Federal Court Changes the Playing Field on ‘Agreed’ Civil Penalties in Regulatory Proceedings

by DLA Piper

The very recent decision of the Full Court of the Federal Court (handed down on 1 May 2015) in Director, Fair Work Building Industry Inspectorate v CFMEU [2015] FCAFC 59 has changed the law in relation to the Court’s approach to ‘agreed’ penalties in civil penalty proceedings. This decision is likely to be highly relevant to any party considering a ‘settlement’ with regulators (including the ACCC). Please click here to read the decision.

In short, the Court has ruled that it must have complete discretion to fix an appropriate penalty in civil penalty cases, and any agreement as to penalty between a regulator and a respondent is no more than an expression of a shared opinion, and therefore inadmissible. This is a significant departure from the long established previous position, whereby the Federal Court in civil penalty proceedings would encourage regulators and respondents to make agreed submissions as to what penalty amount would be appropriate (with a degree of comfort for the parties that the Court would adopt or have substantial regard to the agreed position).

The Court declined to approve pecuniary penalties of $105,000 and $45,000 (respectively) against 2 unions, the CFMEU and the CEPU, in terms that had been agreed with the Director and submitted to the Court in an Agreed Statement of Facts. The respondents had consented to these penalties and related declarations that they had both contravened Building and Construction Industry Improvement Act 2005 (Cth) by engaging in unlawful industrial action. The Court directed the parties to consider its reasons and reconsider their respective positions before a further hearing (stating pointedly that ‘the Court might reasonably expect a little more discernment in identifying the relevant decisions and a little more detail in the submissions concerning them‘).

The position adopted by the Court is now in line with the position that applies in criminal proceedings (as confirmed by the High Court in Barbaro v The Queen (2014) 305 ALR 323, which is the subject of extensive analysis in the CFMEU decision). Some of the key points made by the Federal Court in its judgment which may be of particular interest to insurers and insureds contemplating ‘deals’ with regulators in pecuniary penalty cases are as follows:

  • The Court should have no regard to agreed figures in fixing the amounts of penalties to be imposed, other than to the extent that the agreement demonstrates a degree of remorse and/or co-operation on the part of each respondent. A respondent’s acceptance of liability and willingness to submit to the imposition of a substantial pecuniary penalty are relevant considerations in fixing a penalty, but not as to the actual amount.
  • The responsibility for fixing penalties rests with the Court.  The regulator may choose the remedies which it seeks, but the Court must, in the exercise of its discretion, decide whether to grant such relief.  In particular, it must fix the amount of any pecuniary penalty to be imposed.
  • Whilst the parties may submit statements as to agreed facts and joint submissions, this does not include the right to offer opinions as to an appropriate outcome.  An opinion or view as to penalty is neither evidence nor submission. The Court may not take advice from the regulator as to the exercise of its discretion.
  • The development of a consistent approach to the fixing of pecuniary penalties necessitates reference to prior decisions (as with the criminal sentencing process).

This decision is likely to create much uncertainty for parties and their insurers in relation to current and future negotiations with regulators over appropriate penalties to be imposed in civil penalty proceedings. It will be interesting to see how the parties adapt to this changed playing field, whether settlements of proceedings decline and if (ultimately) there is a legislative response.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© DLA Piper | Attorney Advertising

Written by:

DLA Piper

DLA Piper on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.