Federal Court of Australia

Coal Mining Industry (Long Service Leave Funding) Corporation v Payne (Qld) Pty Ltd ATF the Indamine Unit Trust trading as Undamine Industries [2023] FCA 1681

ORDERS

THE COURT ORDERS THAT:

1.    Between 1 January 2019 and 7 June 2021, on each day, by failing to provide to the Applicant an audit report for the 2018 financial year within 6 months after the end of the 2018 financial year, the Respondent contravened section 10(1) of the Coal Mining Industry (Long Service Leave) Payroll Levy Collection Act 1992 (Cth) (Collection Act).

2.    Between 1 January 2020 and 26 August 2021, on each day, by failing to provide to the Applicant an audit report for the 2019 financial year within 6 months after the end of the 2019 financial year, the Respondent contravened section 10(1) of the Collection Act.

3.    Between 1 January 2021 and 15 August 2023, on each day, by failing to provide to the Applicant an audit report for the 2020 financial year within 6 months after the end of the 2020 financial year, the Respondent contravened section 10(1) of the Collection Act.

4.    Between 1 January 2022 and 8 August 2023, on each day, by failing to provide to the Applicant an audit report for the 2021 financial year within 6 months after the end of the 2021 financial year, the Respondent contravened section 10(1) of the Collection Act; and

5.    Between 1 January 2023 and 8 August 2023, on each day, by failing to provide to the Applicant an audit report for 2022 financial year within 6 months after the end of the 2022 financial year, the Respondent contravened section 10(1) of the Collection Act.

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

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

LOGAN J:

1    The Coal Mining Industry (Long Service Leave Funding) Corporation (the corporation), has instituted proceedings against Payne (QLD) Pty Ltd in its capacity as trustee for the Undamine Unit Trust trading as Undamine Industries (Undamine) in respect of alleged contraventions by Undamine of s 5(1) and s 10(1) of the Coal Mining Industry (Long Service Leave) Payroll Levy Collection Act 1992 (Cth) (the Collection Act).

2    As originally pleaded, the corporation alleged that Undamine had (a) contravened s 5(1) of the Collection Act by failing to submit monthly returns for the months of December 2021, January 2022, February 2022, March 2022, May 2022, July 2022, September 2022, November 2022, December 2022, February 2023 and March 2023 within 28 days after the end of each relevant month (monthly return contraventions) and (b) contravened s 10(1) of the Collection Act by failing to submit audit reports for the 2018, 2019, 2020, 2021 and 2022 financial years within the time required by the Collection Act (audit report contraventions).

3    The corporation does no longer press its case in respect of the alleged monthly return contraventions. For its part, Undamine has admitted to the audit report contraventions as alleged in the originating application. It is important for present purposes to record that that admission was made at a very early stage in these proceedings. As a sequel to court ordered mediation, the parties have reached a joint position as to agreed facts and related submissions as to penalty, together with the amount of penalty and related orders. That joint position is as set out in a statement of agreed facts and joint submissions filed in court.

4    In summary, the joint position is that the following orders should be made:

(a)    declarations under s 21 of the Federal Court of Australia Act 1976 (Cth) in relation to the admitted contraventions of s 10(1) of the Coal Mining Industry (Long Service Leave) Payroll Levy Collection Act 1992 (Cth) (Collection Act), namely, the audit report contraventions;

(b)    an order under s 13A(1) of the Collection Act and s 82 and s 93 of the Regulatory Powers (Standard Provisions) Act 2014 (Cth), which I will term the Regulatory Powers Act, that Undamine pay pecuniary penalties in a single amount, namely, $40,000, in respect of the admitted contraventions;

(c)    an order otherwise dismissing the corporation’s claim in the originating application; and

(d)    an order that each party bear its own costs of the proceeding.

The third of the proposed orders takes up the position already mentioned of the corporation which is not to press the alleged monthly return contraventions.

5    The filed joint position is a very comprehensive document indeed, both as to agreed facts and why the parties jointly promote the orders just recited. The agreed facts portion of the document has an evidentiary quality under the Evidence Act 1995 (Cth). It is desirable before setting out the agreed facts to supplement the statements made therein in relation to the long service leave funding scheme in respect of employees in the black coal industry in Australia. That is because it is essential with respect to the objective of penalisation in deterring both specifically and generally any subversion of that scheme by noncompliance that the purpose of the statutory scheme and its importance be understood.

6    As the parties mention in their joint submission, the operation of the scheme is governed by three statutes, the Collection Act as already mentioned, the Coal Mining Industry (Long Service Leave) Payroll Levy Act 1992 (Cth) (the Levy Act), and the Coal Mining Industry (Long Service Leave) Administration Act 1992 (Cth) (the Administration Act). The corporation is charged with the administration of the scheme. The corporation is a statutory corporation established by the Administration Act. It is administered by a board of directors for which the Administration Act makes provision.

7    It is particularly important, in my view, in the context of deciding whether in the exercise of a judicial discretion to act on the position as to penalty and other orders jointly promoted by the parties to understand the composition of the corporation’s board of directors. The relevant provision is s 13 of the Administration Act, which provides:

Appointment of Directors

(1)    The Directors are to be appointed by the Minister and hold office on a part-time basis.

(2)    One Director is to be appointed to represent the companies engaged in black coal mining in New South Wales or Tasmania.

(2A)    One Director is to be appointed to represent the companies engaged in black coal mining in Queensland.

(3)    One Director is to be appointed to represent companies engaged in black coal mining in Western Australia.

(4)    Two Directors are to be appointed to represent the Mining and Energy Division of the Construction, Forestry, Mining and Energy Union.

(5)    One Director is to be appointed to represent the following organisations:

(a)    the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia;

(b)    the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union;

(c)    the Association of Professional Engineers, Scientists and Managers Australia;

(d)    the Colliery Officials Association of New South Wales;

(e)    the Mine Managers Association of Australia.

(7)    If the Mining and Energy Division of the Construction, Forestry, Mining and Energy Union changes its name or merges with another Division of that Union, the reference in subsection (4) to the first-mentioned Division is taken to be a reference to that Division under its new name or to the other Division, as the case requires.

(8)    If an organisation referred to in subsection (4) or (5):

(a)    changes its name; or

(b)    merges with another organisation; or

(c)    is succeeded by another organisation;

the reference in that subsection to the first-mentioned organisation is taken to be a reference to that organisation under its new name or to the other organisation, as the case requires.

(9)    A person to be appointed as a Director as mentioned in subsection (2), (2A), (3), (4) or (5) is to be a person who the Minister considers, after consulting the bodies or organisations that the person is to represent, is suitable to represent those bodies or organisations, as the case may be.

8    As can be seen, Parliament has chosen for the governing board of directors of the corporation deliberately to ensure that the board has representation both from companies engaged in black coalmining in the various locales mentioned as well as workers via registered industrial organisations. Yet further, Parliament has made a discriminating choice reflected in s 13 to ensure that there is a geographic spread of coalmining industry representation as well as recognising that there is a spread of callings to be found in the black coalmining industry.

9    The board’s composition reflects Parliament’s understanding via the drawing of two directors from the Mining and Energy Division of the Construction Forestry Mining and Energy Union (now Construction Forestry Mining Maritime and Energy Union) that it is from within the industrial coverage of that union that relevant workers will predominantly be found. Equally, though, Parliament has also been sensitive to the position that workers in other callings are found in the black coalmining industry by its provision for a representative board director from industrial organisations registered in respect of other callings.

10    While the court has a discretion in respect of the imposition of penalties in respect of statutory contraventions such as the present, the exercise of that discretion is always informed by a joint position as to penalty promoted by the parties: Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482. Part of being so informed entails judicial recognition of the importance of a policy value judgment reflected in participation in a joint submission as to penalty by the relevant statutory regulator, here the corporation. The composition of the corporation’s governing board of directors entailing, as it does, representation both from companies of which Undamine is an example as well as industrial organisations representing workers in the black coal industry makes its participation in the jointly promoted penalties a particularly powerful consideration in terms of acting upon the joint submission.

11    Nonetheless, if there were discerned by the court some error as to principle in its application to the facts of a given case in a joint submission, that would provide occasion for the court declining to impose penalty in accordance with such a submission.

12    Understanding the purpose of the scheme of which the Collection Act forms part is assisted by regard to the explanatory memorandum which was circulated by the then Minister for Industrial Relations, Senator the Honourable Peter Cook, in introducing the various bills which came to be enacted as the scheme. From this, it emerges that the present legislative scheme is Parliament’s response to the report of an inquiry, the Willett Inquiry Report, which had been commissioned by the Minister in August 1990.

13    At that time, there was an existing legislative scheme which made some provision in respect of the black coalmining industry in Australia for long service leave. That scheme was found in the States Grants (Coal Mining Industry Long Service Leave) Act 1949, the Coal Excise Act 1949, the Excise Tariff Act 1929 and in complementary legislation in the four participating states, namely, New South Wales, Queensland, Western Australia and Tasmania. Under that scheme, money collected from an excise on the production of black coal was paid into Commonwealth consolidated revenue. Amounts equal to those collections were then appropriated by Parliament from consolidated revenue for payment into a trust fund established and maintained under the States Grants (Coalmining Industry Long Service Leave) Act 1949. Under that scheme, long service leave payments were made to employees by participating employers, who were reimbursed by the relevant state, which in turn was reimbursed from that statutory trust fund.

14    The Minister advised Parliament via the explanatory memorandum that projected excise collections under that scheme would be sufficient to meet current long service leave liabilities. However, in the Willett Report presented to the Minister, there was identified a number of deficiencies in the existing scheme. These included the subsidisation of highly mechanised mining operations, of labour-intensive operations and a net accrued unfunded liability for untaken long service leave estimated as at 30 June 1990 to be $250.2M. In introducing the bills which now comprise the legislative scheme, the Minister advised that its aim was “to establish a compulsory national industry scheme to fully fund on an accrual basis the long service leave entitlements of persons employed in the black coalmining industry by firms participating in the scheme”.

15    Other purposes evident from the scheme as a whole are the interest in promoting retention within the black coalmining industry of skilled, experienced miners and other workers in that industry via provision for portable long service leave and a related interest by employers in that industry of having the benefit of such skilled, experienced workers. It might also be thought, and, indeed, this was acknowledged in the submissions of the corporation, that there is an overarching national public interest in the participation of such skilled and experienced workers in such an important national industry.

16    These various purposes must inform a consideration of what is necessary by penalisation to deter noncompliance with the statutory scheme. Equally, however, questions of penalty do not occur in a vacuum. The objective of deterrence must necessarily be tailored to the circumstances of a given case. Those circumstances and further detail concerning the operation of the scheme are set out in the joint submission. It is there stated:

13.    The LSL Scheme administered by Coal LSL involves two main relevant operational elements:

13.1.    the establishment of a fund (as that term is defined in section 4(1) of the Administration Act) (Fund), out of which Coal LSL is empowered to make payments to employers by way of reimbursement of long service leave payments made by those employers to eligible employees, and refunds of overpayments of the ‘levy’ discussed below; and

13.2.    a ‘levy’ on the ‘eligible wages’ (as that term is defined in section 3B of the Collection Act) paid to each ‘eligible employee’ (as that term is defined in section 4(1) of the Administration Act), which is imposed on the person who paid those wages pursuant to sections 4 and 6 of the Levy Act.

14.    To facilitate these operational elements:

14.1.    the Administration Act requires (relevantly) Coal LSL to pay to an employer out of the Fund:

14.1.1.    reimbursements for certain long service leave payments made by the employer to an eligible employee (Administration Act, s 44); and

14.1.2.    if an employer makes an overpayment of the levy to Coal LSL, an amount equal to the overpayment (Administration Act s 47); and

14.2.    the Collection Act requires (relevantly) employers of eligible employees to:

14.2.1.    provide levy returns to Coal LSL on a monthly basis; and

14.2.2.    provide audit reports to Coal LSL on an annual basis.

15.    This requirement to provide annual audit reports is set out in s 10(1) of the Collection Act which is in the following terms:

If a person employs an eligible employee at any time during a financial year, the person must, no later than 6 months after the end of the financial year, give to the Corporation a report prepared by an auditor that:

(a)    states whether, in the opinion of the auditor, the person has paid all amounts of levy, or amounts of additional levy under section 7, that the person was required to pay in respect of the financial year; and

(b)    if, in the opinion of the auditor, the person has not paid all amounts of such levy or additional levy—specifies in what respect and to what extent, in the opinion of the auditor, the person has not paid those amounts; and

(c)    if, during the financial year, the person was paid an amount under Part 7 of the Administration Act—states whether, in the opinion of the auditor, the amount paid is correct; and

(d)    includes reasons for the opinions contained in the report. Civil penalty: 40 penalty units.

16.    Relevantly for s 10(1)(c) of the Collection Act, Pt 7 of the Administration Act deals with requirements on Coal LSL to make payments of amounts out of the Fund to employers of eligible employees for re-imbursements, and levy overpayments.

17.    Pursuant to s 3 of the Collection Act (which in turn relevantly refers to and relies upon s 4 of the Administration Act) ‘eligible employee’ is defined to mean:

(a)    an employee who is employed in the black coal mining industry by an employer engaged in the black coal mining industry, whose duties are directly connected with the day to day operation of a black coal mine; or

(b)    an employee who is employed in the black coal mining industry, whose duties are carried out at or about a place where black coal is mined and are directly connected with the day to day operation of a black coal mine; or

(c)    an employee permanently employed with a mine rescue service for the purposes of the black coal mining industry; or

(d)    a prescribed person who is employed in the black coal mining industry;

but does not include a person declared by the regulations not to be an eligible employee for the purposes of this Act.

18.    During the Relevant Period, there were no regulations in force containing a declaration of the kind referred to in the definition of ‘eligible employee’ set out above.

Undamine’s operations

19.    Undamine is a specialist contracting company engaged in the BCMI in Queensland and New South Wales, providing high risk underground services to major coal mining companies. Undamine has been operating in the BCMI since 1 January 2010, and presently has 213 employees.

20.    Undamine has not previously been the subject of regulatory enforcement proceedings concerning any alleged non-compliance with its employment, health, safety, environmental or other regulatory obligations.

21.    During the Relevant Period, Undamine employed employees:

21.1.    whose duties were directly connected with the day to day operation of a black coal mine; and

21.2.    whose duties were carried out at or about a place where black coal is mined and were directly connected with the operation of a black coal mine.

22.    As a result, at all times during the Relevant Period, Undamine was an employer of eligible employees within the meaning of the Collection Act; and was therefore required to make levy payments, file returns and provide compliant audit reports under the Collection Act.

B.    Audit reports

23.    At all times during the Relevant Period, pursuant to section 10(1) of the Collection Act, as set out at paragraph 15 above, Undamine, as an employer of eligible employees during each relevant financial year, was required to provide Coal LSL with an audit report about the following matters for that financial year:

23.1.    levy payments made by them to Coal LSL; and

23.2.    amounts received by them:

23.2.1.    as reimbursements from Coal LSL for long service leave paid by them to eligible employees; and

23.2.2.    for levy overpayments made by them to Coal LSL,

no later than 6 months after the end of the financial year (Section 10 Due Date).

24.    Undamine gave Coal LSL audit reports for the 2018, 2019, 2020, 2021 and 2022 financial years as follows:

24.1.    Undamine gave Coal LSL an audit report for the 2018 financial year on 7 June 2021, 889 days after the Section 10 Due Date;

24.2.    Undamine gave Coal LSL an audit report for the 2019 financial year on 26 August 2021, 604 days after the Section 10 Due Date;

24.3.    Undamine gave Coal LSL an audit report for the 2020 financial year on 15 August 2023, 957 days after the Section 10 Due Date

24.4.    Undamine gave Coal LSL an audit report for the 2021 financial year on 8 August 2023, 585 days after the Section 10 Due Date

24.5.    Undamine gave Coal LSL an audit report for the 2022 financial year on 8 August 2023, 220 days after the Section 10 Due Date.

25.    Some of Undamine’s delay in filing the 2020 and 2021 audit reports was due to:

25.1.    COVID-19 illness among Undamine staff

25.2.    delay in auditors not providing audit reports.

26.    For example:

26.1.    On 1 November 2021, Coal LSL was advised by a representative of Evans Edward Chartered Accountants, in response to a request for an audit report for the 2020 financial year, that the report could not be provided until January 2022. At this point, the audit report for the 2020 financial year was already overdue by 325 days.

26.2.    On 22 April 2022, Coal LSL sent correspondence to Undamine, noting that the audit reports for the 2020 and 2021 financial years were overdue. Undamine’s Chief Executive Officer responded to this correspondence on 29 April 2022, advising that Undamine had limited capacity due to COVID-19 illness among staff and had sought the audit reports from the auditors on multiple occasions. By this point the audit report for the 2020 financial year was already overdue by 484 days and the audit report for the 2021 financial year was already overdue by 119 days.

C.    Corporate size of Undamine

27.    Undamine receives revenue from performing contract work for operators of black coal mines and presently employs 213 employees. For the financial year ended 30 June 2023, Undamine employed 210 employees and derived a gross income of $47,227,783. Undamine estimates that the profit margin earned by Undamine on its gross income for the financial year ended 30 June 2023 was in the order of 2.46%. Undamine accepts that the total amount of proposed pecuniary penalties put forward in these submissions is appropriate (having regard to the other factors addressed in these submissions) and is not oppressive.

17    Undamine has made particular admissions which, once again, are set out in the joint submission:

PART III    ADMISSIONS    

28.    Undamine admits that it has contravened s 10(1) of the Collection Act by:

28.1.    providing the audit report for the 2018 financial year 889 days after the Section 10 Due Date;

28.2.    providing the audit report for the 2019 financial year 604 days after the Section 10 Due Date;

28.3.    providing the audit report for the 2020 financial year 957 days after the Section 10 Due Date;

28.4.    providing the audit report for the 2021 financial year 585 days after the Section 10 Due Date; and

28.5.    providing the audit report for the 2022 financial year 220 days after the Section 10 Due Date.

29.    Undamine also admits that, by operation of s 93(2) of the Regulatory Powers Act, a separate contravention occurred on each day that an audit report remained overdue.

18    The joint submission of the parties as to penalty and other relief, again, as set out in the joint submission is as follows:

PART IV    JOINT SUBMISSIONS AS TO RELIEF

30.    The parties jointly seek the declarations, penalties and orders set out in the Proposed Orders accompanying this Agreed Document. These submissions explain why the parties contend that relief to be appropriate.

A.    Orders by agreement

31.    The High Court has observed that, in civil proceedings (including civil penalty proceedings), there is considerable scope both for the parties to agree on the facts, consequences and appropriate remedy and for the court to be persuaded that the remedy proposed is ‘an appropriate remedy’.

32.    Consistent with this approach, a court can make orders by consent and to approve a compromise of proceedings on terms proposed by the parties, provided the court is persuaded that what is proposed is appropriate. It follows that the parties’ agreement cannot bind the court in any circumstances to impose a penalty that it does not consider to be appropriate.

33.    However, where the court is sufficiently persuaded of the accuracy of the parties’ agreement as to facts and consequences and as to the appropriateness of the penalty, it is highly desirable for the court to accept the parties’ proposal and to impose the proposed penalty. There is an important public policy interest in giving effect to agreements as to penalty, particularly where such agreements encourage corporations to acknowledge contraventions and thereby avoid lengthy and complex litigation and promote predictability of outcomes in civil penalty proceedings.

34.    Further, the Court may assume that Coal LSL, as a specialist regulatory body, will fashion penalty submissions with an overall view to achieving compliance and will be in a position to offer informed submissions as to the effect of contraventions on the industry and the level of penalty necessary to achieve compliance. Accordingly, while submissions of a regulator will be considered on their merits in the ordinary way, Coal LSL’s views as to the appropriate penalty to achieve the necessary deterrent effect should be highly persuasive in the Court’s consideration of the appropriate penalty.

35.    These principles are not confined to agreed submissions on pecuniary penalties but apply equally to agreement on other forms of relief. The High Court’s conclusions as to the desirability of acting upon agreed penalty submissions were made in the context of its broader recognition that civil penalties are but one of numerous forms of relief which regulators could choose and pursue as a civil litigant in civil proceedings, including by making submissions as to that relief. This is consistent with the long-standing judicial support for agreed positions on declarations, injunctions and the like in civil regulatory proceedings, having regard to the public interest.

B.    Penalties

36.    Section 10(1) of the Collection Act is a civil penalty provision enforceable under Pt 4 of the Regulatory Powers Act: s 13A of the Collection Act.

37.    Under Pt 4 of the Regulatory Powers Act, if the court is satisfied that a person has contravened a civil penalty provision, the court may order the person to pay to the Commonwealth such pecuniary penalty for the contravention as the court determines to be appropriate: s 82(3). For a body corporate (like Undamine), the maximum pecuniary penalty is five times the pecuniary penalty specified in the civil penalty provision: s 82(5).

38.    As noted above, Commonwealth v FWBII highlights the desirability of imposing the recommended pecuniary penalties, subject to the Court being satisfied that they are appropriate. The submission below addresses the appropriateness of the penalties jointly proposed in this case.

(a)    The central purpose – ensuring deterrence

39.    In Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450 (Pattinson), the High Court confirmed a long line of authority that ‘civil penalties are imposed primarily, if not solely, for the purpose of deterrence’.

40.    This has two aspects: ‘specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners’.

41.    In other words, the object of civil penalties ‘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 provision. Further, a civil penalty ‘must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business’.

(b)    Imposing penalties for multiple contraventions

42.    Section 93(1) of the Regulatory Powers Act operates to create a continuing obligation to do an act or thing required to be done under a civil penalty provision, even after the time proscribed to do so has passed. Section 93(2) provides that where a person contravenes a civil penalty provision requiring something to be done within or before a particular time, a separate contravention arises in respect of each day during which the contravention occurs.

43.    Section 10(1) of the Collection Act requires an audit report to be given to Coal LSL no later than 6 months after the end of a relevant financial year. As such, s 10(1) of the Collection Act engages s 93(2) of the Regulatory Powers Act, creating a separate contravention for each day an audit report is overdue.

44.    Accordingly, Undamine contravened s 10(1) of the Collection Act:

44.1.    in respect of the audit report for the 2018 financial year, on 889 occasions;

44.2.    in respect of the audit report for the 2019 financial year, on 604 occasions;

44.3.    in respect of the audit report for the 2020 financial year, on 957 occasions;

44.4.    in respect of the audit report for the 2021 financial year, on 585 occasions; and

44.5.    in respect of the audit report for the 2022 financial year, on 220 occasions.

45.    In total, when s 93(2) is applied, Undamine contravened s 10(1) of the Collection Act on 3,255 occasions. While these contraventions are legally distinct, they are closely factually interrelated, as discussed further below.

Contraventions grouped as a ‘course of conduct’

46.    Where acts give rise to separate contraventions that are ‘inextricably interrelated’, they may be regarded as a ‘course of conduct’ for penalty purposes.

47.    The question of whether certain contraventions should be treated as being truly a single course of conduct is a factual enquiry to be made having regard to all of the circumstances of the case. Such a grouping takes into account the significantly overlapping nature of contraventions which involve repetition of the same conduct. It is a ‘tool of analysis’ which can, but need not, be used in any given case.

48.    To take such an approach is not to downplay the wrongdoing. The principle does not operate as if the course of conduct was only one contravention, but is to ensure that in fixing the penalty, given the interrelationship or overlap between the contraventions, the contravener does not suffer multiple punishment for the same offending. In other words, the statutory maximum for one contravention is not converted into a maximum for the entire course of conduct; the maximum continues to apply to each contravention which forms part of the course of conduct.

49.    Notwithstanding a grouping into courses of conduct, it remains critical to ensure that the penalties ultimately imposed are of appropriate deterrent value having regard to the actual, substantive wrongdoing. However, the maximum penalty for a single contravention, while not binding, can be used as a guide against which to consider the whole of the (overlapping) wrongdoing in that course of conduct.

50.    It has recently been suggested that in circumstances where Parliament has expressly provided that separate contraventions will arise on each day contravening conduct continues, it ‘would be at odds with the legislative intent to assess the penalty on the basis that this is just one course of conduct which took place over a prolonged period’, as this principle (course of conduct) ‘may suggest treating the actions …over a number of days as just one contravention’. In the parties’ submission, this suggestion misunderstands both the object and purpose of the course of conduct principle, which does not seek to reduce a number of contraventions to ‘just one contravention’ but instead provides a way of avoiding a double penalty for those parts of legally distinct contraventions which involve overlap in wrongdoing.

51.    In the present case, it is appropriate to group the many contraventions arising from Undamine’s failure to provide the audit reports within the time required into five courses of conduct, one for each late audit report. This grouping takes into account the significantly overlapping nature of each of those categories of contravention, and the interrelationship between such contraventions in terms of their nature and circumstances as well as harm caused.

The ‘totality’ principle

52.    Where multiple separate penalties are to be imposed upon a particular wrongdoer, the totality principle requires the Court to make a ‘final check’ of the penalties to be imposed on a wrongdoer, considered as a whole. It will not necessarily result in a reduction. However, in cases where the Court believes that the cumulative total of the penalties to be imposed would be too low or too high, the Court should alter the final penalties to ensure that they are ‘just and appropriate’.

53.    In this case, grouping the penalties into the courses of conduct described at paragraph 51 above means that any relevant overlap in the conduct is fully and appropriately addressed by those mechanisms. The parties agree that no totality reduction is thereafter required.

(c)    Determining an appropriate penalty for each contravention

Maximum penalty

54.    The maximum pecuniary penalty specified in s 10 of the Collection Act is 40 penalty units, with the result that, pursuant to s 82(5) of the Regulatory Powers Act, the maximum penalty payable by Undamine (as a corporation) in respect of each contravention of s 10 of the Collection Act is 200 penalty units.

55.    Over the Relevant Period, the value of a penalty unit increased, as set out in the table below:

This leads to a theoretical maximum penalty in the current case of $150,785,000.

56.    While the maximum available penalty operates as a ‘yardstick’, it is only ‘one of a number of relevant factors’ that must be taken into account: Pattinson at [54]. Where a large number of contraventions in a case leads to a statutory maximum that is ‘many orders of magnitude more than the amount required to ensure specific or general deterrence’, it remains relevant only to the extent that ‘it reveals that the legislature did not regard contraventions [of that type] as trivial or inconsequential’.

Factors to be taken into account

57.    In determining the appropriate penalty, s 82(6) of the Regulatory Powers Act requires the court to take into account the following matters:

(a)    the nature and extent of the contravention;

(b)    the nature and extent of any loss or damage suffered because of the contravention;

(c)    the circumstances in which the contravention took place; and

(d)    whether the person has previously been found by a court (including a court in a foreign country) to have engaged in any similar conduct.

58.    The mandatory considerations set out in s 82(6) of the Regulatory Powers Act of ‘loss’ and ‘damage’ ought not be given a narrow meaning and ought not be limited to financial harm. Rather, it is open to the court take a broad view of the concept of ‘loss or damage suffered because of the contravention’, which may be interpreted to include social harm.

59.    In addition to the mandatory considerations set out in s 82(6) of the Regulatory Powers Act, s 13A(5) of the Collection Act requires the court, in determining the pecuniary penalty for a contravention by a body corporate of a civil penalty provision of the Collection Act, to take into account the following matters:

(a)    the level of the employees, officers or agents of the body corporate involved in the contravention; and

(b)    whether the body corporate exercised due diligence to avoid the contravention; and

(c)    whether the body corporate had a corporate culture conducive to compliance.

60.    In addition, there are other factors which are long recognised as being typically relevant in arriving at a penalty amount of an appropriate deterrent value. Such additional relevant factors commonly include:

(a)    The size of the contravening company.

(b)    The degree of power held by the contravening company as evidenced by its market share and ease of entry into the market.

(c)    The deliberateness of the contravention and the period over which it extended.

(d)    Whether the contravention arose out of the conduct of senior management or at a lower level.

(e)    Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention.

(f)    Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the legislative regime relevant to the contravention.

61.    The significance of each factor depends on the facts of the particular case. However, where such matters arise on the facts of a particular case, they must be considered by the court.

[emphasis in original]

19    The parties additionally made reference to particular cases concerning penalty in respect of various types of statutory contraventions. Although I have considered that aspect of the joint submission, in the end result, I have not gained particular assistance from other cases concerning penalisation in different circumstances. I have, however, gained particular assistance from that part of the joint submission which sought to apply the general principles as to penalisation to Undamine’s particular circumstances. The parties jointly submitted:

(e)    Application of principles to Undamine

69.    Application of the above principles points to the imposition of a pecuniary penalty against Undamine. The parties submit that at least the following factors are relevant to the Court’s determination of penalty.

70.    First, considerations of general deterrence point to a need to impose an appropriate penalty. Coal LSL relies heavily on annual audit reports to gain assurance that the information provided to Coal LSL through the year in levy returns and reimbursement claims is supported by the relevant records of the employer and were correct. This is critical for Coal LSL to be able to verify employee records, to ensure the correct levies have been paid over the course of a financial year and that the reimbursements made by Coal LSL to the employer under Pt 7 of the Administration Act are correct. The audit review process will often result in amendments to Coal LSL’s records, based on the findings set out by the auditor in the report. As a result, the timeliness and accuracy of audit reports directly affects Coal LSL’s ability to fulfil its statutory functions, including to maintain proper records and ensure the adequacy of the Fund.

71.    Accordingly, the penalty needs to be fixed at a level appropriate to prevent Undamine and other employers in the BCMI from viewing penalties for non- compliance with the Collection Act by failing to submit audit reports on time as an acceptable cost of doing business.

72.    Second, while the breaches of the Collection Act could be considered administrative in nature, constituted by a failure to perform a reporting step, this does not render them trivial. Parliament has set its face against conduct of this kind through the imposition of a significant maximum penalty of 200 penalty units for a contravention of s 10(1) by a corporation. As noted above at paragraph 54, there is a theoretical total maximum penalty of $150,785,000.

73.    Third, the audit reports for the 2020, 2021 and 2022 financial years show that Undamine has significantly overpaid its levy contributions in these periods. These audit reports were submitted after these proceedings were commenced. The parties agree that the audit reports indicate that the amount of the payroll levy Undamine has overpaid is $151,224.47. If further investigations confirm this figure, Coal LSL will therefore be required to pay this amount to Undamine under Pt 7 of the Administration Act. In the absence of the audit reports, Coal LSL would not have had information which allowed it to identify these overpayments. The amount of the overpayments suggest that Undamine’s non-compliance have not caused harm to any specific employees. The parties do not submit that harm has flowed to any of Undamine’s eligible employees as a result of Undamine’s contraventions. It is possible however that errors in the calculation of eligible wages, as foreshadowed in these audit reports, may have contributed to overpayment of reimbursements to Undamine through this period. Further investigation on this issue is required. However, the inability to identify this issue in a timely way has the potential to impact the Fund. These potential impacts demonstrate the importance of a penalty capable of securing general deterrence, given the harm that late audit reporting visits upon the integrity of the LSL Scheme, insofar as it compromises Coal LSL’s ability to maintain proper records and ensure that employers are contributing correct amounts.

74.    Fourth, Undamine did not benefit from its contravening conduct and, in fact, may have made a significant overpayment to its detriment that, but for the contravening conduct, would have been identified earlier.

75.    Fifth, there is some evidence that at least some of the delay relating to the contraventions arising from the late audit reports for the 2020 and 2021 financial years was the result of delay on the part of Undamine’s auditors (as discussed at paragraphs 25 and 26 above). However, the obligation to provide audit reports under s 10(1) falls on Undamine, as the employer of eligible employees. Undamine accepts that it is not relieved of this obligation by the action or inaction of third parties.

76.    Nevertheless, Coal LSL accepts that Undamine’s contraventions did not arise from any intentional effort to circumvent the requirements of the LSL Scheme. Rather, Undamine’s contraventions arose from a failure to prioritise its obligations in respect of the provision of audit reports, which was aggravated in the case of the audit reports for the 2020 and 2021 financial years by COVID-19 illness among staff and auditor delay.

77.    Sixth, senior officers were aware of Undamine’s noncompliance with s 10(1), and the consequences of this, from at least 29 April 2022.

78.    Seventh, the contraventions occurred over a substantial period of time. In relation to three of the audit reports (for the 2020, 2021 and 2022 financial years), the contraventions did not cease until the present proceedings were commenced.

79.    Eighth, Undamine has employed people in a high risk industry for over 13 years without being the subject of regulatory enforcement proceedings. However, Undamine has a long history of making late levy payments. Further, for over 6 years prior to the audit report contraventions the subject of this proceeding, Undamine repeatedly failed to submit its audit reports on time. When considered alongside the lengthy period of time for which the audit report contraventions continued, such circumstances indicate that Undamine does not have an adequate corporate culture of timely compliance with its obligations under the Collection Act, notwithstanding its record in relation to other regulatory regimes.

80.    Ninth, Undamine’s size by reference to its end of financial year 2023 revenue is $47,227,783.

81.    Tenth, Undamine has shown a significant degree of cooperation with Coal LSL since these proceedings were commenced, including making the admissions in this Agreed Document. Cooperation with authorities in the course of investigations and subsequent proceedings can properly reduce the penalty that would otherwise be imposed. This reduction reflects the fact that such cooperation: increases the likelihood of cooperation in future cases in a way that furthers the object of the legislative scheme in question; frees up the regulator's resources, thereby increasing the likelihood that other contraveners will be detected and brought to justice; and facilitates the course of justice. In this case, the parties consider that a discount for cooperation is appropriate given Undamine’s admission of the audit report contraventions and willingness to resolve the proceeding.

82.    Eleventh, as discussed above at paragraph 51, it is appropriate for the Court to treat the 3,255 contraventions of the Collection Act as five distinct courses of conduct, relating to each of the 2018, 2019, 2020, 2021 and 2022 audit reports, and to take this account in assessing the appropriate penalty.

83.    Twelfth, Undamine has not previously been found by a court to have been in contravention of the Collection Act or any of its other statutory obligations in relation to the operation of the Fund.

84.    Having regard to all of the circumstances above, the parties submit that a total penalty of $40,000 is appropriate for all contraventions of s 10(1) admitted by Undamine. This amounts to a penalty of $8,000 for each of the five courses of conduct which, as outlined earlier in these submissions, are each in turn comprised of hundreds of contraventions.

85.    In reaching this figure, an approximate discount of 20% has been applied in recognition of Undamine’s cooperation.

86.    The parties submit that a ‘final check’ by reference to the totality principle supports the conclusion that the penalty proposed by the parties is just and appropriate in all of the circumstances of this case.

(f)    Single civil penalty order

87.    Section 85 of the Regulatory Powers Act provides that a court may make a single civil penalty order against a person for multiple contraventions of a civil penalty provision if the contraventions are founded on the same facts or form, or are part of, a series of contraventions of the same or a similar character.

88.    In the present case, it is appropriate to make a single civil penalty order in relation to the audit report contraventions, given the that these contraventions have a substantially similar character.

C.    Declarations of contraventions

89.    Undamine’s contraventions of s 10(1) of the Collection Act are established by the facts and admissions set out in this Agreed Document. For the following reasons it is appropriate to make declarations as to those contraventions as set out in the Proposed Orders.

90.    The Court has a wide discretionary power to make declarations under section 21 of the Federal Court Act. The preconditions for declaratory relief, as explained by the High Court, are established in this case:

90.1.    There is a real and not a hypothetical question: There is a direct and important question as to whether Undamine contravened the provisions of the Collection Act in engaging in the Audit Report Contraventions.

90.2.    The applicant has a real interest in raising it: Coal LSL has an obvious interest, as the statutory regulator discharging its functions in the public interest, in bringing the proceedings.

90.3.    There is a proper contradictor and real consequences: Undamine, as the entity declared to have contravened the law, has an interest in opposing the relief. This remains so notwithstanding its admissions and agreement.

91.    The utility of declarations which set out the particular liability found and the basis for penalties ordered is recognised by the High Court and Full Federal Court, and in the great majority of civil penalty cases at primary judge level. In this case the declarations are desirable and appropriate because they will record the Court’s disapproval of the conduct, assist Coal LSL carrying out the duties conferred on it by statute, assist in clarifying the law, and make clear to other would-be contraveners that such conduct is unlawful.

[emphasis in original]

20    As I put to the parties in the course of submissions, a subject which did concern me was a disparity between the statutory aggregate maximum penalty and that promoted by them. One answer to that was offered on behalf of the corporation by reference to Australian Competition and Consumer Commission v Samsung Electronics Australia Pty Ltd [2022] FCA 875, in which at [43] – [45], Murphy J made the following observations:

43    Careful attention to the maximum penalty will almost always be required because the legislature has legislated for it; and balanced with all of the other relevant factors, it provides a yardstick: Markarian v The Queen [2005] HCA 25; 228 CLR 357 at [31] (Gleeson CJ, Gummow, Hayne and Callinan JJ) cited with approval in Pattinson HCA at [52]-[54].

44    Having noted that, where a representation is made in an advertisement, a separate representation is made – and thus a separate contravention arises – in respect of each person who reads the advertisement: Australian Securities and Investments Commission v La Trobe Financial Asset Management Ltd [2021] FCA 1417 at [91] (O’Bryan J) citing Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd trading as Bet365 (No 2) [2016] FCA 698 at [16]-[17] (Beach J). I accept the parties’ submission that this is a case in which the number of contraventions is likely to be very large because of the manner in which the Galaxy phones were marketed, with the misleading representations made in various advertising and marketing material over a lengthy period. I also accept that the large number of contraventions in this case means that the total statutory maximum applicable to the wrongdoing is many orders of magnitude more than the amount required to ensure specific or general deterrence.

45    In other words, while the theoretical maximum remains relevant to the extent that it reveals that the legislature did not regard contraventions of the type that Samsung Australia has engaged in as trivial or inconsequential, the theoretical maximum penalty is so vast as to make precise calculation unnecessary and unhelpful, if it were even possible: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113; 254 FCR 68 at [143]-[145] (Dowsett, Greenwood and Wigney JJ) citing Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2015] FCA 330; 327 ALR 540 at [82] (Allsop CJ); Reckitt at [139]-[145].

21    Samsung is a case decided after Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450 (Pattinson). Even so, and, with respect, I would prefer to reserve to a case where the facts made it pertinent detailed consideration of the relationship between an apparently large, even ruinous maximum penalty prescribed by Parliament and whether such a penalty should be visited in the circumstances on a particular contravener. I would merely observe that it is important that the judiciary not subvert, by idiosyncratic conceptions a statutory objective of deterrence by Parliament in making provision for apparently ruinous penalisation so as to ensure compliance with a particular statutory obligation. The appropriate approach, in my view, is one in conformity with the following observations made in the joint judgment in Pattinson, at [53] – [55]:

53    In a civil penalty context, the relevance of a prescribed maximum penalty as a yardstick was explained by the Full Court of the Federal Court in Reckitt Benckiser, where their Honours, citing Markarian, said:

“The reasoning in Markarian about the need to have regard to the maximum penalty when considering the quantum of a penalty has been accepted to apply to civil penalties in numerous decisions of this Court both at first instance and on appeal. As Markarian makes clear, the maximum penalty, while important, is but one yardstick that ordinarily must be applied.

Care must be taken to ensure that the maximum penalty is not applied mechanically, instead of it being treated as one of a number of relevant factors, albeit an important one. Put another way, a contravention that is objectively in the mid-range of objective seriousness may not, for that reason alone, transpose into a penalty range somewhere in the middle between zero and the maximum penalty. Similarly, just because a contravention is towards either end of the spectrum of contraventions of its kind does not mean that the penalty must be towards the bottom or top of the range respectively. However, ordinarily there must be some reasonable relationship between the theoretical maximum and the final penalty imposed.”

(Citations omitted.)

54    Two aspects of the Full Court’s reasoning in this passage from Reckitt Benckiser deserve particular emphasis here. The first is their Honours’ recognition that the maximum penalty is “but one yardstick that ordinarily must be applied” and must be treated “as one of a number of relevant factors”. As has already been seen, other factors relevant for the purposes of the civil penalty regime include those identified by French J in CSR.

55    The second point is that the maximum penalty does not constrain the exercise of the discretion under s 546 (or its analogues in other Commonwealth legislation), beyond requiring “some reasonable relationship between the theoretical maximum and the final penalty imposed”. This relationship of “reasonableness” may be established by reference to the circumstances of the contravenor as well as by the circumstances of the conduct involved in the contravention. That is so because either set of circumstances may have a bearing upon the extent of the need for deterrence in the penalty to be imposed. And these categories of circumstances may overlap.

[footnote references omitted]

22    Of particular importance here is the reference in the joint judgment in Pattinson, at [55], to some “reasonable relationship” between the theoretical maximum and the final penalty imposed with reasonableness being established by reference to the circumstances of the particular contravention. In this instance, the circumstances of the particular contravention necessarily include three factors, in my view:

(a)    that the corporation did engage auditors and to some extent, whilst it does not relieve the corporation of compliance liability, its compliance was affected by delays on the part of the auditors in completing audits;

(b)    there is at least the contingency that there was no loss to the fund administered by the corporation but rather an overpayment by Undamine; and

(c)    the ready admission of contraventions and also, it must be said, participation by Undamine in a jointly promoted penalty order and related orders.

23    The provision in the scheme for audits entails those companies participating in the scheme in part bearing a cost of external scrutiny whereby the corporation can have reasonable assurance of compliance. So the provision for audit and its cost to be borne in this way can be seen to be a way of relieving the corporation from a need to have a larger investigation and audit staff, which is not to say that the corporation has no capacity for that. The very existence of the present proceeding is eloquent proof of that. But there is in the sense described an element of self-administration borne by companies in the industry in the statutory scheme.

24    Satisfied as I am that the corporation is not operating under any misunderstanding as to the purpose of civil penalty regimes, and, respectful as I am of its value judgment as a regulator particularly and peculiarly constituted in its governance to have insight into the importance of the statutory scheme, I am prepared to act on the joint submission of the parties in the circumstances of this case as related above. I therefore make orders in terms of those promoted by the parties.

Associate:    

Dated:    16 February 2024