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Agreed penalties (ok, says the High Court)

Overview

High Court unanimously held that "in civil penalty proceedings, courts are not precluded from considering and, if appropriate, imposing penalties that are agreed between the parties" (judgment summary)

In May 2015 the Full Federal Court ruled that joint submissions by parties in relation to pecuniary parties (a long time practice of the ACCC in relation to competition law proceedings) was not permitted. This followed an earlier High Court decision (Barbaro) in which that court held that the prosecution should not nominating a sentencing range in relation to criminal sentencing proceedings.

The key issue on appeal to the High Court was whether or not the reasoning in Barbaro should be applied to civil pecuniary penalties or whether parties could continue to make joint submissions with regulators in relation to an appropriate penalty or penalty range. The High Court unanimously held that the reasoning in Barbaro did not apply to civil pecuniary penalties and that, as a result, parties to civil proceedings can continue to submit agreed penalties to the court (which may or may not be accepted).

In their joint judgment, French CJ, Kiefel, Bell, Nettle and Gordon JJ concluded that 'decision in Barbaro does not apply to civil penalty proceedings and a court is not precluded from receiving and, if appropriate, accepting an agreed or other civil penalty submission.' (para 1). In separate (brief) reasons for judgment, Justice Gageler agreed with the conclusion in the majority reasons that Barbaro does not apply to civil penalty proceedings and joined in the proposed orders. In a separate reasons Justice Keane also agreed that the appeals should be allowed for the reasons given by the majority and made a few additional observations.

Although the proceedings did not involve the ACCC, they had direct implications for the common practice of the ACCC to submit agreed penalties after cooperation and negotiation with parties the subject of civil prosecutions under the CCA.

The High Court case page includes transcripts and video of the hearing before the High Court as well as links to judgments, a judgment summary, written submissions and a chronology - a great one stop shop for all the resources relating to this judgment:

High Court judgment and related

Full Federal Court judgment and related

The primary issue dealt with by the Court related to joint submissions as to pecuniary penalties. In Barbaro (Barbaro v The Queen [2014] HCA 2; (2014) 305 ALR 323), the High Court held that in criminal sentencing proceedings, the prosecution should not nominate a sentencing result or range. In this case the Federal Court considered whether or not the decision in Barbaro should be applied regarding the penalties the parties had agreed. The Court concluded the reasoning in Barbaro should apply to this case and that therefore they should not have any regard to the figures agreed by the parties in relation to penalties, 'other than to the extent that the agreement demonstrates a degree of remorse and/or cooperation on the part of the respondent' (para 2).

 

Media and Commentary on High Court ruling

Law firm commentary

Allens><Linklaters: 'Significant High Court Decision on Settlement of Regulatory Proceedings' (Allens><Linklaters Client Update, 9 December 2015)

Clayton Utz, 'Negotiating agreed penalties with regulators is OK, says High Court' (9 December 2015).

Gilbert+Tobin, 'The Return of Certainty: Negotiated Resolutions in Civil Penalty Proceedings' (December 2014)

King&Wood Mallesons: Peta Stevenson, Trish Henry and Emma White, 'Australia's High Court reinstates agreed penalties' (King&Wood Mallesons, 9 December 2015)

King&Wood Mallesons: Emma White, 'High Court reinstates agreed penalties' (In Competition, 9 December 2015)

Media and Commentary on Federal Court ruling

Law firm commentary

Addisons: Sarah Andrews and Rachel White, 'Let judges be judges: The Federal Court asserts its ultimate discretion in determining pecuniary penalties' (Addisons, Focus Papers, 13 May 2015)

Corrs Chambers Westgarth: Ayman Guirguis, Richard Filtcroft and Asa Lam, 'Where to now for Agreed Civil Penalty Outcomes following the CFMEU and Barbaro Decisions' (Corrs Chambers Westgarth, 'Corrs in Brief', 8 May 2015)
Authors consider that the decision 'creates significant uncertainty for regulators and potential respondents alike' and is 'likely to lead to a significant chilling effect on the preparedness of parties to seek to resolve, rather than to contest, matters'.

DLA Piper: Belinda Randall, 'Federal Court Changes the Playing Field on ‘Agreed’ Civil Penalties in Regulatory Proceedings' (DLA Piper, JDSupra, 7 May 2015)

Gilbert + Tobin, 'No Deal! Director v CFMEU and the future of negotiated resolutions in ACCC penalty proceedings' (Updates in Competition + Regulation, May 2015)

Herbert Smith Freehills: Chris Jose, Andrew Eastwood, Paul Hughes, Jeremy Birch and Felicity Lee, 'Federal Court delivers a blow to agreed outcomes in civil penalty proceedings' (Herbert Smith Freehills Legal Briefing, 4 May 2015)

Holding Redlich: Alana Giles and Alex Dold, 'Civil penalty proceedings: approach of the courts following Barbaro and CFMEU' (8 July 2015)

Johnson Winter & Slattery: Sat Katdare & Wolfgant Hellman, 'Over 20 years of jurisprudence on “agreed penalties” overturned!' (Johnson Winter & Slattery, May 2015)

King&Wood Mallesons: Peta Stevenson and Trish Henry, 'Full Federal Court restates position on use of agreed penalties' (King&Wood Mallesons Insights, 4 May 2015)

King&Wood Mallesons: Peta Stevenson, 'Full Court Rules Against Agreed Penalties' (King&Wood Mallesons, In Competition, 1 May 2015)

Lander & Rogers: Calum Henderson, Scott Traeger and Caroline Walker, 'Unsettling: Federal Court rejects propriety of agreed civil penalty submissions' (Lander & Rogers, Competition Law update, 12 May 2015)

Academic commentary

Rebecca Ananian-Welsh and Kate Gover, 'Before the High Court: Commonwealth v Director, Fair Work Building Industry Inspectorate: The End of Penalty Agreements in Civil Pecuniary Penalty Schemes?

Julie Clarke, The Federal Court of Australia rules against submissions on agreed penalties (Fair Work Building Industry Inspectorate / Construction, Forestry, Mining and Energy Union), e-Competitions Bulletin June 2015, Art. N° 73596

Media commentary

John Durie, 'Ruling upsets agreed settlements applecart' (The Australian, 4 May 2015)

 

 

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