sense of a principle from the criminal law being, as it were, binding and operating to displace what would be an ordinary civil law principle. So that is what we submit the Act is against. So that is text and that is context and that is supported by purpose, which is the ordinary civil approach which permits the parties to make submissions on penalty amounts, agreed if desired; positively advances the purpose of this Act.

Now, that is, both in the case at hand, as in individual cases, will be resolved or may be resolved more efficiently and fairly and quickly but – and again, I do not want to overstate this – but it is a point we do not shy away from because it was made in NW Frozen Foods. It does preserve resources of both the regulator and the courts for other cases. If the regulator can reach agreements in some cases and if the hearing on penalty is thus much shorter, there are more resources for the other cases, and in terms of the overall goal of achieving deterrence and disciplining the market, that is a plus and equally of course the resources of the courts are preserved for the cases where there cannot be agreement.

KEANE J: Mr Solicitor, section 71 seems to expressly recognise the regulator’s role in that regard in that it recognises that the ABC Commissioner may intervene in the public interest. So the ABC Commissioner is someone who speaks for the public interest, who is permitted to intervene in that regard, and the extent of that intervention is not circumscribed in any way.

MR GLEESON: Yes, thank you, your Honour, not circumscribed. So in a case brought by the private party affected by the contravention where, on our case, there could be a joinder of issue as to appropriate penalty, the Commissioner could intervene in the public interest to put a submission no, that amount is too low. Although it has been agreed between A and B, it is too low for these reasons and a penalty should be at least X. So it is not circumscribed and could play that very valuable role and provide the complement to what is occurring between the separate parties.

BELL J: In that connection, the functions of the Commissioner under section 10 are specified as including:

intervening in, proceedings, or making submissions, in accordance with this Act - - -

MR GLEESON: Yes, thank you for that as well, your Honour. That is the very function and the very role the regulator would play. It could be discharged by submission; it could be discharged by expert evidence, or both.

BELL J: That might point up another difference which is in Barbaro amongst the considerations against the prosecution proffering the range of sentence was that in the event the judge imposing criminal punishment selects a sentence within that range, the perception may be that the judge has been influenced by the prosecution’s submission. In the case of civil penalty proceedings where the eligible person, or for that matter the Commissioner, proposes a certain outcome, is there a concern about a perception of that kind?

MR GLEESON: We would submit there could be no valid concern, particularly where the statute has said that is part of your role to make submissions and it has not been circumscribed, and it will be both the fact and clear as a matter of perception that the regulator or the private party is performing that discrete role, and the court is performing its discrete role.

Your Honours, in the light of that question, I should restate the one area where we disagree with the Unions just so it is cleared out. There is a strand in the Unions’ argument which may go to this effect; that the parties, as it were, can circumscribe what the court does because if the parties ask for an agreed penalty of $50,000 a court can never go higher. We disagree with that submission if that is put.

The parties can put an agreement of $50,000 and the court can, as it does in a number of cases, look at it and say that is not enough, it needs to be more. So that is an example of the roles being quite discrete. If, indeed – and this is why we depart from the Unions on this – if the parties could, as it were, cap the court’s ability, then one might be starting to stray towards the Barbaro problem.

KEANE J: Well, it is not a Barbaro problem. It is just ignoring the statute that says it is the court that imposes the order.

MR GLEESON: Yes, that is so, your Honour.

GORDON J: It also ignores the fact that in setting some of the pecuniary penalties, although not in this statutory context, disqualification orders in other matters go into the mix into determining what is the pecuniary penalty. Unless the disqualification order is going to be made, you cannot actually set the pecuniary penalty.

MR GLEESON: Exactly, your Honour. We put that point before the Full Court, in the argument at least. If you adopt this other view, what does it mean for the disqualification order, can you put a submission as to the length of that? As we read the judgment, the Full Court has said no, it is different, because it does not have the “magic punishment” effect, and yet, as your Honour says, in choosing the mix of remedies, of course, one needs to look at each of the proposed remedies and one of those may well be the disqualification order.

We know from many cases that the disqualification order, although it is protective in purpose, is punishing in effect, and often can be more punishing in effect than even a fine or a pecuniary penalty because it wipes out a person’s ability to ply their trade. So when the submissions are made in these cases, inevitably the submissions will be trying to suggest how the range of remedies should fit together, and the moving party will be saying if it is a disqualification order of five years, then the pecuniary penalty should be $50,000, et cetera, and the responding party might say “No disqualification is appropriate to protect the public because I am reformed, but I submit to a pecuniary penalty of $100,000”. That is not an unusual case that might be put before a judge, and the judge has to synthesise each remedy and all remedies.

The narrowest statutory argument is that section 49 just does not discriminate. It does not say you can make the submissions as you normally would in the cases of all remedies, but not this one. It treats them the same and the submissions can be made in respect to all of them.

Your Honours, in terms of our outline, at that point I was approximating approaching point 8, which was to make our submissions on Barbaro itself. I think it should be clear from our written submissions that the Commonwealth, who I represent, is not making any application to reopen Barbaro, or to restate Barbaro. Our submission is, rather, that properly understood, it is an important decision on important questions within the criminal sentencing process.

That is the way in which Barbaro was understood by the majority, at least, in the Victorian Court of Appeal, on which your Honour Justice Nettle sat, in a decision we have referenced, which is Matthews v The Queen, which was decided on 19 November 2014. We have not found it reported. The reference we have is simply [2014] VSCA 291. Recognising there were some differences between the majority and the minority in understanding Barbaro, the analysis of Barbaro starts at about paragraph 5. But, importantly, around paragraphs 22 to 25, particularly paragraph 23, the majority said this:

we think it significant that the majority in Barbaro in fact expressed their conclusion on the point in terms only of its application to the prosecution.

Then there is a reference to a passage from Barbaro and then there is some discussion that it ought to be open to defence counsel to put appropriate submissions in order to ensure that the sentence is not excessive and they may, in some cases, be relatively specific submissions rather than simply “Do not punish me too hard.”

Paragraph 27 is interesting because it makes a similar point to that which this Court then made, I think, postdating Matthews in CMB v Attorney-General (NSW) [2015] HCA 9; 317 ALR 308, particularly at paragraphs [38] and [63], which is, even in the criminal context, it is confirmed that it can be part of the duty of the Crown to draw the judge’s attention to material which would prevent the judge falling into appealable error. Then, perhaps, finally in Matthews, paragraph 29, there is a reference to essentially our problem, which is how far does Barbaro carry over beyond the criminal context? The majority concludes:

In our opinion, it is clear the reasoning in Barbaro is concerned only with –

(a) sentencing and (b) the role of the Crown in the process. We would urge that that is the context in which Barbaro was decided and any attempt to, we would call it an extension of Barbaro into the civil law and into this particular statute is not something the Court held or contemplated in Barbaro. It is a rather large exercise in separate reasoning.

So I have gone to Matthews just to indicate the, as it were, the broader submission we are making about Barbaro. We are not asking the Court to overturn it. We are not asking the Court to restate it in the criminal context. We are asking the Court to read it in its context. That is the shorter submission on Barbaro.

The marginally longer submission is to go to the case itself, if your Honours have [2014] HCA 2; 253 CLR 58. Of course, paragraph 3 identifies the argument which was put, which was that the sentencing hearing became an unfair one because the judge would not receive a submission from the prosecution about the range. Now, it is very important to see what the range meant within Barbaro. At paragraph 6 there is the summary and short disposition of these arguments. There are:

two flawed premises. The first is that the prosecution is permitted (or required) to submit to a sentencing judge its view of what are the bounds of the range of sentences which may be imposed –

and the second premise which is false is -

that such a submission is a submission of law.

Now, when the Court comes to flesh out those two summary points, there are a couple of strands to it. The first commences at paragraph 20 with the heading, “Proffering a sentencing range”. There is a reference to the MacNeil-Brown approach in Victoria which is said to be wrong and overturned, but the heading before paragraph 24 is important which is, “Available range”, where the court addresses what it is that it is considering as the available range and paragraph 26 is quite clear that the available range which is being frowned upon is the advance prediction at trial of what on appeal would be found to be a judgment infected by error, that is, “manifest excess” or “manifest inadequacy”.

That is the precise problem that the Court was dealing with and doing away with that, at the trial stage, one should not be making a submission to the judge in these terms, if you go above 10 years, that would be found to be manifestly excessive on appeal and on the other hand, if you go below five years, that would be found to be manifestly inadequate and the Court gives the reasons why that sort of submission should not be made, particularly paragraph 28. It:

is apt to mislead. The conclusion that an error has (or has not) been made –

That is a conclusion on appeal –

neither permits nor requires setting the bounds of the range of sentences within which the sentence should (or could) have fallen. If a sentence passed at first instance is set aside as manifestly excessive or manifestly inadequate, the sentencing discretion must be re-exercised and a different sentence fixed. Fixing that different sentence neither permits nor requires the re-sentencing court to determine the bounds of the range within which the sentence should fall.

Now that, as we would read it, is indicating that whether it is the trial judge or the court re-sentencing on appeal, although you are bringing together these factors which may pull in different directions, you do not do that by trying to pick a range and say anything below five years is too low and anything above 10 years is too high, so where will I choose between five and 10.

You do not do that. What you do consistent with cases such as Wong and Markarian, is that you bring to account all of the sentencing inputs, as your Honour Justice Nettle has referred to them, in accordance with principle, and you seek to reduce them to the single sentence which in the judge’s view best, or most correctly, balances matters pulling in different directions.

Now, so that part of Barbaro, we submit, once it is properly understood, could not by any process of analogy extend to the civil penalty practice that is being frowned upon here, because the practice identified at NW Frozen Foods and Mobil Oil does not have this error in it. That is not what these cases were ever commending. So they never had, even in the civil context, a Barbaro-type error in them.

Then at paragraph 29 and following there is another strand in the judgment which is that which your Honour Justice Bell referred to me, which is within the particular and important confines of the criminal justice system that the very grave importance of both in fact and in perception, keeping the separation of roles, is such that there is a problem if the prosecution is to ask for a specific result. We accept that and commend that in the criminal context, but the type of blurring which the Court is dealing with at paragraph 33 does not occur in the civil penalty context.

Then at paragraph 34 there is another strand which has a heading “The sentencing task” and this makes the point your Honour Justice Nettle referred to of the synthesis that is involved in the criminal sentencing process and there is a reference to Wong v The Queen. We accept all of that. The point made, we would submit, in 35 and 36 is that because that is the sort of process involved, if the Crown were to be permitted to say the sentence should be X or should be between X and Y, that would inevitably be the Crown making a series of predictions or assumptions or submissions on those more particular matters as to how the various inputs should be brought together, including indeed what factual findings should be made in respect to particular inputs.

Now, we would read the Court not as saying that it would be impossible for the Crown to adequately expose that process because in theory – in theory one might be able to, as it were, expose every reasoning step in the Crown’s process. In other words, “Judge, if you find X on this topic and Y on that topic and if you were to give this weight to this factor and that weight to another factor, you would end up with either a particular range or even a precise figure”.

So the point is not that in theory one could not engage in that process, but just that within the confines of the criminal trial the risk of blurring of the roles with this type of submission is simply too great to tolerate, whatever benefits it might have in terms of the judge’s life being easier. Now, that, we would submit, is the consideration which drives paragraphs 34 through to 36, and when one then comes to 38, one, as it were, receives the positive statement of principle of what should happen in a criminal sentencing process and there are three things that the sentencing judge should be given: submissions on the facts to be found, submissions on the principles and material as to the comparable sentences. It is then said:

the judge will have all the information which is necessary to –

pass the sentence. One might add to that now in the light of CMB, as well of that, of course, any submission can be put which is appropriate to prevent the Court falling into appealable error – that is not excluded by these statements – but that is what the judge needs in order to perform the criminal sentencing task and to go further:

will not do anything to help the judge avoid specific error; it will not necessarily help the judge –

carry out the sentencing task in accordance with proper principle. Now, at that stage the judgment is speaking of this MacNeil-Brown range concept, range in terms of later appealable error. We draw attention to the one part of these reasons which goes further, which is the last sentence of 39, and that talks about not only the bounds, but it also says it is not:

the duty of the prosecution to proffer some statement of the specific result which counsel . . . considers should be reached –

So that is obiter, probably to be understood as it follows from what we have already said that not only should you not be making submissions about what would be future appealable error, but if you were to ask for eight years’ prison, for example, some of the vices of the earlier reasoning would also be present, although perhaps for slightly different reasons or slightly different circumstances.

BELL J: It is also against a background of, in the context of criminal proceedings, what has been traditionally seen as the inappropriateness of the prosecution seeking a particular result leading until recent times to the circumstance that the prosecution did not address on sentence at all.

MR GLEESON: Yes, your Honour, and that is where the very sharp difference with the statute really comes into play where one – the statute has told us that the applicant here, whether it be the regulator or the private party, is a person who will be contending for a result and, indeed, unlike the staged criminal trial where there would first be the question of conviction or no conviction and then one may or may not ever move to a sentence stage, in these proceedings, as with any civil proceedings, they commence with a claim not just for liability but for relief, and that claim allows the regulator or private party to be from the outset contending for as specific a result as it seeks in the circumstance.

I should be clear that we are not submitting that the applicant for civil penalty is always bound to identify with as much precision as the applicant did in this case. We are not making submissions about the particular case. This is a case where you know from the application book that the regulator – page 3 – was not only asking for a specific penalty – sorry, was not only asking for a penalty, but had quantified the penalty at the commencement of the proceedings and there was from the very outset of these proceedings a substantial measure of agreement with the respondent as to the appropriateness of that penalty. So, one would not ordinarily expect it with that precision that early, but no problem if there is.

Just while I have the agreed document – I do not want to descend too far into the facts of the case; that is for Mr Kirk and Mr Murdoch – but the Court would see on pages 57 and 58 that even though there were agreed facts and there was an agreement to seek a penalty, on the top of page 58, the agreement was always of itself:

subject to the discretion of the Court to fix an appropriate penalty –

To that extent, the agreement correctly reflected the view of the statute that we contend for, that it is always in the court’s hands whether to go higher or lower. Your Honours, the final part of the majority reasons in Barbaro is paragraphs 42 and 43. These paragraphs have been given very great weight by the Full Court against our argument because the Court here, really, we would submit by way of conclusion and summary from everything that had gone before, said that in the particular criminal context:

the prosecution’s conclusion about the bounds of the available range of sentences –

that is as identified earlier, the bounds beyond which appealable error would later arise –

is a statement of opinion, not a submission of law . . . is a conclusion which depends upon identifying . . . the facts and circumstances relevant to the offence . . . and striking a balance between the many competing considerations –

The first sentence of 43 makes clear that when the Court says it is a mere opinion, it is in the context of this advanced prediction of what would be appealable error. The Court explains what is wrong with it, because if there is “manifest excess” or “manifest inadequacy”, in House v The King terms, that allows an inference of error, but it does not tell you what that error is. That is the reason why it states an opinion and no proposition of law.

GAGELER J: Cannot the error simply be that it is too high, or too low?

MR GLEESON: Yes – I say “yes” as the short answer. The longer answer is different views have been taken in the court on what is the nature of the second limb in House v The King. The approach which has been picked up in these paragraphs is that “too high” or “too low” allows you to infer that something went wrong in the process of getting to the result and, as it were, the court does not know what the precise error is, but they know there must have been an error. That is a view of the second limb of House v The King. Another view of the second limb is it is simply too high or too low. There are some sentences which are too high or too low in response to the circumstances.

Whichever of those views is taken, and they may not in the end differ too much, the submission we are making which is critical to paragraphs 42 and 43 is that when the court says this submission is a mere opinion, it is doing so because of the particular problems in predicting what would later be too high or too low. That just does not carry over to what we are submitting the court can do with a civil penalty.

If anything could be carried over from Barbaro – and I do not believe this is how civil penalty practice works – but it would be an applicant turning up to the court and saying “My submission is if you were to find more than X or less than Y, a later appeal court would find that you had engaged in appealable error”, and the answer to that would be “That submission is not helpful and not relevant to me. Could we come back to the case? What are the principles, what are the facts? What is the order you ask me to make? What is the order in the respondent’s camp you ask me to go no further than?”

So, those paragraphs 42 and 43 make perfect sense, with respect, within the analysis in Barbaro, but what they do not do is produce the rather stark conclusion of the Full Court in this case that it is a mere submission of opinion when the penalty is put before the court for consideration.

Now, your Honours, what that leaves me to do is really two main exercises. The first is paragraph 10 of our outline, which is to just address these three features which the Full Court has seen as distinctive of the criminal trial and sufficiently present in the civil penalty trial to require a Barbaro-type approach. That is one matter. The second matter is just paragraph 12, to submit that NW Frozen Foods and Mobil Oil remain good law and should not be overturned by this Court.

So, your Honours, as to the first of those matters, the three key similarities which the Full Court saw were: instinctive synthesis, number one; punishment, number two; and number three, the public interest of the court being seen to be, and being, independent. They were those three similarities which were identified upfront at paragraph 3 of the judgment, and could I just go to at least part of the remaining reasons which seeks to advance those three points?

So taking the first, which is instinctive synthesis, the court comes back to that inter alia at paragraph 221 which is found on page 179 of the book. The reasoning in this paragraph seems to be an argument from degree that the criminal sentencing process involves, as it were, grade one instinctive synthesis, the highest and most pure form of instinctive synthesis with lots of factors pulling in lots of different directions with lots of serious consequences and the court having the role of producing the single answer. The court then says in the last sentence:

To a lesser extent, the same is true of the imposition of a pecuniary penalty.

Then the judgment seems to go on to say, well, there are other discretions which the court exercises in a civil matter which have some of these features attached to them, but they do not have as much instinctive synthesis as the civil penalty, they certainly do not have as much as the criminal sentencing, therefore we have found a bright line. So we do some sort of degree exercise and say if it is almost like criminal sentencing with instinctiveness synthesis, then hands off; the parties cannot put their contentions as to the case.

Now, our answer to that proposition is that instinctive synthesis, as it is described in a criminal context, is an example of a broader technique used by both the civil and the criminal law whereby when one has discretions which are governed by considerations pulling in different directions the court engages in a reasoned process of bringing those factors together to produce what has to be usually a single outcome. The fact that the court engages in that process does not mean parties cannot make submissions in a civil context as to how the process should be engaged in.

Your Honours, as to instinctive synthesis in the criminal context, it is useful to go back to the classic passage in Wong v The Queen [2001] HCA 64; 207 CLR 584 at paragraph 75 on page 611 which, while it commended instinctive synthesis, also explained that it is not really mysterious. The judgment of Justices Gaudron, Gummow and Hayne said:

the task of the sentencer is to take account of all of the relevant factors and to arrive at a single result which takes due account of them all. That is what is meant by saying that the task is to arrive at an “instinctive synthesis”. The expression is used, not as might be supposed, to cloak the task of the sentencer in some mystery, but to make plain that the sentencer is called on to reach a single sentence which, in the case of an offence like the one now under discussion, balances many different and conflicting features.

Now, that illustrates that instinctive synthesis within the criminal law is an example of a technique which the courts use variously in exercising discretions across the civil and the criminal law and, we would submit, it does not provide the basis for saying that a Barbaro-type rule applies in civil penalty or any other civil case.

That passage in Wong was then approved later by the Court in Markarian v The Queen [2005] HCA 25; 228 CLR 357 at 37. So instinctive synthesis is the first of the three planks, and the other response we would make to it is that it is not a fixed marker which necessarily carries with it any rules or procedures from the criminal trial, and we would contrast the use of the concept of conviction which in Labrador was a fixed marker which carried with it the “beyond reasonable doubt” standard.

The second key feature relied upon by the Full Court is the notion that there is punishment or the coercive power of the State is being applied, and that requires the carryover of Barbaro. That is referred to, for example, at paragraph 206 of the judgment which is found on page 173 of the appeal book, where the Court says that, accepting the submission of Mr Moore:

the imposition of a pecuniary penalty is primarily to sanction contravention of a statutory norm, and to deter others from similar misconduct.

We agree with that much. Then it says:

Such imposition involves an exercise of the coercive power of the State to punish or sanction wrongdoing. The exercise of that power by the Court should be unfettered and entirely independent. We consider that there is considerable merit in that approach.

Now, that seems to say in any case where the court is applying a remedy which has a punishment or a sanction effect, whether civil or criminal – and this is the language used –

the Court should be unfettered and entirely independent.

Now, if that is what the court is ruling, then there will be many instances within a civil trial where there is coercive power of the State, where there is punishment or sanction, either directly or in effect, so we have given many examples of that which include disqualification orders, exemplary damages and many other examples. But the real problem is in the conclusion the court is drawing that in such a case the court should be unfettered - - -

FRENCH CJ: Unfettered by what?

MR GLEESON: Unfettered by what - the theory seems to be that the moment the parties put their contentions, the court has been - - -

FRENCH CJ: Fettered.

MR GLEESON: Fettered and the moment the parties say to the court, we contend that an amount of X would be an appropriate penalty, the court has been fettered, whereas really it is the exact opposite. What the court is there receiving is a relevant consideration, a relevant piece of information, which the court then decides what to do with. The court decides what to do with it in an entirely independent manner by being satisfied it has sufficient information as to whether it is an appropriate penalty. So that is not the court being impermissibly fettered; that is the court just doing its job.

FRENCH CJ: Well, responding to Justice Keane’s question: what do you want, or my question: what are you entitled to?

MR GLEESON: Yes. So the moment you open your mouth and say, “I am entitled to X”, you have - - -

NETTLE J: You have cruelled the pitch.

MR GLEESON: You have. Your Honours, I draw attention to that paragraph because of course these three themes are repeated in various ways through the whole judgment. But we have to land on some part of the judgment to try and grapple with them and 206 is as good as any to identify that theme. Even within 206 we can see strands of the third theme we have teased out, which is the notion that the court is in fact or in perception compromised when it receives the submission and decides to deal with it.

Can I just give one other paragraph that takes up the compromise argument. The first is paragraph 133, page 145. This paragraph goes to the heart of the philosophical approach of the Full Court that when the parties adopt the approach that NW Frozen Foods and Mobil Oil commend, namely, you can agree if you wish, you put it before the court and you seek to persuade the court that that is an appropriate penalty upon which you may succeed or not, depending upon the quality of your evidence and argument, therefore, the court remains unfettered and remains independent. This, according to paragraph 133 is merely a:

pious assertion, frequently made, that it is for the Court to make the final decision. It is not clear to us that it is possible to maintain the public perception that the Court imposes the penalty and, at the same time, lead the parties to believe that their agreement will probably be adopted.

Now, we challenge every word of that, because it is not a pious assertion that it is for the court to make the final decision. That is the law, and that is what happens. One only needs to look at the various decisions, and we have referenced a number of them in our submissions, where judges of the various courts take this obligation, as you would expect, exceptionally seriously.

FRENCH CJ: Well, it has not been unusual, for example, in the Federal Court for proposed consent orders disposing of a regulatory action not to be accepted in their entirety - for example, where proposed injunctions are imprecisely expressed or excessive in terms of – I used to use the metaphor sometimes “mummifying” the defendant with overlapping restraints.

MR GLEESON: Exactly, your Honour, and that task is taken exceptionally seriously in the terms of the injunction. It is taken exceptionally seriously in whether to make, and the terms of any declaration. One of the things the court does not do is simply say there is an agreement on a declaration I make. The court looks very closely at the need for a declaration, and for the terms of it, particularly in these public law areas where the declaration may have great significance beyond simply the parties, because it will record the basis upon which there was a contravention of the law, and the same it is in respect to dealing with these civil penalties.

As with all proposed consent applications, the better the quality of the application – the preparation, the evidence and the submissions – the more chance it may have of finding favour, but then again, it may not. It may simply be a perfectly prepared application which has come up with a number which the court considers too large or too low.

Without being unduly critical of paragraph 133 or of the judgment, we would submit that the sentiment behind 133 does not do credit to the way in which the judges of Australian courts deal with these types of consent orders, let alone any consent orders. That should not be allowed to stand as it being merely a pious assertion. One asks by whom; is it a pious assertion by the litigants saying that “It is for you, judge, to make the final decision, but of course, we have a high degree of probability you will do what we say”? Is that a pious assertion by the litigants? Surely not, and we do not think it should be a pious assertion attributed to anyone. That is one paragraph in which this perceptions point rears its head, and I was going to give just one other example - - -

NETTLE J: I think they are attributing the piety to Justice Middleton’s observation in the previous paragraph.

MR GLEESON: Perhaps I have been too coy about it, your Honour. Justice Middleton is not being pious in those observations. He is simply stating the solemn duty of the judge, and that is to give each agreement the anxious scrutiny it deserves in all the circumstances of the case to decide whether to adopt it or not.

The view which Justice Middleton expressed in that very important decision of his, clearly it is a view we commend, that is the way judges of the Federal Court and Supreme Courts go about this important task in Australia and they do it correctly and they should not be, and the courts not be, as it were, undervalued by an assumption that, I do not want to be too crude about it, but the sentiment behind this is rubber stamping. That is what the sentiment is, the judges say they are doing the right thing but in fact, they are rubber stamping. Now, that is not what judges are doing and there should not be any suggestion that that is what judges in this country are doing.

Now, the other place where this sentiment returned is around paragraph 239, where judgment reaches a crescendo, where a number of the themes are drawn together and in the final sentence - this is page 184 - this is said:

Further, the difficulty in understanding the method by which any such opinion is formed is as real in pecuniary penalty cases as it is in criminal sentencing, as is the risk that such opinions may compromise the sentencing process and/or create a public perception of such compromise.

Well, in the civil penalty context, as with any civil regulatory relief, there is absolutely no difficulty in understanding the method by which the contention, not opinion, has been formed. That is the duty of the parties in their evidence and submissions to explain to the court why the proposed penalty is appropriate. If they do not explain that, the judge very likely will reject it.

The judge may ask further questions. The judge is not bound to ask further questions but - and this is the other aspect of the Justice Middleton point, the Justice Middleton approach, consistent with the courts of the country is you ask, as the court, as many questions as you need to be satisfied it is an appropriate penalty. So this risk of compromise we would ask the Court to reject.

KIEFEL J: What is the submission that the parties are actually putting to distinguish it from an opinion? Is it a submission of mixed fact and law, having regard to these facts, this penalty is appropriate? Is that it?

MR GLEESON: Yes. That is it, and it is a submission of mixed fact and law. The other way we have put it is that it is the fact that the parties have agreed on that as appropriate is a fact the court can take into account, i.e. - - -

KIEFEL J: For policy reasons.

MR GLEESON: For policy reasons, yes. So, it is both of those.

GAGELER J: You go a bit further, do you not? I thought you said that the fact that the regulator holds the opinion that it is appropriate is a fact that can be taken into account by the court.

MR GLEESON: Yes, we have also put that and that would be true, both in the agreed penalty and in the non-agreed penalty - weight, another matter, but as a fact. The regulator who is charged with the job of regulating and seeking to discipline a market can be expected to have some knowledge, perhaps quite a bit of knowledge, of the working of that market and what would be of appropriate deterrent value in a particular case.

FRENCH CJ: Is that something which should be inferred or something which assumed or something should be exposed in terms of what are the relevant aspects of the work of the market which support a particular penalty?

MR GLEESON: Better that it be exposed, as in that being part of the role of the regulator, you get that from the statute. But when the regulator says 50,000 for this conduct, better that the reasoning behind that be exposed.

FRENCH CJ: That would cut across into a non-consensual debate.

MR GLEESON: Yes. If I understand your Honour’s question, in a case of a non-agreed penalty where a regulator - - -

FRENCH CJ: Yes, if the regulator says something and you give greater weight to what the regulator says because it is the regulator.

MR GLEESON: Well, I think I have said twice I do not want to overstate this proposition because, while it is appealing to regulators, it may not be appealing to everyone. But let us take the non-consensual case, the harder case. A regulator says in response to this conduct, “Anything less than 50,000 would not be of appropriate deterrent value”. All we are putting is that it can be taken into account as a relevant fact that the regulator has said that. But the weight to be given to that - the weight to be given to that – will depend upon what the regulator can back it up with.

Now, if the regulator has evidence, that is very important. If it does not have evidence, it ought to have persuasive reasoning as to why, and that will pretty quickly take you back into principles, potentially into the comparable cases. But that is really the – that is the icing on the cake. It is not the primary defence of this. The primary defence is at a much earlier and more important level.

Your Honours, the only matter I had left was the two decisions, NW Frozen Foods and Mobil Oil. Just to avoid overlap with Mr Kirk, he may be going to those decisions, not in great detail, but in a little detail. Our essential submission is they remain correct and the second decision, Mobil Oil, was, if I may say, given by an equally strong Full Federal Court as the first decision.

It carefully analysed all the complaints about the first decision and explained why they were unfounded and perhaps the one point it made express that was not in the earlier decision but not inconsistent with it was it does not mean the court is bound to start with the agreement and only ask the question would that be an appropriate penalty. The court may if it wish – and some judges do – say, “Well, I am going to start at the end of principle and I am going to reason towards an appropriate penalty and then I am going to take into account your agreement before I reach a final result”.

Now, both of those techniques would represent a proper performance of the judicial function. So, your Honours, I just propose to be that brief on those two authorities although they are critical, unless your Honours wish me to go to them a little bit more at this stage.

FRENCH CJ: Thank you, Mr Solicitor. Yes, Mr Kirk.

MR KIRK: Your Honours, we are in substantial agreement and respectfully adopt the vast part of what my learned friend, Mr Gleeson, has said. There is obviously one area of disagreement between us. I do not want to overstate that area of disagreement. It is a very confined point. In essence, it is a pleading point and I will deal with that towards the end of my oral submissions.

I propose to address the topics, and I am seeking to avoid obviously overlap with the Solicitor as much as possible, first, dealing with the issue of specific orders and the ability to make submissions in relation to specific orders sought, then dealing with the issue of consent orders sought including in relation to pecuniary penalties, and thirdly and then fairly briefly, why the orders sought in this case should, in our respectful submission, have been made.

So, turning to the first point relating to the topic of specific orders and the submissions that can be made in that regard, it is a basal and obvious principle that natural justice must be accorded where an exercise of power may detrimentally affect a person’s interest. Self-evidently, a person who is subject to an application for a pecuniary penalty, that is to say a respondent, has a right to be heard - the larger the pecuniary penalty, the greater the detrimental effect, and that being so, such a respondent has, in our respectful submission, a right to be heard in relation to the size of that penalty.

Put another way, and this is the converse of what your Honour Justice Keane put to my learned friend, a party is entitled to be heard with respect to what orders should or should not be made. Now, the provisions in this particular Act, the BCII Act, encompass a range of civil penalty provisions applying to potentially individuals, unions, but also employers. I will not take your Honours to it, but, for example, sections 43 and 44 dealing with coercion and undue pressure potentially could apply to employers.

The difference between a large penalty and a small one may be a difference between a penalty that is bearable by a small business or is not, that may lead to job losses or does not, or insolvency or does not, or is sufficient for specific deterrence or is not. A respondent must be able to make submissions that a small penalty not a large one should be imposed, given all those interests which may be affected. This constitutes making submissions as to the specific penalty that should or should not be awarded.

In our respectful submission, it would elevate form over substance to hold that a respondent could say, “My business would fail if you ordered a $100,000 penalty but I could cope with $20,000”, but not then be able to say, “So your Honour should order a $20,000 penalty”. It would similarly elevate form over substance if the respondent could refer to each and every factor militating in favour of a low penalty rather than a high one; circumstances of the breach, prior history, remorse, co-operation, specific deterrence and so forth.

FRENCH CJ: Are these submissions good for a prosecution for a fine?

MR KIRK: Might I say this about that point, your Honour? It was no part of the Barbaro decision to restrict the submissions that could be made on the part of the defendant and that came out clearly, for example, in paragraph 39 that my learned friend took your Honours to.

KIEFEL J: Although it might be a rare case when a defendant is prepared to chance their arm as to what the outcome might be.

MR KIRK: That might be right, your Honour. But certainly – and again, like my learned friend, I am not here to criticise in any way this Court’s decision in Barbaro, but that did not apply to defendants, and it could not apply to defendants. Again, a defendant must be able to say, “Don’t send me to gaol for the following reasons”.

Barbaro was also quite a different case, of course, because although put in terms of procedural fairness – and I am raising a procedural fairness argument now – the argument there was not about what the defendant could put. Rather, the defendant was saying the other side should have been able to put these submissions in the context where of course the other side was a prosecutor in a criminal case.

It was not in dispute in that case – if your Honours, without going to the decision, take note of paragraphs 17 and 18, and paragraph 45 – the defendant had made significant submissions in the court at first instance as to the penalties that should or should not be imposed. The submissions I have made so far relating to the respondent’s side of the - - -

KIEFEL J: Mr Kirk, is it really procedural fairness that gives rise to this entitlement, or is it a right that the respondent has as a party to proceedings where the regulator or other eligible person makes a claim to a particular penalty of a particular kind and puts facts before the court, and the respondent is really just – the defendant or respondent is meeting that claim and there is actually then either a substantive or procedural right, is there not, rather than a resort to procedural fairness?

MR KIRK: Yes, that perhaps, with respect, is another way of putting what I have put at a higher level of principle, in a sense. To call it procedural fairness may be underrating the significance of it. It is the right - - -

KIEFEL J: The right in a party.

MR KIRK: Indeed. Including, ultimately, founded perhaps on a right to fair proceeding in a fair trial of the civil process. In relation to the applicant’s side of the argument, as your Honour Justice Keane put to my friend, a party is entitled to articulate what orders it seeks. Now, as my learned friend, Mr Gleeson, has shown, for some applicants – at least for proceedings under section 49 of this Act – they may have an actual pecuniary interest in the result, in that it may be an affected employer, for example, seeking an order against a union, and seeking payment of the pecuniary penalty to itself.

But even for a regulator, as has emerged in argument this morning, it will have statutory functions which it is exercising, statutory functions ultimately directed to specific and general deterrence. Part of its function in achieving specific and general deterrence will be affected by the nature and significance of pecuniary penalties sought. The Full Court in this matter – and perhaps this is a distinction to, well, it is a distinction to criminal matters – at paragraph 130 on page 145 of the appeal book said, at the top of the page:

We accept that a regulator may have, and pursue a particular view as to the appropriate outcome of the proceedings.

Now, that stands in stark contrast, as your Honour Justice Bell has pointed out to at least the traditional view of a prosecutor in a criminal matter. But that being so, in our respectful submission, it is difficult to see why, if they can have a view as to the appropriate outcome of the proceedings that does reflect them having an interest in seeking some particular outcome, which interests they are entitled to articulate.

Of course, fundamental to the Full Court’s decision is that it viewed such submissions as inadmissible opinion. I am not going to repeat what my learned friend, Mr Gleeson, has said, but could I take your Honours to page 162, paragraph 180, of the Full Court’s judgment where, in the third line, their Honours said, after referring to Barbaro:

That decision is based upon a well-established understanding as to the permissible content of submissions in both civil and criminal proceedings. In submissions, counsel addresses the relevant law and the facts as they appear from the evidence. He or she cannot seek to supplement the evidence by opinions, whether they be his or her own, or those of the party for whom he or she appears.

In our respectful submission, that is a misunderstanding of the position. By way of example, I appear in this case for two Unions seeking to persuade your Honours of a conclusion, that conclusion being that the Full Court erred in its approach and its orders. Whether or not that is my opinion or that of my clients is irrelevant, and it is not proffered. It is a conclusion to which I seek to persuade your Honours.

If counsel proffers some particular pecuniary penalty as the culmination of their submissions on law and fact, it is not proffered as their opinion; it is not proffered as the opinion of their client; it is proffered as the end to which they seek to persuade the court, exercising their right to be heard in the adversarial processes we have discussed.

It may be that in a matter such as setting a pecuniary penalty, which is far from being a mathematical exercise, that what counsel is saying is something like “Given what I have said, it can be concluded that figure X would be an appropriate outcome”. But that does not alter the legitimacy of seeking to persuade the court to that end. It is, as my learned friend, Mr Gleeson, said, or it can be seen as a submission of mixed fact and law, and another way of looking at it is as just the end, the conclusion to which the party seeks to persuade the court, as it is entitled to do when it appears in proceedings within our common law system. That, of course, is quite distinct from what was at issue in Barbaro, the predictive appealable error, but I will not repeat what my learned friend has said about that.

In our submission, both sides may be heard on the issue of the appropriate pecuniary penalty. If that is so, there can be no objection to joint or agreed submissions being made. In relation to Barbaro, if I can, without repeating what my friend has said, seek to supplement in a couple of brief respects. In relation to the nature of the discretionary exercise in setting the pecuniary penalty, as my learned friend has pointed out, the Full Court appeared to see there being a difference of degree between this task and the exercise of other discretionary decisions.

It is useful, if I might restate a very basic proposition, to take your Honours to AON v ANU [2009] HCA 27; 239 CLR 175 at this point, because it contains at page 210, paragraph 89, a quote from another case as to what a discretion is. In that quote, three members of this Court said:

“Discretion’ is a notion that “signifies a number of different legal concepts”. In general terms, it refers to a decision-making process in which ‘no one [consideration] and no combination of [considerations] is necessarily determinative of the result. Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made.”

That, with great respect, is a very apposite description of what a discretion is and, as the Court well knows, there are a very wide range of circumstances in which legal discretions arise. Indeed, the classical exposition of what judicial power is tends to be talking about applying the law as found to the facts as found and applying any relevant judicial discretions – the Trade Practices Tribunal case in 1972, picked up in Bass v Permanent Trustee, for example. So, in relation to the grant of equitable or administrative law relief, procedural matters such as adjournments, as Mr Gleeson referred to, the granting of relief under provisions such as section 87 of the Competition and Consumer Act, which is also discretionary.

Your Honour the Chief Justice raised an issue about whether there is a difference, in effect, of degree between damages assessments and there may be a difference of degree. But, even there, particularly if one is involved in a Malik-type exercise of looking at hypothetical facts or future facts and as to possibilities that can itself become speculative, difficult, far from mathematical, as the Court has recognised on a number of occasions. The Court still must do the best that it can. That is not a discretion, I accept that, but it is something analogous, perhaps, to a discretion.

Another point that my learned friend, Mr Gleeson, referred to in distinguishing Barbaro was the point about penal provisions in it being an exercise of State power. Can I add this to what my friend said? It is not necessarily an exercise of public power by a regulator, that is, by the State, as regards the position of the claimant. First, the claimant may not be a regulator. But, secondly, as we set out in our written submissions in B36, paragraph 22, without going to it, whilst prosecutions can and have long been able to be brought privately, at least for some decades in Australia, they are still subject to being controlled and ended by the Attorney-General and by the Directors of Public Prosecution. We have given the references at paragraph 22 of our submissions.

So, in a sense, even a private prosecution can be seen as a manifestation of State power. It is not so for this sort of exercise of power. Of course, a court order can be described as an exercise of State power, but that is true for any court order so that does not advance the argument.

An aspect of the Full Court’s reasoning was to refer to pecuniary penalties being intended to punish or sanction wrongdoing. Of course, as my learned friend has said, a range of legal norms may have penal motivations or effects - disqualification, as was discussed by this Court in Rich v ASIC [2004] HCA 42; (2004) 220 CLR 129, particularly at paragraphs 32 and 37 - I will not take your Honours to it.

I will take your Honours, if I may, as my friend foreshadowed, to Gray v Motor Accident Commission 196 CLR 1. This decision was indeed referred to in one of the cases my learned friend took your Honours to this morning. If I can go to the plurality judgment at page 7. This was a case in which exemplary damages had been sought in relation to a motor accident and the defendant in question had been the subject of criminal penalty, so the issue was whether exemplary damages were available in the circumstance where the defendant driver had in fact been gaoled for his conduct in relation to the motor accident. At page 7, paragraph 14, the plurality referred to the key guide to exemplary damages:

“conscious wrongdoing in contumelious disregard of another’s rights” –

In the last five and a half lines of paragraph 15, their Honours said:

If exemplary damages are awarded, they will be paid in addition to compensatory damages and, in that sense, will be a windfall in the hands of the party who was wronged. Nevertheless, they are awarded at the suit of that party and, although awarded to punish the wrongdoer and deter others from like conduct, they are not exacted by the State or paid to it.

Of course, no similar comment may be made in relation to pecuniary penalties, at least, where sought by private parties. Then paragraph 16, if I could invite your Honours to read that and so their Honours pick up what his Honour Justice Windeyer said in Uren about the greatly intermingled “roots of tort and crime” which goes to reinforce, in our respectful submission, any – the inutility of any attempt at sharp distinction between civil matters and criminal matters and, also, the inaccuracy of any suggestion that tort or civil law or civil common law is only directed to compensatory matters and not to other matters including punitive or penal matters. In paragraph 18, if I can jump about halfway down, their Honours note by reference to Uren:

It was said that there are three considerations that should always be borne in mind –

Sorry, that is actually by reference to Rookes v Barnard in the House of Lords. The last of those, in the last two lines is:

the means of the parties, and all matters which aggravate or mitigate the conduct are relevant to the assessment of such damages.

Again, your Honours can see an echo of the approach that might be taken to a pecuniary penalty and yet it could not be submitted, in our respectful submission, that in a civil claim for exemplary damages a plaintiff was unable to articulate what sum was sought and why or that the defendant was unable to answer it.

The issue of exemplary damages was put to the Full Court below and if I can show your Honours how the Full Court dealt with it, it is at page 178 of appeal book, paragraph 219 – page 178, paragraph 219. Their Honours note the Commonwealth pointed to the award of exemplary damages. Their Honours appear to conclude that what they saw as the Barbaro approach should be applied even in relation to exemplary damages.

In our respectful submission, that illustrates the extreme consequences of the logic adopted by the Full Court. One of the relevant matters in assessing exemplary damages, and we have put the references in our written submissions, is, for example, the size of the defendant. Part of that is, of course, because of the deterrent aspect. What deters one corporation may not deter another or one defendant may not deter another.

A plaintiff must thus be entitled to put on evidence as to the size of the defendant, and make submissions as to how that affects. Profits are potentially relevant. A plaintiff must be able to put on evidence of profits and say they are a very large corporation, they have made X million dollars profits – exemplary damages should exceed that, because otherwise there would be no deterrent value. Again, it would elevate form over substance if the plaintiff was then precluded from saying “and so your Honour should award X million dollars”.

For all of reasons, in our respectful submission, both an applicant and a respondent in this type of case must be able to make submissions as to specific outcomes. Can I then turn to the issue of where that is sought to be done by consent orders, as was the subject of discussion in NW Frozen Foods and Mobil Oil.

In our respectful submission, this is a species of the genus of dealing with consent orders. There is well-established case law as to how such orders are to be addressed. They include such as whether the orders serve to resolve a dispute, whether they are within the court’s jurisdiction, whether they are within power, whether they are contrary to legal principle, whether they are contrary to the public interest, whether there is any other reason they should not be made.

Can I take your Honours to just two cases to seek to illustrate these: first, to a decision of this Court, of which we have handed up copies - Thomson Australia Holdings v Trade Practices Commission 148 CLR 150. If I could just take your Honours to pages 163 to 164 in the majority judgment - I will not bother your Honours with the - - -

FRENCH CJ: Well, does this say anything more than that the court cannot make an order by consent, or accept an undertaking – an agreed undertaking – where it could not make an order in those terms in the ordinary exercise of its power?

MR KIRK: That was the specific finding and your Honours will find that discussion at 163 to 164, but perhaps stated at a slightly higher level of generality, namely, if your Honours look at about point 9, there is talk of:

the Court should conform to legal principle -

which encompasses within it the specific point which was at issue in that case, which your Honour the Chief Justice has put to me. So that is one guide. Can I take your Honours to a decision of the Federal Court - Australian Competition and Consumer Commission v Real Estate Institute of Western Australia [1999] FCA 18; (1999) 161 ALR 79 – again, we have handed your Honours a copy.

This was a decision of your Honour the Chief Justice in the Federal Court. I hand it to your Honours not for that reason – or at least, not just for that reason – but because in the nature of things, these consent matters tend to be dealt with at first instance. Secondly, this particular judgment of your Honour has been very regularly cited in relation to the making of consent orders. Again, I will not delay with the facts, but if your Honours turn to page 86, paragraph [17], there is a reference to consent orders being limited by power and jurisdiction, and a reference to Thomson. Paragraph [18]:

The question whether an undertaking is to be accepted or a consent order made is not concluded by a finding that it is within the power of the court to do so -

and then a reference to, if your Honours look a few lines down, the fact that the court:

is exercising a public function and must have regard to the public interest in doing so.

There is then a discussion of that and then your Honours might note the last sentence:

Consideration of the public interest, however, must also weigh the desirability of non-litigious resolution of enforcement proceedings.

Over the page at paragraph [20], your Honour noted at the end of the second line:

It is not the function of the court to impede settlements between parties legally represented and able to understand and evaluate the desirability of agreeing to a settlement –

I pause to note there that obviously in some cases, for some respondents, greater care must be taken in relation to the suitability of the settlement, if they are potentially vulnerable. Going on in paragraph [20], your Honour noted:

This approach extends to the submission of agreed pecuniary penalties –

and then there is a quote from the joint judgment in NW Frozen Foods, referring to the important public policy involved and avoiding very lengthy and complex litigation and so forth. Your Honours will be familiar with that, and then paragraph [21]:

Similarly, in relation to proposed consent orders and undertakings the court will not simply substitute its own view of the orders or undertakings which it would have made if those proffered fall within the range of an appropriate disposition of the case.

Now, pausing there, what your Honour appears to be doing is treating pecuniary penalties as being part of the same approach to consent orders as for other regulatory orders. The orders sought in this case were declarations and injunctions and there was also an issue about undertakings. In our respectful submission, that is correct, that the same principles in relation to consent orders, as apply to injunctions or declarations or, more generally, can apply and should apply to pecuniary penalties.

There is one other factor your Honour picked up. At paragraph [23] your Honour referred to what Justice Merkel had said in the Z-Tek Case about there being a nexus between the conduct and the injunction and your Honour agreed with that at the end of paragraph [23]. In paragraph [26], your Honour referred to the issue of practical issues about enforceability and proper statement of the orders, all of which are potential limitations, in our respectful submission.

To take the approach of the Full Court in this case is in substance to prevent pecuniary penalty matters being resolved by consent. It is to remove one particular type of statutory regulatory order from a way it might have been dealt with and could conventionally have been dealt with in accordance with civil procedures.

FRENCH CJ: Well, in a sense, they are never resolved by consent. They are resolved by the order of the court which is informed by the consent of the parties, I suppose.

MR KIRK: Precisely so. Put another way, the parties seek consent orders. They seek to persuade the court that the consent orders should be made but the reference to public interest in non-litigious resolution that your Honour referred to in that case, and a similar comment was made by the plurality in NW Frozen Foods and in many other cases, that means that the review that the court undertakes is not going to be a full review of the matter as though it had been dealt with on a contentious, disputed basis because were it otherwise the public interest in the efficient resolution of the matter would not be achieved.

Yet the effect of what the Full Court has decided is that a full complete review of everything that would be done if it was a disputed matter must also be undertaken, even if the parties are proffering orders by consent. That is not to suggest for a minute that there is a rubber stamp; the court still has to be persuaded that it would be within power, jurisdiction, legal principle, resolve a dispute, an appropriate exercise of power and so forth.

To address another aspect of the criticism that is made of these things potentially being informed by the consent, one aspect of what the Full Court may have been concerned about in talking about public perceptions and confidence, which my learned friend showed to your Honours, is a concern that somehow the court is tainted by the fact that it is being asked to give effect to consent orders where those consent orders may be the product of compromise and negotiation.

Now, for our part, we do not shy away from the fact that consent orders sought for a pecuniary penalty may well be the result of compromise and negotiation. But that is no different from any other type of consent order for which the consent of the court is sought. In a range of ways in litigation, there may be compromise in negotiation as to orders sought, as to evidence led, as to facts agreed – all of which may have an effect on the exercise of judicial power. But the court is not the one involved in the negotiation. The court is not dirtying its hands with the compromise. It is asked to assess only the result, and whether that would be an appropriate exercise of the power.

A similar point was made by his Honour Justice Sheppard back in Allied Mills, and it is quoted in the Mobil Oil Case, if I can take your Honours briefly to that. That is unreported; [2004] FCAFC 72 is the version I have, and at paragraph 38 of the joint judgment of the court, their Honours quoted his Honour Justice Sheppard in Allied Mills, where his Honour addressed that very question. In our respectful submission, his Honour’s answer to the argument was a correct one.

Another point made by the Full Court here, without going to it, for example, at paragraph 53, last dot point on page 118, was that the Full Court suggested that it would be inconsistent with the statute to take account of consent orders and potentially give effect to them because the statute directs the court, not the parties, to set the penalty. But again, the same point might equally be made of any of the other remedies in section 49, or of section 80 of the Competition and Consumer Act, or any other such provision which empowers the court to do certain things, but for which there is a well-established conventional approach as to how the court deals with consent orders.

To tie all this, in a sense, to where my learned friend started, the effect of the Full Court’s approach is to say that for this statute, although the Parliament has provided for civil process and civil procedures, there is one aspect of well-established conventional civil procedures and civil law which is not to be picked up and applied when this statute is given effect, namely, that area of law I have just sought to address in relation to how a court deals with proffered consent orders.

The approach set out by the Full Court in both NW Frozen Foods and Mobil Oil, in our respectful submission, involves no inconsistency with the statute of the kind addressed, and if I could take your Honours briefly to NW Frozen Foods [1996] FCA 1134; 71 FCR 285, in the plurality judgment of Justice Burchett and your Honour Justice Kiefel. At page 90F there was a recognition of the very point I sought to address that:

The Act places on the shoulders of the Court the responsibility to determine the “appropriate” penalty in each particular case –

But your Honour Justice Kiefel and Justice Burchett then go on to refer, particularly at the bottom of the page to the fact that there is nothing mathematical about it and that, whether or not the court would have arrived at the precise figure, if it fixes an appropriate amount, it can be a proper exercise of the power.

Just as analogously, if an injunction is requested under, say, section 80 of the Competition and Consumer Act, it could be an injunction for one year or two, it could apply to one State or two - there are a whole range of variables – it could apply to one market product or two, and yet it would be entirely conventional for consent, injunction or undertaking to be proffered seeking to resolve, say, a Part IV dispute or to resolve an allegation of misuse of market power or such like, and the court would review that in the sort of way consistent with the principles I have sought to outline. At the end of the judgment at page 298 at the bottom of the page at G, the plurality said:

The cases we have discussed earlier in these reasons unite in affirming the public interest in the promotion of settlements, especially in this area where litigation is likely to be very lengthy -

dealing with the Part IV case -

We agree with the statement made in several of the cases cited that it is not actually useful to investigate whether, unaided by the agreement of the parties, we would have arrived at the very figure they propose. The question is not that; it is simply whether, in the performance of the Court’s duty . . . this particular penalty . . . is one that the Court should determine to be appropriate.

In our respectful submission, that is entirely correct and entirely consistent with the statute about giving effect in an appropriate way to the power of the court to make orders. As my learned friend said, Mobil Oil carefully considers and reaffirms in substance the approach in NW Frozen Foods.

Can I turn to my third topic, that the orders sought in this case should have been made? Can I deal first with one area of disagreement of any significance between us and the Commonwealth, and I put my head above the parapet. As my learned friend pointed out, in the originating application, so if your Honours look at the main appeal book, page 4 using the numbers on the right, the applicant director sought declarations that each of my clients had breached section 38 of the BCII Act, and in particular pecuniary penalties - $105,000 for the first respondent, $45,000 for the second. Without taking your Honours to the provisions, your Honours will recall that section 19 of the Federal Court of Australia Act says:

The [Federal] Court has such original jurisdiction as is vested in it by laws made by the Parliament.

Sections 49 and 75 of the BCII Act here are such a law. This case had to be brought in the Federal Court for the reason your Honour the Chief Justice noted; section 75(7) required that because unions were respondents. Rule 8.01(1) of the Federal Court Rules requires that:

A person who wants to start a proceeding in the Court’s original jurisdiction must file an originating application –

and rule 8.03(1) provides –

An originating application must state:

(a) the relief claimed –

Section 49(1) of the BCII Act grants courts jurisdiction and power to make one or more of the following orders – your Honours have seen that – and it is for the applicant to choose what orders are sought. Here, in our respectful submission, the regulator has chosen those orders sought.

Our point simply is this - in relation to this particular case – so this just limits to this case, not the broader issue of principle – it is open to an applicant to delimit the controversy by deciding what relief it claims, including as to the amount which it claims. If it only seeks a particular amount, then, in our respectful submission, that represents the bounds of the particular controversy in the absence of amendment.

Can I take your Honours briefly to two cases, and then I will deal with the points your Honours have raised this morning with my learned friend about this topic. First, if I can take your Honours to Banque Commerciale 169 CLR 279 – we handed up a copy this morning. This, of course, is a case about pleading, and if I can take your Honours first to page 286 in the joint judgment of his Honour Chief Justice Mason and her Honour Justice Gaudron. At the bottom of page 286, very familiar terms that:

The function of pleadings is to state with sufficient clarity the case that must be met . . . to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party’s right to this basic requirement of procedural fairness.

Then at page 287 at the beginning of his Honour Justice Brennan’s judgment, there is a quote from the Master of the Rolls about the:

object of pleadings is to bring the parties to an issue . . . to narrow the parties to definite issues -

over the page and then immediately under the quote:

When the pleadings bring the parties to the issue, the court’s function is to determine that issue and to grant relief founded on the pleadings unless the parties are allowed to alter the issues at the trial without amendment of the pleadings –

That illustrates, in our respectful submission, that it is the role of pleadings, including we would include the originating application, to articulate the relief sought and that it can extend to seeking a particular amount.

FRENCH CJ: But is it not the case - and maybe I am anticipating something you are going to say - that on the agreed facts at, I think, page 56 of the appeal book:

The parties have agreed that, subject to the discretion of the Court to fix an appropriate penalty:

(a) The penalty amounts set out above, are satisfactory, appropriate and within the permissible range in all the circumstances –

and they being in fact the same amounts as had been sought in the application.

MR KIRK: Yes.

FRENCH CJ: But there was no suggestion that the court must apply the agreed penalty. It was a matter of civil discretion, even on the position of the parties, was it not?

MR KIRK: That was sought to reflect, for example, a NW Frozen Foods approach but, in our respectful submission, whilst there is no doubt whether to grant it, and subject to one limit to what extent to grant it must be within the discretion of the court, that being what the statute provides. Where a party has only sought X, then in the absence of amendment of the originating application, and the originating application here was not amended, that sets the boundaries of the dispute.

GORDON J: But the hearing is not closed. If this matter was sent back to the trial judge it would be open, would it not, for a trial judge to say, “Well, I have looked at the conduct and I am not happy with the proposed penalty” and for the applicant or the plaintiff to seek to amend?

MR KIRK: Yes, your Honour, there would be three options in that case, and that is a very real possibility, with respect. First, and these are not inconsistent possibilities, the court could simply decline to award the relief. Secondly, it could award it but grudgingly or some lesser relief, or thirdly, and most likely, it could decline to award the relief and provide an opportunity for further submissions and amendment and I accept there would be nothing wrong with that course and amendment could take place at any time. That is part of the reason this is just a small point. But unless and until that is done, that reflects the boundaries of the dispute, and it may be that the Full Court accepted that. If your Honours go to page 158, paragraph 170, about six lines in their Honours said:

The Court may well decide that orders proposed by the regulator are inappropriate. This may lead the regulator to seek different orders from those initially claimed. Provided that procedural fairness is afforded to the respondent, there is no reason why such other relief should not be granted.

So the Full Court seems to accept there is a procedural fairness limit.

GORDON J: Why is that not a complete answer to this proposition before this Court?

MR KIRK: Sorry, your Honour, I missed the last part.

GORDON J: Why are those matters not a complete answer to the proposition you now put to us that the Court should make the orders that are set out in the prayer for relief?

MR KIRK: That then leads to the issue which I wanted to address very briefly, which is in relation to whether the orders sought should have been made, and I am only going to address that very, very quickly indeed. I will make two points, if I may.

In our respectful submission, there was enough material before the Full Court, taking a NW Frozen Foods approach, to have made the orders. It declined to do so for two reasons, it seems - first, because of its view as to Barbaro, namely there needed to be, in essence, a full hearing in relation to setting of the penalty; and, secondly, because it made certain criticisms of the agreed facts. In our respectful submission, the second is related to the first because they were criticising the agreed facts, we respectfully submit, in light of the fact that they were going to undertake a full review.

There was enough to set the pecuniary penalty agreed, and there was no issue of jurisdiction, or power, or public interest, or legal principle, or vulnerable parties, or any other matter which might have stood in their way, and for that reason, the orders should have been made. However, the director puts against us that your Honours do not have the benefit of any decision below, of a single judge or the Full Court, addressing in any detail the actual setting of the pecuniary penalty.

If your Honours do not accept our first point put very briefly, namely that there was enough, then, with great respect, it is plainly appropriate that the matter, if we persuade your Honours in relation to Barbaro, be remitted to a single judge of the Federal Court to deal with those submissions. Unless I can assist your Honours any further, they are the submissions for the two Unions.

FRENCH CJ: Yes, thank you, Mr Kirk. The Court will adjourn until 2.15.

AT 12.43 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15 PM:

FRENCH CJ: Yes, Mr Murdoch.

MR MURDOCH: May it please the Court, dealing firstly with the appeal brought by the Commonwealth, the first respondent supports and adopts the arguments of the Commonwealth and support the disposition of the appeal in terms of the orders sought by the Commonwealth in its notice of appeal. Therefore, I propose to say nothing further in terms of the Commonwealth’s appeal.

As for the appeal brought by the two Unions, however, whilst the first respondent supports that much of the Unions’ position that the appeal ought be allowed and the orders of the Full Court ought be set aside, my client however submits that what should follow from that is consistent with the alternative orders sought by the two Unions, that the matter should then be remitted to the Federal Court for determination according to law.

I intended to deal with these points in terms of dealing, firstly, with why the matter ought be remitted and then deal with why, in any event, the amounts set out in the original application do not delimit the penalties that may be imposed. Then, lastly, should your Honours wish me to do so, deal with why it is that the penalties sought in the matter are appropriate. Could I deal first with why, in my submission, after this Court determined the appliqué to the Barbaro principles, the matter ought be remitted to the Federal Court.

The Full Court decision dealt with only the application of Barbaro to the imposition of civil penalty provisions. That can be seen from paragraphs 235 to 243 at appeal book, pages 183 to 186. Their Honours then went on to make some observations generally about the proceeding in question before the court at paragraphs 244 to 253, appeal book 186 to 189. It is apparent, with respect, that the observations that their Honours made were not determinative, they were simply observations. Then at paragraph 254, the Full Court otherwise adjourned the matter to allow the parties to consider their Honours’ reasons and, if they wished, the parties’ respective positions in light of those reasons.

Therefore, the Full Court did not determine any of the matters sought to be the subject of the orders sought by the Unions in orders 3(i) in the appeal. The Full Court did not determine whether penalties were limited to those prescribed in the originating application. Nor did the Full Court determine whether the orders actually sought in terms of penalties and declarations were appropriate. The process that the Full Court articulated at paragraph 254 was overtaken by the applications for leave and the appeals that there followed.

Therefore, the first respondent respectfully submits that in the absence of the Federal Court having determined either of those matters, this Court should, once it determines the matter of principle as to the application or otherwise of Barbaro to civil penalty matters, remit the matter back to the Federal Court to hear and determine the matters in respect of the effect of the reference to particular penalties in the originating application and to determine the actual penalties themselves and the court and the parties can then deal with the matter with the benefit of this Court’s reasoning in respect of the application to Barbaro or otherwise.

It is not just an issue as to the lack of any decision at first instance or, with respect, the use of this Court’s time to determine those matters. There is, in my submission, a real benefit to the parties in having those matters the subject of a remittal. That then allows the parties to make submissions with the benefit of this Court’s ruling on the application of Barbaro or otherwise and of course, depending upon the outcome on that point, the principles that the parties’ submissions in respect of penalty will need to address, may be different.

For example, depending upon this Court’s ruling in respect of Barbaro, it may be that notwithstanding agreement, it is neither appropriate or for the parties to refer in their submissions to specific amounts as to penalty. Similarly, if parties cannot make submissions as to a specific amount, it may well be inappropriate for there to be a reference to the specific amount in the originating application. So, in my respectful submission, there are good reasons why the matters sought to be agitated by the Unions ought be the subject of a remitter as opposed to this honourable Court deciding them.

Can I move then from the submissions I wish to make about why the matter should be remitted to deal with the two issues that the Unions otherwise seek to agitate, that being whether the court is bound by the amounts sought by way of penalty in the originating application, and then the question of the penalties themselves.

Dealing with the first issue, in my respectful submission, the short answer is that the court is not bound by the amounts set out in the originating application and I make that submission on three bases, the first basis being, as has been submitted to the Court by the Solicitor-General, that in imposing penalties the court is engaged in the exercise of a discretion. That discretionary exercise cannot be limited by the parties stating in the originating application a particular penalty amount or amounts. It is at all times a matter for the court to determine in the circumstance of the case.

Secondly, I also adopt the submission of the Solicitor-General to the effect that there is a public element that attaches to a civil penalty in respect of deterrence and that of itself counts against the parties being able to cap, as it were, the amount of penalty.

The third point that I make is that the context of this matter and the actions of the parties have the effect that the prayer for relief could not be taken to seek to limit the court. The penalties in question were agreed in the context of well-established Full Court authority to the effect the court was entitled to exercise its discretion regardless of the agreement between the parties. I refer there, of course, to the Mobil Oil decision and the NW Frozen Foods decision. Secondly, prior to the hearing of the matter by the Full Court, and post the application for relief being filed, an agreed statement of facts was arrived at between the parties, which stated at paragraph 116 – this is reproduced at appeal book 56 – specifically that:

The parties have agreed that, subject to the discretion of the Court to fix an appropriate penalty:

(a) The penalty amounts set out above, are satisfactory . . .

(b) The penalties payable by the Respondents be paid to the Commonwealth –

So the parties specifically acknowledged that at all material times, the penalties were subject to the discretion of the court. Similar sentiments can be seen in the written submissions of both parties, and I do not ask the Court to open these up presently, but the written submissions of the parties before the Full Court are annexed to the two Unions’ submissions. In Annexure 1 at paragraph 19(a), my client refers to Mobil Oil and the principles set out therein. In Annexure 2, which are the Unions’ submissions, the Unions refer in paragraphs 1 and 2 to the agreement that was for the discretion of the court, and at paragraph 27 again refer to Mobil Oil.

It follows this was very much a case which, at all material times, the real question of the proceeding was what was the amount of the penalties to be imposed by the court exercising its discretion? That was the issue brought before the court. That was the matter that was before the court for the court to determine. In light of that, in my submission, notwithstanding the fact that the prayer for relief said what it said, this was a very apt case in which the court had the capacity pursuant to rule 23 of the Federal Court Act to make such orders as the court thinks appropriate.

I also note in that regard the sentiments expressed by your Honour the Chief Justice in the AON Case at paragraph 14, and also the sentiments expressed in the decision handed up to the Court this morning by my learned friend, Mr Kirk, the Banque Commerciale decision, at pages 286 and 287. In particular, what I am referring to there, with respect, is what was said by their Honours Chief Justice Mason and Justice Gaudron from the beginning of the last paragraph on page 286 to about point 3 on page 287. In my respectful submission, this was a case where the court was, at all material times, entitled to exercise its discretion to make an order for penalties that the court considered appropriate.

The Court was able to make orders which decided the real question in controversy between the parties, or put another way, to decide the issues upon which the parties had come before the Court, that being consistent with Mobil Oil, consistent with NW Frozen Foods. The Court was to exercise its discretion to decide the appropriate penalties, be they up or down, with respect, to the amount set out in the originating application. That was all I intended to say in respect of the first point that the Unions raised in respect of the originating application. I was then going to go on to deal with, if the Court wished, why it was that the penalties sought were appropriate.

FRENCH CJ: I am not sure if that is appropriate we deal with that. No, I do not think we need to hear from you on that.

MR MURDOCH: In light of your Honour’s comments, I will not deal with that issue. They are the submissions for the first respondent, may it please the Court.

FRENCH CJ: Yes, thank you, Mr Murdoch. Yes, Mr Moore.

MR MOORE: May it please the Court. We emphasise that because we have no client and our own views are - - -

FRENCH CJ: Very good of you to step into the breach.

MR MOORE: - - - and our own views are irrelevant, we are merely seeking to offer assistance by testing a number of propositions made by others. We do say that what the Court was presented with this morning at times tended towards attacking a straw case, in that it overstated the implications of this particular decision at hand.

First, we point to the fact that the present decision is concerned with agreed penalties and the implications of agreed penalties, and we say that there are special features attending upon such agreed penalties which make them at times unhelpful and potentially distracting for the Court in the proper exercise of its discretion. Secondly, we say that the Full Court in adopting the decision in R v Barbaro in a civil penalty context cannot be taken to have restricted the independent submissions that a defendant or respondent may make because, as was observed this morning, the decision in Barbaro does not so restrict those submissions, and that was also recognised by the majority of the Court of Appeal in the case of R v Matthews.

Further, we do say that the restrictions on the regulator were somewhat overstated. For example, a submission was made about the implications of the decision for the application of the totality principle. But, of course, the totality principle is drawn from the criminal sentencing in context and it has never been a barrier in that context to make proper submissions as to not only the number of contraventions but how one then comes back to address the question of what is the total sentence that is appropriate. So we do say that some of the statements were a little overstated. What I propose to do is come back to these issues in more detail later because what I wanted to deal with first was with some other aspects of the decision that have received less attention this morning but which we suggest are of equal importance.

That concerns firstly the continued application of the NW Frozen Foods and Mobil Oil approach and also the usefulness of an agreed penalty, and we do say that, whatever the court might do with the more general proposition as to the type of submission that should be made, there is at least one baby that should not be thrown out with the bathwater.

Can I turn to the decisions in NW Frozen Foods and Mobil Oil? We do say the principle to be drawn from those cases is that if the court in its independent exercise of discretion, having regard to proper principles, would fix a particular penalty, then the court ought not substitute that penalty for an agreed penalty if the agreed penalty is within what is described as a “permissible range”. Can I go to the decision of NW Frozen Foods [1996] FCA 1134; 71 FCR 285? That decision commenced in the first paragraph with noting that the:

appeal arises out of a very unusual circumstance.

The very unusual circumstance was of course, and was noted there for the first time:

the court has rejected a penalty jointly put forward by a corporation –

and the relevant regulator, being the Commission, and that observation that it is a very unusual circumstance was true in 2005 and remains true a decade later. At page 290 of the decision in the last paragraph on the page, the court observed that:

The Act places on the shoulders of the Court the responsibility to determine the “appropriate” penalty –

but then, about halfway through the paragraph, observed that:

Since the decision in Trade Practices Commission v Allied Mills Industries Pty Ltd, it has been accepted that both the facts, and also views about their effect, may be presented to the Court in agreed statements, together with joint submissions . . . Because the fixing of the quantum of a penalty cannot be an exact science, the Court, in such a case, does not ask whether it would without the aid of the parties have arrived at the precise figure they have proposed, but rather whether their proposal can be accepted as fixing the appropriate amount.

There is then reference to the “public policy”, which is the promotion of settlement of litigation and “freeing the courts to deal with other matters”, et cetera. Then there is a note that:

These beneficial consequences would be jeopardised if corporations were to conclude that proper settlements were clouded by unpredictable risks. A proper figure is one within the permissible range in all the circumstances. The Court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case.

A number of observations may be made about this. Firstly, the reference to “unpredictable risks” must be a reference to the risk that the court will impose a different penalty from the agreed figure. The Commonwealth in its written submissions suggests that one risk that is eliminated by an agreed penalty is the risk that the regulator will seek a higher penalty. That is undoubtedly true, but it is not a relevant risk for present purposes.

That risk is removed whether or not the court acts on the basis of an agreed penalty. Here, the court is referring to a different kind of risk, being the risk of departure by the judge from an agreed penalty. Secondly, and we will come to this in more detail, we say the notion of a permissible range must involve consideration of a range that has boundaries beyond which the penalty would be impermissible. Thirdly, the principle is designed to operate as a constraint, namely, that the court ought not impose its own conclusion as to an appropriate penalty if the agreed penalty is within what is described as a permissible range.

Your Honour the Chief Justice asked this morning, what is the fetter referred to in the Full Court decision. That is the fetter that was being addressed in that case, that there is a fetter flowing from both NW Frozen Foods and Mobil Oil that one does not adopt a view as a product of the instinctive synthesis approach. One has one’s own view of the appropriate penalty, if the agreed penalty is within what is described as a permissible range.

Can I then turn to the decision of Mobil Oil [2004] FCAFC 72; (2004) ATPR 41,993 and at paragraph 2 of that decision there is a statement of the question that was posed for determination by the Full Court which was where the parties propose an agreed amount, is the court bound by NW Frozen Foods:

to consider whether a pecuniary penalty proposed by the parties was within the permissible range in all of the circumstances and, if so, was it required to impose a penalty of that amount –

In paragraph 47 of the decision, page 625, is the citation of the passage from NW Frozen Foods and then in paragraph 48, the court observes that the court of course is not:

precluded from requesting further information in order to determine whether the agreed penalty . . . Secondly, their Honours do not say that the Court is bound by the penalty proposed by the parties or relieved from the necessity of determining that it is appropriate. They say only that the Court will not depart from the agreed figure merely because it might have selected some other figure, or in a “clear case” . . . it is not entirely clear what Burchett and Kiefel JJ meant by the reference to a “clear case”. In context, it appears simply to mean a case where the proposed penalty is outside the range –

Then in paragraph 51, there is a setting out of six propositions said to arise from NW Frozen Foods. Subparagraph (ii) recognises, and there is no dispute about this, that:

Within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another.

But subparagraph (vi) is perhaps the operative provision:

Where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure is, in the Court’s view, appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if within the permissible range.

With regard to the sixth proposition, the meaning of “appropriate penalty” in this context thus includes a figure that differs from the one the court would have been disposed to select, in the proper exercise of its discretionary judgment and is appropriate if it is within some notion described as the permissible range. In paragraph 52 and following there is then a series of clarifying points. That includes paragraph 54 where it was noted that the sixth proposition – the one we have just been addressing:

does not mean, in our opinion, that the Court must commence its reasoning with the proposed penalty –

range. It is open to the court to do so but of course the court could first –

address the appropriate range of penalties independently of the parties’ proposed figure and then, having made that judgment, determine whether the [proposed] penalty falls within the range.

We say that if the latter approach is adopted then there is clearly some need to form some view as to the appropriate range of penalties, logically, which would require identification of some boundaries. In paragraph 59 and following there is a discussion of various criticisms of NW Frozen Foods. We do not need to go through all of those, but in paragraph 70 it is noted that the court is not acting as a “rubber stamp”:

The Court must form its own view about the appropriate range of penalties, on the basis of the agreed facts or evidence.

If the facts are inadequate, then additional information can be sought. We note that emphasis on the appropriate range of penalties in that context. In paragraph 75 there is a discussion of the decision of R v Gallagher, a decision of the New South Wales Court of Criminal Appeal. In that decision, in the second column of the page, about midway through the first paragraph it is noted:

From time to time courts are confronted with situations in which both sides to the forensic contest are agreed upon a particular outcome, but where the parties do not between them necessarily represent all who have a concern with the result. In such a situation the adversary system does not work as it should . . . Judges ordinarily see this as calling for particular caution –

Then there is reference in the next paragraph to arguments in favour of leniency and noting that such arguments “in favour of such leniency comes from the Crown as well as the offender”. Then further down the page, this raises the need for special care on the part of the judge. That notion is picked up in paragraph 77 where the court observes:

The position of the Court where prosecution and defence agree on the appropriate sentence, as laid down in R v Gallagher –

We say that is not entirely accurate. R v Gallagher was not speaking about agreement as to the appropriate sentence. Indeed, in the criminal context one does not reach agreement between the prosecutor and the defence as to the appropriate sentence. The defence say that that has similarities to the position where the regulator and contravener jointly submit that a particular penalty should be imposed. Then, it is said that:

Just as the criminal court will take into account the prosecution’s views on the appropriate sentence –

which is slightly inaccurate, for the reasons we have identified –

so the court in the civil penalty case . . . will take account of the regulator’s position. But in neither case is the court relieved from the responsibility of exercising its own judgment as to the appropriate sentence (in criminal cases), or whether the proposed penalty is within the appropriate range for the contravention (in civil penalty cases).

We see here a clear distinction being drawn between the appropriate sentence itself in a criminal context, and the appropriate range for the contravention in the civil penalty context. We do say, contrary to the matters that are put forward in the written submissions, that there is a difference expressly identified here between fixing an appropriate sentence or penalty, and considering whether an agreed penalty is within an appropriate range.

Then, in paragraphs 80 to 82, the conclusion is expressed, which was to answer the stated question “no”, but the answer was only no because of the qualification that is referred to back in paragraph 54, which we went to, which is that the court does not have to start with the proposed penalty – the court could start with considering the permissible range – but subject to that qualification, the question was not the subject of disagreement.

We submit that the notion of a range of permissible penalties – the very word “permissible” carries with it the notion that there are outer boundaries to the range, and that going beyond those outer boundaries would be impermissible, i.e. erroneous. This requires some consideration of where the boundaries of error lie. This is particularly so if one is adopting the second approach referred to in Mobil Oil, commencing with identifying the permissible range and then considering whether the agreed penalty falls within that range.

Both the Commonwealth and the Unions submit that the notion of “permissible range” in NW Frozen Foods and Mobil Oil is not the same as the notion of an available range in the decision of R v Barbaro, but instead is simply a recognition that there is no single correct penalty and merely requires the court to consider whether the penalty is an appropriate penalty. We do say – and I will come to this in more detail – that closer examination reveals that the notion of available range under consideration in the Barbaro decision is the same notion of the limits within which reasonable minds can differ.

The Commonwealth and the Unions likewise emphasise that there is no single correct result in the penalty case, and that may readily be accepted in the sense that it is impossible to say in advance that the correct result is sentence X, and that the sentence identified by the court may not be said to be incorrect, just because some other judge might have weighed the competing factors and come to a slightly different result.

Nevertheless, we do say that the process of instinctive synthesis is a process of weighing factors which produces a single result – that is the way in which that process has been expressed – and the principle in NW Frozen Foods and Mobil Oil requires a different approach. Now, before going to the decision in Barbaro, I did want to go to the earlier decision in R v MacNeil-Brown [2008] VSCA 190; (2008) 20 VR 677 which we handed up with our written outline. In paragraph 6 and following of that decision there is discussion of “The meaning of ‘sentencing range’”. It is observed in paragraph 6 that it is a discretionary judgment:

The sentencing decision is a discretionary judgment. The sentencing court is required to weigh up a range of relevant matters –

In paragraph 7:

Appeals against sentence accordingly attract the principles which govern, and limit, appellate intervention in discretionary decisions, as laid down in House v R. The concept of “range” emerged in the case law on discretionary appeals.

In paragraph 8, it is noted that:

There is, likewise, an “ambit of reasonable disagreement” in the exercise of the sentencing discretion.

In paragraph 9, their Honours commence with the statement that:

The contention on appeal that a sentence is “manifestly excessive” (or, in a Crown appeal, “manifestly inadequate”) is almost always supported by the proposition that the sentence is “outside the range”.

Then in paragraph 10, it is noted that:

Several propositions can now be stated which lie at the heart of sentencing law and policy, as follows:

1. The decision as to the sentence to be imposed on a particular person for a particular offence is an individual expression of opinion or judgment . . . the discretion which the law commits to sentencing judges is of vital importance . . .
   
2. Reasonable minds can differ on the appropriate sentence for a particular case . . . there is “a range of sentences open to a sentencing judge . . .
   

Therefore:

3. “The range” means the limits within which reasonable minds can differ on the appropriate sentence for a particular case.
   
4. It is an error of law to impose a sentence which is outside the range applicable to the particular case.
   

Then, coming to the decision of this Court in Barbaro v The Queen, the discussion of this aspect commences at paragraph 20, referring to the decision in MacNeil-Brown. The Court observed in paragraph 22 that “a practice has developed” and that, in 23, “The practice is wrong in principle”. Then in 24 and following there is discussion of the notion of “available range”. In paragraph 25, the majority observed that:

a judge fixing the sentence to be imposed on an offender exercises a discretionary judgment. The exercise of discretion is subject to applicable statutory provisions and judge-made law.

In paragraph 26, that:

Reference to an “available range” of sentences derives from the well-known principles in House v The King -

et cetera, finding that it is –

“unreasonable or plainly unjust” and the appellate court infers “that in some way there has been –

an error –

But this kind of error can also be (and often is) described as the sentence imposed falling outside the range of sentences which could have been imposed if proper principles had been applied

That is what is meant by the sentence falling outside the available range of sentences. Then, in paragraph 27, the majority observed that:

the essentially negative proposition that a sentence is so wrong that there must have been some misapplication of principle in fixing it cannot safely be transformed into any positive statement of the upper and lower limits within which a sentence could properly have been imposed -

and therefore that, as observed in paragraph 28:

stating the bounds of an “available range” of sentences is apt to mislead.

These observations are not only made in the context of a submission that would be made by counsel to the court as to the available range of possible sentences, but the majority observed that –

The conclusion that an error has (or has not) been made neither permits nor requires setting the bounds of the range of sentences within which the sentence should (or could) have fallen. If a sentence passed at first instance is set aside as manifestly excessive or manifestly inadequate, the sentencing discretion must be re-exercised . . . Fixing that different sentence neither permits nor requires the re-sentencing court to determine the bounds of the range within which the sentence should fall.

So, what is being observed is that the notion of available range has no proper meaning, not only in the context of a submission being made, but in the context of the consideration that would need to be given by an appellate court or by the consideration given by a sentencing court or by a re-sentencing court. That is because the negative proposition that a sentence is wrong does not translate into a positive proposition as to the available range. In paragraphs 34 and 35, there was the further point made that speaking of an available range in effect:

wrongly suggests that sentencing is a mathematical exercise -

which it is not, and that –

A sentencing judge must reach a single sentence for each offence and must do so by balancing many different and conflicting features.

In paragraphs 38 and following, the majority went on to consider the proper scope of submissions that could be made by a prosecutor, which includes submissions about the fact which can be found, relevant sentencing principles and comparable sentences, which of course could include a range of comparable sentences but not the range of appropriate sentences for this contravention, and that is how the prosecutor satisfies in a proper manner its obligation to the court to assist the court from avoiding appealable error and of course nothing in the decision under appeal in the present case would preclude a proper submission of that sort.

In paragraph 34 of this decision, the majority refers to what was observed in the decision of Wong and, in particular, the reference to the principles which are otherwise known as instinctive synthesis and it is observed in that paragraph:

“[s]o long as a sentencing judge must, or may, take account of all of the circumstances of the offence and the offender, to single out some of those considerations and attribute specific numerical or proportionate value to some features, distorts the already difficult balancing exercise which the judge must perform”.

I will not go to the decision of Wong, but the Court was taken to paragraph 75 of that decision this morning – it is in [2001] HCA 64; 207 CLR 584 – and at paragraph 75, it is emphasised that the instinctive synthesis is used as a process which produces a single result.

We say that, as identified by the majority of this Court in Barbaro, the notion of an available range or a permissible range is inapt. It is a potentially misleading shorthand for the process of appellate review and the basis of a finding of error, and improperly suggests a mathematical approach to sentencing which has been rejected by other decisions of this Court.

It is incompatible with the correct process of instinctive synthesis for the same judge to have to consider whether a different figure – that is, different from the figure which the judge arrives at through the process of instinctive synthesis – is nevertheless appropriate because it is within something described as the permissible range.

We say that is a distinct process of reasoning of assessing a range within which non-erroneous sentencing or penalty fixing might occur, and cases such as the decisions of this Court in Wong or Markarian provide no guidance as to what would be the applicable principles for assessing or establishing the permissible range in that sense. The instinctive synthesis of potential competing considerations by the court produces a single result, not a range, and any notion of a range must involve a different assessment; an assessment of a range of different decisions which could be supported by the same competing considerations.

We observe that the notions are distinct and have been understood to be distinct, and that this is apparent from the various cases that have applied the Mobil Oil principle. In our written submissions at paragraph 13, there is a footnote, footnote 2, which sets out various examples of that approach. We have actually set out the passages from the decisions, which make it clear that in each case, the court is observing that were it not for the agreement as to penalties, I, as the judge fixing the civil penalty, would have adopted a different amount, but I am persuaded that the amount that is proposed is within the permissible range, or the available range.

Indeed, in some cases, it has been observed that penalties so close as to be at the bottom of the permissible range to risk falling below it, and matters of that sort, but there, nevertheless, with reservations, the proposed penalty is adopted. We say this is an application of the Mobil Oil approach, but it is a departure from the correct application of an independent discretion by the court, and it is inconsistent with the recognition by this Court in Barbaro as to the elusive nature of a permissible range, or the assessment of a permissible range.

BELL J: Mr Moore, at paragraph 13 of your outline you say that the process of imposing a civil penalty is analogous to the task – that is, to the task of sentencing in a criminal case?

MR MOORE: Yes.

BELL J: Accepting that there are features in common, nonetheless, why as a matter of principle would one transpose principles that apply to the peculiar function of a judge administering criminal justice to the conduct of proceedings, including proceedings seeking a civil penalty?

MR MOORE: Can I answer that in two parts. The first is to observe that the notion that I have been referring to thus far about applicable range or appropriate range or permissible range, in our submission does not derive specifically from the criminal law in the sense that the concept of a range that is referable to appealable error is relevant to any discretionary decision. That concept, as observed by the majority in Barbaro, is not restricted therefore to a criminal context.

I was going to come in more detail to the second answer that I have to your Honour’s question, which is what is it about the process of civil penalty setting which attracts the same concern or policy rationale that was observed by the Court in Barbaro which applies to the role of a prosecutor and if I might come to that in detail. I need to develop it because it is really the basis on which our third proposition rests, that there is a sufficient analogy that it makes that principle applicable.

But we do emphasise that if we are wrong about that – and that is why I made the comment about throwing the baby out with the bathwater. If we are wrong about that and if this Court was to find that Barbaro in those aspects was confined to a criminal case, that the policy concerns expressed in that case had no wider application to civil penalty proceedings, nevertheless the first and second principles that I am dealing with, we would say, would be unaffected by that view.

The first is what is the relevance of the difficulty with the notion of available range and how does that translate to the reception of the decisions of Mobil Oil and NW Frozen Foods? The second – and I will come to this in due course – is what is the weight or importance that would be given to an agreed penalty, what is the value of an agreed penalty in the penalty-setting process?

GAGELER J: But is it permissible for a judge considering a penalty, whether agreed or not, to ask if I were to set the penalty at X, would I be committing an appealable error?

MR MOORE: The difficulty with that, we say, as recognised by the majority in Barbaro is that the notion of whether one has an appealable error is normally assessed by questions such as whether it is manifestly excessive or manifestly inadequate. It is very difficult for your Honour, sitting as a single judge hearing a penalty matter, to address that essentially appellate question in advance, in anticipation of what might be later adjudged.

Indeed, we say that is a complete distraction from what should be the correct process, which is to simply say, what is the correct amount that I, exercising my discretion, taking into account all of the competing factors which I have to take into account that may point in different directions, what is the correct amount?

Recognising that there is no single correct amount, nevertheless, that is a process that does in fact produce a figure and that asking the court to say, I have done that, but now is that figure within the permissible range, is this other figure that is proposed, is that within the permissible range, is asking the court to address an entirely different question and one which we say is incompatible or inconsistent with the exercise of judicial discretion, which has been reposed in the Court and in no one else.

GAGELER J: I am sorry, just following through, does that mean that it would make it impermissible, would it not, for either side to make a submission to the judge, not just the prosecutor or the applicant?

MR MOORE: No, and here we are not dealing with what I have to deal with when I deal with my third topic, which is whether there should be any prohibition on making a submission at all. We would say that correctly approaching the matter, if the party is permitted to make a submission which includes a suggested penalty, the court can say, well, I see you have put that penalty forward. A court could consider, is that the figure that I would arrive at in my independent exercise of discretion.

A court could alternatively say, well, what is the figure that I would arrive at in the independent exercise of my discretion? The problem, we say, emerges where NW Frozen Foods and Mobil Oil tell you, if you arrive at that, you must nevertheless consider something else and then consider whether it is in within something called the “permissible range”. That is the vice we identify, and we say that in light of the consideration of that issue in Barbaro, that is problematic.

In our written submissions at paragraph 18, we refer to the observations in the decision of the Victorian Court of Appeal in the case of ASIC v Ingleby (2013) 39 VR 554 at paragraphs 29 and 30, and in that case it was observed, we say correctly, that the approach in NW Frozen Foods and Mobil Oil does require the court to address an appellate question, whether the agreed figure falls within a range of penalties reasonably available.

NETTLE J: This was decided before Barbaro?

MR MOORE: It was, it was, but we say correctly recognising that, nevertheless, there is that aspect of the decision that one is required to make; that the process of reasoning that one has to engage in, which is an appellate function. Now, all of this we emphasise is different - - -

NETTLE J: Can I just ask - this went against both NW Frozen Foods and Mobil Oil at the time, both of those Full Federal Court decisions?

MR MOORE: Yes, it did, yes, your Honour.

NETTLE J: Thank you.

MR MOORE: Indeed, there had been some concern expressed for a while by Justice Weinberg, who was a member of that court, about the implications of those decisions.

NETTLE J: The rubber stamp syndrome.

MR MOORE: The rubber stamp syndrome but - - -

NETTLE J: The piety.

MR MOORE: But also this aspect which is, we say, a relevant and important aspect of the decisions, and we do emphasise that this does mean that the court cannot consider, as I have indicated, is the penalty that is being proposed an appropriate penalty in the synthesis, or in the exercise of the discretion, but to require the court to consider, notwithstanding that they would have arrived at a different figure, is it nevertheless within a range and a permissible range, which must be broader than the appropriate figure. It is problematic.

KEANE J: This decision is inconsistent with the decision of the Full Federal Court in this case because Ingleby accepts – indeed, it says – that the joint submission of the parties as to an agreed penalty is an important factor to be considered. That is quite inconsistent with the notion that you cannot look at it at all.

MR MOORE: That is why – I am sorry, your Honour, I have been trying to emphasise that my first and second propositions are quite distinct from my third; in other words, there are aspects of the reasoning by the Full Court in this case which is not just about can a submission be made, but is also about, and I will come to it in a moment, whether the impact of this part of the decision in Barbaro is such as to cause difficulties with the continued application of Mobil Oil and NW Frozen Foods.

The Act in question here, the Building and Construction Industry Improvement Act, in section 49, as the Court has seen, confers on the Federal Court the task of imposing a penalty for certain contraventions. That may be contrasted with other sections of the Act which confer various tasks on the regulator. The Act selects the court, and the judicial exercise of independent discretion by the court, as the means of fixing a penalty for various contraventions. Any limitation on the free and independent exercise of that discretion of the sort stated in NW Frozen Foods and Mobil Oil, we submit, is not found in the text or the structure of the Act.

Further, by directing the court to consider the question of whether the proposed penalty is within the permissible range, the approach in those decisions, NW Frozen Foods and Mobil Oil, directs, we say, the court to ask the wrong question. The proper question is what is the appropriate penalty in the circumstances of the present case, having regard to proper principles and precedents which would include previous penalties imposed in more or less comparable cases. We do say that the approach of the court in the cases we refer to in footnote 2 does not involve the exercise of the judicial discretion conferred on the court by section 49.

Having reached a conclusion as to the particular penalty through the proper exercise of that discretion, and the process of synthesis, the court then departs from that figure by the application of the principle in Mobil Oil. We do say that there is no statutory support for that approach. It is an approach that results in an otherwise broad discretion being constrained by limitation that is not found in the Act, and it is a constraint that is inconsistent with the unfettered and independent exercise of the discretion which the statute confers on the court. The propositions I have advanced so far do not turn on any particular feature of the criminal justice system, and they do not turn on the special role of the prosecutor.

BELL J: Save that the analysis in Barbaro was entirely in that context, so that consideration of whether judicial discretion is correctly characterised as having been fettered by the approach adopted in Mobil Oil and NW Frozen Foods was simply an issue not considered.

MR MOORE: I would agree with that, your Honour, but we do submit that, having regard to those observations, they are applicable to any exercise of discretionary judgment. The notion of an available range – if one put that notion forward in any context, we say it would founder on the same difficulties that it foundered upon in Barbaro.

NETTLE J: It is the same irrelevant expression of opinion in the civil jurisdiction that is in crime.

MR MOORE: Quite, your Honour. Now, turning to a slightly related matter but a different matter, we also say that the approach in Mobil Oil – and this does depend upon the notion of the prosecutor - that the approach in Mobil Oil is inconsistent with the sharp distinction referred to by the majority in Barbaro, consistent with the earlier statements of this Court in GAS v The Queen [2004] HCA 22; 217 CLR 198 between the role of the prosecutor and that of the judge whereby it is for the prosecutor alone to decide what charges are to be preferred, it is for the accused alone to decide whether to plead guilty. This decision cannot be made with any foreknowledge of what sentence will be imposed and that it is for the sentencing judge alone to decide what sentence will be imposed.

We do, however, say that those principles are relevant for the fixing of a civil penalty which is an analogous process for reasons we will develop. Those propositions were repeated by the majority in the decision of Barbaro at paragraphs 47 and 48 and, although there is no controversy about this, in the decision of this Court in CMB v Attorney-General. The citation I have is in the Australian Law Reports. It may be reported elsewhere, but it is [2015] HCA 9; (2015) 317 ALR 308. At paragraph [64], your Honours Justices Kiefel, Bell and Keane observed that:

The determination of the appropriate sentence is one that rests solely with the court. The public interest in the sentencing of offenders does not permit the parties to bind the court by their agreement.

Now, what is the relevance of all of that, you might ask. Although the Act in question here reposes various functions in the regulator, the statute grants the function of setting the penalty to the court and we do submit that it is problematic that the court would adopt a penalty agreed between the parties, even if the court would have been disposed to select some other figure in the exercise of its discretion in accordance with the function given to it by the statute. As we have discussed, the appropriateness of this approach has hitherto rested on the notion of permissible range, which is inapt, and the approach results in an otherwise broad discretion being constrained by limitation and not found in the Act.

Further, it is a constraint that is inconsistent with the unfettered and independent exercise of the discretion which the statute confers on the court and we submit that any foreknowledge by the parties as to the outcome would be inconsistent with the clear distinction between the role of the regulator and the role of the court and the legislative choice to repose in the court, and the court alone, the task of fixing an appropriate penalty.

Concerns expressed as to the impact of the Full Court’s decision in this respect, that the beneficial effects of settlements might be jeopardised if corporations perceive that settlements were clouded by unpredictable risks are, we say, inconsistent with the unfettered exercise of discretion by the Court. To put it simply, one cannot have both a proper and independent exercise of the discretion by the Court and any degree of foreknowledge or certainty for the contravener. And, more generally, in considering questions of policy it cannot be the case that the constraint or fetter of the sort identified in NW Frozen Foods or Mobil Oil is vital to achieving settlement and thus the various efficiencies said to follow.

Firstly, we note that there are no plea bargains in criminal proceedings, but that does not impede the resolution of those proceedings and indeed the presentation of guilty pleas and sentencing accordingly. Secondly, as the Commonwealth observes, settlement has other benefits for the respondent. It constrains the conduct of the regulator, it allows agreement as to the factual matters that would be put before the Court, not only the factual matters as to the circumstances of the contravention and the identification of the contraventions, the number of contraventions, but also facts the basis of which the penalty would be fixed and would be relevant to the separate considerations that are necessary in considering penalties – that is, the size of the contravener, their market share and so on, all of the normal factors that the Court has to take into account.

All of those matters can be the subject of resolution and settlement, which promotes early resolution of these matters. But if what is said is that it is necessary for the parties to have confidence in the outcome, in the resolution then we do say that that is inconsistent with the independent exercise of discretion.

FRENCH CJ: A fortiori, I suppose, if there is some particular weight given to the regulator’s position.

MR MOORE: I was going to come to that separately because that is - - -

FRENCH CJ: That does not have to be in the context of a consensual - - -

MR MOORE: It does not have to be in the context of a consensual resolution and it does not require that the Court must refrain from departing from the agreed penalty, simply in order to take into account, as a matter for each consideration, what is the view of the regulator or submissions otherwise made as to an appropriate penalty.

NETTLE J: These are fine distinctions.

MR MOORE: They are fine distinctions, perhaps, but we do emphasise that these decisions do require some form of fetter and that that fetter, we do say, is anathema to the correct exercise of discretion. In particular, I am responding to the proposition, which was also supported by evidence in the court below, that it is essential for the regulator to be able to, in effect, give some certainty to potential contraveners that the agreement that will be reached will be upheld. We say that that evidence, which is put forward as a virtue, in fact highlights a vice, which is that if what is being said is that we can give certainty to contraveners merely because we have reached an agreement, then that suggests that the independent exercise of the discretion is somewhat illusory and properly applied, given that on this aspect the Parliament has chosen to repose that discretion in the court, that there should be no certainty and there cannot be certainty. It is an essential aspect of the system.

We note that the approach endorsed by NW Frozen Foods and Mobil Oil is in rather stark contrast to the permissible approach in criminal sentencing, where there has been a rejection of any form of US-style plea bargaining. In the criminal law, the only acceptable form of negotiation is a charge negotiation, is what charge will be pursued as guilty pleas, on a statement of agreed facts to be placed before the sentencing judge.

Just to provide a reference, we included in our list of authorities a reference to an article by Webb and Turow, who are District Attorneys in the northern district of Illinois. It is interesting to observe that even in a plea bargain in a jurisdiction, at page 257 and following of that article, there is considerable discussion of the constraint that will be exercised - - -

FRENCH CJ: Sorry, which page?

MR MOORE: Sorry, 657 – I misspoke – and following. There is discussion of the constraint which would be exercised, having regard to the importance of the independent exercise of discretion by the court. For example, at page 675, there is discussion of what is the most extreme form of the plea bargain, which is an agreed disposition, but it was noted that, “Our office approaches [that] with extreme caution” because those agreements “tend to intrude on the traditional sentencing discretion of the district court judge”.

In our system, certainly in the criminal context, pleas of guilty must be made without any certainty as to the outcome, which was observed by the majority in Barbaro at paragraph 47 to be a fundamental proposition. We submit that it is unclear why any different approach would be applicable in the circumstances of a civil penalty, yet there is a different outcome because courts almost universally do not disturb the agreed penalty, applying the principles in NW Frozen Foods and Mobil Oil.

We submit that if courts were instead required to set a penalty on an independent basis, then they would most likely require additional information, possibly a better understanding of the circumstances, and a better understanding of other relevant circumstances pertaining to the culpability of the contravener.

The Full Court in the present case remarked upon those particular matters at paragraphs 237 to 239. Prior to the decision of the Full Court in the present case, there was a stark contrast in the case of a person who admitted a crime or a civil penalty contravention between the approach as to criminal sentencing and the approach to imposing a civil penalty, and on this topic, we submit, there is no apparent basis for such a stark contrast.

In the decision below, these notions were picked up at various points. There is reference in paragraph 53 in the first bullet point to one of the notions that I have been addressing, and likewise in the last bullet point in that paragraph, this is page 118 of the appeal book, in the last bullet point it was observed:

As to the proposition that it may not be useful for the Court to consider whether it would have imposed the precise agreed penalty, the point is that the relevant legislation effectively directs the Court to do so.

The decision in Ingleby and the appellate role is referred to in paragraph 113 of the decision and it was noted in paragraph 114 that it is fair to say that those remarks anticipated at least part of the reasoning of the High Court in Barbaro.

FRENCH CJ: Now, just looking forward to putting this in the practical context of the orders that are sought on the appeal - - -

MR MOORE: Yes.

FRENCH CJ: - - - and it is a bit unusual for this Court to be sitting on appeal from an adjournment order made by a court exercising original jurisdiction - - -

MR MOORE: Quite.

FRENCH CJ: - - - but I suppose the basis of that is that from the appellant’s perspective, had the court – not erred in holding itself constrained by Barbaro, they would have proceeded to deal with the question of the penalty on the basis of the submissions and materials put before them - - -

MR MOORE: Yes.

FRENCH CJ: - - - whatever, however that might have been exercised, and that the adjournment was granted on the basis that the parties had to re-think their positions in the light of that constraint, so that the appeal was against the adjournment and the failure of the court to proceed to make a decision on the basis of the submissions and materials before them.

MR MOORE: That is right, so I must recognise that the approach the Full Court took in refusing to, in effect, have any regard to any submission, I have to deal with separately but this aspect of the reasoning, which is that even if we were to take such matters into account, we would not apply the NW Frozen Foods or Mobil Oil approach to say, we are in effect bound to adopt that agreed penalty, if we are satisfied it is within something called the permissible range, whether or not we would reach a separate view or a different figure ourselves. That aspect is freestanding. It was an aspect of the reasoning in the present case and it was in part through the application, not entirely, but in part, through the application of the decision of this Court in Barbaro.

FRENCH CJ: But if we were to allow the appeal then an appropriate disposition would be to send it back to the Full Court to complete its task.

MR MOORE: Yes.

FRENCH CJ: Albeit there would no doubt need to be submissions from the parties as to the effect of this Court’s decision.

MR MOORE: Yes, I agree with that, with respect. Sorry, I was just completing a reference to some of the paragraphs. In paragraph 133 of the decision which was being subject to some criticism this morning, this reasoning nevertheless gives effect to the matters I have been addressing, which is that the notion that the perceived importance of certainty, as addressed in the evidence:

could only be achieved if there were a very high level of expectation that the Court would adopt the agreed outcome. Such an expectation would belie the pious assertion, frequently made, that it is for the Court to make the final decision.

Stripped of the adjectives, that is the very notion that I have been addressing, that if there is said to be some need to have a certainty or comfort that the decision will be in accordance with the agreed penalty, then that would be inconsistent with the independent exercise of discretion. We say that these observations are well-founded and no error has been demonstrated in this aspect of the approach.

Could I then turn to the second topic I wish to address, which is the proper role of agreed penalties. We say that, quite apart from the principles in NW Frozen Foods and Mobil Oil, it is relevant to consider the weight which may properly be afforded to an agreed penalty. We submit that an agreed penalty is even less than a statement or submission by a regulator as to the most appropriate penalty applicable to the circumstances of a particular case. That is because agreed penalties are necessarily the product of a bargain between the parties whereby some degree of compromise generally is involved. They attract, therefore, the application of many pragmatic considerations.

The regulator may have to assess its chances at trial, cost and time savings that it might make by the early resolution, the effect of that resolution on other matters which it is investigating or considering investigating, including its reputation for having efficacious resolution of such matters, and many other considerations. The range of considerations that may influence a respondent is probably even broader. Of course, the figure could also be the result of trade-offs as to remedies more generally, such as a corporate respondent agreeing to a higher financial penalty if it is saved from reputational damage from some other remedy such as an order for corrective advertising or similar order.

Of course, these are just matters of common sense, having regard to the pragmatic considerations that pertain to resolution of proceedings. We do say that one has to be a little realistic about this. Agreed penalties are reached in the process whereby the regulator has to make a pragmatic decision as to whether to compromise the matter or continue with a contested hearing. We do not for a moment suggest there is anything wrong with that. That is entirely proper. The compromise frees up resources to take on other respondents.

But the nature of the agreement ordinarily requires some compromise, if only for the reason that the respondent has to agree to it as well in order for it to be an agreed penalty. They have to identify a penalty that they are prepared to live with, often involving giving up any chance of successfully defending liability.

The Commonwealth in its written submissions emphasises matters such as the model litigant obligations, but those obligations, of course, do not apply to a respondent. It has to reach some agreement and, therefore, say little about the significance of an agreed penalty or what can be drawn from it.

In our written submissions at paragraph 31, we note the process of reaching the penalty in the present case and the frank admission that the penalty was, in effect, an agreement; a deal done. That could be justified by, in effect, working backwards to explain it in terms of application of proper principle, but that was not the way that the penalty was reached. There is nothing improper about that, but it merely illustrates the pragmatic nature of the process.

Having regard to that process of compromise, the agreed penalty is unlikely to represent the regulator’s best assessment of what is an appropriate penalty and, therefore, the penalty says little other than it is a figure that the parties have agreed to and possibly that neither is likely to complain if the court adopts it. It is not a figure that is the product of a process which the court must undertake in exercising its independent discretion.

FRENCH CJ: I suppose exercising its independent discretion, a court might well impose a lesser penalty where, absent agreement, the respondent has simply admitted liability and left it to the court. There has no agreement as to penalty, in other words, something analogous to the discount for a guilty plea in a criminal context.

MR MOORE: Yes. I do not think there is any controversy about the proposition with which this decision accepts that, for example, the mere preparedness to agree to something might be an act of contrition or that there may be other factors that have to be taken into account in the exercise of the discretion and although, of course, it is dealing with an analogous situation, I hasten to add because someone will point it out to me if I do not, in the decision in Barbaro, there was discussion at paragraphs 29 and following of the circumstance that even when dealing with the position of a prosecutor, views that the prosecutor may have as to leniency, the benefit of assistance that the offender has given or promised cannot be dispassionate because they must necessarily reflect the pragmatic considerations given by a prosecutor, which, as the majority of this Court emphasised in Barbaro, is not the same as the considerations which must be given by the court itself.

The observations in those paragraphs identify, we say, with considerable force the difficulties inherent in giving effect to the position of a prosecutor or a regulator who is inevitably influenced by such pragmatic considerations that are not dispassionate, and we say a fortiori where that position is a result of a negotiation.

BELL J: Is there a principled distinction between recognition that the regulator charged with regulating and maintaining discipline within the market falls pragmatic views about the appropriate course to take in relation to civil proceedings that may result in a civil penalty, and the position of a prosecutor bringing proceedings in the name of the Crown for a criminal offence?

MR MOORE: We appreciate that distinction and the force of that point. However, the point that we are making is that of greater value or weight would be a submission made by a regulator unaffected by the pragmatic considerations that go into an agreement, in other words, if the regulator was to come before the Court and say, “Our view of the most appropriate penalty is X”, then that would have more force, we say, than a regulator saying, “Well, we have managed to agree upon a penalty of Y”, because the agreement process necessarily involves some aspect of compromise or bargain.

There cannot be any confidence that that is the regulator’s best estimate of the appropriate penalty. Indeed, the nature of such a bargaining process means the regulator starts with a figure, the respondent starts with a figure, and somewhere in the middle there is consensus which both can live with, but it is not the regulator’s unvarnished view as to – or best view as to the appropriate amount.

KIEFEL J: Compromise is not an essential feature of this process. In some cases the respondents to these matters concede the amount claimed for penalty. I take your point about sometimes there will be compromises reached but, just as equally, sometimes the respondents do not see the point in arguing about it.

MR MOORE: I accept that, and I also must accept that it is not every case where that sort of hard bargaining will occur and it is not every case that one would say that is the result. But what we do say is the court is right to be a little – treat with slight caution the agreed penalty as the determinant or the best determinant - - -

KIEFEL J: It might be accepted that courts do.

MR MOORE: Sorry, your Honour?

KIEFEL J: Courts usually do and they usually do require an explanation.

MR MOORE: Yes.

KIEFEL J: That is the point, is it not? There is nothing - - -

MR MOORE: Yes.

KIEFEL J: Unless you take the earlier cases to suggest that the court is somehow precluded from – and I realise that your argument goes some way towards this – that the courts are precluded from requiring a proper explanation of how a figure was arrived at and sufficient facts to identify where it stands as compared with penalties for other contraventions in the past, there is nothing to prevent the court exercising its statutory obligation, is there?

MR MOORE: Not at all, your Honour, and indeed - - -

KIEFEL J: You have to read some restriction into NW Frozen Foods, the earlier cases.

MR MOORE: Yes, and it is clear even in that context where NW Frozen Foods says there is some constraint in that you would not depart from an agreed figure in those circumstances, clearly there is recognition that assistance can be obtained and the like. But we do submit that, freed of that constraint, the court would be even more likely to say, “Well, I need to be well satisfied and would need to assess very carefully”, because the court would then be simply exercising an entirely independent discretion.

KIEFEL J: What practical difference would it make in the approach that you contend for? What would the court do? The court would say to the parties what facts are relevant – these would all be pleaded, of course.

MR MOORE: Yes. Well, given that – although there are some cases where the court has departed from the agreed penalty, the vast majority of cases are cases where the agreed penalty has been accepted. They include those cases that we have highlighted where the court says, in effect, “Well, if I had been acting independently I might have come to a different figure, but I am satisfied this is within the permissible range”.

We do say that that lowers the bar somewhat for the type of inquiry that is necessary because one is comforted that, “Well, provided I am within something known as the permissible range, provided I am satisfied that it is not manifestly excessive or manifestly inadequate, this one will do”. We do say that a requirement of a fully independent exercise would at the very least sharpen the focus on exactly what do I need to undertake that task.

All I am addressing at the moment is perhaps a subsidiary point that the agreed penalty certainly should not be put on a pedestal above the best submission that a regulator could make. Indeed, on one view it should be seen as below that. In the decision at hand, paragraph 139, at about two-thirds of the way through the paragraph or perhaps halfway through the paragraph:

However it is likely that an agreed sentence will also reflect the particular interests of the regulator and the respondent in question, leading to the real possibility, or perhaps probability, that the opinion is not based on a dispassionate view of all of the circumstances.

We say those observations are uncontroversial and, indeed, consistent with the observations of this Court in Barbaro, at paragraphs 29 and following. Similar observations are made at paragraph 141 and reference to the prosecution’s view not being “dispassionate”, and the similar position for regulators. Indeed, the court observes:

a regulator has neither the history of independence nor detachment from the investigation which are generally characteristics of prosecuting authorities.

We say there is no error in that part of the reasoning. So, in summary, where we are up to so far is that in relation to these first two topics we submit, firstly, that the exercise of judicial discretion should be unfettered, not constrained by a requirement to have regard to a permissible range or to prefer an agreed penalty over the penalty that the court in the independent exercise of its discretion would impose.

Secondly, that in the carrying out of this discretionary task an agreed penalty should properly be recognised as a more modest value. Put simply, the court should exercise an independent discretion and, indeed, it would be only a matter of coincidence and, indeed, possibly unlikely that this independent exercise would lead to precisely the same result as the agreed penalty, having regard to the number of possible penalties that could be imposed in a given case. If such an approach was adopted, we say there would be no danger of subversion of the proper exercise of the discretion, no danger of the court being seen to rubber-stamp agreed penalties.

I then come to the third proposition, which is whether the court can receive a suggested penalty from a regulator at all. We recognise at the outset that this topic is more difficult. We also recognise that, whilst the decision in Barbaro referred to the principle that a prosecutor will not advocate for a specific figure or result, Barbaro, of course, is not the source of that principle. That principle is old and well established. It has not, hitherto, been given any application in civil penalty proceedings.

Can I just note that in our written outline we handed up, in paragraph 11 we listed a number of the authorities which recognise that principle which I have referred to, that is that the prosecutor will neither suggest a precise amount or nor, historically, any range of penalties. The prosecutor simply will not contend for a particular sentence and so we do need to recognise that there is nothing in Barbaro that cited a new proposition or established a new proposition in that regard.

We do, however, say that the decision of this Court in Barbaro recognised a rationale for the principle and that the principle itself and its rationale is apposite to the civil penalty context. The rationale is apparent from firstly, the observations in paragraphs 29 and following of Barbaro, that the role of the prosecutor is one such that the prosecutor is not necessarily dispassionate and in paragraph 33, the majority observed that:

The statement by the prosecution of the bounds of an available range of sentences may lead to erroneous views about its importance in the process of sentencing with consequential blurring of what should be a sharp distinction between the role of the judge and the role of the prosecution in that process.

NETTLE J: Mr Moore, it is not at all uncommon for the Crown to make submissions as to whether there should be a custodial disposition or otherwise. Indeed, if they do not, they are unlikely to succeed on appeal against manifest inadequacy.

MR MOORE: Yes.

NETTLE J: What is the difference in principle?

MR MOORE: There is a restraint attaching to the submission that a Crown would make, for example, a prosecutor might say that the matter is in the range of seriousness, at the upper end or a moderate seriousness. The prosecutor may address what is the maximum possible penalty, the principles that would be applied and precedents that would be relevant in taking into account - - -

NETTLE J: Notwithstanding the supposed dispassionate approach of the Crown?

MR MOORE: Notwithstanding that, but there is a practice of restraint at saying but the sentence should be 10 years or should be eight and a half years or - - -

KIEFEL J: Some sentencing legislation directs attention specifically to the last resort principle - - -

MR MOORE: Yes.

KIEFEL J: - - - which might partly explain why the Crown is obliged to say something, not to leave the court completely unguided about what is said to be a statutory objective.

MR MOORE: Yes, so as her Honour Justice Bell observed this morning, initially the Crown did not say anything on sentencing, other than perhaps identifying the offence and the maximum penalty - - -

KIEFEL J: But then a practice grew up in Victoria and Queensland.

MR MOORE: Because of Crown appeals, a greater role was adopted.

KIEFEL J: I think there a number of factors in play.

MR MOORE: Yes, I accept that, with respect, but there is still a constraint that is applied, which is that the prosecutor does not contend for a specific sentence. In this part of the reasoning in Barbaro, in the paragraphs I am about to come to, there is at least some explanation as to the rationale that lies behind that.

FRENCH CJ: Do I understand, just to know where you are going by reference to paragraph 46 of your submissions, that the proposition you are offering the Court is that:

a submission by the regulator as to the precise penalty which

the Court should impose -

is inconsistent with the – that the Full Court was correct to conclude that that is inconsistent with the principles drawn from NW Frozen Foods and Mobil Oil – I am sorry, the Full Court’s position is correct and inconsistent with the principles from NW Frozen Foods and inconsistent with the submission of an agreed precise penalty. That is on the basis that the considerations applicable to criminal sentencing transpose into this context?

MR MOORE: Yes, your Honour. Here, in this part of the argument, I have to proceed by analogy. I have to say that the concerns that are expressed by this Court in Barbaro as to the strict separation of roles between the prosecutor and the court are equally applicable to the separation of roles between regulator and court, that the concern about the views of the prosecutor being either unduly influencing – or perhaps even more importantly, being seen to be unduly influencing – would apply with equal force to the role of the regulator.

Indeed, having regard to the role of the regulator under this Act – and I will come to that – that view might be expressed in even stronger terms, because the regulator is in fact investigator, educator, administrator, and ultimately, equivalent to a prosecutor for a civil penalty.

FRENCH CJ: There is an overlap between some of the considerations that inform your submissions on the previous topic and this particular topic?

MR MOORE: Yes, but I also have to recognise that if this Court was to say, on this topic only, the role of the prosecutor is just too different and no analogy can be drawn, then the proposition I am advancing would not succeed and, therefore, that the court would be entitled to have regard to any submission as to penalty made by a regulator, but we would then approach the matter in the independent exercise of discretion, and not in accordance with the NW Frozen Foods approach.

FRENCH CJ: They would not be received on any premise about the equation of the position of the regulator with that of a prosecutor in the criminal process, and the independence to which you have drawn attention. One knows you are dealing with a party who has a particular statutory purpose and responsibilities and so forth.

MR MOORE: That is correct, but we say that in some respects that heightens some of the concern that was referred to in this case because whereas the prosecutor is, as we know, acting independently, the regulator has a different role and, therefore - - -

FRENCH CJ: Is the position any different if it is a person other than some other eligible person, a person affected by a contravention seeking a pecuniary penalty?

MR MOORE: We would say yes, and so we would accept that the reason I am now referring to would not have application to persons other than a regulator, because they would not be in any sense analogous to a prosecutor.

NETTLE J: But it would still be an expression of an irrelevant opinion, on the earlier leg of the argument?

MR MOORE: Well, it should not be given any weight other than purely a submission and it would not in any way fetter the independent exercise of discretion.

GORDON J: Just so that I am clear, Mr Moore, does that mean that your complaint is limited to, in effect, a figure only, so there is no complaint about submissions as to agreed facts, no complaint about other relief, no complaint about the principles and the application of the facts to that relief, form of injunctions, form of declarations, disqualification orders?

MR MOORE: That is exactly correct, your Honour. Indeed, we say - - -

GORDON J: So your complaint is about the number?

MR MOORE: When your Honour says my complaint, I am here trying to assist the Court, so it is not my complaint personally, but we do say that that is correct and, indeed, that is what the Full Court here decided. What was proscribed was the submission of a precise figure or a recommendation that a particular penalty should be awarded and, indeed - - -

GORDON J: What is the fetter on discretion that exists in the context of the agreed penalty which would not then exist in relation to the other relief, which is also discretionary?

MR MOORE: So, with the other relief, there is no suggestion at the moment of a NW Frozen Foods principle.

GORDON J: No, I am asking you about your proposition that because it is discretionary and, therefore, it should be unfettered - all the other relief is discretionary as well.

MR MOORE: I accept that, but the principle that was drawn from the criminal proceedings is that the prosecutor should not suggest a particular figure for a sentence, or a particular sentencing result.

GORDON J: If you apply that principle here where you have interrelated relief, does that proposition still hold true?

MR MOORE: Well, if one was considering, for example, injunctions or the like, it may be difficult to draw any further analogy. So the decision in the Full Court is in that sense quite limited and the principle that I am therefore advancing is in that sense limited to moving beyond what the Court in Barbaro recognises as the proper form of submissions that could be made, i.e., submissions saying here are the principles, here are the precedent cases, maybe this matter is a serious matter or a not so serious matter, but without contending for a particular penalty. So, just continuing with the reasoning of the majority in Barbaro, in paragraph 38 there is discussion of the proper role of the prosecution:

what facts should be found, the relevant sentencing principles and comparable sentences –

and if that is provided –

the judge will have all the information which is necessary to decide what sentence should be passed without any need for the prosecution to proffer its view about available range.

Similar observations were made in paragraph 40. Of course, in paragraph 39, there was the observation that it was:

neither the role nor the duty of the prosecution to proffer some statement of the specific result which counsel then appearing . . . considers should be reached or a statement of the bounds within which that result should fall.

In imposing civil penalties, Australian courts have accepted that a number of criminal sentencing principles are both relevant and instructive in performing that judicial task. It has been observed that:

the law of sentencing for criminal offences is an appropriate source of principles applicable by analogy to the determination of the matters which arise in civil penalty proceedings.

That was an observation by his Honour Chief Justice Spigelman in Vines v ASIC [2007] NSWCA 126; (2007) 63 ACSR 505 at paragraph [103], which we refer to in our written submissions. The rationale, mostly implicit, but sometimes expressly stated, is that both are, in essence, sentencing tasks - the assessment of an appropriate consequence, issued by the State by means of the exercise of judicial power, after the finding of guilt or contravention, to serve both as a penalty, but also importantly, as deterrence – both specific deterrence to the individual, and general deterrence to the wider community. Both processes are punitive in nature, making the application of criminal sentencing principles apt.

Put another way, criminal sentencing principles have been developed and refined over time to safeguard the exercise of judicial power in the very particular task of exercise of that power by way of punishment and deterrence in the face of a range of contradictory factors and considerations. In paragraph 42 of our written submissions – I will not go through them all – but we set out some of the criminal sentencing principles that have been held to apply in a civil penalty context. Of course, there is also the privilege against self-exposure to a penalty, which although it has a different historical origin, is analogous in its modern operation to the privilege against self-incrimination.

The Full Court in the present case likewise noted that the civil penalty process is closely analogous. It did that at the beginning of the decision in paragraphs 3, 12 and 13. I will not go to them, but that point is made. We also say that given the issue we have raised as to the potential modest significance of an agreed penalty in the penalty fixing process, there is a danger that the agreed penalty will distract from the correct task.

There is a further danger the court will be seen to have been unduly influenced by the agreed penalty in reaching its decision. In particular, to adapt the words of the majority of this Court in Barbaro at paragraph 33, that the reception of an agreed penalty:

may lead to erroneous views about its importance in the process of –

fixing a penalty, that would be inconsistent with the preservation of the requisite sharp distinction in the respective roles. We say that that danger and concern is particularly apposite having regard to the significance of the role of the regulator and the undue weight that could be given to its views. The regulator in the present case has many roles. Section 10 of the Act in question, in setting out the functions of the ABC Commissioner, gives a taste of that. It has the functions of:

(a) monitoring and promoting appropriate standards of conduct by building industry participants . . .

(b) investigating suspected contraventions . . .

(c) instituting, or intervening in, proceedings, or making submissions, in accordance with this Act;

(d) providing assistance and advice to building industry participants –

It has an advice role –

(e) providing representation to a building industry participant . . .

(f) disseminating information . . .

(g) any other functions conferred on the ABC Commissioner by this Act –

The Commissioner has wide powers to obtain information, set out in section 52. In sections 57 to 59, there are significant powers to appoint inspectors, who, in turn, have wide powers to enter premises to inspect, investigate, interview, to ascertain compliance with legislation. In paragraph 67, there is a power to publicise non-compliance with the relevant legislation, and it can also accept enforceable undertakings.

Your Honour the Chief Justice’s questions this morning about the potential additional weight that might be given to the views of a regulator as opposed to the views of the other party might in fact highlight the potential concern applying those observations in Barbaro, that the regulator’s views might be seen to be unduly influential in the exercise by the court of its independent discretion.

Likewise, your Honour Justice Gageler teased out that the Commonwealth, of course, submits that the fact that the regulator considers a particular penalty to be appropriate is said to be a fact that can be taken into account. That is one area where one is perhaps shading into – or not even shading into – a view or expression, an opinion, offered by the regulator which is different from perhaps a mere submission.

As a result of these matters, we say that the regulator has a central and expert role across the building industry. Its role is much more significant than that of a private party, and its role is far broader and more pervasive in relation to this industry than the role of a prosecuting authority in the criminal justice system because it is investigator, educator, adviser, monitor and prosecutor, in effect.

In light of its pervasive role, its views as to penalty or anything put forward by it is likely to be of such significance as to squarely attract the concern identified in Barbaro, i.e. the concern that if its views are not dispassionate, its views are unduly influenced by pragmatic considerations. The views may nevertheless be very influential and may have the appearance of swaying the court in a manner incompatible with the division of functions where this Act gives many tasks to the regulator, but of course gives this task exclusively to the court, that being the task of setting a penalty.

We say that what is apparent from the decision of the majority in Barbaro is a concern about the partial usurping or the appearance of partial usurping of the function reposed solely in the court. That concern arises with even greater force in the context of an indication as to appropriate penalty by a regulator charged with the administration and supervision of the very legislative scheme, the subject of the proceedings. Some of that reasoning - or that reasoning was adopted by the Full Court in the present case.

I should indicate that the Full Court also made observations about the fact that a regulator’s view was merely an opinion. We have not advanced submissions as to the role of a submission as an opinion but there are different pathways that the particular decision is supported being the ones that I have indicated.

We do emphasise that even if this Court was minded not to draw the analogy that I have drawn between the role of the regulator and the role of prosecutor thus attracting the concerns in Barbaro, the earlier principles that I have referred to are of considerable practical significance for the day-to-day administration of not only this regulatory scheme but other regulatory schemes that adopt the approach of applying civil penalties.

Can I then briefly deal with some points that were made this morning? In relation to an observation about the significance of section 37M and N of the Act, we say that those sections would continue to have an almost unaltered role to play. A settlement avoids contested proceedings even if there is then a further constraint of the sort recognised in the Full Court decision.

It permits the parties to agree upon facts put before the court, the contraventions, as I have indicated; the number of contraventions and so on. One can reach agreement on facts going to the factors and the contraventions themselves. All of those matters are matters that can be resolved efficiently and avoid the need to have protracted proceedings, including contested proceedings as to liability and contested proceedings as to the facts which of course can be very lengthy.

We also observe that the parties could, consistently with the approach in Barbaro and consistently with the approach of the Full Court, reach agreement on a joint submission as to relevant principles and relevant precedents and of course, there is no constraint on what the respondent can do. The principle prevents a regulator from saying what the precise result should be or the range. That is a very limited exception which we say is not in any sense inconsistent with sections 37M or N.

As to the statutory scheme itself, we say that section 49 is neutral in this respect. It is common ground that principles from the criminal law are applicable in assessing a civil penalty. Various sentencing principles are, undoubtedly, of relevance and there is no dispute about any of that. Those principles apply to some but not all aspects of the scheme set out in section 49. They will not apply to the assessment of compensation, for example. The particular principles in question that we have been discussing, likewise, would not apply to compensation. They would not constrain the ability of an eligible person to make a submission in the way that we have discussed.

So one really takes a statutory scheme that is applied in accordance with the general law, likewise section 71, whilst it provides that the Commissioner can intervene and become a party, it does not specify the precise manner of that intervention. It does not cut across any principle from the general law, common law or statute that informs or regulates the

manner of conducting proceedings, including principles of evidence or procedures or likewise principles such as we are concerned with in the present case.

For those reasons we say that the statutory scheme does not point against the approach adopted by the Full Court in the present case. Unless there is anything else, those are the submissions of the contradictor.

FRENCH CJ: Thank you very much, Mr Moore. Mr Solicitor.

MR GLEESON: Your Honours, we are grateful to Mr Moore for those submissions. I do wish to reply to a number of his points. I think it will be difficult to do that in seven minutes this afternoon.

FRENCH CJ: How long to you expect to take?

MR GLEESON: About 25 minutes, your Honour.

FRENCH CJ: Yes, we will sit on, Mr Solicitor.

MR GLEESON: If your Honours please. Your Honours, I think it is important to identify the levels upon which Mr Moore has sought to defend the judgment because there are three different levels upon which he has done that and it is helpful to address each in turn. He commenced with the proposition that the judgment can be seen as, really, limited to agreed penalties, and it is not a judgment which more broadly goes into the submissions which could be made on the moving party’s side.

He also said the judgment does not restrict the respondent’s submission. So, in other words, your Honours can just focus on agreed penalties as the issue of principle. We disagree with that as a fair reading of the judgment. Could I take you to a couple of paragraphs which makes clear that it is much broader than that in its application? Firstly, paragraph 2 of the judgment, where the court refers to the context:

Frequently, submissions are made by the parties, often jointly –

that is, not always jointly –

nominating the actual figure to be adopted, or the range within which it should fall. In some cases, the parties urge adoption of an agreed figure.

So, the court is treating this as a larger problem to be grappled with. Agreed penalties are a part of the problem, but not the whole problem. That is also made clear at paragraph 19 particularly in the last sentence, paragraph 53, and paragraph 143 where the court says:

For present purposes the issue is as to the extent to which an opinion as to range of penalty, actual outcome, or the fact of an agreed penalty should be disclosed to the Court and taken into account by it in fixing a pecuniary penalty.

So, it is those three matters that the court is addressing and in the concluding paragraphs 236 to 242 where the court reaches the crescendo, one can see that it is all three topics that are being addressed. In 237, for example, it is submissions about:

range, agreed penalty or a specific outcome –

So it is much more than agreed penalty and, as the judgment is worded, it applies to the respondent as well as the moving party. It cannot be limited in that way. So the issues of principle, we submit, need to be addressed in that broader context. Your Honours, that is the first matter.

The next matter is to come to Mr Moore’s first point which is paragraphs 1 to 6 of the outline. What he is essentially doing here is teasing out from Barbaro a point which he says is a point about the general law, civil and criminal, about how discretion should be exercised and then saying NW Frozen Foods and Mobil Oil correctly read offend that more general proposition.

So, for this part of the case he is really taking paragraphs 24 to 28 of Barbaro, which I sought to analyse this morning, which indicate, at least in the criminal context, it is misleading to exercise a discretionary judgment by thinking about what would later be found to be the subject of appealable error and saying that is a general proposition about all discretions, civil and criminal, large and small, penal and non-penal.

Now, even in the criminal context, this proposition at 24 to 28 has, of course, the corollary which the Court identified in the CMB decision, which I referred to this morning and your Honour Justice Nettle raised, namely, it is part of the prosecution’s duty to take steps not to lead the court – or not to permit the court to engage in appealable error, that is a qualification which sits together with these paragraphs, and because of that important principle, it becomes very difficult for the Crown on appeal to point to appealable errors which it knew were about to occur and remain silent about.

So, even what is in 24 to 28 must, in the criminal context, have that important corollary to sit next to it and so when your Honour Justice Gageler asked can the judge ask, “Would I fall into appealable error if I were to do X”, can a judge ask that, the answer is a judge can ask that if the judge considers it appropriate and, if they do, counsel should attempt to answer the question as best they can in a civil or a criminal context.

So, one aspect and one response to this part of the case is that it is not an absolutely blanket rule across civil and criminal litigation that a judge can never even be thinking about the question of appealable error. It is not the primary question, but it is not, as it were, the rule that has this hard edge to it that is asserted.

The more important answer is that NW Frozen Foods and Mobil Oil do not suffer from this vice. This is where the construction that has been placed on those decisions is, we submit, incorrect and your Honours can really address this by looking at paragraph 1 of Mr Moore’s note where he says that the cases stand for the proposition that the court is required:

to accept an agreement penalty, notwithstanding the court would have come to a different figure, if the agreed penalty is “within the permissible range”.

What he means by the permissible range, we see from paragraph 4 in the middle, is beyond the bounds of what would later be found to be appealable error. A short answer to it is that neither NW Frozen Foods nor Mobil Oil stands for that proposition so we have a disagreement here about what these cases stand for.

They stand for a more modest proposition which is that a judge and a court may receive the agreed penalty and can take it into account and will ultimately decide whether it is appropriate and, in deciding whether it is appropriate, the court will take into account the proposition Mr Moore conceded that within certain limits it will be difficult to say that one penalty is more appropriate than another and that is all that these two cases stand for.

So, can I make that good from the cases themselves and I need to go to them for this purpose. Firstly NW Frozen Foods [1996] FCA 1134; (1996) 71 FCR 285, the reference to range emerged at the bottom of page 290, letter G. It is in a context of the court discussing the need to determine the appropriate penalty, having regard to all relevant matters, and at letter G, the court said:

Because the fixing of the quantum of a penalty cannot be an exact science –

That is the premise and Mr Moore accepts the premise - the conclusion is:

the Court, in such a case, does not ask whether it would without the aid of the parties have arrived at the precise figure they have proposed, but rather whether their proposal can be accepted as fixing an appropriate amount.

There is then a reference to the important public policy, which is again not disputed. In the next paragraph, at about halfway down letter B, it says:

A proper figure is one within the permissible range in all the circumstances. The Court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case.

Now, the short submission is that Mr Moore is wrong. The reference there to “permissible range” is not the reference to the range that was disfavoured in Barbaro, that is, the advance prediction of appealable error. It is the range, if there be one, which merely reflects the accepted proposition that there is no exact science involved. So, if that is the correct reading of - - -

GAGELER J: What is the difference?

MR GLEESON: What is the difference?

GAGELER J: Yes.

MR GLEESON: The disfavoured range in Barbaro is, I am exercising a discretion, and what I do is I look forward and say, when my case comes before an appellate court, or this case comes before an appellate court, what would that court – based on the same material – identify as the upper limit beyond which there would be manifest excess, or the lower limit, beyond which there would be manifest inadequacy? That is the advance prediction of appealable error.

What is being recognised here is something narrower which is simply because the fixing of the quantum cannot be an exact science, there may be more than one number which could satisfy the demands of appropriateness. Each of them could be regarded as appropriate. NW Frozen Foods is saying where the parties propound an agreed penalty, and where that agreed penalty is one where a court can say that that could meet the demands of appropriateness, even though, possibly, some other figure could, I am entitled - we would say, not bound - to accept that number on the ground that it advances one public policy interest which is the encouragement of settlements. I am not bound to accept it, but I may.

Now, that is the difference. It is no different perhaps, in a criminal context, where, of course, although the judge in the end has to come up with a single sentence, and if it is to be imprisonment, the single number of years, as part of the reasoning process, the judge may say “I am thinking seven to eight years - neither seven or eight could be regarded as indisputably beyond any view better than the other, but in the end, I have got to come to the best figure I can, and I come to a figure somewhere between seven to eight”.

That is not predicting where appealable error will fall down the track. It is engaging in commonsense reasoning when, because the considerations pull in different directions, no one figure is necessarily more correct than certain other figures. That is my answer to your Honour’s question about what is the difference. That is the sense in which “range” was used in this case, and it is also clear from 291 at letter G, where – it is a reference back to what Justice Burchett had said in TNT:

“[I]t cannot be denied that the fixing of the quantum of a penalty is not an exact science. It is not done by the application of a formula, and, within a certain range, courts have always recognised that one precise figure cannot be incontestably said to be preferable to another.”

It is that concept of Justice Burchett which the judgment is picking up. Now, that is where the range was left in NW Frozen Foods. When one comes to Mobil Oil, Mr Moore correctly draws attention to the way the question was posed in paragraph 2, and the question was whether the earlier decision requires the court to consider whether the proposed amount is within the permissible range in all the circumstances, in other words, is that the only way the court can discharge its duty to decide what is appropriate?

The answer to that question, although it was minimised by Mr Moore, is in fact quite decisive because that question is answered no. It is not the only way the court can reason. That is clear from paragraph 82. At the same time the court says there is no error in principle in NW Frozen Foods, and the reason for that is clear from paragraph 81, that to answer affirmatively would purport to say that the judge must always reason in one fashion, namely start with the penalty and ask whether it is within the appropriate range. You do not have to do that. It is a tool. It is an available way of dealing with it. It is not the only way. That also refers back to paragraphs 48 and 54 which explain there are various ways to decide what is the appropriate penalty, and 54 says one way is the court can first:

address the appropriate range of penalties independently of the parties’ proposed figure and then, having made that judgment, determine whether the [proposed] penalty falls within the range.

To be clear at that point, it would be the Commonwealth’s submission that if the proposed penalty falls outside the range here understood, that gives the court a good reason to reject it. Conversely, if the proposed penalty falls within the range, the court would be entitled to accept the penalty but is never bound to. One can think of a case and the examples Mr Moore gives in his footnote are in fact quite instructive of courts applying this principle, where the court reasons your proposed penalty only just, only just falls within a range that I might regard as appropriate and I do not accept that penalty even though that would advance the policy of encouraging settlements. The penalty to be appropriate must be higher than you say it is, and so that is an example of how paragraph 54 does not constrain the court.

Indeed, your Honours, I would go so far as to say this - because of the way the question was answered Mobil Oil does not require, as a matter of law, the judge in a civil penalty case always to use a concept of range. It permits it in an appropriate fashion but it does not require it. A judge may simply say, more directly, “I look at all the factors. The proposed penalty is $50,000. I am satisfied in all the circumstances $50,000 is appropriate. I fix $50,000.”

So, in the end, there are two answers to the range argument. Firstly, the range being discussed here is not the disfavoured appealable error range, but, secondly, even the range is just a tool which the court can use if appropriate as part of its assessment of whether the proposed penalty is appropriate. So, your Honours, that is Mr Moore’s first strand.

GAGELER J: Mr Solicitor, on that point, do you just say Justice Weinberg was wrong in Ingleby at paragraph 29, which seems to be Mr Moore’s argument.

MR GLEESON: Yes, he was wrong. That is not what the cases were doing. So the first strand in his argument would be, you may be able to put the agreed penalty to the court, but you cannot use it in the way he understands these two cases. We have given our answer to that. The second strand in his argument - paragraphs 7 to 9 – again assumes you can put the penalty before the court, but as it were, urges a blanket or a generalised approach that it should be given modest significance. Indeed, he would say less significance than the regulator putting a direct submission as to the result which is not the subject of agreement.

Now, this strand of the argument clearly departs from the judgment of the Full Court, because what he is really commending here is the best thing that could occur is for the regulator to put a precise submission without agreement. Second best is agreement. They can be received, but they should be approached in a particular way. Our response to that would simply be that no such blanket rules are necessary. Everything will depend, in terms of weight, on the particular case, including how well the submission or agreement is backed by evidence and argument. So, your Honours do not need to adopt general rules as per paragraphs 7 to 9. One allows the submission or the agreed penalty to be received, and the court assesses it as appropriate in the particular case.

Your Honours, the third strand of his argument, which is 11 to 15, which he puts last – although logically it is really the first strand, because this is the big one – the big one is, you should find sufficient analogy in the Barbaro decision to take its concerns from the criminal context and treat them as applicable in the civil penalty context.

As this argument has been clarified this afternoon, it only applies to the regulator as eligible applicant. It does not apply to the private citizen. It does not apply to any other relief in the smorgasbord. It only applies to the pecuniary penalty. The reason there is said to be an analogy is because of the supposed parallel between the role of the criminal prosecutor and the civil regulator.

So, as we see from paragraph 15 he agrees with us that the regulator has these very significant and varying roles under the statute which we embrace and say well, they are reasons why it is perfectly appropriate for the regulator to put forward a specific contention or reach an agreement and put it before the court. He draws the opposite conclusion that there will be the reality or the perception that the court has been compromised when it does its independent function because the regulator has such a significant role in disciplining the market.

Now, as this point is narrowed down to one about a supposed analogy between criminal prosecutor and regulator, our answer to it is the one given in-chief this morning and discussed in questions today, including by Justice Bell, that the regulator is charged with the overall regulation and disciplining of the market and, therefore, necessarily brings to bear a duty to put submissions as specific and as tailored as possible. That does not fetter the court. That gives the court the assistance the regulator provides and then the court exercises its independent role to decide whether to accept or reject those submissions.

I might observe that two of the important strands of the Full Court’s judgment were, firstly, the concept that this submission or agreement would be a mere opinion and thereby inadmissible. Mr Moore has not supported that argument. I think it is also correct to say that the strand of the Full Court’s judgment that says wherever you see punishment in the civil context, you should apply criminal procedural approaches has not been advanced by Mr Moore. So the big point, as I call it, which is whether Barbaro applies from crime into civil penalty in the end comes down to the supposed analogy between the criminal prosecutor and the civil regulator.

I think it is clear from what I have put, but the submission is that the regulator’s views as to penalty of an appropriate deterrent value will be given such weight as the court thinks appropriate, having regard to the evidence, the agreed facts, the circumstances evidenced by earlier decisions, any concessions or admissions of the respondent and the degree to which such submissions are opposed.

FRENCH CJ: When you say the “regulator’s views” - - -

MR GLEESON: The regulator’s submission – it is not the view, it is the submission. Finally, Mr Moore concluded on his answer to our case based on the statute and asked you to find section 49 was essentially neutral and section 71 was really not to the point. We would urge that he cannot get around the statute unless one can somehow read consistent with those sections the concept that one set of rules apply for the penalty remedy and a radically different set of rules apply for every other remedy. That would not be consistent with the statute. Your Honours, they are the matters in reply.

FRENCH CJ: Mr Solicitor, just in terms of the orders, we are dealing here with a decision of the Full Court exercising federal jurisdiction pursuant to a direction of the Chief Justice of the Federal Court, the original jurisdiction, and that is set out at page 58 of the appeal book and it directs that:

the original jurisdiction of the court in relation in the whole of this matter shall be exercised by a Full Court.

The outcome, of course, was that they made an order adjourning the proceedings and the parties would then consider their position and there might be further directions from a single judge. There seems to me, if we allow the appeal, it is on the basis that the Full Court has inappropriately constrained its role, having regard to the position it has taken with respect to the submissions and agreements between the parties and that, in essence, what, on your submissions, they ought to have done was just get on with the job and determine what remedies and penalties were to be imposed, and that if you were to succeed on the appeal the appropriate order would simply be to send it back to the Full Court to determine the matter according to law.

MR GLEESON: That is correct, your Honour.

FRENCH CJ: There would be no question of remitters to single Justices?

MR GLEESON: No. We had pointed to a different matter, but it is answered by what your Honour has just put to me. The different matter is, if we did not have the Barbaro point, this matter would never have got before a Full Court - - -

FRENCH CJ: Of course.

MR GLEESON: It would have just been dealt with by a single judge. But your Honour points out correctly that is where it is; that is the direction that has been made; and the process, as we would submit, has been interrupted on a false basis. If that interruption is cleared away, the natural place for it to go back is to that Full Court to finish the job. If something else were to be done, it is really in the hands, probably, of the Full Court or the Chief Justice to send it to a single judge. May it please the Court.

FRENCH CJ: Thank you. Mr Kirk, you had not filed a reply, I noticed, but do you want to say anything?

MR KIRK: Thank you, your Honours, if I might just have one minute just to come back to that core point in relation to permissible range and not inconsistently with what my learned friend has said. My learned friend, Mr Moore, answered a question from your Honour Justice Nettle to say it is the same inadmissible opinion as was the subject of discussion in Barbaro.

NETTLE J: He did walk away from that at the end of his submissions though, did he not?

MR KIRK: Yes, I think he did, and it cannot be, in our respectful submission. In Barbaro it was a predictive range as to appealable error. I know your Honour Justice Gageler did not accept that submission in Barbaro, but that is how it was dealt with by the plurality. Here, for what is put before a judge on a pecuniary penalty, there is no element of prediction but a particular result is sought – X thousand dollars.

The issue for the court to decide is whether that is an appropriate exercise of power, either because the word “appropriate” is an express statutory qualification of the power or, if it is not express, it will be implicit always, or some equivalent word. So the issue for the judge is is this particular result an appropriate exercise of power, going back to what I said about consent orders, one of the conditions being on the exercise of the power to consider its appropriateness.

But as my friend, Mr Gleeson, said, there is not one right answer and so, whilst the judge might have come up with a different number themselves, as your Honour Justice Kiefel and Justice Burchett indicated in NW Frozen Foods, that is not the necessary requirement of the power. The

necessary requirement is is it appropriate? If the judge is persuaded on all the material this is an appropriate exercise of power that is enough to satisfy the statutory condition; it is enough to take account of the consent proposal and it can be done.

If I could add one more point, this is not unfamiliar territory for courts. Courts have to approve particular settlements for vulnerable people, for infants or section 33V of the Federal Court Act in relation to representative proceedings. The court there does not ask is this what we could have come up with? It asks for 33V, for example, is this a fair and reasonable outcome in light of all the facts, and your Honour Justice Gordon participated in the lead recent judgment dealing with this issue, ASIC v Richards [2013] FCAFC 89 in relation to settlement of class actions, and it is not a dissimilar sort of issue here. If it please the Court.

FRENCH CJ: Thank you, Mr Kirk. The Court will reserve its decision. The Court adjourns until 9.45 on Thursday, 15 October, for pronouncement of orders.

AT 4.36 PM THE MATTER WAS ADJOURNED