Insurance in MOtion – You do the crime, you pay the fine – personally

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The High Court has held that a union was not able to indemnify its member for a fine imposed on the member, on the basis that the member should be personally responsible to pay it (Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3). While not directly on point, the case has direct implications for the insuring of fines and penalties. Some commentators consider the availability of insurance in Australia to meet fines and penalties to be out of step with other jurisdictions such as the US. This case opens the door for the judiciary to require fines and penalties to be paid personally.

The union member, and the union through the actions of the union member, admitted that a blockade organised by the union member breached relevant legislation. The primary judge imposed civil penalties on both the union and its member, and made a further “non-indemnification” order that the union was not to indemnify its member for the fine imposed on him ($18,000).

On appeal, the Federal Court overturned the non-indemnification order.

The High Court agreed with the Federal Court that the relevant legislation did not provide the primary judge with the power to order that a third party (the union) could not to indemnify the member. However, the High Court went on to state that the explicit power to impose a penalty necessarily carried with it a power for the Court to impose an obligation that the penalty imposed be paid “personally”.

This conclusion has ramifications for civil penalty powers in other statutes – potentially it would only be a small step for a Court to make such an order to prevent recourse to insurance in relevant circumstances. You can read further here.

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