Civil Penalties Update - Throwing the book at a serial offender: High Court confirms the primacy of deterrence in determining civil penalties

Commercial Law
Matthew Peckham Portrait

In Australian Building and Construction Commissioner v Pattinson & Anor [2022] HCA 13, a 6-judge majority of the High Court have reiterated the primacy of deterrence in determining civil penalties.

High Court

Overturning a decision of the Full Federal Court, the High Court reinstated an order by the trial judge imposing the maximum penalty available against a serial offender, for deliberate and systematic contraventions. In doing so, the majority held that the purpose of deterrence was not constrained by notions of proportionality, that might otherwise be drawn from the criminal law.


This case concerned contraventions of civil penalty provisions within the Fair Work Act 2009 (Cth) (the Act).

The contraventions occurred on a construction site in Frankston, Victoria, where Multiplex Constructions was the principal contractor. The first respondent, Mr Pattinson, was an employee of Multiplex, and a union delegate for the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) –the second respondent. A subcontractor had been engaged to install solar panels. In the course of inducting its employees to the site, Mr Pattinson asked whether they were members of a union – they were not. Mr Pattinson then told them they would need to join a union, before being permitted to work on the site. As a result, they lost a day’s work.

Mr Pattinson’s enquiry was consistent with a longstanding “no ticket, no start” policy held by the CFMMEU, requiring all workers on sites where the CFMMEU had a presence to hold a union membership. It was not in dispute that the enforcement of that policy has been unlawful since at least the introduction of the Workplace Relations Act 1996 (Cth). Accordingly, the Commissioner brought proceedings for civil penalties against both Mr Pattinson and the CFMMEU itself. Each of Mr Pattinson and the CFFMEU admitted the contraventions in question.

The penalty at trial

In respect of the CFMMEU, Snaden J of the Federal Court imposed the maximum penalty of $63,000 under s 546 of the Act. In doing so, Snaden J had regard to the CFMMEU’s longstanding history of contraventions in furtherance of its “no ticket, no start” policy. In particular, the trial judge had held that the CFMMEU was notoriously a serial offender, had acted historically in disregard of the law, and appeared to treat the imposition of civil penalties as “little more than the cost of its preferred business model”.

In respect of Mr Pattinson, Snaden J imposed a penalty of $6,000.

Appeal to the Full Federal Court

On appeal, the Full Court of the Federal Court held that the history of the prior contraventions, and the deterrent purpose of s 546 of the Act did not warrant the imposition of a penalty that was disproportionate to the nature, gravity and seriousness of the contraventions in question. Rather, the Full Court considered the maximum penalty should be reserved for only the most serious of contraventions. They set aside the original penalties, and imposed a penalty of $4,500 in respect of Mr Pattinson, and $40,000 for the CFMMEU.

The Commissioner appealed to the High Court.

High Court – majority of Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ

In the High Court, the majority accepted that the Full Court had made two errors:

  • Firstly, it had erred in considering that a penalty must be proportionate to the seriousness of the conduct in question: [10]. Rather, the primary consideration was deterrence.
  • Secondly, it had erred in its view that the maximum penalty must be reserved for only the most serious examples of contraventions, and that this might prevent the awarding of the maximum penalty even where necessary to prevent future contraventions. Rather, there need only be a “reasonable relationship” between the theoretical maximum and the penalty that was finally imposed. That relationship was established where the maximum penalty does not exceed what is reasonably necessary to achieve the purpose of deterrence: [10].

Purpose of civil penalties

The majority affirmed that civil penalty provisions have the “statutory function of securing compliance with provisions of the [statutory] regime”: [14].[1] Although the courts may adapt principles from the law of criminal sentencing, there were basic differences between the two: [14]. Most importantly, where criminal sentencing imports notions of retribution and rehabilitation, civil penalties are imposed primarily, if not solely, for the purpose of deterrence: [15]. The majority concluded that this was consistent with previous key cases on civil penalties: [17] – [19].[2]

Proportionality (in a retributive sense) does not apply

Accordingly, the majority concluded that the notion of proportionality was so closely connected to the central role of retribution of criminal sentencing that it could not be translated coherently into the context of civil penalties: [38]. In criminal sentencing, they noted that the principle of proportionality required that the sentence imposed for an offence must not be disproportionate to the seriousness of the offending. In other words, it acted to constrain the sentencing discretion, by requiring that the punishment fit the crime, and be no greater retribution than the offender deserves. In a civil penalty context, retribution has no part to play: [39].

Rather, the majority held instead that the penalty discretion must be exercised fairly and reasonably, having regard to the subject matter, scope and purpose of the legislation. If the term “proportionality” was to be used at all, it was merely to strike a balance between the purpose of deterrence, and oppressive severity: [40]-[41].

In this case, the use of “proportionality” to reduce the severity of the penalties imposed on the CFMMEU, was to fail to have a proper regard for deterrence. The majority concluded that the CFMMEU’s repeated and historic contraventions of the Act were a compelling indication that the penalties imposed previously had not been sufficient, but rather were regarded as an “acceptable cost of doing business”: [43].

Other concepts from criminal sentencing: totality, parity, course of conduct

The majority sought to distinguish their views on the non-application of the principle of proportionality, with other principles that are borrowed from the criminal law and regularly applied in the context of civil penalties: totality, parity, and the penalising of a course of conduct. In the view of the majority, each of those principles were analytical tools, which assisted in determining a reasonable penalty. In contrast, the principle of proportionality was normative in character, developed in the context of retributive punishment: [45].

Dealing with recidivists and serial offenders

Although restoring the maximum penalty in this instance, the majority cautioned that a similar approach would not necessarily be warranted in every case of recidivist contraventions: [46]. For example, it would not be warranted if the repeat offending was inadvertent, or based on mere ignorance, or had been met with an internal response – ie discipline for the officer in question, or some act of public remorse: [47].

Contravention vs contravener

The majority observed that the Full Court had drawn too sharp a distinction between the relevant circumstances of the contravention, and the circumstances of the contravener themselves: [56]. The majority held that, on the correct approach, both considerations were relevant. Where a contravener is well resourced, or determined to have its way, and engaging in deliberate contraventions, a greater deterrence may well be required: [60].

Aggravating factors and the relevance of other laws

The majority warned against making too much of the fact that the contraventions were not accompanied by violent or intimidatory behaviour, in terms of assessing the seriousness of the contravention. The contravention in question was concerned with protecting rights of association in the workplace, not matters of that nature. If aggravating circumstances of the nature should arise in the context of a different contravention, they might well engage other laws, and attract a separate sanction in their own right: [62].

Outcome and conclusion

In conclusion, the majority stated that the theory of imposing a civil penalty was that the penalty is intended to encourage compliance with the law (and to deter non-compliance), by ensuring that contraventions are viewed by the contravener (and other potential contraveners) as an economically irrational choice: [66]. Accordingly, where it is evident that a contravention has occurred as a matter of deliberate industrial strategy, and without regard for the law, a court may reasonably conclude that no penalty short of the maximum will be appropriate: [67].

Accordingly, the majority restored the original penalties set by the trial judge, including the maximum as ordered against the CFMMEU.

Justice Edelman’s dissent

In a dissenting judgment, Edelman J forcefully disagreed with the favouring of deterrence as the primary criterion of justice in determining civil penalties, over principles of “just desert”. Edelman J described that departure as “radical”: [103]. Putting aside this question of principle, on the imposition of the maximum penalty more generally in the face of a systematic pattern of misconduct, Edelman J stated that the primary judge may not have been in error to do so: [117].

In relation to the question of principle, Edelman J stated at [88]:

There is a fundamental difference between (i) a penalty that focuses on “just dessert”, that is, the penalty that, in justice, is no more than the law treats as deserved by a defendant for their past conduct, and (ii) a penalty that focuses upon deterrence, that is, the penalty that is necessary to prevent a defendant or others in a similar position from contravening in future.

Stripped of the focus on “just dessert” (or proportionality), Edelman J argued that a person could be penalised in an amount that they did not deserve, in order that the penalty should act as a deterrent: [90]. The focus on “just dessert” was already reflected in the three critical principles that were regularly applied in a penalty context:

  • totality (ie that cumulative penalties should not be incommensurate with the whole of the contravening conduct): [94];
  • consistency (ie that similar conduct should attract a similar penalty): [95]; and
  • the course of conduct principle (ie that penalties for multiple offences, forming part of a single course of conduct, should be penalised based on the entirety of that conduct): [96].

On the deterrent effect of penalties more generally, Edelman J described it as a “questionable assumption”, stating that:

It is the experience of every judicial officer who has sentenced offenders or imposed civil penalties that even the largest and most extreme penalties will not deter everyone in a similar position. It is also an unfortunate truth that many potential contraveners, or their officers or advisers, do not spend many hours each week carefully reading the wisdom collected on AustLII, Jade, and other databases containing legal decisions on penalties. ([106])

Although in the minority, Edelman J’s dissent raises practical and principled issues that may be grappled with further in subsequent cases.

[1] Affirming Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 (the Agreed Penalties Case)

[2] Eg the Agreed Penalties Case; ACCC v TPG Internet (2013) 250 CLR 640; Trade Practices Commission v CSR Ltd [1991] ATPR 41-076; ASIC v Adler (2002) 42 ACSR 80; Kelly v Fitzpatrick (2007) 166 IR 14.

Matthew Peckham Portrait

Matthew specialises in commercial, corporate and regulatory litigation

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