FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v IPM Operation and Maintenance Loy Yang Pty Ltd (No 2) [2007] FCA 11
Trade Practices Act 1974 (Cth) ss 45E, 45EA, 76(1), 76(3), 76(1A)(a)
Workplace Relations Act 1996 (Cth) ss 804, 807
Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 followed
NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 followed
Schneider Electric (Australia) Pty Ltd v Australian Competition and Consumer Commission (2003) 127 FCR 170 cited
J McPhee & Son (Australia) Pty Ltd v Australian Competition and Consumer Commission (2000) 172 ALR 532 applied
Australian Competition and Consumer Commission v Visy Paper Pty Ltd (No 2) (2004) 212 ALR 564 followed
Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281 cited
Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) (2005) 215 ALR 301 followed
Australian Competition and Consumer Commission v NW Frozen Foods Pty Ltd (1996) ATPR 41-515 considered
Trade Practices Commission v CC (NSW) Pty Ltd (No 3) (1994) ATPR 41-363 cited
Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd (1978) ATPR 40-091 cited
Trade Practices Commission v Mobil Oil Australia Ltd (1984) 4 FCR 296 cited
Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR 41-375 considered
Australian Competition and Consumer Commission v Ithaca Ice Works Pty Ltd (2002) ATPR 41-851 cited
Minister for Environment and Heritage v Greentree (No 3) (2004) 136 LGERA 89 cited
Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 75 FCR 238 cited
Trade Practices Commission v Advance Bank Australia Ltd (1993) ATPR 41-229 applied
Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169 cited
Australian Competition and Consumer Commission v George Weston Foods Ltd (2000) ATPR 41-763 cited
Australian Competition and Consumer Commission v Rural Press Ltd (2001) ATPR 41-833 approved
Trade Practices Commission v Allied Mills Industries Pty Ltd (No 4) (1981) 37 ALR 256 applied
L Vogel & Son Pty Ltd v Anderson (Minister for Customs) (1968) 120 CLR 157 cited
Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd (No 2) (1980) 44 FLR 149 cited
Trade Practices Commission v Simpson Pope Ltd (1980) 30 ALR 544 cited
Australian Competition and Consumer Commission v Cromford Pty Ltd (1998) ATPR 41-618 cited
Australian Competition and Consumer Commission v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2004) ATPR 42-002 considered
Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993 cited
Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236 applied
Australian Securities and Investments Commission v Vizard (2005) 145 FCR 57 cited
Australian Competition and Consumer Commission v Maritime Union of Australia (2001) 114 FCR 472 considered
Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2006] FCA 1730 considered
VID 79 OF 2005
YOUNG J
16 JANUARY 2007
MELBOURNE
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IN THE FEDERAL COURT OF AUSTRALIA |
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VICTORIA DISTRICT REGISTRY |
VID 79 OF 2005 |
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BETWEEN: |
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant
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AND: |
IPM OPERATION AND MAINTENANCE LOY YANG PTY LTD (FORMERLY KNOWN AS EDISON MISSION OPERATION AND MAINTENANCE LOY YANG PTY LTD) (ACN 055 563 696) First Respondent
COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA Second Respondent
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JUDGE: |
YOUNG J |
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DATE: |
16 JANUARY 2007 |
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PLACE: |
MELBOURNE |
REASONS FOR JUDGMENT
1 In this proceeding, the applicant (‘ACCC’) alleged that the second respondent (‘CEPU’) was an accessory to conduct on the part of the first respondent (‘Edison’) that contravened ss 45E(3) and 45EA of Pt IV of the Trade Practices Act 1974 (Cth) (‘TPA’). The case between the ACCC and the CEPU proceeded to a contested hearing. Edison and the ACCC agreed on terms of settlement for the resolution of the proceedings between them and Edison has filed a defence admitting that it contravened ss 45E(3) and 45EA of the TPA.
2 On 19 December 2006, I delivered judgment in relation to the claims brought by the ACCC against the CEPU, except for the claims relating to penalty and costs: Australian Competition and Consumer Commission v IPM Operation and Maintenance Loy Yang Pty Ltd [2006] FCA 1777. Amongst other relief, I said that I would grant the following declarations in relation to the CEPU’s accessorial conduct:
‘1. Prior to August 2001, the First Respondent was accustomed to acquire goods or services from certain Contractors, and in those circumstances, in August 2001, the Second Respondent:
(a) aided, abetted, counselled, procured and induced the First Respondent to make; and
(b) was knowingly concerned in and party to the First Respondent making,
a contract, arrangement or understanding with the Second Respondent which contained a provision that:
(c) the First Respondent would not engage a Contractor to perform work at the Loy Yang B power station in Victoria unless that Contractor had a current certified agreement with the Second Respondent; and
(d) was included in the contract, arrangement or understanding for the purpose of preventing or hindering the First Respondent from acquiring goods or services from Contractors who did not have a current certified agreement with the Second Respondent,
with the consequence that the First Respondent thereby contravened s 45E(3) of the Trade Practices Act 1974 (Cth).
2. Prior to August 2001, the First Respondent was accustomed to acquire goods or services from certain Contractors, and in those circumstances, in August 2001, the Second Respondent counselled, procured and induced the First Respondent to give effect to the provision of the contract, arrangement or understanding with the Second Respondent referred to in paragraph 1 of these declarations, with the consequence that the First Respondent thereby contravened s 45EA of the Trade Practices Act.’
I also held that the ACCC was entitled to injunctive relief against the CEPU.
3 For convenience, I will adopt the terms defined in my principal judgment for the purposes of these reasons for judgment.
4 The ACCC sought orders that a pecuniary penalty be imposed on the CEPU pursuant to s 76 of the TPA and that the CEPU pay the ACCC’s costs of the proceedings against the CEPU on an indemnity basis. The CEPU disputes that it should pay the ACCC’s costs of the proceedings on an indemnity basis. At the request of the parties, I heard submissions on penalty on 22 December 2006 and deferred the question of costs. I was informed by the parties that this course was necessary because both parties had made Calderbank offers during the course of the proceedings and that it was not possible to address the question of indemnity costs until the Court has determined what penalty should be imposed on the CEPU. These reasons for judgment are therefore confined to the question of penalty.
5 The proceeding between the ACCC and Edison has been fixed for hearing before another judge of this Court in February 2007. Subject to orders of the Court, the ACCC and Edison have agreed on proposed orders concerning declarations, pecuniary penalties and costs.
Section 76(1)
6 Section 76(1) of the TPA provides:
‘(1) If the Court is satisfied that a person:
(a) has contravened any of the following provisions:
(i) a provision of Part IV;
(ii) section 75AU or 75AYA;
(b) has attempted to contravene such a provision;
(c) has aided, abetted, counselled or procured a person to contravene such a provision;
(d) has induced, or attempted to induce, a person, whether by threats or promises or otherwise, to contravene such a provision;
(e) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or
(f) has conspired with others to contravene such a provision;
the Court may order the person to pay to the Commonwealth such pecuniary penalty, in respect of each act or omission by the person to which this section applies, as the Court determines to be appropriate having regard to all relevant matters including the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission, the circumstances in which the act or omission took place and whether the person has previously been found by the Court in proceedings under this Part or Part XIB to have engaged in any similar conduct.’
7 Under s 76(1A)(a), the pecuniary penalty payable by a body corporate for each act or omission that relates to s 45E or s 45EA is not to exceed $750,000. Section 76(1) does not authorise the making of an order against an individual because the individual has contravened, or attempted to contravene, or been involved in a contravention of, s 45E or s 45EA.
8 There was no dispute between the parties as to the principles which govern the imposition of a penalty under s 76(1). The relevant principles have been discussed at length in numerous cases: see Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 (‘CSR’) at 52,151–52,153 per French J; NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 (‘NW Frozen Foods’) at 291-295 per Burchett and Kiefel JJ; Schneider Electric (Australia) Pty Ltd v Australian Competition and Consumer Commission (2003) 127 FCR 170 at 172–173 [2]-[6] per Sackville J and at 181–184 [47]-[60] per Merkel J; J McPhee & Son (Australia) Pty Ltd v Australian Competition and Consumer Commission (2000) 172 ALR 532 (‘McPhee’) at 577-579 [158]-[166]; Australian Competition and Consumer Commission v Visy Paper Pty Ltd (No 2) (2004) 212 ALR 564 (‘Visy Paper (No 2)’) at 571-572 [28]-[32] per Sackville J; Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281 at 283–285 [5]-[12] per Merkel J; and Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) (2005) 215 ALR 301 (‘Leahy (No 3)’) at 307-311 [31]-[43] per Goldberg J.
9 Section 76(1) directs the Court to have regard to all relevant matters, including the nature and extent of the act or omission, the nature and extent of any loss or damage suffered as a result of the act or omission, the circumstances in which the act or omission took place, and whether the person has previously been found by the Court to have engaged in any similar conduct.
10 In CSR at 52,152–52,153,French J identified six additional factors:
(i) the size of the contravening company;
(ii) the degree of its power, evidenced by its market share and ease of entry into the market;
(iii) the deliberateness of the contravention and the period over which it extended;
(iv) whether the contravention arose out of the conduct of senior management or at a lower level;
(v) whether the company had a corporate culture conducive to compliance with the TPA, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention; and
(vi) whether the company has shown a disposition to cooperate with the authorities responsible for the enforcement of the TPA in relation to the contravention.
These factors were approved by Burchett and Kiefel JJ, with whom Carr J agreed, in NW Frozen Foods at 292.
11 In his trial judgment in Australian Competition and Consumer Commission v NW Frozen Foods Pty Ltd (1996) ATPR 41-515 at 42,444–42,445, Heerey J said that it was also relevant to consider whether the respondents had engaged in similar conduct in the past, the financial position of the respondents and their capacity to pay, and the deterrent effect of the proposed penalty. These factors were not the subject of any adverse comment in the Full Court.
12 As the wording of s 76(1) indicates, the factors enumerated above are not exhaustive and other considerations may be relevant in a particular case: Trade Practices Commission v CC (NSW) Pty Ltd (No 3) (1994) ATPR 41-363 at 42,723; and Leahy (No 3) at 308 [33] per Goldberg J. It is also necessary to bear in mind that s 76 covers a range of different classes of contravention under Pt IV of the TPA to which different considerations may be relevant.
13 Deterrence is the principal object of the penalties regime. In CSR at 52,152, French J said that the principal, and he thought probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the TPA. His Honour also observed that it is conducive to deterrence to adopt an approach under which the greater the scope and impact of the conduct, the heavier the penalty should be: at 52,153.
14 In NW Frozen Foods at 293–295, Burchett and Kiefel JJ said that the deterrent effect of a penalty, both specific and general, is an important factor to be taken into account in determining the appropriate penalty in a particular case, although it must also be borne in mind that the penalty should not be so great as to be oppressive.
15 Much earlier in the history of the TPA, Smithers J expressed similar views in Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd (1978) ATPR 40-091 (‘Stihl’) at 17,896:
‘The penalty should constitute a real punishment proportionate to the deliberation with which the defendant contravened the provisions of the Act. It should be sufficiently high to have a deterrent quality, and it should be kept in mind that the Act operates in a commercial environment where deterrence of those minded to contravene its provisions is not likely to be achieved by penalties which are not realistic. It should reflect the will of Parliament that the commercial standards laid down in the Act must be observed, but not be so high as to be oppressive.’
16 In McPhee, the Full Court (comprising Black CJ, Lee and Goldberg JJ) reviewed the authorities, including Stihl, Trade Practices Commission v Mobil Oil Australia Ltd (1984) 4 FCR 296 at 298 and Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR 41-375 (‘TNT’) at 40,166, in which the courts attached importance to the deliberateness of the contravening conduct. The Full Court concluded that in fixing penalties under s 76 it is appropriate and relevant to take into account whether the conduct that contravened the TPA was systematic, deliberate or covert: at 577 [158] and at 579 [163]. In doing so, the Court does not stray into irrelevant moral considerations.
17 In Visy Paper (No 2), Sackville J noticed the debate as to whether the punishment of a contravener is a relevant factor to take into account in determining the appropriate penalty to be imposed. His Honour said that the authorities suggest that there is little or no difference between taking into account the deliberate nature of the conduct in question and the object of punishing the contravener: see Australian Competition and Consumer Commission v Ithaca Ice Works Pty Ltd (2002) ATPR 41-851 at 44,542–44,543 [50]; Minister for Environment and Heritage v Greentree (No 3) (2004) 136 LGERA 89 at 102–104 [52]-[57] per Sackville J; see also Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 75 FCR 238 at 241 per Goldberg J; and Leahy (No 3) at 308–309 [37]-[39] per Goldberg J.
18 In Leahy (No 3) at 309 [39], Goldberg J concluded his discussion of deterrence, as the principle object of the penalties regime, with the following observations:
‘The penalty imposed must be substantial enough that the party realises the seriousness of its conduct and is not inclined to repeat such conduct. Obviously the sum required to achieve this object will be larger where the court is setting a penalty for a company with vast resources. However, as specific deterrence is only one element and general deterrence must also be achieved, consideration of the party’s capacity to pay must be weighed against the need to impose a sum which members of the public will recognise as significant and proportionate to the seriousness of the contravention.’
19 Depending on the circumstances of the case, other principles may also be relevant. Where the relevant conduct gives rises to several contraventions of the TPA, it will be relevant to take into account the totality principle to ensure that the total penalty does not exceed what is proper for the entire contravening conduct in question: see Trade Practices Commission v Advance Bank Australia Ltd (1993) ATPR 41-229 (‘Advance Bank’) at 41,164 per Gummow J; Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169 (‘ABB Transmission’) at 179-180 [38]-[39]; TNT at 40,169. The parity principle, ie all other things being equal, similar conduct should be deserving of similar penalties, will have direct application where penalties are being imposed on several contravening respondents. The principle also draws attention, albeit less directly, to the penalties that have been imposed in past cases. There is, of course, a limit to the usefulness of any comparison with past penalties: the circumstances of particular cases are likely to differ in significant respects and each case must be considered by reference to its own circumstances: see Australian Competition and Consumer Commission v George Weston Foods Ltd (2000) ATPR 41-763 (‘George Weston’) at 40,984 [31] per Goldberg J.
20 It was common ground between the parties that not all of the factors discussed in the cases are relevant to the penalty that the ACCC seeks to have imposed on the CEPU in this case. I propose to examine the factors that the parties argued were relevant in this case under a number of broad headings.
One penalty: section 76(3)
21 Section 76(3) provides:
‘If conduct constitutes a contravention of two or more provisions of Part IV, a proceeding may be instituted under this Act against a person in relation to the contravention of any one or more of the provisions but a person is not liable to more than one pecuniary penalty under this section in respect of the same conduct.’
The CEPU contends, and the ACCC disputes, that this provision applies.
22 The CEPU submitted that the conduct that made it an accessory to Edison’s contravention of s 45E was the same conduct as that which made it an accessory to Edison’s contravention of s 45EA. Consequently, the CEPU submitted that it is only exposed to a single penalty which is not to exceed $750,000.
23 The CEPU also advanced a number of alternative submissions. First, it submitted that its conduct should be viewed as a single course of conduct, attracting one penalty only, even if it were possible to draw some distinction between the conduct that was relevant to s 45E and that which was relevant to s 45EA. In support of this submission, the CEPU relied upon Advance Bank at 41,164 per Gummow J; ABB Transmission at 179-180 [38] and Australian Competition and Consumer Commission v Rural Press Ltd (2001) ATPR 41-833 (‘Rural Press’) at 43,290 [16]-[17]. Further or alternatively, the CEPU submitted that if this approach could not be adopted, its conduct in relation to the two contraventions was so interconnected that, by the application of the totality principle, the Court ought to arrive at a penalty of the same magnitude as if it were dealing with a single contravention: see Rural Press at 43,290 [19] and TNT at 40,169.
24 In all the circumstances, the CEPU submitted that the Court should impose a single penalty of $20,000 in relation to its involvement in Edison’s contraventions of ss 45E and 45EA.
25 The ACCC submitted that one penalty should be imposed in respect of both contraventions, but that the quantum of that penalty should be determined on the footing that there were two contraventions attracting two penalties. Thus, the ACCC submitted that the Court should impose a penalty in the range of $210,000 to $250,000, representing approximately one-sixth of the maximum possible penalty of $1.5 million.
26 The first question, therefore, is whether the CEPU’s conduct attracts a single penalty that is limited to a maximum of $750,000.
27 The courts have adopted a practical and commonsense approach where a single transaction or course of conduct results in multiple contraventions. Even where s 76(3) does not strictly apply, but the contravener’s conduct amounts to one episode or one course of conduct, the courts will apply the totality principle, sometimes producing outcomes that are not very different from those that would have resulted from the application of s 76(3).
28 In Trade Practices Commission v Allied Mills Industries Pty Ltd (No 4) (1981) 37 ALR 256 (‘Allied Mills’) at 258, Sheppard J was required to assess penalties in relation to price fixing contraventions of s 45 of the TPA. His Honour said that where more than one breach of s 45 is alleged and admitted, it would not be appropriate to impose substantive penalties for each breach because each arises out of the one transaction, namely, the arrangement or understanding alleged in the amended statement of claim. In taking this course, Sheppard J followed the approach adopted by Kitto J in imposing penalties for breaches of the Customs Act 1901 (Cth) in L Vogel & Son Pty Ltd v Anderson (Minister for Customs) (1968) 120 CLR 157 at 164-165. Sheppard J’s approach was followed in TNT at 40,169. These cases involved applications of the totality principle rather than s 76(3).
29 The same observation can be made concerning Advance Bank, upon which the CEPU relied. In that case, Gummow J was required to assess penalties in relation to five misleading advertisements published over a two week period. His Honour referred with approval to the following remarks by Lockhart J in Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd (No 2) (1980) 44 FLR 149 at 176:
‘Guidance is given in the field of sentencing for criminal offences by the well-known principle that where several offences are heard together and arise out of the same transaction it is a sound working rule that the sentences imposed for those offences should be made concurrent; it is inappropriate to sentence consecutively when the offences were all really involved in the same episode…
I accept that the contraventions arose out of the one course or pattern of conduct. Although it is necessary to look at each contravention separately, nevertheless consideration must be given to the facts common to each contravention.’
30 The decision of Mansfield J in Rural Press illustrates the proposition that s 76(3) and the totality principle can produce similar results. His Honour said at 43,290 [19]:
‘The ACCC is correct in stressing that, as I have found, the conduct of the respondents involved two contraventions of s 45 of the Act, namely the making of an arrangement and separately carrying it into effect. In a practical sense, I consider that the conduct that constituted the first of those contraventions was “part and parcel” of the conduct that constituted the second of those contraventions: see for example J McPhee & Son (Australia) Pty Ltd v Australian Competition and Consumer Commission (2000) ATPR ¶41-758; (2000) 172 ALR 532 (“McPhee”), per Black CJ, Lee and Goldberg JJ at ATPR 40,923; FCR 583 [182]. However, although the conduct constituting the contraventions of s 46 was also closely allied to that conduct, in my view the contraventions of s 46 are separate and could be dealt with separately. For the reasons proposed by the ACCC, and accepted by the respondents, I will however impose one penalty upon each respondent for the contraventions of the Act by that particular respondent, or in which that particular respondent was involved. In this matter, the level of pecuniary penalty which I impose would not alter whether the s 45 and s 46 contraventions had to be treated as part and parcel of the one set of conduct by reason of s 76(3) or were capable of being treated as separate contraventions.’
31 In McPhee at 583 [181]-[183], the Full Court considered the imposition of penalties for making and giving effect to an arrangement or understanding in contravention of s 45. The Court concluded that s 76(3) applied because the conduct which constituted the second contravention of giving effect to the arrangement was part and parcel of the conduct which constituted the first contravention of making the arrangement:
‘The case presented to his Honour did not distinguish the conduct of McPhee involving the formation of the proscribed arrangement or understanding from the conduct of McPhee said to constitute giving effect to such arrangement or understanding. According to the Commission’s case, the delivery by Mr Webb to Mr Jolly of McPhee’s rates was an integral part of the conduct that constituted the contravention of s 45 in making, or arriving at, an understanding or arrangement. That same act was also relied upon by the Commission as the act which constituted the further contravention by McPhee of giving effect to the arrangement or understanding.
If the disclosure by McPhee to DFE of the rates charged by McPhee to ACI Florapak could be said to be an act giving effect to an arrangement or understanding already made or arrived at, it was not conduct distinguishable from the conduct of McPhee which constituted the making of such an arrangement or understanding. Pursuant to s 76(3) of the Act, if conduct constitutes a contravention of two or more provisions of Pt IV, a proceeding may be instituted in respect of each contravention but a person is not liable to more than one pecuniary penalty in respect of the same conduct. This was not a case involving repeated conduct concerning discrete events occurring at different times and involving disparate parties: Trade Practices Commission v Simpson Pope Ltd (1980) 30 ALR 544; 47 FLR 334 at 336 per Franki J.
We therefore accept the submission that his Honour erred in imposing separate penalties in respect of the ACI Florapak conduct. The conduct which constituted the second contravention was part and parcel of the conduct which constituted the first contravention and s 76(3) prescribed that only one penalty could be imposed.’
32 The Full Court added at 584 [185] that, if s 76(3) did not apply, the totality principle should have been applied because of the interlocking nature of the conduct involved in the two contraventions:
‘If it could be said that the conduct relevant to the two contraventions was not the same conduct for the purpose of s 76(3), we would be of the opinion that his Honour's discretion in calculating the appropriate penalty to be imposed miscarried, in that his Honour failed to have regard to the interlocking nature of the conduct involved in the two contraventions and to the need to set a total penalty appropriate in the circumstances. On the particular facts of this case, it was not appropriate to impose a substantive penalty for each breach of the Act arising as they did out of the one transaction. The appropriate course was to set a penalty for the conduct imposed in respect of one breach and to take the other breach into account: Trade Practices Commission v Allied Mills Industries Pty Ltd (1981) 37 ALR 256; 60 FLR 1 per Sheppard J at FLR 40; Trade Practices Commission v TNT Australia Pty Ltd, above, at 40,169; McDonald v R (1994) 48 FCR 555; 120 ALR 629. For the reasons we have set out above, we consider that the appropriate total of penalty would have been a sum of $500,000.’
The penalty of $500,000 was the same figure that the Full Court considered to be the appropriate penalty on the footing that s 76(3) did apply.
33 I dealt with the CEPU’s accessorial liability at [219]–[222] of my principal judgment. In relation to s 45E, I said that the evidence established that the CEPU made demands which instigated, induced and procured Edison to make both the broader arrangement and the heads of agreement, and that the same evidence established that the CEPU aided and abetted, and was knowingly concerned in, the making of a contract, arrangement or understanding between Edison and the CEPU. In relation to s 45EA, I concluded as follows at [222]:
‘I have found that Edison gave effect to the contract, arrangement or understanding by excluding DJN from performing work as an electrical contractor at Loy Yang B. In pursuance of the arrangement, the CEPU signed the Simon Engineering site agreement. Further, in its discussions with Edison in August 2001, the CEPU incited, induced, counselled and procured Edison’s exclusion of electrical contractors who did not have a certified agreement with the CEPU from performing work at Loy Yang B. I am satisfied that the CEPU thereby counselled, procured and induced Edison’s contravention of s 45EA.’
34 The ACCC submitted that the CEPU’s conduct in relation to s 45EA was not identical to its conduct in relation to s 45E. In oral submissions, senior counsel for the ACCC accepted that there was a very substantial overlap in the conduct by which the CEPU aided, abetted, counselled, procured and induced the making of an arrangement in contravention of s 45E(3), and the conduct by which it incited, induced and procured Edison to give effect to the offending provision of that arrangement. Indeed, senior counsel for the ACCC accepted that there was a continuum of conduct on the CEPU’s part that was closely related and which, in practical terms, could be regarded as a single course of conduct. Nevertheless, the ACCC submitted that there was a critical difference between the conduct relevant to the s 45E contravention and that relevant to the s 45EA contravention in that, after the making of the arrangement, the CEPU took steps to perform its part of the bargain and thereby induced and procured Edison to give effect to the offending provision. Those steps comprised the CEPU’s execution of the Simon Engineering MOU on 15 August 2001 and its execution of the Simon Engineering site agreement on 23 August 2001. According to the ACCC, those events post-dated the making of the arrangement and were relevant only to Edison’s contravention of s 45EA.
35 One difficulty with this submission is that Edison gave effect to the provision of the arrangement on 13 August 2001 when its employee, Buckley, advised Nabulsi of DJN that DJN’s services would no longer be utilised by Edison because Edison had been asked by the CEPU not to engage the services of electrical contractors that did not have an EBA with the CEPU: at [66] of my principal judgment. Further, Pearson and Buckley informed the team leaders of Edison’s maintenance staff on 16 August 2001 that Edison had entered into, or was entering into, an arrangement with the CEPU whereby it would only be using electrical contractors who had a certified agreement with the CEPU: at [69] of my principal judgment. Thus, Edison changed its practices in relation to the engagement of electrical contractors from 13 or 16 August 2001. Edison did not revert to its pre-August 2001 practices until late in 2003 after receiving correspondence from the ACCC: see my principal judgment at [94].
36 There was no evidence that Edison had any knowledge of the CEPU’s execution of the Simon Engineering MOU on 15 August. Nor was there any evidence that Edison gave effect to the offending provision of its arrangement with the CEPU because it knew that the CEPU had taken steps to implement its part of the bargain. Rather, the evidence indicates that Edison gave effect to the provision of its arrangement with the CEPU that it would not engage the services of electrical contractors that did not have an EBA with the CEPU because that was what the CEPU had demanded on 9 August 2001 and that was what was required by Edison’s arrangement with the CEPU.
37 Another difficulty with the ACCC’s submission is that, as in McPhee, the ACCC conducted the trial without attempting to draw any distinction between the conduct on the part of the CEPU that was relevant to its involvement in Edison’s contravention of s 45E(3) and that which was relevant to Edison’s contravention of s 45EA. Quite the contrary; the ACCC relied on the same conduct for its contention that the CEPU was involved in both contraventions. This is confirmed by paras 41 and 42 of the ACCC’s amended statement of claim. At trial, senior counsel for the ACCC expressly submitted that the ACCC relied on the same conduct by the CEPU over a relatively short period of time between 9 August and 23 August 2001 in connection with both contraventions.
38 The ACCC’s submission fails to take into account the full ambit of my findings concerning the contract, arrangement or understanding between Edison and the CEPU. In my principal judgment, I found that prior to 23 August 2001 Edison and the CEPU made or entered into an arrangement that included a provision that Edison would not engage electrical contractors to perform work at Loy Yang B unless they have a certified agreement with the CEPU prior to commencing work at the site: at [142]. However, I also found that the heads of agreement was entered into on 23 August 2001 in accordance with, and was controlled by, this broader arrangement: at [142] and [173]. Even if the heads of agreement were the only relevant arrangement between Edison and the CEPU, I concluded that cl 4.1 of the heads of agreement constituted a provision that was included in the heads of agreement for a purpose which infringed s 45E(3): at [192]. When I turned to consider the CEPU’s liability as an accessory to Edison’s contraventions of ss 45E and 45EA, I pointed out that the evidence established that the CEPU made demands which instigated, induced and procured Edison to make both the broader arrangement and the heads of agreement: at [220]. In these circumstances, the implementation steps which the CEPU took on 15 and 23 August 2001 can be regarded as actions by which the CEPU induced, counselled or procured Edison to sign the heads of agreement, which relevantly formed part of the contravening arrangement. Put another way, there is no reason to conclude that the implementation steps which the CEPU took on 15 and 23 August 2001 are relevant only to the contravention of s 45EA and not to the contravention of s 45E(3). In my opinion, they are relevant to both, given the findings I have made concerning the heads of agreement and the relationship between the heads of agreement and the broader arrangement that Edison and the CEPU made some days earlier.
39 For the sake of completeness, I note that the ACCC advanced a different argument in its written submissions on penalty, but it did not pursue that argument in its oral submissions. Shortly stated, the argument was that the CEPU’s conduct in relation to s 45EA included its failure to prevent the continuation of Edison’s new practice between August 2001 and November 2003. The ACCC did not advance this argument at the principal hearing and, assuming it was not abandoned during the penalty hearing, it is now too late to raise it. At all relevant times, the ACCC’s case was that the CEPU was involved in Edison’s contravention of s 45EA because the CEPU had counselled, procured or induced Edison to give effect to the offending provision by means of the demands which the CEPU made to Edison in the period leading up to Edison’s execution of the heads of agreement on 23 August 2001. At the principal hearing, senior counsel for the ACCC submitted that the ACCC could not point to anything that the CEPU did after the making of the arrangement on or about 23 August that made it an accessory to Edison’s contravention of s 45EA. The ACCC did not mount a case that the CEPU policed or sought to enforce the arrangement after it was entered into in August 2001. The ACCC did not ask any questions of Burns or Sutherland or any other witness to the effect that the CEPU had taken any steps to enforce the arrangement after it was entered into in August 2001.
40 This is not a case where different actions were taken by the CEPU at different times and in relation to dealings with different persons or entities. In such a case, the most that could be said was that the conduct on each occasion was of a similar character: see Trade Practices Commission v Simpson Pope Ltd (1980) 30 ALR 544 at 548 per Franki J. On the findings I have made, the CEPU’s conduct was part and parcel of one transaction or episode that took place over the period between 9 August and 23 August 2001.
41 In my opinion, the conduct on the part of the CEPU that made it an accessory to Edison’s contravention of s 45E(3) is the same conduct that made it an accessory to Edison’s contravention of s 45EA. Accordingly, s 76(3) applies. The consequence is that the CEPU is not liable to more than one pecuniary penalty under s 76(1) in respect of its conduct, and the maximum amount of that penalty is $750,000.
42 If the CEPU’s conduct that is relevant to Edison’s contravention of s 45EA can be distinguished from its conduct in relation to the s 45E(3) contravention, with the consequence that s 76(3) does not apply, I consider that the approach described in Allied Mills, Advance Bank and in McPhee at 584 [185] should be applied in the circumstances of this case. In substance, the CEPU engaged in a single course of conduct that was related and interlocking and which involved it in both contraventions. To my mind, it would be artificial to distinguish between the conduct that is relevant to the making of the arrangement and that which is relevant to Edison’s giving effect to the arrangement. The CEPU’s conduct in relation to the two contraventions is so interconnected that the appropriate course is to apply the totality principle to set a penalty for the CEPU’s accessorial conduct in respect of one breach and to take the CEPU’s involvement in the other breach into account. Adopting that approach, I have concluded that the appropriate penalty would not differ from that which I would impose on the basis that s 76(3) applies.
The nature and extent of the contravening conduct by the cepu
43 The CEPU was the instigator of the contraventions of the TPA by Edison: see my principal judgment at [21]-[23], [125] and [220]. The CEPU’s actions were deliberate, and they were calculated to procure Edison’s agreement to, and Edison’s implementation of, a provision that Edison would not engage electrical contractors to perform work at Loy Yang B unless they have a current certified agreement with the CEPU prior to commencing work at the site. So much appears clearly from the findings at [144] of my principal judgment:
‘While I do not propose to rehearse all of the findings of fact that I have set forth above, it is appropriate to emphasise some of them. On 9 August, Mighell told the Edison executives that the CEPU required Edison to agree that all electrical contractors working on the Loy Yang B site must have a certified agreement to which the CEPU was a party. The Simon Engineering site agreement was not expressly mentioned at the 9 August meeting. But the context in which the meeting took place must have made it clear to all participants that the CEPU was taking the position that it would not sign the Simon Engineering site agreement unless Edison accepted the two requirements that the CEPU advanced, ie site access and the requirement that all electrical contractors on the Loy Yang B site must have a certified agreement with the CEPU. I also infer that those present at the 9 August meeting knew that the delay in the execution of the Simon Engineering site agreement was delaying the construction of the peaker plant. The CEPU was a necessary signatory to the Simon Engineering site agreement. I infer that Mighell knew that the CEPU’s refusal to sign the Simon Engineering site agreement was exerting heavy pressure on Edison, and that he was consciously exploiting that situation in making the demands he did of Edison concerning site access and electrical contractors.’
I also found at [177] that the CEPU’s purpose for proposing the provision and including it in its arrangement with Edison was to limit the electrical contractors who could be engaged to work at Loy Yang B to those who had a current certified agreement with the CEPU. It did not include the provision in order to get the Simon Engineering site agreement signed; that was the leverage that the CEPU used to get Edison to agree to include the provision. I agree with the ACCC’s submissions that the actions taken by the CEPU were deliberately undertaken at a time when Edison was vulnerable to the demands made by the CEPU because of its urgent need to get the Simon Engineering site agreement signed and to commence construction on the peaker project.
44 The ACCC submitted that the CEPU’s actions were covert, as well as deliberate. Further, the ACCC submitted that the CEPU’s actions were calculated to hide the true nature of the arrangement or understanding between itself and Edison, in that the CEPU and Edison agreed to exchange written heads of agreement which did not reflect the true nature or extent of the unlawful arrangement or understanding between them. In my opinion, these submissions are not supported by the findings I made in my principal judgment. Mighell’s demands were advanced at the meeting of 9 August 2001 in the presence of representatives from Industrial Relations Victoria and the Victorian Treasury. The heads of agreement of 23 August 2001 was prepared by Edison’s solicitors and not by the CEPU. Counsel for the ACCC did not ask Sutherland, Burns or any other witness whether the heads of agreement was prepared at the request or instigation of the CEPU and with the objective of concealing the true nature of the arrangement or understanding between the CEPU and Edison. The ACCC never put to any witness that the heads of agreement was prepared in a way that sought to hide the true nature of the arrangement. The ACCC cannot properly ask the Court to draw inferences of that character at this time, when such serious allegations were never raised during the course of the hearing or put to any relevant witness.
45 The ACCC’s submissions concerning the covert nature of the CEPU’s actions appear to be based on a misunderstanding of certain passages in my principal judgment. At [166] of my reasons for judgment, I rejected the CEPU’s submission that a finding that the 13 August 2001 letter was sent by Sutherland to the CEPU would be inconsistent with the parties having subsequently entered into the heads of agreement on 23 August 2001. In rejecting the logic of the CEPU’s submission, I pointed out that it was possible that Mighell, or someone else within the CEPU or within Edison, raised concerns about the explicit language in which Edison had expressed its proposed agreement in the 13 August letter. In the same context, I also said it was possible that a decision was taken, perhaps on Corrs’ advice, to record the parties’ agreement in ambiguous or opaque language, without altering the underlying arrangement between the parties. In making these observations, I was not making findings of fact; I was simply rejecting the logic of the argument advanced by the CEPU. The evidence before me did not allow me to draw any inferences concerning the purposes of the heads of agreement, as the ACCC had entirely failed to pursue those issues with the witnesses.
46 The conduct by the CEPU was undertaken or directed by Mighell, who is and was a senior official of the CEPU. At all relevant times, Mighell was the secretary of the Victorian branch of the ETU which is a division of the CEPU. As I said in my principal judgment at [180], Mighell and other relevant officers of the CEPU were aware that DJN performed work at Loy Yang B, that DJN did not have an EBA with the CEPU, and that the provision proposed by Mighell and ultimately agreed between the CEPU and Edison would exclude DJN from working at Loy Yang B if it did not enter into an EBA with the CEPU.
47 The arrangements between the CEPU and Edison had a direct and immediate impact on DJN. On 13 August 2001, Edison informed Nabulsi of DJN that DJN’s services would no longer be utilised by Edison because Edison had been asked by the CEPU not to engage the services of electrical contractors that did not have an EBA with the CEPU: at [66] of my principal judgment. Between 13 August and about 20 September 2001, DJN continued to carry out work at Loy Yang B pursuant to contractual arrangements that pre-existed the events of August 2001. However, DJN was excluded from any new contracting work at the Loy Yang B site between August 2001 and about November 2003. It was only after Edison received a letter from the ACCC on about 27 October 2003 that Edison unilaterally decided to cease its practice of requiring all electrical contractors to have a current certified agreement with the CEPU before they could commence work at the Loy Yang B site. Pursuant to this change in practice, DJN was invited early in 2004 to once again tender for work at Loy Yang B. DJN resumed work as an electrical contractor at the Loy Yang B site on or about 2 March 2004: see [151]-[152] of my principal judgment.
48 Two points can be made in the light of these findings. First, the CEPU’s conduct impacted on DJN for a period of some 27 months, that is to say from August 2001 until November 2003. Secondly, whilst the contraventions ended voluntarily, this occurred at the instance of Edison, not the CEPU, and only after the ACCC had commenced its investigation.
49 The ACCC asked the Court to infer that the CEPU policed and enforced its arrangement with Edison over the period between August 2001 and November 2003 and that, but for this case, the CEPU would have continued to police and enforce the arrangement. No such contention was advanced by the ACCC at the principal hearing. There is no finding, and indeed no evidence capable of supporting a finding, that the CEPU policed or sought to enforce the arrangement after it was entered into in August 2001. If the ACCC wished to put a case to this effect, it should have been advanced at the principal hearing. I therefore reject the ACCC’s submission.
50 In its submissions on penalty, the CEPU did not dispute the proposition that its conduct was deliberate or that it used its refusal to sign the Simon Engineering site agreement as leverage to get Edison to agree to a provision restricting the electrical contractors whom Edison could engage at Loy Yang B to those who had a current certified agreement with the CEPU. However, the CEPU submitted that several aspects of its conduct, as found by the Court, weigh in favour of a low penalty. Those aspects are that the conduct was confined in duration to the period between 9 August and 23 August 2001, it occurred five years ago, and the CEPU was involved only in the inducement to Edison to enter into the contravening agreement. I do not consider that the last of these factors assists the CEPU. Although the CEPU was an accessory to Edison’s contraventions, it was the instigator of those contraventions. I accept that it is relevant that the contraventions occurred five years ago and that the CEPU’s conduct took place over a short period of time in August 2001. Nevertheless, I consider that the CEPU’s conduct was central to Edison’s contraventions of the TPA and that the conduct must be regarded as serious.
The impact of the contravening conduct
51 I have already observed that the CEPU was aware that DJN performed work at Loy Yang B, that it did not have an EBA with the CEPU, and that the provision proposed by the CEPU for Edison’s agreement would operate to exclude DJN from working at Loy Yang B so long as it did not enter into an EBA with the CEPU. Edison was also aware of these matters. As events transpired, DJN was the only electrical contractor affected by the arrangement over the period between August 2001 and December 2003. However, the impact of the arrangement was potentially wider than this. In my opinion, it is appropriate to have regard to the fact that the arrangement was general in terms, and that the exclusionary provision had the potential to prevent any electrical contractor being retained by Edison to perform work at Loy Yang B if the contractor did not obtain or maintain a current certified agreement with the CEPU. In Rural Press at 43,296 [46], Mansfield J pointed out that even in cases where the contravening conduct was not carried through to its conclusion and therefore no loss resulted, courts have taken into account the potential harm in determining the seriousness of the offence; see also George Weston and Australian Competition and Consumer Commission v Cromford Pty Ltd (1998) ATPR 41-618.
52 The ACCC did not adduce any evidence as to the actual financial loss or damage suffered by DJN as a result of its exclusion from performing new work at Loy Yang B between August 2001 and late November 2003. In fact, the ACCC did not ask any questions of Nabulsi of DJN concerning DJN’s actual loss or damage. Nevertheless, the ACCC submitted that Edison’s actions in giving effect to the provision must have caused some loss or damage to DJN although the precise amount of that loss or damage could not be quantified. The CEPU submitted that this was mere speculation and unhelpful. I do not agree. I am prepared to infer that DJN suffered some loss or damage by reason of its exclusion from new work at Loy Yang B between August 2001 and November 2003. Prior to August 2001, DJN regularly supplied electrical services to Edison at Loy Yang B, and it resumed doing so in about March 2004 after Edison abandoned its arrangement with the CEPU. In the absence of evidence, however, I am not prepared to make the assumption that the loss or damage that DJN suffered was substantial.
53 The ACCC acknowledged that there was no evidence that any other electrical contractor was adversely affected by the contravening conduct.
54 The ACCC submitted that Edison suffered some loss, albeit minor in quantum, as a result of the contravening conduct, to the extent that it was prevented from acquiring electrical contracting services on the best terms or at the cheapest price. There was no evidence of any loss or damage of this kind. The ACCC did not attempt to adduce evidence from Edison of loss or damage suffered by it. The evidence before the Court indicates that the rates that would be payable to electrical contractors who had entered into an EBA with the CEPU hardly differed, or differed only marginally, from the rates that would be payable by Edison to electrical contractors who did not have an EBA with the CEPU. In the absence of concrete evidence, I am not prepared to assume that Edison suffered any material loss or damage as a result of the contravening conduct.
The cEPU’s position
55 The CEPU accepted that the conduct in question was engaged in by, or at the direction of, Mighell who was a senior official of the CEPU. However, it submitted that the Court should take account of the fact that the CEPU did not engage in the relevant conduct for profit or financial gain but rather did so in defence of working conditions for employees whose employment was governed by the National Electrical, Electronic & Communications Contracting Industry Award 1998. I accept that this is a relevant factor to take into account in favour of the CEPU, but it does not excuse the CEPU from liability.
56 There was no dispute as to the capacity of the CEPU to pay a penalty even at the level proposed by the ACCC. The ACCC tendered financial statements of the ETU division of the CEPU as at 31 December 2005 which showed that the ETU had cash assets of $1,784,540 and net assets of $2,517,328. The CEPU submitted that a penalty at the level proposed by the ACCC of $210,000 to $250,000 would represent a disproportionate burden on the union’s funds and in that sense would be oppressive. It pointed out that the penalty proposed by the ACCC would represent between 11.8 per cent and 14 per cent of the CEPU’s cash assets.
57 Prior to August 2001, there was no finding that the CEPU had contravened, or been involved in any contravention, of the TPA. Arising out of events that took place in October 2002, the ACCC instituted proceedings against the CEPU and other unions alleging a contravention of Pt IV of the TPA and which resulted in consent orders: see Australian Competition and Consumer Commission v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2004) ATPR 42-002 (‘PKIU’). The proceedings related to a picket that was established between 2 October and 23 October 2002 at premises in East Gippsland. The CEPU was the third respondent to the proceedings. Under the consent orders, the CEPU submitted to an injunction by consent, agreed to pay a pecuniary penalty of $100,000, and agreed to implement a trade practices compliance program.
58 Aside from this proceeding and the PKIU case, there is no evidence of any other finding that the CEPU has been involved in contraventions of the TPA either before or after August 2001.
59 The trade practices compliance program which the CEPU implemented in 2004 in accordance with the consent orders made in PKIU is ongoing. It includes the preparation of a compliance procedure document outlining the CEPU’s obligations under the TPA and the conduct of regular trade practices seminars for all CEPU officers throughout Australia. On the evidence before the Court, there is no reason to doubt the rigour or ambit of the compliance program. The implementation of the compliance program has been audited and reviewed each year since 2004 and a copy of each audit report was provided to the ACCC. The ACCC has not raised any concerns about its content or reach.
60 The ACCC said that the existence of a trade practices compliance program was ‘possibly relevant’ to the determination of penalty. I do not see any need for the qualification added by the ACCC. In my opinion, the introduction of a compliance program in 2004, and its continuing operation, is a relevant factor in determining penalty: see CSR per French J at 52,123; and NW Frozen Foods at 293-294 per Burchett and Kiefel JJ. In Rural Press at 43,291 [22], Mansfield J said:
‘The fact that, following a contravention, a contravening entity has implemented at its own expense a trade practices compliance program to ensure its compliance and that of its employees and agents with the Act, will also be a consideration which will mitigate the level of a pecuniary penalty: NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commissioner (1997) ATPR ¶41-546; (1996) 141 ALR 640…; Prestige Motors. Such conduct gives some confidence that the particular contravener will not engage in similar conduct in the future, and it may also be assumed would come to the knowledge of the community through the reasons given when fixing penalty, so as also to serve the purpose of community deterrence.’
I agree with these observations.
Absence of co-operation by the cepu
61 It is a well accepted principle that, in the assessment of a penalty, a respondent who withdraws defences and acknowledges liability, and thereby saves the community the costs of a lengthy trial, is entitled to special consideration in reduction of the penalty that would otherwise be assessed: NW Frozen Foods at 293-294 per Burchett and Kiefel JJ; TNT at 40,169–40,170 per Burchett J; and Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993 at 48,626–48,630 [49]-[71] per Branson, Sackville and Gyles JJ. The extent of the discount will depend, inter alia, upon whether the respondent’s co-operation with the ACCC indicates a resolve to comply with the law, thereby reducing the need for specific deterrence: see Leahy (No 3) at 309-310 [40]-[41] per Goldberg J.
62 In its written submissions, the ACCC appeared to go much further than this principle would sanction by arguing that the CEPU had not co-operated with the ACCC in any way and that this ought to be reflected in the penalty imposed by the Court. For instance, the ACCC submitted that the CEPU had not given discovery of any emails or other documents and had denied the authenticity of many relevant documents and that these actions should be reflected in the penalty determined by the Court.
63 The CEPU strongly resisted these submissions. It argued that in a quasi-criminal proceeding, in which the CEPU was exposed to the risk of substantial pecuniary penalties, there was nothing improper in it putting the ACCC to its proof, especially when much of the case was dependent on the drawing of inferences. It also strenuously denied the suggestion that it had acted improperly in putting the ACCC to its proof.
64 The ACCC’s submission is unacceptable as a matter of general principle and runs counter to settled authority in this Court. In TNT at 40,170, Burchett J said:
‘It need hardly be emphasized that the acceptance by the Court of the principle recognizing the taking into account of an admission of liability, and the saving of time and expense involved in it, does not imply any doctrine that would increase a penalty because there was no admission. The law does not permit that. The contravener who fights the case to the bitter end will obtain no discount, but the penalty imposed will be the proper penalty, and no more. However, the penalties I have ordered to be paid here do not represent what I would have imposed as proper in such circumstances, since I have made substantial allowance for the admissions, both as indicative of a true resolve to comply with the law in future, and as involving a benefit to the community, belated though it was, that ought to be recognized in the fixing of penalties that are just in all the circumstances.’
In Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236, the ACCC contended on appeal that the trial judge had erred by concluding that the respondents should be given credit for their meaningful co-operation in the investigation of the ACCC and in the conduct of the hearing. On that occasion, the ACCC submitted that there was no support in the authorities, or in principle, for a penalty to be reduced on account of the way in which litigation is conducted where liability is in issue. The Full Court accepted the ACCC’s submission and concluded that the conduct of the trial should not have been taken into account in fixing penalty, although it is something to which regard might have been had in relation to costs orders: at 285 [166].
65 In the face of these authorities it is not surprising that the ACCC resiled from its original submission in the course of oral argument. It eventually accepted that there is no authority suggesting that the CEPU’s conduct in putting the ACCC to proof should attract a heavier penalty. The ACCC’s final position was that the absence of co-operation should not aggravate the penalty, but it does mean that no benefit or discount can be given to the CEPU for co-operation.
DETERRENCE
66 Deterrence has two aspects: specific deterrence and general deterrence. Specific deterrence refers to the need to deter the contravening party from a further contravention of the TPA. General deterrence refers to the need to deter others in the community by showing the seriousness with which the Court considers such contraventions: see Leahy (No 3) at 308 [35] per Goldberg J. For a penalty to achieve these objectives, it must be imposed at a meaningful level, consistent with the other considerations that must be taken into account in determining the appropriate level of penalty.
67 The CEPU submitted that three factors diminish the need for specific deterrence: the compliance program which the CEPU has implemented and which is ongoing; the injunctions which I am prepared to grant and which I said at [234] of my principal judgment are, inter alia, to operate by way of deterrence; and the period of over five years that has passed since the contravening conduct occurred in August 2001. I agree that these three factors are relevant and ought to be taken into account in determining penalty.
68 In relation to general deterrence, the CEPU placed particular reliance on the recent enactment by the Federal Parliament of ss 804 and 807 of the Workplace Relations Act 1996 (Cth) (‘WRA’). Section 804 provides:
‘(1) A person (the first person) must not discriminate against another person (the second person) on the ground that:
(a) the employment of the second person’s employees is covered, or is not covered, by:
(i) the Australian Fair Pay and Conditions Standard; or
(ii) a particular kind of industrial instrument; or
(iii) an industrial instrument made with a particular person; or
(b) it is proposed that the employment of the second person’s employees be covered, or not be covered, by:
(i) a particular kind of industrial instrument; or
(ii) an industrial instrument made with a particular person.
(2) Subsection (1) is a civil remedy provision.
Note: See Division 9 for enforcement.
(3) Subsection (1) does not apply to conduct that is protected action (within the meaning of section 435).’
Under s 807 in Div 9, the maximum penalty for breach of s 804 by a body corporate is fixed at 300 penalty units, ie $33,000. A person who is involved in a contravention of s 804 or any other civil penalty provision is treated as having contravened that provision: s 728 of the WRA.
69 In addition, the CEPU pointed out that Pt 6 of the WRA provides for an inspectorate which is empowered to investigate whether the requirements of the WRA and the regulations under it are being observed. For that purpose, inspectors may enter premises, inspect documents and interview persons. In addition, the inspectorate can bring proceedings in respect of contraventions.
70 According to the CEPU, the relevance of ss 804 and 807 is that they are recent enactments of the Federal Parliament, they are specific to the particular type of conduct at issue in this case, and they offer the Court an important indication of the seriousness with which the legislature currently views such conduct. Thus, in the CEPU’s submission, it is relevant and appropriate for the Court to have regard to these provisions in deciding the quantum of the penalty to be imposed under s 76(1A)(a) of the TPA.
71 There are significant differences between the kind of conduct that would fall within s 804 of the WRA and the kind of conduct that falls within s 45E, s 45EA and the accessorial provisions of s 76(1) of the TPA. Section 804 of the WRA is directed to unilateral conduct by a first person that discriminates against a second person on any of the grounds referred to in paras (a) and (b) of s 804(1). On the other hand, s 45E(3) of the TPA is directed to the making of a contract, arrangement or understanding between a first person and an organisation of employees, or a representative of that organisation, which includes a provision that was included for the purpose of preventing or hindering the first person from acquiring or continuing to acquire goods or services from a second person. In other words, s 45E(3) is directed at concerted or combined conduct. Section 45E(2) operates in a similar way in a supply situation. Section 45EA prohibits a person giving effect to a provision of a contract, arrangement or understanding that contravenes s 45E(2) or (3). Section 76(1A)(a) provides that the pecuniary penalty payable by a body corporate is not to exceed $750,000 for each act or omission that relates to, inter alia, s 45E or s 45EA. This affords a clear indication that Parliament regards combined or concerted conduct of the kind prohibited by s 45E or s 45EA as a much more serious infringement of the law than unilateral acts of discrimination of the kind prohibited by s 804 of the WRA. For these reasons, I consider that the analogy that the CEPU seeks to draw between ss 45E and 45EA of the TPA on the one hand and s 804 of the WRA on the other hand is a very weak one, and does not provide any real assistance in determining the appropriate level of penalty in this case.
72 The ACCC submitted that an important consideration in the context of deterrence is that the CEPU has expressed no contrition for its involvement in Edison’s contraventions of ss 45E(3) and 45EA. As a result, the ACCC submitted that the Court could have no confidence that the CEPU and its senior officers, including Mighell, regret what happened or that they have resolved to ensure that contravening conduct of the kind in question in this case will not happen again. An explicit statement of contrition will ordinarily be associated with an admission of liability: see eg, Australian Securities and Investments Commission v Vizard (2005) 145 FCR 57 at 64 [31]. Where a respondent contests allegations that it contravened a provision of Pt IV of the TPA, and wishes to preserve its right of appeal, it is hardly to be expected that the respondent will express unreserved contrition at the penalty hearing. Moreover, there may be reasons unknown to the court why a respondent has not been prepared to admit liability prior to the hearing. In general, I consider that an appropriate expression of contrition may warrant a discount on penalty, but the absence of an expression of that kind ought not to elevate the penalty beyond what would otherwise be appropriate. In this context, the inquiry that must be pursued is what level of penalty is required to achieve the objective of specific deterrence, having regard to the factors to which the CEPU points, including its record of non-contravention since October 2002 and its ongoing compliance program, and the other circumstances of the case. I have concluded that the absence of an expression of contrition by the CEPU for its contraventions should not elevate the penalty to be imposed on the CEPU beyond what would otherwise be appropriate.
Penalties in other cases
73 The CEPU referred the Court to three cases in which penalties were imposed on unions under the TPA. It contended that these cases supported its submission that the appropriate penalty was in the order of $20,000, and that the penalty proposed by the ACCC was excessive.
74 In the PKIU case, the Court held that three unions, including the CEPU, contravened s 45D of the TPA by forming and maintaining a picket line over the period from 2 October 2002 to 23 October 2002 which prevented the construction of a gas plant. Each of the unions agreed to a penalty of $100,000, in circumstances where there was no order for costs against them. The picket line was established in defiance of orders made by the Australian Industrial Relations Commission (‘the Commission’) and caused significant losses to the owner of the plant. In his reasons for judgment, Gray J noted that the respondents had reached agreement to pay compensation to the plant owner for its losses, that the respondents were entitled to credit for their co-operation with the Commission and for the saving of public money in relation to the litigation, and that it was not suggested that any of the respondents had a record of similar contraventions: at 48,750 [8]. On the other side of the ledger, Gray J noted several factors that would tend to increase the size of the penalty: the picket continued to be operated despite the orders of the Commission, the delay in the construction of the plant was thus extended, and the unions had not instituted any program or training designed to ensure compliance with the TPA: at 48,751 [10]. His Honour concluded that the penalties ought to be at the very highest end of the range appropriate for conduct of the kind in question, and on that basis he made orders which imposed penalties at the agreed level of $100,000. In the absence of agreement as to that level of penalty, Gray J said that he would have fixed a figure considerably lower than $100,000. In expressing this view, Gray J took particular note of the fact that the unions were not profit-making enterprises and did not engage in the conduct in question for their own gain. His Honour also noted that the agreed penalties represented a large sum for the unions to pay from their own resources which would ultimately have to come from the pockets of wage earners.
75 In Australian Competition and Consumer Commission v Maritime Union of Australia (2001) 114 FCR 472, the offending conduct comprised two picket lines which delayed the departure of two vessels. The parties agreed upon a penalty of $75,000 for each of the contraventions of s 45DB of the TPA. Hill J found that these penalties were appropriate, although he considered them to be at the bottom of the range, bearing in mind that the conduct was deliberate and involved the implementation of a policy which was most likely to contravene the TPA: at 493 [97]. Hill J also said that, in accepting the agreed penalties of $75,000 for each contravention, he had taken into account the fact that the respondents had co-operated with the ACCC to agree the facts and had accepted that their conduct amounted to a contravention, thereby reducing the expense which a contested hearing would have required: at 493 [97].
76 In Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2006] FCA 1730, two unions were involved in conduct on two separate occasions, in April 2004 and again in November 2004, in contravention of s 45D of the TPA. The April conduct interrupted a concrete pour for several hours and it was followed by a picket which obstructed access to a construction site for a new hotel at the Burswood Casino in Perth. The interruption of a concrete pour and the picket caused significant delays to the project and exposed the builder to losses. The November conduct was another picket at the site which restricted access by construction workers. Each of the unions agreed to pay a pecuniary penalty to the Commonwealth of $50,000. Nicholson J concluded that the proposed penalties were appropriate. In doing so, his Honour made particular reference to the fact that the unions had co-operated with the ACCC by approaching the Court for the final disposition of the proceeding on a non-contested basis, and that neither union had engaged in the conduct for financial gain: at [14].
77 The facts of these cases are very different from the facts of the case before me. Each case involved an agreement as to the appropriate level of penalty. I accept that the conduct involved in each case had significant adverse commercial or financial consequences, more so than in the case before me, although I note that in the PKIU case the unions agreed to pay compensation to the affected company. In the end, while these three cases provide general guidance, I have derived limited assistance from them because each case turned on its particular facts.
Conclusion
78 Weighing up all of the factors to which I have referred, I consider that the penalty of $20,000 proposed by the CEPU does not properly reflect the nature and seriousness of the contravening conduct. It is, moreover, inadequate from the viewpoint of both specific and general deterrence. On the other hand, I consider that the penalty proposed by the ACCC is disproportionate to the size and financial resources of the CEPU and the nature, seriousness, duration and impact of the contravening conduct.
79 In my opinion, the appropriate level of penalty which reflects the deliberate and serious nature of the contravention, the requirement of deterrence, and the other factors which I have mentioned is $125,000.
80 As I indicated in earlier hearings, I will postpone the making of final orders until I have determined the outstanding question of costs.
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I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Young. |
Associate:
Dated: 16 January 2007
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Counsel for the Applicant: |
N O'Bryan SC with P Gray |
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Solicitor for the Applicant: |
Australian Government Solicitor |
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Counsel for the First Respondent: |
There was no appearance for the First Respondent |
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Counsel for the Second Respondent: |
H Borenstein SC with D Guidolin |
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Solicitor for the Second Respondent: |
G Borenstein, in-house for the Second Respondent |
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Date of Hearing: |
22 December 2006 |
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Date of Judgment: |
16 January 2007 |
