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University of New South Wales Law Journal Student Series |
RUCHIT GOYAL*
As provided in the Corporations Act 2001 (Cth), a registered company is a separate legal entity, and therefore, has the legal capacity and powers of a natural person.[1] This includes, amongst other things, the power to sue and be sued.[2] However, there exists practical difficulties with treating a corporation as a natural person since it cannot form a mental intention of its own, beyond the intention of its principal officers.[3] Whilst some may argue that this makes the concept of corporate criminal prosecution no different than imposition of a civil pecuniary penalty,[4] the author’s position is that there exists strong arguments in holding a corporation criminally responsible for its (mis)conduct. In saying so, the author does recognise the difficulties associated with criminally prosecuting corporations and accepts that civil pecuniary penalties can provide an alternative means of achieving the ultimate objective of deterrence – although not to the same extent as criminal sanctions.
This paper is broadly split into two halves – criminal prosecution and civil pecuniary penalties.[5] The first half (Part II) begins with an overview of criminal corporate prosecution, before moving on to discuss the rationales behind holding corporations criminally liable for their actions. This is followed by a detailed discussion on the difficulties, largely due to the accusatorial nature of our criminal justice system, associated with criminally prosecuting corporations.
The second half of this paper (Part III) begins with an explanation of the purposes of civil pecuniary penalties. The paper then explores the role courts play in approving agreed civil pecuniary penalties and the author’s position on whether they do so effectively. Finally, in Part IV, the author states his opinion on the effectiveness of civil pecuniary penalties more broadly, whilst suggesting ways in which the author believes such penalties can be utilised more effectively.
As observed by Lord Justice Buckley, ‘[a corporation] has neither body, parts nor passions... Apart from its corporators, it can have neither thoughts, wishes or intentions, for it has no other mind than the minds of the corporators’.[6] This makes the concept of prosecuting a corporation an unusual one since without a ‘soul to be damned, [and a] body to kick’,[7] a corporation cannot be incarcerated.[8] In fact, some critics have even found the underlying rationale for corporate criminal liability ‘problematic’, arguing that civil and administrative sanctions can comfortably capture the desirable features of corporate criminal liability.[9] As such, one begins to question not only the appropriateness, but also the usefulness of holding companies criminally responsible if the same outcome can be achieved through other civil and administrative enforcement tools.[10] Instead, it can be argued that regulators should devote their time and resources on ensuring compliance through other civil mechanisms and/or prosecuting individuals who committed the criminal acts.[11]
However, whilst there may not exist any real theoretical distinctions between criminal prosecution and civil penalties in the context of corporations, there do exist some very sensible and powerful rationales in favour of the imposition of corporate criminal liability.[12]
A Why Criminally Prosecute Corporations?
Firstly, whilst the legal sanctions (i.e., monetary sum) imposed on corporations as a result of criminal prosecution may not differ to a civil penalty, there exist additional social sanctions, such as reputational loss, which cannot be ignored.[13] Reputational loss can not only cost a company its customers and workers, but also have a negative impact on its financial performance.[14] It is widely recognised that customers will often hesitate to purchase goods and/or services from corporations with a history of criminal conduct, particularly if competitors can offer the same good and/or service at a similar price.[15]
Nowadays, the market also has the means to become and spread awareness about corporate criminal misconduct through the ease of their smartphones. Whilst the same can be said about civil penalties, the author argues that market perception has always viewed ‘criminal’ misconduct as more severe and damaging than civil contraventions.[16] The connotation and social stigma around the term ‘criminal’ carries weight which, if proven, incurs an additional ‘solemn pronouncement of the moral condemnation of the community’ – something which civil contraventions fail to achieve to the same extent.[17] Some even view criminal law as society’s synthesis of what is evil,[18] thereby making the rationale for prosecuting corporations a powerful one.
This leads to the second reason that it is not only beneficial, but also vital that a distinction be drawn between conduct which is merely wrong, and conduct which is criminal.[19] As discussed above, society views a criminal prosecution differently to a civil contravention, even though the monetary price paid is identical. Arguably, this is not only because it demands more culpability, ‘but [also] because of the condemnation it imposes on its transgressors’.[20] As such, it is vital that a corporation’s conduct which contravenes the definitions of social morality be expressed as criminal and brought to the society’s attention accordingly.[21] Only in this way will members of the community be given the full opportunity to impose social sanctions upon the corporation,[22] with a hope of promoting a culture of compliance within the industry.
Thirdly, the additional reputational consequences which come with criminal convictions are, in the author’s opinion, more likely to deter corporations from engaging in such misconduct than a civil penalty. Criminal sanctions are widely acknowledged as being the greatest deterrent of corporate misconduct – both for the specific corporation and the industry in general.[23] Whilst some argue that civil penalties can also have the same deterrent effect,[24] deterrence theory assumes that a wrongdoer will commit an unlawful act if the expected private benefit is greater than the expected disutility of any sanctions.[25] In this way, imposition of a civil penalty can, if inadequate, become a cost-benefit analysis for a corporation, whose primary goal is profit maximisation. Criminal prosecution, on the other hand, is a system for public communication of values and as discussed above, corporations pay more than simply a monetary amount if found guilty.[26] Therefore, the additional consequences that come with criminal prosecution are essential to have a strong deterrent effect, particularly on large corporations with infinite funds.
Fourthly, whilst it is well accepted that deterrence is the primary objective for imposing sanctions on a corporation, the author argues that the objective of retribution must not be overlooked.[27] Common law has always viewed criminal sanctions upon an individual to be justified not only because of the consequences which result, but also because it is morally proper to punish that person.[28] Similarly, a company’s recognition as a separate legal entity means that commissions of acts by a corporation which the community clearly deems to be morally wrong and evil must also be punished.[29] In other words, even though the contravener of the act is a corporation, it must nonetheless be met with ‘disapprobation for the sake of the victim and the sake of the community’.[30]
Lastly, and closely linked to the reasons discussed above, criminal prosecution of corporations is the most effective means of promoting a culture of compliance and thereby implementing structural change within the industry.[31] This proposition finds support in the concept of an ‘enforcement pyramid’,[32] whereby escalating up the pyramid is more likely to motivate voluntary compliance within corporations.[33] One can also say, as was explained by the Law Reform Commission of Canada, that sanctioning the corporation can further produce systemic change in the behaviour of individuals within the corporate setting – which is another key objective of corporate criminal prosecution.[34]
Therefore, the reasons discussed illustrate the effectiveness of corporate criminal prosecution in achieving deterrence, promoting a culture of compliance and sanctioning the misconduct. However, whilst that is true, commencing criminal proceedings is not at all straightforward. There exist various difficulties which regulators must face and overcome if they choose to bring a criminal proceeding against a corporation.
B Difficulties with Criminal Corporate Prosecution
The first difficulty when criminally prosecuting a corporation arises from the accusatorial nature of our criminal justice system.[35] It is a fundamental principle of our justice system that the onus of proof is upon the prosecution to prove its case beyond reasonable doubt.[36] In theory, this reflects a balance struck between the power of the State to prosecute and the position of an accused.[37] Whether such is true in practice – given the resources at disposal of large corporations in comparison to regulators such as ASIC[38] and ACCC[39] – is arguable and beyond the scope of this paper.[40] For our purposes, the accusatorial nature of the justice system means that it for the prosecution, and not the defence, to prove its case.[41] This requires the prosecution to meet the ‘highest standard of proof known to the law... much higher state of satisfaction than [one required in civil proceedings]’.[42] As such, the Commonwealth Director of Public Prosecutors (CDPP), the body to whom the regulator refers serious criminal matters to,[43] must carefully consider the evidence before deciding to commence criminal proceedings against a corporation.
Secondly, discharging the onerous standard of ‘beyond reasonable doubt’ requires significant time and resources not only during the trial, but also in gathering evidence, investigating witnesses and preparing for trial.[44] However, it is well recognised that both the regulator and the CDPP have finite resources and simply do not possess the means to prosecute every criminal offence.[45] In such circumstances, they must make a judgment call on whether or not to prosecute a particular corporation, keeping in mind their duty to ensure the efficient use of taxpayer’s dollars and state resources.[46] This poses another difficulty to overcome, particularly since the CDPP has very strict guidelines governing the decision to prosecute.[47]
Therefore, whilst on paper, criminally prosecuting corporations may look ideal, it is extremely difficult to do so in practice. As a result, regulators look towards a civil pecuniary penalty to both achieve its objectives (although not to the same extent) and avoid the difficulties that come with an accusatorial criminal system.
A civil penalty is a pecuniary penalty imposed by the court in civil proceedings.[48] It is distinct from a criminal fine discussed above. However, civil pecuniary penalties are sometimes regarded as ‘a hybrid between the criminal and civil law’,[49] and described by some as ‘punitive civil sanctions’.[50] This is because civil pecuniary penalties are notionally a form of statutory remedy, provided for in regulatory legislation where the focus is upon compliance.[51]
Nonetheless, there are certain critical differences between a criminal prosecution and civil penalty proceedings. Firstly, the standard of proof in a civil penalty proceeding is the ‘balance of probabilities’ as opposed to the onerous ‘beyond reasonable doubt’.[52] As such, the degree of certainty required to support a conviction on a criminal charge is not required in a civil pecuniary context.[53] Secondly, civil penalty proceedings, whilst adversarial, are governed by the issues and the scope of relief framed by the parties as they choose.[54] As a result, there exists considerable scope for parties to agree upon an appropriate remedy and for the court to be persuaded that it is an appropriate remedy, making settlements of civil proceedings a commonplace.[55] Commencing a civil proceeding also saves time for the regulator and avoids trial costs due the lower burden of proof and the usualness of settlements.[56]
Further, in a civil pecuniary proceeding, the tribunal of fact is always a judicial officer and it is well recognised that the basis upon which a pecuniary penalty is imposed ordinarily turns upon quite different considerations to those relevant for criminal sentencing.[57] Some of these considerations will now be discussed.
A Purposes of Civil Penalties
As discussed above, imposition of criminal penalties is conditioned not only upon notions of deterrence, but also a degree of retribution. On the other hand, the purpose of civil penalties is ‘primarily if not wholly protective in promoting the public interest in compliance’.[58] In other words, penalties are directed with a goal of putting a price on the contravention that is sufficiently high to deter repetition both by the contravener and others who may be tempted to contravene.[59] Therefore, retribution is not a consideration at all when imposing a pecuniary penalty upon a corporation.[60]
However, for civil pecuniary penalties to be effective, the ‘sting or burden of the penalty’ must be greater than the benefit acquired,[61] as otherwise imposition of the penalty simply becomes a cost-benefit analysis for large corporations with sufficient funds.[62] This was a point stressed by the Full Federal Court in Singtel Optus Pty Ltd v ACCC at [63], where their Honours said that corporations ‘must be deterred from the cynical calculation involved in weighing up the risk of penalty against the profits to be made from contravention’.[63]
The higher penalty also sends a message to the marketplace that simply because the corporation was not tried in the criminal jurisdiction, that does not mean that the contraventions are not serious.[64] As recognised by Rod Sims, former ACCC Chair, at the 2022 Ruby Hutchinson Memorial Lecture, ‘high penalties are essential for effective deterrence. The ACCC does not have the resources to tackle most consumer law breaches, so our approach is to take specific cases, and allow high penalties to send a message to all other companies’.[65]
An example of a regulator attempting to send a message to the industry can be seen through the recent case of AUSTRAC v Westpac.[66] In essence, Westpac accepted that it had contravened various provisions of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth).[67] AUSTRAC and Westpac came to an agreed pecuniary penalty of $1.3 billion before approaching the Federal Court for approval.[68] Beach J approved the agreed figure and held that the amount was appropriate to achieve both general and specific deterrence,[69] reflecting the ‘biggest fine [paid] in Australian corporate history’.[70] Although Westpac had contravened the Act on over 23 million occasions,[71] the penalty despite not being criminal in nature, does reflect the gravity and seriousness of the misconduct. In the author’s opinion, a penalty of such gravity allows the regulator to balance the need to send a strong message, with the finite resources available to them. As identified by Rod Sims above, regulators can only take on limited cases, and a case such as AUSTRAC v Westpac demonstrates an effective use of state resources, whilst also promoting deterrence and a culture of compliance within the industry.[72]
In this way, even though civil pecuniary penalties are not specifically designed to express outrage, regulators can impose penalties in a way that does not suggest a weak tolerance of defiance of the law.[73]
B Civil Pecuniary Penalty Settlements
As indicated above, the usual practice in a civil pecuniary proceeding is for parties to reach a settlement and subsequently, approach the courts for approval.[74] In approving the parties’ agreed civil penalty, the court is not to act as a mere ‘rubber stamp’, but instead form its own view about the appropriate range of penalties.[75] However, the Court must not depart from the agreed figure either, given the agreed penalty is within the permissible range considering all the circumstances.[76] There are in fact important public policy arguments in favour of not departing from an agreed penalty, except in a clear case.[77] As recognised by the Courts on numerous occasions,[78] agreed penalties avoid very lengthy and complex litigation – therefore, freeing the courts to deal with other matters.[79] In this way, agreed penalties also allow regulators to allocate their limited resources to other areas of the economy which require their attention.[80]
However, whilst an agreed penalty promotes an efficient use of court resources,[81] the author argues that such an approach is not entirely effective to deter either the specific corporation or other corporations in the market from engaging in similar conduct.[82] Large corporations with plenty of funds have the means to hire top-tier solicitors and barristers to negotiate an adequate settlement on their behalf. This means that personnel from such large corporations have limited participation in the settlement process, placing these companies in their comfort zone without the pressure, distress or embarrassment of a public court hearing where evidence is tendered and witnesses are cross-examined. Instead, lawyers can simply make submissions on their behalf at the court approval hearing, without the need for a trial. As a result, the author argues that a regulator is unlikely to achieve a strong deterrent effect in circumstances where the corporation is not placed in a difficult and testing situation.
Courts have further argued that negotiated resolutions promote vigorous competition within the market, which would potentially be jeopardised if agreed settlements were clouded by unpredictable risks.[83] The author disagrees with such an argument as being a justification for courts not playing a more active role in disapproving agreed penalties. Instead, the author is of the opinion that the so-called ‘unpredictable risk’ will in fact promote compliance within the marketplace as corporations will no longer be able to avoid heavy fines and sanctions simply by ‘strong-arming’ the regulator. It is no secret that in civil penalty proceedings, large corporations usually have more resources than the regulator, and therefore the means to hire top-tier law firms to defend their claims. As such, by playing a more conservative role, courts are in fact failing to promote compliance within the market as most large corporations can simply negotiate a penalty with the regulator knowing that it is more likely than not to be approved by the court.[84] Instead, courts must adopt a more proactive approach when considering agreed penalties and not hesitate to propose a higher penalty if appropriate in the circumstances.
For example, in ACCC v Volkswagen,[85] ACCC brought proceedings against Volkswagen for contravening certain provisions of the Australian Consumer Law.[86] Putting aside the facts of the case for present purposes, the ACCC and Volkswagen came to an agreed pecuniary penalty of $75 million before approaching the Federal Court for approval.[87] However, after an in-depth analysis of all the circumstances of the case, Foster J held that ‘the $75 million agreed penalty is not sufficient to meet the overriding objects of specific deterrence and general deterrence required in matters such as this and is manifestly inadequate’.[88] As a result, his Honour ordered Volkswagen to pay $125 million to the Commonwealth of Australia.[89] The higher penalty imposed was further confirmed on appeal to the Full Federal Court.[90] The case sends a message to the market and reminds wrongdoers that a court’s task of determining and, ultimately, imposing a civil pecuniary penalty is always an exercise of the court’s discretion.[91] In the author’s opinion, such a decision is likely to raise concerns within large corporations as it places them outside of their comfort zone, and potentially deters them from engaging in such conduct in the future knowing that their agreed figure can be set aside by an independent judge.[92]
Therefore, whilst courts can be seen to play a more active role in recent cases, there still exist only a handful of cases in which agreed penalties have not ultimately been ordered by the Court.[93]
The pros and cons of both criminal prosecution and civil pecuniary penalties have now been discussed in detail. Whilst the author maintains the position that imposition of civil penalties does not suggest the same level of moral culpability as results from criminal sanctions, and consequently civil penalties do not give rise to the same level of deterrence, their punitive nature cannot be denied.[94] In particular, the author accepts that imposing a penalty that is significantly greater than the benefit acquired can achieve the ultimate objective of deterrence, even if not to the same extent as a criminal sanction.[95] As such, it cannot be denied, recognising both the difficulties associated with criminal prosecution and the finite resources available to regulators, that civil pecuniary penalties have a huge role to play in achieving deterrence. However, in the author’s opinion, there are ways in which civil pecuniary penalties can be used even more effectively.
Firstly, in approving / disapproving an agreed penalty, the court considers a number of factors.[96] Whilst it is not necessary to discuss those factors for the purposes of this paper, it is worth pointing out that one of those factors is the agreed penalty itself and whether it sits within a permissible range.[97] The author argues that this principle places a significant constraint on the exercise of the judge’s discretion in determining an appropriate penalty.[98] Instead, judges should be afforded a wider discretion when considering an agreed penalty and should not be constrained by the figure reached by the parties.[99] For instance, courts have often approved the agreed penalty even though the figure was at the ‘very bottom of the permissible range’,[100] and sometimes even with ‘some hesitation and not without some solicitude’.[101] Whilst the author does not deny that determining the quantum is not an exact science,[102] the author does argue that in certain circumstances judges should be afforded greater latitude to influence the agreed penalty in order to achieve the ultimate objective of deterrence.
Secondly, the regulator must be more willing to use the courts when bringing a civil pecuniary penalty claim. Although criminal prosecution is the strongest deterrent,[103] the author does recognise the limitations with proceeding with one. However, the author argues that even in the civil context, a public hearing can be embarrassing for the defendant and sends a strong message to the marketplace that the misconduct was serious and not acceptable.[104] This was a point stressed by Commissioner Hayne in the Royal Commission Interim Report, concluding that court proceedings are the most effective way of achieving general and specific deterrence.[105] Although ASIC did adopt a ‘why not litigate’ stance in response to the Royal Commission,[106] it is the author’s position that court proceedings should be used more frequently in the context of civil pecuniary penalties.
Therefore, given the difficulties faced by a regulator when criminally prosecuting a corporation, civil pecuniary penalties do provide an alternative means of achieving the objective of deterrence, if used appropriately.
Criminal prosecution of corporations is unarguably the most effective means of achieving general and specific deterrence. The social stigma around ‘criminal’ misconduct is well recognised within the broader community, with the sanctions on a corporation being more than simply monetary. However, that is not to say that civil pecuniary penalties are not effective. Appreciating the difficulties associated with corporate criminal prosecution, a regulator must look towards a civil pecuniary penalty to impose some sort of sanctions on the wrongdoer. However, to be most effective, the penalty must be significantly higher than the profits acquired by the corporation. This is where the role of courts in approving agreed penalties becomes vital, particularly given the disparity between the resources available to each party. Therefore, regulators must never hesitate to bring either a criminal or a civil penalty proceeding against a corporation – but must keep in mind that the former, although difficult to prove, is far more effective.
* Final year undergraduate law student at the University of New South Wales (UNSW). I would like to thank Professor Michael Legg for his support and advice. All opinions and errors are solely attributable to the author.
1 Corporations Act 2001 (Cth) s 124; Salomon v A Salomon & Co Ltd [1897] AC 22 applied in Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424, 445 [46] (Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ), 454-5 [76] (Kirby J).
[2] Australian Competition and Consumer Commission v Oceana Commercial Pty Ltd (2004) 139 FCR 316, 322 [136] (Heerey, Sundberg and Dowsett JJ).
[3] Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705, 713-4 (Viscount Haldane LC).
[4] Vikramaditya Khanna, ‘Corporate Criminal Liability: What Purpose Does it Serve?’ (1996) 109(7) Harvard Law Review 1477 (‘Corporate Criminal Liability’); Daniel Fischel and Alan Skyes, ‘Corporate Crime’ (1996) 25(2) The Journal of Legal Rights 319 (‘Corporate Crime’).
[5] Note that this paper limits its discussion on corporate criminal prosecution and civil pecuniary penalties. Other civil and administrative enforcement tools include, but not limited to, infringement notices, enforcement undertakings and civil compensatory claims, which are beyond the scope of this paper. For a discussion on those enforcement tools, see Aakash Desai and Ian Ramsay, ‘The Use of Infringement Notices by ASIC for Alleged Continuous Disclosure Contraventions: Trends and Analysis’ (2011) 39 Australian Business Law Review 260; Helen Bird, George Gilligan and Ian Ramsay, ‘The Who, Why and What of Enforceable Undertakings Accepted by the Australian Securities and Investments Commission’ (2016) 34 Company and Securities Law Journal 493.
[6] Continental Tyre and Rubber Co (GB) Ltd v Daimler Co Ltd [1915] 1 KB 893, 916.
[7] John C Coffee, ‘“No Soul to Damn: No Body to Kick”: An Unscandalized Inquiry into the Problem of Corporate Punishment’ (1981) 79 Michigan Law Review 386.
[8] Compare the position in jurisdictions such as Germany where the concept of corporate criminal liability does not exist: Edward B Diskant, ‘Comparative Corporate Criminal Liability: Exploring the Uniquely American Doctrine Through Comparative Criminal’ (2008) 118(1) The Yale Law Journal 126, 142.
[9] Khanna, ‘Corporate Criminal Liability’ (n 4); Fischel and Skyes, ‘Corporate Crime’ (n 4).
[10] See Luke Hastings, Grant Marjoribanks and Jeremy Birch, ‘Developing Australia’s framework for corporate prosecutions’ (2015) 33 Company and Securities Law Journal 435, 435 (‘Developing Australia’s framework for corporate prosecutions’).
[11] See ibid 436.
[12] Ibid; See also Paul Redmond, Corporations and Financial Markets Law (Thomson Reuters, 7th ed, 2017) 206.
[13] See Khanna, ‘Corporate Criminal Liability’ (n 4) 1499.
[14] Dominik Breitinger and Jean-Philippe Bonardi, ‘Firms, Breach of Norms, and Reputation Damage’ (2019) 58(6) Business & Society 1143, 1144; Nadine Gatzert, ‘The Impact of Corporate Reputation and Reputation Damaging Events on Financial Performance: Empirical Evidence from the Literature’ (2015) 33 European Management Journal 485, 485-7.
[15] Studies have shown that the top reputational risk driver of concern for corporations is criminal misconduct such as fraud, bribery and corruption: Deloitte, Global Survey on Reputation Risk (2015) 3.
[16] In this way the author respectfully disagrees with Khanna, ‘Corporate Criminal Liability’ (n 4) 1508-9.
[17] See Henry M Mart, ‘The Aims of Criminal Law’ (1958) Law and Contemporary Problems 401, 405.
[18] Ibid; John L Diamond, ‘The Crisis in the Ideology of Crime’ (1998) 31(291) Indiana Law Review 291, 292 (‘The Crisis in the Ideology of Crime’).
[19] Hastings, Marjoribanks and Birch, ‘Developing Australia’s framework for corporate prosecutions’ (n 10) 436.
[20] Ibid; Diamond, ‘The Crisis in the Ideology of Crime’ (n 18) 311.
[21] Ibid
[22] Ibid.
[23] Brendon O’Neill, ‘Corporate Crime and Regulatory Discretion: Rethinking the Use of Criminal, Civil and Administrative Penalties’ (2018) 42 Criminal Law Journal 322, 324 (‘Corporate Crime and Regulatory Discretion’).
[24] See Khanna, ‘Corporate Criminal Liability’ (n 4) 1493-7.
[25] Nick Werle, ‘Prosecuting Corporate Crime when Firms Are Too Big to Jail: Investigation, Deterrence, and Judicial Review’ (2018) 128 The Yale Law Journal 1366, 1381.
[26] John C Coffee, ‘Does “Unlawful” mean “Criminal”? Reflections on the Disappearing Tort/Crime Distinction in American Law’ (1991) 71 Boston University Law Review 193, 194.
[27] Lawrence Friedman, ‘In Defense of Corporate Criminal Liability’ (2000) 23 Harvard Journal of Law & Public Policy 834, 840-4.
[28] Whilst the pure Kantian theory can be regarded to be outdated in modern criminal law, it nonetheless remains a benchmark in discussing retributive theories of punishment in the criminal justice context: see ibid 842.
[29] See ibid.
[30] Ibid 842.
[31] Hastings, Marjoribanks and Birch, ‘Developing Australia’s framework for corporate prosecutions’ (n 10) 436-7; See also Vicky Comino, ‘“Culture” Is Key – An Analysis of Culture-focused Techniques and Tools in the Regulation of Corporations and Financial Institutions’ (2021) 49(1) Australian Business Law Review 6.
[32] Michael Legg, Olivia Dixon and Stephen Speirs, Corporate Misconduct and White Collar Crime in Australia (Thomson Reuters, forthcoming) [1.210]-[1.220].
[33] Hastings, Marjoribanks and Birch, ‘Developing Australia’s framework for corporate prosecutions’ (n 10) 436-7.
[34] Law Reform Commission of Canada, Criminal Responsibility for Group Action (Working Paper 16, 2006) 29-33.
[35] Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 478, 503 (Mason CJ and Toohey J).
[36] Ibid; Construction, Forestry, Mining and Energy Union v Boral Resources Pty Ltd [2015] HCA 21; (2015) 256 CLR 375, 387 [36] (French CJ, Kiefel, Bell, Gageler and Keane JJ) (‘CFMEU v Boral’).
[37] Lee v The Queen [2014] HCA 20; (2014) 253 CLR 455, 466-7 [32] (French CJ, Crennan, Kiefel, Bell and Keane JJ).
[38] Australian Securities and Investments Commission.
[39] Australian Competition and Consumer Commission.
[40] For a discussion on this topic, see Vicky Comino, ‘Effective Regulation by the Australian Securities and Investments Commission: The Civil Penalty Problem’ [2009] MelbULawRw 27; (2009) 33 Melbourne University Law Review 802 (‘Effective Regulation by the Australian Securities and Investments Commission’).
[41] CFMEU v Boral (n 36) 387 [36].
[42] R v Dookheea [2017] HCA 36; (2017) 262 CLR 402, 425 [39] (Kiefel CJ, Bell, Gageler, Keane, Nettle and Edelman JJ).
[43] Australian Securities & Investments Commission, Cooperating with ASIC (Information Sheet 172, February 2021) 2-3.
[44] See Commonwealth Director of Public Prosecutors, Prosecution Policy of the Commonwealth: Guidelines for the Making of Decisions in the Prosecution Policy (CDPP, 19 July 2021) (‘Prosecution Policy of the Commonwealth’).
[45] Ibid 4; Joanna Bird, ‘Regulating the Regulators: Accountability of Australian Regulators’ [2011] MelbULawRw 27; (2011) 35(3) Melbourne University Law Review 739, 740-1, 743-4; Kenny Yang, ‘Public Accountability of Public Prosecutions’ (2013) 20(1) Murdoch University Law Review 28, 32-3 (‘Public Accountability of Public Prosecutions’).
[46] This is sometimes referred to as the ‘[p]rosecutor’s intelligent use of court [and state] resources’: William Hamilton and Charles Work, ‘The Prosecutor’s Role in the Urban Court System: The Case for Management Consciousness’ (1973) 64 Journal of Criminal Law and Criminology 183, 183-4; Yang, ‘Public Accountability of Public Prosecutions’ (n 45) 32-3.
[47] CDPP, Prosecution Policy of the Commonwealth (n 44) 4-8.
[48] Australian Government Solicitor, Annual Report 2012-13 (Report, 27 September 2013) 46.
[49] Australian Securities and Investments Commission v Ingleby [2013] VSCA 49; (2013) 275 FLR 171, 173 [5]; See also Peta Spender, ‘Negotiating the third way: Developing effective process in civil penalty litigation’ (2008) 26 Company and Securities Law Journal 249, 249 (‘Negotiating the third way’).
[50] Comino, ‘Effective Regulation by the Australian Securities and Investments Commission’ (n 40) 811.
[51] Spender, ‘Negotiating the third way’ (n 49) 250; Rebecca Ananian-Welsh and Kate Grover, ‘Before the High Court Commonwealth v Director, Fair Work Building Industry Inspectorate: The End of Penalty Agreements in Civil Pecuniary Penalty Schemes?’ (2015) 37(1) Sydney Law Review 418, 418 (‘Before the High Court’).
[52] Evidence Act 1995 (NSW) ss 140-1.
[53] Rejfek v McElroy [1965] HCA 46; (1965) 112 CLR 517, 521-2 (Barwick CJ, Kitto, Taylor, Menzies and Windeyer JJ); Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission [2007] FCAFC 132; (2007) 162 FCR 466, 480-1 [33] (Weinberg, Bennett and Rares JJ).
[54] Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482, 505 [53] (French CJ, Kiefel, Bell, Nettle and Gordon JJ) (‘Commonwealth v Fair Work Building’).
[55] Ibid 507 [57].
[56] Jenny Copper, ‘Making the Penalty Fit the Crime: The Pros and Cons of Civil Penalties as a Means of Enforcing Commercial Law’ [2016] OtaLawRw 1; (2016) 14 Otago Law Review 213, 221.
[57] Ibid 492-5 [16]-[24], 505-10 [51]-[64]; Australian Securities and Investments Commission v Whitebox Trading Pty Ltd [2017] FCAFC 100; (2017) 251 FCR 448, 451-2 [12]-[13] (Allsop CJ, Middleton and Bromwich JJ).
[58] Commonwealth v Fair Work Building (n 54) 506 [55].
[59] Trade Practices Commission v CSR Ltd [1990] FCA 762 [40] (French J) (‘Trade Practices Commission v CSR’).
[60] Commonwealth v Fair Work Building (n 54) 506 [55]. However, Carr J in NW Frozen Foods v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285, 299 (‘NW Frozen Foods v ACCC’) noted that ‘in my view the cases decided to date on the question of the assessment of pecuniary penalties have not ruled out or excluded punishment as one of the purposes...’ However, his Honour left the issue open and did not find it necessary to decide for the purposes of the case.
[61] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157, 195 [116] (Keane, Nettle and Gordon JJ) (‘ABCC v CFMEU’).
[62] Cam H Truong QC and Luisa F Alampi, ‘Increased Civil Pecuniary Penalties – The “Cost of Doing Business” or an Effective Deterrent?’ (2020) 28 Australian Journal of Competition and Consumer Law 101, 103.
[63] Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20 [63] (Keane CJ, Finn and Gilmour JJ) (‘Singtel Optus v ACCC’).
[64] Australian Competition and Consumer Commission v ACM Group Ltd [2018] FCA 2059 [26] (Griffiths J) (‘ACCC v ACM Group’).
[65] Australian Competition and Consumer Commission, ‘New digital platform rules crucial next step in consumer law reform’ (Release Number 31/22, 15 March 2022).
[66] Chief Executive Officer of the Australian Transaction Reports and Analysis Centre v Westpac Banking Corporation [2020] FCA 1538 (Beach J) (‘AUSTRAC v Westpac’).
[67] Ibid [1].
[68] Ibid [2].
[69] Ibid [10], [38], [41], [70].
[70] James Eyers, ‘Westpac settles AUSTRAC case for $1.3b’ Australian Financial Review (24 September 2020).
[71] AUSTRAC v Westpac (n 66) [55].
[72] Vicky Comino, ‘‘Corporate Culture’ is the ‘New Black’ – Its Possibilities and Limits as a Regulatory Mechanism for Corporations and Financial Institutions’ (2021) 44(1) University of New South Wales Law Journal 296, 306-7.
[73] Trade Practices Commission v TNT Australia Pty Ltd [1995] ATPR 41-375 (Burchett J).
[74] See Samantha Teong, ‘Stamping Out Rubber-Stamped Penalties? Determining an Appropriate Judicial Response to Agreed Penalties in Civil Penalty Settlements’ (2015) 43 Australian Business Law Review 48 (‘Stamping Out Rubber-Stamped Penalties?’).
[75] Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 [70] (Branson, Sackville and Gyles JJ).
[76] NW Frozen Foods v ACCC (n 60) 291; Ananian-Welsh and Grover, ‘Before the High Court’ (n 51) 421.
[77] Commonwealth v Fair Work Building (n 54) 496 [28].
[78] NW Frozen Foods v ACCC (n 60) 291; Commonwealth v Fair Work Building (n 54) 503-4 [46]; Australian Competition and Consumer Commission v Volkswagen Aktiengesellschaft [2019] FCA 2166 [191] (Foster J) (‘ACCC v Volkswagen’).
[79] See Teong, ‘Stamping Out Rubber-Stamped Penalties?’ (n 74) 48-9.
[80] NW Frozen Foods v ACCC (n 60) 291; Commonwealth v Fair Work Building (n 54) 503-4 [46].
[81] Herbert Smith Freehills, ‘Current developments – Legal and administrative: The Dangers of Asking the Courts to ‘Rubber Stamp’ Settlements by ASIC’ (2013) 31 Company and Securities Law Journal 332, 334-5.
[82] See Teong, ‘Stamping Out Rubber-Stamped Penalties? (n 74) 48-9.
[83] NW Frozen Foods v ACCC (n 60) 291; Commonwealth v Fair Work Building (n 54) 503-4 [46].
[84] Bill Keane, ‘Enforcement and Remedies: Agreed Penalties Under Scrutiny’ (2021) 29 Australian Journal of Competition and Consumer Law 202, 205.
[85] ACCC v Volkswagen (n 78) [135].
[86] Competition and Consumer Act 2010 (Cth) sch 2 (‘Australian Consumer Law’).
[87] ACCC v Volkswagen (n 78) [147]-[272].
[88] Ibid [273].
[89] Ibid [274].
[90] Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission [2021] FCAFC 49 (Wigney, Beach and O’Bryan JJ).
[91] Douglas Shirrefs, ‘Snapshots: A Short Point But a Good One – Agreed Civil Penalties Engage the Court’s Discretion’ (2021) 29 Australian Journal of Competition and Consumer Law 122, 122.
[92] See ibid.
[93] Ibid.
[94] Comino, ‘Effective Regulation by the Australian Securities and Investments Commission’ (n 40) 813.
[95] Trade Practices Commission v CSR (n 59) [40]; ABCC v CFMEU (n 61) 195 [116]; Singtel Optus v ACCC (n 63) [63].
[96] These factors include, but not limited to, deterrence, parity, maximum penalty, course of conduct, totality, nature and extent of contravening conduct, amount of loss or damage caused, circumstances in which the conduct took place, size of contravening company, deliberateness of the contravention, cooperation, extent of management’s involvement, and the culture conductive to compliance. These are known as ‘the French factors’, named after a list provided by his Honour, as he then was, Justice French in Trade Practices Commission v CSR (n 59) [42]. For a detailed application of these factors, see ACCC v Volkswagen (n 78).
[97] Ibid.
[98] Ananian-Welsh and Grover, ‘Before the High Court’ (n 51) 430-1.
[99] Teong, ‘Stamping Out Rubber-Stamped Penalties?’ (n 74) 56-7.
[100] Australian Competition and Consumer Commission v Navman Australia Pty Ltd [2007] FCA 2061 [136] (Jacobson J); See also Australian Competition and Consumer Commission v Cabcharge Australia Ltd [2010] FCA 1261 [59] (Finkelstein J) where the penalty was at ‘the low end of the acceptable range’ but nonetheless accepted.
[101] Australian Competition and Consumer Commission v Australia and New Zealand Banking Group Ltd [2016] FCA 1516 [143] (Wigney J).
[102] Commonwealth v Fair Work Building (n 54) 504 [47].
[103] O’Neill, ‘Corporate Crime and Regulatory Discretion’ (n 23) 324.
[104] ACCC v ACM Group (n 64) [26].
[105] Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Interim Report, September 2018) vol 1, 277.
[106] ASIC Commissioner Sean Hughes, ‘ASIC’s approach to enforcement after the Royal Commission’ (Speech, 36th Annual Conference of the Banking and Financial Services Law Association, Gold Coast, Queensland, 30 August 2019).
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