Civil penalty provisions are now a big part of our regulatory environment – and they’re getting bigger. They no longer affect only the top end of town. Yet recent case law indicates there is still real uncertainty around the procedure courts are to observe in civil penalty proceedings:
- In a major development, recent Full Federal Court authority has cast doubt on a long-entrenched practice of ‘settling’ civil penalty proceedings by submitting joint statements of facts and submissions on an agreed penalties to a Court.
- The precise content of the obligation of fairness owed by regulators in civil penalty proceedings is still being developed.
The expanding reach of civil penalties
Civil penalties are no longer restricted to regulation at the top end of town – where ASIC and the ACCC are still very active. Already, the middle market and individuals are facing regulator civil penalty proceedings in:
Less-known areas of regulation which include civil penalty regimes are:
- tax legislation prohibiting the promotion and implementation of certain tax schemes;
- Commonwealth privacy legislation;
- telecommunications legislation, including the Spam Act 2003;
- new legislation announced this year inserting civil penalty provisions (to be administered by the ATO) into the Foreign Acquisitions and Takeovers Act 1975.
Uncertain procedural content?
While the breadth of the fields of regulation including civil penalty provisions is expanding, the procedural content of civil penalty matters is still a developing area of jurisprudence.
In a decision which sweeps away a practice approbated by the Full Federal Court in 1996, a bench of the Full Federal Court found recently in Director, FWBII v CFMEU  FCAFC 59 that the parties could not by agreement ‘bind’ a court to accept a penalty they jointly submit it should impose: . The change of approach was said to be required by the High Court’s decision in Barbaro v The Queen, which ended the practice in criminal sentencing criminal in Victoria of seeking an indication from the prosecution of the appropriate sentencing ‘range’.
The consequence of the CFMEU decision in civil penalty proceedings is significant. The incentive to settle is reduced considerably when the certainty of an agreed outcome is taken away.
Is a barrister practising in commercial disputes, tax and administrative law. His practice has included extensive experience in civil penalty and regulatory compliance proceedings. He appeared for the Commissioner of Taxation in FCT v Ludekens and FCT v Barosssa Vines – the first two civil penalty proceedings concerning the ‘promoter penalty’ provisions in the Taxation Administration Act 1953 which prohibit the promotion and implementation of certain tax schemes.