Case: Trade Practices Commission v CSR Ltd (1991) ATPR 41-076
Outcome: cited
Thus, in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 French J made the following observations in the context of assessing the penalty to be imposed pursuant to s 76(1) of the Trade Practices Act (at 52,152 52,153). The assessment of a penalty of appropriate deterrent value will have regard to a number of factors which have been canvassed in the cases. These include the following: 1. The nature and extent of the contravening conduct. 2. The amount of loss or damage caused. 3. The circumstances in which the conduct took place. 4. The size of the contravening company. 5. The degree of power it has, as evidenced by its market share and ease of entry into the market. 6. The deliberateness of the contravention and the period over which it extended. 7. Whether the contravention arose out of the conduct of senior management or at a lower level. 8. 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. 9. Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention. Those observations are both an elaboration of the terms of s 76(1) itself and directed to the legislative context set forth in the 1974 Act. Comparable principles have also been applied when assessing penalties under the Superannuation Industry (Supervision) Act : Australian Prudential Regulation Authority v Derstepanian [2005] FCA 1121 , 60 ATR 518 ; Australian Prudential Regulation Authority v Holloway [2000] FCA 1245 , 45 ATR 278. 25 In Minister for the Environment and Heritage v Greentree (No 3) [2004] FCA 1317 , 136 LGERA 89 Sackville J reviewed the authorities and likewise concluded that the specific legislative context in which a penalty is being sought must obviously prevail. His Honour was there considering the Environment Protection and Biodiversity Conservation Act 1999 (Cth). Reference was made to the checklist provided by French J in the CSR case and His Honour continued: [58] The principles formulated in the context of s 76(1) of the TP Act provide guidance in proceedings for pecuniary penalties under the EPBC Act, although they cannot be transferred uncritically into the rather different context of proceedings seeking the imposition of penalties for environmental damage to protected sites. Obviously enough, for example, the degree of market power is a consideration likely to be highly relevant to a penalty for a contravention of Pt IV of the TP Act, but is not likely to be relevant to the imposition of a penalty under the EPBC Act. Similarly, the question of a corporate culture may not necessarily have relevance to proceedings under the EPBC Act, although whether a contravener has taken remedial action to minimise environmental damage may be significant on the question of penalty. On the other hand, there may be circumstances relevant to proceedings under the EPBC Act that have no relevance to proceedings under the TP Act. In the end, while the statutory criteria must of course be taken into account, each case must depend upon its own unique circumstances. His Honour's decision was affirmed on appeal: Greentree v Minister for Environment and Heritage [2005] FCAFC 128 , 144 FCR 388. The application by the trial judge of the " principles " he identified does not appear to have been the subject of debate on appeal: [2005] FCAFC 128 at [51] [57]. 26 Also of general relevance to most (if not all) civil penalty provisions is the significance that a pecuniary penalty may have for deterrence upon both the current offender and others: cf Trade Practices Commission v CSR Ltd (1990) ATPR 41-076 ; Australian Competition &amp; Consumer Commission v D M Faulkner Pty Ltd [2004] FCA 1666 at [53] per Bennett J; Australian Competition &amp; Consumer Commission v Gullyside Pty Ltd [2005] FCA 1727 at [34] per Kiefel J; Australian Competition &amp; Consumer Commission v High Adventure Pty Ltd [2005] FCAFC 247 at [11] ; Australian Competition &amp; Consumer Commission v Australian Safeway Stores Pty Ltd (No 4) [2006] FCA 21 at [15] per Goldberg J. A " civil penalty ", it has been said, " needs to be sufficiently high to deter contravention by others, but not so high as to be oppressive ": Vivian v Fitzgeralds [2007] FCA 1602 at [29] per Logan J. An apparent limited capacity of a respondent to pay cannot mitigate against the need for an appropriate pecuniary penalty to be applied: Australian Communications and Media Authority v Clarity1 Pty Ltd (No 2) [2006] FCA 1399 at [41] , [2006] FCA 1399 ; 155 FCR 377 at 386 7 per Nicholson J. See also: Beaton-Wells C, 'Recent corporate penalty assessment under the Trade Practices Act and the rise of general deterrence' (2006) 14 CCLJ 65; Yeung K, 'Quantifying Regulatory Penalties: Australian Competition Law Penalties in Perspective' (1999) 23 Melb Univ L Rev 440 (particularly at 468 74). 28 In addition to the more general factors referred to in CSR , and in the specific context of the Therapeutic Goods Act , there was agreement between the parties that further " relevant matters " within the meaning of s 42Y(3) also included (in particular) the following: (i) the object of maintaining a national system of controls relating to the quality, safety, efficacy and timely availability of therapeutic goods; (ii) the object of creating a national Register; (iii) the fact that the Act creates both civil and criminal offences, the latter being punishable by imprisonment; (iv) the particular difficulties that may be encountered in detecting a contravention of the 1989 legislation; and (v) the particular difficulties that may be confronted if an application was to be defended and the Secretary put to proof. All of these matters place emphasis upon an important public interest in maintaining the integrity of the legislative regime in respect to therapeutic products. Further matters of relevance in the present statutory context, as in many (if not all) civil penalty cases are: (vi) whether or not there has been co-operation by a respondent in the conduct of a proceeding; and (vii) whether or not there has been agreement as to the relief to be granted. 29 These matters, it is considered, emerge from a proper construction of the Act itself. They are only reinforced by a recognition that s 42Y was inserted by way of an amendment effected by the Therapeutic Goods Amendment Act (No 1) 2006 (Cth). During the course of the Second Reading Speech in the House of Representatives on 17 August 2005 of the Therapeutic Goods Amendment Bill 2005 (Cth), the then Minister for Health and Ageing said: The bill introduces a parallel civil penalty regime for breaches of the act. The inclusion in the act of civil penalties, alongside criminal penalties, will allow for an alternative and quicker process for dealing with a wide range of legislative breaches. Civil penalties are expected to be more effective in deterring and preventing non-compliance with regulatory requirements by body corporates, who represent the bulk of those regulated under the Therapeutic Goods Act 1989 and regulations. Higher penalty levels attach to civil penalties because they are designed to provide adequate incentives, especially in relation to well-resourced corporate entities, for deterring breaches of regulatory requirements under the act. The inclusion of alternative civil penalties and criminal offences is an effective strategy that has worked well under other Commonwealth legislation. 30 Prior to the commencement of the hearing on 7 October 2008, there was agreement between the parties as to the facts; but there was no agreement as to the relief to be granted. At that stage, the task of the Court was to apply the principles to such facts as were the subject of agreement and to those further facts set forth in three Affidavits filed by the Respondents and the cross-examination of those deponents.