86 Candles Pty Ltd v Commissioner for Fair Trading
[2025] ACTSC 34
•18 February 2025
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | 86 Candles Pty Ltd v Commissioner for Fair Trading |
Citation: | [2025] ACTSC 34 |
Hearing Date: | 14 – 18 October 2024 |
Decision Date: | 18 February 2025 |
Before: | Balla AJ |
Decision: | See [221] |
Catchwords: | CIVIL LAW – AUSTRALIAN CONSUMER LAW – Access Canberra – declaratory relief – statutory compensation – natural justice – investigation into business conduct – complaints about a business – procedural fairness – response to media enquiries – media statements – media reports – functions of the Commissioner for Fair Trading – exercise of statutory functions – grounds not pleaded |
Legislation Cited: | Competition and Consumer Act 2010 (Cth) sch 2 |
Cases Cited: | Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 |
Parties: | 86 Candles Pty Ltd ACN 607 264 586 as trustee for the 86 Candles Unit Trust formerly trading as Pink Frosting ( First Plaintiff) Louise Curtis ( Second Plaintiff) Commissioner for Fair Trading ( First Defendant) Australian Capital Territory ( Second Defendant) |
Representation: | Counsel WDB Buckland w/ V Geraghty and B Game ( First and Second Plaintiff) A Berger KC w/ B Jullienne ( First and Second Defendant) |
| Solicitors Eastwoods Legal ( First and Second Plaintiff) ACT Government Solicitor ( First and Second Defendant) | |
File Number: | SC 344 of 2023 |
BALLA AJ:
Introduction
1․The first plaintiff (86 Candles), as trustee of the 86 Candles Unit Trust, carried on business as an online retailer of party supplies and goods known as Pink Frosting from August 2015 to March 2020. The second plaintiff, Ms Curtis, was the sole director of 86 Candles from March 2017. She was employed as Chief Executive Officer of Pink Frosting.
2․The first defendant, the Commissioner for Fair Trading (the Commissioner), is an independent statutory office created by s 32 of the Fair Trading (Australian Consumer Law) Act 1992 (ACT) (ACL). The Commissioner is the ACL regulator in the Australian Capital Territory (ACT) and is supported by the Fair Trading and Compliance branch within Access Canberra, for which the second defendant is responsible.
3․Pink Frosting came to the attention of various consumer regulatory authorities, including in the ACT, before Ms Curtis took over the business in August 2015.
4․On 6 April 2018 the Complaints Management Team in Access Canberra asked Ms Curtis to provide information by 12 April 2018 in relation to two complaints they had received. When they had not received a reply from Ms Curtis by 20 April 2018, and had received additional complaints, they referred the complaints about Pink Frosting to the Investigations and Enforcement Team in Access Canberra.
5․The Investigations and Enforcement Team at Access Canberra continued to engage with Pink Frosting about various complaints.
6․In January 2019 Access Canberra received inquiries from the media about Pink Frosting. Access Canberra responded to the inquiries and responded again to media inquiries in August 2019.
7․Ms Curtis says that, until the first story was published in the Daily Telegraph in January 2019, she did not know that the business Pink Frosting was under investigation by Access Canberra.
8․The business closed on 5 March 2020.
9․The plaintiffs claim, on various legal grounds, that they are entitled to compensation from Access Canberra for its conduct in relation to the complaints made against Pink Frosting and the responses Access Canberra gave to media enquiries. Pink Frosting also seeks a declaration that Access Canberra did not afford Pink Frosting natural justice and/or breached applicable government policy when dealing with the complaints.
Witnesses
10․Ms Curtis gave evidence. She also relied on affidavit evidence from Ms Beerworth who, through her superannuation fund, bought a 10 percent shareholding in 86 Candles on 6 November 2017.
11․Access Canberra called several witnesses. Mr Snowden was appointed as the ACT Commissioner for Fair Trading from January 2015 to 2021. Ms Harrison was a Senior Manager of the Investigations and Enforcement Team of the Fair Trading Branch of Access Canberra. From October 2018 to January 2021 Mr Connor worked as Manager and then Director of the Team. Mr Prescott and Mr O’Rourke also worked in the Team. Ms Springett was the Senior Director of the Communications Team of Access Canberra and led a team of media officers who dealt with media enquiries.
12․Expert evidence was given by Mr Senatore and Mr Ivey.
Legal Framework
13․Section 32 of the ACL provides that the director-general must appoint a public servant as the Commissioner for Fair Trading.
14․Section 33(1) sets out eight functions which the Commissioner may exercise. Four of those functions are to:
(b)deal with the complaints in a way the commissioner considers appropriate, including by investigating them or referring them to the entity the commissioner considers to be best able to take appropriate action; and
(c)investigate compliance with fair trading legislation; and
(d)conduct other investigations and research into consumer and fair trading issues and practices; and
(e)inspect records and accounts that must be kept under fair trading legislation.
15․Section 34(1) provides that the commissioner may delegate the commissioner’s functions under the consumer and trader legislation or another territory law to a public servant.
16․Sections 32, 33 and 34 are in pt 5 div 5.1 of the ACL.
17․The four s 33(1) functions outlined above can be carried out by a person appointed as an investigator by the Commissioner (s 36). In these proceedings the investigation into the complaints against Pink Frosting was conducted by investigators appointed pursuant to this section. Section 36 is in pt 5 div 5.2 of the ACL.
18․Section 51, which is in pt 5 div 5.2 of the ACL, then provides:
(1)A person may claim reasonable compensation from the Territory if the person suffers loss or expense because of the exercise, or purported exercise, of a function under this division by an investigator or a person assisting an investigator.
…
(3)A court may order the payment of reasonable compensation for the loss or expense only if it is satisfied it is just to make the order in the circumstances of the particular case.
The evidence
19․Mr Connor explained that, from June 2018 to August 2018 Access Canberra adopted an “engage, educate and conciliate” approach in dealing with Pink Frosting. This approach was typically the initial phase used to address consumer complaints. In practice it meant that Access Canberra shared the complaints information with Pink Frosting. Pink Frosting was then expected to provide the reasons or circumstances around those events and make attempts to address the concerns so that its business behaviour would improve and the number of complaints would be reduced.
20․On 13 June 2018 Mr Prescott wrote to Ms Curtis:
… confirming that Access Canberra has received 17 complaints from consumers in relation to alleged breaches of the ACL which related to:
· Accepting payments from consumers and not providing goods
· Accepting payments from consumers and not providing them in the required time
· Accepting payment from consumers and not providing the correct goods they have ordered
· Accepting returned goods from consumers and not providing refunds
· Not providing refunds to consumers after non-supply of goods.
21․Mr Prescott also sent a table with details of the 17 complaints. The complaints had been received by Access Canberra between 4 September 2017 and 1 June 2018. They included the two complaints the subject of the email sent on 6 April 2018. The table set out the name of the consumer, the order number, and a summary of each complaint. Some complaints were marked “Resolved complaints. Provided for information only”.
22․Mr Prescott asked Ms Curtis to provide a status update for each complaint and an explanation around the business processes which applied when consumers placed orders which could not be filled in the required time or at all and the policies and procedures for refunds. He concluded by saying “The purpose of this letter is to provide you the opportunity of responding to the concerns outlined above, in order for this office to resolve this matter” and requested a written response by 23 June 2018. The letter informed Ms Curtis that if she required further information or wished to discuss the matter, she should contact “… the Investigator Mr Aidan Prescott of the Investigations and Compliance Enforcement Unit” and it was signed by Mr Prescott as “Investigator, Investigations and Compliance Enforcement” as was the covering email attaching the letter.
23․Ms Curtis says that the majority of the complaints referred to in the schedule had been resolved or were in the process of being resolved. It also included a number of customers whom she considered had defrauded Pink Frosting because they had claimed both a chargeback from their bank as well as a refund from Pink Frosting.
24․Chargebacks are a consumer protection measure offered by credit card companies. They can be requested by a cardholder in a number of circumstances, including where they have paid for goods that they did not receive or the goods that they did receive were not as described. The business is provided with an opportunity to disagree with the dispute and provide evidence to substantiate that the goods have been delivered or a refund has been provided.
25․Ms Curtis said she did not consider that Pink Frosting was under investigation when she received the letter dated 13 June 2018 because the language did not suggest an informal or formal investigation.
26․Ms Curtis did not reply to Mr Prescott’s letter by the requested date of 23 June 2018. When he did not receive a reply, Mr Prescott sent a reminder email on 25 June 2018.
27․Ms Curtis replied within minutes:
I have most of it compiled, just waiting on Fastway couriers to come back to me with some proofs of delivery etc. Do you want it in part? Let me know.
28․Mr Prescott replied:
Thank you for letting us know. We look forward to receiving your advice at your earliest possible convenience.
29․On 5 July 2018 Ms Curtis sent a lengthy email to Access Canberra. She said that when she purchased the business two years earlier it had a poor reputation for customer service, which was reflected in its poor reviews, and it had been very hard for the business to recover. In relation to refunds, Ms Curtis explained that if a customer says that they will be disputing a transaction on their credit card, Pink Frosting does not issue a refund, otherwise the customer would be refunded twice.
30․In relation to the table of complaints, Ms Curtis said that fourteen of the seventeen complaints had been resolved by refunds and that she was willing to work with Access Canberra to resolve the remaining three. Her response to the complaints was set out in a spreadsheet attached to her email.
31․On 11 July 2018 Mr Prescott thanked Ms Curtis for her assistance, said he was working through the spreadsheet she had provided and was liaising with consumers to see if their issues had been resolved. He informed Ms Curtis that he, together with Ms Harrison, wanted to attend the Pink Frosting office to discuss the complaints received from other States and see how the business processes were currently working.
32․That meeting on 18 July 2018 was attended by Ms Curtis, Ms Harrison and Mr Prescott. There is conflicting evidence as to what occurred.
33․Ms Curtis says Ms Harrison told her that they were thrilled because complaints had stopped since she (Ms Curtis) had bought the business, but the purpose of the meeting was to understand why there had been a recent uptick in cases. Ms Curtis said that she was not told that it was an investigation, and she felt it was an informal chat. She told them about the difficulties she was having with her landlord, issues she was having with shipping, and her suspicion that there were fake reviews on the ProductReview.com website (ProductReview). Ms Curtis said that Ms Harrison had said that she empathised with her because she understood the type of customers she had to deal with. At the end of the meeting Ms Curtis said she thought that no further action was required.
34․Ms Harrison denies saying she was thrilled or that she empathised with Ms Curtis. She also denied saying that they had noticed a decline in complaints since Ms Curtis took over the business – the reason for the meeting was the increase in complaints.
35․On 20 July 2018 Mr Prescott wrote via email to Ms Curtin:
Thank you for meeting with Wendy and I on Wednesday. As discussed, could you please provide information around some of the complaints we have received. The complainants are: …
36․The copy in evidence is redacted but further information was requested in relation to five complaints.
37․No reply was received. On 27 July 2018 Mr Prescott wrote again to Ms Curtin, forwarding a copy of the email dated 20 July 2018 and asking her to please send through the information.
38․No reply was received. On 6 August 2018 Mr Prescott wrote to Ms Curtin telling her he was following up the email sent on 20 July 2018 and asking her to provide the information which had been sought.
39․On 8 August 2018 Ms Curtis replied. She provided information in relation to two of the complaints and advised she would provide information in relation to the other two later that day.
40․On 9 August 2018 Mr Prescott told Ms Curtis that he had closed the files for the two customers referred to in her email dated 8 August 2018. He asked for the information regarding the others.
41․On 14 August 2018 Mr Prescott advised Ms Curtis that Access Canberra had received a complaint from a customer waiting for reimbursement for postage costs. He asked her to let him know when the payment was made. Mr Prescott also asked for a reply to the information sought in relation to three of the complaints referred to in the email sent on 20 July 2018.
42․No reply was received. On 5 September 2018 Mr Prescott asked Ms Curtis for a reply to his email sent on 14 August 2018, or to call him, as a matter of priority.
43․On 25 September 2018, a Pink Frosting shareholder meeting decided that Pink Frosting could not continue to sell items which it had been purchasing from one of its major suppliers, described in these proceedings as Balloon Agencies.
44․The ownership of Balloon Agencies had changed in around March 2018. After that, Pink Frosting found Balloon Agencies was failing to provide products in a timely fashion, which meant Pink Frosting had issues with providing those products to its customers on time.
45․Ms Curtis then engaged with two other retailers. She was able to purchase the same or similar items from those retailers but at a higher price.
46․Ms Curtis did not remove all of Balloon Agencies’ products from Pink Frosting’s website in September 2018 because it would have had an impact on Pink Frosting’s Google rankings. The products were removed at a rate of approximately 1,500 a month. Ms Curtis agreed that while the run-down of Balloon Agencies’ stock was occurring, there was a risk that either customers would not get the products they had ordered, or Pink Frosting would have to purchase them at a higher retail price to meet the order.
47․No reply had been received from Ms Curtis by Access Canberra to its emails sent on 14 August and 5 September 2018.
48․On 3 October 2018 Ms Harrison emailed Ms Curtis. The header says, “Outstanding complaints against Pink Frosting”. The email commences:
Access Canberra still awaiting information in relation to a number of complaints as per the emails from Investigator Prescott dated 4 August 2018, 14 August 2018 and 5 September 2018.
49․Information was then sought about four complaints.
50․There are in evidence Access Canberra internal emails concerning Pink Frosting. In an email sent on 9 October 2018 headed “RE: Information for Briefs” Mr Prescott said to Ms Harrison:
Access Canberra received 18 complaints in relation to the alleged non-supply of goods and not refunding customers after the non-supply. Consumers also advised that if they did receive goods, they were sometimes different to what they had ordered and there was usually a delay in receiving the goods. Investigators formally wrote to Louise Curtis (Owner) and raised concerns about the complaints that had been received and the potential Australian Consumer Law (ACL) breaches.
…
Investigators met with Louise … and discussed the complaints …
Currently, there are 4 open complaints … I have requested numerous times through email and telephone for Louise to provide information surrounding the complaints … Louise said she would provide this info but Access Canberra has not received anything yet … The remaining 4 complainants may be advised to lodge an ACAT application as Pink Frosting appears that they will not engage and action the complaints as requested.
51․In late October Ms Harrison decided that the Pink Frosting file should be closed even though Ms Curtis had not provided the outstanding information. Since the meeting in July 2018 the complaints against Pink Frosting had appeared to come to a halt. Ms Harrison thought that Ms Curtis may have addressed the underlying issues that had led to the complaints. She also accepted that the range of difficulties that the business had faced in July 2018 seemed to have been outside Ms Curtis' control. She arranged for a closure letter to be drafted. At around this time Mr Connor joined the Investigation and Enforcement Team.
52․However, before the closure letter had been sent, Access Canberra received six new complaints about Pink Frosting. In addition, Consumer Protection in Western Australia notified Access Canberra of four new complaints it had received about Pink Frosting and said that Pink Frosting had not responded to their attempts to contact them. A table was prepared summarising the six recent complaints which had been made to Access Canberra.
53․To support cooperation and coordination among ACL regulators, the Commonwealth had established an information and intelligence sharing portal named ACLink. It served as a secure electronic platform for ACL regulators to request and share intelligence, including complaints information and data.
54․On 9 November 2018 Access Canberra posted a request for complaints information regarding Pink Frosting on ACLink. Mr Connor said the request had been prompted by advice from the Australian Competition and Consumer Commission (ACCC), regarding an increase in complaints about Pink Frosting, as well as the additional complaints which had been received by Access Canberra.
55․The response from ACL regulators showed that from 2 June 2018 to 9 November 2018 there had been a total of 84 complaints and 11 enquiries about Pink Frosting. A substantial number of those complaints had been made since Access Canberra had commenced its investigation in June 2018. Mr Connor had anticipated a decrease in complaints as Pink Frosting improved its practices. However, the significant increase in complaints which had occurred raised a concern about a possible pattern of ongoing conduct. Mr Connor was also concerned that the number of complaints received by ACL regulators might only represent a portion of affected consumers, since some people may have chosen not to pursue complaints. Mr Connor was also concerned that although Pink Frosting had cooperated with Access Canberra in resolving complaints, it had not consistently provided timely or complete responses to requests for information despite numerous follow ups.
56․Mr Connor, who has legal qualifications, formed the view that there may be breaches of s 36 of the ACL which requires businesses which accept payment for goods to supply the goods within the specified time, or if there is not a specified time, within a reasonable period.
57․These concerns led Mr Connor to reevaluate the investigation approach. He determined that continuing with an “engage, educate, and conciliate” approach was no longer viable and decided to shift focus to conducting further investigations and exploring potential enforcement outcomes directed to Pink Frosting stopping the non-compliant conduct; improving its compliance and complaint handling processes; and, providing affected consumers with redress. Such an enforcement outcome could be achieved using a court enforceable undertaking or through civil court action.
58․It is common ground that Pink Frosting was not informed about the change in approach.
59․On 13 November 2018 Mr Connor emailed Mr Prescott informing him that the Pink Frosting complaints would progress to an in-depth investigation, and Mr O'Rourke would be added to the team.
60․On 14 November 2018 a Complex Compliance and Enforcement Investigation Plan was prepared. Mr Connor described it as a roadmap for an investigation which is more complex and resource intensive.
61․On 15 November 2018 Ms Curtis replied to the email which Ms Harrison had sent on 3 October 2018. She expressed her sincere apologies for the delay but said she had been involved in a hideous legal battle with Pink Frosting’s ex-landlord which had taken her away from the business for a considerable length of time. Information was provided in relation to the four outstanding matters. She also advised that Pink Frosting had appointed a manager to look after all matters in relation to returns/refunds/complaint emails.
62․In that email Ms Curtis again raised her concern that fake reviews were being posted on ProductReview. It was the evidence of Mr Connor that Access Canberra was not empowered to intervene in disputes between businesses, such as Pink Frosting and ProductReview, or to provide legal advice to individuals such as Ms Curtis regarding how to address her concerns. Access Canberra’s investigation centred on complaints received by ACL regulators, not complaints posted on ProductReview. These complaints received by the ACL regulators were assessed against the available evidence, including communication records and bank statements. He was sceptical about the likelihood of widespread fake complaints to ACL regulators, considering the diverse names, locations and contact information provided by complainants.
63․Mr Connor considered that the email marked a significant shift as it signalled Pink Frosting's renewed engagement with Access Canberra and demonstrated that Pink Frosting had taken proactive steps in appointing a manager responsible for consumer complaints and refund requests. It also demonstrated Pink Frosting's acknowledgement of the need to address consumer complaints by issuing refunds to complainants identified by Access Canberra.
64․Mr Connor concluded that a change in the investigations and enforcement approach was necessary and that Access Canberra should engage with Pink Frosting directly at a meeting instead of preparing a written request for information. This would provide an opportunity to discuss the complaints and explore the possibility of Pink Frosting providing a court enforceable undertaking aimed at efficiently stopping and resolving the concerning conduct.
65․Mr Connor instructed Mr Prescott and Mr O'Rourke to prepare an Investigation Strategy Review (ISR). An ISR is a document used to relay information to the Commissioner for Fair Trading about a particular investigation and to seek his view as to strategy and resources. The headings in the document are “Alleged Conduct”, “Background”, “Key issues, date and evidence” and “Proposed investigation strategy, including potential outcomes”.
66․On 10 December 2018 Mr Connor reviewed the ISR and it was sent to Mr Snowden. On 11 December 2018 Mr Connor discussed the further conduct of the investigation with Mr Snowden. Mr Connor then sent an email to the Team advising of the outcome of his meeting with Mr Snowden earlier that day. That email says:
·…
We met with David this morning to discuss this matter. David directed the team to seek a court enforceable undertaking from Pink Frosting. If provided, any undertaking would include compliance program obligations, including complaints handling measures. We’ll look to meet with representatives of Pink Frosting before Christmas to get a sense for their willingness to provide an undertaking. Please note that we are not looking to take any representative action at this time.·We recommend that consumers who contact Access Canberra about the non-delivery of items be directed to see if a chargeback via their banks (we understand this is worked for many consumers) or consider lodging a claim with ACAT.
·We recommend that Pink Frosting complaints not be escalated at this time.
·ICE will continue to monitor complaints about Pink Frosting.
67․On 12 December 2018 Mr Connor called Ms Curtis. He told her that a rise in complaints about Pink Frosting had been identified by the ACCC, and that these complaints primarily centred around Pink Frosting's alleged failure to deliver goods within a reasonable time or at all. He mentioned that Access Canberra was reviewing these complaints for compliance with the ACL and that he would send an email to schedule a meeting to discuss them. He could not remember whether he used the term 'investigation' during the conversation.
68․Later that day Mr Connor sent Ms Curtis an email which relevantly said:
As previously discussed, Access Canberra and other Australian Consumer Law regulators around Australia have recently received an increase in complaints about Pink Frosting. While the individual circumstances of each complaint varies, a common theme has been the alleged failure of Pink Frosting to supply goods in a reasonable timeframe in contravention of section 36 of the Australian Consumer Law.
Access Canberra has previously engaged with Pink Frosting regarding consumer complaints. We acknowledge that there have been some challenges in operating Pink Frosting, including due to a flood at the Pink Frosting warehouse and subsequent proceedings. Nevertheless, Access Canberra is concerned about the significant uptick in consumer complaints about Pink Frosting in recent months.
We would welcome the opportunity to meet with you in our office on Tuesday or Wednesday of next week to discuss our concerns. If you are amenable to this request, could you please nominate a time that is convenient for you …
Regards Rohan
Rohan Connor
Manager |Advice, Investigations and Enforcement
69․Mr Connor said that, at the meeting, he planned to discuss the substantial number and nature of complaints received by other ACL regulators and propose the option of Pink Frosting providing a court enforceable undertaking to address the ongoing concerns. He envisaged the undertaking would include compliance and complaints handling processes that would be aimed at stopping the ongoing conduct, resolving outstanding complaints, and ensuring future compliance with the ACL.
70․Ms Curtis was not available to attend a meeting at the Access Canberra office before Christmas. They agreed to have a meeting in the week beginning 14 January 2019.
71․On 7 January 2019, News Corp journalist Mr John Rolfe sent an email to the media office of Access Canberra which relevantly said:
Could you please give me a ring about ACT based business Pink Frosting? It’s causing quite a bit of trouble for consumers across Australia. I’m wondering what’s being done about it.
72․The email was sent to Mr Connor. After a few drafts had been circulated the final form of the reply was approved by Mr Snowden. The response sent to Mr Rolfe on 9 January 2019 said:
Access Canberra is currently investigating a number of complaints about the ACT based business Pink Frosting.
While the individual circumstances of each complaint varies, a common concern has been the alleged failure of Pink Frosting to supply goods in a reasonable timeframe, which may raise concerns under the Australian Consumer Law.
As part of ongoing enquiries, access Canberra has been in contact with other Australian Consumer Law regulators throughout Australia.
Access Canberra urges anyone who is currently experiencing problems with Pink Frosting to contact access Canberra on 13 22 81.
73․On 8 January 2019 Mr Rolfe sent a second enquiry to Access Canberra. It said:
Pink Frosting and CEO Louise Curtis say fair trading authorities contacted her at the start of 2018. She has fortnightly conversations with fair trading authorities and “they come to my office every two months”. She says her company’s problems stem from a storm in November 2017. The landlord did not repair the damage and Pink Frosting has suffered a hit of $800,000 since. She said she disclosed her company’s financial difficulties to ASIC and was advised to attempt to trade out of the poor cash flow situation. She says a “guideline” has been put in place that includes a limit on the dollar value of refunds processed each day. She has to record and report that. She wouldn’t say what the limit was. She said “a lot” of customers seek a refund at the same time as putting in a bank dispute. Those customers are not given refunds because they would be paid twice, she said.
I’d like to know what Fair Trading says about these claims especially that she has the OK to put a cap on refunds. I’ve also asked NSW Fair Trading and am about to ask ASIC.
74․Regarding Mr Rolfe’s further media enquiry of 8 January 2018 Mr Connor gave evidence that he was very concerned that Ms Curtis had appeared to suggest that Access Canberra had advised her to put a daily cap on refunds. He said he absolutely had not advised her to do so. He also noted that it was incorrect to say that Access Canberra attended Ms Curtis’ business premises every two months. This had only occurred on one occasion, on 18 July 2018. He also denied having advised Ms Curtis not to refund customers who had lodged a bank dispute.
75․In the response sent to Mr Rolfe on 9 January 2019, which had been approved by Mr Snowden, Access Canberra said:
Access Canberra understands that Pink Frosting was impacted by a storm that occurred in late 2017.
Access Canberra has visited the business premises of Pink Frosting on one occasion to discuss Australian Consumer Law concerns.
There are no standing guidelines or agreements between Access Canberra and Louise Curtis.
Access Canberra categorically rejects any suggestions that it instructed Pink Frosting to put a cap on refunds.
76․On 12 January 2019, The Daily Telegraph published the following article:
Pink Frosting party supplies under investigation by Fair Trading after customers complain about orders
This mum and many others are furious after one of Australia's largest party supplies businesses is under investigation amid claims it failed to deliver on first-birthday celebrations, baby showers and weddings.
Exclusive: One of Australia's largest party supplies businesses is under official investigation following claims it has failed to deliver what were meant to be special touches on first-birthday celebrations, baby showers and weddings.
While Pink Frosting argues it's being unfairly accused, many of its gutted customers also say it has been slow to refund – or doesn't at all.
Some have gone public with their experiences to warn others, posting scathing criticisms on leading consumer feedback site productreview.com.au.
"Pink Frosting are the worst-rated online-only shop that we have," said ProductReview managing director Elmar Shar. About 500 such stores are tracked on the site.
Pink Frosting has a rating of 1.7 out of five from 1116 reviews. One, defined as "terrible", is the lowest possible rating.
Owner and CEO Louise Curtis described complaining customers as "hysterical".
She also said it was the victim of an alleged "witch hunt” by ProductReview, which Mr Shar denied.
Ms Curtis said her business had been further hampered by its former landlord, which had not fixed storm damage to the Pink Frosting building. She said she was suing.
Ms Curtis said fewer than 180 of the 879 one-star reviews for Pink Frosting were under her ownership, which began in August 2015.
A check then showed that twice that many were. Mrs Curtis wouldn’t comment other than to say the business “disputes the validity of many of those reviews.”
Pink Frosting has a rating of 2.2 out of five from 102 Google reviews; one is the lowest rating.
Three reviewers who have recently given it top marks also rate a Halloween costumes store in California five stars; two who give Pink Frosting a maximum score also do so for a Michigan tool business. Ms Curtis wouldn’t comment about the validity of those reviews.
Perth mother Rhonwen Ammendolea's experience typifies many of those who have given Pink Frosting one star on ProductReview. She ordered 70 personalised lollipops in August for her son Jordan’s first birthday party in October.
“lt seemed like quite good deal," Ms Ammendolea said.
But they never arrived and she only got a refund after putting a review on ProductReview. The refund delay was blamed on “a technical error”. She tried to alert Pink Frosting’s more than 200,000 Facebook followers but customers are not allowed to give feedback there.
It's just for their advertising," she said.
She also made a complaint to the ACCC, which is assisting in the investigation into Pink Frosting.
Another one-star reviewer, Jess Finos of Adelaide, told News Corp Australia she ordered tablecloths and balloons for a combined birthday party for her one and three-year-olds. She didn't get the items or receive a refund so she posted on ProductReview. Pink Frosting responded on the site by saying sorry and that it would get the refund was processed.
An ACT Fair Trading spokesman said it "is currently investigating a number of complaints" and that "as part of ongoing inquiries, it has been in contact with other Australian Consumer Law regulators throughout Australia". Ms Curtis wouldn't comment beyond saying Pink Frosting had a "productive and open relationship" with authorities.
Ms Curtis said a daily limit had been put on the value of refunds Pink Frosting issues and that the results were being reported to authorities. ACT Fair Trading said it "categorically rejects any suggestions that it instructed Pink Frosting to put a cap on refunds.”
Pink Frosting does have one physical store in Canberra. On ProductReview, ACT customers rate Pink Frosting more highly.
77․On the next day, 13 January 2019, Ms Curtis sent the following email to Mr Connor, copying in Mr Prescott, Mr O’Rourke and Ms Harrison:
…
It is noted that you provided a Statement to tabloid media, The Daily Telegraph last week in relation to Pink Frosting. This is extremely disappointing, just ten days out from my Court hearing, and has placed significant risk over my outcome in Court.Mostly extremely disappointing due to my open and honest engagement with your organisation during this year. Your last email to me was about 'having a chat'.
Today, in national papers, my Company is under "Official Investigation".
As a result, and in accordance with legal advice, it has been suggested that our meeting be rescheduled until after my Court hearing, and to allow time for my lawyers to attend.
We are currently preparing for this Court case and now your Statement has placed myself and my Company in a further precarious position.You are welcome in suggest another time after 28 January 2019 and I will check availability with my lawyers. In the meantime, if you need to issue any official statement/or take an official line/action with me or my Company, I would prefer you do it directly with me, not via the tabloid press. …
78․On 14 January 2019, Mr Connor emailed Ms Curtis suggesting several different days and times when they could meet.
79․On 15 January 2019, Ms Curtis replied:
In refer to your advice provided to Mr John Rolfe of News Limited last week, that Pink Frosting is under formal investigation by your Department. We have received nothing from you to that effect, which is concerning. l do understand the process of being under 'formal investigation' would include me being advised of that, which at this stage - I have not been. What I am aware of is an invitation from you to a meeting to discuss concerns about an increase in complaints. This would seem to be a far cry from "being under formal investigation", worthy of a full page story in a national newspaper.
You would appreciate an article such as that printed in the national papers on Sunday would cause me personally, and my Company significant financial loss and personal damage to my reputation. It's important from my perspective to understand why you gave the press this information without in the first instance providing this to me.
Please advise what documents you require from us to complete that 'formal investigation'. At this stage, until we receive something confirming the investigation, and engaging us in that investigation, no appointment will be made to meet with you.
My lawyers have obviously been appointed to proceed with defamation proceedings against the Daily Telegraph, and this will no doubt involve your Department and the information you provided to News Ltd.
…
I reiterate that Pink Frosting is an ‘open book’ and have invited you to my office (and your Department has attended previously) to review our systems/orders and CRM management system. At all times we have been willing to work with you in an open and trusted relationship. I note that our next meeting was to be held on 14 January 2019, however I have cancelled same due to information you have provided to the press.I do need to understand however how you have legally provided this information to the press, without first providing it to me and I look forward to your response by 5 pm today.
80․Mr Connor said he was disappointed by and concerned about the emails from Ms Curtis because they suggested Pink Frosting may not be willing to cooperate with Access Canberra to resolve the matter. To resolve the matter by an enforceable outcome would require the cooperation of Pink Frosting.
81․On 15 January 2019 Mr Connor asked Mr O’Rourke to prepare a table setting out details of the complaints made to Access Canberra. Between 4 September 2017 and 2 January 2019, there had been 32, five of which were made by ACT residents.
82․On 15 February 2019, Mr Connor sent a letter attached to an email to Ms Curtis. The subject line in the email is “Pink Frosting - Show Cause Letter”. The letter refers to numerous consumer complaints regarding the conduct of Pink Frosting. Access Canberra, as the entity administering and enforcing the ACL, was concerned that Pink Frosting’s conduct may have breached s 36 of the ACL. That section had a maximum penalty of $10,000,000. Under the heading “Next steps” Mr Connor said that, since June 2018, Access Canberra had continued to receive further complaints of a similar nature about the conduct of Pink Frosting and Access Canberra had not yet formed a view about what, if any further action it would take. Ms Curtis was requested to provide the information set out in the annexure to the letter. That annexure asked for documents and then asked for information regarding nine complaints.
83․Mr Connor said that he had intentionally focused on a sample set of complaints that captured the primary concerns raised across the complaints and spanned the period from 30 May 2017 to 19 November 2018. The aim was to narrow the focus of the investigation and reduce the time and effort needed for Pink Frosting to respond to the request.
84․Ms Curtis replied on 16 February 2019, setting out the history of the business, the steps she had taken to turn the business around, the impact of the storm damage to the warehouse in 2017 leading to her dispute with the landlord, her issues with Balloon Agencies, the unreliability of ProductReview and the impact of the bad reviews on that site on her business. She responded to the queries in the 15 February 2019 letter.
85․Mr Connor said that Ms Curtis had provided a lengthy narrative of the history of the business but had not provided the requested documentary evidence with respect to receipts/invoices/transactions, correspondence with consumers, and evidence of the dispatch and delivery of the orders.
86․On 1 March 2019 Mr Connor telephoned Ms Curtis. He thought she sounded quite angry and he found it difficult to convey information to her because she was quite persistent in speaking and at times cut him off when he tried to explain the reasons why Access Canberra had made the comments to the media.
87․That evening Ms Curtis emailed Mr Connor. She reiterated her anger at the lack of response to her requests for an explanation for providing a media statement without giving her an opportunity to “present a case”. The email then said:
I also reiterate that The Daily Telegraph was not responding to customer complaints (which you stated on the phone and which is entirely incorrect) … The Daily Telegraph was responding to Productreview.com.au because Productreview.com.au was under pressure from Pink Frosting. The Daily Telegraph contacted you, because I explained to this journalist that I had been in constant contact with your office during the year because the difficulties the company was having. I have been completely transparent with your Office, and in return, I received a complete slap in the face from your office with no consideration for how this would play out.
I also advise that I have complained to the ACCC about Productreview.com.au. As expected, I have got nowhere fast. I have therefore taken matters into my own hands and involved the media. It is now subject to an ABC News investigation and it is looking like it will be a 4 Corners story which involves 80 businesses across Australia. Product Review are subject to a class action from 60 businesses - they are under siege. They created this mess, they got the Daily Telegraph involved, and you added all the fire they needed. Reading this you would appreciate that yes I am a woman scorned, and yes I want answers, and I am not going to go away until I have the answers I am entitled to. I haven't worked for 30 years and built up my reputation to have it destroyed by News Limited, your Office and Product Review within minutes, it is not fair or just when I've had zero opportunity for a right of reply.
I require a written response as to the protocol used and evidence that it is your usual practice to expose a business to media outlets prior to giving them an opportunity to present a case.
88․On 7 March 2019 Mr Connor provided Ms Curtis with the two responses sent to Mr Rolfe and said:
I refer to your emails and our conversation late last week. I understand you are seeking clarification about how Access Canberra responds to media requests, including News Limited's requests regarding Pink Frosting.
In some circumstances, it may be in the public interest for Access Canberra to provide comment on an investigation. Access Canberra takes a range of factors into consideration when considering if making a statement about an investigation is in the public interest and outweighs the possible detrimental effect of public commentary. These factors include, but are not limited to, whether comment is necessary in order to maintain public confidence that Access Canberra is fulfilling its responsibility by investigating issues of public concern and whether making a statement will allay public concern, for example, where there is evidence of a substantial number or concerning trend of complaints regarding a business.
For your reference, I have attached copies of Access Canberra's full statements to News Limited, which were provided in response to two requests for comment about Pink Frosting. Personal information has been redacted from the statements. The information contained in the statements is consistent with the information previously provided to Pink Frosting, including by email on 12 December 2018 and during a telephone call with you prior to sending the email of 12 December 2018.
Finally, I note that Access Canberra is currently reviewing the information and documents recently provided by Pink Frosting. We will contact Pink Frosting again in due course either to obtain further information and documents, if necessary, or to advise of the outcome of our investigation.
89․Mr Connor observed in his evidence that the letter to Ms Curtis was referring to the letter of 16 February 2019.
90․Ms Curtis said that, after receiving this letter she did not hear anything further from Access Canberra and assumed that there was no further action or investigation to be taken against Pink Frosting.
91․Pink Frosting’s business account was held at the Commonwealth Bank. On 31 March 2019 the bank closed Pink Frosting’s merchant facility and placed Pink Frosting on a blacklist. Ms Curtis complained to the Australian Financial Complaints Authority. It concluded that the Bank had acted reasonably.
92․On 7 May 2019 an updated table of complaints made to Access Canberra was prepared. Mr Connor reviewed the document which concluded that a contravention of s 36 of the ACL could not be established and determined that the Pink Frosting investigation should be discontinued, and the business should be advised accordingly.
93․On 17 June 2019 Mr Rolfe made a further media request regarding Pink Frosting. He said:
Hello, could you please provide an update on the investigation of complaints about Pink Frosting? I look forward to hearing from you by close of business tomorrow.
94․A decision to discontinue the investigation was approved by Mr Snowden on 18 June 2019.
95․Shortly after this decision, Ms Springett told Mr Snowden and Mr Connor that NSW Fair Trading had become aware of Access Canberra’s intention to discontinue its investigation. It had requested Access Canberra reconsider this decision as it had continued to receive complaints about recent orders with Pink Frosting and had faced challenges in resolving these complaints with the business.
96․Mr Connor said that this information raised serious concerns, as the complaints related to transactions in 2019 and suggested potential systemic issues that could not be explained by circumstances beyond Pink Frosting's control, based on the information available at the time.
97․In response to this information, Mr Snowden decided that the Investigations and Enforcement Team should proceed with the investigation and that the media response should note that the investigation was ongoing. The statement made on 18 June 2019 by Access Canberra to Mr Rolfe’s enquiry of 17 June 2019 was:
Access Canberra is continuing to look into this matter. As this matter is still open, we unfortunately cannot provide additional detail at this time.
98․On 21 June 2019 the decision in respect of Pink Frosting’s landlord had been handed down.
99․Pink Frosting tried to mitigate the damage caused by being blacklisted by the Commonwealth Bank by applying to a different merchant provider for online payments to be made through Stripe. On 3 April 2019 Stripe refused Pink Frosting’s application because of the action which had been taken by the Commonwealth Bank.
100․On 6 August 2019 Mr Rolfe wrote another media request to Access Canberra:
Hello, could you please confirm there has still been no action by Access Canberra regarding Fyshwick based trader Pink Frosting? There have been a further 80 one-star reviews of the company on Product Review since we published this story on your investigation in January. …
How many complaints has Access Canberra received?
Why is the investigation taking so long?
Can you provide any more detail on the investigation?
I look forward to receiving your response by 2 PM Thursday.
101․On 8 August 2019 Access Canberra replied:
• Given access Canberra’s ongoing investigation of Pink Frosting, we are unable to provide any further comment on this matter at this time.
• An update and information will be provided in the near future.
• Consumers who are experiencing problems dealing with Pink Frosting can contact access Canberra on 13 22 81.
• They can also contact their bank to cease seek any cash-back arrangements if goods have not been delivered as promised.
102․On 12 August 2019 the Daily Telegraph published an article entitled:
Pink Frosting CEO Louise Curtis selling business after court loss.
103․The article included the following:
The official investigation into customer complaints is ongoing. The ACT’s consumer affairs body Access Canberra would not comment further.
104․On 12 August 2019 Access Canberra received a media enquiry from the Canberra Times regarding Pink Frosting.
I have some questions relating to fair trading by a company called Pink Frosting which is run by a woman called Louise Curtis.
Can you please advise if either party (Pink Frosting or Louise Curtis) is, or has been under investigation by ACT fair trading?
If so, what was the finding and the Commissioner’s recommendation/fine?
If so when was the finding made?
It is also understood that Ms Curtis may have taken up another business name/franchise what would be the restrictions placed around an individual against him fair trading orders have been made?105․On 13 August 2019 Access Canberra emailed the following response to the Canberra Times:
• Access Canberra can confirm that there is an investigation underway into Pink Frosting.
• Given our investigation is ongoing, Access Canberra is unable to provide any further comment on this matter at this time.
• An update and information will be provided in the near future.
• Consumers who are experiencing problems dealing with Pink Frosting can contact Access Canberra on 13 22 81.
• They can also contact their bank to seek any cash-back arrangements if goods have not been delivered as promised.
• Access Canberra is unable to comment on any particular circumstances relating to Pink Frosting and Ms Curtis.
106․On 16 August 2019 the Canberra Times published an article regarding Pink Frosting. It referred to a Facebook page for dissatisfied consumers of Pink Frosting which had been created six years ago with 143 supporters. In relation to Access Canberra the article said:
... Access Canberra confirming that the company ... is under active investigation
...
Access Canberra would not provide details of its fair trading investigation and was unable to provide any further comments 'at this time'.107․On 1 August 2019 Access Canberra posted a request on ACLink for complaints information from ACL regulators for the period 28 November 2018 to 1 August 2019.
108․Access Canberra received 129 complaints and commenced a comprehensive engagement with consumers throughout Australia for the purpose of gathering witnesses for possible enforcement action against Pink Frosting. Over 45 complainants responded, with most providing documents outlining their interactions with Pink Frosting. In the majority of responses received, the consumer had made multiple attempts to contact Pink Frosting to request either delivery of the ordered goods or a refund.
109․Access Canberra issued notices under s 52 of the ACL to the Commonwealth Bank of Australia for Pink Frosting’s business accounts, and to Pink Frosting. Section 52 notices require the recipient to produce the requested documents and information to assist with an investigation. These notices were issued for the purpose of obtaining evidence with a view to possible civil proceedings.
110․In late 2019, Ms Curtis had agreed to sell the Pink Frosting business for $70,000 to a competitor. The Pink Frosting business was ultimately sold for $60,000. On 5 March 2020 Pink Frosting ceased trading.
111․On 6 April 2020 Fair Trading posted a further request for data to ACLink for any complaints between August 2019 and 6 April 2020. In response, Fair Trading received a further 75 complaints.
112․On 10 August 2020 the ACT Government Solicitor's office, on behalf of Access Canberra, wrote to Ms Curtis advising that the investigation into complaints by consumers against Pink Frosting had now concluded. The Commissioner was satisfied that Pink Frosting had engaged in conduct which breached ss 36(4) and 23 of the ACL and proposed resolving the matter by way of a court enforceable undertaking from Pink Frosting. There is no complaint made by either plaintiff about this decision.
113․On 11 August 2020 Ms Curtis advised that she no longer owned or operated Pink Frosting and therefore there was no need to enter into a court enforceable undertaking.
114․On 13 August 2020 Ms Curtis’ solicitor emailed the ACT Government Solicitor's office providing an ASIC notification in relation to a notice of intention to deregister the business name “Pink Frosting”.
115․On 18 August 2020 the ACT Government Solicitor's office on behalf of Access Canberra advised the solicitor that, as the Pink Frosting business was no longer in operation, Access Canberra would discontinue pursuing a court enforceable undertaking. This approach was taken as the deregistration of the business meant that the ongoing risk of harm to consumers no longer existed.
What is/are the cause/s of action relied on by the plaintiffs?
History
116․The plaintiffs have failed to clearly articulate their claims against the defendants. Most of the pleadings in the Statement of Claim are no longer relied on. At the commencement of Final Addresses, I was provided with a short Outline of their case which is set out below. Counsel for the plaintiffs concedes that some of the claims set out in that document have not been pleaded.
117․Even the declaration now sought by the second plaintiff has not been expressly pleaded.
118․Despite the fact that the plaintiff’s expert gave evidence of a significant loss caused by the defendants, I was not provided with any document which set out the actual claims by the plaintiffs and when I asked for this information from counsel for the plaintiffs, he used imprecise expressions such as “Less the ultimate price of $60,000 or $70,000”, which makes it very difficult for me to understand what exactly is being claimed.
119․Nor was the claim for interest, articulated in the Originating Claim, mentioned in addresses.
120․In their Statement of Claim, the plaintiffs recount the history of the investigation and the other factual matters on which they rely in paras 1–51.
121․The pleading then continues:
Investigation contravened the Act and Investigative Policies
52. In commencing and conducting the Investigation, and in communicating with media organisations in respect of the Investigation, the first defendant was exercising or purporting to exercise investigative functions under the Act.
53. In conducting the Investigation pursuant to the Act, or in purporting to do so, the first defendant was obligated to have meaningful regard to relevant government investigative policies and standards.
Particulars
(a) Access Canberra Accountability Commitment
(b) Regulatory Compliance and Investigation (RCI Policy)
(c) Regulatory Compliance and Enforcement (RCE Policy);
(d) Access Canberra Investigations Standard
(e) Access Canberra Investigations Manual
(f) ACT Public Service Code of Conduct (ACTPS Code of Conduct)
(g) Australian Government Investigations Standards (AGIS)
(collectively referred to as the Investigative Policies)
54. The first defendant conducted the Investigation in a way which did not comply with its obligations under the Act or the Investigative Policies.
55. The first defendant did not comply with, or otherwise contravened, the RCI Policy by:
(a) Failing to reasonably assess the volume and severity of complaints allegedly received by the first defendant;
(b) Failing to present a meaningful number of complaints, or particulars thereof, to the first plaintiff for comment prior to commencing the Investigation or during the Investigation;
(c) Failing to clearly notify plaintiff of the transition of the Investigation from the complaints management to the Invitation to Respond or formal investigation stage;
(d) Failing to clearly notify the first plaintiff of the nature of the complaints or the concerns being investigated;
(e) Failing to clearly notify the first plaintiff of an indicative timeframe for the Investigation; and
(f) Failing to complete the Investigation within a reasonable timeframe.
Particulars
(a) Access Canberra Investigation Closure Report states the Investigation commenced in April 2018
(b) Access Canberra letters to the first plaintiff dated 13 June 2018 and 15 February 2019 did not expressly indicate a formal investigation had commenced.
(c) Access Canberra letter to the first plaintiff dated 10 August 2020 confirming the Investigation would not proceed due to the first plaintiff's business closure.
56. The first defendant did not comply with or otherwise contravened the RCE Policy by:
(a) Failing to adequately consider the isolated nature of the complaints it allegedly received and the minimal detriment alleged in the complaints before commencing formal investigative action; and
(b) Failing to adequately consider the suitability of other 'Tools to address non-compliance' listed in the RCE Policy in lieu of a formal investigation, including but not limited to formal warning letters and compliance monitoring.
57. The first defendant did not comply with or otherwise contravened the AGIS by:
(a) Failing to provide a meaningful number of complaints to the first plaintiff, contravening principles of natural justice and procedural fairness;
(b) Failure to interview a meaningful number of complaints or keep records of such interviews;
(c) Failure to keep sufficient records of complaints allegedly received;
(d) Failure to conduct the Investigation in accordance with the Standard for Conducting Major Investigations despite the alleged volume and severity of the complaints allegedly received; and
(e) Prejudiced the first plaintiff's right to procedural fairness in respect of the Investigation by publicly confirming the Investigation to multiple media outlets without having formally transitioned the Investigation to the investigation stage or notified the first plaintiff of any such transition.
Particulars
(a) Access Canberra statement to the Daily Telegraph - 9 January 2019
(b) Access Canberra internal email correspondence in June 2019 indicating the Commissioner of Fair Trading's intention to discontinue the Investigation due to insufficient evidence
(c) Access Canberra statement to the Daily Telegraph - 8 August 2019
(d) Access Canberra statement to the Canberra Times - 13 August 2019
(e) Access Canberra s 52 notice issued to Commonwealth Bank of Australia on 21 August 2019;
(f) Access Canberra statement to the Canberra Times – 4 and 7 November 2019
(g) Access Canberra correspondence with complainants commencing August 2019 or thereabouts requesting evidence
(h) Access Canberra s 52 notice issued to the first plaintiff on 30 March 2020
58. The investigator(s) appointed by the first defendant conducted the Investigation in a way which did not comply with the ACT Public Service Code of Conduct because:
(a) Their failure to provide a meaningful number of complaints to the first plaintiff did not accord with the principles of natural justice and procedural fairness; and
(b) Their failure to exercise reasonable care and skill in failing to keep sufficient records of complaints allegedly received before and during the Investigation.
Defendants are liable for plaintiffs' loss, expenses and damages
59. Section 51 of the Act entitles the plaintiffs to compensation from the second defendant in the amount the Court considers just for loss or expense suffered because of an exercise or purported exercise of a function under Division 5.2 of the Act by an investigator or a person assisting an investigator.
60. As a result of the exercise or purported exercise of their functions under Division 5.2 of the Act by investigators and persons assisting the investigators as pleaded above, the first plaintiff has suffered loss, damage and expense.
Particulars
(a) Loss of the value of the Pink Frosting business as online complaints soared in August 2019 after media coverage confirmed the Investigation was underway;
(b) Loss of opportunity to rebuild and carry on the 'Pink Frosting' business due to adverse and inaccurate media coverage of the Investigation;
(c) Loss of goodwill due to reputational damage.
61. As a result of the exercise or purported exercise of their functions under Division 5.2 of the Act by investigators and persons assisting the investigators, the second plaintiff has suffered loss, damage and expense.
Particulars
(a) Economic loss resulting from the second plaintiff's loss of employment with the first plaintiff, exacerbated by the damage to the first plaintiff's reputation due to coverage of the Investigation;
(b) Economic loss resulting from the reduction in value of the second plaintiff's units in the Unit Trust; and
(c) General damages relating to the adverse impact on the second plaintiff's health, general wellbeing and loss of enjoyment of life in circumstances where:
(i) the Pink Frosting business was central to the second plaintiff's sense of pride and respect prior to its closure;
(ii) the second plaintiff became the subject of personal online attacks following adverse publicity regarding the Investigation.
62. It is just in the circumstances to order payment of reasonable compensation to the plaintiffs due to:
(a) The first defendant commencing, conducting and concluding its Investigation based on alleged complaints which did not exist or which were otherwise not adequately documented;
(b) The first defendant's failure, after February 2019, to present the complaints supporting the purported findings of its Investigation, or particulars thereof, to the first plaintiff for comment;
(c) The first defendant providing attributable statements to the Daily Telegraph and the Canberra Times confirming the Investigation prior to meaningfully investigating the alleged complaints or presenting the complaints or particulars thereof to the first plaintiff for comment;
(d) The first defendants' failure to advise the Daily Telegraph and the Canberra Times of the absence of meaningful evidence of the first plaintiff's alleged breach of the Australian Consumer Law despite the first defendant acknowledging this in their 18 June 2019 email to the second defendant's investigative personnel;
(e) The Investigation not complying with the Act for the reasons set out in paragraphs [53] to [58];
(f) The Investigation not complying with the RCI Policy for the reasons set out at [55]; and
(g) The Investigation not complying with the RCE Policy for the reasons set out at [56];
(h) The Investigation not complying with the AGIS for the reasons set out at [57];
(i) The first defendant providing the plaintiffs with inaccurate accounts of complaints allegedly received; and
(j) The first defendant's internal oversight mechanisms failing to prevent any of the above.
122․In opening the plaintiffs’ case, counsel for the plaintiffs outlined the facts and then said:
(a)In June, October and December 2018 Ms Curtis was not told that Pink Frosting was under investigation.
(b)Ms Curtis was not told of the decision by Access Canberra to proceed to an
in-depth investigation in November 2018.(c)A media article which used information provided by Access Canberra described Pink Frosting as under “official investigation by Fair Trading” and said that Pink Frosting may have breached consumer law. These statements caused significant damage to Pink Frosting’s business.
(d)In June 2019 a decision was made to conclude the investigation. A draft closure letter was prepared but not sent, because Access Canberra decided to keep the investigation open. Ms Curtis was not informed of the decision to keep the investigation open nor given the opportunity to respond to the facts which informed it.
(e)Ms Curtis was not given notice of or given the opportunity to comment on the proposed response to the media inquiries in August 2019.
(f)The principles providing for declaratory relief of the kind sought are of longstanding, highest authority and closely analogous. A declaration to repair reputation is appropriate.
(g)Damages are sought under s 51 of the ACL.
(h)There is a debate between the parties as to whether a media response by the Commissioner, was the exercise of a function under s 33, which would mean that the plaintiffs could not claim compensation under s 51 of the ACL.
(i)All of the acts leading up to the decision to approve a media statement were functions capable of founding a claim for damages under s 51. The gross denial of procedural fairness to Ms Curtis and Pink Frosting meant that the articles and media releases on which they were based were made without Ms Curtis having an opportunity to respond.
123․On Day 2 of the hearing senior counsel for the defendants opened. In his opening he asserted that the Investigative policies pleaded in paras 54, 55, 56, 57 and 58 of the Statement of Claim either did not exist at the time of the alleged breaches or did not apply to the investigations conducted by Access Canberra.
124․In closing submissions counsel for the plaintiffs:
(a)Stated that paras 53, 54, 55, 56, 57, 58, and 62 (e) to (h) were not pressed by the plaintiffs. These related to asserted failures by Access Canberra to comply with the Investigative policies.
(b)Conceded that the decision by the Commissioner to reply to a media enquiry is not capable of giving rise to compensation under s 51 of the ACL.
125․Counsel for the defendants noted that the only acts of Access Canberra which now remained in the Statement of Claim which were said to have caused the plaintiffs’ losses were the media responses provided to Mr Rolfe on 9 January 2019 and 8 August 2019 and the media response provided to the Canberra Times on 13 August 2019.
126․I then asked counsel for the plaintiffs to confirm that they were the only acts relied on.
127․Counsel for the plaintiffs said they were not the only acts, the plaintiffs also relied on the “charged acts” which he said were the 11 December 2018 email in which Mr Connor told the complaints response team to inform people who were complaining about Pink Frosting to request charge backs. He conceded that this had not been expressly pleaded, but said it was a complaint raised about the conduct of the investigation and the denial of procedural fairness in relation to the investigation.
128․Counsel for the defendants then said that the defendants did not agree to the plaintiffs advancing a case that had not been pleaded.
129․I then informed counsel for the plaintiffs that I would not deal with the issues raised on an informal basis and, if leave was sought to amend the Statement of Claim, the plaintiffs would need to prepare an Application and an affidavit in support which would be dealt with in the usual way. No such application was made at any time.
130․At the commencement of final addresses counsel for the plaintiffs handed up a document which said:
Outline of closing submissions
Breach of Procedural Fairness
· Nov 2018
o Decision to proceed with an investigation based on 84 complaints (CB 824-5)
o Actual number of relevant complaints was 44, misrepresentation to Ms. Curtis.
o Denial of opportunity for Ms. Curtis to respond to these complaints, particularly as many pre-dated her ownership of the business.
· Dec 2018
o 11 December: meeting between Commissioner Snowden and Mr. Connor, advice based on flawed information about complaints.
o Ms. Curtis was not informed about key facts (complaints, chargeback recommendation, enforceable undertaking).
o Miscommunication about the investigation status during the December 12 call and follow up email (CB 863-5).
· 7 & 8 January 2019
o Media releases approved by Commissioner Snowden without informing Ms. Curtis.
o Investigation details were withheld, leading to negative media coverage directly impacting the plaintiff’s reputation (CB 863-865).
· 15 February 2019
o Show cause notice issued to Ms. Curtis, attaching only a sample of complaints (nine complaints) and not disclosing this fact.
o Ms. Curtis was not able to fully respond as she was unaware of the complete set of complaints (CB 863-5).
Declaratory relief
· The plaintiff’s claim for declaratory relief is based on established principles, particularly in Ainsworth and Another v. Criminal Justice Commission (1992) 175 CLR 564.
· Reputational damage resulted from the publication of articles, which were directly impacted by the denial of procedural fairness during the investigation. Ainsworth at 581-582.
· Ainsworth confirms that declaratory relief is appropriate where there is reputational harm, even without an administrative decision.
· The inherent power of the court to issue declaratory relief includes cases where reputational damage occurs due to flawed investigations (Forster v Jododex Australia Pty Ltd [1972] HCA 61; 127 CLR 421; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63).
· Declaratory relief should be granted to address the reputational harm suffered, as there is a real interest in restoring reputation, even if only partially.
Section 51 of the Fair Trading (Australian Consumer Law) Act 1992
· The investigation from June 2018 to August 2019, including flawed advice and withheld information, falls under s 51 of the Fair Trading (Australian Consumer Law) Act 1992.
· The Commissioner’s media responses were affected by these investigative flaws.
· Compensation may be sought for the consequences of these actions, regardless of whether media publication itself is compensable. I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41, 210 CLR 109 at 62
Quantum
· The business suffered significant reputational and financial damage due to the investigation and media coverage.
· Revenue declined, and the business eventually closed in early 2020 as a direct consequence of the investigation and negative media responses.
· The August 2019 article was particularly damaging, leading to a failed attempt to sell the business and its eventual closure.
131․I did not receive any written submissions from the defendants.
132․During final submissions there was also an issue as to the scope of the declaration sought. The Originating Claim says:
Relief claimed:
1. A declaration that the conduct of the investigation into the affairs of the Pink Frosting business conducted by the first defendant was carried out:
(a) without affording the first plaintiff natural justice; and/or
(b) In breach of applicable government policy regarding the investigation and actioning of relevant complaints.
….
5. Such further or other declarations or relief as the Court may see fit to make.
133․The relief sought in prayer 1(b) was not pressed.
134․In relation to prayer 1(a) the following exchange took place during final submissions:
MR BUCKLAND: … The conduct of this investigation is sufficiently poor to warrant a public statement in the nature of declaratory relief. If there is even a remote possibility that the reputation of Ms Curtis could be restored through the issuance of declaratory relief to the plaintiffs, then it has some utility and ought to not be refused.
HER HONOUR: The second plaintiff isn’t mentioned in the declaration you ask for.
MR BUCKLAND: Neither plaintiff is mentioned, your Honour. It's the affairs of the Pink Frosting business.
HER HONOUR: “(a) Without affording the first plaintiff natural justice”.
MR BUCKLAND: Thank you, your Honour. Ms Curtis' reputation is squarely linked to that of the business in the articles.
HER HONOUR: I'm just saying it doesn’t mention her in the order that you're asking for.
MR BUCKLAND: I see that, your Honour.
HER HONOUR: That's why I asked you if that's what actually you're asking for.
MR BUCKLAND: Yes. In my submission, it's within the scope of order 5 for your Honour to order that neither plaintiff was afforded natural justice, and the terms of the declaration stated in the originating claim do not bind the court if it determines that further other declarations are appropriate.
135․Counsel for the defendants submitted that if the plaintiffs were making an application to amend the Originating Claim it should be rejected. Any such order should not be made pursuant to prayer 5 as it would be a very generous reading of a catch-all provision in circumstances where the defendants were not clearly on notice so that they did not have the opportunity to obtain evidence relating to matters such as Ms Curtis’ reputation at various times.
136․The defendants oppose the plaintiffs being able to rely on the other matters set out in the plaintiffs’ Outline of Submissions on the basis they have not been pleaded.
Denial of procedural fairness
137․The defendants say that the plaintiffs have not established that they were denied procedural fairness.
138․The High Court noted in Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 (Ainsworth) at [24] that:
… a duty of procedural fairness arises when the power involved is one which may ‘destroy, defeat or prejudice a person's rights, interests or legitimate expectations’. Thus, what is decisive is the nature of the power, not the character of the proceeding which attends its exercise.
(Citations omitted.)The High Court continued:
It is not in doubt that, where a decision-making process involves different steps or stages before a final decision is made, the requirements of natural justice are satisfied if ‘the decision-making process, viewed in its entirety, entails procedural fairness’ (Ainsworth at [29].
(Citations omitted.)
(Emphasis added.)
139․I will deal with each of the four topics as set out in the plaintiff’s Outline of Closing Submissions.
Nov 2018
140․I will describe this section of the Outline as Ground 1. In three bullet points counsel for the plaintiffs listed what I take to be the particulars of Ground 1.
141․In oral addresses counsel for the plaintiffs explained that Ground 1 arises from Mr Connor’s decision on 13 November 2018 to change the investigation approach from “engage, educate, and conciliate” to a more in-depth investigation into the conduct leading to the complaints because he had become aware of new complaints.
142․Counsel for the plaintiffs submitted, that as a matter of procedural fairness, the information about the new claims should have been given to Ms Curtis before Mr Connor made the decision on 13 November 2018 as she may have been able to satisfactorily explain what had happened and this could have affected the course of the investigation.
143․Counsel for the plaintiffs conceded that this submission was not pleaded in the Statement of Claim but said it should be permitted to be put, because it emerged from the defendants' evidence, their documents and their witnesses.
144․Counsel for the defendants submitted that there would be prejudice to the defendants if this was permitted. It would be a profound breach of procedural fairness to enable the plaintiffs, in final submissions, to advance claims for compensation and declaratory relief on the basis of something which happened in November 2018 when it is not mentioned in the Statement of Claim. The change in the focus of the investigation was in the affidavit evidence as background context. If the plaintiffs were permitted to pursue this claim, the defendants would be deprived of the opportunity to consider what, if any, evidence would have been put on to deal with whether moving from a less formal to a more formal stage, is in fact a change of any substance or just an internal matter, and would have given consideration to more squarely addressing through the affidavit evidence why that occurred, what factors went into the decision and matters of that kind.
145․I will not permit the plaintiffs to rely on Ground 1. The primary reason is that it is not pleaded. The plaintiffs were given an opportunity to seek leave to amend their pleading and did not do so. No reason has been given, other than counsel had sought instructions. Even on the last day, after four days of evidence, this claim is very poorly articulated in the Outline of Submissions and in oral submissions. The relevance of there being 44 or 84 claims was not explained. In addition, I accept the submission by the defendants as to the prejudice which would flow to them if this claim is allowed.
146․If I am wrong and the plaintiffs should be allowed to plead that there was a denial of procedural unfairness in the decision to change the nature of the investigation, I would have dismissed that claim.
147․I have set out earlier in these reasons the full chronology of what occurred. In summary, on 9 August 2018 Mr Prescott again asked Ms Curtis to provide information in relation to two complaints which had first been sought on 20 July 2018 so he could finalise the matter. A further complaint was sent to Ms Curtis on 14 August 2018.
148․In late October Ms Harrison decided that the Pink Frosting file should be closed even though Ms Curtis had not yet provided the outstanding information because new complaints against Pink Frosting had appeared to have come to a halt.
149․On 13 November 2018, Mr Connor decided to continue the investigation because he had received information about new complaints.
150․A duty to afford procedural fairness attaches when a decision is made which may destroy, defeat or prejudice a person's rights, interests or legitimate expectations (Ainsworth at [24]). This was not such a decision. I am satisfied that it was simply an administrative decision on 13 November 2018 to continue with the investigation because new material had been received and modifying the way the investigation would be conducted.
151․The manner of conducting the investigation was modified again after Access Canberra received Ms Curtis’ email on 15 November when they decided to meet with her rather than seek the information in writing. Both of these decisions were centred on obtaining explanations from Ms Curtis about the complaints and not on denying her that opportunity. Information about the very complaints which led to the decision on 13 November 2018 was brought to Ms Curtis’ attention in a telephone call on 12 December 2018 when it was agreed that they would meet to discuss them. This was confirmed by email later that day.
152․Ground 1 must fail.
Dec 2018
153․I will describe this section of the Outline as Ground 2. In three bullet points counsel for the plaintiffs listed what I again take to be the particulars of Ground 2.
154․In oral submissions counsel for the plaintiffs explained this as follows:
HER HONOUR: … But let's go on to the second decision. You say they should have told her that they were considering discussing a court enforceable undertaking. Is that pleaded?
MR BUCKLAND: No. The fact that she wasn't notified in relation to - the events of 12 December are pleaded at paragraph 10.
HER HONOUR: Yes, but the complaint in paragraph 10 is that she wasn't told the first plaintiff was under investigation, not that they didn't tell her they were going to ask for an undertaking.
MR BUCKLAND: In my submission, your Honour, the issues in relation to 12 December 2018 were squarely raised, and the fact that later more factual complexity emerges in the course of a hearing is to be expected.
….
HER HONOUR: No, about at the meeting on 11 December, the advice was based on flawed information, they didn't tell Ms Curtis about a charge back recommendation, they miscommunicated the investigation status. I don't even know what that means exactly. And you also say they didn't communicate the investigation status at all.
MR BUCKLAND: To Mr Snowden, yes.
HER HONOUR: Does that mean to Mr Snowden?
MR BUCKLAND: Miscommunication of the investigation status.
HER HONOUR: It can’t be. It says during the 12 December call and follow-up email.
MR BUCKLAND: Pardon me.
HER HONOUR: That's obviously referring to Ms Curtis.
MR BUCKLAND: Yes, and that's the fact that it was an increase in complaints but not that it was an investigation.
155․As set out above, counsel for the plaintiffs said Ground 2 had been pleaded in para 10 of the Statement of Claim. Para 10 says:
On 12 December 2018, the first defendant through its representative Mr Rohan Connor (Manager, Advice, Investigations and Enforcement, Access Canberra) requested a meeting with the first plaintiff to discuss complaints received. The first defendant did not at this time advise the first plaintiff that it was under investigation. The parties further agreed to hold a meeting in the week beginning 14 January 2019.
Particulars
Emails between the first plaintiff and Rohan Connor on 12 December 2018 between 9.35 am and 10.05 am.
156․This pleading only refers to a failure to tell Ms Curtis that Pink Frosting was under investigation in the telephone call and emails on 12 December 2018.
157․At one point in oral submissions counsel for the plaintiffs said that the telephone call and letter to Ms Curtis on 12 December 2018 did not afford the plaintiffs procedural fairness. A reference to a significant uptick in complaints with a common theme was not enough information for the plaintiffs to be able to provide a meaningful response to the complaints and show the improvements Pink Frosting had made in its business practices. Mr Connor also did not inform Ms Curtis that Access Canberra considered that the matter was serious and had to be investigated. This meant that Pink Frosting had not had the opportunity to be heard. The plaintiffs say that, if the decision made by the Commissioner on the previous day had been made clear to the plaintiffs, the plaintiffs would have changed the urgency with which they addressed the issues so that the issues would have been resolved before the media enquiries came through in early January.
158․Counsel for the defendants submitted that the issues in Ground 2 are not raised in para 10 of the Statement of Claim. The decision made by Commissioner Snowden to seek an enforceable undertaking that was made on 11 December 2018 is not referred to in the Statement of Claim. Para 10 only refers to the plaintiffs not having been told on 12 December 2018 that Pink Frosting was under investigation. There is no reference to the other matters in the Outline – “Ms Curtis was not informed about key facts (complaints, chargeback recommendation, enforceable undertaking)” and “Miscommunication about the investigation status”.
159․Counsel for the defendants submitted that the defendants had made evidentiary and forensic decisions based on the pleaded case. If these matters had been pleaded, the defendants may have put on different evidence, re-examined differently, potentially called different witnesses and might have cross-examined Ms Curtis differently.
160․I will not permit the plaintiffs to rely on Ground 2. Again, the primary reason is that it is not pleaded, and no reason has been given. The plaintiffs were given an opportunity to seek leave to amend their pleading and did not do so. Again, even on the last day, after four days of evidence, Ground 2 is also very poorly articulated in the Outline of Submissions. In addition, I accept the submission by the defendants as to the prejudice which would flow to them if this claim is allowed.
161․If I am wrong and the plaintiffs should be allowed to plead that there was a denial of procedural unfairness for the reasons set out in Ground 2, I would have dismissed those claims.
162․Ground 2 asserts, in part, that at a meeting on 11 December 2018, advice was based on flawed information about complaints. This flawed information was not identified. I was not taken to any decision made on that day which I consider may have destroyed, defeated or prejudiced the plaintiffs’ rights, interests or legitimate expectations (Ainsworth at [24]).
163․Ground 2 then asserts that there was a miscommunication about the investigation status during the 12 December 2018 call and follow up email. I understand that this is where the plaintiffs say they should have been given more information about the complaints and advised of changes to the investigation approach.
164․Counsel for the plaintiffs mistakenly said in submissions that it was Access Canberra which was not available to meet before Christmas:
HER HONOUR: I mean, their plan was for them to meet in December.
MR BUCKLAND: I accept that.
HER HONOUR: It was Ms Curtis who wasn't available in December.
MR BUCKLAND: Yes.
HER HONOUR: Given that the publication was in January.
MR BUCKLAND: Yes, Ms Curtis said she was happy to meet first thing in the morning, 8.30 to 9.00, or late in the day at 4.30. She did say that there was availability during that time and that was not acceptable to the Commissioner. There was a mutually convenient time which was agreed upon and that agreement was reached in the context of that phone call and this email.
165․It is clear from the email evidence that Ms Curtis said she was available at those times when she thought that the meeting was at her office. When she realised it was to be at the Access Canberra office, she said was too busy before Christmas.
166․I am satisfied that on 13 November 2024 Mr Connor had intended to write to the plaintiffs providing details of the new complaints and asking for her comments, but, as he says in his affidavit, when he received Ms Curtis’ email on 15 November 2018, he felt that there had been a significant positive shift in Ms Curtis’ engagement with Access Canberra and he decided it would be better to discuss the new complaints at a meeting. He thought that at that meeting they could also explore the possibility of Pink Frosting providing a court enforceable undertaking. That change was approved by Mr Snowden on 11 December 2018. The approaches to Ms Curtis on 12 December 2018 were made to ascertain whether Ms Curtis would agree to a meeting. The email says that Access Canberra was seeking a meeting within the next week to discuss their concerns about the recent uptick in complaints. Ms Curtis was not available before Christmas and they agreed to meet in the week commencing 14 January 2019.
167․A duty of procedural fairness attaches when a decision is made which may destroy, defeat or prejudice a person's rights, interests or legitimate expectations (Ainsworth at [24]). I decline to find that a decision to invite the plaintiffs to a meeting to discuss the complaints made against them and propose that Pink Frosting enter into an enforceable undertaking was a denial of procedural fairness.
168․I understand that Ms Curtis feels that that if she had received the details of the complaints sooner, she could have satisfied Access Canberra that she had dealt appropriately with those complaints and thus Access Canberra’s file could have been closed before the media started making inquiries on 7 January 2019. However, this is not the relevant legal test.
7 & 8 January 2019
Section 33 of the ACL
169․I will describe this section of the Outline as Ground 3. In the two bullet points under this heading counsel for the plaintiffs said:
· Media releases approved by Commissioner Snowden without informing Ms Curtis. (Particular 1)
· Investigation details were withheld, leading to negative media coverage directly impacting the plaintiff’s reputation (CB 863-5). (Particular 2)
Particular 1
170․In considering Particular 1 it must be borne in mind, as I have said before, that one of the statutory functions of the Commissioner under s 33 of the ACL is to make information available to, and provide guidance to, the public about consumer and fair trading issues and practices. In the exercise of that function, the Commissioner is not required to exercise procedural fairness. In addition, no claim for compensation under s 51 of the ACL can be made in respect of the exercise of that statutory function. The fact that the defendants would deny that, in communicating with the media Access Canberra was exercising an investigative function, is denied in the Defence.
171․In my opinion, this disposes of Ground 3 Particular 1. The words used are directed to the conduct of the Commissioner. I consider that a response to a media enquiry by the Commissioner, which would be informed by the investigation carried out by an investigation team, is the statutory function I have set out in the preceding paragraph.
Particular 2
172․The defendants do not admit that investigation details were withheld, leading to negative media coverage directly impacting on the plaintiff’s reputation (Particular 2).
173․In Particular 2, the plaintiffs say that if Mr Snowden had known that details of the complaints made from June 2018 to early January 2019 had not been provided to Ms Curtis, he may have made a different decision in relation to the media release.
174․I decline to find that the claim that Access Canberra should have provided comprehensive details of all claims to Ms Curtis before responding to the media enquiry was pleaded. The only relevant pleading in the Statement of Claim identified by counsel for the plaintiffs was paragraph 14 which says:
The first plaintiff was not informed by the first defendant that it was under investigation, or that the first defendant had liaised with government investigative bodies in other jurisdictions regarding the first plaintiff's alleged conduct, before the publication of the article on 12 January 2019.
175․This obviously is confined to a failure to inform Pink Frosting that it was under investigation or had liaised with other regulators.
176․I will not permit the plaintiffs to rely on Ground 3 Particular 2. Again, the primary reason is that it is not pleaded, and the only reason given was that it arose from the evidence of Mr Snowden in cross-examination. The plaintiffs were given an opportunity to seek leave to amend their pleading and did not do so. Again, even on the last day, after four days of evidence, this claim is also very poorly articulated in the Outline of Submissions.
177․If I am wrong and the plaintiffs should be allowed to plead that there was a denial of procedural fairness by the investigation team failing to contact the plaintiffs for investigation details before Access Canberra responded to media inquiries in January 2019, I would have dismissed that claim.
178․I am satisfied that, for two reasons Particular 2 could not succeed.
1. Oral evidence of Mr Snowden
179․It was submitted that details of the complaints made from June 2018 to early January 2019 had not been put to Ms Curtis before Mr Snowden issued the two media responses. If Mr Snowden had known, it was submitted, he may have made a different decision. The plaintiffs rely on the following evidence from Mr Snowden:
Were you informed that the complaints which had been received since June 2018 had not been referred to the trader for comment? --- No. That wouldn’t – that’s not my understanding.
And if you had been told that the complaints which had been received after June 2018 had been referred, had not been referred to the trader, what would have been your response? --- My response would have been along the lines of were they local? Were they national? Have you had any other contact with those complainants and, of course, have you put those to the business? Those issues.
And it was important that those issues be put to the business before a decision was made to respond to a media enquiry, wasn’t it? --- It’s a factor, but not the sole factor.
I wasn’t saying it was the sole factor but it was an important factor, wasn’t it, Mr Snowden? --- It was a factor.
You’re resisting the word ‘important’, Mr Snowden. Why? --- Because it’s a factor.
…
And so it’s the case, isn’t it, in order to apply those considerations that you needed to know whether Pink Frosting had been contacted for comment on the proposed response, didn’t you? --- I needed to know that our investigators had engaged with Pink Frosting.
And you needed to know whether your investigators had engaged with Pink Frosting in relation to the investigation as it then stood. Correct? --- Correct.
And in relation to those matters which were now on the mind of the investigators. Correct? --- Correct.
And that included the complaints which have been received after June 2018. Correct? --- Yes.
And you say at paragraph 28 that you were satisfied that the content was accurate and that it was in the public interest to respond and you give a number of reasons, correct? --- Yes.
If it was the case that none of the complaints received after June 2018 had been put to the trader, would your satisfaction had been any different? In relation to the approval of the media comment?
Yes? --- It – it could have been.
So it could have changed your viewpoint if you had been told that there were complaints which had been received after June 2018 which had not been put to the trader. Is that your evidence? --- Yes, it could have.
And it could have changed your view on the content of the responses as well, couldn’t it? --- Perhaps, yes.
And what should have been said or should not have been said; correct? --- Yes.
180․I consider that the propositions put to Mr Snowden did not accurately reflect what had occurred between June 2018 and 7 January 2019. The questions used language such as “none of the complaints received after June 2018 had been put to the trader” and “complaints which had been received after June 2018 which had not been put to the trader”. I am satisfied that, in these questions, counsel for the plaintiffs was putting to Mr Snowden that Access Canberra had not provided any information at all to Ms Curtis about those claims.
181․That is not what happened. I have set out the detailed chronology above. In summary, as at 3 October 2018 Ms Curtis had not provided all of the information requested in June 2018 and August 2018 despite reminder emails. Ms Harrison nevertheless considered closing the file because new complaints had come to a halt. However, in October and November 2018 further inquiries revealed there had been a significant number of claims in other jurisdictions. Internal procedures were followed to obtain approval for the future conduct of the investigation, including approval from Mr Snowden. When that approval was received, Ms Curtis was told there had been a recent uptick in claims and was asked to come to the Access Canberra office to discuss them.
182․I find that this conduct means that Ms Curtis firstly had been informed about details of claims from June to August 2018 and, secondly had been told in writing in December 2018 that a significant number of new complaints had been received.
183․I decline to find that the evidence of Mr Snowden supports the submission that he may have made a different decision in certain circumstances because what did in fact occur was not reflected in the questions he was asked.
2. Was Ms Curtis under investigation?
184․Secondly, counsel for the plaintiffs submitted that if Access Canberra had contacted Ms Curtis they would have been told that she had not been under investigation so that term would not have been used in the response to the media enquiry.
185․There is no evidence to suggest that Access Canberra expressly informed Ms Curtis before January 2019 that Access Canberra was undertaking an investigation.
186․Ms Curtis maintains that she only became aware that Access Canberra was conducting an investigation into the complaints against Pink Frosting when she read the Daily Telegraph in January 2019.
187․In determining this issue, I take into account the following matters:
(a)The first letter to Pink Frosting is dated 13 June 2018. It commences by advising Ms Curtis that Access Canberra is responsible for the administration and enforcement of the ACL in the ACT set out in Schedule 2 of the Competition and Consumer Act 2010 (Cth). They confirmed they had told her by telephone that they had received 17 complaints from consumers in relation to alleged breaches of the ACL. The letter then goes on to describe the alleged conduct in the complaints. She was asked to provide an update in relation to the status of each complaint and the procedures of the business for products which were not delivered on time or at all and for the administration of refunds. The letter advises that she is being given the opportunity to respond to the concerns in order for the office to be able to resolve the matter. The final paragraph in the letter said, “If you require further information or wish to discuss the issues outlined above please contact the Investigator Mr Aidan Prescott of the Investigations and Compliance Enforcement Unit”. It was signed by Mr Prescott as “Investigator, Investigations and Compliance Enforcement, Access Canberra”.
(b)Ms Curtis said the language used in the letter did not suggest that there was an informal or formal investigation in relation to the complaints or that there were any other issues with the Pink Frosting business. In cross-examination she said that while she understood that Mr Prescott was an investigator in the Investigations and Compliance Enforcement Unit, he had written in relation to the ACL, she was asked to provide an update in relation to the status of each complaint, she was asked to provide Pink Frosting’s policy and procedures in relation to refunds and they were giving her an opportunity to respond to concerns, she nevertheless maintained that she did not know that Access Canberra was conducting an investigation. The email did not refer to an investigation and the complaints had been caused by factors outside her control so it did not raise a concern. Although Mr Prescott may have disclosed that he was an investigator, she was not told that she was under investigation. There was no investigation, just a continuation of her dealings with regulators about complaints. The letter did not inform her of the seriousness of the matter. She had told Access Canberra, before they sent the email, that most of those complaints had already been resolved.
(c)On 11 July 2018 Mr Prescott wrote to Ms Curtis again informing her that Access Canberra would like to attend the Pink Frosting office to discuss complaints received from other states and see how her business processes were working. The letter was again signed by Mr Prescott as “Investigator, Investigations and Compliance Enforcement, Access Canberra”. The meeting was held on 18 July 2018. Ms Curtis showed them the customer relationship management system, the eWay system processes and a folder with chargebacks. Ms Curtis said she did not feel that the meeting was an informal or formal investigation. She said it felt like an informal chat and was collaborative, relaxed and friendly. There are in evidence several other emails around this time from Mr Prescott to Ms Curtis, some of which were reminder emails and others sought further information. Mr Prescott has sent them as “Investigator, Investigations and Compliance Enforcement, Access Canberra”. The email from Ms Harrison to Ms Curtis on 3 October 2018 commences “Access Canberra is still awaiting information in relation to a number of complaints as per the emails from Investigator Prescott …”. Ms Curtis said she continued to believe it was not a serious matter because all the complaints had been dealt with. In fact, she was frustrated that Access Canberra had not spoken to the consumers to confirm that they had been dealt with.
(d)I have set out earlier in these reasons the full text of the email sent by Mr Connor to Ms Curtis on 12 December 2018. It commences:
As previously discussed, Access Canberra and other Australian Consumer Law regulators around Australia have recently received an increase in complaints about Pink Frosting. While the individual circumstances of each complaint varies, a common theme has been the alleged failure of Pink Frosting to supply goods in a reasonable timeframe in contravention of section 36 of the Australian Consumer Law.
(e)Mr Connor invited Ms Curtis to come to his office “to discuss our concerns”. The letter is signed “Rohan Connor. Manager, Advice, Investigations and Enforcement”. Ms Curtis said she did not get the impression from that letter that Pink Frosting was under any informal or formal investigation.
188․It may be that Ms Curtis managed to misinterpret all of these signs that Access Canberra was investigating the complaints made about Pink Frosting. However, I am satisfied that a reasonable person in the position of Ms Curtis would have, possibly after receiving the first letter, but certainly by mid-December, understood that such an investigation was underway and that they were seeking to decide whether Pink Frosting may have breached the ACL.
Outcome
189․As I have said a duty to afford procedural fairness attaches when a decision is made which may destroy, defeat or prejudice a person's rights, interests or legitimate expectations (Ainsworth at [24]). This was not such a decision. The media asked for information about any investigation into Pink Frosting. Providing an answer to that question did not need any information from Ms Curtis.
190․I would add that, if I am wrong, I have not been shown how providing a copy of the draft response to Ms Curtis could have prompted any response which could have caused Access Canberra to change the draft wording. As submitted by counsel for the defendants, the brief, entirely accurate statements made by Access Canberra were necessary to maintain public confidence that the Commissioner was discharging his responsibility to investigate matters of consumer concern, and to correct the inaccurate claim apparently made by Ms Curtis relating to a cap being placed on refunds, which if left uncorrected was likely to have raised serious concerns about the extent to which the Commissioner was fulfilling the statutory functions.
15 February 2019
191․I will describe this section of the Outline as Ground 4.
192․In November 2019 Access Canberra became aware of complaints made to other ACL regulators. On 15 February 2019 Access Canberra sought information about nine complaints. Mr Connor has, as I have set out above, explained why he sent a sample.
193․The plaintiffs say that they were denied procedural fairness because they were not told that they were only a sample. Counsel for the plaintiffs invited me to infer that, had Ms Curtis been notified of all of the complaints, or even told that she had only been sent a sample, she would have provided further and better and more evidence and greater responses to potentially bring the investigation to a close at that point.
194․It is conceded that this has not been pleaded.
195․Counsel for the defendants submitted that allowing the plaintiffs to rely on this decision would cause prejudice to the defendants. If the issue had been pleaded, he would have re-examined Mr Connor in relation to why he asked for only a sample of the complaints to be put to the plaintiffs.
196․I will not permit the plaintiffs to rely on this submission. Again, the primary reason is that it is not pleaded, and no satisfactory reason has been given. The plaintiffs were given an opportunity to seek leave to amend their pleading and did not do so. I also accept that there would be prejudice to the defendants if I did so.
197․If I am wrong, I decline to find that the plaintiffs were not afforded procedural fairness. As I have said, a duty of procedural fairness attaches when a decision is made which may destroy, defeat or prejudice a person's rights, interests or legitimate expectations (Ainsworth at [24]). This was not such a decision. It was simply an administrative decision in the investigative process. Further, I decline to infer that, had Ms Curtis been fully informed it would have meant that the investigation would have closed at an earlier time.
Other matters
198․The Commissioner replied to enquiries from the Daily Telegraph and the Canberra Times in August 2019. I have set out the full reply and the words used in the two articles earlier in these reasons.
199․The Commissioner told the Daily Telegraph that Access Canberra was continuing to look into the matter which was still open. Additional detail could not be provided. The thrust of the Daily Telegraph article was that Ms Curtis was selling her business because she had lost the court case against her former landlord. It did mention that the Access Canberra “official” investigation was ongoing.
200․The Commissioner told the Canberra Times that the investigation was ongoing, and an update would be provided in the near future. The article simply said that Access Canberra had confirmed that Pink Frosting was under active investigation and further details and comments would not be provided.
201․Those responses by the Commissioner are not one of the four Grounds in the section of the Outline of Submissions titled “Breach of Procedural Fairness”. Under “Quantum” the Outline says:
The August 2019 article was particularly damaging, leading to a failed attempt to sell the business and its final closure.
202․The Outline does not even identify whether the reference is to the Daily Telegraph article or the Canberra Times article.
203․In his opening, counsel for the plaintiffs used the plural and the singular interchangeably:
There was a further mediation enquiry in August 2019 in response to which Fair Trading responded that the investigation into Pink Frosting was under way and ongoing with an update to be provided in the near future. It also advised consumers to seek charge-backs from their banks. Once again, Ms Curtis was not given notice of this enquiry, or asked to comment on the proposed response to it.
The August articles were the final nail in the coffin of the Pink Frosting business.
204․In final submissions counsel for the plaintiffs said:
As it was, the investigation remained open through August 2019 when further responses to media enquiries were provided by the defendant. As with the earlier media engagements, Ms Curtis was not given the opportunity to provide submissions to the investigation. She had not heard from Fair Trading since March 2019. While it may have been a fact that the investigation was ongoing at that time, the investigation was so long in the tooth and so hampered by denials of procedural fairness that the continuation of the investigation was unfairly and unduly detrimental to Ms Curtis and her business.
The August 2019 article was the nail in the coffin of the business. Revenue further plummeted and Ms Curtis made the difficult decision to attempt to sell the business in late 2019, and as I submitted to your Honour in opening, Ms Curtis ceased to operate the business in early March 2020.
The mention of an official investigation could have damaged the business’ reputation. We have the temporal correlation both between the January and the August articles and the downturn in the company’s business.
205․The words “official” and “active” were not in the Commissioner’s response to the media enquiries.
206․Counsel for the plaintiffs did not articulate the basis on which he took issue with the responses to the media, other than saying that the publication of the articles led to a further reduction in revenue. It cannot be the use of the word “investigation” because the situation had changed since January 2019. By August 2019 Ms Curtis was aware that Access Canberra considered that it was undertaking an investigation, and she had written to them on 13 January 2019 pointing out that she thought they had just been having a chat.
207․I accept the submissions of the defendants that the brief, entirely accurate statements made by Access Canberra were necessary to maintain public confidence that the Commissioner was discharging his responsibility to investigate matters of consumer concern.
208․I am satisfied that the two responses were made by the Commissioner in the exercise of his statutory function under s 33 to make information available to, and provide guidance to, the public about consumer and fair trading issues so that damages under s 51 are not available.
Declaratory relief
209․As I have already said the pleadings only seek a declaration that the conduct of the investigation into the affairs of the Pink Frosting business conducted by the first defendant was carried out without affording the first plaintiff natural justice.
210․Counsel for the plaintiffs submitted that the conduct of the investigation was sufficiently poor to warrant a public statement in the nature of declaratory relief by reason of the reputational harm to the plaintiffs.
211․I accept the submission by counsel for the defendants that declaratory relief will not be granted if it will not have any foreseeable consequences for the parties. (Ainsworth at [37]-[38]). In this case the business ceased trading on 5 March 2020.
212․In addition, I have not accepted any of the issues raised by the plaintiffs in relation to any deficiencies in the conduct of the investigation.
213․Declarations are discretionary relief. I refuse to exercise the discretion to make the Order sought in 1(a) of the Originating Claim.
214․A declaration in favour of Ms Curtis has not been expressly sought in the Originating Claim. I will not make such an Order by reason of the fifth Order sought on the Originating Claim. Any such relief should be clearly pleaded so the opposing parties are on notice as to Ms Curtis’s claim. Even now, the wording sought has not been reduced to writing.
215․I also refuse to grant leave to amend the Originating Claim to seek such a declaration. The reason why it was not included in that pleading has not been explained. I accept that there would be prejudice to the defendants because they did not have the opportunity to make enquiries about and call evidence in relation to the reputation of Ms Curtis.
216․If I am wrong, and such an amendment should be allowed, I would have refused to exercise the discretion to make the Order sought because I have not found any deficiencies in the conduct of the investigation by Access Canberra.
Quantum
217․I have declined to find that the plaintiffs were denied procedural fairness and therefore refuse to make any order for compensation.
218․I cannot indicate with any confidence what compensation I would have awarded if it had been necessary because I was provided with very little assistance by counsel for the plaintiffs.
219․I would have made the following findings in relation to the assessment of the extent to which the media articles had an impact on the financial viability of the business:
(a)The plaintiffs have not established that there was any incorrect information provided by Access Canberra to the media.
(b)I would have preferred the evidence of the defendant’s expert Mr Ivey to the plaintiffs’ expert, Mr Senatore as to the plaintiffs’ losses for following reasons:
(i)Mr Senatore said that the business had been unable to recover following publication of the article on 12 January 2019. However, he conceded in cross-examination that these were the instructions he received from Ms Curtis. He did not suggest that he had arrived at the same conclusion independently after examining the business records.
(ii)Mr Senatore attributed the whole of any loss to the publication of the January newspaper article. I would have preferred the approach taken by Mr Ivey who listed at paragraph 1.5 of his first report dated 30 April 2016 all of the other factors which would have had significant negative impacts on the business.
(iii)Ms Curtis bought the business for $624,000. The vendors had misrepresented the financial position of the business by not disclosing it owed $290,500 which was repaid by Ms Curtis. Ms Curtis threatened to take legal action against the vendors. Mr Senatore said the value of the business at the time of sale was the purchase price plus the outstanding liabilities being $914,500. This cannot be the correct approach – a purchaser who was aware of the debt would factor it into the amount the purchaser would pay for the business. I prefer the evidence of Mr Ivey who, at paragraph 4.2.5 of that report, points out that the unforeseen contingent liabilities of the business of $290,500 should be subtracted from the sale price, meaning the true value of the business at the time it was purchased was $333,500.
Costs
220․I will give the parties an opportunity to make submissions in relation to any order for costs.
Orders
221․I make the following orders:
(1)The Originating Claim lodged on 24 August 2023 and re-lodged on 1 September 2023 is dismissed.
(2)Any Application for an Order for costs is to be filed and served within 14 days together with written submissions and any evidence in support of the Application.
(3)The costs respondent is to file and serve any written submissions and evidence in reply within 14 days of receiving the Application.
(4)The parties must state in their submissions whether or not they consent to the costs application being determined on the basis of the parties’ written submissions and attached documents, if any, without the need for a hearing.
(5)Subject to the parties’ submissions, the Court will determine any costs application made on the basis of the papers filed in the Registry.
| I certify that the preceding [221] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Acting Justice Balla. Associate: Date: 18 February 2025 |
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