Federal Court of Australia

Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union (Kiama Aged Care Centre Appeal) [2023] FCAFC 63

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be allowed.

2.    The following orders of those made by the Court on 21 January 2022 be set aside:

(a)    Order 11, which imposed a pecuniary penalty on the third respondent (Mr Dimitriou) in respect of a contravention of the Fair Work Act 2009 (Cth) (FW Act);

(b)    Order 12, which imposed penalties on the first respondent (the Union) in respect of contraventions of the FW Act; and, consequentially; and

(c)    Order 13, but only to the extent that it allowed Mr Dimitriou and the Union time to pay the penalties respectively imposed by Orders 11 and 12.

3.    The proceedings be remitted to the Court’s original jurisdiction for reconsideration according to law, if possible by the primary judge, of the question of the penalties to be imposed on the first and third respondents in respect of the contraventions of the FW Act which the Court found had occurred.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT

Introduction

1    It is an occupational hazard for any judge sitting in the original jurisdiction for a later judgment at ultimate appellate level in another proceeding to demonstrate that a statement of principle by an earlier intermediate appellate court which the judge was at the time bound to follow and apply, and did, was erroneous.

2    Sometimes, where the existence of that other proceeding is known, this hazard can be avoided by the adjourning of the original jurisdiction proceeding, pending the outcome of the proceeding at ultimate appellate level. But there is no hard and fast rule which requires such an adjournment. Parties are entitled to have the original jurisdiction proceeding heard and determined, even where there exists the contingency that a judgment at ultimate appellate level in another case might have relevant if not decisive impact. In the present case, neither party sought an adjournment. As later events have transpired, the hazard mentioned has been encountered.

3    The relevant court events are as follows. On 21 January 2022, for reasons set out in Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (Kiama Aged Care Centre Case) (No 2) [2022] FCA 19 (Penalty Judgment), the learned primary judge made orders imposing penalties which have become the subject of the present appeal. These were a sequel to findings by the primary judge that the respondents were liable for breaching various provisions of the Fair Work Act 2009 (Cth) (FW Act): Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (Kiama Aged Care Centre Case) [2021] FCA 920; 309 IR 353 (Liability Judgment).

4    In the Liability Judgment, the primary judge found that the second respondent (Mr Danalis) contravened s 500 of the FW Act as a result of various actions undertaken at the project site for the Kiama Aged Care Centre of Excellence (the Site) on 27 and 28 November 2018. The primary judge also found that the third respondent (Mr Dimitriou) contravened s 500 of the FW Act on 28 November 2018 by refusing to undertake a visitors’ induction at the Site, and by entering the Site and speaking to workers when neither he nor Mr Danalis had undertaken an induction and when they were unaccompanied. The primary judge also declared that Mr Danalis contravened s 503 of the FW Act. Furthermore, since Messrs Danalis and Dimitriou engaged in the relevant conduct on behalf of the first respondent, the Construction, Forestry, Maritime, Mining and Energy Union (Union) and within the scope of their actual or apparent authority, the primary judge found that the Union was taken to have contravened ss 500 and 503 of the FW Act by virtue of ss 550 and 793 of the FW Act.

5    In the Penalty Judgment, the primary judge imposed, on Mr Danalis, a penalty of $6,000 for his 27 November 2018 contravention of s 500, and $3,000 for his 27 November 2018 contravention of s 503. For Mr Danalis’ 28 November 2018 contravention of s 500, the primary judge imposed a penalty of $2,000. For Mr Dimitriou’s contravention of s 500 on 28 November 2018, the primary judge imposed a penalty of $3,000. The primary judge imposed an overall penalty of $170,000 on the Union.

6    Initially, the appellant, the Fair Work Ombudsman, who has latterly succeeded to responsibilities previously undertaken by the Australian Building and Construction Commissioner, appealed against orders made in both the Penalty Judgment and the Liability Judgment. Further, the Union separately relied upon a notice of contention. However, by way of an interlocutory application, the appellant sought leave to further amend her notice of appeal.

7    The proposed further amended notice of appeal, inter alia, abandoned all grounds of appeal in relation to the Liability Judgment. Further, the appellant advanced but one ground of appeal from her original notice of appeal in relation to the Penalty Judgment (Ground 9). She sought to advance, by amendment by leave, a new ground of appeal in relation to the Penalty Judgment (Proposed Ground 11). The respondents opposed the appellant’s interlocutory application insofar as it sought to raise Proposed Ground 11. They also withdrew, prior to the hearing, their notice of contention.

8    The appellant’s interlocutory application was heard and determined in conjunction with the substantive appeal. At that hearing, we determined that the appellant should be granted leave to raise Proposed Ground 11. We did so for these reasons.

9    The proposed amendment concerned whether the primary judge erred by taking into account, for the purposes of civil penalisation, a proportionality principle. The penalty hearing occurred in November 2021. The related judgment was, as already noted, handed down on 21 January 2022. At first instance, the appellant made submissions as to the incorrectness of taking into account the proportionality principle, to which the Union and its officials responded. The appellant did not include the ground when she filed her appeal on 14 February 2022. However, the appellant filed an interlocutory application seeking leave to amend the notice of appeal a very short time later, on 28 April 2022. That was shortly after the High Court had, earlier that month, published a judgment in another case, to which we refer below, on the correctness of taking into account that principle.

10    The issue as to the relevance of proportionality in civil remedy penalisation could not possibly have come as a surprise to the Union. An amendment of the grounds of appeal so as expressly to raise it did nothing more than formalise an issue long foreshadowed to the Union. The Union made no argument as to having suffered any material prejudice. It would have been quite artificial in the circumstances to do other than to permit the amendment.

Issues for determination

11    As a result of the amendment permitted, the appeal raises two questions:

(a)    Whether it was erroneous for the primary judge to have taken account of the proportionality principle (Ground 11); and

(b)    Whether account may be taken of the “extra curial punishment” a person may endure in the form of the loss of their entry permit under another provision of the legislative scheme (Ground 9).

Proportionality

12    As soon as we determined the appellant should have leave to amend her notice of appeal so as to raise Ground 11, so much of the appeal as concerned the Union had to be allowed.

13    That it was, at the time when the learned primary judge gave judgment, relevant to take the proportionality principle into account flowed from the conclusion unanimously reached by a specially constituted five member Full Court of this Court in Pattinson v Australian Building and Construction Commissioner (2020) 282 FCR 580. The Full Court had been specially so constituted in that case in an endeavour to quell differences of views on this subject evident in earlier Full Court judgments. It is not necessary to refer to those earlier judgments of the Full Court.

14    There can be no doubt that the learned primary judge, as her Honour was then bound to do, followed and applied the Full Court’s judgment in Pattinson. While recognising (at paragraph [24] of the Penalty Judgment) that, “[t]he principal, if not sole, purpose of a civil penalty is protective, to operate as a deterrent for the wrongdoer and those who might be tempted to follow suit”, her Honour added, consistently with the Full Court’s judgment in Pattinson, “[b]ut the penalty must be proportionate to the contravention such that, even where a large penalty is necessary to provide or promote effective deterrence…”.

15    Some three months later, the High Court delivered judgment in the appellant’s appeal against the Full Court’s judgment in Pattinson. In that appeal, the Full Court’s view was emphatically rejected: Australian Building and Construction Commissioner v Pattinson (2022) 96 ALJR 426, esp. at [10] and [40]. In the joint judgment in the High Court, it was held that there is no place in a civil penalty regime for a “notion of proportionality” (at [10]), in the sense in which the Full Court had used the term and as had, consistently, the primary judge. It was held that the “notion of proportionality” as derived by the Full Court was so closely connected to the central role of retribution in criminal sentencing that it could not be translated coherently into the civil penalty context of the FW Act (at [38]).

16    It necessarily follows from the High Court’s judgment that the orders made in relation to the Union were grounded in an error of principle in relation to civil penalisation. They must be set aside with the proceeding being remitted to the primary judge for reconsideration of the case according to law in relation to penalty.

17    It will be a matter for the primary judge, after hearing submissions, to re-exercise, in the case of the Union, the penalisation discretion, having regard to the terms and purpose of relevant provisions of the FW Act, what was said as to this in the High Court’s judgment, the circumstances of the contravening conduct as found in the Liability Judgment and the Union’s circumstances and antecedents. The latter necessarily include the Union’s history of past contravening conduct. It is neither necessary nor in any way desirable for this Court to express any view as to what may be the resultant appropriate penalty.

Extra-curial punishment

18    It is desirable to commence discussion of the extra-curial punishment question in the appeal with an account of the background to the case, as it emerges from a detailed summary offered by the primary judge in the Liability Judgment.

19    The relevant events at the Site occurred on 27 and 28 November 2018. The principal contractor for the Site was Richard Crookes Constructions Pty Ltd. Crookes Constructions engaged subcontractors who employed employees to perform work at the Site. Those events are summarised in detail in the Liability Judgment (at [35]–[55], with respect to 27 November and at [56]–[61] with respect to 28 November). In short, however, the events and the relevant contraventions were as follows.

20    On 27 November 2018, Mr Danalis, Mr Dimitriou and the fourth respondent (Mr Burke) (together, the Union officials) attended the Site “purportedly due to concerns about access and egress on the site” (Liability Judgment at [3]). While on the Site, the appellant alleged that Mr Danalis, Mr Dimitriou and Mr Burke interfered with a scheduled concrete pour, which obstructed and hindered various people, and/or otherwise acted in an improper manner contrary to s 500 of the FW Act. In the alternative, the appellant alleged that Mr Dimitriou and Mr Burke were accessories to contraventions committed by Mr Danalis (Liability Judgment at [3]). Further, the appellant alleged that Mr Danalis, by threatening to stop the concrete pour and obstructing concrete trucks, engaged in an unlawful picket at the Site (along with Messrs Dimitriou and Burke) contrary to the (now repealed) s 47 of the Building and Construction Industry (Improving Productivity) Act 2016 (Cth) (BCIIP Act). Mr Danalis also informed two concrete truck drivers and representatives of the local council that the Site would be shut down for safety reasons, with the intention of giving the impression that the Union officials were authorised to take that action (which they were not) or were reckless as to whether the impression was given, contrary to s 503 of the FW Act.

21    On 28 November 2018, Messrs Danalis and Dimitriou unexpectedly returned to the Site, refused to undertake a compulsory visitors’ induction before completing an inspection and entered the Site unaccompanied in breach of their entry permits. Messrs Danalis and Dimitriou told some workers to leave the Site, thereby contravening s 500 of the FW Act by preventing Crookes Construction and its employees from performing work scheduled to take place that day or otherwise acting in an improper manner.

22    The primary judge was not satisfied that the Union officials had contravened either s 497 of the FW Act (or s 47 of the BCIIP Act) on either 27 or 28 November 2018 by failing to produce their entry permits for inspection when asked (Liability Judgment at [412]).

23    However, her Honour did find that the Messrs Danalis and Dimitriou (and the Union by virtue of being within the scope of their actual or apparent authority) contravened s 500 of the FW Act. The primary judge also found that Mr Danalis (and the Union, as his conduct could be attributed to it pursuant to s 793 of the FW Act) had contravened s 503 of the FW Act. Her Honour summarised her liability findings as follows (Penalty Judgment at [6]–[7]):

6     I found that on the second day, 28 November 2018, each of Danalis and Dimitriou contravened s 500 in that they each acted in an improper manner by refusing to undertake a visitor’s induction when Thomas requested them to do so and entered the project site unaccompanied and without having undergone an induction.

7     I also found that the Union was knowingly concerned in all these contraventions and was therefore taken to have contravened the same provisions.

24    Following the primary judge’s liability findings, her Honour determined the appropriate orders to be made including, inter alia, the appropriate penalties to impose on the respondents.

25    The $3,000 penalty imposed on Mr Dimitriou in respect of his contravention of s 500 of the FW Act was said by the primary judge to be “roughly 25% of the maximum”. This penalty was slightly higher than that imposed on Mr Danalis due to Mr Dimitriou’s “lack of contrition”: Penalty Judgment at [91].

26    As advanced in Ground 9, the extra-curial punishment question was framed as follows:

9.     The primary judge erred in principle and was affected by an extraneous and irrelevant matter in paragraph [90] of the reasons for judgment of 21 January 2022 (Penalty Judgment) in applying as a mitigating factor relevant to the determination of the pecuniary penalty to be imposed on Dimitriou in respect of his contravention of s 500 of the FW Act on 28 November 2018 the possibility that he may suffer “extra-curial punishment” by having his entry permit revoked or suspended under s 510 of the FW Act as a result of that contravention in circumstances where that possibility was a consequence of, and was part and parcel of, holding and acting beyond the authority granted to an entry permit holder.

27    Given the terms of Ground 9, it is worthwhile extracting the whole portion of the primary judge’s reasoning with respect to the factors to be taken into account specifically concerning Mr Dimitriou (Penalty Judgment at [88]–[91]):

Dimitriou

88     The Commissioner submitted that the penalty for Dimitriou attracted a penalty in the low range (20%–40% of the maximum).

89     I agree that the penalty for Dimitriou should be in the low range. Forty percent of the maximum penalty is outside the range and would be inappropriate. While Dimitriou has exhibited no insight and expressed no contrition, and did not cooperate with the Commissioner, this was an isolated event and Dimitriou is a first “offender”.

90     I also note that Dimitriou faces the possibility of extra-curial punishment. Section 510 of the FW Act requires that the Fair Work Commission revoke or suspend his entry permit unless it is satisfied that revocation or suspension would be harsh or unreasonable in the circumstances.

91     Taking all relevant matters into account, I would impose a penalty of $3,000 which is roughly 25% of the maximum. It is slightly higher than the penalty I have fixed for Danalis because of Dimitriou’s lack of contrition.

(Emphasis added.)

28    Necessarily, Ground 9 must be resolved by reference to the relevant legislative context. That requires that we set out a number of provisions of the FW Act.

29    Section 500 of the FW Act provides:

500 Permit holder must not hinder or obstruct

A permit holder exercising, or seeking to exercise, rights in accordance with this Part must not intentionally hinder or obstruct any person, or otherwise act in an improper manner.

Note 1:        This section is a civil remedy provision (see Part 4‑1).

Note 2:    A permit holder, or the organisation to which the permit holder belongs, may also be subject to an order by the FWC under section 508 if rights under this Part are misused.

Note 3:    A person must not intentionally hinder or obstruct a permit holder, exercising rights under this Part (see section 502).

30    Section 503 of the FW Act provides:

503 Misrepresentations about things authorised by this Part

(1)     A person must not take action:

(a)     with the intention of giving the impression; or

(b)     reckless as to whether the impression is given;

that the doing of a thing is authorised by this Part if it is not so authorised.

Note: This subsection is a civil remedy provision (see Part 4‑1).

(2)     Subsection (1) does not apply if the person reasonably believes that the doing of the thing is authorised.

31    Section 510 of the FW Act provides:

510 When the FWC must revoke or suspend entry permits

When the FWC must revoke or suspend entry permits

(1)     The FWC must, under this subsection, revoke or suspend each entry permit held by a permit holder if it is satisfied that any of the following has happened since the first of those permits was issued:

(a)     the permit holder was found, in proceedings under this Act, to have contravened subsection 503(1) (which deals with misrepresentations about things authorised by this Part);

(b)     the permit holder has contravened section 504 (which deals with unauthorised use or disclosure of information or documents);

(c)     the Information Commissioner has, under paragraph 52(1)(b) of the Privacy Act 1988, found substantiated a complaint relating to action taken by the permit holder in relation to information or documents obtained under section 482, 483, 483B, 483C, 483D or 483E;

(d)     the permit holder, or another person, was ordered to pay a pecuniary penalty under this Act in relation to a contravention of this Part by the permit holder;

(e)     a court, or other person or body, under a State or Territory industrial law:

(i)     cancelled or suspended a right of entry for industrial purposes that the permit holder had under that law; or

(ii)     disqualified the permit holder from exercising, or applying for, a right of entry for industrial purposes under that law;

(f)     the permit holder has, in exercising a right of entry under a State or Territory OHS law, taken action that was not authorised by that law.

(2)     Despite subsection (1), the FWC is not required to suspend or revoke an entry permit under paragraph (1)(d) or (f) if the FWC is satisfied that the suspension or revocation would be harsh or unreasonable in the circumstances.

(3)     Subsection (1) does not apply in relation to a circumstance referred to in a paragraph of that subsection if the FWC took the circumstance into account when taking action under that subsection on a previous occasion.

Minimum suspension period

(4)     A suspension under subsection (1) must be for a period that is at least as long as the period (the minimum suspension period) specified in whichever of the following paragraphs applies:

(a)     if the FWC has not previously taken action under subsection (1) against the permit holder—3 months;

(b)     if the FWC has taken action under subsection (1) against the permit holder on only one occasion—12 months;

(c)     if the FWC has taken action under subsection (1) against the permit holder on more than one occasion—5 years.

Banning issue of future entry permits

(5)     If the FWC takes action under subsection (1), it must also ban the issue of any further entry permit to the permit holder for a specified period (the ban period).

(6)     The ban period must:

(a)     begin when the action is taken under subsection (1); and

(b)    be no shorter than the minimum suspension period.

32    The Court can impose pecuniary penalty orders pursuant to s 546 of the FW Act, which provides:

546 Pecuniary penalty orders

(1)     The Federal Court, the Federal Circuit and Family Court of Australia (Division 2) or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.

Note:     Pecuniary penalty orders cannot be made in relation to conduct that contravenes a term of a modern award, a national minimum wage order or an enterprise agreement only because of the retrospective effect of a determination (see subsections 167(3) and 298(2)).

Determining amount of pecuniary penalty

(2)     The pecuniary penalty must not be more than:

(a)     if the person is an individual—the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2); or

(b)     if the person is a body corporate—5 times the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2).

Payment of penalty

(3)     The court may order that the pecuniary penalty, or a part of the penalty, be paid to:

(a)     the Commonwealth; or

(b)     a particular organisation; or

(c)    a particular person.

Recovery of penalty

(4)     The pecuniary penalty may be recovered as a debt due to the person to whom the penalty is payable.

No limitation on orders

(5)     To avoid doubt, a court may make a pecuniary penalty order in addition to one or more orders under section 545.

33    Section 550 of the FW Act provides:

550 Involvement in contravention treated in same way as actual contravention

(1)     A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.

Note:     If a person (the involved person) is taken under this subsection to have contravened a civil remedy provision, the involved person’s contravention may be a serious contravention (see subsection 557A(5A)). Serious contraventions attract higher maximum penalties (see subsection 539(2)).

(2)     A person is involved in a contravention of a civil remedy provision if, and only if, the person:

(a)     has aided, abetted, counselled or procured the contravention; or

(b)     has induced the contravention, whether by threats or promises or otherwise; or

(c)     has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or

(d)     has conspired with others to effect the contravention.

34    Section 793 of the FW Act provides:

793 Liability of bodies corporate

Conduct of a body corporate

(1)    Any conduct engaged in on behalf of a body corporate:

(a)     by an officer, employee or agent (an official) of the body within the scope of his or her actual or apparent authority; or

(b)     by any other person at the direction or with the consent or agreement (whether express or implied) of an official of the body, if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the official;

is taken, for the purposes of this Act and the procedural rules, to have been engaged in also by the body.

State of mind of a body corporate

(2)     If, for the purposes of this Act or the procedural rules, it is necessary to establish the state of mind of a body corporate in relation to particular conduct, it is enough to show:

(a)     that the conduct was engaged in by a person referred to in paragraph (1)(a) or (b); and

(b)     that the person had that state of mind.

Meaning of state of mind

(3)     The state of mind of a person includes:

(a)     the knowledge, intention, opinion, belief or purpose of the person; and

(b)     the person’s reasons for the intention, opinion, belief or purpose.

Disapplication of Part 2.5 of the Criminal Code

(4)     Part 2.5 of Chapter 2 of the Criminal Code does not apply to an offence against this Act.

Note:    Part 2.5 of the Criminal Code deals with corporate criminal responsibility.

(5)     In this section, employee has its ordinary meaning.

The primary judge’s consideration of “extra-curial punishment”

35    The Union contended that Ground 9 failed for two reasons: Firstly, on the basis that the primary judge did not “apply” as a mitigating factor as opposed to “point out” the possibility that Mr Dimitriou may possibly face extra-curial punishment and, secondly, if the primary judge did so apply this factor it was given negligible weight. At hearing, the Union raised a third basis for opposition namely, that her Honour was entitled to take into account the fact of the possibility of the FWC making orders under s 510 of the FW Act, as it is “generally relevant to deterrence”.

36    Dealing with the first argument, we reject the Union’s submission that the primary judge did not “apply” as a mitigating factor the possibility that Mr Dimitriou might possibly face extra-curial punishment.

37    The primary judge commenced her reasons by identifying the relevant general principles applicable for pecuniary penalties (Penalty Judgment at [22]–[23]), using the (then) accepted proportionality principle (at [24]). Her Honour then identified additional principles relevant in cases involving multiple contraventions, namely double jeopardy (at [28]), course of conduct (at [29]–[32]), and totality (at [33]). Her Honour referred to the applicable maximum penalties and other relevant factors which may be taken into account, which included, inter alia, the objective seriousness of the contraventions (at [37]) and factors relevant to the particular circumstances of the contravenors, which her Honour described in this way (at [38]):

Factors relevant to the particular circumstances of the contravenors are the extent, if any, to which they cooperated with the Commissioner; any contrition they have exhibited; and whether any extra-curial punishment may have been imposed or any detriment suffered. In the case of the Union, additional factors include its size and financial position (which bears upon the extent of the penalty necessary to operate as an effective deterrent), whether it has a culture of compliance or has in place compliance systems; and what if any improvements have been made since the contraventions occurred. They also include the history, if any, of contravening conduct.

(Emphasis added.)

38    Her Honour thereafter structured her reasoning by first considering the objective seriousness of the contraventions in a narrative form, dealing with the conduct of each respondent together; second, by considering the loss and damage caused by the contraventions, and third, by then turning to the factors relevant to the particular circumstances of each of the contravenors.

39    Her Honour considered Mr Danalis’s circumstances at some length, including the “impact of newspaper reports”, the purported inaccurate and defamatory content concerning his conduct and the potential impact that reporting had had in his current employment with another union. In addition, her Honour considered the effect of the Commissioner’s inaccurate pleading, stating that it was “unnecessarily inflammatory” (at [82]) and should not have been pleaded in that way. Consideration was then given to the submission made by counsel for the respondents that “the Court should take into account in mitigation of the penalty the harm Danalis had suffered as a result of the publications as an “extra curial punishment”” (at [83]).

40    The primary judge then in the same way considered Mr Dimitriou’s circumstances (at [88]–[91]) (extracted above but repeated for convenience):

Dimitriou

88     The Commissioner submitted that the penalty for Dimitriou attracted a penalty in the low range (20%–40% of the maximum).

89     I agree that the penalty for Dimitriou should be in the low range. Forty percent of the maximum penalty is outside the range and would be inappropriate. While Dimitriou has exhibited no insight and expressed no contrition, and did not cooperate with the Commissioner, this was an isolated event and Dimitriou is a first “offender”.

90     I also note that Dimitriou faces the possibility of extra-curial punishment. Section 510 of the FW Act requires that the Fair Work Commission revoke or suspend his entry permit unless it is satisfied that revocation or suspension would be harsh or unreasonable in the circumstances.

91     Taking all relevant matters into account, I would impose a penalty of $3,000 which is roughly 25% of the maximum. It is slightly higher than the penalty I have fixed for Danalis because of Dimitriou’s lack of contrition.

41    Her Honour referred to all of the “factors” her Honour had identified as being relevant when considering the contravenor’s circumstances (at [38]), namely the extent of any cooperation with the Commissioner, the existence of contrition and “whether any extra-curial punishment may have been imposed or any detriment suffered”. We do not accept the Union’s submission that her Honour merely “noted” (in effect) as opposed to “applied” the possibility of the punishment, given the distinction, at [38], between her recognition of the fact of any past “imposition” of extra-curial punishment and the fact that she refers only, at [90], to its future possibility.

42    Further, a consideration of her Honour’s reasoning as a whole goes against the Union’s reading. Firstly, her Honour had identified the relevant factors to be taken into account when considering a contravenor’s circumstances (at [38]). Secondly, her reasoning follows the identified multi-factorial approach which included the existence of extra-curial punishment. Thirdly, the approach is applied in the same way to Mr Danalis as to Mr Dimitriou. Fourthly, her Honour identified the fact of the possibility of this punishment and in particular what it was – the possibility of the revocation or suspension of his entry permit, which is distinct from the kind of extra-curial punishment (namely media reporting) relied upon by Mr Danalis. Her Honour proceeded immediately thereafter with the conclusory phrase “taking all relevant matters into account”. Fifthly, her Honour was addressing the purportedly “relevant” extra-curial punishment factor identified by the Union, at [38] of the Union officials’ written submissions on penalty, which was:

The final aspect of extra curial punishment is the extra curial consequences that arise from a finding of contravention. The Fair Work Act sets out a series of provisions that require the examination of a person’s capacity to continue to hold an entry permit in circumstances where they have been found to have contravened a section of the Fair Work Act. In particular the Court should consider section 508 that allows the Fair Work Commission to impose conditions upon entry permits, suspend entry permits or revoke them. The court should also consider section 510 which requires the FWC to revoke or suspend entry permits if found to have contravened section 503 of the Act. Finally the Court should consider section 513 in relation to future applications before and entry permit in circumstances where the person may not be a fit and proper person as a consequence of orders made by the Court.

(Footnotes omitted, emphasis added.)

43    In reply to the Union’s penalty submission, the appellant made the following written submission (at [42]) to the primary judge:

The Respondents argue that the Court should regard the consequences of a finding of contravention to the holding of an entry permit under ss 508, 510 and 513 as an aspect of ‘extra curial punishment’. This consequence always existed to the knowledge of permit holders and there is no logical basis for regarding these consequences as mitigatory in any sense and no authority is cited in support of such a proposition. If anything, they serve to underscore the seriousness of permit holders contravening the FW Act. Further, even if such an argument were accepted, it could not be of any relevance to Danalis based on his evidence that he no longer has a permit.

(Footnotes omitted.)

44    The Union officials had drawn her Honour into this debate, had made a submission to the effect of her Honour’s capacity to take this into account with respect to Mr Dimitriou and her Honour had accepted that it could be taken into account.

45    Accordingly, we conclude that the primary judge did take into account as a mitigating factor that Mr Dimitriou faced the possibility of “extra-curial punishment” by reason of s 510 of the FW Act, which requires the Fair Work Commission to revoke or suspend an entry-permit if satisfied that the holder has contravened a provision within Pt 3-4 of the FW Act (Penalty Judgment at [90]–[91]).

46    We are not persuaded that we are in a position to glean from her Honour’s reasoning what weight was given to this factor. There is nothing on the face of the reasoning to reveal the same.

47    Lest we be misunderstood, we do not in referring to this absence of revelation intend any adverse criticism. Although, as the High Court in Pattinson at [10], [14] and [39] underscores, principles derived from the criminal law sentencing process must not be uncritically applied in the different context of civil penalisation under the FW Act, having regard to the deterrent purpose of such penalisation, not every such principle so derived is irrelevant. As with the imposition of criminal penalties (see, e.g., Markarian v The Queen (2005) 228 CLR 357 at 373 [37]; Wong v The Queen (2001) 207 CLR 584 at 611 [75]; Stanley v Director of Public Prosecutions (NSW) (2023) 296 ALJR 107 [59]), ultimately the imposition of civil penalties is a matter of “instinctive synthesis”, rather than a mathematical process of increments and decrements of particular amounts attributable to particular factors. For present purposes, a conclusion that the process of instinctive synthesis was affected by the taking into account of the contingency of extra-curial punishment is sufficient.

48    That requires us to proceed to consider whether the consequences which may flow under s 510 of the FW Act from a contravention of s 500 of the FW Act can be taken into account as a mitigating factor.

Can the consequences that may possibly flow under s 510 of the FW Act from a contravention of s 500 of the FW Act be taken into account as a mitigating factor?

49    With respect to the criminal law, it is a principle of the common law that a court may take into account, in the exercise of a sentencing discretion, “extra-curial punishment”, at least where that can be seen to be a loss or detriment imposed on an offender by persons for the purpose of punishing the offender for the offence or at least by reason of the offender having committed the offence: Silvano v R [2008] NSWCCA 118 at [29]. This Court has taken into account extra-curial adverse consequences (as mitigatory) when determining penalties in a number of statutory civil penalty contexts, including under the FW Act: see for example, Fair Work Ombudsman v Lam [2021] FCA 205 at [24] (Perram J); Fair Work Ombudsman v Austrend International Pty Ltd (No 2) [2020] FCA 1193 at [142]–[145] (Banks-Smith J) applying Australian Competition and Consumer Commission v Multimedia International Services Pty Ltd (2016) 243 FCR 392 at [107]–[117], per Edelman J (as he then was) and Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832 at [77]–[83] (White J). Even after Pattinson, such consequences may be relevant in considering what penalty is necessary to serve the purpose of deterrence.

50    The appellant submitted that any (adverse) consequences which flowed under s 510 of the FW Act from a contravention of s 500 could not permissibly be taken into account in the determination of penalty. The appellant contended that the correct approach was that taken by Abraham J in Australian Building and Construction Commissioner v Holl (The Wheeler Cranes Case) [2021] FCA 1480 at [179] in response to a submission that she should take into account extra-curial consequences such as the prospect of a loss or conditioning of an entry permit:

…No authority is cited in support of the proposition. As the ABCC submitted, there is a singular cohesive regime and any potential impact on Mr Holl or Mr Hobson’s permits are the consequences that may naturally flow from a person who takes the privilege of being a permit holder. This is not dissimilar to the Corporations Act 2001 (Cth) where there are consequences that may follow if a director engages in contraventions…That there may be consequential effects for a contravention of an Act is unremarkable.

51    We first make the following observation in relation to the present case. As apparently occurred in Holl, the primary judge was not given adequate assistance by either party by reference to authority as to the applicability of this criminal law principle in civil penalty provisions.

52    In combination with the fact that neither the parties nor her Honour had the benefit of the High Court’s reasoning in Pattinson, we consider that this absence of reference to authority led her Honour into error. In our view a possibility that the contravener may be the subject of orders under s 510 is not “extra-curial punishment” and may not be taken into account in the imposition of a civil penalty under the FW Act for the following reasons.

53    Firstly, the starting premise for this conclusion is a point already made by reference to Pattinson at [10], [14], [39]: Care must be taken not to adopt criminal law principles where they are inconsistent with the primary, if not sole, purpose of the legislative scheme, namely the achievement of deterrence. It would seem necessarily to follow from this that a retributive consequence inflicted otherwise than by the sentencing court is not relevant to achieve this purpose.

54    Secondly, and as Basten JA (with whom Hulme and Latham JJ agreed) observed in Einfield v R [2010] NSWCCA 87 at [86], the phrase “extra-curial punishment” has two limbs – “extra-curial” and “punishment”. His Honour thought neither could be described with precision. His Honour allowed (and we respectfully agree) that “extra-curial” means something imposed otherwise than by the sentencing court. As reasoned below, nothing in this case has been imposed. Further, Basten JA considered that the conditions of imprisonment and the impact of imprisonment on the particular offender did not fall within what could be described as “extra-curial”. With respect, that might be moot but it is not necessary further to explore that. Where we respectfully agree with Basten JA is that affording precision to what constitutes “punishment” is more elusive. Regardless, Pattinson makes clear that the purpose of civil penalties under the FW Act is to achieve deterrence rather than any form of retribution.

55    Thirdly, even though, overwhelmingly, deterrence from contravention of an ordained mode of conduct is the purpose of a civil penalty regime, it may be relevant to the Court’s consideration of general or specific deterrence if the person will be (as opposed to may be) or has been the subject of some form of disqualification or removal of their licence. An automatic statutory removal from an office might achieve a protective purpose but it also might conceivably reduce what would otherwise be a necessary level of penalisation to achieve the purpose of general or specific deterrence. Even accepting what was said in Pattinson, it may be that there is no necessary antipathy between an inevitable statutory consequence of a contravention, which consequence can be seen to have a protective purpose, and regarding that consequence as relevant to deterrence in the context of imposing a civil penalty for that contravention. In Holl, Abraham J apparently (and we say correctly) used the word “may” as a reference to possible statutory consequences.

56    In the circumstances of this case, the subject of whether an order would be made under s 510 of the FW Act was only a possibility (as the primary judge correctly recognised). Whether an order would be made was speculative. That remains the case notwithstanding industrial commission cases to which reference was made for Mr Dimitriou. A mere possibility could not have bearing on the determination of an appropriate penalty in this case.

57    Fourthly, the structure of the legislative scheme assumes that proceedings under s 510 do not occur until after a civil penalty has been awarded (s 510(1)(d)). This suggests a legislative intention consistent with the appellant’s contention.

58    Given that the primary judge did take into account the possibility, it follows that, in relation to Mr Dimitriou also, the discretion to impose a penalty miscarried. In this regard also, the appeal must be allowed and the proceeding remitted to the primary judge for re-determination.

Conclusion

59    For the above reasons, the penalty orders in respect of the Union and Mr Dimitriou on 21 January 2022 (and the related order in respect of time for payment) must be set aside and the proceeding remitted to the original jurisdiction for re-determination according to law.

Associate:

Dated:    2 May 2023

SCHEDULE OF PARTIES