Australian Building and Construction Commissioner v Pattinson & Anor [2021] HCATrans 90 (20 May 2021)

Last Updated: 21 May 2021

[2021] HCATrans 090

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M117 of 2020

B e t w e e n -

AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER

Applicant

and

KEVIN PATTINSON

First Respondent

CONSTRUCTION, FORESTRY, MARITIME, MINING AND ENERGY UNION

Second Respondent

Application for special leave to appeal

GAGELER J
EDELMAN J
STEWARD J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 20 MAY 2021, AT 9.29 AM

Copyright in the High Court of Australia
MR S.P. DONAGHUE, QC, Solicitor‑General of the Commonwealth of Australia: May it please your Honours, I appear with MS J.D. WATSON, for the applicant. (instructed by MinterEllison)

MS R.M. DOYLE, SC: If the Court pleases, I appear with MR P.A. BONCARDO and MR B. BROMBERG, for the respondent. (instructed by CFMMEU)

GAGELER J: Yes, Mr Donaghue.

MR DONAGHUE: Your Honours, this special leave application is a result of differences of opinion that have emerged in the Federal Court since this Court gave its judgment in the Agreed Penalties Case, and it is to the ramifications of that case for the correct approach to the setting of civil penalties, particularly with respect to contraveners who have demonstrated an unwillingness to obey the law. In the Agreed Penalties Case, of course this Court was clear that retribution and rehabilitation had no part to play in the imposition of civil penalties and it emphasised that the primary, not the only, object of the imposition of such penalties was to:

put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others [of those] who might be tempted to contravene the Act.

GAGELER J: Mr Donaghue, that underlies your proposed ground 1, as I understand it.

MR DONAGHUE: Yes.

GAGELER J: What can you say in support of proposed ground 2?

MR DONAGHUE: Really only, your Honours, that if the Court were minded to give leave on ground 1, then that would be a short point that warrants correction but I cannot say that there is a point of general principle inherent within ground ‑ ‑ ‑

EDELMAN J: It is not really much more than a construction of the primary judge’s reasons, is it?

MR DONAGHUE: It is not, your Honour, that is right.

GAGELER J: It might be useful if we hear from Ms Doyle at this point.

MR DONAGHUE: If the Court pleases.

GAGELER J: You can limit your submissions to proposed ground 1, Ms Doyle.

MS DOYLE: Thank you for that indication, your Honour. To succeed in obtaining a grant of special leave, the applicant regulator here must demonstrate that the Full Court erroneously concluded that the statutory maximum penalty for any contravention of a civil penalty provision, an Act, operates as a mandatory yardstick. That is, of course, the manner in which the first question is posed in the regulator’s application for special leave.

It must also demonstrate that, insofar as the Full Court deployed the term “yardstick” – I am going to come back to that term in a moment, your Honours – it must also demonstrate that the deployment of that term constituted an error and/or the regulator must demonstrate that the Full Court has now, in its reasons, propounded an approach to the imposition of civil penalties which is affected by an appellable error, even perhaps in its treatment of the relevance of the maximum penalty or in its approach to the relevance of priors on the part of anyone who comes before the Court or in respect of its application for the principle of proportionality generally.

Now, it appears that there has been a strong drift to the last of those points, but it may be that the applicant no longer intends to focus attention on the “yardstick” phrase which, of course, was the subject of most attention in submissions.

If I can break down those two issues in this way and then I will come back and develop them more fully, as to the contention that the Full Court has treated the maximum penalty as some species of mandatory yardstick, the respondent submits – first of all, it is not, of course, at all, what the Full Court said. It did not treat the statutory maximum as a mandatory yardstick. It said no more than this. It is one factor among many to which it is relevant to have regard. I am going to demonstrate to your Honours in a moment why that is a perfectly orthodox approach both in respect of criminal sentencing and in respect of the imposition of penalties in a civil penalty regime.

As to that second broader point, proportionality, and if it be the case that the applicant now does intend rather to open up that topic more broadly, then the respondent submits that the Full Court statement of the correct approach to the imposition of civil penalties, in particular, under the subject provision here which, of course, is section 546 of the Fair Work Act, was orthodox and correct.

I can do no better, perhaps, than start with two paragraphs from each of the reasons of those who constituted the Full Court. Can I ask your Honours first of all to go to paragraph 201 in the reasons of the plurality? Your Honours will see there that the Chief Justice and Justices White and Wigney said as follows:

The assessment of what is an appropriate penalty –

and I pause there to remind your Honours that of course “appropriate” is the terminology drawn from this Act:

is informed by a reasonable appreciation of all the circumstances that rationally go to an assessment of the gravity and seriousness of the contravention before the court, including (but not limited to) what can be drawn from past conduct –

So, first, we have their Honours there invoking the relevance of priors - or prior contraventions:

as to the instant contravention, and that rationally go to an assessment of what is reasonably necessary, and thus appropriate –

invoking the statutory language again:

to deter such or like contravention in the future by the contravenor or by others.

There, we say, their Honours are clearly invoking the very important principle of deterrence – general and specific. Then their Honours go on to explain why it is – and their Honours are clearly here having regard to the split among decisions in Broadway on Ann – their Honours go on to say:

If a grave contravention and a much less serious contravention, (thus analysed in the same context) are both said to require the imposition of the maximum penalty, it is difficult to conclude otherwise than that in respect of the latter contravention, the less serious, the penalty has been imposed for both the present contravention and for the past contraventions -

I pause there to paraphrase. That, of course, is a recognition of the court turning its face against double punishment. I will not detain the Court with reading at length any other long passages from these reasons, but can I point the Court to paragraphs 105 and 106 – also in the plurality’s reasons.

EDELMAN J: Ms Doyle, what do you say about the treatment in the judgments of Broadway on Ann?

MS DOYLE: The navigation of the question of any contest, both between the majority in Broadway on Ann and the minority and as between the decision in Broadway on Ann and that on Parker, has had what I can only diplomatically call a difficult history and a difficult path through the Full Court to here. But in the end what the Full Court in Pattinson has said is all judges across each of those two full benches, differently constituted with some overlap, have correctly understood the principle, which is effectively that which I have just read from paragraph 201 and the other instances I am about to take the Court to.

However, said the full Bench in Pattinson, what has happened and what has vexed and, in their Honour’s conclusion, ultimately led the trial judge here into error, is the reality that the vast difference in outcome as between the majority and minority in Broadway on Ann is to be understood as an error in the application of the correct principle.

So, in the end what the Full Court in Pattinson said, and this is best evidenced at paragraphs 151 and 170 of their reasons, is that the majority in Broadway on Ann had the principle right, sadly applied the principle incorrectly.

Could I just, to conclude the remarks I was sketching out on the question of what test the Full Court has posed, point your Honours to paragraphs 105 and 106. Without reading them, what you will see is that there we have the plurality pointing to the relevance of the maximum penalty – so in the second sentence of 105:

Parliament is to be taken to be setting the maximum penalty for cases in which the need for deterrence is strongest -

and I commend the balance of those passages to your Honours and note that of course there the decision of the Full Court in Reckitt is set out – I will explain why that is important in a moment.

STEWARD J: Ms Doyle, can I ask a question. How do you say that the penalty imposed by the Full Court will act as a real deterrence, in the light of the findings made by the primary judge at paragraph 84, which remain unchallenged?

MS DOYLE: The principle of deterrence, of course, is one of longstanding, and one which, since the decision in the 2015 Agreed Penalties Case, we now understand is the principal object and that is accepted and appreciated.

Perhaps I can answer your Honour’s question in this way. Nothing in the reasons in the 2015 decision in that case, nor I might say in the subsequent appeal, 2018, in the Personal Payment Case – where for a different purpose this Court revisited some of the principles of civil penalty provisions – nothing in either of those cases suggested that from that time forward, whether it be 2015 or 2018, that civil penalty principles were now to be untethered from the criminal law sentencing principles in which they were deeply rooted, including proportionality.

As the plurality has explained here, while the notion of retribution is perhaps what you might call the prelude from which the principle of proportionality grew, in the context of criminal sentencing – and while we accept that the object of retribution is not apt or apposite in the context of civil penalties, there is nothing in those High Court pronouncements in 2015 or 2018 on civil penalties which would suggest that deterrence, being the principal object, has now given rise to a need to jettison the principle of proportionality.

So my answer to your Honour’s question would be this. Deterrence must still be the principal purpose or object, but it is something which co‑exists with proportionality.

EDELMAN J: Ms Doyle, when you are speaking of deterrence, I take it you mean both specific deterrence and general deterrence?

MS DOYLE: I do, your Honour.

EDELMAN J: Does your submission really then boil down to the point that a penalty could never be appropriate if it were to give or to require someone to pay more than they deserve to pay, to use the language of proportionality, simply in order to deter perhaps others from the same conduct?

MS DOYLE: No, with respect to your Honour, our answer would be as follows. Speak of “deserving” is to return to a criminal law notion of retribution. In the civil penalty regime, the principal focus is on the circumstances, namely, the gravity and seriousness of the instant contravention, but not solely on that. The passages in the plurality’s reasons that invoke the test ‑ and I have identified just two, but your Honours will also see in the judgment the other judgment at paragraph 227, subparagraph (3) and 230 to 231, a powerful exposition of the reality that there are many factors, the maximum penalty is one. The need to have a look at the gravity and seriousness is another.

The relevance of priors is acknowledged by the Full Court in many passages in their reasons and we set those out in our written submissions. But, with respect, the applicant and the trial judge tend to treat deterrence and proportionality as if they are alternatives and as if they cannot co‑exist. The reality is that deterrence is an object or purpose.

The principle of proportionality no double punishment is just that, it is a principle. Those are both principles fashioned through years of development in the criminal law so as to avoid injustice and it is our submission that there is nothing that emerged from the Agreed Penalties Case wherein the High Court identified a previous error, namely, the Barbaro approach being transposed from crime to the civil penalty regime.

There is no point in the reasons in that appeal where it is suggested that any other principle ‑ and we put proportionality at the front there but, of course, totality, cause of conduct, are other critical common law sentencing principles that have a long and established history in the orthodoxy of the imposition of civil penalties. There was no hint that they were also now to be untethered from the appropriate approach to the imposition of civil penalties under this Act or any other civil penalty regime.

I mentioned in passing a moment ago, your Honours, that the Full Court in this matter was clearly appraised of the careful passages in Reckitt and when your Honours go back to that part in the reasons in Pattinson you will see that there are large passages of it set out there where, for example, the Full Court in Reckitt was invoking the reasoning in Markarian.

It might be that this is where the label “yardstick” emerged from so as to so dominate the applicant’s application, at least in its written submissions here. But, in so quoting it, it becomes obvious that the Full Court here in Pattinson understood that the maximum penalty is but one consideration. Yardstick is perhaps an unhappy label but it is all that their Honours clearly meant when you read it in context.

Can I, because it is a handy way to find it, take your Honours to those couple of paragraphs that I mentioned in the reasons of Justices Besanko and Bromwich, because they are instructive. Paragraph 227, first of all, that is where their Honours set out what appeared, to this Full Court below, as the three potential pathways, and they embrace pathway (3), so I am going to ask your Honours to look at 227(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 –

and then ‑ ‑ ‑

EDELMAN J: Ms Doyle, I do not quite understand what your submission then is about proportionality, if it is not concerned with desert, or what is deserved. Concepts of moral desert are not necessarily inextricably tied with retribution, are they?

MS DOYLE: Not necessarily, but, your Honour, we put it plainly this way. In the realm of imposition of civil penalties, proportionality has long been understood, and in our submission correctly, and in an orthodox way, to invoke the notion of proportionality to the effects, combined with a proper appreciation of the relevance of priors. And the plurality and Justices Besanko and Bromwich make it clear many times that prior conduct is relevant, can, and indeed must be had regard to, and may tell you a great deal about the circumstances of the offender, one of the examples given is its wilfulness or its continuing disobedience.

But nevertheless, having done those things, having had regard to each of those, I would say “criteria”, at times others have said “yardsticks” ‑ whether that is an apt label or not, I do not quibble about that now ‑ having done that, one then invokes the principle, not the object but the principle of proportionality, and in our submission what is called for there is an assessment of the proportionality of the penalty to the instant contravention.

GAGELER J: So, as I understand it, paragraph 227(3) really captures effectively the ratio of the case, is that right?

MS DOYLE: It does.

GAGELER J: It is a variation on paragraph 161 in the plurality judgment, I think, perhaps it is a restatement of that.

MS DOYLE: It is both, because in fact their Honours Justices Besanko and Bromwich conclude that little passage in 227(3) by saying “as analysed by” the plurality, and it is clear that their Honours are not intending to depart, even if there be slight variations in language, from the plurality’s approach. But I also commend – sorry, your Honour?

GAGELER J: I am sorry, so you never get to the maximum penalty unless you can characterise the conduct in issue at the gravest end of a scale. Is that the way it goes?

MS DOYLE: That is the way it goes, generally speaking. In other words, it would be difficult to imagine any other outcome. I would accept that, your Honour. But having said so, neither the plurality nor their Honours Justices Besanko and Bromwich were willing to turn their back against the relevance of priors, and they say over and over again that prior conduct is relevant to an assessment of all the circumstances.

GAGELER J: At some point, in the plurality judgment, the word “subtle” appears. It is a rather subtle point, is it not?

MS DOYLE: With respect, your Honour, that was a kind description of my argument below.

GAGELER J: I see.

MS DOYLE: But their Honours are being generous. Their Honours in fact, in my submission, make it clear that it is not subtle in any out of the way that poses a difficulty. Can I conclude by just pointing your Honours also to the exposition at paragraphs 230 to 231. There, if you like, their Honours draw together the thread of some of the debate, which had been raging, admittedly, among single judges of the Court, but they made this point after the citation you see in paragraph 230. Their Honours say:

in properly applying Veen No 2, prior contravening history may be able to be demonstrated to be relevant to an assessment of the seriousness or gravity of the instant contravening conduct.

I wanted to point to that, your Honour Justice Gageler, as the reason why I said “generally” in answer to your Honour’s question.

GAGELER J: Yes.

MS DOYLE: Their Honours here advert to the possibility that there will be a case or a time or an offender with respect to whom the maximum penalty may be applied despite not having identified or detected the worst category of conduct.

GAGELER J: I am just not sure about the time, Ms Doyle.

MS DOYLE: Sorry.

GAGELER J: Two minutes, I am sorry.

MS DOYLE: Still on the yellow button, your Honour? I would like to conclude by putting it this way, your Honour. Below the Full Court challenged the appellant regulator to identify why it was then submitted that a recognition by this Court in the Agreed Penalties Case that the principal object of the civil penalties regime is deterrence and not punishment or retribution ‑ to go back to your Honour’s Justice Edelman’s point ‑ why does that have the result that proportionality has now been, or is to be
jettisoned from the process of imposing civil penalties? In our submission, there has been no answer to that.

Secondly, the Full Court challenged the regulator to answer this: when do you assert that those principles and the principle of proportionality derived from the criminal law but applied year after year after year by single judges and Full Courts in civil penalty cases, recalling not just with respect to this respondent but across the entire regime of consumer law and many other aspects of the regulation of corporations?

In other words, the Full Court challenged the regulator: when do you say this uncoupling of proportionality from the regime occurred? And so therefore, thirdly, posed the most challenging question of all: which other Full Federal Court decisions do you now blatantly say were plainly wrong?

In our submission, there was not then – and there has not been now – a disciplined answer to those three questions. Rather, there has been a drift to wanting to assert, as the written submissions here do, that the maximum ought not be simply reserved for the worst category of conduct without a disciplined analysis of that three‑stage question – which, in our submission, was aptly asked and appropriately asked. If your Honours please.

GAGELER J: Thank you. Yes, there will be a grant of special leave to appeal in this matter, limited to ground 1.

AT 9.53 AM THE MATTER WAS CONCLUDED