Australian Building and Construction Commissioner v Pattinson

• Jurisdiction: Australia Federal only
• Court: High Court
• Judge: Kiefel CJ,Gageler,Keane,Gordon,Steward,Gleeson JJ,Edelman J.
• Judgment Date: 13 April 2022
• Neutral Citation: [2022] HCA 13
• Docket Number: M34/2021

[2022] HCA 13

HIGH COURT OF AUSTRALIA

Kiefel CJ, Gageler, Keane, Gordon, Edelman, Steward and Gleeson JJ

M34/2021

Australian Building and Construction Commissioner

Appellant

and

Kevin Pattinson & Anor

Respondents

Representation

S P Donaghue QC, Solicitor-General of the Commonwealth, and T M Begbie QC with J D Watson for the appellant (instructed by MinterEllison)

R M Doyle SC with P A Boncardo and B Bromberg for the respondents (instructed by Construction, Forestry, Maritime, Mining and Energy Union)

Fair Work Act 2009 (Cth), ss 349, 546.

Industrial law (Cth) — Pecuniary penalties — Determination of appropriate penalty — Where s 349(1) of Fair Work Act 2009 (Cth) (“Act”) relevantly provided that person must not knowingly or recklessly make false or misleading representation about another person's obligation to engage in industrial activity — Where s 546 of Act empowered Federal Court of Australia to order person to pay pecuniary penalty that court considered “appropriate” in respect of contravention of civil remedy provision — Where first respondent union officer and second respondent union each contravened s 349(1) of Act twice — Where second respondent had longstanding history of contraventions of Act — Whether discretion under s 546 of Act constrained by notion of proportionality drawn from criminal law — Whether statutory maximum penalty for civil remedy provision may be imposed only for worst category of contravening conduct.

Words and phrases — “appropriate penalty”, “civil penalty regime”, “civil remedy provision”, “deterrence”, “discretion”, “maximum penalty”, “pecuniary penalty”, “proportionality”, “retribution”.

ORDER

• 1. Appeal allowed.

• 2. Set aside the orders of the Full Court of the Federal Court of Australia made on 16 October 2020 and, in their place, order that the appeal to that Court be dismissed.

1 Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ. This appeal concerns the scope of the power conferred on the Federal Court of Australia by s 546 of the Fair Work Act 2009 (Cth) (“the Act”) to impose civil pecuniary penalties in respect of contraventions of the civil remedy provisions of the Act.

2 The contraventions in question occurred in September 2018 at a building site in Frankston, Victoria. The site was occupied by Multiplex Constructions Pty Ltd, the principal contractor. The first respondent (“Mr Pattinson”) was an employee of Multiplex. He was also an officer of the second respondent union (“the CFMMEU”) and was the union delegate on site 1.

3 A subcontractor was engaged to install solar panels at the site. Two employees of the subcontractor arrived at the site to carry out that work and attended an induction conducted by Mr Pattinson. During the induction, Mr Pattinson enquired whether the two employees were “union” and whether they had a “ticket”. This enquiry alluded to the CFMMEU's longstanding “no ticket, no start” policy, pursuant to which all workers are required to hold union membership in order to work on construction sites where the CFMMEU has a presence. Since at least the advent of the Workplace Relations Act 1996 (Cth), the implementation of such a policy has been unlawful 2.

4 Neither employee was a member of the CFMMEU and they told Mr Pattinson as much. In response, Mr Pattinson represented to the two employees that, in order to perform the work they had attended the site to perform, they were required to become a member of an industrial association (“the misrepresentations”). As a result of the misrepresentations, the two employees were prevented from performing any work on the site that day 3.

5 In civil penalty proceedings brought by the Australian Building and Construction Commissioner (“the Commissioner”) in the Federal Court of Australia, these matters of fact were admitted by Mr Pattinson and the CFMMEU. It was accepted that, by the misrepresentations, Mr Pattinson twice contravened s 349(1) of the Act, in that he knowingly or recklessly made a false or misleading representation about the supposed obligation of the two employees to become members of an industrial association. It was also accepted that Mr Pattinson, in making the misrepresentations, acted in his capacity as a delegate of the CFMMEU, and therefore his action was attributable to the CFMMEU pursuant to s 363 of the Act. It followed that the CFMMEU itself also contravened s 349(1) 4.

6 The primary judge (Snaden J) imposed civil pecuniary penalties in the amounts of $6,000 in respect of Mr Pattinson ($3,000 for each contravention) and $63,000 in respect of the CFMMEU ($31,500 for each contravention). His Honour was minded to fix the penalty for the CFMMEU at the statutory maximum of $63,000 for each contravention, having regard to the CFMMEU's longstanding history of contraventions of the Act in furtherance of its “no ticket, no start” policy. However, because both contraventions occurred in the course of a single episode, the primary judge reduced each penalty by half, so that their total reflected a single maximum penalty 5.

7 On appeal, the Full Court of the Federal Court of Australia (Allsop CJ, Besanko, White, Wigney and Bromwich JJ) held that the history of the CFMMEU's prior contraventions and the deterrent purpose of s 546 did not warrant the imposition of a penalty that was disproportionate to the nature, gravity and seriousness of the circumstances of the instant contraventions 6. The Full Court considered that the primary judge had erred in imposing on the CFMMEU what was, in effect, the maximum penalty, which the Full Court considered ought to be reserved for the most serious examples of conduct in contravention of s 349(1) of

the Act 7. The Full Court set aside the penalties imposed by the primary judge and, exercising afresh the discretion conferred by s 546, proceeded to impose penalties in the lesser amounts of $4,500 in respect of Mr Pattinson ($4,000 and $500) and $40,000 in respect of the CFMMEU ($38,000 and $2,000) 8

8 The Commissioner appealed to this Court, contending that the Full Court made two related errors: first, in regarding the discretion under s 546 of the Act as constrained by a “notion of proportionality”; and secondly, in regarding the statutory maximum civil penalty as providing a “yardstick” according to which the maximum may be imposed only in a case involving the worst category of contravening conduct.

9 The Commissioner's contentions should be accepted and the appeal allowed. Under the civil penalty regime provided by the Act, the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the Act by the deterrence of further contraventions of the Act. In that context, the penalties fixed by the primary judge were appropriate because they were no more than might be considered to be reasonably necessary to deter further contraventions of a like kind by Mr Pattinson, the CFMMEU or others. They represented a reasonable assessment of what was necessary to make the continuation of the CFMMEU's non-compliance with the law, amply demonstrated by the history of its contraventions, too expensive to maintain.

10 The Full Court's critical error was that it was distracted by a concern, drawn from the criminal law, that a penalty must be proportionate to the seriousness of the conduct that constituted the contravention. The power conferred by s 546 of the Act is not subject to constraints drawn from the criminal law and there is no place for a “notion of proportionality”, in the sense in which the Full Court used that term, in a civil penalty regime. Further, and relatedly, their Honours were misled by the view that the Act required that the maximum penalty be reserved for only the most serious examples of the offending comprehended by s 349(1), and that this principle could prevent the court from imposing the maximum penalty

even though a penalty in that amount might reasonably be considered to be necessary to deter future contraventions of a like kind. Nothing in the text, context or purpose of s 546 requires that the maximum penalty be reserved for the most serious examples of misconduct within s 349(1). What is required is that there be “some reasonable relationship between the theoretical maximum and the final penalty imposed” 9. That relationship is established where the maximum penalty does not exceed what is reasonably necessary to achieve the purpose of s 546: the deterrence of future contraventions of a like kind by the contravenor and by others 10

11 Before turning to discuss the reasons of the primary judge and the Full Court in more detail, it is desirable first to set out the civil penalty provisions of the Act, and to refer to the authoritative and uncontroversial judicial exegesis of those provisions and analogous civil penalty provisions in other Commonwealth legislation.

Civil penalties pursuant to s 546 of the Act

12 Section 546(1) of the Act empowers the Federal Court to order a person to pay a pecuniary penalty that the court considers is “appropriate” in respect of a contravention of a civil remedy provision. Section 349(1) is one such civil remedy provision. It provides:

“A person must not knowingly or recklessly make a false or misleading representation about either of the following:

(a) another person's obligation to engage in industrial activity;

(b) another person's obligation to disclose whether he or she, or a third person:

(i) is or is not, or was or was not, an officer or member of an industrial association; or

(ii) is or is not engaging, or has or has not engaged, in industrial activity.”

13 By reason of s 546(2), a pecuniary penalty must not exceed the relevant “maximum penalty” specified by s 539(2). The maximum penalties for a contravention of s 349(1) are 60 penalty units for an individual and 300 penalty units for a...