Australian Building and Construction Commissioner v Pattinson & Anor [2021] HCATrans 211 (7 December 2021)

Last Updated: 10 December 2021

[2021] HCATrans 211

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M34 of 2021

B e t w e e n -

AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER

Appellant

and

KEVIN PATTINSON

First Respondent

CONSTRUCTION, FORESTRY, MARITIME, MINING AND ENERGY UNION

Second Respondent

KIEFEL CJ
GAGELER J
KEANE J
GORDON J
EDELMAN J
STEWARD J
GLEESON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA BY VIDEO LINK TO BRISBANE, SYDNEY AND MELBOURNE ON TUESDAY, 7 DECEMBER 2021, AT 10.00 AM

Copyright in the High Court of Australia
KIEFEL CJ: In accordance with the protocol for remote hearings, I will announce the appearances of the parties.

MR S.P. DONAGHUE, QC, Solicitor‑General of the Commonwealth of Australia appears with MR T.M. BEGBIE, QC and MS J.D. WATSON for the appellant. (instructed by MinterEllison)

MS R.M. DOYLE, SC appears with MR P.A. BONCARDO and MR B. BROMBERG for the respondents. (instructed by CFMMEU)

KIEFEL CJ: Yes, Mr Solicitor.

MR DONAGHUE: Thank you, your Honour. Your Honours, the question raised by this appeal is whether, having regard to this Court’s repeated statements that the principal, if not the only, purpose of civil penalties is to secure deterrence, the imposition of what the statute called the appropriate penalty under section 546(1) of the Fair Work Act requires adherence to what the Full Federal Court called a notion of proportionality, which it derived exclusively from criminal sentencing principles.

In holding that it does, the Full Court said that the maximum penalty must be reserved for cases where the circumstances of what it called the instant contravention, as distinct from the characteristics of the contravener, placed the contravention in what it called the worst category. The court expressly held that a history of defiance of the law of repeated contraventions cannot in itself place a contravention into that worst category.

The effect of that analysis, on our submission, is that unless the circumstances of the instant contravention are objectively – again, to borrow a word from the Full Court – in the worst category, the court cannot impose the maximum penalty even if it is satisfied that that penalty is necessary in order to deter further contraventions of the kind that are before the court.

That, in our submission, cannot be right. It cannot be reconciled with what this Court explained as to the purpose of civil penalties in the Agreed Penalties Case. It would be a rule that would have the effect – as it did have in this case – that the penalties to be imposed will fail to achieve the only purpose for which they can properly be imposed – particularly in the context of recidivist contraveners.

EDELMAN J: Mr Solicitor, at the heart of that submission seems to be the assumption that deterrence is a binary concept – either it will be achieved, or it will not be achieved. But we know from experiences – hundreds of years of experience in the law – that things like a potential penalty of losing a hand or losing one’s life for theft will deter some people but it will not deter everyone. Deterrence is not a concept that is absolute or nothing.

MR DONAGHUE: Your Honour, I accept that, and, in my submission, it does not need to be – for the submission that I propose to develop – made good. Essentially, at the heart of the controversy here is that whether, looking at all of the circumstances of the instant contravention, including the history of the contravener, if a court thinks that what is appropriate to deter conduct of what has occurred – and I accept that that is not binary but the court ultimately has to make a judgment in pursuit of that objective as to what penalty is appropriate to that end – there is then some further limiting principle that says but, notwithstanding the fact that that is what you think is appropriate for deterrence, you cannot do more than is appropriate to the gravity of the instant contravention. So, it is that overlaid limit on the imposition of an appropriate penalty that we submit involves error.

EDELMAN J: I suppose what I am really asking is - and you can get to it whenever is suitable for you - if deterrence is the only criterion, it will still be necessary to answer a question of how much deterrence. Deterrence not being binary could be as much as possible with capital punishment, for example, or a small amount of deterrence, but when one has to decide how much deterrence is going to be required there must be another factor that the court is considering because otherwise the question simply just cannot be answered.

MR DONAGHUE: Your Honour, I will develop this if I may, but our short answer really is that what the court is doing in a conventional imposition of civil penalties is looking at all of the circumstances including those of the particular contravener before it and assessing what penalty will be appropriate to change the behaviour of this contravener.

So that you are looking to situate the penalty at a point that will modify behaviour for this contravener and contraveners of the same kind, which is why one can have two contraventions that are in substance manifest through very similar physical acts, but where one of those contraveners is extremely asset rich it may be that you need a greater penalty to be applied there because that is necessary to modify the behaviour of contraveners of that kind than would be the case for a small business where you could say, “I can get a modification of behaviour by a much lower penalty in that kind of situation”.

So, the objective - now, obviously there is a cap there, so one is not cutting off hands or engaging in – because Parliament is saying in this regime you may pursue deterrence by the imposition of penalties only up to a statutory limit that Parliament has determined is appropriate in the pursuit of compliance with the regime. But our submission is that within that limit the objective of the penalty imposer is to actually achieve behavioural modifications so as to bring about compliance with the regime.

GLEESON J: Mr Solicitor, this raises another question, again to be dealt with in due course, but what happens if the offender is identified as being impervious to deterrence? Does that mean that it is not appropriate to issue or to determine a penalty at all because it is clear that the penalty will have in fact no deterrent value?

MR DONAGHUE: No, your Honour. That means that one does everything that one can to achieve deterrence up to the limit, except that if Parliament wants more then that is a matter for Parliament. It is no part of our case to complain about the availability of the maximum. Our submission is about what is properly to be done within the constraints imposed by the maximum and your Honour’s question is apt to the situation in which we find ourselves because it may well be the case that the maximum penalty will often not be sufficient to deter the CFMMEU but that does not mean that ‑ ‑ ‑

EDELMAN J: Mr Solicitor, what about the reverse scenario from that which Justice Gleeson raises, where the court is satisfied that, although a contravention is extremely serious, the particular contravener is very unlikely, maybe certain never to do it again, and others are very unlikely never to do it again perhaps because of the publicity that has been given to the seriousness of the contravention? Is it your submission that deterrence would then say, well just give a very, very small penalty for this very, very serious contravention?

MR DONAGHUE: Your Honour, I think the short answer to that is on those factual findings, both as to the particular contravener and as to general deterrence – so, accepting the whole of your Honour’s example – logically the answer must be yes because as - - -

EDELMAN J: That was not the submission that was made very recently on a special leave application in the Volkswagen litigation. It is exactly the opposite.

MR DONAGHUE: Your Honour, I am not familiar with the details of what was submitted to your Honours in the special leave application in that case, but there one had a contravener found by the Full Federal Court at least to have engaged in wilful contraventions that had been deliberately concealed over a period of time, as I understand the facts of that case. In those circumstances, in my submission, general deterrence is unlikely to be reduced to a nothingness – it is probable that one would need to be able to say that when people are found having engaged in concealed behaviour of a serious wrongful kind, then there is a serious penalty, because the absence of a penalty there might well undermine general deterrence, even if Volkswagen had learnt its lesson.

Your Honours, in developing the submission that I have just outlined, I propose to take the submission in five parts corresponding to the headings in our oral outline. I will start with the facts in the first instance judgment. Second, I will take your Honours to the relevant parts of the statutory setting. Third, I will take your Honours briefly to the two leading authorities in this Court - the purpose of civil penalties. Fourth – and this is the main part of our oral submissions – I will take your Honours to the Full Court’s judgment, both to identify the way that it derives its notion of proportionality and the way that we submit that that resulted in error. Finally, I will briefly address what we submit is the correct approach to the setting of an appropriate penalty.

If I could start with the facts and invite your Honours to turn to the core appeal book at tab 1, where you will find the primary judge’s judgment. The facts of the contraventions, as your Honours well appreciate, were all admitted. They are summarised by his Honour starting on page 14 of the core appeal book at paragraph 11.

The essence of the facts are as follows. Mr Pattinson was a delegate of the CFMMEU, which I will call the Union, and also an employee of Multiplex Constructions working on a project at Monash University’s “Peninsula” campus in Frankston, Victoria. In September 2018, two employees of.....had been engaged to install solar panels at that site:

arrived . . . they attended an induction session overseen by Mr Pattinson (in his capacity as a delegate of the Union’s at the Site). During the course of that session –

and your Honours see this at paragraph 15 – Mr Pattinson asked one of the employees whether he was a member of the Union and whether he had a ticket for his fees and the employee said that his company was not union based and that he did not have a ticket. That resulted in Mr Pattinson representing to each of the two employees that in order to work they would have to become members of the Union – that representation being made to give effect to the Union’s long‑held “no ticket, no start” policy.

Those facts – and we see that at paragraph 19 – were admitted to involve two contraventions to section 349(1) of the Fair Work Act by each of Mr Pattinson and the Union – so four contraventions in total. The contraventions having been admitted, the issue in contest before the primary judge was what penalty was appropriate in response to them. Your Honours will see on page 20 of the book at paragraph 32 his Honour recording that:

What divides the parties is the extent to which the nature of the Agreed Contraventions, insofar as they are attributable to the Union, should be informed by the Union’s history of contravening the FW Act and its predecessors.

So that was the dispute. In referring there to the history of contravening, his Honour was foreshadowing the section of the reasons that appears immediately below recording a history of some notoriety which your Honours are familiar with, to some extent, a somewhat similar history having been recounted in the non‑indemnification judgment in this Court a few years ago. You will see that, having described the Union as a:

“serial offender” that has, over a longer period, exhibited a willingness to contravene workplace laws in the service of its industrial objectives –

his Honour quoted from Justice Tracey’s observations in the Werribee Shopping Centre case explaining some of that history.

GORDON J: Mr Solicitor, may I ask one question about that?

MR DONAGHUE: Yes, your Honour.

GORDON J: May I ask just one question of fact about that? Since at least CSR, one of the factors relevant to the imposition of the penalty has been the financial position of the contravener. One of the things which was recognised by this Court in ACCC v TPG was that it was not to be – the penalty to be imposed was not to be regarded as an acceptable cost of doing business.

MR DONAGHUE: Yes, your Honour.

GORDON J: What was the evidence before the trial judge about the financial position of the CFMMEU, other than that set out in 34?

MR DONAGHUE: Your Honour, I will have to take that on notice. There were multiple references in some of the other judgments to the asset and cash rich position of the CFMMEU but, as to what was actually put in evidence before the trial judge, I will have to check, and I will come back to your Honour.

At paragraph 35, your Honours will have seen a reference to the court having had evidence put before it of a similar kind that had caused Justice Tracey to refer, in the Werribee Shopping Centre case, to 120 contraventions by the Union since 2000. The evidence in this case was that what had been 120 was:

now in the vicinity of 150 –

including contraventions of section 349 of the Fair Work Act of the kind that had occurred here. There was a very detailed table that summarised that history – which I do not need to take your Honours to but so your Honours know that you have it – in the appellant’s book of further materials, there is, behind tab 3, at page 25 the appellant’s submissions on relief that were advanced before his Honour.

In partial answer actually, to your Honour Justice Gordon’s question – so, perhaps, I should take your Honours to this – if you have the book of further materials, tab 3, page 31, there is a heading “The size and status of the CFMMEU” and it refers to the Union being:

both cash and asset rich –

and it includes some figures with footnotes to affidavit evidence. Your Honours, I think, do not have the Lee affidavit referred to in those footnotes but you do have the figures that were before the court. While your Honours are on that page, further down in paragraph 22, the submissions record:

The CFMMEU’s penal record is well‑established. Prior contravening conduct of the CFMMEU is set out in a table at Attachment B –

That table appears in the supplementary book, from pages 39 right through to 114. So, it is the balance of the book.....detailed table.

The conclusions that the primary judge drew from that history of contravening resulted in findings that you will see at paragraph 84 of the judgment at page 37 of the core appeal book, commencing with his Honour stating that viewing the agreed contraventions:

against the backdrop its sorry record . . . as very much of the gravest, most serious kind . . . yet again, in deliberate defiance of the law that it has been told time and time again that it must obey. Its behaviour . . . admits only of the following conclusions.

Then his Honour makes the three findings set out at (1), (2) and (3):

(1) it favours a policy “no ticket, no start” and holds that philosophy (if not the achievement of its industrial objectives more broadly) as preferable to the law . . .

(2) it appears to be wholly unmoved by the prospect that it might be forced yet again to dig into its members’ “big pots of gold” in the name of “fight[ing] the good fight” –

picking up language from a prior case, and perhaps most importantly:

(3) it regards doing so as an acceptable cost of the way that it conducts its affairs—the misconduct in this case is but the latest example of the Union’s strategy “...to engage in whatever action, and make whatever threats, it wishes, without regard to the law, and then, once a prosecution is brought, to seek to negotiate its way into a position in which the penalties for its actions can be tolerated -

The Full Court recorded at paragraph 20 of its reasons on page 76 of the book that there was no appeal by the Union against any of those findings. So not only were those findings not disturbed on appeal, they were not even challenged on appeal.

GLEESON J: Mr Solicitor, can I ask you in relation to the third of those findings, do you accept that what that finding indicates is that the Union is highly unlikely to be deterred by penalties no matter what penalties are imposed upon it?

MR DONAGHUE: Yes, your Honour. That seems to be the current position, given that this policy has been, as Justice Snaden explained - conduct of the kind that occurred here has been unlawful for about a quarter of a century, and yet in the construction industry in certain areas it has persisted notwithstanding the imposition of progressively increasing penalties.

GLEESON J: My difficulty then is that if they are highly unlikely to be deterred by the penalty, how can a further penalty serve the purpose of deterrence?

MR DONAGHUE: It seeks to achieve deterrence with the law to the greatest extent that Parliament has authorised. The only alternative, your Honour, would be to throw up one’s hands and say if you are lawless enough, then you are free to disregard the law of the land, and in our submission that cannot be right.

GLEESON J: Another alternative might be to recognise that a civil penalty serves some legitimate purposes other than deterrence, albeit in most cases deterrence will be the most important factor – for example, denunciation.

MR DONAGHUE: Your Honour, it would certainly service to denounce the contravening conduct. I do not deny that. But, in my submission, as the Court has explained in the cases that I am going to come to shortly and which your Honours are all familiar with, the phrase usually used is “solely if not exclusively” or a phrase of that kind for the purposes of deterrence, so perhaps denunciation might be embraced within the allowance that there might be some specific considerations in play.

But if the Union continues to behave unlawfully and those contraventions are met by the maximum penalty that Parliament has authorised to try to bring about compliance, there may come a point where it becomes untenable to regard.....as an acceptable cost of doing business, that the cost becomes too high.

We have not reached that point yet, but there may come a point, and, in my submission, the courts should not assume that that point will never be reached. Until then, in my submission, the appropriate mindset or framework for the Court to pursue is to endeavour up to the limit that Parliament has set to bring about compliance with the regime. The regulator is charged with the statutory duty of bringing about compliance with the regime and that, in my submission, is what they should endeavour to do.

The unchallenged factual finding at paragraph 83 demonstrates that to date the Union has regarded the deliberate defiance of the law in the implementation of its “no ticket, no start” policy and the attendant penalties as an acceptable cost of doing business which, as Justice Gordon pointed out, was the very thing that the Court said in TPG was to be avoided, that penalties should not be able to be viewed in that way.

Now, that set of findings formed the basis for Justice Snaden’s judgment imposing a single maximum penalty. Just before I take your Honours to that, I should highlight one passage, or two paragraphs, in his reasons before taking you to the penalty, which appear at paragraphs 72 to 73 on page 33 of the book. His Honour, having noted the objective of civil penalties being to deter:

The court is charged, simply enough, with fashioning a penalty that serves to deter, both generally and specifically –

his Honour posed the question for himself:

If the only way to deter . . . is to impose a penalty at or approaching the maximum amount available, then the imposition of anything less would necessarily result in a failure to achieve the only object to which the imposition of civil penalties is directed . . . To phrase that proposition as a question: how can a penalty be disproportionate to the nature or gravity of the conduct in respect of which it is imposed if it is no more than what is necessary to achieve the only objective that its imposition is meant to achieve?

His Honour then sets out what has been the conventional expression of the limiting proposition in the joint judgment of Justice Burchett and your Honour Justice Kiefel, as your Honour then was, in Frozen Foods:

if deterrence is the object, the penalty should not be greater than is necessary to achieve this object –

So that is a conventional expression of the limit that we entirely embrace, and that was what caused me to answer Justice Edelman’s question as I did earlier in a situation where, if the Court were to be satisfied that deterrence both general and specific could be achieved by a low penalty or no penalty, then it would seem to contravene that formulation to impose a penalty greater than was necessary to achieve the deterrent effect.

But, subject to that, in our submission, there is no good answer to the question that the learned primary judge posed in paragraph 72 that would explain why a penalty lower than is necessary to deter should be imposed or how it could properly be concluded that the penalty was disproportionate to the contravention, even if it was no more than is necessary to deter contraventions of that kind. The penalty that his Honour imposed ‑ ‑ ‑

EDELMAN J: Mr Solicitor, when you are talking about no more than is necessary to deter contraventions, are you talking about specific deterrence, general deterrence, or both? If you are also talking about general deterrence, then you do run into the problem that I raised with you right at the start that there is no litmus point at which every single other potential offender will be deterred. There are points where at a very, very low end of the scale might be some other offenders that are deterred, and at a very, very high end of the spectrum there will be some offenders who are not deterred. There still needs to be some other criterion by which the Court assesses to set the penalty.

MR DONAGHUE: I am not sure that I understand what the other criterion that your Honour is putting to me is. I do accept that this is not a perfect science, that one cannot look at a particular penalty and say this will achieve – it is easier to be more precise with specific deterrence than general, but even with specific deterrence it may be impossible to be certain that deterrence will be achieved by a particular penalty, and with general deterrence the task is harder.

But that, in my submission, is not a reason for the Court not to endeavour, having regard to the familiar kinds of factors identified in CSR and the other cases, to do its best to identify the penalty that will achieve that end, in the same way as a criminal court in sentencing to the extent that deterrence is in play, does not know exactly what will be necessary but can still do its best to make an assessment of how deterrence is best achieved.

EDELMAN J: Is the effect of your submission that the primary judge erred therefore by awarding only half of the maximum penalty which could have been awarded?

MR DONAGHUE: Your Honour, as is recorded by his Honour at paragraph 25 on the bottom of page 17, the Commissioner contended at first instance that:

the Agreed Contraventions should attract penalties at or approaching the maximum in respect of the Union (that is, a total of, or near, $126,000.00) –

His Honour did not do that, because at 113 he considered it appropriate to impose a course of conduct‑type analysis that led him to conclude that even though he thought the maximum was appropriate, and he recorded that in 115 – he said:

I am minded to impose upon the Union two penalties each set at the maximum amount, $63,000.

So that was what he was minded to do, but he then applied the course of conduct‑type principle to reduce it down to one. We did not cross‑appeal in respect of that finding.

So, while the position that your Honour puts to me aligns with the position that we put to his Honour, I accept the fact that we did not put that issue in the Full Federal Court and it has not been put in play before your Honours. But, analytically, the position that – the conduct of the Union warranted penalties near the maximum is consistent with how we always conducted this case. I have just referred your Honours to paragraph 115, where you see at the start of that paragraph.....having said:

I am minded to impose upon the Union two penalties, each set at the maximum . . . In light of. . . the “course of conduct” principle, those penalties will be reduced to the equivalent of a single maximum penalty.

So, a penalty of $63,000. The Full Court – after engaging in a rather elaborate analysis, to which I am going to take your Honours – found that that involved error. In some respects ‑ ‑ ‑

GLEESON J: Mr Solicitor, could I just clarify? So, you are saying that the “course of conduct” principle is still an appropriate principle to be applied in the assessment of a civil penalty?

MR DONAGHUE: Your Honour, we accept – as the learned primary judge explained in his analysis from 103 through to about 113 – that there are many cases where it has been said that it is not a rule, but it is a principle or a tool that the Court might analytically deploy in assessing the appropriate penalty. We have not but in issue in this appeal – or we did not put in issue in the appeal to the Full Court – his Honour’s application of that principle. So, in my submission, I am somewhat constrained in what I can say about that in circumstances where his Honour applied the principle. We do not object to his Honour’s analysis of the authorities in 105 through to 108. We do not entirely agree with the way that his Honour supplied that, but we did not appeal against it.

EDELMAN J: Your submission, Mr Solicitor, as I understand it is therefore that had, in this case or maybe in a future case, there been 10 contraventions, all part of the same course of conduct and perhaps all very closely related – but 10, rather than two - that the appropriate penalty would have been at or close to $630,000, no matter how minor those 10 contraventions are – if the evidence was that this was just - the cost of paying penalties was just a cost of doing business.

MR DONAGHUE: Your Honour, I think your Honour’s question said, “would have been”. I would answer, “could have been” – that the available maximum would have been there and then the court would have needed to look at all of the relevant factors guided by the purpose of achieving deterrence. I do not submit that it is not permissible to look at totality, for example – so, to look at the total penalty that would be being imposed – but all guided by the pursuit of the objective of deterrence.

It might be the case – and, your Honours, Volkswagen was actually an example – the case your Honour Justice Edelman raised to me earlier – where the Full Court accepted that that was a case where there was effectively no maximum because the.....maximum was in the.....by reason of the very large number of contraventions and possible limits. So, it is not the case that the existence of a very high possible maximum necessarily means that that penalty has to be imposed.

There are cases, and the money‑laundering cases are another example where the notional maximum is so high that it cannot sensibly guide the court, so the court needs to do the best it can, having regard to other factors to impose an appropriate deterrent penalty.

I am not suggesting that an appropriate deterrent penalty would be to crush the Union out of existence for one contravention because the notional penalty would allow that to occur. A court is most unlikely to think that that is an appropriate way to respond to the contraventions, but it should be, in my submission, seeking to bring about compliance with the law.

Where one has unchallenged findings that a contravention is the result of a deliberate policy not to comply with the law, in my submission there should be.....difficulty with the proposition that that is a scenario that calls for the imposition of, at the very least, the single maximum penalty that Justice Snaden found.

In order to succeed in this appeal, your Honours, all I have to do is to demonstrate that against that background of unchallenged findings the Full Federal Court was wrong to say not even a single maximum, let alone the possible maximums for the two contraventions, was warranted by these facts.

In our submission, the clearest indication of error in the judgment below is when you look at what the Federal Court did at the very end of its judgment at page 151 in paragraph 222. This is in imposing what the Full Court described as the appropriate penalty and your Honours see it accepted that:

In the light of the history of contravening conduct in attempted enforcement of the union’s policy, the absence ‑ ‑ ‑

So, there is a history of attempting to implement the “no ticket, no start” policy, there is an absence of contrition or evidence that the policy has changed or ended, and it is said in what we submit is rather an understatement that:

the call for deterrence is heightened . . . It can be taken that the contravening . . . is an example of a continuation of a policy framed and implemented in direct opposition to the statutory policy of freedom of association . . . and reflects a willingness . . . to contravene the statute.

In our submission, accepting all of that, the maximum is clearly appropriate, but what their Honours then do from the next sentence, in the second part, having said well, we take that all into account, but - and it is the “but” that reveals the error because what their Honours then do is discount the maximum penalty back by reference to what they describe as:

the nature of the objective circumstances of what actually occurred -

Their Honours are referring to the fact that it was a single exchange of two people, that there was no evidence of proof of financial impact. In fact, at 218 they mention the fact that there was not any evidence of a confrontation of the kind that sometimes occur.

So those, what are called “objective circumstances”, cause conduct that is accepted to have been one step in a policy of defiance of the law to attract only two‑thirds of the maximum for a single contravention, let alone the maximum theoretically available by reference to the fact that two contraventions had occurred.

In our submission, one sees nowhere in this judgment any explanation as to how a penalty at that level could reasonably have been thought to have any prospect of deterring the Union, particularly in circumstances where penalties – that resultant penalty, the $40,000 is lower – than penalties that had previously been imposed upon this same Union in respect of “no ticket, no start” contraventions without effect. We have cited those cases in footnotes 1 and 2 in paragraph 6 of our submissions. So, in our submission ‑ ‑ ‑

STEWARD J: Mr Solicitor, I am sorry to interrupt, I apologise. Is there anywhere in the reasoning where one sees a justification for the $2,000 penalty?

MR DONAGHUE: I do not think so, your Honour. I think that is giving effect to the fact there were two contraventions, so that the Court wanted to impose a penalty for each, and it split them up rather differently to the way Justice Snaden had done. Justice Snaden just halved them so as to arrive at a total, but I do not think that that is explained.

STEWARD J: Is there a finding that the second contravention was demonstrably less.....than the first?

MR DONAGHUE: No, your Honour, because it was a single utterance made to two people. So, it was exactly the same conduct.

STEWARD J: Thank you.

MR DONAGHUE: Your Honours, can I take you now briefly to the Act which your Honours will find relevantly in volume 2, tab 4 and invite you to turn to section 546, which is the power to impose pecuniary penalty orders, relevantly:

The Federal Court . . . may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.

So, the statutory question for the court is, is it satisfied that the contravention has occurred? If so, then the only statutory guidance is to impose the penalty that the court considers appropriate. But, having regard to the authorities in this Court that I am about to come to, that is a question properly understood as meaning considers appropriate in order to achieve – or to endeavour to achieve – compliance with the relevant statutory regime, not what is appropriate to achieve retribution for the non‑compliance with the relevant norm of conduct.

In our submission, one sees nothing particularly that would justify an overlay that means that the penalty that is appropriate to deter nevertheless cannot be imposed if it is not proportionate to the objective circumstances of the contravention.

Now, I will not take your Honours to it right now, but I will shortly come to the Penalty Indemnification Case in this Court, where your Honours Justices Keane, Nettle and Gordon made some remarks about how one should construe a power phrased in similar terms. That judgment was dealing – in the relevant passage - with section 545, which is the power to make other orders that the court considers appropriate.

In that circumstance, at paragraph 103, the plurality judgment explained that the starting point must of course be the text of the provision, and then, your Honours said this and if I could just read a few sentences:

the first and most immediate point of significance is the breadth of the terms in which s 545(1) empowers the court to make any order the court considers appropriate. What is “appropriate” for the purposes of s 545(1) falls to be determined in light of the purpose of the section and is not to be artificially limited . . . such broad terms of empowerment are constrained only by limitations that are strictly required by the language and purpose –

Their Honours cited the famous passage in Shin Kobe Maru where Justice Gaudron explained that it was wrong to read.....granting powers to courts by making implications or imposing limitations not found in the words.

So the starting point in construing 546, which in our submission should be uncontroversial, is that it would be wrong to imply into the broad power to order a person to pay a pecuniary penalty that the court considers appropriate any artificial limits or limits that are not strictly required by the language of the section but, in our submission, for the reasons that I will develop in the course of our case, that is precisely what the Full Court did by importing from the criminal law limiting ideas that have their foundation in retributive notions.

EDELMAN J: Mr Solicitor, if your submission is accepted, that “appropriate” really means appropriate to achieve compliance with the statute, then why should the Court accept your concession that notions of totality, which are also seen in the criminal law, should have any role to play? For example, if you have a situation of a serial offender where the only way to deter - to achieve compliance with the statute, is – to use your phrase – to crush the offender out of existence, then why should that not be what is required by the statute?

MR DONAGHUE: Well, your Honours are ultimately engaging in a task of construction as to what that word means, the power having been conferred upon a court in pursuit of the objective that I have identified. In my submission, it would be a rather extreme interpretation of that provision to say that Parliament’s intention was that the court should crush anybody who contravenes the regime that it has created at all if they have contravened in a way that makes it possible to impose a crushing burden of that kind, bearing in mind that there are some regimes – and this kind of language ‑ the penalty the Court considers appropriate is found in the Fair Work Act but there is similar language in the penalty empowering provisions in the legislation in the consumer context and in other penalty contexts.

So what the Court says here will have some ramifications beyond the fair work regime, and in a context where it might be the case that the regime can be contravened literally thousands or hundreds of thousands of times so that the notional penalty becomes extremely large, it would be an unreasonable exercise of that power to utilise it in a way that had the extreme consequences that your Honour puts to me.

Perhaps another way of answering this question, your Honour, is to say that while the sole and perhaps only object is to pursue deterrence, that does not mean that deterrence has to be pursued at any cost no matter how ‑ ‑ ‑

GORDON J: Mr Solicitor, sorry, just so I understand it, is your argument reduced to the following propositions – and I may have them out of order. As I understand it, the way you put it is that 546 empowers the court to impose a pecuniary penalty that is appropriate provided of course they have satisfied or contravened the civil remedy provision. What is appropriate is determined by reference to the purpose of 546 and is not artificially limited and, as I understand it, you cite for that paragraph 103 of the indemnification case.

MR DONAGHUE: Yes, your Honour.

GORDON J: Is it then that the object of the penalty under 546 is deterrence both specific and general and that notions of retribution and, to that extent, rehabilitation have no role to play, but one of the limits is they are not to be regarded – that is, the penalty imposed and fixed is not to be regarded as a cost of doing business, consistent with what the Court said in ACCC v TPG.

Then, is it, in answer to Justice Edelman’s question, that what is appropriate to achieve deterrence is going to be informed by a range of factors including those identified, for example, by Justice French in CSR, that there are then these three limits, that is, this discretion really, which is broad, to impose the penalty is not itself unlimited. You have the maximum penalty operating as a cap. It cannot be any greater than is necessary to achieve, as I understand it, your deterrence objective and three, there is of course the requirement that it be exercised within the bounds of reasonableness as in effect derived from the text, scope, purpose and object of the provision. Is that the way you put it?

MR DONAGHUE: It is, your Honour. I agree with everything that your Honour just put to me. The only thing that I would add is that, while we submit that the penalty is to be appropriate to achieve the objective of general and specific deterrence, it is of deterrence not unfettered from the actual contravention before the court, so one is seeking to deter contraventions of a like kind to that that have occurred.

So, one does not take – one of the things that was suggested in the court below is that to approach this in the way that we urge completely untethers the setting of the penalty from the contravention that has occurred. That is not so, in our submission, because it is that contravention that one looks at, applying the Justice French CSR‑type factors, to assess what is appropriate to achieve general and specific deterrence, not contraventions of a completely different kind. But, subject to that addition, I ‑ ‑ ‑

GORDON J: I am sorry, I just have one final matter. Does that mean that if you flip it and you look at it in terms of this requirement of notion of proportionality being a further limit on 546, what that does in a sense is takes the cap as a cap which is not a cap in terms of monetary imposition of penalty, but a cap by which you must assess a scale of contravening conduct. Is that the way in which it is said to work?

MR DONAGHUE: It is. So, in effect, what the Full Court’s approach requires is that in addition to a French‑type factor analysis of what is appropriate, you also need to try to situate this contravention on a scale possible from least worst to most worst kind of contraventions. The cap is only available for the most extreme category, and so the notional cap drops back depending on where on that scale or yardstick the particular instant contravention is situated and that, we submit, is the error.

EDELMAN J: At some point, Mr Solicitor, it would help me if you could explain to me what the difference is between “proportionality” and the “bounds of reasonableness” – the former of which, you say, has no role to play, but the latter of which does have a role to play.

MR DONAGHUE: I am going to do that, your Honour, because “proportionality” – it might be as a matter of language that they might be similar in some context but what the Full Court meant by the notion of proportionality is something very much more specific than that. I intend to take on that burden shortly.

KEANE J: Mr Solicitor, just before you go on, looking at section 546, it is the conferral of a power on a court by statute. Does one not, inevitably – in the absence of some extreme language – understand that as conferring a power to be exercised judicially by the court and that that always requires reasonableness and fairness in the exercise of the discretion?

MR DONAGHUE: Absolutely, your Honour. That is what I was endeavouring to say to Justice Edelman earlier.

KEANE J: Insofar as proportionality is deployed as a concept – or a notion of proportionality is deployed by the Full Court in this case – it is derived from the notion that, in sentencing for crime, the sentence that is imposed must be proportionate to the just deserts – that is to say, the seriousness of the offence warranting punishment of the individual offender – and that, in that context, that is what proportionality is about.

MR DONAGHUE: Exactly, your Honour. In that context, the point is to stop other sentencing purposes being used in a way that result in a penalty that is not proportionate to the just deserts. That is the purpose of the principle in criminal law. But it does not work in the context of civil penalties because you are not reconciling competing sentencing objectives, you are just pursuing deterrents. So, the whole reason for the principle in criminal law is not capable of sensible translation, in our submission.

EDELMAN J: Except for the fact that, historically, the purpose of – or the role of a principle of proportionality has been expressed as performing a function judicially, which is exactly the proposition that Justice Keane put to you and you agreed with.

MR DONAGHUE: Your Honour, Justice Keane’s proposition – one needs not just the notion of proportionality but proportionality to what? In criminal law, it is proportionality to ensuring that the penalty is not – “the punishment fits the crime”, to use the colloquial‑type phrase. So, one is linking punishment with gravity of misconduct in an explicitly retributive context. That context is not present here, so one cannot use the same idea without taking account of the different underlying objectives or purposes.

GLEESON J: Mr Solicitor, in Markarian the Court identified maximum penalty as having particular significance as a yardstick and as identifying the appropriate penalty for the worst category of cases. Markarian has been applied in the Federal Court now for many years as a starting point in the assessment of civil penalties and, for example, was applied in TPG at first instance and in the Federal Court with no.....comment from this Court. At some stage, it would be very helpful if you could address whether the effect of your submission is to say that Markarian does not apply in relation to civil penalties and, if not, why not.

MR DONAGHUE: Your Honour, can I come to that. I am going to come to the role of the maximum and that idea, but if I might I will do it within the structure of the submission I am seeking to develop. But I will come to it.

Before I leave the statute, your Honours, can I ask you to note a few other provisions that draw a very clear demarcation between the civil penalty regime that the Fair Work Act creates and the criminal law, again, these provisions are the kind that are common to civil penalty regimes and your Honours will have seen them before. Here, looking first at 549 of the Act, in Division 4, “General provisions relating to civil remedies”, it says:

A contravention of a civil remedy provision is not an offence.

In section 551:

A court must apply the rules of evidence and procedure for civil matters when hearing proceedings relating to a contravention . . . of a civil remedy provision.

That particular provision is of a kind that makes express – a point that your Honour Justice Keane made in the Agreed Penalties Case – that this regime is avowedly distinct from a regime that would be appropriate for the imposition of criminal sanctions.

The statute also addresses the relationship between civil penalties and crime so that in section 552 it is said that there cannot be a civil penalty order after a person has been convicted, but the reverse is not true in section 554, criminal proceedings can be commenced after a civil penalty has been obtained, although there are some restrictions in section 555 on the use of evidence in those subsequent criminal proceedings that came from the civil penalty proceeding.

All of that reflecting the observation in the Agreed Penalties Case, that I am about to come to, where the Court said that that kind of demarcation points against importing criminal principles into a regime that was “precisely calculated to avoid the notion of criminality”, to quote your Honours in paragraph 54. So, it is a statutory regime providing for the imposition of appropriate civil penalties in respect of contraventions by a regime that is quite deliberately not a regime involving criminal punishment or criminal responsibility and that is significant in terms of the underlying purposes.

Can I come then to the two cases that I have already briefly mentioned, the Agreed Penalties Case and the Non‑Indemnification Case in this Court, starting with the Agreed Penalties Case [2015] HCA 46; (2015) 258 CLR 482which your Honours have in volume 5, tab 14. Your Honours might recall that in some respects there are some similarities between that case and this in that in there the Full Federal Court had taken some statements made by this Court in the criminal context, in Barbaro’s case, and had held that they applied in the context of criminal sentencing, and this Court unanimously said, allowing the appeal, that those principles should not have been imported from criminal sentencing into the task of imposing civil penalties.

The leading judgment is the judgment of five members of the Court, Chief Justice French, Justice Kiefel, as your Honour then was, and Justices Bell, Nettle and Gordon. If I could ask your Honours to start at paragraph 24 on page 495, where having noted in the previous paragraph that:

Since 1974, the Commonwealth has enacted a considerable number of civil penalty provisions -

your Honours then explain:

civil penalty provisions are included as part of a statutory regime involving a specialist industry or activity regulator . . . with the statutory function of securing compliance with provisions of the regime that have the statutory purpose of protecting or advancing particular aspects of the public interest.

That is what I was drawing from in some of the earlier answers I have given to the Court. It is the purpose of securing compliance with the regime in protecting or advancing the public interest. “Typically”.....there are other ways of doing it:

injunctions, compensation orders –

et cetera, which one also has here in section 545 of the Fair Work Act, although it is not directly in issue.

If your Honours could then move forward to paragraph 50 on page 505, the Court says that in two individual judgments in the Federal Court, Justices Middleton and McKerracher, had been:

correct in their view that what was said in Barbaro applies only to criminal proceedings –

and their Honours then go on to explain why:

Contrary to the Full Court’s reasoning, there are basic differences between a criminal prosecution and civil penalty proceedings and it is they that provide the “principled basis” for excluding –

Barbaro. At 54, the second sentence:

But a criminal prosecution is aimed at securing, and may result in, a criminal conviction. By contrast, a civil penalty proceeding is precisely calculated to avoid the notion of criminality as such.

That is the passage I was referring to a few moments ago. Then the key passage at 55, which has been commonly cited in the Federal Court since:

whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance –

So, again, that public interest in compliance with the regime. Punishment has three elements:

deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation –

I will not read it all but are imported:

The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.”

Then paragraph 59, it is repeated near the top of 508:

Once it is understood that civil penalties are not retributive –

So, the Court is quite emphatic. In the last few lines of paragraph 60:

As was emphasised in NW Frozen Foods, it is the function of the regulator to regulate the industry in order to achieve compliance and, accordingly, it is to be expected that the regulator will be in a position to offer informed submissions as to the effects of contravention on the industry –

so that is picking up again the point:

and the level of penalty necessary to achieve compliance.

So that ties in to paragraph 24 earlier, and at the end of 62 near the top of 509:

By providing for civil penalty proceedings, it implicitly assumes the application of the general practice and procedure regarding civil proceedings and eschews the application of criminal practice and procedure.

Your Honour Justice Keane agreed with the plurality, and also at paragraph 110 of your Honour’s reasons starting at the bottom of page 523 picked up the TPG statement that Justice Gordon mentioned earlier:

a civil penalty . . .

“must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business.”

So that is picking up the plurality’s observations in TPG Internet. So that case, in my submission, is very clear that the purpose of penalties is to deter both specifically and generally for the purpose of encouraging compliance with the regime that the regulator is tasked with enforcing. Those points were reinforced perhaps even more emphatically by the Court in the Non‑Indemnification Case (2018) 262 CLR 57 which your Honours have in volume 5 behind tab 12. The leading judgment is the joint judgment of Justices Keane, Nettle and Gordon. If your Honours turn to paragraph 87 on page 185 it said:

As the primary judge stated, the principal consideration in the imposition of penalties for contravention of civil remedy provisions is deterrence, both specific and general; more particularly, the objective is to put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene -

citing the Agreed Penalties Case, and there is reference to the CFMMEU’s antecedents:

penalties needed to be fixed with particular reference to providing specific deterrence against further contraventions by the CFMEU.

Then in the same judgment there is the passage at 103 that I mentioned in my submissions earlier in relation to the construction of the Act, but did not take your Honours to, so that is at the bottom of page 190 over onto page 191. That is the passage about not artificially limiting the power. Then, at 116, their Honours come back to dealing just specifically with section 546 of the Act:

the principal object of an order that a person pay a pecuniary penalty under s 546 is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would‑be contraveners. According to orthodox sentencing conceptions as they apply to the imposition of civil pecuniary penalties, specific deterrence inheres in the sting or burden which the penalty imposes on the contravener. Other things being equal, it is assumed that the greater the sting or burden of the penalty, the more likely it will be that the contravener will seek to avoid the risk of subjection to further penalties and thus the more likely it will be that the contravener is deterred -

That, in my submission, accepts your Honour Justice Edelman’s point that there is a spectrum. It is not a “yes” or “no”. But one is attempting to identify a sting or burden that will motivate compliance. At the end of the page:

Ultimately, if a penalty is devoid of sting or burden, it may not have much, if any, specific or general deterrent effect, and so will be unlikely, or at least less likely, to achieve the specific and general deterrent effects that are the raison d’etre of its imposition.

So, that is a rather emphatic statement as to the purpose of the imposition of the penalty. Your Honour Chief Justice Kiefel said something similar at paragraphs 141 to 144 – including in 144, that “attainment of the deterrent effect” is the very point of pecuniary penalties, is the way that your Honour put it there. I may have misspoken, your Honours. I was intending to refer to 41 and 42 of the Chief Justice’s judgment and then to 44.

So, in our submission, we respectfully submit, it is very difficult to see how this Court could have been clearer in relation to two main points: one, that provisions authorising the imposition of civil penalties are concerned principally, if not solely, with deterrence and should be construed as requiring penalties to be imposed that are appropriate – putting a price on contravention sufficiently high to deter repetition of contravening conduct of that kind; and, second, that retributive principles have no place in the setting for the imposition of civil penalties. Those two principles are, we submit, in stark tension with the Full Court’s analysis.

Can I ask your Honours to turn to the Full Court’s judgment – which you have in the core appeal book, behind tab 5. It is, in my submission, a complex, difficult judgment. So, can I start with an overview of the sections into which it falls and then come back to focus on the particular parts that are significant in identifying the errors because one can usefully break the judgment up into a number of discrete sections.

Your Honours will appreciate there are two judgments – a joint judgment of Chief Justice Allsop and Justices White and Wigney – and then a short concurring judgment of Justices Besanko and Bromwich – which is only three or four pages long. So, my focus will be on the joint judgment of three of their Honours and when I am not referring to that judgment, I will refer your Honours, specifically, to the short concurring reasons. The joint judgment starts at paragraph 1 on page 71 with an acknowledgement of the importance of the issues raised:

important questions as to the proper approach to the determination of the appropriate level of civil penalties . . . in particular –

in a case of a contravener with a demonstrated:

unwillingness to obey a statute.

So, that is the issue. Their Honours, from paragraph 7 through to paragraph 20 summarised the primary judgment, including on page 75 quoting the findings at paragraph 84, I think, and at paragraph 20.....against those findings. Then, on page 78, from paragraph 25 through to about 37, their Honours summarised the judgment in this Court that I have just taken your Honours to, and some in the Federal Court as to the purpose of penalties. Interestingly, and perhaps slightly oddly, at paragraph 26, your Honours will see the Court saying that:

the Agreed Penalties Case (HC) settled what had been perceived to be a difference . . . as to the object of the imposition of civil penalties.

In my submission, that is a surprising way to put it in circumstances where there were numerous cases in the Federal Court that actually held that the purposes of penalty is included - punishment, deterrence and rehabilitation – and you can see that, for example, in paragraph 29, on the next page, quoting from Ponzio v B & P Caelli Constructions – where the quote begins:

There are three purposes at least for imposing a penalty -

So, it was a not a perceived difference, in our submission. This Court in the Agreed Penalties Case held that that kind of analysis is wrong. So, cases that precede the Agreed Penalties Case need to be approached with some level of caution, because there was a stream of authority in the Full Federal Court that treated penalties as in part serving retributive objectives.

Then, after a short discussion on pages 82 and 83 of “The place of punishment” – where their Honours said it might be better to try to avoid that word, lest notions of retribution intrude – there is, starting at paragraph 40, under the heading “Principles of sentencing in crime” a very long discussion of criminal sentencing principles. It runs from page 83, paragraph 40, through to page 99, paragraph 93.

I am going to come back to aspects of that, but you can just see structurally that fairly early in the judgment there is a 16‑page discussion of criminal sentencing principles, which gives some feel for the role – the foundational role that they played in the analysis of the court that follows. But as I say, I will come back to it.

Then at 99, the statutory provisions are set out – 99 through to 102. Then the next section starts at 102, under the heading “The appropriate penalty” and runs through to about line 10, and there are quite a number of statements of legal principle in that section of the judgment – quite a number which are uncontroversial – there is the CSR factors, and there is a reference in 103 to the Frozen Foods passage that I have mentioned earlier.

It is difficult, just reading this part of the judgment, to put one’s finger on error because much turns upon exactly what particular phrases mean. So, one sees in 104 the introduction of the Full Court’s notion of proportionality and, indeed, the way that the Full Court have linked together a number of principles is explained in 104 to come up with that context – with that concept.

But a lot turns upon what is meant by the phrase “imposed for the instant contravention” or “guided by the statutory maximum” and what the court means by that becomes clear only later in the judgments. So, it is later in the judgment where I propose to focus.

After that summary of legal principles, many of which are correct or uncontroversial and some of which are ambiguous, there then commences the next section on page 110 of the judgment, at paragraph 113, which is again a long discussion of authority in the Full Federal Court or the Federal Court post the Agreed Penalties Case. That discussion lasts about 30 pages. It runs from 110 through to 140 and includes a 16‑page discussion of Broadway on Ann, which was significant in the primary judge’s reasoning, a few pages discussion of Parker.

I will come back to that discussion as well because it is particularly in the court’s adoption of the dissenting reasons of Justice Bromwich in Broadway on Ann that the error, in our respectful submission, starts to become clear.

Then at the end of that lengthy discussion of the Federal Court authorities post the Agreed Penalties Case one sees on page 140 the dispositive reasoning disposing of or allowing the appeal on rejecting primary argument the Union had run below but accepting what the Full Court called a subtle variation of it. The particularly critical paragraphs are 193 and 195, to which I will also return.

There is then a discussion about co‑operation from paragraph 204, which your Honours do not need to concern yourselves with, special leave having been refused on that ground. So that issue is not before you. Then finally, the judgment deals with the reimposition of the penalties to which I have already taken your Honours.

Out of that, I invite your Honours to take that the court was plainly aware of the decision of this Court, particularly in the Agreed Penalties Case and the Non‑Indemnification Case and endeavoured to conform its reasons to what was said there, but it grounded its analysis in, notwithstanding that, a very lengthy and detailed examination of criminal sentencing principles and, as one can see in Broadway on Ann, which I will come to, those criminal sentencing principles were ultimately given decisive effect in the reasoning which one sees at 193 and 195 in allowing the appeal.

I need to develop all of that, but I note the time, your Honours. Is that convenient or should I proceed to do that?

KIEFEL CJ: No. This is a convenient time for the Court’s break, thank you, Mr Solicitor.

MS DOYLE: Your Honours, may I raise a difficulty we are having in Melbourne. The screen froze just after 10.00 am. I have been able to follow the Solicitor‑General by listening and I have been assisted by watching a live stream on another laptop. But your Honours will appreciate that lags behind the action. So, while the morning has had the quality in terms of sound of a very well‑produced radio play or podcast, I am going to find it very difficult to know who is asking me questions as the day goes on. We will try to resolve it during the break, and could we inform the Court if we are continuing to have difficulties?

KIEFEL CJ: Yes, please do, Ms Doyle. Thank you.

MS DOYLE: If your Honour pleases.

AT 11.16 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.34 AM:

KIEFEL CJ: Yes, Mr Solicitor.

MR DONAGHUE: Thank you, your Honour. Your Honours, I indicated that I was going to come back to particular parts of the Full Court judgment that I just skipped. Can I do that starting with the section of the judgment commencing on page 85 of the core appeal book at paragraph 46 under the heading “The principle of proportionality in the criminal law and Veen (No 1) and Veen (No 2)”.

There your Honours will see in paragraph 46 that the Full Court acknowledges that the facts and circumstances of these cases are a tragic and brutal world away from the imposition of civil penalties to determine non‑compliance with the regulatory provisions in industrial relations and that, we submit, is plainly true, that the context of Veen and criminal sentencing is far removed from the imposition of appropriate civil penalties, but notwithstanding that difficulty, your Honours will see in the next sentence their Honours saying:

That difference in context does not, however, make applicable principle derived from Veen (No 2) any less binding -

In our respectful submission, that is not correct. It cannot be the case that principles from Veen were binding with respect of the exercise that the Full Court was engaged in. They may be analogically relevant but that is, in our submission, the most that could be said for them. In much of the reasoning that follows, your Honours will see the Full Court apparently seeing itself as required out of fidelity to Veen (No 2) to transport a version of proportionality that is very close, not identical but very close to what one sees in Veen (No 2).

Their Honours quote quite a number of the relevant passages from Veen (No 2) over the next few paragraphs, but I am about to take your Honours to the case so I will not take your Honours through that. At paragraph 55 on page 87 you will see the Full Court referring to:

two further (and related) principles, described as subsidiary for the resolution of that appeal, which are of central importance to this appeal: the antecedent criminal history (here, antecedent contraventions) and the place of the maximum penalty ‑

those two ideas forming the heart of the Full Court’s notion of proportionality or the foundation for the Full Court’s notion of proportionality, but which are derived, as the previous paragraph notes, in Veen from:

the retributive object of punishment ‑ ‑ ‑

GLEESON J: Mr Donaghue, am I right in thinking that those two considerations as relevant factors could both have been taken from Justice French’s analysis in CSR?

MR DONAGHUE: Not in the way that the Full Court deploys them because, whereas Justice French in CSR is identifying a range of matters that might assist, depending upon facts, in determining the appropriate penalty, the way that it works in Veen, which I am about to take your Honours to, is as a controlling principle, and that is the point that we are seeking to develop, not that these are matters – I am not suggesting that they are matters that cannot be taken into account, I am suggesting that they do not give rise to a controlling principle of the kind the Full Court identified.

To try to explain that, can I ask your Honours to go to Veen (No 2) [1988] HCA 14; (1988) 164 CLR 465, which is volume 5, tab 15, and to turn when you have it to page 472 in the joint judgment of the Chief Justice and Justices Brennan, Dawson and Toohey. Near the foot of that page, their Honours say in the final paragraph on the page:

The principle of proportionality is now firmly established in this country. It was the unanimous view of the Court in Veen [No. 1] that a sentence should not be increased beyond what is proportionate to the crime in order merely to extend the period of protection of society from the risk of recidivism -

So that principle of proportionality is a limit on the pursuit of a competing sentencing purpose, the protection of society from recidivists, obviously in a brutal world away from the present context where the recidivist might be guilty of murder or manslaughter. So, proportionality stops community protection resulting in a disproportionate sentence. But as the Court then explains on the next page, 473 in the middle of the page:

It is one thing to say that the principle of proportionality precludes the imposition of a sentence extended beyond what is appropriate to the crime merely to protect society –

but it is a different thing to say that community protection is not a relevant matter and accept that community protection was a relevant matter. But as to the way those things were to be reconciled, their Honours adopted, in effect, or found illuminating the debate that they set out at the bottom of page 473, including the thesis advanced by Mr C.S. Lewis which you see at about point 7 on the page:

The thesis advanced by Mr. Lewis was that the retributive theory of punishment — punishing an offender “because he deserves it” — prevents the injustices which may be involved in detaining an offender in order, e.g., to protect society or to reform the offender.

Then C.S. Lewis’ plea which is endorsed over the page was that:

the prior condition of ill desert; loss of liberty justified on retributive grounds before we begin considering the other factors –

is all he sought. That plea, it is said over the page:

has been heard by the courts of this country by adopting the principle of proportionality –

albeit that, as their Honours accept, the practical application of the distinction calls for judgment and discernment. So that in criminal law one asks the question about whether the punishment is proportionate to the actual offending – does the punishment fit the crime – and that is a limiting idea that prevents reference to matters such as community protection or deterrence from increasing the sentence above that which would be proportionate to that punitive objective. But those other considerations are relevant in that they can cancel out factors that might otherwise result in a reduction or mitigation of the plea, but they cannot inflate the appropriate penalty above what is appropriate as a matter of retribution or punishment.

Then, if your Honours move on to page 476 near the bottom, still in the plurality judgment, about point 7, their Honours say:

sentencing is not a purely logical exercise, and the troublesome nature of the sentencing discretion arises in large measure from unavoidable difficulty in giving weight to each of the purposes of punishment. The purposes of criminal punishment are various: protection of society, deterrence of the offender and of others who might be tempted to offend, retribution and reform. The purposes overlap and none of them can be considered in isolation from the others when determining what is an appropriate sentence . . . They are guideposts . . . but sometimes they point in different directions.

Then one sees over the page, about four or five lines out:

These effects may balance out, but consideration of the danger to society cannot lead to the imposition of a more severe penalty than would have been imposed if the offender had not been suffering from a mental abnormality.

So, this really picks up the answer I gave to your Honour Justice Keane earlier, that in the context of balancing sometimes factors that are sometimes in tension with one another, in the criminal law, consistent with C.S. Lewis’ plea, retribution is recognised as a governing principle from which the sentence cannot depart and it is only within the constraints of that governing principle that other matters can be looked at.

In effect, what has happened in the judgment here is that the Full Court has employed a notion of proportionality that has the same consequence, that has a governing or limiting effect by reference to the fit between how the instant circumstances of the contravention are characterised and the ultimate penalty. But that whole idea in the criminal law is based upon retribution and the court’s rejection of retribution as a relevant factor in the Agreed Penalty Case, in the imposition of civil penalties, therefore pulls out the foundation upon which that whole analysis is built in a way that, in our submission, the Full Court’s reasoning cannot properly explain.

It is then later down on 477, the second half of 477, that one sees the two subsidiary principles that the Full Court said at paragraph 55 are of central importance in this case and I do need to dwell here just a little because – so your Honours will recall the two principles are the relevance of antecedent criminal history and the place of the maximum penalty. It is in the bottom half of 477 that the Court explains how, in the criminal law, one can properly use antecedent criminal history. It:

is a factor which may be taken into account . . . but it cannot be given such weight as to lead to the imposition of a penalty which is disproportionate to the gravity of the instant offence.

That is the exact reasoning we see replicated by the Full Court. It is then said:

The antecedent criminal history is relevant, however, to show whether the instant offence is an uncharacteristic aberration or whether the offender has manifested . . . continuing attitude of disobedience of the law.

So, it is the case, both on the Veen analysis and on the Full Court’s analysis below, that you can look at antecedent contraventions for some purposes, the Full Court did not rule them out entirely. But they can be looked at only subject to that limit that is identified in the second sentence of that paragraph:

it cannot be given such weight as to lead to . . . a penalty which is disproportionate to the gravity of the instant offence.

It is relevant but in a very tightly bounded or restricted way and while we, of course, take no issue with that in the context of the criminal law with the different objectives to be pursued in the central role of retribution, we do submit that it cannot readily be translated to the civil penalty setting context. Going back to the Full Court’s reasons, having quoted from Veen ‑ ‑ ‑

GORDON J: Sorry, Mr Solicitor, can I just ask about the second subsidiary principle, which is the maximum penalty, on 478 in Veen. Do you wish to address that aspect?

MR DONAGHUE: I do, but I was going to come to it later if I might – not much later, but there are a number of different ways of breaking this up and I am going to try to stay with the first subsidiary principle and then deal with the second. So, if I could ask your Honours to go back to the Full Court’s reasons. On page 88 of the core appeal book – the passage that I have just read to your Honours as to the use that can be made of the antecedent criminal history – and there is some discussion of that and then at paragraph 61, summarising their discussion of Veen, their Honours say:

Running throughout Veen (No 2) is the place of proportionality. Its source lies in the place of retribution for the gravity of the offending.

We respectfully agree with that.

The appropriate sentence, for the instant offence –

their Honours’ emphasis:

is reached by a process which may have regard to prior offending . . . an attitude of disobedience –

So that is all true, as a matter of criminal law. It is the translation to the civil penalties that we take issue with. Then, there is 62, which is about the other limit – so I will come back to it – and then at 63, their Honours say:

The passages in Veen . . . are at the centre of the disagreement in this case. They must be understood by reference to, and in the light of, contemporaneous and later High Court decisions . . . It is appropriate to spend a little time examining that disagreement –

that has arisen from them, which is what the court then does over on quite a number of pages. It starts with two judgments in this Court - Baumer and then Hoare, addressed in 64 and 65 – Baumer concerning the relevance of prior convictions in the context of dangerous driving. Your Honours will see the quote from Baumer in the middle of page 90, including in the Full Court’s bolding:

It would clearly be wrong if, because of the record, his Honour was intending to increase the sentence beyond what he considered to be an appropriate sentence of the instant offence . . . the sole criterion relevant to a determination of the upper limit of an appropriate sentence is that the punishment fit the crime. Apart from mitigating factors, it is the circumstances of the offence alone –

So, one starts to see this language of the circumstances of the offence being used to distinguish from the circumstances of the offender, or, in particular to exclude prior contravening behaviour. So:

it is the circumstances of the offence alone that must be the determinant of an appropriate sentence.

Perhaps even more clearly in the next case, in Hoare v The Queen, the quote:

[A] basic principle of sentencing law is that a sentence of imprisonment imposed by a court should never exceed that which can be justified as appropriate or proportionate to the gravity of the crime considered in the light of its objective circumstances –

So again the “objective circumstances” language, with “objective” being emphasised. That has given rise to quite some level of debate in the criminal law about what the objective circumstances of the crime are, having regard to Veen and, in particular, whether or not prior offending is capable of affecting the gravity or the seriousness of the offence or the objective circumstances. Your Honours can see at paragraph 70, that their Honours, in the Full Court, accept that, on the authorities, there might possibly:

be a distinction between the “gravity” or seriousness of the offence and the “objective circumstances” –

depending on what is meant by – the meaning of “objective circumstances”. Then they say, about six lines up:

if the criminal history of an offender can increase the seriousness or gravity of the offence by illumination of moral culpability or a continuing attitude of disobedience to the law –

So, even if it can be:

it cannot be given such weight as to lead to the imposition of a penalty which is disproportionate to the gravity of the crime considered in the light of its objective circumstances –

citing Veen and Hoare:

So, even if the gravity of the crime can be affected by antecedent criminal history on one reading of Veen –

it could be:

the sentence must be proportionate to that gravity considered in the light of the objective circumstances. Thus, the prior offending cannot unmoor or untether the sentence from the crime’s objective circumstances.

Then, what the Court goes on to do is to discuss the authorities in the intermediate appellate courts about what that concept of “objective circumstances” means. I will not take your Honours right through it, but the length and detail of the discussion is informative of the role it ultimately plays in the Full Court’s conclusions. It is probably enough for my purposes now to invite your Honours to look at 71 – dealing with the New South Wales authorities – recounting Chief Justice Spiegelman’s judgment in McNaughton – from four lines down:

“prior convictions do not themselves play a role in determining the ‘gravity of the offence’ which, as Hoare confirms, turns on the ‘objective circumstances’ of the offence.

Lots of cases accepting that in New South Wales – including, quite recently, in Gilshenan where, within the quote:

the upper boundary of a proportionate sentence to be set by the objective circumstances of the offence which circumstances do not encompass prior convictions –

So, your Honours can see the dichotomy that is being drawn. The objective circumstances of the offence are the limiting concept for proportionality purposes and the objective circumstances of the offence do not include priors.

That is the position as the Full Court explains, accepted also in Victoria, you see at 74; in South Australia at 83; in the ACT at 88. There seems to have been a vigorous disagreement within the Northern Territory Court of Appeal about it and that is set out at some length as well. But it all ends at paragraph 90 with the proposition that there are some difficulties in resolving the taxonomical debate, passing the words of Veen. But if your Honours then look at the last couple of sentences in that paragraph, their Honours say:

Thus prior convictions cannot distort the sentence to that which is disproportionate in the light of such objective circumstances of the offending (as opposed to the offender).

So, we are splitting the matters that govern the proportionality assessment so that some – those going to the objective circumstances of the offending – are relevant and others – going to the objective circumstances of the offender – are not. But if one looks at the CSR‑type factors – traditionally applied in this area – both kinds of factors are rolled in together. So, what is inherent in this is that dividing off of some of the matters usually treated as relevant, such as, for example, the size and resources of the offender so that they cannot inform the appropriate penalty on a proportionality analysis of the kind here implied.

Right at the conclusion of its discussion of all of these criminal cases, you see paragraphs 92 – or 91, where Justice Mortimer is recorded as saying it is perhaps easy to understand why one goes into all of this in the context of a “deprivation of liberty”‑type analysis – which we respectfully endorse. But, 93, the Full Court strives to preserve what it can out of this discussion despite the Agreed Penalties Case and its rejection of retributions. So, their Honours say that there are “two informing considerations” from Veen:

not tied to retribution (as distinct from deterrence) –

and one is that:

the deterrence was in respect of offences “of a like kind” –

and the other is the role of:

the maximum penalty –

It is said they are:

not wholly dependent upon –

retribution and:

They can be seen to survive the rejection of retribution as an object of the imposition of civil penalties.

So that, conscious of the rejection of retribution, their Honours still seek to take those informing considerations including this notion of the objective circumstances of the offence into the civil penalty context and they go on to use a variety of phrases to try to capture that in the passages that I will come to when I identify the error at the end of this submission.

You see phrases like, “the focus needs to be on what actually happened”, or “what happened in the instant case”, or “the human conduct that constituted the contravention in question”, or “the actual reality of what constitutes the contravention”, or “the acts and circumstances that make up the contravention”. You see all of those phrases from 194 to 198 – the contravening conduct itself, as distinct from circumstances of the contravener including in particular their prior history.

It is the first subsidiary principle that leads to the focus on demarcating the instant contravention in the way I have just described. The other subsidiary principle that your Honour Justice Gordon and your Honour Justice Gleeson have both asked me to address is the role of the maximum penalty. There I can be much briefer. The court in paragraph 62 of its reasons on page 89 expressly states that:

The maximum penalty is not just a on power, it provides a statutory indication of the punishment for the worst type case, by reference to which the assessment of the proportionate penalty for other offending -

Then on page 102, paragraph 98, you see at the end of the court’s reasons there that the role of the maximum in the Full Court’s conception is as a mandatory matter. It says:

it is the deterring of contraventions of the kind before the court to which regard must be had in fixing the penalty that is considered appropriate, by reference to the frame of reference or yardstick provided by the maximum penalty -

It is there, in our submission, that one sees a difference from the role that has to date been played by the maximum penalty, which is as a matter that the Court might find, together with all other relevant matters, as of some assistance in the determination of the appropriate penalty, but not as something that is a mandatory matter that requires, in the exercise of the setting of an appropriate penalty, some comparator that situates this contravention as against the yardstick constituted by the most innocuous to the most offensive category. Perhaps one sees the distinction most clearly from 105 of the Full Court’s reasons where the Full Court start by saying that:

The setting of a maximum . . . is a part of such a notion of proportionality. Parliament is to be taken to be setting the maximum penalty for cases in which . . . deterrence is strongest -

That is the mandatory yardstick, but in the passages then quoted in Reckitt, which is one of the leading Full Court authorities on this, it is avowedly not put in a mandatory way. So, at 154:

regard must ordinarily be had to the maximum penalty. In Markarian . . .

almost always be required –

but obviously not always required – then over the page at the end of 155:

As Markarian makes clear, the maximum penalty, while important, is but one yardstick that ordinarily must be applied.

156 Care must be taken to ensure that the maximum penalty is not applied mechanically, instead of it being treated as one of a number of relevant factors.

So again, our submission does not suggest that it is impermissible to use as one of a number of matters informing a judgment of appropriateness Parliament’s specification of the maximum. Our submission is that there is not as a mandatory part of setting an appropriate penalty a need to situate the objective circumstances of the contravention - what actually happened or the human conduct in question - on a yardstick that compares it with other possible contraventions and then uses that to limit the penalty that can be regarded as appropriate in a particular case. It is that second use that, in our submission, is erroneous.

Now, I can come at last, if I might then, to the actual passages in the judgment that we submit most clearly reveal the error that I submitted occurs. That starts in the Full Court’s discussion of the authorities, in the 30‑page discussion of the post‑agreed penalty authorities, with the adoption of the dissenting reasons in Broadway on Ann starting in the core appeal book at 128, paragraph 157.

Broadway on Ann was a case where there had been six connected right of entry contraventions by a senior union official which the majority had held each warranted the maximum penalty largely by reason of the persistent non‑compliance of the Union with its obligations. Special leave was sought and refused in that case. Justice Bromwich dissented.

The Full Court analysed the reasons as if there was no difference in principle between the majority and the minority, notwithstanding that the penalty imposed was a factor of.....two of them and, in our submission, the passages I am about to come to show a quite significant difference in principle between the way that the majority approached matters in Broadway on Ann and the analysis that Justice Bromwich adopted which has now been reflected in the judgment under appeal.

At 157 their Honours say it “is important to set out what Bromwich J said”, and those two passages are quite a clear statement of the mode of analysis that, in our submission, the Full Federal Court has now adopted. So, it is accepted that it is legitimate to take account of antecedent conduct in the way that was identified in Veen. But as the bolder passage that the Full Court have added makes clear, that permissible use is constrained in the sense that the penalty imposed:

must still be proportionate to the gravity of the instant contraventions, as assessed in their own terms -

True from Veen but limited here in the way that I have already described. Then in 107:

Veen (No 2) above is particularly relevant where there is, as in this case, a serious and sustained prior history of contraventions . . . The role of any past contraventions is to be no more than a prism through which to view the instant contravention -

even if there is:

“a continuing attitude of disobedience of the law.” If the latter, as is clearly available to be concluded in this case, the heightened need for deterrence indicates that a more severe penalty is warranted . . . Nonetheless, that penalty must still fall within the applicable range that is otherwise considered appropriate –

In other words, prior contraventions cannot change the applicable range. They can be taken into account only within a range set by reference to this assessment of the seriousness of the objective contravention. Over the page, at paragraphs 159 and 160, Justice Bromwich refers to the maximum being:

reserved for the worst category of cases.

So, it is not that the maximum – “mandatory yardstick” means that the only kind of case that can attract the maximum are those in the worst category, and as is explained in 160, you cannot be a:

worst category merely by reason . . . a history of prior contraventions –

So, it said:

a case is not in the worst category merely by reason that the contravener has a history of prior contraventions –

So that it does not matter how long you have been giving effect to your unlawful policy, that cannot put you in the maximum case unless the circumstances of the instant contravention would take you there.

At 177, their Honours move on from Broadway on Ann to a case Parker. There Justice Bromwich was no longer in dissent but formed part of the majority with Justice Besanko – or, indeed, it was a unanimous judgment, Justice Reeves agreeing with their Honours. The analysis is quoted in 175 and 177, and 177 I will not read out to your Honours again but is in much the same terms as the passages from the dissent in Broadway on Ann that I have just read, quoted in 157. Again:

no more than a prism through which to view the instant contravention -

and in a separate quote:

a case is not in the worst category merely . . . [because] of prior contraventions –

So, fairly clear. Then at 180, in summarising what the Full Court takes from all of these cases:

what can be seen as clear and as taken from the content of the statute (as directed to the instant contravention for the objective of deterrence . . . in a statutory context of a maximum penalty for the worst type of contravening warranting the heaviest possible penalisation . . . ) is that the notion of proportionality of the penal response is central to the content of the statutory power to impose the penalty . . . is not blind to wilful recidivism –

because you can use it in the Veen way. In that sense, it forms:

a principled part of the assessment of the seriousness of the contravention . . . What is not permitted in the name of deterrence is to untether the penal response from the nature and character of the instant contravention such that the penalty imposed can be seen to be undifferentiated between grades of conduct assessed and characterised on a principled basis.

So, you have to grade the contravention and you have to do it not taking into account priors. It is that analysis that then informs the dispositive reasoning for allowing the appeal that one sees at 193 and 195.

GORDON J: Before you go there, Mr Solicitor, do you propose to deal with 181? That seemed to be the point that was being raised with you by Justice Edelman and also Justice Gleeson, I think, and that is the middle passage that the consequence which flowed from that was this idea that you are not punishing or penalising the instant contravention and, in effect, the maximum penalty is always going to be available for a recidivist. As I understand your argument, you would say that that is a matter of statutory construction, that is the available result.

MR DONAGHUE: In part I would say that, your Honour, and I would also say that it is no part of our submission to say that one does not look at the instant contravention. So, if one takes, for example – and this is the way the court deploys the example it discusses at 183 to 184 in the Auimatagi case – but a situation where the contravention is not implementing a “no ticket, no start” policy involved in wilful defiance of the law. You say union representative seeking to reflect, on the Full Court’s description of the case, the wishes of the workers on the site in disobeying a policy about the wearing of short pants and short sleeves on a really hot day in Brisbane.

Now, in that kind of circumstance, the fact that the contravention might be by a union official of the CFMMEU does not mean that one would look at the deplorable history of wilful defiance of the law and say that every time anyone from the CFMMEU makes a mistake, the maximum penalty must be required because you still look at the instant contravention, and if the instant contravention is a new official seeking to give effect to the wishes of workers on the site in an understandable context that does not involve a deliberate defiance of the law, that might still be a contravention of the Act that warrants a penalty, but there would not be any occasion to say that the call of - deterrence there is so great as to require the maximum.

So, you do still look at the facts and circumstances of the instant contravention. But you are not required, as the Full Court would have it, to disregard the history of contravening in assessing the severity of the instant contravention. That is the point we are seeking to make. So, it is not untethered from the nature and seriousness of the instant contravention and it is not punishing again for past conduct, because the question is always, what is necessary to deter future contraventions of this kind.

The answer to that question is informed by the past – logically and rationally informed by the past – so that you do not need to punish the past contravention again, you just say, I know that you have done this before and that the penalties that have been imposed upon you before were not sufficient to deter. That logically informs the penalty that needs to be appropriately imposed in this case, whereas in the kind of example I just gave, to impose the maximum may well be to contravene the frozen foods type limit by doing more than is necessary - could reasonably be thought to be necessary to deter the conduct of the crime that has occurred.

Can I ask your Honours to go to the two dispositive passages, really that caused the Court to allow the appeal – which is 193 and 195. So, 193 is just after having rejected the Union’s main argument on appeal, which was effectively that prior contraventions had no role at all, not even the Veen role, in assessing the nature and gravity of the contravention. Their Honours said that that was wrong. But they then said that there was a more subtle version of the argument that they accepted. You can see that really in the middle of the paragraph:

The statutory task involved necessarily the assessment of the objective characteristics of the contravening in the light of all the factors attending the contravention, including prior contraventions –

which means in the Veen sense:

Thus, as was said in Parker -

which is the prism passage I have shown your Honours:

the history of prior contravention may assist in the proper characterisation of the instant contravention, but caution was required not to use it to overwhelm the process to change the character of the instant contravention into something it cannot properly and reasonably be seen to be . . .

The point is a subtle one, but important and real.

It is, in our submission, an extremely difficult form of analysis that their Honours are inviting, which says well, you can look at prior contraventions for the limited Veen purpose, but ultimately you just have to give effect to the character of the instant contravention by reference to the objective conduct. In applying that, your Honours can see very starkly at the top of 195 that the practical effect of it was to say that it was an error to focus or:

to impose a penalty at the highest level because of the number of prior contraventions, in what was said to be the demonstrated intention promoting a no‑ticket no‑start policy, but without any real evaluation of, or weight being given to, the objective characteristics of what occurred as part of the assessment -

Your Honours, in our submission the characteristics of this contravention critically included the fact that the contravention occurred because Mr Pattinson was implementing a deliberate policy of applying no ticket, no start in preference to compliance with the law.

The Full Court’s analysis denies that that fact forms any part of the objective character of the contravention that then governs the proportionality analysis and it therefore requires the exclusion of the most important factor in setting an appropriate penalty in this case. That whole paragraph warrants close inspection, but it is long, and I will not read it to your Honours, but focusing on just the last six or seven lines, the error is identified as saying:

This approach elevated past offending to be the defining consideration of the character or gravity the contravening, irrespective of the actual reality of –

what occurred, constituting:

the contravention. It was not an assessment of the gravity of the circumstances . . . what could be drawn legitimately and contextually as to the instant contravention . . . rather, it was to draw from the past a conclusion that, regardless of how objectively serious or not the conduct in question was otherwise, the maximum penalty should henceforth be imposed.

The effect of the analysis seems to be that, if you pursue the “no ticket, no start” policy politely, without threats, without standover‑type tactics, then that cannot be serious. That could only be somewhere in the middle of the range because the objective circumstances of what actually occurred could have been worse, and that we submit is the very profound distortion that results from the application of the Full Court’s reasons.

Your Honours see the same kind of analysis perhaps even more clearly in Justice Besanko and Justice Bromwich’s judgment. I will only take your Honours to two passages there. On page 153 of the book you will see that at paragraph 227 their Honours set out three different ways that prior history could be relevant. The Union’s version that prior history was not relevant at all was rejected in (1). The idea that prior history could inform the seriousness of the instant contravention to the extent of justifying the maximum, effectively the submission I am putting now, rejected in paragraph (2) and in (3):

Prior history may be relevant to an assessment of the seriousness or gravity of the instant contravening conduct, but neither that history, nor the object of deterrence, can result in a penalty that is disproportionate to the contravening conduct itself, having regard to the maximum penalty provided. This is directly supported by . . . Veen No 2 -

That is just applying the criminal limit to ensure that the penalty is not disproportionate to its retributive object, notwithstanding the fact that the retributive object has gone. You see that again in paragraphs 230 and 231 where their Honours apply that, but I do not need to read those paragraphs to your Honours.

In our submission, and really by way of conclusion, the rather subtle and elaborate analysis drawing heavily on criminal law principles, is a wrong turn. The appropriate approach largely followed in the Federal Court cases – at least those that adopt the CSR‑type analysis – is to just look at what the statute says. It requires the court to impose an appropriate penalty once it is satisfied that contravening has occurred, to not add to or gloss upon that task by importing criminal principles and to engage in the kind of analysis that Justice Gordon put to me by way of summary of understanding of our case earlier which says that task is is informed by a range of relevant factors.

The checklists can be helpful in the sense that they identify matters of the kind that are commonly relevant but they are not appropriately applied as if they were rules of law – the court should look – it is a wide judicial task to be performed judicially so the court should be trusted to look at all of the identified relevant factors and, subject to the cap imposed by subsection (2) – and subject to the kind of principle identified in Frozen Foods and applied ever since – that you cannot do more than is necessary in pursuit of the deterrent purpose – the court should be left to fashion the appropriate penalty without some artificial exclusion of the matters that form part of the seriousness of the instant contravention.

So that if one has a contravention by a large and very well‑resourced corporation or union, then the penalty necessary to deter – specifically deter – that corporation, should be taken into account even though it would not, on the Full Court’s view, be relevant to the objective character of the offence. That is the effect of the Volkswagen case that has already been mentioned this morning.

Similarly – although not particularly relevant to the context of the Fair Work Act contraventions – if one has a contravention where the benefit derived from the contravention is financially very high, then the penalty will need to be higher than the value of the benefit derived in order to make sure that the penalty is not just treated as an acceptable cost of doing business – that is the ACCC v Reckitt kind of scenario.

The scenario of a repeat contravener is another example of - a determinedly recidivist contravener is another example where it does not matter that the contravention could have been worse in its objective features. If the contravention occurs in the pursuit of unlawful policy, then the statutory objective of trying to bring about compliance with the statutory regime calls for warrants and requires a penalty at or near the maximum.

It is not necessary to overlay principles from a very different criminal law context in order to ensure that that judicial task is performed appropriately. It certainly should not be subjected to the hard limit derived directly from Veen that has an explanation in reconciling complete sentencing principles. That just bears no sensible parallel in the civil penalty context once it is recognised that its concern is solely with deterrence.

In conclusion, our submission, which I hope is clear, is that it is not our case that there is some crossing of the Rubicon whereby you contravene X number of times and thereafter every contravention must be punished with the maximum. That is not what we are saying. But it is our submission that, where contraventions repeatedly occur in deliberate contravention of the law in pursuit of an unlawful policy, that is a factual matter for which a court is entitled to give very great weight and that is capable in and of itself of warranting the maximum penalty even if the other circumstances of the contravention are not of a kind that would be characterised as putting it in the worst kind of case.

Finally, just by way of completing an answer to your Honour Justice Gordon earlier this morning about the evidence, your Honour would have seen in the submission there was a reference to the affidavit of Sui Lee that had been sworn on 19 June. That affidavit is not before the High Court, but it is referred to in the index to Part B in the core appeal book, I am told, at tab 7, 164. I think that, given it was evidence below, if your Honour wants it, I believe that means we could provide it to the Court, so I am in your Honour’s hands. If the Court pleases.

KEANE J: Mr Solicitor, before you finish, what about Markarian?

MR DONAGHUE: Sorry, your Honour. So Markarian – can I ask your Honours to go back to 105 of the judgment which is also 105 of the core appeal book, in the quote from Reckitt. So, Reckitt is an example of the way the Federal Court has used Markarian. Markarian even in its own terms, even in the criminal law context, does not say the maximum is a mandatory matter to be given effect in every case. It says that it is often helpful as a matter to be taken into account together with all of the other relevant factors. In our submission, there is nothing wrong with that.

How one uses the maximum penalty in a civil penalty context will vary quite widely depending on the facts. So there might be cases, which I referred to quickly earlier this morning, where because of the number of contraventions, the maximum is so high that you cannot use it sensibly, and one could take, for example, the money‑laundering contraventions found against the Commonwealth Bank earlier this year or last year where the penalty was I think $1.1 billion and the maximum could have been vastly higher than that because there were hundreds of thousands or millions of contraventions that had occurred. So, in that kind of context, the notional maximum does not help, and you have to have regard to other matters.

On the other end of the scale, there are cases where there might be very little evidence of the kind Justice Gordon asked about – the parties might not have put evidence as to the financial position of the person, there might just be facts that show an agreed contravention has occurred with little evidence for the court to work from in terms of either specific or general deterrence and the court is trying to make a judgment as best it can as to the appropriate penalty in all of the circumstances.

There, the Federal Court would not uncommonly reach for the maximum, as some indication of Parliament’s ideas about how serious a contravention should be in order to assist it in setting the appropriate penalty. That, in our submission, is consistent with Markarian – but Markarian does not, in our understanding – in the civil penalty context – has not been understood as mandating an analysis that in every case says, is this contravention of the worst kind and only if I conclude that it is, is the maximum appropriate?

That step is just never taken in many cases imposing civil penalties, where the court might conclude that a civil penalty is the appropriate penalty – quite irrespective of whether or not the contravention could have been worse – simply because the maximum is in some cases less than the court thinks is necessary to deter – so it says, well I do not care whether this is the worst category or not, I need to impose this penalty in order to have any hope of deterring you and I will do so whether or not it is in the worst category case.

So, I think the short answer, your Honour, is that, in my submission, nothing that we put is inconsistent with Markarian, or the way that Markarian has been understood in the Federal Court.

GLEESON J: Mr Donaghue, I just had a question about Comcare v Banerji. The respondents referred to paragraphs 40 and 84 in
their written submissions. Am I right to understand that you do not perceive any tension between your case and what is said in those two paragraphs?

MR DONAGHUE: You are, your Honour, because to the extent that - what is said in those two paragraphs is just that there can be some notion – “proportionality” is a word that can mean lots of different things. When it means something like reasonableness or requiring an assessment of that kind, all that Banerji is saying, in my submission, it does not add to the statutory word “appropriate”, but it does not create difficulties of the kind that are created by importing proportionality when it carries with it the Veen (No 2) meaning, which is the problem that we identify. So, yes the words are the same, but their legal meaning is very different, and, in my submission, Banerji really says nothing that supports the kind of analysis that the Full Court engaged in.

Unless the Court has anything further, those are my submissions.

KIEFEL CJ: Yes, thank you, Mr Solicitor. Yes, Ms Doyle?

MS DOYLE: May it please the Court. I am still labouring under the disadvantage that the screen is frozen, but I gather there will be a workaround implemented at lunchtime. If I have any difficulty at all between now and then, it is likely to be not being able to figure out who is asking me a question. Other than that, I can hear ‑ ‑ ‑

KIEFEL CJ: Ms Doyle, would you prefer us to adjourn earlier and recommence after they have connected you in the way that they are intending to?

MS DOYLE: No, if your Honour pleases, I am content to soldier on until lunch time. I will let the Court know whether there is any difficulty that means I cannot. I can certainly get a good start.

KIEFEL CJ: All right, thank you.

MS DOYLE: If the Court pleases, the sole ground of appeal before the Court contends that the Full Court erred by treating the maximum penalty as a yardstick and as requiring that the highest penalty be reserved for contravening conduct of the most serious kind. The ground also contends that it is a consequence of the adoption by the Full Court of this so‑called erroneous yardstick approach that the maximum penalty cannot be imposed for contravening conduct that is not of the most serious and grave kind, even if that penalty is necessary in order to deter contravening conduct of the kind that has in fact occurred.

Your Honours, I am going to spend some time today on the import of that word “necessary” which I have emphasised. I pause here also to say, of course, it is obvious that the appellant’s submissions, and that was made good this morning by the Solicitor‑General’s submissions, raised two additional issues that might be seen to hang off that ground.

The first is whether section 546 of the Fair Work Act permits the imposition of the maximum penalty in respect of the contravening conduct at issue in a particular case, in cases other than that of the most serious and grave kind, and by reason only of the past contravening conduct of the contravener, and relatedly whether a principle of proportionality has any role to play with respect to the imposition of penalties for contravention of civil penalty provisions.

Now, I have described that as the sole ground of appeal and there is certainly enough in that to spawn a detailed argument today, but despite the number of layers, if you like, or limbs, to that sole ground of appeal we have this morning heard on a number of occasions a slide to what, in our submission, is not a ground of appeal before this Court, and that is the question of whether the Full Court or, potentially, even the primary judge below failed to give sufficient weight to the criterion or factor of whether one should act in a particular way or react in terms of the imposition of a penalty when faced with a well‑resourced contravener.

That is not the subject matter of this appeal. There was some evidence before the court about the financial standing of the Union which I will develop later this afternoon, to the extent it is relevant. But I wanted to make clear at the outset that the particular criterion which dates back to TPC v CSR and, of course, has been much more centrally enlivened, if you like, by the Volkswagen matter, is not before the Court here.

That is not surprising for a couple more reasons. Not only was it not part of the ground of appeal at either level, either before the Full Court or here, but there are of course legislative provisions now – and they are scattered through the Corporations Act, the Australian Securities Investments Commission Act and others – by dint of some changes introduced in 2019. There are provisions which empower the courts to fashion penalties based on percentage of annual turnover of a contravener and what shorthand called the multiple gain theory or, in other words, by having regard to, usually, the profits that have been garnered by dint of the contravening conduct.

I emphasise that phrase, “the contravening conduct”, because in those legislative provisions, one does not look just at the size of the contravener and its asset base or cash flow – which might be seen to be relevant to the first criterion I mentioned – percentage of annual turnover – but when one looks at multiple of gain, one looks at the profit derived from that contravening. Of course, the Court sees this as being front of mind in at least a couple of Full Court decisions of the Federal Court that come to mind – Reckitt, in relation to pharmaceuticals and Volkswagen, in relation to vehicles.

I divert also here to just refer to another phrase that gets a workout in many decisions and is also being invoked today – “the cost of doing business”. That is a phrase that is easy to trot out. It may often also be used in a merely colloquially sense – I accept that. But, to the extent that when the phrase is deployed in a manner designed to, or intended to, connote some sort of direct relationship to the price of wrongdoing – in other words, the dollar figure of a civil penalty – then it is as well to bear in mind that one is dealing here with a contravention under the Fair Work Act and by – at least in the case of the second respondent – a participant in Australia’s industrial relations system – a union, but also a registered organisation regulated by a suite of legislation now that deals with its requirements and obligations.

I am emphasising that because, of course – unlike Reckitt or Volkswagen or NW Frozen Foods or CSR – a union does not conduct a business in the traditional sense. It derives revenue – principally from its members’ union dues – but that revenue does not translate to a profit and is not sound in the price of a share or dividends returned to shareholders. Those are important matters when one too readily leans on the phrase “cost of doing business”, in my submission.

Can I say at the outset as well, a lot of attention has been directed by the Solicitor‑General to the reasons below and that relieves me of the need to rehearse them at length. But, if your Honours think back to the somewhat wordy way in which I described the sole ground of appeal, can I suggest that your Honours will find the way, at least, that the Full Court answered this – and we, of course, seek to vindicate that matter of so finding – you will find it in relatively few paragraphs in the sense that there is a lot of explication and a lot of analysis by the Full Court.

We do not seek to criticise the Full Court for that. Of course, we want to emphasise that, when read in context of the matters before the Full Court, it is hardly surprising that such a deal of analysis was required. I will mention a couple of reasons which that is so.

Firstly, a full Bench of five had been convened because of, if I can use a neutral term so far as I can, the difficulties and the differences of view that had been bedevilling the Full Court’s analysis of these matters in matters and decisions, including Broadway on Ann and Parker.

It is also important to remember what was before the Full Court. My clients were, of course, the moving party there and the Full Court was seized of a notice of appeal, on which we relied, in which it was contended by the appellants below that the primary judge had erred insofar as his Honour had found that a contravention could be or could be transformed into one of the gravest or most serious kind, warranting the imposition of the maximum penalty by reason only of a contravener’s priors.

Your Honours have also been taken to the trial judge’s reasons. You will find that sort of phraseology at 68, 82 and 84 of his Honour’s reasons. So that was the vice with which the Full Court was concerned, but it was also the Full Court’s burden to deal with a notice of contention on which the regulator relied below and the regulator’s notice of contention contended that, once a contravener’s antecedents reached a particular point or level, the maximum penalty ought to be imposed for any contravention, regardless of the objective seriousness of the acts and circumstances constituting that contravention. That the court below was concerned to deal with this notice of contention, as it was required to do, emerges at paragraphs in the Full Court’s reasons, including 198 and 201.

So, in defence, if I might, of the Full Court’s level of attention and level of attention to detail, it is of course important to bear in mind that the Full Court was dealing with a particular error that we submitted below had been detected in the approach of the primary judge and the regulator’s, if I might say, with respect, bold position pursuant to its notice of contention with respect to the way in which the priors of particularly the second respondent might be deployed.

Against that background, can I suggest to your Honours that the way in which the Full Court ultimately answered the questions asked by this notice of appeal in this Court, while framed up by the context that I have just given, and grounded in a careful analysis of the history, is relatively easy to understand, I am going to work backwards and suggest that your Honours start with paragraph 227(3) of the reasons of Justices Besanko and Bromwich.

Your Honours will find this convenient, no doubt, because there in an elegant simplicity, their Honours reject, as the Solicitor‑General has already pointed out, reject in subparagraph (1) of 227 the Union’s position below, reject in 227(2) the highwater mark of the regulator’s position below, and chart what we submit is the middle ground in 227(3) where their Honours say:

Prior history may be relevant to an assessment of the seriousness or gravity of the instant contravening conduct –

So, first of all an endorsement of the use of priors:

but neither that history, nor the object of deterrence, can result in a penalty that is disproportionate to the contravening conduct itself –

I now want to walk your Honours through a very short list of paragraphs that we principally rely on. We of course say, as one would with any Full Court analysis, that you never pluck out paragraphs or cherry pick them and read them on their own; it is always against the background. There is an important sequence of paragraphs I want to draw to your Honours’ attention.

The first is paragraph 104 in the plurality’s reasons. If your Honours have that, you will see there is a very important leading sentence there. Some mileage has been made this morning of the length of time and the number of pages their Honours devoted to, if you like, the pre-agreed penalties phase of the development of jurisprudence in this arena and relatedly to criminal jurisprudence, but in our submission it is unfair to read the Full Court’s reasons without giving due weight to the leading line in paragraph 104 where, having looked at at least part of the survey that was the subject of the critique this morning, their Honours say:

These considerations –

in other words, everything that has come before:

must be assessed, now, in the clear light of the instruction of the High Court in the Agreed Penalties Case . . . If one accepts, as in our view one must by a reading of s 546 in the light the Agreed Penalties Case (HC), that the penalty is imposed to deter –

and I pause there to say obviously your Honours are saying with the purpose of deterring:

that it is imposed for the instant contravention and not for past (already penalised) contraventions or past (unpenalised, but unpleaded) contraventions, and (as one takes from s 546 and from the Full Court decisions set out –

earlier in their Honours’ reasons:

that the penalty is set at what is considered appropriate to deter contravention of such kind, guided by the statutory maximum penalty, but not at a level reasonably thought to exceed that purpose and thus be oppressive, one sees a notion of proportionality within the task set out in s 546.

There is very much packed into those sentences but of course if one just plucked out this paragraph without appreciating the scholarship that precedes it, one might be left unclear. But it is clear here that their Honours were aware of the history and aware of the instruction given by this Court. I will not read it because part of this has been touched on this morning and time will not permit, but of course we rely on the balance of that paragraph and in particular the last sentence:

Proportionality is not a free‑standing principle separate from the requirement of what is “appropriate” –

Their Honours are invoking the word of this provision in 546:

rather it is part of that assessment which will necessarily involve examining the nature of the contravention, and all the factors that rationally bear on the assessment of the need for deterrence in all the circumstances.

I am going to come back to some of that terminology, but of course it will not escape your Honours that “all the factors” includes a reference to those factors which have been established for a long time, at least since the decision in TPC v CSR of Justice French, as he then was. We also rely on paragraphs 105 to 106, and at 105 their Honours refer to the fact that:

The setting of a maximum penalty by Parliament is part of such a notion of proportionality.

Their Honours make an observation about what Parliament can be taken to be doing. In other words, when it sets a higher maximum for some contraventions than for others, it is signalling if you like those matters in respect of which the need for deterrence is the strongest.

I will come to this later in my submissions, but the Act at least as presently formed is fairly simple in its approach. There are really three tiers of offending, and then a fairly recent introduction of a notion of serious contraventions. Serious contraventions are only those which are.....and proven as such, some label that can be retrospectively applied. It is something one must articulate in the allegation, and there is a touchstone which requires proof of systematic conduct, not as some synonym for priors; systematic conduct constituting the instant contravention is a serious contravention under the Fair Work Act.

To return to paragraph 105, you will see their Honours invoke Markarian. That has been the subject of submissions this morning and some questions from the Bench that I will return to this afternoon. We also rely on paragraph 106, where their Honours go further in explaining – it would be like the Markarian yardstick notion or label in a broader context.

We also want to direct the Court’s attention to paragraphs 180 to 181. What is made clear in paragraph 180 is the proper use in the Full Court’s approach - the proper use to be made of “priors”. Importantly, a few lines down from the beginning of paragraph 180, one sees these words:

That proportional response is not blind to wilful recidivism, to asserted impunity from obedience to the law, or to any other aspect of intentional disobedience to the will of Parliament.

Your Honours will be aware there are many other passages in the plurality’s reasons which make it clear that their Honours correctly apprehended that a contravener’s priors – particularly those of a recidivist – can be called in aid in order to do a number of things – including (a) deny or repel any suggestion of leniency being afforded or extended and (b), in order to understand whether what is before the court – instant occasion – is an aberration, a mistake or something else – and the “something else” might be, in the right case with the right evidence, based on appropriate submissions – might be something which one can detect is wilful or even done with impunity, as per the language in paragraph 180.

Turning to paragraph 181, their Honours give some of the rationale for the position that they have marked out:

Were the statute to permit such penalisation -

and by there, their Honours are referring to something I perhaps I should not have skipped over - just above that, their Honours say to do otherwise would be – this is at the bottom of paragraph 180:

to untether the penal response from the nature and character of the instant contravention such that the penalty imposed can be seen to be undifferentiated between grades of conduct assessed and characterised on a principled basis.

I should have drawn that last part of 180 to your Honours’ attention – then moving to 181, their Honours say:

Were the statute to permit such penalisation: that is the imposition of a penalty disproportionate to the seriousness of the contravention –

and then their Honours remind the reader and us:

(having considered any willingness to disobey the law –

So, 180 tells you they are aware of that, they are keenly aware of it – they have repeated it again:

one would need the clearest words.

To give some context to why their Honours might say that there, well, it is because the Fair Work Act was introduced in 2009 against the backdrop of TPC v CSR, Markarian and a host of other cases, but most of all Veen – and section 76 of the Trade Practices Act had for a long time, as had its modern cognates, included the word “appropriate” in the penalising provisions.

The point their Honours are making in this more elliptical comment about “clearest words” – the point they are making includes that when the Fair Work Act provision 546 was introduced, if it were intended by Parliament to jettison proportionality, then one would expect it to say so.

Can I segue in to say that it is our submission – and of course we do not shy away from this – that if this Court in the Agreed Penalties Case had intended to jettison proportionality, it is likely to have said so either in that case or in the Non-Indemnification Personal Payment Case two years later. We do also ‑ ‑ ‑

KIEFEL CJ: Ms Doyle, this might be a convenient time – it is the Chief Justice.

MS DOYLE: Thank you, your Honour.

KIEFEL CJ: The Court will now adjourn until 2.15.

AT 12.47 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.16 PM:

KIEFEL CJ: Yes, Ms Doyle.

MS DOYLE: If the Court pleases. Before the break I was just completing a survey of the paragraphs that, in our submission, encapsulate the reasons of the plurality, or the basis upon which they reached the conclusion they did. The last paragraph that I was just about to go to is paragraph 194. So, to take your Honours back to that, it is a paragraph your Honours have had your attention directed to. It is the one where their Honours say:

The point is a subtle one –

referring back to the way in which we had put the matter on appeal below. Their Honours then describe it as:

important and real.

It is another example, if I might put it this way, of the Full Court recognising and making clear the use to which prior contraventions may be put. So, in the third sentence there their Honours say:

A demonstrated unwillingness to obey a law of Parliament can be seen to bear upon the seriousness of conduct that is a contravention of that law . . . The relevant question may be seen to be the demonstrated or inferred attitude or state of mind of the contravener to the law in question. That will be . . . taken into account –

That is but one of a number of examples of instances in the reasons where their Honours point to the use to be made of prior contraventions.

Now, as we say in point 1 of our summary of the oral submissions, part of the stepping‑off point for the difference between the parties is that in our submission the appellant has erroneously conflated two questions or two problems, if you like. The first question is why do we punish contraventions of civil penalty provisions? We accept that that answer has been clearly given in the Agreed Penalties Case and subsequently endorsed by the observations of this Court, so far as it touched upon this question, in the Personal Payment Case. The answer is, for the purpose of deterring contraventions of a like kind.

The second question, namely, how much ought we punish a contravener in the particular case, in our submission admits of a different answer and that is, on the basis that I will develop over this afternoon, an appropriate penalty ought to be fixed, in our submission, by having regard to the factors relevant both to the circumstances of the contraventions and the circumstances of the contravener.

But the big difference between us and the Commonwealth, the appellant in this appeal, is that in our submission one takes into account principles including proportionality. So, while we of course accept that deterrence is the primary, potentially even the sole purpose for which judicial discretion is exercised when fixing civil penalties, in our submission proportionality is a principle, along with others derived from criminal jurisprudence, which apply, perhaps not directly, perhaps by analogy but which apply and those criminal principles include parity, course of conduct and totality.

In our submission, the Commonwealth’s position does not explain how it is that ‑ for example, course of conduct and totality, both of which are concerned with avoidance of double punishment – that they survived the transplant, post Agreed Penalties decision, to the civil penalties regime when proportionality was left back at base, so to speak.

EDELMAN J: Ms Doyle, do you say that course of conduct and totality are separate principles from proportionality or are they part of a proportionality assessment itself?

MS DOYLE: Separate to the three grounded in the same object or purpose or principle. We say the course of conduct, totality, proportionality, are distinct principles but all of them are grounded in the avoidance of double punishment and, in our submission, the Commonwealth has not identified how it is that two of them travelled over to the civil penalty realm and one, proportionality, was left behind.

The Commonwealth’s submissions also proceed on the basis of a latent assumption that a recognition of the primacy of the purpose of deterrence has the result that the principle of proportionality is to be put to one side. I repeat really the rhetorical question from earlier: why is that so when course of conduct and totality have survived?

One of the questions asked this morning was about course of conduct. I think it was your Honour Justice Gleeson initially, but others may have also echoed this query - asked whether or not it remains relevant. In our submission, it does, and not only that, but there is a recent Full Court authority handed down in December last year in which these very issues came into play.

The decision involved the regulator, the registered organisation’s commissioner, and if your Honours will bear with me I will just turn up where I had a note of the citation. The decision is CEPU v Registered Organisations Commissioner [2020] FCAFC 232. I am not going to detain the Court by working through it, save to say it was handed down, as I say, very recently, and the Full Court there had occasion to look at whether the trial judge had erred in terms of dealing with the notion of course of conduct and I should say no application for special leave was made by admittedly a different regulator, but a Commonwealth regulator, Registered Organisations Commissioner, from that decision.

When one stands back and looks at the difference between the parties – I have had to summarise them in what I have just said, and I will go to them in more detail – but it might be helpful to look at those differences in the following way. The appellants, including the Union, urge upon this Court that one ought not use priors to overwhelm the objective character of what happened or of the contravention. Conversely, the Commonwealth it appears is urging through the submissions it has put – urging upon this Court that you ought not use what happened to control the outcome.

In the end it is really, as we say, that the Full Federal Court that has chartered the right third way or the middle way, including by dint of that very nice summary that I showed your Honours from the judgment of Justices Besanko and Bromwich at paragraph 227(3). In other words, the Full Court has said, well, both are relevant, namely, what happened and who did it, but neither is determinative.

So, insofar as we urge the position that one should not use who did it, or priors, to overwhelm what happened and the Commonwealth contends that one should not use what happened to control the level of penalty, we repeat that both are relevant – the contravener and the contravening conduct – but neither is determinative.

Before going to the rest of the points in our oral outline – or, perhaps, I will deal with it slightly out of order in order to pick up some of what has emerged this morning during submissions – I am going to go to point 4 in our summary and then cycle back to 2 and 3 and go through the others in order.

As we say in point 4 in our outline, in our submission the appellant’s approach confuses the purpose of imposing a civil penalty – which we accept is genuine specific deterrence – with some sort of posited judicial obligation – posited by the appellant – to objectively achieve specific deterrence.

In our submission, the question whether the exercise of the judicial discrimination to impose a civil penalty has miscarried in a particular case is the test and that traditionally – at least in the orthodox approach – does not involve interrogating supervening events in the search for empirical proof of effective deterrence – if what is meant by “effective deterrence” is proof that it is working or has worked.

I am emphasising this because the Commonwealth’s ground in its notice of appeal has set the bar high. Your Honours will recall the notice of appeal is at core appeal book, page 171. It has been recited so often you may not need to turn it up but that is where it appears. The ground is that the Full Court erred by treating the statutory maximum as a yardstick, and so on – I have really read that terminology this morning – I am directing attention to the last phrase:

even if that penalty is necessary in order to deter contravening conduct of the kind that has in fact occurred.

In our submission, the Commonwealth is required to make good what must be a deliberate use of the phrase “even if that penalty is necessary in order to deter”. To put it bluntly, the Commonwealth has pitched its appeal at the level necessary to achieve deterrence.

We accept that phrase might have been borrowed from the Volkswagen appeal where that phrase appears. I have not found it elsewhere – I do see it there. It is worth remembering that in the Volkswagen appeal, the Court was addressing a systemic contravention – not a series of priors – even priors that might look like a system or a policy – but what it found to be a systemic contravention – contravening conduct – borne of a system of deceiving consumers in a particular way and deceptively so.

The Court was also concerned with the question of profits derived. So, it was in that case that that other point that I raised this morning – the well‑resourced contravener – or the contravener who is making a profit from their deception – was front of mind for the Full Court, in our submission, very different from the circumstances here.

But there is a more fundamental vice with the way the Commonwealth has, in our submission, set the bar so high. I have described it as pitching its appeal at “necessary”. It has to show it is necessary to achieve deterrence here to impose the maximum on, at least, the Union. This is a departure, in our submission, from the orthodox focus upon whether the exercise of judicial discretion – here by the Full Court – in reimposing a penalty, whether it has miscarried.

It is not as if this is a slip by the Commonwealth in their notice of appeal or something for which they have departed in how they put their case because your Honours will see in their written submissions, at paragraph 25, they use the terminology that the Full Court has imposed penalties that:

manifestly fail to achieve –

the purpose of deterrence. But why am I emphasising this? Because the touchstone used by the Commonwealth is not imposed without adequate regard to – or proper regard to the purpose of deterrence. It has said “failed to achieve”. Your Honours will see the same sort of terminology in the Commonwealth’s appeal submissions at 53 – where there appears an assertion that there is no basis upon which the Full Court could have had any confidence that the penalties it imposed would achieve deterrence. The Commonwealth goes on to say this suggests the penalties were not calibrated to achieve deterrence.

Your Honours will see other variations on this theme in the reply submissions at paragraphs 6 and 17. The reply submissions at 6 refer to “calibrated to achieve”, and at 17 “plainly insufficient to deter future contraventions”. Each of the iterations I have pointed to relies on the same unifying theme, if you like, which is that the Commonwealth asserts that the maximum penalty is that which is required or necessary, and it seems to be a necessary implication that flows from their position, the only one capable of achieving, presumably, specific deterrence. We have heard a lot about general deterrence, and I am assuming that the Commonwealth is substantially focused on specific deterrence.

This is also a departure from the traditional approach wherein one would answer this question by reference to considerations such as whether the exercise of the judicial discretion has miscarried. One would not normally be working with this tight standard, namely, a contention that it seems the Commonwealth puts, that the maximum was the only penalty that could properly be imposed in respect of the instant contravention, consistently with the proper exercise of judicial discretion, or – and perhaps this is a question for the Solicitor‑General in reply – would the Commonwealth concede that there is a range of penalties, perhaps even at the upper end or within a certain percentage of the maximum, each of which would be consistent with a proper exercise of judicial discretion – because that is what this is, that is what it was by the trial judge and that is what it was in the hands of the Full Court – to impose a penalty under section 546, a section which uses the word “appropriate”. The Commonwealth has not, in our submission, ever explained why a penalty which is disproportionate to the objective circumstances of the contravention is appropriate.

It should also be noted, of course, that while the notice of appeal propounded by the appellants in the Full Court included a ground that the penalty imposed on the Union was manifestly excessive, the obverse is not true. There is no ground of appeal before this Court which contends that the penalty imposed on the second respondent, on the Union, is manifestly inadequate. The ground that I am talking about in the notice of appeal below is ground 1.7 and your Honours will find that at appeal book 56.

I say that, of course, because it is our submission that the Commonwealth needs to point to an error of principle, it needs to demonstrate that the maximum penalty – if it says that is what was necessary to achieve deterrence – and only the maximum penalty, was consistent with the proper exercise of judicial discretion, and they cannot find a safe harbour in a fallback position looking for a House v King error or something of that kind by retreating to manifestly inadequate. That appeal ground is not there.

I wonder also if one flips the Commonwealth’s position around the other way. Is it implicit in the regulator’s position that it asserts and perhaps could make good the proposition that if the maximum penalty is imposed from now on every time on the second respondent that this will achieve deterrence? This is perhaps echoing one of the questions asked by your Honour Justice Gleeson this morning. Is that what is being said?

Harking back to that question, your Honour Justice Gleeson asked the Solicitor‑General: if something is unlikely to deter does it mean it has been rendered futile? I am paraphrasing, it was something along those lines. The Solicitor‑General said no because the only alternative would be to throw up one’s hands. Your Honour then noted that there were other purposes possibly that might be called in aid like.....

We would add these other observations. One does not have to just throw up one’s hands. One could look to Parliament. It is for Parliament to change the maximum applicable penalty with respect to either freedom of association matters or section 349. I say “or 349” because one thing that appears to have been somewhat lost here is that the gravamen of this contravention is not the implementation of a freedom of association policy, it is a misrepresentation about its existence or effect but, in any event, it falls to Parliament to increase the applicable maximum for contravention either of section 349 or any other provision that pertains to freedom of association, or it falls to Parliament to alter the criteria that are to be looked to in order to ascertain whether a particular contravention is serious.

Your Honours will recall that before the luncheon adjournment I pointed out that there were some changes to the Act – I think it was 2017 – that rendered certain contraventions capable of being labelled serious contraventions, only if that is pleaded and only if that is made out. This comes from section 557A(1) of the Act where it is said that a serious contravention is one where:

(a) the person knowingly contravened the provision; and

(b) the person’s . . . contravention was part of a systematic pattern of conduct -

There are a number of factors prescribed by the legislature in 557A(2), including:

(a) the number of contraventions . . . committed by the person –

that go to satisfaction of that criterion of seriousness. That is available to the Parliament. If it wanted to showcase freedom of association contraventions or anything else, it could group them or define them differently such as to underscore that they are in the class of serious contraventions or that perhaps systemic patterns or systemic patterns of contravening are not required.

The third alternative would be to.....sentencing Acts around the various States of Australia do is define or identify some aggravating circumstances. There are examples in the statute books of criminal sentencing regimes that define priors or priors of particular kinds or aggravating circumstances as particular aggravating features that may serve to increase the sentence.

So, one might say that if one has committed a contravention of section 349 or a particular freedom of association provision a number of times, a different maximum attaches. Or one might say that, if one contravenes section 349, which prohibits misrepresentations, with additional aggravating factors like violence or a threat of the same, that it might catapult the contravener into a category of serious contravention.

That is not what the statute says, and it is obviously not what happened here and, in our submission, for many reasons it is significant that what happened here was not accompanied by aggression, violence or threats of the same. It is significant that it was a misrepresentation admitted pursuant to an admission to a rolled‑up plea to be a misrepresentation that was made either recklessly or knowingly but with no particular evidence of economic loss and with no violence, actual or threatened.

GAGELER J: Ms Doyle, could I ask you a question about the terminology you are using in your submissions?

MS DOYLE: Yes, your Honour.

GAGELER J: I am looking at your paragraph 1 and the two questions that you have framed. In the answer to your question 1 you have used the word “purpose”. Is that a reference to the purpose of the court or to some other purpose, and if it is a reference to the purpose of the court, is it using “purpose” in the sense of that which is sought to be achieved by the exercise of judicial power or is it using it in some other sense - that is question 1. Question 2, you framed it “How much ought we to punish in the particular case?” Who is the “we”?

MS DOYLE: Our rhetorical flourishes may have let us down there, your Honour. Working backwards, the “we” is the court but the use of – or any judicial officer exercising the discretion to penalise, but the language is used in that way because part of our submission develops an analysis of retributive theories – of punishment when compared with deterrence. One of them drifts into talking in that sort of language in that context, but the “we” is the court.

Working back to question 1, the “purpose” is the purpose of the provision, namely section 546, in the hands of a judicial officer exercising the discretion. So it must be – one directs one’s attention to whether what the judicial officer has done can be seen to be consistent with the purpose of the statute, namely deterring contraventions of a like kind and it is another part of our submission that that does not import, as I have said, a test for whether objectively this has been achieved, much less a search for empirical proof that it has been achieved. That is not that the touchstone that we would be familiar with in the context of administrative law or judicial review. It is obviously not how one determines appeals against sentence.

Can I give an example? If a judge in a criminal law context imposed a community corrections order, having received submissions that the reasons for judgment said the court found compelling, namely high prospects of rehabilitation, no need to send the person to prison, it is best that they are controlled through a community corrections order in the community.

Say there was an appeal against that disposition and, while waiting for the appeal to come on, the person reoffends while in the community. That fact cannot be called in aid to show that the judicial officer’s discretion miscarried. Their discretion is to be determined as against the backdrop of what was properly before them in evidence in the submissions that were made.

The subsequent contravention – or criminal activity – may of course – probably will – be centrally relevant to a re‑exercise of the sentencing discretion but cannot be used as a retrospective means to attack the proper exercise of the discretion. It is those sorts of considerations that underpin our submission about the difference between asking oneself the right question which, in our submission, is, was this penalty imposed consistently with the objects of this Act – and not the wrong question which is, in the real world, is it working, has it achieved it, will it achieve it? That is not the test, in our submission, when interrogating the correctness of the exercise of the discretion. One looks for an appellable error – judged against the usual test in terms of judicial discretion.

I am going now to move to paragraphs 2 and 3 of our oral submission outline, which I will deal with together because really they are two sides of the same coin. Your Honours will see in point 2, we make the point that:

Proportionality inheres in the task of imposing a penalty –

and we give three reasons: one, terminology in the Act – the court is empowered:

to impose an appropriate penalty –

and we add that:

A penalty which is disproportionate . . . could not be appropriate –

I will develop that in a moment. Two:

the judicial discretion . . . must be exercised reasonably –

That will involve me coming back to one of the questions that Justice Keane asked this morning. Three:

the object of deterrence is directed to deterring contraventions of a like kind –

What we mean there by emphasising those words, “a like kind”, is to make it clear that if the only object was deterrence, one might, from the beginning or at least after a certain point in time just impose the maximum to be sure that a particular contravener would always keep their nose clean in all respects with respect to anything on the long list of contraventions that one might either accidentally commit or wilfully commit under the Fair Work Act. That is not, in our submission, the way that the regime ought to be seen to work, nor is it the way that the principle should operate. It is deterrence of contraventions of a like kind.

We flip that around in ground 3, if you like, and put the reverse. We say the Commonwealth or the appellant’s position does not adequately explain why it is that a disproportionate penalty, when assessed against all the circumstances. Now, the long list of paragraphs that we put there from the plurality’s reasons I will not go to again; I have already highlighted some of them. But they are some of the many places where the plurality make it clear that they understand there is an important role to be played, having regard to contraveners’ priors.

You have been told a bit about section 546 already and some things are obvious and notorious. It is the empowering provision, and of course section 546(2) provides that the pecuniary penalty must not be more than the maximum set by section 539(2). Your Honours will probably know different maxima are set for bodies corporate and individuals; nothing surprising about that.

But when one looks at the overall structure of the Act, there are different classes of maxima provided for in relation to different types of contraventions. I will come back to that in a moment. But we say it is important that the Commonwealth has identified those contraventions which it says should be met with a particular maximum, which is a cap, and a yardstick in the Markarian sense again, something I am going to develop in a moment.

One other item of history, if you like, of this provision that is important to bear in mind is I mentioned in passing this morning that the long history of cases in which section 76 of the Trade Practices Act is in play, it is worth remembering that that section used the same terminology. It referred to the penalty that:

the Court determines to be appropriate having regard to all relevant matters including the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission, the circumstances in which the act or omission took place and whether the person has previously been found . . . to have engaged in any similar conduct.

I am reading from the version of the Act as it appears in Trade Practices Commission v Stihl Chain Saws, a 1978 decision. It remained in very similar form at the time of Justice French’s decision in CSR. Similarly, in NW Frozen Foods, the Full Court’s decision in 1996. Similarly, the Full Court’s decision in Dataline in 2007, and through to today. At the same time, the industrial legislation ‑ ‑ ‑

STEWARD J: Ms Doyle, just before you go on, whilst you are mentioning CSR, could I ask you is it your case that there is something wrong about Justice French’s reasoning and the factors his Honour said we should often consider or, alternatively, that there is something incomplete about them?

MS DOYLE: There is nothing wrong with them, your Honour. There is one thing we would add, and this can be easily found by going to the plurality’s reasons at paragraph 99. So, at 99 – it is a handy recitation, or extract, of the criteria – the factors, I should say – there. Your Honours will see that under the heading “The appropriate penalty” and there is the extract from Justice French’s reasons. If you read down, in paragraph 99 of the plurality’s reasons you will see, just after the citation for Kelly v Fitzpatrick, their Honours says:

To the list of French J may be added, to the extent that it is not inherent within his Honour’s list, the apparent attitude of the contravenor to compliance with the relevant law of Parliament.

Then their Honours give the traditional caution which one sees in decisions like Ophthalmic and elsewhere:

Such lists are (unless found in a relevant statutory provision) –

Relevant to the point I was just making about the history of the Act:

not legal check lists. They are judicial descriptions of likely relevant considerations applicable to the task of coming to an appropriate penalty in the circumstances of varied cases –

and then, in fact, their Honours go on to cite Ophthalmic. They point to the utility of such lists, and then at 100, again underscoring the assistance that might be derived from such factors. So, in answer to your Honour Justice Steward’s question, there is nothing wrong with them but there is an essential addition and we embrace and endorse the reasons of the plurality in that respect.

KIEFEL CJ: Ms Doyle, how does one determine the apparent attitude of the contravener to compliance with the relevant law?

MS DOYLE: This is something ‑ ‑ ‑

KIEFEL CJ: Is it by reference to past conduct?

MS DOYLE: Yes, that is one relevant way. The plurality made the point that it has become convenient, if not a crutch, for people to, in submissions, on both sides, point to priors as proof of an attitude as if that were the sole mode and as if to say it were to make it so, and they cast some doubt on whether that it will always be appropriate or enough. But I do not need to intrude on that debate in this case because, for the purposes of this appeal, we accept that priors may be used, as the Full Court has said in various different ways, but always with this in mind ‑ ‑ ‑

KIEFEL CJ: Would you agree, Ms Doyle, that in this case a review of past conduct indicates that the Union is pursuing a policy?

MS DOYLE: I appreciate it has been said against us. There has been no appeal against the trial judge’s findings at paragraph 84. I do want to say something about that, and even the assignment of the label “findings” in the traditional sense to his Honour’s reasons at 84. His Honour’s reasons at 84, which touch on this very policy of which your Honour the Chief Justice speaks, are not, in our respectful submission, either findings in the traditional sense, namely, on the basis of evidence that was before his Honour, or things that it could be said we needed to appeal in order to criticise them.

One does not appeal reasons, of course, and when one pulls them apart, with the greatest of respect, a number of his Honour’s observations are recitations of observations made in other very different cases with some flourishes. But they are not a finding that there was evidence before the court of either the terms of any such policy or of the way in which it is implemented.

Can I take your Honours to the trial judge’s reasons at 84, just for the purpose of identifying how we parse that paragraph, if you like. I think your Honours have been taken to this, so I will not detain the Court by reading it, but your Honours will see that the way that the trial judge below set out paragraph 84, his Honour said:

admits only of the following conclusions –

and then sets out three things:

(1) it –

and here it is the Union:

favours a policy of “no ticket, no start” and holds that philosophy . . . as preferable to the law of the land -

If what his Honour means by that is to say that in this case and in others to which he has had regard in the table of priors, there was an admission or a finding that things done or said in relation to the policy were deliberate, in the sense that they were not said or done by an automaton or someone affected by some other relevant consideration of that kind, then we could not disagree. But that is not to say much, because there has been, in this case, an admission of a contravention. Then as to subparagraph (2), his Honour says:

(2) it appears to be wholly unmoved by the prospect that it might be forced yet again to dig into its members’ “big pots of gold” -

Being cognizant of the fact that that is a quotation from Justice McDonald in an economic tort case in the Supreme Court of Victoria, it did not appear to be a matter either necessary or desirable to be appealed as such. It is not a finding, it is a reference to something that was said by a judge in another context in an economic tort case.

One, if one did seek to appeal it, would run smack into section 91 of the Evidence Act, for example, and the rule in Hollington v Hewthorn where it is found that evidence of a decision, or a finding of fact in an Australian or overseas proceeding is not admissible to prove the existence of that fact if it was an issue in a proceeding. But it is those sorts of considerations that put that in context. As to subparagraph (3) – I have already said something about this - his Honour says, it, the Union:

regards doing so as an acceptable cost of the way that it conducts its affairs‑the misconduct in this case is but the latest example of the Union’s strategy -

picking up from Justice Mortimer in a different context, her Honour’s criticism of the difference between the Union co‑operating and not showing contrition. I will not detain the Court with another debate on that topic. That has been squarely answered by this Court in the indemnification case. Contrition is afforded or treated as having utilitarian value, and Justice Mortimer there was critiquing what her Honour detected was, her Honour said, a strategy of pleading fairly close to the courtroom door, or, on occasions when the allegations appeared overwhelming – a different point from what is at issue here.

So, to go back to your Honour the Chief Justice’s question, the trial judge did say that. It has been said against us, including by the Full Court that there was no appeal from that prior. In our respectful submission, we did not need to to propound the grounds that we did in the Full Court and we did not need to unsettle that paragraph to run the ground of appeal that we successfully did.

When one parses that paragraph, it really could have been open to the distinct criticism that we were seeking to appeal reasons, or his Honour’s mode of expressing his extreme distaste for the conduct of the contravener viewed through the prism of its priors and, of course, on this appeal, we do not dispute that his Honour is entitled to do that. We just say that those priors cannot be used to overwhelm the objective circumstances of the contravention in the particular case.

So, your Honour the Chief Justice asked whether there was a finding or whether there is such a policy. That is the finding, such as it is, but we seek to put it in the context that I have just indicated to the Court with that additional point that I have emphasised, namely, of course, this was not a contravention of a freedom of association provision. At its highest, it was a contravention of a prohibition on misrepresentation about whether such a policy exists or is being implemented on a particular worksite.

Before I conclude our grounds 2 and 3, I should say something about the question of reasonableness, particularly so because your Honour Justice Keane raised it this morning. We, of course, endorse the Full Court’s conclusion that there is a notion of proportionality that inheres in the common law principle of reasonableness, or in a reasonable exercise of the judicial discretion. The Full Court refers to this at paragraphs, including 92, 100, 107, 109 and 111. It is there that their Honours say the:

proportionality inheres . . . in the notion of the reasonableness of an appropriate judicial response to contraventions ‑

This, of course, has a history to it, including the observations of the Full Court in NW Frozen Foods where the Full Court there made specific reference to the need to secure a:

“balance” between the “insistence upon the deterrent quality of the penalty” and –

a requirement:

that the penalty not be greater than is necessary to achieve the object of deterrence –

That brings me nicely to ground 5, because ground 5 is where we grapple with this issue. We accept that deterrence is the principal purpose of fixing civil penalties.....and we could not say otherwise. We, of course, refer to the Agreed Penalties Case at paragraph 55 and the Penalty Indemnification Case at 42 and 116. But here is where we and the appellant part company. It is the respondents’ position that there is nothing in the Agreed Penalties Case, or in its rejection of retributive theory as a punishment, which involved some recognition or suggestion that this requires jettisoning the consideration of proportionality when fixing an appropriate penalty.

The Court did not call that into question in the Agreed Penalties Case, it said nothing about it in the Indemnification Case and, in our submission, that is not surprising. The appropriateness of a multifactorial assessment of the type used by Justice French ‑ and everyone since ‑ in CSR is of longstanding.

I have already made this point, but it hangs off paragraph 5(c) of our outline. The relevance of other criminal sentencing principles like totality, parity, course of conduct – I have principally highlighted totality and course of conduct because of what we say is the startling reality that they are grounded in avoidance of double punishment, along with proportionality. How could it be, in our submission, that two of them survived the journey to civil penalties and the fixing of the same and proportionality was left behind?

This also takes us to points 6 and 7 in our oral outline. Point 6 is where we talk about the history. Since Stihl Chain Saws in the 1970s there have been references to proportionality, and it is part of our submission that CSR and the cases since CSR demonstrate a hybrid, if you like, demonstrate a process of having regard to factors traditionally associated with retributive theories, and others whose origins lie in deterrence.

As we say in point 7 in our outline, this hybrid approach has survived a lot of other changes, changes on the statutory front and changes in terms of decisions of this Court. If we use the Agreed Penalties Case as a marker, the simple version of our submission goes like this. Between CSR and the Agreed Penalties Case, the multifactorial approach was used - Justice French’s criteria and proportionality as a principle.

The Agreed Penalties decision was handed down – of course the Court there was focused on correcting an error that had arisen, and we see the analogy, had arisen in the use of a criminal approach in terms of penalties put to a court in submission in a civil penalty arena. But with that very issue having been enlivened, the Court did not digest that all criminal principles were to be jettisoned.

Then in a similar context in the Non-Indemnification Case, the matter came back to the Court and it did not suggest otherwise, and the Full Federal Court continued to apply this hybrid or multifactorial approach in Full Court decisions afterwards, without anyone suggesting that it was in error because of something said in the Agreed Penalties Case.

In other words, if proportionality was uncoupled from the wagon back at the time that the Agreed Penalties Case was decided, everyone failed to detect it, and a number of Full Courts said nothing about the absence of proportionality when these matters came back before the Full Court, both in industrial cases and in commercial or corporate cases. I want to take the Court to TPC v CSR just to identify the passages that we point to. Your Honours will find that in the joint book of authorities at 1643.

EDELMAN J: Sorry, Ms Doyle, which tab is that?

MS DOYLE: I apologise, I will have to cross‑reference it, if you would just excuse me ‑ ‑ ‑

GLEESON J: Tab 21.

MS DOYLE: I am grateful for the indication. I am sorry I have pulled the case out from the folder. Another difficulty is my print has some of the pages cut off, but if your Honour move to page 33, using the print numbers - sorry, are your Honours able to find that? I may have led you astray because I am using a version that has the pagination obscured.

KIEFEL CJ: Do you have the pagination of the joint book of authorities ‑ ‑ ‑

MS DOYLE: Yes, I will just find ‑ ‑ ‑

KIEFEL CJ: It starts at 1643.

MS DOYLE: At 1659 your Honours will see the nine factors to which I have already directed attention at the bottom of the page. Now, above that, about three paragraphs down from the top, your Honours will see a sentence that starts “Punishment”:

Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by –

what was then Part IV of the Trade Practices Act -

Nor, if it be necessary to say so, is there any compensatory element in the penalty fixing process -

Now, what is important to observe about that when read with the factors that sit below it, is this. Insofar as his Honour refers there to morality, it is perhaps best to read his Honour’s observations in the following way. His Honour was at pains to point out that when, or now that we are regulating effectively economic matters, companies, corporations, the market – morality, in a biblical sense, has no role to play because what one is concerned with – and his Honour was obviously looking at the Trade Practices Act, but you would say nothing different with respect to the modern Consumer and Competition Act, is that regulation of information in the market, competition or anti‑competitive practices, standards of corporate behaviour, sometimes moral language is used, but in reality, what the statute is doing is regulating commercial and industrial norms – it is not a moral question. It is often a political question. It may be a policy question – the policy may change when the government of the day changes, but it does not have to.

The Act or the Trade Practices Act in its modern cognates are about regulating the market and the players in the market. The Workplace Regulations Act, and all of its earlier iterations are about regulating the labour market. Languages of morality often intrude, and, with respect, the trial judge’s observations and reasons at paragraph 84 are an example of that. But it is all about regulation of just another market, a labour market, and the way ‑ ‑ ‑

STEWARD J: Ms Doyle, I am sorry to ask you a question, but just looking at the nine factors in Justice French’s reasons, do you accept that on the facts of the given case, and it is a very factual test, that it is possible that any one of those nine factors could, perhaps in combination with other factors, justify the award or the imposition of the highest penalty in a given case?

MS DOYLE: It is possible, your Honour. I will pass on an example. It is possible that items 1 and 4 taken together might. I am going to draw on Reckitt as an example, but I am probably distorting the actual facts in that case, but a pharmaceuticals company might be huge, and what I mean by that is significant assets but most importantly income, derived from the nature and extent of the contravening conduct, namely, misleading consumers about the attributes of the drug itself.

So, one might then say that either 1 or 4 or the two of them together might justify the imposition of the maximum, but what is interesting is on the Solicitor‑General’s case they could not because unless it was also the case that the pharmaceuticals company was a terrible recidivist, then it would not in general enliven that approach.

STEWARD J: Does that mean that you accept that factor 8 might, on the facts of a given case, justify, together perhaps with other matters, the highest penalty?

MS DOYLE: It might, your Honour, but only because of the way in which his Honour Justice French phrased it, because his Honour there is saying that where – one assumes that what his Honour is saying is a company has been proven, or found, to have a corporate culture conducive to ‑ whether or not it has a corporate culture conducive to compliance with the Act and his Honour is not just there talking about priors. His Honour is talking about the very thing that the plurality said was missing here when they observed – I will just remind myself of the paragraph. Their Honours observed that – it is at paragraph 194:

How one approaches, properly and fairly, the proof of such a present state of disobedience relevant to the instant contravention was not explored in argument.

Now, I am assuming that in Justice French’s paragraph 8, or item 8, his Honour is talking about a case where it is proven, so there might be a body of priors and some other imported material that shows either these companies never had any policies – I will return to that Reckitt or pharmaceuticals example – these companies never had any policies apt to weed out misrepresentations. If they are made by over‑eager sales people, there is no quality control, there is no one who ensures that those things do not go out into the marketplace or, conversely, they had all the systems, but something went wrong on this occasion. In the latter case, leniency will prevail. In the former, none might be afforded.

So, the only reason I gave that somewhat cagey answer to your Honour Justice Steward is ‑ if I read into the particular way his Honour has phrased it ‑ that there is proof of the type that the plurality said in 194 they observed somewhat wryly was missing here. The priors are a fact but there was no evidence before either the learned trial judge or the Court of Appeal sufficient to plug that gap and join the dots, if you like, between a string of priors, admitted, found – many of them admitted – and the something more, and the something more is what does it tell you about the attitude?

It tells you something, harking back to the question the Chief Justice asked before. It tells you something, but does it tell you everything that is in paragraph 8? Not necessarily. It does not tell you whether there was a system to pick up non‑compliance. It does not tell you ‑ ‑ ‑

STEWARD J: I am sorry to disturb you. Just so I can understand your argument, does that mean that if there had been proof, as you put it, of things that might have justified the findings at paragraph 84 of the primary judge’s judgment, then that might have justified a higher penalty? Is that what it comes down to?

MS DOYLE: It is possible. It is always a question of weighing all the factors. I could not rule it out. Just dealing with your hypothetical, I could not rule it out.

EDELMAN J: Ms Doyle, is the hypothetical to which Justice Steward refers not reasonably close to Broadway on Ann?

MS DOYLE: It may be, but it is always worksite and branch specific, so I am conscious of the fact that it may depend – or it probably is elucidated by the reality that in that case there was more evidentiary material about who had done what and in what particular context. It is probably a good stepping‑off point for me to make a couple of observations I want to make about the contravention here.

Your Honours will be familiar with this. It is in both judgments below. But Mr Pattinson, a natural person, a person in the real world who is at issue here, had no priors. There is a bit of a tension between the findings of the trial judge and the Full Court with respect to his circumstances. They both agree, as is the fact, that he had been a member of the Union since 1995 and a delegate since 1997.

Can I emphasise in case it has been lost in all the ink that has been spilt on the topic of proportionality that this gentleman is not an elected official of the Union who would sit in an office in Melbourne, in Melbourne’s CBD. He is an elected representative of workers employed by Multiplex. He worked on a building site, building buildings.

So, when the trial judge referred to him a couple of times as a senior participant, to the extent that that might be a synonym with “of longstanding” or even his age, we do not cavil with it. But the judgment of the plurality put this right at paragraph 218 where their Honours said he:

was not a senior union official, but he had been a site delegate since 1997.

Can I add at the risk of being a little flippant: senior, yes, he was, in the sense of long‑serving; senior in the sense of a senior citizen, yes, that too. The gentleman is 70. He has retired from building. That raises some interesting questions, not least of which is, if this Court were to find that the discretion had miscarried below, and if any occasion arose to reimpose sentence, specific deterrence is a non‑issue with respect to Mr Pattinson who has retired from the building industry at the age of 70. Those features personal to Mr Pattinson are important to him and no doubt explain why on both occasions fairly low penalties were imposed.

But the circumstances of the contravention are also by no means in the most serious category of offending, even the most serious category of offending with respect to issues that impinge on freedom of association. It was uncontroversial at both levels below that this was pleaded – or alleged to be and admitted to be two contraventions, but two contraventions in such a technical sense as this, two contraventions because there were two members of the audience.

One misrepresentation was made to two people so, in other words, it affected an audience of two. It was a short conversation and, as I have already emphasised, with no violence or threat of..... There was no evidence of loss or damage from the contravention. Their Honours below at 217 and 220 made the point it was objectively less serious than a number of previous “no ticket, no start” cases.

What is now probably becoming my boring, repetitive quibble with that is, yes, but save to say it is not a “no ticket, no start” case, it is a case about a misrepresentation pertaining to whether such a policy existed. Your Honours will recall that I have noted, as the plurality does at 212, that there was an admission to a somewhat rolled‑up allegation, so it leads to what the plurality called a little equivocation, namely, Mr Pattinson was to be treated as if he was either reckless or knew that what he said was a misrepresentation.

What did he say? Well, he asked these two gentlemen whether they were union and whether they had a ticket. He was told, “No, we’re not a union‑based company and we don’t have one”. I am now referring to the particulars to the allegation, and these appear in the book of further materials at page 9,and of course the observation has been made you do not plead to particulars, nor did the Union do so. They just agreed the headline allegation. The particulars have Mr Pattinson saying:

“If you don’t have your card you are not working on the site. Everyone’s sort of fair around here. If you guys aren’t paying your fees and everyone else on the site is unionised and has paid fees, it’s not fair for you guys to work on the site. So, I am going to ask you guys to leave. You guys have to get off site. Here’s a hot tip. If you want to work on a big site like this, say like Lend Lease or Multiplex, you’re going to need to have your union ticket.”

It is not disputed they did leave and did not work on that day. But what is interesting and, in our submission, instructive is Mr Pattinson did not invoke the name of the Union. He invoked the name of his employer, Multiplex. He gave the audience of two a tip and he referred to fairness vis‑à‑vis the other workers on the building site.

So, not only was it a short conversation – three contraventions but to an audience of two who heard it at the same time – that is no doubt why (a) the penalty on Mr Pattinson was pretty low and (b) the course of conduct principle was deployed by both the trial judge and the Full Court in favour of he and the Union. They deployed it differently, but the important additional observation is that the Full Court was very alive to the fact that the contravening conduct should be judged differently in the hands of the Union as opposed to Mr Pattinson.

It was for that reason that, with respect to Mr Pattinson, the penalty ultimately imposed on him – combined penalty of 4,500 by the Full Court – one could look at that and say it is either about 35 per cent of the maximum available to Mr Pattinson, which was 12,600 for one contravention, or 18 per cent of two. Then with respect to the Union, a very different outcome, a much higher percentage of the maximum. If one is looking at one contravention, 63,000 was the available statutory maximum, just over 63 per cent of one contravention was imposed on the Union when 40,000 was imposed, or 31 per cent of two contraventions.

I have made this point before, there is no appeal or cross‑appeal at either level about their Honours – both the trial judge and the Full Court’s application of course of conduct and in the result, in our submission, it is telling and important that ultimately the disposition with respect to the Union was about 28 per cent more of the maximum than with respect to Mr Pattinson. In other words, there is discernment.

The Full Court well understood that it should look at the objective circumstances of the contravening as part of a multifactorial approach along with a number of other matters, characterise the seriousness, look at all the other matters and then in the hands of contravener one, Mr Pattinson, a relatively low penalty should be the case given he is a cleanskin with no priors, despite his long period of membership and long period acting as a delegate on the site, very different outcome with respect to the corporate offender who had the priors.

I am going to jump to ground 8, having dealt with 5, 6 and 7 somewhat together, and make some brief submissions about the conceptual underpinnings of the two theories that have come into consideration in this appeal - retributive theories, punishment and the concept or theory of deterrence.

Now, it is an additional submission advanced by the respondents, that even if one were to say because the sole purpose of fixing civil penalties is deterrence, one cannot look to anything drawn from a retributive theory – we do not necessarily accept that that is the case, I have just spent a lot of time talking about why hybrid is available and appropriate – but even if that were to be the case, the utilitarian origins of the theory of deterrence also demand a proportionate response, because taken back to those utilitarian origins and understanding that basis for punishment in a civil penalties sense, deterrence itself calls for different levels of response or the imposition or provision for different levels of deterrence in response to relatively minor contraventions compared with the more serious contraventions at the other end.

Can I just go back to basics for a moment and, of course, remind your Honours that a retributive approach is one which has the offender or contravener should receive their just deserts for violating the law. Now, as Justice French has said, that originally and, at least, in crime has a moral underpinning. But when one moves to the sphere of economic regulation and I have posited an analogy with labour market regulation, one pulls out the morality, but one might keep the concern with retribution.

But when one is in the realm of a retributive approach, punishment is its own end. There is a moral imperative or an economic regulation imperative for an offender or contravener to receive their just deserts and it has, therefore, traditionally been said in that realm that the punishment or the penalty must be proportionate.

Within retributive theories it is also necessary, of course, to look for criteria, or to have some criteria upon which to assess seriousness, and seriousness is generally assessed by having reference to probability, harm caused and so on – harm caused to the victim and so on. So, it is clear that proportionality inheres in retributive theories.

I want to make good to your Honours the proposition that it is also not absent from deterrence. Deterrence has its origins in utilitarian theories which justify punishment by reference to the beneficial effects, in other words, the greatest good, greatest possible good, in preventing or reducing future unlawful conduct. We say in our written submissions the origins can be traced back to Plato and they have then been developed by a classical theorist like Bentham.

But here is something we want to say about deterrence. While the retributive approach involves punishment as an end in itself, specific deterrence, focusing on that for a moment, relies on the pain or the sting of punishment as a means of seeking to deter future contraventions. That phrase, “the sting or the pain of punishment”, turns up in the decision of Justices Keane, Nettle and Gordon – and your Honours Justices Keane and Gordon were, of course, in the Penalty Indemnification Case – and your Honours used that terminology at paragraphs 113 and 116, “the sting or burden”.

Now, your Honours were obviously – particularly given the background against which that case was determined following on from Agreed Penalties – cognisant of what had been said there, the purpose is deterrence. But your Honours, nevertheless emphasised, along with Justice Nettle, that sting or burden is important. Why? Because it helps to teach people a lesson and it helps to educate them not to do it again, to put it in very simple and blunt terms.

There are some other features about deterrence that it is important to bear in mind. It, of course, assumes a rational act ‑ assumes that the contravener is a rational actor, and it posits that contraveners are rationally self‑interested actors who will not engage in unlawful conduct if the cost, the pain or the sting of the punishment exceeds the benefit. In particular, in the economic regulation version of deterrence, punishment is simply the price of violating the law.

It is because I am aware of that underpinning of the theory of deterrence that I made the submission I made earlier this afternoon, that the price of doing business is something that is easy to say but, of course, is that necessarily a problem? When one looks at it through this prism, deterrence is precisely about making someone pay enough that they will not do it again, but utilitarian theorists, of course, see waste and inutility in making someone pay too much.

So, there is an important balance to be struck there and, in our submission, that balance is just another version of proportionality. There is no reason why proportionality does not inhere in notions of deterrence. One other observation to make about deterrence is it is primarily in a moral consequentialist model and that is why it is well and truly apt to deal with regulation of the market – whether it be the money market or the labour market.

STEWARD J: Does that mean, Ms Doyle – and one last question – that, on that submission, a penalty which is apt to deter and do no more than that, is precautional?

MS DOYLE: Yes.

STEWARD J: Thank you. I think we might have lost the Solicitor‑General.

MS DOYLE: I will have one of my team ‑ ‑ ‑

KIEFEL CJ: We will deal with it, Ms Doyle. Solicitor‑General, Mr Solicitor, can you hear us? No. We will have to adjourn until we can re‑establish a connection.

AT 3.23 PM SHORT ADJOURNMENT

UPON RESUMING AT 3.31 PM:

KIEFEL CJ: Mr Solicitor, I understand that you cannot see Ms Doyle. I do not know whether you now have images of the Justices?

MR DONAGHUE: I can see all the Justices, I cannot see Ms Doyle, but we are quite content to proceed without.

KIEFEL CJ: Thank you, Mr Solicitor. Yes, Ms Doyle.

MS DOYLE: Thank you. I need to backtrack to the question asked by Justice Steward just before the break. I think I.....the import of your Honours question, or perhaps was also distracted. Your Honour asked me if a penalty is apt to deter and does no more, whether it is proportionate. There is probably a need to be very clear about the meaning of the phrase “apt to deter”. I said yes, but what I meant was, only if the penalty is imposed with the requisite purpose, and the purpose is that of deterrence.

Then it still begs one more question that I ought to have pointed out needs to also then be added on to your Honour’s observation, and that is, proportionate to what? It is the respondents’ submission that the answer to that question is proportionate to the instant contravention, so I was missing a part of the answer. I apologise for that, your Honour.

STEWARD J: Thank you for that.

MS DOYLE: I was addressing the underpinnings of both the retributive theories of punishment, but then the deterrence model. If one goes back to the origins of the model, it is one which has always had it that punishment should be:

graduated to commensurate with the seriousness of the offence . . . Absent proportionality, potential offenders would not be deterred from committing serious offences any more than minor ones -

I have taken that quotation from the analysis of the utilitarian underpinnings in the article of Mr Bagaric, which appears in the joint book of authorities volume 7, commencing at page 1805, and in particular we commend to the Court the learned author’s observations at pages 1818 to 1819.

Without reading them at length, your Honours will see in particular on those two pages, 1818 to 1819, a powerful analysis, in our submission, of the role that proportionality has to play in utilitarian theories of punishment. If your Honours have managed to turn that up you will see it under a bold heading, “Utilitarianism and Proportionality”. The author says:

Proportionality has traditionally been thought to have no role in a utilitarian theory of punishment. However, Bentham outlined a general argument which provides a utilitarian justification for proportionality: ‘the greater the mischief of the offence, the greater is the expense, which it may be worthwhile to be at, in the way of punishment’ -

Can I commend to your Honours the balance of that page and through to the next heading on page 1819 where these matters are explored. You will see similar observations in the article at 1807 and, indeed, generally at 1816 to 1821. I mentioned earlier the utilitarian concern with deterrence also has it that an excessive punishment is one which is inutile, it is also capricious and unjustifiable, and those are other matters highlighted by the learned author in this article.

While your Honours are in this volume of the joint book, I might backtrack to the very useful article of Yeung, which starts at page 1769, and the author of this article, in our submission, makes a powerful assessment of the different underpinnings between the deterrent approach and the retributive approach, but also explains why it may be, and why it ought to be, that a hybrid approach is perfectly appropriate, in other words, an approach that draws both on deterrent theories and retributive theories.

We commend the entire article to the Court but with particular reference to these pages: 1774, 1775, 1781 and 1782 to 1785. Can I show your Honours as well that on the way through the author assists with a very helpful analysis of the CSR case. That appears in the author’s article at page 1798 in the joint book and you will see there the very familiar setting out of the nine factors that we have spent some time on, the nine factors of Justice French.

Then over on page 1799 the “Morality has no role to play” extract, to which I already drew the Court’s attention. What the author then does, in our submission in a very helpful way, is track through other Full Court decisions like NW Frozen Foods, on the balance of page 1799 and then makes this interesting observation at page 1800, Your Honours see at the bottom of page 1800, there the learned author says:

A closer examination of the comments made by French J in CSR reveals that he conflated the substantive rules for determining whether a contravention of the TPA has occurred with the principles to be applied in determining the level of penalty for contravention -

in other words, confused the question of breach with the question of penalty and there is an interesting analysis that follows. Halfway down page 1801, the author says:

Furthermore, on a closer examination of the nine factors . . . six are concerned with matters of culpability and cannot be easily reconciled with the deterrence theory . . . nor regarded as devoid of moral content.

I posited to your Honours another way of reading what his Honour says about moral content and that is strip the Bible out of it when one is talking about regulating the market – that is perhaps one solution when one looks with modern eyes back at what his Honour said about the Old and New Testaments.

Another analysis and one that is equally powerful, in our submission, is that which the author propounds here and that is perhaps there has been a conflation or a knowing utilisation by his Honour of both retributive theories and factors and those that have their origins in deterrence.

Just because it is a handy place to find it, if your Honours turn to page 1802, you will also see that the author sets out the old quotation of Justice Smithers in Stihl Chain Saws. Right back then in this 1978 decision you will see that it is said:

The penalty should constitute a real punishment proportionate to the deliberation with which the defendant contravened the provisions of the Act.

I suspect and predict it will be said against me that that is before the Agreed Penalties Case. It is, but as I have developed, particularly when addressing grounds 5 and 6 of our outline, there has been no walking away from proportionality either by this Court or by the Full Federal Court since the decision in the Agreed Penalties Case. In our submission, that is important.

I want to go to ground 9 of our outline, conscious of the time, and I do not need to spend long on this because I have plucked the eyes out of some elements of it on the way through. But we make the point that Parliament has characterised some contraventions of the Fair Work Act as being more serious than others, and it has done that in the traditional way, by setting a higher maxima for particular contraventions.

There are three types of maximum – or three classes, I should say, of maximum penalties prescribed under the Act. The vast preponderance of the civil penalty provisions in this Act attract a maximum penalty of 30.....penalty units and the majority of them – sorry, some attract a maximum penalty of 30 penalty units and the majority 60. There are a small number of provisions that attract a substantially higher maximum of 600 penalty units.

We set all this out in our written submissions, but your Honours will see if you go to section 539(2) of the Act – it is a cumbersome provision, but there are a number of items, and item 32A there makes it clear that contraventions of a particular provision - section 712B of the Act - attract a very high maximum of 600 penalty units. Section 712B is a provision that attaches to those who fail to comply with notices issued by the regulator.

So, insofar as any policy can be detected in what the legislature has done here, it is clear that it wishes to mark out very obviously with that higher maximum that it regards contraventions of those provisions that are protective of the regulators were as being very serious indeed. Your Honours will find a greater explanation of these matters in paragraphs 48 to 53 of our written submissions and, in particular, in a long dense footnote, footnote 77, we explain what serious contraventions are under this Act and we also explain the different maxima. You will find the different maxima explained in footnote 75.

On my way through can I correct a typographical error we found very recently in that long dense footnote, footnote 77. Towards the end of we refer to the Environment Protection Act, section 137. We apologise, that is section 136. We have erroneously put the wrong section in the joint book of authorities.....mistakes we have made, and we will attend to that after court by giving your Honours the right section.

So, the point I was making there, your Honours, is that there are already indications in the Act, in the very structure of the Act and in the way that the legislature assigns different maxima to different classes or categories of contraventions and that it is by those means that the legislature indicates the seriousness with which it regards certain types of offending.

As an example.....perhaps open to the legislature to do that in an additional way using the armoury available to it, if it wishes to, by adding freedom of association provisions to the list of those which attract.....by determining and identifying aggravating features, including numbers of priors or ways in which contravening is carried out.

This is traditional. This happens in criminal sentencing Acts, it has already happened in this Act, and I have already noted to your Honours the different contexts in which some market regulation corporate standards legislation works, namely, there are legislative provisions that deploy two other tools from the kit bag that the Commonwealth has been known to use, penalties based on percentage of annual turnover, corporate offenders, and penalties based on multiple of gain, in other words, looking at the profits derived from contraventions themselves. Those things are open. They have been injected into a number of other Acts as recently as 2019. They do not appear in this Act.

That is not to say that the Union’s financial position is irrelevant but the only material that was before the court – rather simple if not simplistic recitation of some edited highlights about assets and revenue, in an appropriate case – or in the next of these types of cases because there might be different types of submissions made about the materials and the accounts attached to the affidavit – for example, the difference between assets that are liquid and those that are not; the difference between revenue and outgoing, and the like. But we cannot.....the proposition that the evidence before this Court was that the Union has an asset base and has a revenue stream. No one can dispute that. But there is nothing more and there is also no other tool – no other legislative tool – for penalising by dint of those facts.

Can I turn to point 10? A number of questions were raised about yardstick and Markarian this morning. It is important, in our submission. When taking your Honours to paragraph 98, in the plurality’s judgment – I will just take your Honours back to that, if I might – when the Solicitor‑General took you to paragraph 98 this morning, the Solicitor‑General was critical of the indication by the plurality that they regarded advertence to the maximum as a mandatory criterion. Just to remind your Honours about paragraph 98, it is there that the plurality said that:

The court’s task is to determine and impose a penalty that it considers “appropriate” –

and so on, upon a person:

whom the penalty is to be imposed . . . That is, it is the deterring of contraventions of the kind before the court to which regard must be had in fixing the penalty that is considered appropriate, by reference to the frame of reference or yardstick provided by the maximum penalty –

and the Solicitor‑General made the point that their Honours had invoked the phrase “must be”.

In our submission, there is nothing wrong with that. It is something of a mandatory consideration – if you want to use that language – to have regard to the maximum. In our submission, it is not surprising because, if it were otherwise, where on earth would one start? Would one dream up a number or would one – would a judicial official turn their mind to what they think ought to be the price of contravening? Of course not. It is absolutely orthodox and traditional – since Markarian – if not before – to have regard to the maximum. Without it one would be at sea – one would be at large.

More play was made below, and some has been made in this Court of the term “yardstick”. I should say, the plurality’s reasons used the word four times throughout the reasons. On three occasions, their Honours are simply quoting other decisions in which the phrase appears. So, by way of example, their Honours use it at paragraph 105 of the plurality’s reasons. But, of course, it is because their Honours are quoting from the agreed penalties case in Markarian that it comes up.

So, if you look at paragraph 105, there is.....on the Agreed Penalties Case – sorry, it is Reckitt, I apologise. I can see that by reading up. Then, at paragraph 155, within Reckitt – because Markarian is quoted – there is a reference to the maximum penalty and, towards the end of paragraph 155:

but one yardstick –

Can your Honours see that? So, that is one place where the plurality refers to “yardstick”.

At 114, in the plurality’s reasons, their Honours refer to – or use that term “yardstick”, but again that is only because they are quoting it. I have just got to put my finger on it, your Honours – there is a long extract at paragraph 114 from the ACCC v ANZ, and you will see they reference at paragraph 100, Markarian – and I am just trying to put my finger on “yardstick” – “yardstick” is somewhere in this long paragraph, your Honours, I have lost the reference.

I note their Honours also refer at paragraph 107 within that extract to Stihl Chain Saws and NW Frozen Foods – and it is in paragraph 106, just above, that you will see the word “yardstick” – very proximate to the word Markarian – unsurprisingly because it is picking it up from there. You will see the same in paragraph 136 where their Honours quote Justice Logan from Broadway.

The only paragraph where – if I can put it this way – the plurality use the word “yardstick” on their own account is paragraph 98, where I started. If you go back to paragraph 98, you will see in the last couple of sentences, a reference to:

by reference to the frame of reference or yardstick –

the quotation I just took your Honours to. As I say, much play is made of the fact that their Honours invoke that phrase. In our submission, there is nothing wrong with it. In fact, their Honours were bound to invoke it, having regard to the maximum it is orthodox, it is long established in a civil penalty arena and without it, where would one start? Having regard to the maximum, it was well settled by the time the Fair Work Act was incorporated in 2009. The legislature must be taken to have been aware of it when section 546 was enacted – and you will of course see it referenced in decisions as diverse as Justice French on his own in.....and in Reckitt, a decision of the Full Court in that extract that I just took the Court to.

I am now just going to do out of order grounds 13, 11 and 12. I will do 13, and then 11 and 12. In ground 13 of our oral outline, we make the point – or it is our submission that there was no error in the Full Court’s approach because it held that contravener’s antecedents are relevant in assessing the objective gravity for contravening conduct and in revealing the need for specific deterrence.

But what is important is that their Honours did not allow it to overwhelm the objective circumstances of the instant contravention. Their Honours in that regard used language like there must be a “reasonable relationship” between the two or, the penalty imposed must not be “untethered” from the objective circumstances of the contravening. We set out in that ground in our outline the particular paragraphs, which I will not repeat – there is a long list of them – but the paragraphs in which it is made clear their Honours understood the work to be done by looking at priors.

They give those priors much work to do, and they also tie that work to the object of deterrence, because their Honours emphasise that the assessment of gravity includes that which can be drawn from the contravener’s antecedents, but it also is important in terms of ascertaining the degree of deterrence required. Now, the “degree of deterrence required” is terminology that the plurality use in their reasons at 108 and 149.

Backtracking to grounds 11 and 12, we point there in ground 11 to some risks that are inherent in embracing the appellant’s approach. The first of them concerns avoiding double punishment. Now, I have already made some submissions to your Honours about the difficulty we see here. The first is a logical problem. Why is it, we ask of the Commonwealth, that proportionality, which turns its face against double punishment, is to be left behind at the starting gate, while course of conduct and totality have moved from the criminal arena to the civil penalty arena.

KEANE J: Ms Doyle, perhaps the answer to that question is that it is unreasonable - to punish twice is unreasonable. To punish or to impose a penalty that reflects an appreciation of a steadfast determination to continue to break the law is something different, but it is just being reasonable in exercising the discretion that is reposed in the Court that is the answer to these risks that are being identified in paragraph 11.

MS DOYLE: That is as may be, your Honour, and it certainly – another issue is, of course, that the Commonwealth says, well if you have reasonableness why do you need proportionality, and I guess the burden of answering that question falls to me.

KEANE J: Well, because in this context they are actually synonymous. What “reasonableness” is not synonymous with is the theory of necessary proportionality between retributive punishment and the seriousness of the offence. That is from a different field of discourse and the different ‑ ‑ ‑

MS DOYLE: I accept that, your Honour ‑ ‑ ‑

KEANE J: ‑ ‑ ‑ and one cannot blur them. One is not using proportionality – or the Full Court is not using “proportionality” as a synonym for “reasonableness”.

MS DOYLE: I accept it almost certainly was not using it as a synonym. I also accept that the two principles or the way in which they might guide the exercise of a judicial discretion will often look and feel the same, but this case might throw up the circumstances where they are not entirely the same, and so it is on that basis that the respondents respectfully disagree with everything that is then married with treating them as the same principle. We do rely upon a principle of proportionality as being correctly used to inform the appropriate penalty in this case. Can I tie that to two other risks ‑ ‑ ‑

GORDON J: Ms Doyle, can I raise two matters in relation to the 11? Do you accept that one of the – that your concern about double punishment falls away if you realise that the purpose is to deter future contraventions of the same kind? It is not past conduct, it is about deterring future contravention.

MS DOYLE: It assists.....the risk but, in our respectful submission, our concern does not fall away. Our principal submission remains that there is an element of double punishment when the past is permitted to overwhelm the present, not just inform in an.....way by, for example, shedding light on the attitude of the contravener but, in our submission, it overwhelms and invokes double punishment when it goes further and, in our submission, the deterrent purpose is not just not advanced, but is in fact undermined when two additional problems – so double punishment is one, we point to two more - the crossing of the Rubicon problem, if you like. That is, the Commonwealth has not ever identified and, in our submission, it may be embarrassing for them to be required to do so – when the point was passed that this contravener is required to have imposed upon it the maximum every time, but not only is it ‑ ‑ ‑

GORDON J: That depends, does it not, Ms Doyle, on the conduct of the contravener. So, for example, you may have a recidivist contravener who says, “Listen, I’ve made a clear decision to reform my attitude of non‑compliance”, and it may very well be that if you go through the Justice French factors in that context then a breach may not warrant the maximum penalty because the circumstances and facts of the particular case render a different conclusion. There is no box here which says you get to recidivist, therefore big tick. Each of these cases is considered in the circumstances in which it arises, is it not?

MS DOYLE: Of course, and that is what we urged on the Full Court. But when I was identifying what was before the Full Court, your Honours will recall, there was our notice of appeal and there was the then respondent’s notice of contention which put it that boldly, I might say, your Honour; put it as boldly as after a certain point of time the recidivist is to be met with the maximum, and this is echoed in the appellant’s submissions here, paragraph 53. If your Honours turn to the appellant’s submissions in this Court, you will see at paragraph 53 – sorry, I mean 55. Your Honours will see at paragraph 55, the last sentence of it:

That is the reason why, in a context where deterrence is the objective, there is nothing wrong with imposing a higher penalty for contravention A than is imposed for objectively more serious contravention B, provided that contravention A is otherwise likely to be repeated, whereas contravention B is not.

That, in combination with what was propounded below in support of the notice of contention, in our submission, makes it clear that it is the regulator’s position that after a certain point in time there will be no difficulty and no appellable error if judicial officers impose the maximum penalty every time, but also with respect to relatively anodyne contraventions as much as with respect to objectively grave ones.

This is where we call in aid the other problem we refer to – the “sheep and lambs” problem. There is an unintended, if not perverse, potential outcome there – here, crossing the Rubicon, so to speak – the maximum was always imposed. Our position is much closer to your Honour Justice Gordon’s position which is, is it not every time a requirement to look at all of the factors and modify it appropriately for the contravention in question and the facts found or admitted, all the factors developed in CSR and onwards, and have regard to the maximum in the Markarian sense – which we do not shy away from and, in so doing, look at the priors and also use those priors in the way the Full Court has identified so as to inform, so far as one can, whether it says anything about a continuing attitude of disobedience.

If there are just a string of priors, it says something – it says there may be such an attitude. If there is more evidence that demonstrates a system – a policy – it may go even further. Then one balances it. Where we part company, I suspect, is on this final matter and that is a proportionality question – and to go back to the way the Solicitor‑General put it this morning – proportional to what? We say, one always comes back to whether it is proportional to the circumstances of the contravening.

We have said it for lots of reasons but one of the reasons that I was just developing a moment ago – when talking about utilitarian underpinnings of deterrence theories – is deterrence is not served by an excessive punishment with an inutile component of it that goes above and beyond what might be appropriate to deter.

Exercise of the discretion is not reasonable if the level of the penalty imposed is capricious or arbitrary which it would be if one were – after a certain point or a certain level of recidivism – simply imposing the maximum every time. It is worse than that though. The other difficulty we point to is that you cannot approach risks operating as a de facto fetter on the judicial discretion, if it is used so as to allow a characterisation of the past – or a contravener’s priors – to overwhelm the present.

We do not articulate this in that ground, but can I say it also leads to this other problem that I have put in a different way during this afternoon a couple of times and that is, if one is to jettison proportionality, are we not throwing out the baby with the bathwater. Why would we not also have to form the view that totality, course of conduct, parity and other principles drawn from the criminal arena are also to founder.

GLEESON J: Ms Doyle, is proportionality, as used by the Federal Court, a necessary corollary of using the maximum penalty as a yardstick or is there some way of separating out those two ideas?

MS DOYLE: They are separate. They are related, your Honour, and often will lead to the same conclusion, but they are separate. So, the yardstick – one of the questions your Honour Justice Gordon asked this morning was - you put a number of positions to the Solicitor‑General and described the maximum penalty as a cap.

Now, we would accept that the maximum penalty is both a cap on power, obviously you cannot exceed it, and then to return to your Honour Justice Gleeson’s question, it is also a yardstick because it enables one to look at, as a proportion of the maximum, how serious a particular contravening conduct is.

Proportionality sometimes looks and feels the same, but in our submission, it is a separate, additional test or layer. You use the yardstick approach to measure it as against the maximum, but proportionality is also, I know the Solicitor‑General used this in a pejorative sense, but we embrace it, we say it is a merit or a positive, it is also a controlling principle. We do not and we cannot shy away from that. We embrace proportionality as a final controlling principle, like totality, a final check.

Proportionality also comes in towards the end, usually, and it is that final check as to whether or not the overall penalty for the particular contravention is proportionate to the objective circumstances of the contravention, and necessary to deter the contravener on bases including what one knows about the contravener’s past, which is why it will sound in Mr Pattinson at a low level on the yardstick, and in the hands of the Union at a higher level on the yardstick, so that they are principles that are separate, or tests that are separate, to answer your Honour Justice Gleeson. They look and sound the same in some respects, but they are quite differently applied and grounded.

Your Honours, the final thing I should say is this. If the Court, or a majority thereof, detected an error in exercise of the discretion by the Full Court – we notice that nobody’s written submissions addressed what then should be done and, in our submission, if any relevant error were detected, the matter – if any discretion is to be re‑exercised – ought be remitted to the Full Court. That is consistent with practice in recent times, including in these very types of matters. That is what happened in the Non‑Indemnification Case.

Alternatively, this Court could re‑exercise the discretion for itself and it, we accept, in a worst‑case scenario, might do so by setting aside the Full Court’s orders. Those are the two alternatives, in our respectful submission. It is not a case where it would go back to the trial judge. If it were to happen, I have already pointed to one matter which has changed, and that is Mr Pattinson’s personal position.

Now, on one view, there will be no occasion for reimposing any penalty on Mr Pattinson. The penalty imposed on him was taken down by the Full Court not because of ground 1. He did not prosecute the ground of appeal pertaining to proportionality. He was a joint prosecutor of the second ground, the one that is not before the Court, the ground about discounts - utilitarian value and discounts for co‑operation.

Properly understood, that is why the Full Court discounted his penalty and, in our submission, there is no reason why he would not continue to be the beneficiary, having won on that ground – and it is not the subject of any grant of special leave here. In fact, that ground was specifically abandoned during the hearing of the special leave application.

So, on one view, his penalty does not fall to be touched, but can I say as I have adverted to, if that were to be the case, there is some very important supervening information pertaining to Mr Pattinson in that specific deterrence is now irrelevant to the gentleman. He is 70 and he has retired from the building industry. We thought it probably important to alert the Court to those matters. Our principal position of course is that no occasion will arise for the re‑exercise of a discretion on either basis - but certainly, we say, with respect to Mr Pattinson.

There is another small matter. As I was going through the submissions, I pointed your Honours to one typographical error. Can I just note that there are a couple more – we only mention them because they will probably cause your Honours to be looking in the wrong place for a couple of items.

In our written submissions, at footnotes 10 and 54, we have made the same mistake, unfortunately, in citing the Personal Payment Case on remittal to the Full Court. We referred to volume 264 FCR – that is correct but each time we have said page 68 and we meant, on both occasions, page 155. That error is in footnotes 10 and 54.

In footnote 19, there is just an embarrassing typographical error. In quoting from Plato, we refer to the “unreasonable fury of a best”, we meant “beast” – and hopefully that was obvious to your Honours. In footnote 33, in citing Ophthalmic, we omitted the year of that case – it is 2008. I have already directed your Honours to the unfortunate error in footnote 77. We did not mean section 137 of the Environment Protection Act, we meant section 136.

Apologies for those, we hope those corrections will make your Honours use of those materials more efficient. If there are no other questions, those are the submissions of the respondents.

KIEFEL CJ: Yes, thank you, Ms Doyle. Yes, Mr Solicitor.

MR DONAGHUE: Your Honours, can I ask Mr Begbie to deal with the reply, and I will change places with him.

KIEFEL CJ: Yes, Mr Begbie.

MR BEGBIE: Thank you, your Honour. There are four matters we will address briefly in reply. The first deals with what was developed at the outset of our learned friend’s submissions around the choice of the word “necessary” in the ground of appeal. Can I tell your Honours that that comes from NW Frozen Foods, as applied by the learned primary judge at paragraphs 72 and 73. If your Honours go, very briefly, to what his Honour there said – it is at page 33 of the core appeal book. The fundamental question his Honour posed was a question posed by reference to what was necessary to deter. So, his Honour began at 72:

If the only way to deter –

and your Honours can read through. In the second‑last line, his Honour said:

in respect of which it is imposed if it is no more than what is necessary to achieve the only objective that its imposition is meant to achieve?

What his Honour is there picking up is the passage from NW Frozen Foods, which is cited in 73, and that is the controlling limit on an appropriate penalty for the purposes of deterrence:

the penalty should not be greater than is necessary to achieve this object –

.....as your Honours heard this morning, the primary judge found that a penalty of $63,000 was necessary to achieve that object. The Full Court found an error because of its notion of proportionality, which limited the use to which this prior history could be put. But what is important here is that the Full Court did not at any point say that the primary judge was wrong to conclude that 63,000 was actually necessary as a matter of deterrence and your Honours have not heard anything from the Union today to suggest that $63,000 was not necessary. There is nothing to suggest the learned primary judge was wrong at that conclusion. The only thing that stands in the way of that is what the Full Court found by reference to its notion of proportionality.

The second matter is it found voice in a number of ways but on a number of occasions it was suggested that we failed to explain how the court is permitted to impose what was called a disproportionate penalty. Of course, that question posed that way all depends on what is meant by “disproportionate”. To be very clear, if by “proportionate” you simply mean what is a reasonable exercise of judicial power imposing a penalty appropriate to achieve specific and general deterrence, having regard to all the facts and circumstances and factors relevant to deterrence, then yes, the penalty must not be disproportionate to that exercise. That is all that is said in NW Frozen Foods.

But if you say that the penalty must be proportionate to the objective circumstances as assessed against the mandatory yardstick of the maximum penalty, then the answer is no. There is no requirement for that kind of retributive proportionality. We say that illustrates the danger of introducing a term like “proportionate”, which has such a settled meaning in the context of the criminal law and trying to use that as some form of overlay on what is the statutory language of appropriate. The closely related third point ‑ ‑ ‑

GLEESON J: Mr Begbie, can I just clarify - as I understand your case based on the notice of appeal, you are contending that the statutory maximum penalty applies to conduct that is not of the most serious and grave kind. That is the point, is it not?

MR BEGBIE: The statutory maximum can be imposed for conduct of that kind, yes.

GLEESON J: Yes, and applies in this case.

MR BEGBIE: Does your Honour mean by that that in this case the statutory maximum must be applied? I am sorry if I - - -

GLEESON J: I am just trying to interpret the notice of appeal.

MR BEGBIE: So, what we say in the notice of appeal, your Honour, is that the Full Court created a principle – or a notion of proportionality that requires the highest penalty to be reserved for a particular category of case, namely a category in which the conduct – including an attitude of defiance to the law – is itself assessed to be the most serious and grave kind and, we say, no, the maximum penalty is not reserved only for that category of case.

EDELMAN J: Mr Begbie, ultimately is the difference between your position and the respondents’ position – whether one describes it as a difference as to the application of proportionality or the label to be used – a difference which involves, on the one hand, starting with the maximum penalty and allowing that to shape what is then regarded as the appropriate penalty having regard to all of the circumstances – including as I understand the respondent to accept, prior contraventions – and on the other hand, your position, which as I understand it to be, that one has regard to what is necessary to deter, irrespective of the maximum penalty, but if that amount that is necessary to deter is greater than the maximum penalty, the maximum penalty just forms a cap – and that is really its only role.

MR BEGBIE: We accept largely what your Honour has said, but with this qualification. We do not insist upon a sequence of reasoning by which you start with the question of what is necessary to deter – or a penalty, in Justice French’s language from CSR:

a penalty of appropriate deterrent value –

and then turn to the maximum penalty, as if those are two stages that must be undertaken in that sequential way. We do not insist upon that. We say the maximum penalty can inform in a way that the Solicitor‑General made submissions about earlier today. But we do say that you must ultimately get to that question, what is appropriate to deter? What is the penalty of appropriate deterrent value? To be clear, you cannot use the maximum penalty as a statutory yardstick which positively requires an outcome in which a lesser penalty is imposed, except of course to the point of it being a cap.

If I deal with the third point which is closely related to the question of what is meant by proportionality, our learned friends developed a submission at some length that nothing in the Agreed Penalties Case or the Non‑Indemnification Case involved a jettisoning of the principle of proportionality, or a notion of proportionality.

We need to be very clear here again about what is meant by proportionality. We are talking about proportionality in this appeal as it is derived from Veen and the subsidiary principles that the Full Court relied upon, i.e. proportionality grounded in retribution. Once that is understood, it is very clear that there was nothing to jettison. If you trace back to CSR – and I do not need to take your Honours back to the passages – it begins with the very clear and express recognition that retribution has no role to play, that is, excluding retributive proportionality at that point.

It is of no moment that Justice French, as his Honour then was, went on to develop a number of factors. They are all factors relevant to deterrence. It does not matter that those same factors might, in another context, the criminal sentencing context, also have a role to play in relation to proportionality, and your Honour Justice Steward highlighted in a way that we would embrace the eighth factor, and it is an uncomfortable exercise to sit that deterrent factor that has been there since CSR alongside what our learned friends say.

CSR having, as it were, set the ground work, that was reinforced powerfully in the Agreed Penalties Case by embracing exactly what was said in CSR. We draw your Honours’ attention, again without going to it now, to the way in which that decision of the High Court rejected the reliance on retribution in Ponzio.

Our learned friend’s outline relies on showing that proportionality existed in some intervening period after CSR. Well, the Full Court here at paragraphs 29 to 37 explains very carefully why the Agreed Penalties Case squarely rejected that understanding of Ponzio. Then finally, of course, the Non-Indemnification Case had no occasion to say anything about jettisoning proportionality. It just simply did not arise in the first place, either in CSR or in the Agreed Penalties Case.

The final matter that we address in reply concerns the ongoing application of other principles, namely course of conduct and totality and what was put, you will recall, is that it makes no sense for proportionality to be put to one side when those two principles survive. We say there is a very simple explanation for that. Proportionality is a rule. It is an actual limit on the discretion, and it is set by retribution.

Neither course of conduct nor totality have those characteristics. They are both analytical tools which can have analogical work to do in setting an appropriate civil penalty. It is not because they are mandatory sentencing rules and it is certainly not because they are retributive in their very nature, but it is because they assist the court in a practical task.

So, a course of conduct analysis - you will know has been emphasised in many, many cases – this is a way of analysing what actually happened and asking what is the character of the events and circumstances which attract the penalty. Your Honours could go to many, many cases that pick up this language that the course of conduct principle is no more than a tool of analysis which can – but need not be – used in any given case.

A Full Federal Court case which makes that point is ACCC v Yazaki Corporation, which is cited by the primary judge in the discussion at 105 to 108 of his Honour’s reasons. The same point is made in other Full Federal Court cases - ACCC v Cement Australia [2017] FCAFC 159; (2017) 258 FCR 312 at 421 to 424, and likewise in Singtel Opus v ACCC [2012] FCAFC 20; (2012) 287 ALR 249 at [53].

So, it is uncontroversial that that is just a tool that can be used and can be helpful. It does not stand inconsistently with putting proportionality squarely back and only back in the criminal sentencing world. Likewise, in totality, that is just a practical tool that ensures that the limits set out in the passage we have referred to many times now in NW Frozen Foods, is adhered to:

the penalty should not be greater than is necessary to achieve –

deterrence, so if you have many penalties that are being imposed for separate contraventions, and you get at the end of the task, and you look at the mathematical accumulation of all of those, and you say, as the court, this mathematical accumulation would be more than is necessary to achieve deterrence, totality is, if you like, a label for the tool by which you can reduce that to what is appropriate. So, there is no inconsistency, with respect, between what we say about proportionality having no role to play and these other principles remaining.

The final matter is a question of the appropriate orders here, and any re‑exercising of the discretion. The appropriate order, we say, is that which is sought in order 2 of the notice of appeal, that is, the orders of the Full Court should be set aside and in their place order that the appeal to the Full Court be dismissed. The effect of that will be that the learned primary judge’s orders will be restored, and we have not sought to.....in this appeal.

KIEFEL CJ: What do you say about the position of Mr Pattinson, Mr Begbie?

MR BEGBIE: Your Honour will appreciate that our primary focus in this appeal has been on the Union. If the Court felt that it was not appropriate to disturb the Full Court’s orders with respect to Mr Pattinson, we do not wish to be heard against that.

KIEFEL CJ: Yes, thank you.

MR BEGBIE: If the Court pleases, those are the reply submissions.

KIEFEL CJ: Thank you. The Court reserves its decision in this matter and adjourns to 2.15 pm tomorrow.

AT 4.24 PM THE MATTER WAS ADJOURNED