The use of concise statements in civil penalty proceedings

Some recent Federal Court decisions have emphasised that when a regulator commences a civil penalty proceeding, it is important that it frames its case with a degree of specificity, and identifies clearly the relief that it seeks in the event that its case is made out. Those judgments have also contained some interesting observations regarding the regulators’ use of concise statements when initiating such actions (which has become common practice).?

In ASIC v National Australia Bank Limited [2023] FCA 1118, the issue arose in the context of a penalty judgment, and whether it was open to ASIC to contend that the penalty should be determined on the basis of many contraventions of the law (rather than just one).?

In that case, Derrington J noted, among other things, that:

• In civil penalty proceedings, the regulator will be required to bring a particular degree of clarity and exactness to its pleadings and evidence (citing Commissioner of Taxation v Ludekens (2013) 214 FCR 149, Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2015) 230 FCR 298, Australian Building and Construction Commissioner v Hall (2018) 261 FCR 347). This proposition is no more than an expression of ordinary procedural fairness. However, the fact that the party urging the imposition of a penalty is a regulator, who has experience in prosecuting comparable contraventions, and who can readily be assumed to be familiar with the legal landscape, only heightens the need for adherence to these principles.
• It follows that the regulator’s case must ordinarily have some quality of “rigidity” to it, and the regulator may not be permitted to run a case that has not been disclosed entirely openly from the outset.
• However, a Court will not hold a party to the literal meaning of their pleaded case in circumstances where such an approach would be unduly technical or restrictive.

Similar sentiments were expressed by Button J in her Honour’s recent judgment in ASIC v Diversa Trustees Limited [2023] FCA 1267. Button J stated that in civil penalty proceedings, it is especially important that those accused of a contravention know with some precision the case to be made against them. It is incumbent on the regulator to be clear and consistent regarding the allegations made, and it is not appropriate for the regulator to plant “a forest of forensic contingencies”, or to alter the basis of the allegation of the alleged contraventions on a rolling basis in the leadup to, and during, the trial.?

Having regard to these principles, in ASIC v NAB the Court discussed ASIC’s articulation of its case by way of a concise statement. The Court noted that the use of a concise statement is not intended merely to substitute the traditional form of pleading with a shorter form of pleading: it is a different type of document altogether. It is intended to facilitate case management at an early stage of the proceedings, including as to whether or not pleadings ought to be used. Derrington J accepted that the “current zeitgeist” is that a concise statement is a legitimate means by which a party, including a regulator, may articulate its case in a proceeding involving the potential imposition of a civil penalty. However, his Honour cautioned:?

“a regulator ought to exercise a degree of care in adopting this course. A concise statement, in and of itself, has the potential to prove inapt to satisfy the requirements identified in this Court in relation to the articulation of a regulator’s case, as set out above. It is, by nature, an awkward means by which the regulator might attempt to fulfil its obligation to set out clearly and precisely the case that the alleged contravenor must meet.”?

Derrington J also observed that if a regulator elects to commence a civil penalty proceeding by way of a concise statement, it can be expected to draft that document diligently, and it must be prepared to supplement the concise statement with further material that is apt to disclose the full detail of its case (not merely in the ordinary course of case management, but expeditiously). Moreover, in certain cases in the civil penalty context, it will be appropriate to resort to the use of a conventional statement of claim. Further, a respondent in a civil penalty proceeding is entitled to take its opponent’s case as it finds it, and it cannot reasonably be required to interrogate a concise statement that appears, on its face, to disclose a certain case merely for the purpose of ensuring that it will not be treated by the regulator, at some later stage, as in fact giving rise to another.?

Derrington J's cautionary comments regarding the use of concise statements are clearly shared by Beach J. Indeed, in ASIC v Australia and New Zealand Banking Group Limited [2023] FCA 1150, his Honour said that he would go even further than Derrington J “in being even less generous and sympathetic than he is as to their use in complex contexts.” Further:?

“In simple factual cases where the real contest is say a point of construction on an insurance policy or some other straight-forward legal point, concise statements are desirable and can more than adequately take the place of proper pleadings.?

But where there is substantial factual complexity involving circumstances or transactions over a lengthy time frame, which facts are contested, the use of a concise statement should be confined to its valuable triaging function only. And this applies all the more so in civil penalty proceedings if a large number of contraventions and a serious factual contest are involved, where both the underlying facts and the number and characterisation of the alleged contraventions need to be identified with precision rather than utilising a superficial narrative form.”?

These views appear to stand in contrast to those previously expressed by the former Chief Justice of the Federal Court, Allsop CJ. For instance, in ASIC v Australia and New Zealand Banking Group Limited [2019] FCA 1284, his Honour (in discussing the desirability of a clear and helpful concise statement in narrative form) went so far as to suggest that where the question is whether a body of conduct has in all the circumstances been unconscionable in the statutory sense or amounts to the provision of services otherwise than efficiently, honestly and fairly, it is not amenable to pleading a “cause of action” constituted by “material facts”, and that the better approach is to understand what the plaintiff says are the “connected circumstances that ought to influence the determination of the case”.

In my view, these recent comments from Derrington, Button and Beach JJ, emphasising the importance of regulators conducting civil penalty proceedings with clarity, precision and rigidity, are to be welcomed. I’ll be watching closely to see whether regulators, such as ASIC and ACCC, pay heed to the warnings from the Court regarding the use of concise statements. And it will be interesting to see whether we see a broader trend, across the Federal Court, away from concise statements in favour of more traditional pleadings, in other than the most straightforward cases.

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