In this practice area
Defending companies, directors and officers in civil penalty proceedings brought by ASIC, the ACCC and other regulators, from pleadings through liability, penalty and disqualification.
What civil penalty proceedings are
Civil penalty proceedings are brought by a regulator in a civil court seeking a declaration of contravention and a pecuniary penalty, rather than a criminal conviction. They are common under the Corporations Act 2001 (Cth), the ASIC Act 2001 (Cth), the Competition and Consumer Act 2010 (Cth), work health and safety laws in some jurisdictions, the Fair Work Act 2009 (Cth) and other regulatory statutes.
Typical subjects include breach of directors' duties, continuous disclosure failures, market misconduct, licensing obligations, misleading or deceptive conduct, unconscionable conduct, cartel-type civil contraventions and consumer protection breaches.
The legal framework
Under Part 9.4B of the Corporations Act, the court must make a declaration of contravention where satisfied a civil penalty provision has been contravened (section 1317E) and may order a pecuniary penalty (section 1317G), compensation (sections 1317H and following) and, for individuals, disqualification from managing corporations under section 206C. Maximum penalties are calculated by reference to penalty units, the benefit obtained and, for companies, annual turnover. Proceedings generally must be started within six years of the contravention.
The civil standard of proof applies, but the court takes into account the gravity of the allegations in deciding whether it is satisfied. The court may relieve a person from liability where they acted honestly and ought fairly to be excused, under section 1317S and section 1318. The penalty privilege, which protects individuals from being compelled to expose themselves to a penalty, can affect how pleadings and evidence are dealt with.
How these matters run
Proceedings start with an originating application and a concise statement or statement of claim, often following a long investigation. Early issues include the adequacy of the pleading, the use of material obtained compulsorily, and whether a defendant must file evidence before the regulator closes its case.
The matter may be split into liability and penalty phases. Many cases resolve by agreed facts and jointly proposed penalties, which the court still scrutinises. Contested matters involve documentary evidence, lay and expert witnesses and a trial, followed by submissions on penalty and any disqualification.
How GopherWood Lawyers acts
We analyse the regulator's case against the elements of each provision and the evidence actually available, and test the pleading early. We consider penalty privilege, the use of compelled material and the scope for a negotiated outcome.
Where a matter is defended, we prepare evidence, brief counsel and run the case to judgment. Where resolution is sensible, we negotiate agreed facts and penalty submissions that accurately reflect the conduct.