The King v Jacobs Group (Australia) Pty Ltd

• Jurisdiction: Australia Federal only
• Judge: Kiefel CJ,Gageler,Gordon,Steward,Gleeson,Jagot JJ,Edelman J.
• Judgment Date: 02 August 2023
• Neutral Citation: [2023] HCA 23
• Court: High Court
• Docket Number: S148/2022

[2023] HCA 23

HIGH COURT OF AUSTRALIA

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

S148/2022

The King

Appellant

and

Jacobs Group (Australia) Pty Ltd formerly known as Sinclair Knight Merz

Respondent

Representation

J T Gleeson SC with C J Tran for the appellant (instructed by Commonwealth Director of Public Prosecutions)

B W Walker SC with N M Kirby for the respondent (instructed by Jones Day)

Criminal Code (Cth), s 70.2.

Statutes — Construction — Where respondent pleaded guilty to offences of conspiracy to cause offer of provision of bribe to foreign public official contrary to ss 11.5 and 70.2(1) of Criminal Code (Cth) — Where s 70.2(5) of Criminal Code (Cth) relevantly prescribed maximum monetary penalty for offence as not more than greatest of: (a) 100,000 penalty units; or (b) if court can determine value of benefit that body corporate obtained that is reasonably attributable to conduct constituting offence, three times value of that benefit — Where parties agreed “benefit” obtained was securing contracts for carrying out construction projects — Where parties also agreed “benefit” obtained was money received for performing contracts — Whether s 70.2(5)(b) required value of benefit obtained by respondent to be determined as sum of amounts respondent in fact received under contracts secured by bribery — Whether deduction could properly be made for any costs incurred in performing contracts.

Words and phrases — “any advantage”, “benefit”, “bribery”, “effective, proportionate, and dissuasive”, “fine”, “foreign public official”, “gross amount”, “international obligations”, “maximum penalty”, “monetary penalty”, “net benefit”, “obtained directly or indirectly”, “OECD Convention”, “reasonably attributable”, “sentence”, “value of the benefit”.

ORDER

• 1. Appeal allowed.

• 2. Set aside the order of the Court of Criminal Appeal of New South Wales made on 11 July 2022, in so far as it dismissed the appeal against sentence for sequence three, and remit the matter to that Court for redetermination of that part of the appellant's appeal under s 5D of the Criminal Appeal Act 1912 (NSW).

On appeal from the Supreme Court of New South Wales

1 Kiefel CJ, Gageler, Gordon, Steward, Gleeson AND Jagot JJ. If a body corporate bribes, or conspires to bribe, a foreign public official 1, it is liable to be punished on conviction by a monetary penalty 2. The issue in this appeal is the proper construction of s 70.2(5) of the Criminal Code (Cth) 3, which is a provision that prescribes the maximum monetary penalty for that offence as a fine not more than the greatest of the following:

• “(a) 100,000 penalty units ^[ 4 ^];

• (b) if the court can determine the value of the benefit that the body corporate, and any body corporate related to the body corporate, have obtained directly or indirectly and that is reasonably attributable to the conduct constituting the offence – 3 times the value of that benefit;

• (c) if the court cannot determine the value of that benefit – 10% of the annual turnover of the body corporate during the period (the turnover period) of 12 months ending at the end of the month in which the conduct constituting the offence occurred.”

2 The respondent pleaded guilty to three charges of conspiracy to cause an offer of the provision of a bribe to a foreign official. This appeal is concerned only with the third count, which related to a period after the maximum penalty provision was amended by the insertion of s 70.2(5) in the terms identified above 5.

3 Before the primary judge in the Supreme Court of New South Wales, it was common ground that the benefit the respondent and its related bodies corporate

obtained, directly or indirectly, and that was reasonably attributable to the conduct constituting the third count was securing contracts for the carrying out of three construction projects. It was also agreed that the “value of the benefit” that the respondent so obtained involved the money received for performing those contracts, a sum which could be determined 6

4 The respondent contended that the value of the benefit it obtained was the amount it received for performing its obligations under the contracts less the costs it paid to third parties to enable that performance, excluding all such costs paid, or possibly paid, as part of the bribery offence. This was referred to as a “net benefit” approach. Before the primary judge, the respondent's position was that:

“The net amount received by [the respondent] and its related body corporates in respect of the conduct … was AUD $2,680,816. It is [the respondent's] position that this is the relevant benefit that should be used to determine the maximum penalty in accordance with s 70.2(5)(b) of the Code. As three times this amount is less than $11,000,000.00, the maximum penalty would be calculated in accordance with s 70.2(5)(a), which is $11,000,000.”

5 The Crown contended that the value of the benefit the respondent obtained was the total gross amount the respondent received for performing its obligations under the contracts. Before the primary judge, the Crown's position was that:

“The total gross amount received by [the respondent] in respect of the three projects … was AUD $10,130,354. It is the Crown's position that this is the relevant benefit that should be used to determine the maximum penalty in accordance with s 70.2(5)(b) of the Code.”

6 While the parties referred to the Crown's approach as the “contract price” approach (in contrast to the respondent's “net benefit” approach), that is a misnomer. The sum of the contract prices for the three projects is unknown. What is known is the gross amount the respondent received for the performance of these contracts and the external costs the respondent incurred in that performance. Accordingly, the label “contract price”, in this case, does not mean the amount promised to be paid under the contracts, but the amount in fact received under the contracts.

7 The primary judge held that the respondent's “net benefit” approach was correct 7. As three times the value of the benefit yielded by this approach was less than the 100,000 penalty units in s 70.2(5)(a) of the Criminal Code, the maximum penalty for the relevant bribery offence was 100,000 penalty units or $11 million 8. The primary judge assessed the penalty to be imposed for the relevant offence based on this maximum penalty 9. If the Crown's “contract price” approach had been adopted, three times the value of the benefit yielded (totalling $30,391,062) would have been greater than the amount in s 70.2(5)(a) of the Criminal Code ($11 million), so that the maximum penalty would have been as specified in s 70.2(5)(b) 10.

8 The Crown appealed against sentence. The Court of Criminal Appeal of New South Wales dismissed the appeal 11.

9 The Crown was granted special leave to appeal. The only issue in this Court is that described at the hearing before the primary judge – whether, as the Crown contended, the value of the benefit that the respondent obtained as a result of the bribery offence was the amount it received in performing the contracts or whether, as the respondent contended, the value of the benefit was that amount net of costs, expenses, or other outgoings incurred in performing the contracts, other than costs or expenses paid, or possibly paid, as part of the bribery.

10 For the following reasons the appeal must be allowed. On the facts of the present case, the value of the benefit the respondent obtained and that is reasonably attributable to the conduct constituting the offence is the amount it received for performing the contracts. That amount was agreed to be $10,130,354 12. As three times that amount is $30,391,062, being greater than the amount of the penalty of

100,000 penalty units (or $11 million) in s 70.2(5)(a), the maximum penalty for the third count was $30,391,062. The penalty to be imposed by way of sentence was to be assessed based on this maximum penalty

The statutory scheme

History

11 Division 70 of Ch 4 of the Criminal Code was enacted as part of the Criminal Code Amendment (Bribery of Foreign Public Officials) Act 1999 (Cth) “to implement the OECD [Organisation for Economic Co-operation and Development] Convention on Combating Bribery of

Foreign Officials in International Business Transactions, which is a very significant response by the international community to the problem of transnational corruption” 13. The provisions of Div 70 were intended to “convey a message to the world and the Australian community that the parliament takes the problem of bribery seriously” 14. The reasons given for why “[i]t [was] important that Australia should support the OECD's initiative to combat the bribery of foreign public officials and take a principled stand against corruption” 15 were that “[b]ribery distorts attempts at international competitive bidding, bribes themselves are non-productive and are therefore paid from profits and bribes distort trade in that contracts are not based on merit and can lead to production of poor quality goods and services” 16. Further, the Explanatory Memorandum for the Criminal Code Amendment (Bribery of Foreign Public Officials) Bill 1999 (Cth) explained that the Bill ensured “Australia complies with the key feature of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (‘the OECD Convention’)” 17

12 A subsequent OECD review of implementation of the OECD Convention 18 exposed that the penalties in Div 70 (which were a maximum fine of $66,000 for an individual and $330,000 for a body corporate) were inadequate, having regard to Art 3.1 of the OECD Convention which provides that “[t]he bribery of a foreign public official shall be punishable by effective, proportionate and dissuasive criminal penalties”. The OECD Working Group on Bribery in...