What is changing?
The High Court of Australia handed down a judgement on 13 April 2022 that has significant implications for the way civil penalty maximums are imposed by courts.
In Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 (Judgement), the High Court said courts must impose penalties that deter persons from repeatedly breaking the law.
Historically, courts have relied on the principle of proportionality (“let the punishment fit the crime”) when determining what penalties should be imposed on those guilty of criminal offences. However the High Court has held that this principle no longer has a place in determining the appropriate civil penalty to be applied. Courts should impose more severe penalties on offenders that have a wilful disregard of the law.
Who will this affect?
Companies, directors, and officers who are subject to the civil penalties provisions in the Corporations Act 2001 (Cth) may now be impacted by this Judgement.
Failure by companies and directors to self-audit their behaviour and comply with applicable civil penalty regimes, and continuation of poor workplace practices will heighten the risk of a severe outcome if civil proceedings are commenced against them. The maximum civil penalty may be applied even for breaches that may seem minor or have a minimal impact.
The Judgement observes that the maximum can be applied regardless of whether the breach is ‘the most severe’ in its category. Courts will impose the maximum if they feel that the defendant has not been paying attention to previous penalties imposed, warnings given, or is in ‘continual defiance’ of the rules they are bound by.
Why has this occurred?
The High Court recognises that contraveners with greater resources (for instance: larger or well-funded companies, wealthy directors) will need stronger financial penalties to feel the impact of a penalty and be incentivised to abide by the law.
The Judgement also highlighted that it believes that ‘the more determined a contravener is to have its way in the workplace and the more deliberate its contravention is, the greater will be the financial incentive necessary to make the contravener accept that the price of having its way is not sustainable.’[1]
In Pattinson\’s case the Court imposed the maximum civil penalty on an individuals in contravention (not just the company), stating that the severe punishment was justified to deter other individuals from continuing or beginning to engage in behaviour similar in the wider business community.
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This article was written by GRT Lawyers, Dana Heriot (solicitor).
[1]Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 at [60].
