FEDERAL COURT OF AUSTRALIA
Australian Securities and Investments Commission v Accounts Control Management Services Pty Ltd [2012] FCA 1164
Citation: Australian Securities and Investments Commission v Accounts Control Management Services Pty Ltd [2012] FCA 1164 Parties: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v ACCOUNTS CONTROL MANAGEMENT SERVICES PTY LTD ACN 050 268 141 and ACM GROUP LTD ACN 127 181 097 File number: NSD 684 of 2011 Judge: PERRAM J Date of judgment: 26 October 2012 Catchwords: TRADE PRACTICES – Misleading or deceptive conduct – application by Australian Securities and Investments Commission alleging misleading or deceptive conduct against debt collection agency – allegation that agency had misled debtors by making various representations about, inter alia, the likelihood, imminence and possible impacts of court proceedings – whether misleading or deceptive conduct established
TRADE PRACTICES – Unduly harassing or coercive conduct – application by Australian Securities and Investments Commission alleging unduly harassing or coercive conduct against debt collection agency – allegation that agency had engaged in unduly harassing or coercive conduct by, inter alia, threatening legal proceedings, contacting third parties and threatening other consequences – whether unduly harassing or coercive conduct established
WORDS AND PHRASES – ‘unduly harassing or coercive’ – consideration of the meaning to be given to the word ‘unduly’ in the context of debt collection – whether ‘unduly’ qualifies both ‘harassing’ and ‘coercive’
Legislation: Australian Securities and Investments Commission Act 2001 (Cth) ss 12DA, 12DJ
Payment Systems (Regulation) Act 1998 (Cth) s 11
Trade Practices Act 1974 (Cth) s 52, 60Australian Securities and Investments Commission Regulations 2001 (Cth) Reg 2B
Cases cited: Ahmed v Harbour Radio Pty Ltd (2009) 180 FCR 313 applied
Australian Competition and Consumer Commission v Maritime Union of Australia (2001) 114 FCR 472 applied
Australian Competition and Consumer Commission v McCaskey (2000) 104 FCR 8 applied
Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No. 2) (2011) 279 ALR 609; [2011] FCA 382 citedDate of hearing: 23, 24, 26, 27 April, 16 May 2012 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 350 Counsel for the Plaintiff: D Stack Solicitor for the Plaintiff: Australian Securities and Investments Commission Counsel for the Defendants: G Sirtes SC, J Petrolo Solicitor for the Defendants: Beilby Poulden Costello
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 684 of 2011
BETWEEN: AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION
PlaintiffAND: ACCOUNTS CONTROL MANAGEMENT SERVICES PTY LTD ACN 050 268 141
First DefendantACM GROUP LTD ACN 127 181 097
Second Defendant
JUDGE:
PERRAM J
DATE OF ORDER:
26 OCTOBER 2012
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1. The parties bring in short minutes of order to give effect to these reasons within 14 days.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 684 of 2011
BETWEEN: AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION
PlaintiffAND: ACCOUNTS CONTROL MANAGEMENT SERVICES PTY LTD ACN 050 268 141
First DefendantACM GROUP LTD ACN 127 181 097
Second Defendant
JUDGE:
PERRAM J
DATE:
26 OCTOBER 2012
PLACE:
SYDNEY
REASONS FOR JUDGMENT
I. INTRODUCTION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .
[1]
II. RELEVANT PRINCIPLES........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .
[10]
III. GENERAL FACTS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......
[19]
IV. THE TELEPHONE CALLS........ ........ ........ ........ ........ ........ ........ ........ ........ ........
[45]
(a) Debtor One........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..
[49]
Call 1: 27 March 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...
[56]
Call 2: 31 March 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...
[60]
Call 3: 3 April 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........
[63]
Call 4: 8 April 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........
[65]
Call 5: 17 April 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......
[68]
Call 6: 28 April 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......
[72]
Call 7: 6 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..
[75]
Call 8: 7 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..
[78]
Call 9: 11 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........
[80]
Call 10: 13 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[82]
Call 11: 13 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[83]
Call 12: 15 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[86]
Call 13: 15 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[88]
Call 14: 15 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[90]
Call 15: 15 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[92]
Call 16: 15 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[94]
Call 17: 15 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[96]
Call 18: 18 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[100]
Call 19: 22 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[102]
Call 20: 25 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[105]
Call 21: 25 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[108]
Call 22: 25 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[110]
Call 23: 27 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[114]
Calls 24 – 27: 29 May 2009 – 9 June 2009........ ........ ........ ........ ........ ........ ........ ....
[116]
Call 28: 11 June 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....
[118]
Conclusions on Debtor One........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...
[120]
(b) Debtor Two........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .
[126]
Call 29: 22 December 2008........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....
[130]
Call 30: 22 December 2008........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....
[132]
Calls 31 – 33: 19 March 2009 – 21 April 2009........ ........ ........ ........ ........ ........ ......
[136]
Conclusions on Debtor Two........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...
[138]
(c) Debtor Three........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......
[141]
Call 34: 3 December 2008........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[146]
Call 35: 4 December 2008........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[149]
Call 36: 22 December 2008........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....
[151]
Call 37: 18 March 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..
[153]
Call 38: 18 March 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..
[155]
Call 39: 15 April 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....
[158]
Conclusions on Debtor Three........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .
[160]
(d) Debtor Four........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........
[165]
Call 40: 30 April 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....
[170]
Calls 41 – 44: 25 June 2009 – 22 September 2009........ ........ ........ ........ ........ ........
[172]
Call 45: 2 October 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..
[174]
Call 46: 24 November 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....
[176]
Call 47: 25 November 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....
[179]
Call 48: 27 November 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....
[181]
Call 49: 27 November 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....
[184]
Call 50: 30 November 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....
[189]
Call 51: 30 November 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....
[191]
Call 52: 11 December 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....
[194]
Conclusions on Debtor Four........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..
[196]
(e) Debtor Five........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..
[200]
Call 53: 24 November 2008........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....
[204]
Calls 54 – 57: 3 December 2008 – 6 January 2009........ ........ ........ ........ ........ .......
[206]
Call 58: 13 February 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[209]
Call 59: 17 February 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[211]
Call 60: 20 February 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[213]
Call 61: 20 April 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....
[215]
Call 62: 11 August 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .
[217]
Call 63: 23 December 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....
[219]
Call 64: 8 January 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .
[221]
Call 65: 19 January 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......
[223]
Call 66: 19 March 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..
[225]
Call 67: 19 March 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..
[227]
Call 68: 24 March 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..
[229]
Call 69: 25 March 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..
[231]
Conclusions on Debtor Five........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...
[233]
(f) Debtor Six........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....
[236]
Call 70: 16 December 2008........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....
[240]
Call 71: 17 December 2008........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....
[242]
Call 72: 23 December 2008........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....
[245]
Conclusions on Debtor Six........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....
[247]
(g) Debtor Seven........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......
[251]
Call 73: 28 May 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[254]
Call 74: 2 June 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......
[256]
Call 75: 4 June 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......
[259]
Call 76: 26 June 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....
[261]
Call 77: 26 June 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....
[262]
Call 78: 26 June 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....
[264]
Call 79: 26 June 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....
[266]
Conclusions on Debtor Seven........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .
[268]
(h) Debtor Eight........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......
[272]
Call 80: 14 July 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[276]
Call 81: 14 July 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[278]
Call 82: 20 July 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[280]
Call 83: 16 December 2009........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....
[282]
Call 84: 4 January 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .
[284]
Call 85: 4 January 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .
[286]
Call 86: 4 January 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .
[288]
Call 87: 4 January 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .
[290]
Call 88: 4 January 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .
[292]
Call 89: 5 January 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .
[293]
Call 90: 16 June 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....
[295]
Call 91: 16 June 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....
[296]
Call 92: 16 June 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....
[298]
Call 93: 17 June 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....
[299]
Call 94: 18 June 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....
[301]
Call 95: 18 June 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....
[303]
Call 96: 21 June 2010........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....
[305]
Conclusions on Debtor Eight........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .
[307]
V. WHETHER THERE SHOULD BE A GRANT OF DECLARATORY RELIEF........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..
[313]
Misleading or deceptive conduct........ ........ ........ ........ ........ ........ ........ ........ ........ .......
[315]
(a) Significance of the contraventions........ ........ ........ ........ ........ ........ ........ ........ .
[315]
(b) Change in manuals........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........
[316]
(c) Change in ownership........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[317]
(d) Form of declaration........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........
[321]
Unduly harassing or coercive conduct........ ........ ........ ........ ........ ........ ........ ........ .....
[323]
(a) Significance and nature of the contraventions........ ........ ........ ........ ........ ......
[323]
(b) Change in ownership........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....
[325]
VI. WHETHER THERE SHOULD BE A GRANT OF INJUNCTIVE RELIEF........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..
[327]
VII. CAN THE CLAIMS UNDER THE ASIC ACT BE MAINTAINED?........
[329]
VIII. RELIEF........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......
[350]
I. INTRODUCTION
The second defendant, ACM Group Ltd, is a debt collector and the first defendant, Accounts Control Management Services Pty Ltd, is its predecessor entity. The second defendant assumed the conduct of the first defendant’s business in July 2009. Except where the context otherwise requires, I will refer to this business, regardless of which entity was conducting it at the relevant time, as ‘ACM’. ACM purchases outstanding debts from financial institutions such as the National Australia Bank (‘NAB’) and corporates such as Telstra. Having acquired those debts, it uses its workforce to seek to recover some portion of the face value of the debts in question. Because it buys the debts at a steep discount to their face value (typically a discount of between 79% and 99%), it does not need to recover very much before it is making a profit.
This case is concerned with the methods adopted by ACM to pursue recalcitrant debtors to make them pay up. Generally this was done by telephone call from an outward-bound call centre by employees of ACM. The plaintiff (‘ASIC’) alleges that, on a large number of occasions during those telephone calls, ACM employees said things which were not true (for example, that lawyers had been retained to sue the debtor when this was not so) or that the conversations were unduly harassing or coercive.
ACM recorded all of these calls. ASIC relied upon a large quantity of transcripts of the telephone calls together with the audio files from which those transcripts were drawn. It submitted that in a number of instances the hectoring tone of what took place could not wholly be grasped from the written word on the page.
Because it is illegal to engage in misleading or deceptive conduct or conduct which is unduly harassing or coercive, ASIC’s claimed relief against the defendants was that this Court should issue an injunction restraining them from engaging in such conduct in the future. Declaratory relief was also sought.
The defendants accepted that, in some of the instances upon which ASIC relied, misleading or deceptive conduct was established, but not in all of them. Whilst it accepted the accuracy of the recordings and transcripts, it disputed, at least in some instances, ASIC’s characterisation of the conduct as misleading or deceptive. Insofar as the allegations that the defendants had engaged in conduct which was unduly harassing or coercive were concerned, the defendants again accepted the factual substratum of ASIC’s case but denied in all cases that its conduct bore the characterisation which ASIC sought to put on it.
It was inherent in that defensive posture, at least so far as factual arguments were concerned, that some contraventions would be found. But, so the defendants submitted, relief would be withheld from ASIC for three related reasons. First, viewed in their full context the contraventions were minor and historical; secondly, this was particularly the case where the second defendant was a successor to the first defendant and where many of the breaches identified by ASIC related to the first defendant’s conduct and not its own; thirdly, the internal arrangements of ACM had been altered to overcome whatever systemic difficulties there had been in the past – staff manuals had been revised and the staff in question had moved on. Taken altogether, there was no need for relief to be granted because, to put the matter compendiously, nothing was now wrong.
Against the possibility that this line of defence might prove insufficient, ACM deployed a supplementary legal argument. It noted that ASIC’s claims for relief were premised, at least initially, on ss 12DA and 12DJ of the Australian Securities and Investments Commission Act 2001 (Cth) (‘the ASIC Act’). Both of these depended for their enlivenment upon whether the defendants could be said to be providing ‘financial services’ within the meaning of that Act. ACM submitted that its debt recovery activities could not plausibly be described as the provision of a financial service so that relief under the ASIC Act was unavailable.
ASIC, of course, denied this but with a weather eye invoked identical provisions in the former Trade Practices Act 1974 (Cth) (‘TPA’) which were not, however, dependent upon the presence of financial services for their enlivenment. To this the defendants countered that it was beyond ASIC’s statutory functions to seek a remedy under the former TPA. In short, the defendants submitted that the ASIC Act and the former TPA were stools which ASIC was betwixt but not upon.
Insofar as the facts were concerned, ASIC’s case was advanced in relation to eight debtors. I will refer to them as Debtors One to Eight to preserve their anonymity. I turn first to the relevant principles.
II. RELEVANT PRINCIPLES
Only two areas of discourse are involved: misleading or deceptive conduct and conduct which is said to be unduly harassing or coercive.
As to the former there was no debate between the parties. ASIC’s case was simply that some of the things said by the call centre staff were not true or, if they related to future matters, lacked a reasonable basis. If those contentions be made good then, subject to the defendants’ more general arguments about the non-application of the ASIC Act and the former TPA, breaches of the relevant sections would be established. Those sections were s 12DA(1) of the ASIC Act (‘A person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive’) and s 52(1) of the former TPA (‘A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive’). Section 52 is the relevant provision rather than the corresponding provision in the Competition and Consumer Act 2010 (Cth) because the events in question antedate its commencement. It was agreed, correctly, that this was the effect of the transitional provisions to that legislation. The operation of those provisions is explained in Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No. 2) (2011) 279 ALR 609; [2011] FCA 382 at [5]-[6].
There was a minor debate between the parties as to how the question of undue harassment and coercion was to be approached. The relevant proscription is contained in s 12DJ(1) of the ASIC Act as follows:
A person contravenes this subsection if:
(a) the person uses physical force or undue harassment or coercion; and
(b)the person uses such force, harassment or coercion in connection with the supply or possibly supply of financial services to a consumer, or the payment for financial services by a consumer.
The relevant section of the former TPA, s 60, was as follows:
A corporation shall not use physical force or undue harassment or coercion in connection with the supply or possible supply of goods or services to a consumer or the payment for goods or services by a consumer.
In the present circumstance, the only words which matter are ‘use physical force or undue harassment or coercion’. The first matter which is clear is that the rule is against undue harassment rather than mere harassment. The content of the word ‘undue’ will vary with the circumstances. In the context which is the confronting business of debt collection, it is likely to have a significant impact. By definition, the class of person who find that they have fallen into the hands of a debt collection agency are likely to be those who, for whatever reason, have not met their legal obligations. The necessary context is one, therefore, in which the law of contract and the ordinary usages of lending have failed to secure compliance by the debtor with his or her obligation to repay. It is not to be expected in such cases that the debt collector must proceed as if at a prayer meeting. There are, of course, limits to everything. In Australian Competition and Consumer Commission v McCaskey (2000) 104 FCR 8 at 27 [48] French J thought that, in the context of debt collection, if the frequency, nature or content of approaches and communications from the debt collector were such that they were ‘calculated to intimidate or demoralise, tire out or exhaust a debtor rather than convey the demand and an associated legitimate threat of proceedings, the harassment will be undue’. This view was endorsed by Hill J in Australian Competition and Consumer Commission v Maritime Union of Australia (2001) 114 FCR 472 at 485 [60] and by Foster J in Ahmed v Harbour Radio Pty Ltd (2009) 180 FCR 313 at 321-323 [33]. It is with this test that I will assess the unduly harassing or coercive nature of the calls before me.
Turning then to coercion, there is some debate as to whether ‘undue’ qualifies only ‘harassment’ or whether, instead, it qualifies ‘coercion’ as well. For the reasons given by Hill J in Australian Competition and Consumer Commission v Maritime Union of Australia at 485 [58] it is likely that French J did regard ‘coercion’ as being governed by ‘undue’. Hill J reached the contrary view; that is, that ‘undue’ did not qualify ‘coercion’ (see 485-486 [59]-[62]). I agree with the views of Hill J to which I have nothing to add.
Consequently, all that is required is ‘coercion’. That, however, is a stronger word than harassment. It connotes, as Hill J observed in Australian Competition and Consumer Commission v Maritime Union of Australia at 485 [61], some negation of choice or freedom to act.
Of course, whether any particular discussion or conversation is revealed to be unduly harassing or coercive will depend not upon a line-by-line analysis but, rather, on the overall impression.
I turn then to the facts.
III. GENERAL FACTS
ASIC’s case based on misleading or deceptive conduct is premised on the claim that what ACM had told the debtors about the nature of its own business and its intended actions was false. For example, it was said that ACM was a ‘litigation firm’ or that it was about to commence proceedings. Before the correctness or otherwise of those claims may be assessed it is necessary to grasp, if only in broad outline, the day-to-day way in which ACM’s business was conducted.
ACM employs around 280 staff. Of these around 90% are ‘collections officers’. These staff work from ACM’s premises in Melbourne and Sydney. In Sydney there are two sets of offices – one in Elizabeth Street and the other in Castlereagh Street in the Central Business District. The collections officers are organised into teams presided over by a team leader.
Each collections officer had a portfolio of debtors. The debtors could fall into different categories: credit card debtors, personal loan debtors and corporate debtors (such as Telstra customers). According to one of ACM’s former employees who was called, a Mr Tompson, most of ACM’s debtors’ debts had been outstanding for a considerable time. The size of a collections officer’s portfolio fluctuated but it was not unusual for it to have 300 or so debtors (as Mr Tompson had).
The work involved was not easy. Many of the debtors, as might naturally be expected, were abusive. Others – up to 80% of the total – were evasive; that is, they did not return calls or became uncontrollable. The strategies used on debtors varied. The general aim was to get the debtor to pay the account in full or to agree to some kind of arrangement under which the debt would be paid off over time with interest. Sometimes an interest freeze might be offered. The details and history of each debtor was recorded in a computer system called DebtSmart. This allowed the collections officer to see the history of the debtor.
Perhaps as a result of the rather confrontational nature of the work, the turnover rate for collections officers was quite high, about 50% per annum. The work of the collections officers was always over the phone and never face-to-face. Nor was there sending of emails or letters by collections officers.
Upon being hired by ACM, each employee was given a training manual. At the time relevant to the events the subject of the present proceedings, the manual was in the form of Exhibit 2. The manual suggested various scripts which might be used to assist a debtor in coming to the decision that he or she should pay up. The manual made it very plain that debtors should be threatened with litigation. One of the responsibilities that a collections officer had was, according to the manual, to ‘use litigation when speaking to debtors’. The suggested litigation threats ranged from the relatively innocuous – ‘I wish to offer you the opportunity to settle this account before legal proceedings commence against you’ – through to more developed threats such as this one:
Mr/Mrs/Ms. (Surname), the reason for my call to you today is a courtesy call due to the fact that I have received your physical file this morning from our solicitors. I have unfortunately been requested by our solicitors to put forward a final recommendation in reference to the outstanding amount of $(Balance) and will need to finalise my recommendation by no later than (Note down the exact time on paper to refer back to in later part of conversation)… As I was looking through your file (give time) I have noticed here in your file is a Statement of Liquidated Claims which has been drawn and it is set for issuance at the local court in Sydney on (Give exact date) at (Give exact time). (Pause) Mr/Mrs/Ms. (Debtors Surname), Do you understand what a Statement of Liquidated claims is? (If the debtor answers YES, Ask the debtor to explain, so that you can confirm). (If the debtor answer NO, Explain by saying… it is a series of document basically called summons).
(Emphasis in original.)
Many other parts of the manual encouraged collections officers to make the strong suggestion that lawyers had already been involved in the account. For example there was this script:
IMPORTANT PHRASES
●I HAVE RECEIVED STRICT INSTRUCTIONS FROM MY SOLICITOR, TO PROCEED WITH LITIGATION…
…
●I DON’T EVEN KNOW WHERE YOUR MATTER IS UP TO AS OUR SOLICITORS HAVE YOU [sic] FILE…
●I HAVE JUST COME OUT OF A MEETING WITH THE SOLICITOR WITH RESPECT TO 3 MATTERS UNFORTUNATELY 1 WAS YOURS…
Or this one:
CLOSING A CALL
●IF I DON’T RECEIVE THE RECEIPT BY (time) THE ACCOUNT WILL BE DEEMED AS NOT PAID
…
●IF YOU DO NOT ADBIDE [sic] BY THIS AGREEMENT, UNFORTUNATELY I WILL HAVE TO HAND DOWN MY FINAL RECOMMENDATION TO THE SOLICITORS
Or this:
NEW LINES
● I CAN ONLY HELP YOU IF YOU HELP YOURSELF.
●MY SOLICITORS HAVE HAD A GOOD LOOK AT YOUR FILE AND HE HAS [sic] ADVISED ME TO ASSIST YOU.
…
●BY TOMORROW 3.00PM THIS ACCOUNT WILL ACCUMULATE $350.00 WORTH OF LEGALS [sic] FEES
●THIS IS YOUR LAST CHANCE BEFORE IT GOES TO COURT.
●YOUR ACCOUNT HAS BEEN BROUGHT FROM THE SOLICITORS OFFICE AND THEY ARE EXPECTING A RESPONSE FROM ME AS TO PROCEED WITH LITIGATION AT 2.30PM THIS AFTERNOON.
…
●JUST A REMINDER THAT OUR SOLICITORS HAVE GIVEN YOU ONE LAST CHANCE TO SETTLE THIS ACCOUNT.
It is true that the defendants did have a legal section which employed 4 or 5 people. It is also true that it was not completely unheard of for the defendants to pursue proceedings. That was, however, a fairly rare event. Mr Brabazon, ACM’s Chief Operating Officer, gave evidence that this would occur on the recommendation of a section manager and would result in a referral of the debtor to the legal section. After that section’s consideration, a matter then might be sent to external solicitors. The percentage of debtors who were subject to legal action was quite small. Mr Brabazon was shown Exhibit 18, which was a schedule of the total number of accounts for each month in the period September 2008 to January 2010. It also showed the number of accounts for which: (a) legal status was indicated; (b) judgment had been obtained; and (c) legal fees were charged. The month of March 2009 was typical: there were 489,752 open debtor accounts; 2071 of which were in legal status; 95 of which had been pursued to judgment; and 458 of which involved the charging of legal fees. One cannot be precise about such matters, but the percentage of debtor accounts which were sent to the Legal Department was less than 0.5% and the number in which legal fees were incurred less than 0.1%.
What should one take from this? Only this: the defendants did have a Legal Department but it was not in any sense a common part of its business to refer debtors to this section. Further, when matters were referred to the legal section, this was done on the recommendation of the section manager and not by individual collections officers. In no way were collections officers in a position to threaten to commence litigation (at least if that threat was to be accurate). What this means, of course, is that the manual which the first defendant had prepared was suggesting to collections officers that they should make statements which were not true. That misleading conduct then ensued is hardly surprising.
I turn to the statements which were actually made below. ASIC contended that I should make a number of specific factual findings about the defendants’ business. The specific findings formed the basis of its later claims that ACM had engaged in misleading or deceptive conduct. The particular matters were:
(a) The defendants did not employ ‘in-house’ lawyers
It will follow from what I have said above at [28]-[29] that this contention is not correct – the defendants did have a small legal section.
(b)The defendants did not specialise in commencing legal proceedings against debtors for the recovery of debts
I accept this contention. Whilst the defendants did very infrequently commence proceedings this was such a minor aspect of its business that it could not be described as a speciality.
(c)The defendants infrequently commenced legal proceedings against debtors, for the recovery of debts
For reasons already given I accept this proposition.
(d)The defendants did not utilise officers of the Sheriff of New South Wales to serve originating processes or to have affidavits sworn
At the trial no one was able to point to any practice in New South Wales by which service or the taking of evidence was effected in this manner. The ACM manual, however, encouraged collections officers to tell debtors that court documents would be served by Sheriff’s officers and to ‘stress that they are dressed like a police man [sic] and Come in a marked car’.
(e)The defendants were not in a position immediately to commence proceedings against debtors
Although ACM’s Legal Department was small and did not frequently cause proceedings to be commenced, this does not mean that the Legal Department was incapable of commencing proceedings against particular debtors, nor that they could not do so rapidly if necessary. I reject the proposition.
Above at paragraphs [24]-[27], I have referred to a manual distributed to collections officers. After ASIC began its inquiries, its chief operations manager, Mr Brabazon, decided to examine it a little more carefully. Mr Brabazon had commenced with ACM in 2008 so it is perhaps a little surprising that he had not acquainted himself with the manual until 2010 when ASIC began its inquiries, but little was made of this and it would not be appropriate to take this aspect of the matter any further.
In Mr Brabazon’s opinion, and mine also, many aspects of the manual encouraged collections officers to engage in misleading conduct. I have dealt with this already above. Perhaps the matter is best summarised by Mr Brabazon’s evidence at T106:
It’s the case, isn’t it, that collection officers weren’t involved in legal processes; is that correct? --- Sorry ---
Collection officers were not involved in legal processes? ---Not – no, not per se.
So in terms of the process that was adopted if there were legal proceedings that would involve others in the organisation; is that so?--- Yes.
Once he became aware of the problem, Mr Brabazon reviewed the manuals, as a result of which he produced a new manual with the misleading parts excised.
It should be noted that, while the earlier manual did encourage misleading or deceptive conduct, it did not encourage collections officers to engage in unduly harassing or coercive conduct in the way in which that behaviour is described at [12]-[17]. Indeed, the manual repeatedly instructed collections officers to conduct themselves in a professional manner.
The manual did not stand alone. Each collections officer was given a phase of initial training. Mr Brabazon gave evidence of a process of on-going training consisting of ad hoc sessions as well as any additional training that might arise from a collection officer’s reviews.
ASIC did not submit that these training arrangements were unsatisfactory, although comparison with other operators of call centres might have suggested that regular training could be more structured. Nevertheless this was not suggested and I say no more of it.
Mr Brabazon gave this evidence about call monitoring:
Now, how often – are you aware – how often are calls monitored? --- Calls are monitored regularly – monthly – and/or when complaints are made.
And who’s primarily responsible for reviewing or monitoring calls? --- The section managers do the calls on the staff but if there’s a complaint that comes through to Mr Oates’ office then he listens to the calls.
Again, ASIC did not submit that this level of call monitoring was inadequate. Although I will not decide the matter on this basis, it does seem to me quite unrealistic to expect much adherence to the procedures now specified in the manual if operators are monitored so infrequently.
The upshot of this is that, as a result of Mr Brabazon’s review, there is now a manual in place which does not encourage misleading behaviour, a training régime whose particular aspects were not subject to criticism and a system of call monitoring not alleged by ASIC to be inadequate. When pressed, counsel for ASIC conceded that, since the introduction of the new manual, there was no evidence of any new complaints. This is consistent with the inference I am minded to draw that the new manual has largely eliminated the difficulties which had been identified insofar as misleading or deceptive conduct is concerned.
ASIC submitted that it was significant that ACM’s compliance officer had not been called. But the fact is that its chief operations officer – who rewrote the manual – was called. I do not quite see how ASIC’s submission advances matters. Mr Brabazon was cross-examined about the old manual and he accepted that it was inappropriate in many ways. This was unsurprising evidence since it had already been elicited in chief. He was not challenged on his evidence about training or call monitoring. In the absence of such an attack it is difficult to know how I would go about rejecting Mr Brabazon’s evidence on these matters or how a failure to call the compliance manager might aid in that process.
In the circumstances, I conclude that:
(a)the misleading or deceptive conduct which occurred was largely a function of the manual which was in place; and
(b)the manual has now been replaced and there is no evidence of any repetition of the former conduct.
A second important factual matter concerns the structure of the ACM group. The current entity operating the business is the second defendant, ACM Group Ltd. The business was formerly operated by the first defendant, Australian Control Management Services Pty Ltd. Both entities are ultimately under the control of Mr Humberto Vieira. Mr Brabazon’s evidence was that it had been decided that the business would be floated by way of an initial public offering (‘IPO’) but that the IPO had not proceeded. It was an aspect of the IPO that the business should be transferred from the first defendant to the second defendant. To that end an undated deed was executed assigning all of the debts owned by the first defendant to the second defendant. Mr Brabazon’s evidence was that the deed was executed in July 2009.
ASIC was sceptical of this evidence, suggesting obliquely instead that it was a device for avoiding the granting of relief. More than scepticism, however, would be needed to put a case that this was what had occurred. The groundwork for such an argument was not, in my opinion, in place.
In those circumstances, I conclude that:
(a)the transfer of the business was an aspect of an IPO which was abandoned;
(b)it had no impact on the day-to-day running of the business; and
(c)the business remains under the control of Mr Vierira and the day-to-day management of Mr Brabazon.
IV. THE TELEPHONE CALLS
ASIC’s case traced the trials and tribulations of eight debtors at the hands of ACM in some 96 separate calls. Each must be dealt with.
Before doing so it is useful to note some introductory matters about the evidence. ASIC is a regulator, of course, with compulsory powers of examination. It used that power extensively during its antecedent investigation. In particular, it examined a number of ACM’s employees including its call centre staff. Transcripts of these examinations, which were on oath, were taken. With only minor objection ASIC tendered the following transcripts (I have included a brief description of the employee’s position):
Wade Dennis
(Collections Officer)
Ex 8
Rebecca Thompson
(Collections Officer)
Ex 9
Alex Khalil
(Collections Officer and, later, Team Leader)
Ex 10
Ryan Clarke
(Collections Officer and, later, Team Leader and Section Manager)
Ex 11
Melissa Teuma
(Collections Officer and, later, Senior Staff Member)
Ex 12
Paul Brabazon
(Chief Operating Officer)
Ex 13
I did not find the way in which ASIC dealt with this material helpful. I was provided with a nine page document entitled ‘Important Passages of Employee Transcripts’ which contained 96 references. To give the flavour, one such entry read ‘Page 14, line 25 to page 16, line 17 – training’. There were 95 other such entries. What precisely I was meant to do with this sort of submission is unclear. In the end I have decided to ignore it. That luxury is not available in the case of the 96 telephone calls upon which both parties between them relied.
It is necessary then to deal with the position of each debtor.
(a) Debtor One
It appears that Debtor One formerly had a credit card debt with the Commonwealth Bank. ACM purchased this debt which, by the time it came into ACM’s hands, was in the vicinity of $21,690.13. Debtor One was initially entered into the collections system on 14 May 2008. The ACM Ledger entry for Debtor One is 13 pages long and records the many discussions which took place between her and various collections officers at ACM between 14 May 2008 and 8 July 2009. She was married but her husband was unaware of the existence of the credit card debt.
Ultimately, ASIC relied upon 21 individual telephone discussions. ACM also relied upon a number itself. There were, broadly speaking, seven ways in which ASIC alleged that ACM had engaged in misleading or deceptive conduct. These were that ACM had represented to Debtor One, her husband, her neighbour and her friend that:
(a)ACM employed ‘in-house lawyers’ (which it did not);
(b)ACM specialised in commencing legal proceedings against debtors for the recovery of debt (when it did not);
(c)ACM frequently commenced legal proceedings against debtors for the recovery of debts (when it did not);
(d)the matter had been referred to ACM’s lawyers for the purpose of commencing legal proceedings (when it had not);
(e)ACM had decided to, could and would commence legal proceedings shortly against Debtor One (when it had not, could not and would not);
(f)ACM was going to send Sheriff’s officers to serve documents upon her (when this was not so); and
(g)ACM was going to commence bankruptcy proceedings against Debtor One (when it was not).
It will have been noted that, above at [30], I have already rejected (a) on the basis that ACM does employ in-house lawyers. I there also rejected (e) to the extent that it suggests that ACM could not commence legal proceedings rapidly.
Additionally, ASIC also submitted that ACM had engaged in undue harassment or coercion by:
(a)threatening to inform Debtor One’s husband about her indebtedness (where Debtor One had already told ACM that her husband did not know and that she did not want him to know);
(b)threatening to call Debtor One’s friends and employer until she repaid the debt;
(c)threatening to have Sherriff’s officers attend her house to effect service (when this was not going to happen);
(d)threatening immediately to commence bankruptcy proceedings (when this was not going to happen);
(e)calling third parties (her employer, neighbour and friend) with the expectation that they would tell Debtor One that ACM had contacted them; and
(f)making the representations outlined at [50].
I set out below those portions of the transcript of the various calls upon the parties rely. For present purposes, a few features should be noted:
(a)the persistent suggestion that her husband would be informed of the debt (either directly or, in one case, by the suggestion he would work it out once the marked cars were on-site);
(b)the discussions which took place with Debtor One’s neighbour;
(c)the constant threat of legal action of various kinds; and
(d)the offensive nature of some of the remarks.
I now turn to the conversations themselves. I should say that the parties created a colour-coded chart indicating their position on each of the calls. The parts of each call in issue were extracted, which was useful, and then coloured yellow (if relied upon by ASIC), pink (if relied upon by both parties) or blue (if relied upon by ACM). Neither party made submissions about why any particular call was misleading or deceptive or unduly harassing or coercive. ACM did admit some of ASIC’s allegations in a likewise colour-coded pleading (although it did not do so extensively). In the end, it has been necessary to assess each call.
In Debtor One’s case there were 28 relevant calls.
Call 1: 27 March 2009
ASIC relied on this call. The following exchange took place:
Male speaker: [You will be receiving a letter soon] just about the transfer for your credit card outstanding debt to a litigation company, which is our company, ACM.
Debtor One: Okay.
Male speaker: Commonwealth [Bank] have sold a debt to us.
Debtor One: Okay
Male speaker: Okay. Now we are handling your affairs. We are a Legal Department, so basically Commonwealth Bank has exhausted all attempts to reclaim the amount. Now they’ve sent it to a Legal Department, which is our department.
…
Male speaker: It’s just that there is a legal case pending.
Two aspects of this are simply wrong. The recoveries officer was not in the ‘Legal Department’ of ACM, which was not a ‘litigation company’; there was no court case pending.
Misleading conduct is established.
Neither unduly harassing nor coercive conduct were established, however. As noted above at [14], unduly harassing conduct will be shown to exist where ‘the frequency, nature or content of approaches and communications from the debt collector were such that they were “calculated to intimidate or demoralise, tire out or exhaust a debtor”’. It will not be shown to exist where, as here, there is no more than a demand and a threat of legal proceedings. If, as here, legal proceedings are a legitimate option open to the creditor, I do not think that the mere communication of a threat of legal action, without more, can amount to unduly harassing conduct, even if the terms of the threat are misleading or deceptive. Furthermore, the conduct in Call 1 was not coercive because it did not attempt to remove Debtor One’s freedom to act: see [16] above.
Call 2: 31 March 2009
Both ACM and ASIC relied upon Call 2, which took place after Debtor One received the letter referred to in Call 1. It included the following:
Quang:We are planning to take this matter legal.
Debtor One: Yes.
Quang:…because the Commonwealth Bank has sold it to our company.
Debtor One: Yes.
Quang:We specialise in litigation, so we will take this matter to Court, and the judge will ask you for receipt and your accounts details to see whether you are – you are – you can pay.
…
Quang:Now, [Debtor One], I need documents, of course, because we are a Legal Department; a stat dec. Can you get your hands on a stat dec?
…
Quang:They wouldn’t have sent it to a Litigation Department.
Debtor One: Okay.
Quang:Because we are not from the bank, we don’t…
Debtor One: Yes, I…
Quang:…deal with customer service.
Debtor One: Sure.
Quang:We just take debtors to court and have that dealt [with] there.
Although there were cases where ACM did escalate matters to its Legal Department this was not one of them; nor is there any evidence which suggests that as at this date there was any proposal to escalate the matter in that way. It was misleading to suggest that there was such a proposal, just as it was misleading to claim that ACM was a company specialising in litigation and that the caller was from the Legal Department. This was not the case.
The call was not unduly harassing or coercive for the reasons given in relation to Call 1.
Call 3: 3 April 2009
Both ACM and ASIC relied upon Call 3. It included the following:
Male speaker: Have you spoke to your – I believe your husband [name given] – [name given]?
Debtor One: No.
Male speaker: No. Is he aware of – is he aware about your debt?
Debtor One: No.
Male speaker: Obviously you want this to be kept under the rug.
Debtor One: Oh, definitely, yes.
There was nothing misleading about this exchange, nor do I think there was anything unduly harassing or coercive about it, when considered in isolation. However, as will be seen, the information gleaned by ACM from this exchange, which was recorded in ACM’s Ledger Report for Debtor One, was used in subsequent calls to harass and coerce Debtor One. The call was not itself harassing or coercive, but it did lay the groundwork for subsequent unduly harassing and coercive conduct.
Call 4: 8 April 2009
Both ACM and ASIC relied upon Call 4. It included the following:
Male speaker: Yes. I just need to know yes or no. If it’s no, then we might proceed with legal action.
This expressed as a remark about what might happen in the future. No attempt was made before me to submit that in Debtor One’s case there was any prospect of this. I accept that, in a small number of cases, litigation did occur, but it was not explained what the circumstances were which might trigger such action. In those circumstances I cannot find that this statement – admittedly couched in somewhat uncertain terms – had a reasonable basis. It was accordingly misleading.
The call was not unduly harassing or coercive for the reasons given in relation to Call 1.
Call 5: 17 April 2009
ASIC relied upon this call. It included the following:
Male speaker: Yes, I understand. It’s just that this matter is on the brink of going legal, that’s why I’m giving you a call about that many times, but I’m – I’m willing to give you until the 27th…
…
Male speaker: It’s just that – it’s just that on the 27th I’ll tell the Legal Department if I don’t receive a result it will go legal.
Debtor One: Okay.
Male speaker: It is a big amount, [$]21,000. If this does go legal, we will serve a Statement of Liquidated Claims…
Debtor One: Okay.
Male speaker: …at your address, with two Sheriffs.
Debtor One: Okay.
Male speaker: So you can sign off the paper, and they’ll tell you when you – when the matter will be going to court, and it’s just that it – I know you don’t want your husband to know, but it’s just that when that happens, when there’ll be a marked – a marked car going down your driveway, to hand you those letters, I am sure he would finally realise there is a problem. Have you spoken to your husband about – maybe he can help you out.
…
Male speaker: …it’s just that our Legal Department knows that either the property that you have at – just let me pull your file – at [address given] belongs to …
Debtor One: Right.
Male speaker: …either you or your husband, so we know that you own property, and we also know that you work full time; so – do you know you are in a position to pay us that debt this – this debt you owe, and they will enforce – enforce that law on to you.
Debtor One: Okay.
Male speaker: Unfortunately.
Debtor One: I (indistinct).
Male speaker: Like I said, I’m just doing my – my – my job. I – I am not going to enforce it myself, but the lawyers here, the solicitors here, they are going to enforce it.
…
Male speaker: It’s just that we are not with a bank, we just require payment in a week or so, but I’ve been sticking my neck out for you, and I said, you know, ‘This lady’s genuine, just give her more time, I am sure she’ll come up with the money’.
…
Male speaker: Okay, I’ll put that on my notes [that you will be calling back on the 27th] and I’ll update our Legal Department in regards to that matter, all right?
This was misleading. The collections officer was not going to tell the Legal Department and it is not shown that the matter was about to ‘go legal’; a statement of claim was not about to be issued; the Sheriffs were not coming; the lawyers were not about to act; the speaker was not going to update the Legal Department.
The suggestion that there would be a marked car at Debtor One’s house with two Sheriff’s officers, when combined with the observation that the collection officer knew that the debtor did not want her husband to know of the situation, was, in effect, a tactic by which the officer sought to intimidate the debtor and suborn her will. It was thereby unduly harassing and coercive.
On the other hand, the references to Debtor One’s home ownership were neither unduly harassing nor coercive. Legal proceedings followed by enforcement against Debtor One’s property was a legitimate option for ACM: see [14].
Call 6: 28 April 2009
ASIC relied upon this call. It included the following:
Quang:Yeah. The thing is, [Debtor One], listen, I’m being – I’ve been getting grilled by our legal team…
Debtor One: Yes, okay.
Quang:…last week and just the last couple of days…
Debtor One: Yes.
Quang:…asking why haven’t I proceeded with legal action against you.
…
Quang:…but I’m telling you the Legal Department will be overtaking this case…
Debtor One: Okay.
Quang:…maybe in three or four days. They’ve already conducted a land title search. They know that [name given], your husband…
Debtor One: Mmm-hmm.
Quang:…owns the property at, I believe, [address given]…
Debtor One: Mmm-hmm.
Quang:Yes, and now they are just gathering evidence whether it is more – more – more reasonable to take legal action against you.
…
Quang:Whether it will be over – overwritten by the Legal Department, I do not know.
…
Quang:Because it’s just that we litigate matters. We don’t operate like the bank, where we just provide customer service and, ‘Oh, yes, we’ll give you one week’, and then another week and another week. We just take it legal.
This was misleading. The collections officer was not being ‘grilled’ by the legal team and legal action was not imminent; nor was the Legal Department about to take over the case in 3 or 4 days. The image projected that what ACM did was to litigate matters was not correct: this is not how it did business.
In the context of the previous calls, the reference to the debtor’s husband was a veiled threat to expose her to him. For the reasons previously given it was unduly harassing and coercive. For the reasons given in relation to the previous call, however, the reference to home ownership was neither unduly harassing nor coercive.
Call 7: 6 May 2009
Both ASIC and ACM relied upon Call 7. It included the following:
Quang:Yes. Legal action will commence in 48 hours, which Court documents will be drafted up against your name, have that…
Debtor One: Right.
Quang:…stamped in the Magistrates.
Debtor One: Right.
Quang:That becomes a legal document, and then we will serve it at your address with two Sheriff’s officers in a marked car.
This was misleading: legal action was not imminent. ‘The Magistrates’ had not stamped the process, nor were they going to. The Sheriff’s officers would not be there in a marked car.
For the reasons given in relation to Call 5, the references to Sheriff’s officers and marked cars was coercive.
Call 8: 7 May 2009
ASIC relied upon Call 8. It included the following:
Quang:But, like the letter says, legal documents have been drafted up. It just needs my approval to go ahead and get it stamped at the Magistrate’s to become a Court document.
This was misleading for the same reasons as the previous call, but it was not unduly harassing or coercive for the reasons given in relation to Call 1.
Call 9: 11 May 2009
Both ASIC and ACM relied upon Call 9. It was as follows
Quang:…and I’ve spoken to my Legal Department.
Debtor One: Please, just this one last chance, to Wednesday, please.
Quang:But, [Debtor One], don’t take this personally, it is not me who’s on the matter.
Debtor One: I know.
Quang:It’s our Legal Department.
…
Quang:I could suggest it, but if [the Legal Department] choose – they’ve already drafted up documents, they are just in the process of collecting more information on your property. Now, I’ll speak to them but, again, this is [a] $22,000 case.
…
Quang:…there’s a 90% likelihood that you will come back to me and say that you need more time, and that they are free to just do whatever with the case because that – they – they are looking at recovering that $22,000…
Debtor One: Yes.
Quang: …legally…
Debtor One: Yes.
Quang:…and they are quite confident, I’m telling you.
…
Quang:But, okay, look I’ll put up a suggestion. We are having a meeting today, just to vote on whether – how this case is going.
…
Quang:I’m just telling you right now, we – we do – we are just still ascertaining the legal documents. It’s just that if – if you’re, you know, delaying it more then the ball keeps rolling and soon it will snowball and, unfortunately, it will – it will not be in my hands…
This was misleading. Legal action was not imminent; the matter had not been referred to lawyers. It was not unduly harassing or coercive for the reasons given in relation to Call 1.
Call 10: 13 May 2009
Both ASIC and ACM relied upon Call 10, though neither party drew my attention to any part of it. It was a call placed by ACM to a business where Debtor One apparently used to work, but whose employ she had left by the time of the call. I have reviewed the call and find nothing improper. ACM did not mislead the business, nor was it unduly harassing or coercive towards it. As Debtor One was unaware of the call, it cannot have misled her or unduly harassed or coerced her.
Call 11: 13 May 2009
Both ASIC and ACM relied upon Call 11. It included the following:
Quang:Yes. Listen, I’ve kept up with my word. I’ve waited a long time. Unfortunately, I’m going to hand this case to my solicitors.
…
Quang:It is not a $2,000 or $200 case, it’s a $22,000 case, which you have a whole team waiting on my authority to…
Debtor One: I know.
Quang:…process legally.
…
Quang:[Debtor One], we’ve played it your way, can you play it my way? At least play with one – I’m not forcing you. Look, I can hold off legal action, I can hold off my authority to sign off to let our solicitors handle the case but I need a figure [that you can commit to paying by Friday].
…
Quang: If I take this back to my solicitors, I’m telling you, the whole room will be laughing at me because I – I – I am giving someone – someone who owes money, a debtor, so many chances when I know you are going to fall through, and our solicitors have been working in this industry for 20 years and we’ve seen so many excuses that – no kidding – that they always fall through.
…
Quang:Okay, and I’ll go back to my solicitors saying that I took a stat dec and I can hold you liable. In that way I could save my arse, and in that way you’ve – you’ve got your extension, so there’s a win/win situation there.
This was misleading. It implied a fictional interaction with the Legal Department.
For the reasons given in relation to Call 1, there was no unduly harassing or coercive conduct.
Call 12: 15 May 2009
ASIC relied upon Call 12. It included the following:
Debtor One: Well, my husband’s just rang and said that someone – you’ve called.
Quang:Our litigation…
Debtor One: He’s talking…
Quang:One of our Litigation Department called.
I take from this that the collections officer had made good his threat to speak to the husband. This was not coercive. It was rather what occurs after coercion has failed. I have no doubt in this circumstance this was a species of harassment. The question is whether it was ‘undue’ harassment. In my opinion this was improper conduct. The debt was unrelated to the husband. The likely – although not inevitable – consequence of contacting the husband was marital strife. One does not need to determine whether it was wrong to interfere with the debtor’s relationship with her husband. It suffices instead to observe that it was certainly wrong to interfere with the husband’s relationship with the debtor. He was a third party who should not have been involved. This was undue harassment.
Call 13: 15 May 2009
ASIC relied upon Call 13, in which ACM called one of Debtor One’s neighbours. It included the following:
Male speaker: Yes, hello. Is this the residence of – of [address given]?
Neighbour:Yes.
Male speaker: Yes. How are you going? Do you know the [surname given] family at [address given] – if their phone is working – the [surname given] residence?
Neighbour:[Surname given], yes.
Male speaker: Yes, if their phone is working, your neighbours?
Neighbour:Their phone?
Male speaker: I’m – I’m calling from ACM Group, the Litigation Department. I have an urgent civil message for them, and unfortunately the council advised me the phone is cut – is temporarily unavailable.
Neighbour:Oh.
Male speaker: Yeah, is it possible for you to pass on a message for me?
Neighbour:Yes, well, I can do that.
Male speaker: It’s quite – it’s quite urgent and we need an answer by five o’clock today.
…
Neighbour:ACM.
Male speaker: That’s correct.
Neighbour: Yes.
Male speaker: Legal Department.
Neighbour:Legal.
…
[The Male speaker asks the neighbour to pass a message on to Debtor One’s husband to call ACM]
Male speaker: Yes, that will be great. That’s my message. Very simple. Just for [Debtor One’s husband].
This was misleading. The call was not from the Legal Department. Contacting the debtor’s neighbour and asking him to pass a message to the debtor’s husband, as opposed to the debtor, was also a distinctly unsavoury tactic. It was both a species of harassment and coercion, showing that they are not dichotomous. It was quite unacceptable to be involving third parties in these machinations. It carried with the implicit suggestion that such exposures might be expected in the future. As harassment, it was undue.
Call 14: 15 May 2009
ASIC relied upon Call 14. It included the following:
Quang:Yeah. The thing is [my supervisor, Connie,] told me, before she left [to go to a court meeting], that the instructions she gave you would stick; like, she says she spoke to you before that – I spoke to you a couple of days ago, that I’m handling the matter with our Legal Department, and I already passed on the file.
…
Debtor One: Yes, someone – someone has called [my husband], and I am not – someone’s called around and rang my next-door neighbour or something, and they’ve…
Quang:I believe that…
Debtor One: …told my husband.
Quang:No, we – I believe our investigation wasn’t telling your husband, it was just – we left a message to get in contact with you.
…
Quang:And now I believe your husband knows about it, the better, because you can inform him about the case together, and what you will do about it, in this account.
…
Quang:So, again, even though you don’t appreciate how our Investigation Department has gone about in contacting you, but as well – we – you know, we didn’t breach Privacy Act because we didn’t tell your husband about your debt, we just told him that it was an urgent matter.
…
Quang:So provide me with a stat dec on Monday, I’ll forward it to our Legal Department…
This was misleading insofar as it referred to the Legal Department. The provision of free marriage counselling was inappropriate, but neither unduly harassing nor coercive.
Call 15: 15 May 2009
ASIC relied upon Call 15, in which Debtor One’s husband responded to the message left with his neighbour. It included the following:
Debtor One’s husband: Apparently a neighbour of mine got a call…
Shell:Yep.
Debtor One’s husband: …from a woman that was trying to contact me, but she managed to contact my neighbour, but I don’t – and he said it’s a civil matter, but I’ve got no idea what it’s about.
Shell:Okay. Can I just get your full name?
Debtor One’s husband: [Name given].
Shell:[Debtor One’s husband]. Okay. Okay. Okay, and what was your date of birth, [Debtor One’s husband]?
Debtor One’s husband: [Birth date given].
Shell:[She spells Debtor One’s husband’s name].
Debtor One’s husband: Yes.
Shell:Mmm.
Debtor One’s husband: Who am I talking to? Is this a company or…
Shell:We are a litigation company.
Debtor One’s husband: A what, sorry?
Shell:A litigation company.
Debtor One’s husband: Litigation?
Shell:Yes.
Debtor One’s husband: I can’t hear you, you’ve gone – your voice has gone really…
Shell:Can you hear me now?
Debtor One’s husband: Yes.
Shell:Yep. We are a litigation company.
Debtor One’s husband: Okay.
…
[Shell, who answered the call at ACM, transfers Debtor One’s husband to Quang]
Quang:Yes, I’m trying to get in contact with [Debtor One], but unfortunately I think her phone’s switched off. Is it possible I leave a message with you so you can pass it on to her?
…
Quang:It’s a legal matter…
Debtor One’s husband: Mmm-hmm.
Quang:…and due to – due to privacy reasons, I can’t really tell you, because I’ll be breaching certain articles of the Privacy Act…
Debtor One’s husband: Uh.
Quang:…but if you could leave her a – a message…
Debtor One’s husband: Mm-hmm.
Quang:…and get her to call us back…
Debtor One’s husband: Yes.
Quang:…that would be fantastic, but it’s a very urgent legal matter.
…
Quang:Because I’ve got – I’ve got strict instructions from our solicitors to pass the message on to her.
…
Quang:Okay. Well, she can call and speak to our Legal Department, and anyone there could just pick – pick up the call and handle her matter, or basically the person that is on the letter.
…
Quang:Yes, ACM Group, Litigation Department.
…
Quang:…okay, or within 48 hours, because it is an urgent matter and needs to be addressed with her.
This was misleading: ACM was not a litigation company; the speaker had no instructions (strict or otherwise) from the solicitors. It was also harassment of an undue kind to be contacting the husband for the reasons given in relation to Call 12.
Call 16: 15 May 2009
ASIC relied upon Call 16. It included the following:
Quang:…if you can help yourself, and my solicitor’s had a good look at your file, and he has advised me to assist you and, again, you must understand how important it is that you pay this amount.
…
Quang:I need – I need to pass – I need to pass you on to one of my legal – legal advisors. Can I put you on hold, please?
Debtor One: Well, I have to go, but can I ring you back at 2.30. I have – I’ve got to go back to work now, so I’ll ring you back at – between two and three.
Quang:Well, look, I’ll – look, I’ll tell you what I’ll do. I’ll pass the file on to my legal advisor. Unfortunately, I can’t help you any more.
Debtor One: Please, just give me a little bit more time, Quang. I’m trying to get this all together.
Quang:Yes, I need you to speak to my legal advisor at the moment.
Debtor One: Yes, but I have to go to work. I will call you back. As I always said, I always do, you know…
Quang:Well, call – call back at 2.30…
Debtor One: Okay.
Quang:…and I’ll pass you on to my legal advisor…
Debtor One: All right.
Quang:…because I am not handling this account any more.
This was misleading. There were no legal advisers. It was not unduly harassing or coercive for the reasons given in relation to Call 1. However, as the next call shows, the collections officer was passing the matter on to someone else.
Call 17: 15 May 2009
ASIC relied upon this call. Before setting the next call out it is worthwhile noting that the transcript does not capture the tone of Connie, who appears to have been Quang’s supervisor. By turns rude, condescending and vicious, no description of this call (and some of her later efforts) can adequately capture the offensiveness involved.
Call 17 included the following:
Connie:Is your husband a secondary cardholder on this?
Debtor One: No, no.
Connie:Does he know about this card?
Debtor One: No.
Connie:No. That’s why you are scared?
Debtor One: Yes.
…
Connie:The only time [a previous debtor] acted on her account, was when she was served with papers to take her home. Do you understand?
…
Connie:We are going to be serving you with papers.
Debtor One: Okay.
Connie:And we don’t necessarily have to serve you in person. We can then turn up to your family home and serve your husband with them papers, and then he will find out.
…
Connie:Right. And [your house is] in your name and [your husband’s name].
…
Connie:We are going to start legals, and you will be served at [address given].
…
Connie:But at the moment when you go to court, all the Magistrate’s going to see [is] that you’ve been nothing but promises, broken promises, and you know how much your – it’s – you know how much it’s for, this debt?
…
Connie:Right. Who’s Lisa [full name given]?
Debtor One: She’s a family friend.
Connie:We’ve actually even tried to get in touch with her to get this sorted out.
…
Connie:We never got through to her, but we’ve actually got a number here to ring her.
…
Connie:I would be on your red alert now, because if you really didn’t want you husband to know about it…
Debtor One: Yes.
…
Connie:…he’s not only going to find out about it, he’s going to lose his home over it, let me tell you.
…
Connie:And [your husband] will lose his house over it. That’s how – that’s how critical it is. I am not talking [$]2,000.
…
Connie:Mm. Okay. This gets more and more suspicious, this conversation. [You have given us a] PO Box [number, instead of an address], [you have told us that] you are staying here, [you have told us that] you are not working, [you have told us that] you are working casual. We are really, really going to have to subpoena you to court to tell us everything, I think.
…
Connie:But you have never done anything about [the debt]. We’ve – we’ve even got calls here recorded from [Commonwealth Bank] Collections, and the same story – you promised, you promised. They’ve even tried to contact your husband, did you know that?
…
Connie[Telephone number provided]. They tried to contact [name provided]. [Name provided] is your husband, isn’t he?
…
Connie:Yeah, well, there you go. Eventually…
Debtor One: I know, I know, and that’s – that’s what – I know I keep saying I know, and I’m sorry, because I just don’t know what else to say to you at this stage, but please – please, leave it with me, and I will – please, just give me the benefit of the doubt, and I will…
…
Debtor One: On Monday I’m going to get you a stat dec.
Connie:And what’s that stat dec going to say?
Debtor One: It’s – the stat dec is going to say that I promise to pay…
Connie:‘I promise to pay’.
This exercise in unpleasantness conveyed several misleading statements: that papers were going to be served (they were not); that legal action was about to be commenced (it was not); that Magistrates would soon be involved (they would not).
It contained at least two threats: a threat to bring the debtor’s husband into the whole picture and a threat to bring a family friend into the matter. For reasons already given in relation to Calls 5 and 6, this was both undue harassment and coercion.
Call 18: 18 May 2009
ASIC relied upon Call 18. It included the following:
Connie:What we are going to do is we are going to serve you with bankruptcy papers, okay?
…
Connie:I’m going to do it today. Probably in the next couple of days you will get them at the home address.
…
Connie:No, we’ve been giving you – this is the conversations that go on and on and on, that’s why Quang’s put it on to me because he’s just absolutely given up. Now, I’m following it through, I’m following it through. Okay? It was me that asked Quang to organise who your neighbour was, and to get in touch with your husband. We have to do something. We are not having any more broken promises. Do you understand, [Debtor One]?
…
Debtor One: I understand what you are saying.
…
Connie:We are back to square one, so how about I take the next step…
Debtor One: No, can’t you…
Connie:…and do the bankruptcy. That way you will have to…
Debtor One: We were discussing…
Connie:…do something about it.
…
Connie:There’s enough equity in the family home, I suggest you put it up for sale, the home, and you pay your debts, but in the meantime we’ll issue you with bankruptcy papers, therefore you will have no choice but to do that, okay?
This was misleading. Bankruptcy proceedings were not about to be commenced. For the reasons given in relation to Call 1, it was neither unduly harassing nor coercive.
Call 19: 22 May 2009
ASIC relied upon Call 19, which was from ACM to a family friend of Debtor One’s, the ‘Lisa’ referred to in Call 17. It included the following:
Connie:That’s good. I was wondering whether you could help me. I’ve got an application form here in front of me regarding [Debtor One and her husband] – or [Debtor One]. Do you know of a [Debtor One]?
Lisa:Yes, I do.
Connie:I’m trying to locate her work. Do you know where she’s working at the moment?
Lisa:May I ask what this is about?
Connie:It’s a legal matter, a civil matter.
Lisa:Okay.
Connie:Yes, she’s put your name on the application form.
Lisa:Oh, okay. I’d have to talk to her about this, I think.
Connie:Oh, would you?
Lisa:Yes.
Connie:Okay. Because – what about [her husband], can you get [her husband] to give me a call as well, her – her husband?
…
Connie:Yes, sure, it’s Connie from ACM Legal Group in Sydney.
Lisa:ACM Legal…
Connie:Legal…
Lisa:Yes.
Connie:…Group, regarding a civil matter.
Lisa:Yes.
Connie:I’ve been in touch with her the last couple of weeks, but she’s not answering her mobile.
Lisa:Okay, yes.
Connie:I just wanted to know if she’s okay, firstly, but I need to talk to her urgently.
Lisa:Okay.
Connie:And if you could let her know that I’ve got your number too, to ring you whenever she – you know, she’s not available or whatever.
Lisa:So what am I to do about the matter…
Connie:No. Well, she’s put your name down on the application form.
…
Connie:Okay, because – yes, I need to talk to her urgently, or if you could let [her husband] know that Connie called. One or the other would be great.
This suggested, erroneously, that ACM was some kind of legal firm. In that way it was misleading. Although, by itself, I would not regard the reference to the matter being a ‘civil’ matter as by itself misleading, in the context of the reference to the ‘ACM Legal Group’ it was likely to convey an impression that litigation was involved and was therefore misleading. This is unsurprising given that this is what the manual suggested should be conveyed.
This was misleading. No court papers were being drawn up and service was not about to happen. Despite being, again, a highly uncivil conversation, it was not unduly harassing or coercive. The rudeness went in both directions.
Call 78: 26 June 2009
ASIC relied upon Call 78, which also took place between Jade and Debtor Seven’s mother on the same day. It included the following:
Debtor Seven’s mother: Right. I just went in touch - got in touch with [the National Australia Bank], spoke to gentlemen there. He said it has been passed over to [the National Australia Bank], they have it but he said it takes two weeks to come across and he said someone will be ringing today your compliance manager in there and advising them to stop all action on the account and that’s what they have informed me this morning.
…
Debtor Seven’s mother: You’re – you’re filing something in court that not – should not be there.
Jade:Did I say that? Did I say that? You’re putting words in my mouth now. What I did say was…
…
Jade:I said I was drawing up the papers, yes, I was.
Debtor Seven’s mother: Right. Well, that’s what I said. If…
Jade:Doesn’t mean it’s going to go to court straightaway.
This was misleading and deceptive – there were no papers being drawn up. I do not find undue harassment or coercion. I must say, though, that the rudeness from both parties, by this time, had reached significant levels. I found the following remarks from Jade particularly distasteful:
Debtor Seven’s mother: Please, be reasonable. I’m not to know [that the National Australia Bank have not yet contacted ACM to notify you that they are buying the debt back]. I don’t know how long things take. I’m in a – a retail furniture store. I’m home on a rostered day off today. I’ve got my son vomiting his heart up out there since – because he heard about what you said about…
Jade:Oh, look, [Debtor Seven’s mother], you telling me your son’s vomiting his heart out because what I’m telling you…
Debtor Seven’s mother: (Indistinct).
Jade:…it’s totally irrelevant.
Debtor Seven’s mother: Isn’t irrelevant. He’s got…
Jade:Give him a bucket, then. Him vomiting’s got nothing to do with me.
Debtor Seven’s mother: That’s why he’s doing it because he’s stressed, he’s got a mental depression.
Jade:I don’t care – [Debtor Seven’s mother], unfortunately your son vomiting has got nothing to do with what we are talking about…
Call 79: 26 June 2009
ASIC relied upon Call 79. It included the following:
Jade:And that’s fine. All I’m saying to you is I can’t stop any legal proceedings until [the National Australia Bank] contact me.
…
Jade:It’s not my fault your son is vomiting.
Debtor Seven’s mother: He is stressed, mentally ill, stressed.
Jade:And that’s unfortunate.
Debtor Seven’s mother: For (indistinct).
Jade:It’s not – you’ve got to understand, [Debtor Seven’s mother]. It’s not me, I’m not the solicitor.
This was misleading: there were no legal proceedings and no solicitor. It was not, however, unduly harassing or coercive conduct.
Conclusions on Debtor Seven
Debtor Seven’s debt was ultimately bought back by the National Australia Bank, apparently at the urging of his mother. I was told at trial that this was for reasons of hardship which, as has been seen, fell on deaf ears at ACM.
I conclude that ACM engaged in misleading and deceptive conduct in relation to Debtor Seven. Specifically, I find that ACM engaged in misleading or deceptive conduct by representing that:
(a)ACM was proceeding to bankrupt Debtor Seven, a process that would involve his house being repossessed;
(b)the matter had been referred to ACM’s lawyers; and
(c)ACM had decided to and would commence legal proceedings shortly against Debtor Seven.
I can see no representations in the passages I was taken to to the effect that:
(a)ACM specialised in commencing legal proceedings against debtors for the recovery of debt; and
(b)ACM frequently commenced legal proceedings against debtors for the recovery of debts.
Despite the claims by Debtor Seven’s mother about her son’s medical condition, I am not prepared to use that as a basis for a conclusion about undue harassment or coercion.
(h) Debtor Eight
Debtor Eight is a public servant. She owed three debts that were transferred to ACM:
(a)a debt of $4,531.55 owed on a National Australia Bank MasterCard, which first appeared on the ACM Ledger Report on 11 February 2008;
(b)a debt of $658.94 owed on a National Australia Bank Visa card, which first appeared on the ACM Ledger Report on 8 October 2008; and
(c)a debt of $9,935.11 that was initially owed to the Commonwealth Bank in respect of a Variable Rate Personal Loan. This debt first appeared on the ACM Ledger Report on 30 April 2009.
ACM were seeking to extract, therefore, a total of $15,125.60 (plus any interest and late fees that might accrue) from Debtor Eight.
My attention was drawn to seventeen calls. ASIC alleged that, in those calls, ACM had engaged in misleading or deceptive conduct by representing to Debtor Eight, her mother and her father that:
(a)ACM employed ‘in-house’ lawyers (when it did not);
(b)ACM specialised in commencing legal proceedings against debtors for the recovery of debt (when it did not);
(c)ACM frequently commenced legal proceedings against debtors for the recovery of debts (when it did not);
(d)the matter had been referred to ACM’s lawyers for the purpose of commencing legal proceedings (when it had not); and
(e)ACM had decided to, could and would commence legal proceedings shortly against Debtor Eight (when it had not, could not and would not).
ASIC also alleged that ACM engaged in unduly harassing or coercive conduct by:
(a)calling Debtor Eight’s mother in an attempt to put pressure on Debtor Eight, including by threatening to commence legal proceedings; and
(b)making the representations referred to in the previous paragraph.
Call 80: 14 July 2009
ASIC relied upon Call 80. This was a voicemail message left by ACM which included the following:
Clarizze:Please be advised this is in regards to a civil matter that requires your urgent attention.
I do not regard this as misleading, although it teeters on the brink. It was not unduly harassing or coercive.
Call 81: 14 July 2009
ASIC relied upon Call 81. It was another voicemail message that included this:
Female Voice: …please contact ACM Group in regards to a very, very urgent legal matter that we need to discuss.
Again, I do not regard this as misleading, although it is close. It was not unduly harassing or coercive.
Call 82: 20 July 2009
ACM relied upon Call 82, in which ACM called Debtor Eight’s father. It was not submitted to me by ASIC that there was anything inappropriate about that fact. The call included the following:
Rachel:All right, no problem.
Debtor Eight’s father: Now we’re square, aren’t we?
Rachel:Pardon?
Debtor Eight’s father: She’s square with you now?
Rachel:Yes, yes.
Debtor Eight’s father: Well, that’s the important thing.
Rachel:Yes, everything is fine at our end.
Debtor Eight’s father: Thank you. You’ve been very professional.
There is nothing inappropriate in this exchange.
Call 83: 16 December 2009
ASIC relied upon Call 83. This was another voicemail message that was left for Debtor Eight and included this:
Female Voice: …regarding your reference number [number given], and it’s an urgent legal matter.
This was not misleading. It was not unduly harassing or coercive.
Call 84: 4 January 2010
ASIC relied upon Call 84, another voicemail message. It included the following:
Female Voice: …in regards to an urgent legal matter.
This was not misleading or unduly harassing or coercive.
Call 85: 4 January 2010
Both ASIC and ACM relied upon Call 85, in which ACM called Debtor Eight’s mother. It included the following:
Emily:Yes, hi, is that [Debtor Eight’s mother]?
…
Emily:Well, [ACM is] a credit management group. In relation to account – it’s a legal matter, I really can’t discuss it with you due to the Privacy Act.
…
Emily:Well, it’s got to do with one of her accounts and it’s pending…
Debtor Eight’s mother: What sort of account?
Emily:…for legal action.
Debtor Eight’s mother: Sorry?
Emily:It’s pending for legal action. It has been passed on to us…
…
Debtor Eight’s mother: How soon is this legal action – are you allowed to say the vicinity of the amount?
Emily:No. You can ask her, she’s your…
Debtor Eight’s mother: You’re not after her for a dollar, are you?
Emily:Sorry?
Debtor Eight’s mother: Are you going to be after her for a dollar?
Emily:What do you mean ‘after her for a dollar’? No, we’re talking about…
Debtor Eight’s mother: The point is are we talking about the general vicinity?
Emily:We’re talking about several thousand.
Debtor Eight’s mother: Huh?
Emily:We’re talking about several thousand.
Debtor Eight’s mother: Okay.
This was misleading in that there was no ‘pending’ legal action. It was not unduly harassing or coercive. The context of the call included the fact of an earlier non-objectionable discussion with the father and the operator’s initial reluctance to discuss the matter.
Call 86: 4 January 2010
ASIC relied upon Call 86, which was another voicemail message. It included the following:
Female Voice: …regarding an urgent legal matter…
This was not misleading or deceptive or unduly harassing or coercive.
Call 87: 4 January 2010
ASIC relied upon Call 87, which was another voicemail message. It included the following:
Female Voice: Hi [Debtor Eight]. Just to let you know our fax number for your stat declaration form is [number given]. Again, that’s [number given], and I’m expecting that stat dec by 5pm tomorrow. Okay then. Great, thank you, bye.
This was not misleading or deceptive or unduly harassing or coercive.
Call 88: 4 January 2010
ASIC relied upon Call 88, but did not specify any particular passage in it. I have reviewed the call and find nothing improper.
Call 89: 5 January 2010
ACM relied upon Call 89, in which Debtor Eight called ACM. It included the following:
JohnOkay, all right.
Debtor Eight: I have kind of disclosed everything in the fax there, if you read it. I suffer from a psychiatric illness, which is what has caused the problem in the first place.
John:All right, okay.
Debtor Eight: Now that that has stabilised, I’m somewhat overcommitted, do you know what I mean?
John:Yeah, it takes you a while to get back on your feet after something like that, doesn’t it?
Debtor Eight: Yeah, and I need to make sure that I leave enough for my medication and also my health cover as well, that covers me for psychiatric, so it’s important from a health perspective. Otherwise, I’ll go off the rails completely. So I just want to put something that’s in good faith that I know I can commit to and then if down the track I make a different arrangement, I’ll do that. You can see I’ve made a lump sum in the past.
John:Yeah.
There was nothing inappropriate about this.
Call 90: 16 June 2010
ASIC relied upon Call 90 but, again, did not specify any particular part. I have reviewed the call and find nothing inappropriate.
Call 91: 16 June 2010
Both ACM and ASIC relied upon Call 91. It included the following:
Debtor Eight: …because I suffer from severe case of bipolar…
…
Greg:Okay. Well, we can’t stop you from paying your account, but I consider this is one of our legal accounts now and the amount you owe is [$]10,283.
…
Greg:Yeah, I can’t put you back on the arrangement, I’m sorry because from what I can see, this is to go to legal (indistinct).
…
Greg:Well, that’s your choice, but this account has been marked for legal action, so I can’t help ya.
…
Greg:I can give you a fax number, it’s on every letter that you received from us.
Debtor Eight: Okay. Can you provide that to me again?
Greg:But what’s the difference? What are you trying to achieve, I don’t understand, by you writing that you have bipolar or something like that? Is that what you’re trying to write to us?
…
Greg:It’s what is requested by solicitors on this file, from what I can see, and I’m only relaying the message back.
…
GregSo why then don’t you just go bankrupt?
Debtor Eight: Pardon?
Greg:Why don’t you just go bankrupt?
…
Greg:But you do realise if the company goes legal and if they proceed with bankruptcy, it’s going to be an issue at a later stage, don’t you think?
It was misleading because legal action was not about to commence and solicitors were not involved. Whilst it was certainly insensitive to suggest that Debtor Eight’s mental illness was irrelevant, I do not think, all things considered, that it was unduly harassing or coercive.
Call 92: 16 June 2010
ASIC relied upon Call 92, but did not draw my attention to any particular part of it. I have reviewed it and there is nothing inappropriate.
Call 93: 17 June 2010
Both ACM and ASIC relied upon Call 93. It included the following:
Debtor Eight: Okay. I’m not planning for either of these things to happen, but aside from any of that, I would also just like an indication of what the status of the matter is at the moment, like where it is with you guys and at what point, what date, that you have set for it to to be referred to civil action.
Freg:I can’t give you a date.
Debtor Eight: Why not?
Greg:Because I haven’t signed off on [legal action] yet.
…
Greg:Well, being honest with you, if you’re going to make the payment by the 30th, there is no reasonable agreement that has been reached by the 30th of this month, then I will be signing that off.
…
Debtor Eight: …will stay any further proceedings, I will then be able to assess which option I can take and I will take those promptly.
…
Greg:…The offer one is 50 per cent of the debt and no legal proceedings go on, if you don’t breach the arrangement. That’s how it works anywhere.
…
Greg:(Indistinct) I work up to 9 o’clock. If I have to go to court, I come back, that’s it.
…
Greg:I can’t give you a day [that legal action will commence] because I haven’t signed off on it.
…
Greg:How can someone provide you with a date if it hasn’t been issued yet, do you know what I mean? (indistinct) to everyone else to get it stamped and then we can only advise of you a date.
…
Greg:Which I will go and speak to my solicitors and see if they will approve it by the 30th. If not, then nothing is going to happen about it.
…
Debtor Eight: But once a demand for legal action has been made…
Greg:Yeah.
Debtor Eight: …there is usually a required time frame, a reasonable time frame.
Greg:2009 (indistinct) 12, that’s the time frame, the write-off date.
Debtor Eight: So I don’t even understand what I am having a conversation with you, what the status of this matter is, and that’s all that I want to know.
Greg:I just don’t understand what you – you wanted a settlement offer, I gave you settlement offer.
Debtor Eight: Okay, and you’re going to include on there that if that’s not paid by 30 June…
Greg:It’s voided, yeah.
Debtor Eight: …you’ll then sign off on the legal action; is that right?
Greg:I’m going to say it’s voided, that’s what I’m going to put on there.
This was misleading: the operator did not have to go to Court; there were no solicitors; compendiously, the inference that proceedings were at hand was not correct. It was not unduly harassing or coercive for the reasons given in relation to Call 1.
Call 94: 18 June 2010
ASIC relied upon Call 94. It included the following:
JasminaYes. Your case manager is just in a legal meeting at the moment…I’m going to take a message. Okay?
This was misleading albeit only in a minor way – there was no legal meeting. It was not unduly harassing or coercive for the reasons given in relation to Call 1.
Call 95: 18 June 2010
Both ACM and ASIC relied upon Call 95, in which ACM called Debtor Eight’s father. It included the following:
Debtor Eight’s father: The first I’ve heard about all of this is a couple of days ago. She’s rung me up, very upset, and I didn’t know anything of this. But, apparently she’s had an arrangement with you to repay her debt at $100 a month and she has been a few days late.
Greg:Mmm-hmm.
Debtor Eight’s father: And you’re now threatening to take her to court, declare her bankrupt, et cetra, et cetra. Is that about right?
…
Greg:Now the account has hit the legal status. What that means is legal recovery action may commence on the account if we can’t come to some sort of amicable agreement.
Debtor Eight’s father: Yep.
Greg:Now, the amount owing is $10,283. The solicitors have advised that they are willing to take the offer of $8,700 to close off the account or she can come up with a 50 per cent amount of the actual debt owing and then she can be placed back on the arrangement.
…
Debtor Eight’s father: So hopefully this will cure the situation. Greg, can you do this for me. Can you go to your solicitors and say if this were to be settled shortly, forthwith, is eight-seven is their absolute bottom line.
Greg:Yep. I can assure you, [Debtor Eight’s father], that is it because I actually spoke personally, I know one of guys personally here, and I do sympathise with her circumstances and I put it all down on the line, I did put my head towards it, and that is the lowest amount that they will go, because [$]10,283, it’s a large amount, and for them to drop to – usually they’ll give a couple of hundred dollars, $500 max, not 8,700 to close off the account.
Debtor Eight’s father: Yeah.
Greg:It’s nothing, [Debtor Eight’s father], believe me. I’ve been in this industry for a while and being honest with you, they now have to do it.
This was misleading: no solicitors were involved; the inference that proceedings were close at hand was not correct. It was not, however, unduly harassing or coercive for the reasons given in relation to Call 1.
Call 96: 21 June 2010
ACM relied upon Call 96. It included the following:
Rebecca:[Debtor Eight’s father], it’s Rebecca from ACM Group. How are you today?
Debtor Eight’s father: Hello Rebecca. Have we spoken before?
Rebecca:No, we haven’t. You were dealing with Greg.
Debtor Eight’s father: No, I know that, but I mean last year on another matter to do with my daughter?
Rebecca:What was your daughter’s name?
Debtor Eight’s father: [Debtor Eight].
Rebecca:No, not that I can recall speaking to you, no.
Debtor Eight’s father: Okay.
Rebecca:And I’m the only Rebecca that works in this department as well.
There is nothing untoward about this.
Conclusions on Debtor Eight
Debtor Eight’s three Ledger Reports (one for each debt) were all printed on 11 November 2010. By that time:
(a)the debt of $4,531.55 owed on the National Australia Bank MasterCard had increased to $4,544.31 due to the addition of $12.76 in interest;
(b)the debt of $658.94 owed on the National Australia Bank Visa card had been joined by $11.52 in interest and $30 in late fees, leaving a total debt of $700.46; and
(c)the debt of $9,935.11 that was initially owed to the Commonwealth Bank in respect of the Variable Rate Personal Loan had increased to $10,743.75 because $763.64 in interest and $45 in late fees had been added.
All three debt accounts were marked as ‘Settled in Full’, however. Debts (a) and (b) were settled by a payment of $4,800 made by Debtor Eight’s father on 17 July 2009 (representing a $444.77 discount). Debt (c) was settled on 25 June 2010 when Debtor Eight’s father made a payment (apparently on his own credit card) of $8,700. It seems that a total of $9,160 was paid by Debtor Eight (or on her behalf) to settle debt (c).
I have found that, in relation to Debtor Eight, ACM did engage in misleading or deceptive conduct, though not to the extent alleged by ASIC. Specifically, I find that ACM engaged in misleading or deceptive conduct by representing that:
(a)the matter had been referred to ACM’s lawyers; and
(b)ACM had decided to and would commence legal proceedings shortly against Debtor Eight.
I do not think that it has been shown that ACM misleadingly represented that:
(a)ACM employed ‘in-house’ lawyers;
(b)ACM specialised in commencing legal proceedings against debtors for the recovery of debt;
(c)ACM frequently commenced legal proceedings against debtors for the recovery of debts; and
(d)ACM could commence legal proceedings shortly against Debtor Eight.
Furthermore, I do not think that it has been shown that ACM engaged in unduly harassing or coercive conduct.
I turn then to the legal issues.
V. WHETHER THERE SHOULD BE A GRANT OF DECLARATORY RELIEF
I do not consider in this section whether the defendants’ argument relating to financial services (see infra at Section VII) should be accepted. Instead, in this section, I consider the following matters:
(a)whether the contraventions were small in scope and hence whether declaratory relief should be declined on that basis;
(b)whether a change in the defendant’s manuals now means that there would be little point in granting declaratory relief; and
(c)whether the alteration in the ownership of the business means that it is no longer useful to grant declaratory relief.
It is useful to consider the issue of misleading or deceptive conduct first.
Misleading or deceptive conduct
(a) Significance of the contraventions
At least insofar as the question of misleading and deceptive conduct is concerned, there is not really any doubt in my mind that the conduct was widespread. Indeed, the constant references to litigation were not an accident. They were the intended outcome of a house manual which promoted threatening litigation as a means to achieving recoveries. The operators were told to make references to legal proceedings and lawyers and it is only natural that this is what they did. For example, many faithfully drew on the imagery, referred to in the manual, of the uniformed Sheriff’s officer arriving in a marked car (see [30]). What occurred was not just widespread, it was systemic.
(b) Change in manuals
When Mr Brabazon became aware of the manual’s contents (as a direct result of ASIC’s enquiries), he had it changed. Since it has been changed, there was no evidence of any further contraventions. Accepting that to be so does not alter the need to be clear about what has happened in the past. It may provide grist for an argument that the risk of future repetition is low. Indeed, I am inclined to accept that view of things but, even so, I do not think that it provides good reason in itself to decline relief.
(c) Change in ownership
I accept that in or about July 2009, the business of the first defendant was transferred to the second defendant. The evidence of Mr Brabazon was that the restructuring had occurred as part of the aborted preparations for an IPO. At the level of formality, the majority of the conduct which has been identified was not conduct of the new entity but only its predecessor.
It was said, in those circumstances, that the utility of declaring that an entity no longer engaged in business had engaged in misleading and deceptive conduct was limited.
I do not agree. Of the 96 calls to which I was referred, 36 occurred after 1 July 2009 and the most recent (Call 96) took place on 21 June 2010. The last instance of misleading or deceptive conduct was Call 95 on 18 June 2010 and the last instance of unduly harassing or coercive conduct was Call 67 on 19 March 2010 – both well after July 2009. There may be some circumstances in which the fact that an entity has ceased to trade may provide good reason not to make declaratory orders. Here I think this is not so. The purpose of the declaration will be to identify for the business community a species of unacceptable behaviour. It will also serve the purpose of vindicating ASIC’s claims.
In those circumstances, and subject to the legal issues still to be resolved, the discretionary considerations favour the granting of declaratory relief against both defendants.
(d) Form of declaration
I would not, however, be willing to make declarations in the form proposed by ASIC. These ran to 66 pages, and dealt, in detail, with the position of each of the debtors. Although I am prepared to entertain further debate, at present it seems to me that an appropriate declaration would be that:
The Defendants engaged in misleading and deceptive conduct by informing debtors who they pursued on unpaid accounts they had acquired from third party creditors that:
(a) they were about to sue them; or
(b) the file was in the hands of their lawyers; or
(c) a decision had been made to sue them; or
(d)they would shortly be served with Court process by the Sheriff
when none of this was true.
I turn then to the question of whether it should be declared that the defendants engaged in conduct which was unduly harassing or coercive.
Unduly harassing or coercive conduct
(a) Significance and nature of the contraventions
Here the question is more difficult. The examples of this behaviour are more limited. This conduct occurred but, because it was not a result of the manual which was in place (as to which, see [34]), it was not systemic. The defendants submit that it is best viewed as a series of isolated examples resulting from errant operators. There will always be, so the argument runs, a few bad employees and this is particularly so when the defendants employ several hundred staff with a large turnover.
No doubt this behaviour is to be seen as qualitatively different to the misleading and deceptive conduct because it is not the result of the manual. However, just because there is no evidence that ACM suggested this conduct to its employees does not mean that it is not responsible for it. Although there was some evidence that the operators were occasionally monitored, the evidence did not suggest, and I do not find, that this was done on a regular basis. I was taken to no evidence which would have shown that the call monitors had been given specified matters to watch out for; that individual operators were counselled or disciplined; or that there were in place basic systemic guidelines to ensure compliance with consumer protection requirements.
(b) Change in ownership
This consideration influences the decision of whether to make declarations of unduly harassing or coercive conduct in the same way that it did misleading or deceptive conduct.
In those circumstances, I do not think it would be right to withhold declaratory relief against the first defendant. Again, I would not embrace the declarations suggested by ASIC. Instead I would declare that:
The Defendants engaged in unduly harassing and coercive conduct while recovering debts from debtors which had been purchased from third party creditors by:
(a)heaping personal abuse upon them; or
(b)blackmailing them by threatening to reveal their positions as debtors to relatives, friends, employers or neighbours.
VI. WHETHER THERE SHOULD BE A GRANT OF INJUNCTIVE RELIEF
ASIC also sought injunctive relief. In the case of the unduly harassing and coercive conduct I think such relief should be granted. Its occurrence is more the result of a certain mindset amongst some of its employees. The only way that sort of bullying will stop is if the second defendant makes it stop. I do not think a declaration by itself will serve that end sufficiently. Without expressing a concluded view, the appropriate form of that injunctive relief is likely to be directed to the second defendant’s procedures, such as call monitoring, rather than a bare order not unduly to harass or coerce. I will hear the parties on this question, however, if necessary. The situation with the misleading and deceptive conduct case is less clear. That conduct was the result of the earlier manual and that manual has now been revised. ASIC did not point to any contraventions since that revision. Notwithstanding, I have concluded that injunctive relief should be granted. It will ensure that the second defendant gives effect to its manual. I see no utility in granting injective relief against the first defendant. ASIC’s vindication in relation to it will be properly served by the declaratory relief I have indicated.
I turn then to the central question in the case, namely, whether the relief claimed by ASIC is legally foreclosed to it.
VII. CAN THE CLAIMS UNDER THE ASIC ACT BE MAINTAINED?
ASIC’s claims under the ASIC Act related to misleading and deceptive conduct (s 12DA(1)) and undue harassment and coercion (s 12DJ(1)). In both cases the conduct must be connected to ‘financial services’. In the case of s 12DA(1) the misleading and deceptive conduct must be ‘in relation to financial services’. In the case of s 12DJ(1) the undue harassment or coercion must be ‘in connection with the supply or possible supply of financial services to a consumer or the payment for financial services by a consumer’.
In both cases the defendants’ challenge to ASIC is straightforward: the business of extracting money from overdue debtors did not involve the provision of a financial service.
ASIC submitted that the situation of the defendants was covered by s 12BAB(1)(g) which provided:
For the purposes of this Division…a person provides a financial service if they:
…
(g) provide a service that is otherwise supplied in relation to a financial product
The ‘financial product’ involved was said to be the loan contracts and credit card contracts which had previously existed between each debtor and his or her original creditor (that is, in this case the NAB or the Commonwealth Bank). These contracts had been assigned to ACM. The service which was provided to the debtors in relation to these financial products was said to be the provision to the debtors of on-going credit.
I accept that the loan and credit card contracts between the debtors and the original creditors were ‘financial products’. There are two steps in this conclusion. The first is that these contracts would be a ‘credit facility’ within the meaning of reg 2B of the Australian Securities and Investments Commission Regulations 2001 (Cth). The pertinent parts of the regulation are thus:
(1)For paragraph 12BAA(7)(k) of the Act, each of the following is a credit facility:
(a) the provision of credit:
(i) for any period; and
(ii)with or without prior agreement between the credit provider and the debtor;
(iii)whether or not both credit and debit facilities are available
…
(3) In this regulation:
credit means a contract, arrangement or understanding:
(a) under which:
(i)payment of a debt owed by one person (a debtor) to another person (a credit provider) is defined; or
(ii)one person (a debtor) incurs a deferred debt to another person (a credit provider); and
(b) including any of the following:
(i) any form of financial accommodation;
…
(iii) credit provided for the purchase of goods and services;
…
(v) an article known as a credit card or charge card;
…
(ix)a financial benefit arising from or as a result of a loan;
(x)assistance in obtaining a financial benefit arising from or as a result of a loan.
Most of the original debts had arisen from credit card accounts between the debtors and the NAB. There were also personal loans: one from NAB and one from the Commonwealth Bank. These all fell within the definition of a credit facility within reg 2B. All of those contracts were assigned to ACM. I do not think that altered their character as credit facilities. All that occurred at the moment of assignment to ACM was that the identity of one of the parties changed – all other rights remained the same.
The second step in reaching the conclusion that these contracts (now exposed as credit facilities under reg 2B) were financial products are the challenging terms of s 12BAA(7)(k) of the ASIC Act, which relevantly tells anyone who has got this far that:
Subject to subsection (8), the following are financial products for the purposes of this Division:
…
(k) a credit facility (within the meaning of the regulations)
Since we know that the contracts are credit facilities, the challenges which s 12BAA(7)(k) presents are not obvious. They lie, however, in the relatively innocuous opening words ‘Subject to subsection (8)’.
Section 12BAA(8) tells one some things which are not ‘financial products’. Section 12BAA(8)(e) and (f) include on this list:
(e)a facility that is a designated payment system for the purposes of the Payment Systems (Regulation) Act 1998;
(f)a facility for the exchange and settlement of non-cash payments (see subsection (b)) between providers of non-cash payment facilities
On 11 April 2001 the Reserve Bank of Australia designated the credit card schemes operated by Bankcard, Mastercard and Visa as a ‘payment system’ under s 11 of the Payment Systems (Regulation) Act 1998 (Cth).
I do not think that the individual contracts in question are themselves a facility which is a designated payment system. No doubt they are part of a payment system but that is not what (e) requires. Likewise the individual contracts are not, by themselves, a facility for exchange and settlement between the banks involved; they are at best merely part of such a system.
It follows that the carve-outs in s 12BAA(8)(e) and (f) are not engaged. The contracts between ACM/ACM Group and the debtors are therefore ‘financial products’.
The question then becomes whether, as ASIC submitted, defendants had, to use the language of s 12BAB(1)(g), ‘provid[ed] a service that is otherwise supplied in relation to a financial product’ (if so, it will be recalled, they would be taken to provide a financial service).
ASIC submitted that by providing on-going credit to the debtors the defendants were providing a ‘service’ and that ‘service’ was supplied ‘in relation to a financial product’ viz the loan and credit card contracts. I accept the latter submission given the breadth of the words ‘in relation to’. Attention can, therefore, be confined to whether the defendants provided a ‘service’ consisting of on-going credit.
‘Service’ is defined in s 12BA(1) to include ‘any rights (including rights in relation to, and interests in, real or personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce’, subject to some irrelevant exceptions.
I accept that the granting to each debtor of more time to pay was the granting of a right (namely, the right to relieved of the immediate obligation to pay) and that this occurred in trade or commerce. An essential part of each collections officer’s job was to get the debtors on to payment plans. Necessarily, the provision of a payment plan was, albeit in an unusual sense, the provision of credit. No doubt it is difficult to view the unpleasant calls the debtors received as a service but those calls were not the service but rather merely an encouragement to take the service up.
It follows that I conclude that there was a provision of a financial service to each debtor on each occasion that more time was extended.
This brings one back, at length, to ss 12DA(1) and s 12DJ(1). The former requires the misleading conduct to occur ‘in relation to’ financial services. I am satisfied that the misleading conduct I have identified was ‘in relation to’ the provision of the financial services I have identified and hence, as s 12BA(1) requires, in relation to those financial services.
It also follows that the unduly harassing or coercive conduct which I have identified can be said to be ‘in connection with the supply or possible supply of financial services to a consumer’ within the meaning of s 12DJ(1).
In those circumstances, ASIC is entitled to pursue the defendants under these two provisions.
ASIC also pursued its relief under the equivalent provisions of the former TPA. The defendants submitted that ASIC had no authority to pursue relief under that Act. Since I have concluded that ss 12DA(1) and s 12DJ(1) apply, the resolution of that debate presently lacks utility and its resolution is not necessary.
VIII. RELIEF
ASIC is entitled to the relief I have indicated. The defendant’s should pay ASIC’s costs. The parties should bring in short minutes of order giving effect to these reasons within 14 days. If this cannot be agreed then the matter will be relisted to resolve any remaining debates.
I certify that the preceding three hundred and fifty (350) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate:
Dated: 26 October 2012
- AGLC
- Australian Securities and Investments Commission v Accounts Control Management Services Pty Ltd [2012] FCA 1164
- Case
- [2012] FCA 1164
- Decision Date
CaseChat Overview and Summary
The court considered the meaning of the term 'unduly' in the context of debt collection and whether it qualified both 'harassing' and 'coercive'. The court found that ACM had engaged in misleading or deceptive conduct by representing that it was proceeding to bankrupt debtors, the matter had been referred to ACM's lawyers, and ACM had decided to and would commence legal proceedings shortly against debtors. However, the court did not find that ACM's conduct was unduly harassing or coercive. The court found that while there was evidence of some employees engaging in unduly harassing or coercive conduct, it was not systemic and was the result of isolated incidents by errant operators.
The court concluded that the discretionary considerations favoured the granting of declaratory relief against ACM. The court would declare that the defendants engaged in misleading and deceptive conduct by informing debtors that they were about to sue them, the file was in the hands of their lawyers, a decision had been made to sue them, or they would shortly be served with court process by the sheriff when none of this was true. The court would also declare that the defendants engaged in unduly harassing and coercive conduct while recovering debts from debtors by heaping personal abuse upon them or blackmailing them by threatening to reveal their positions as debtors to relatives, friends, employers, or neighbours. The court did not embrace the declarations suggested by ASIC and instead proposed shorter and more focused declarations.
Orders
Orders of the court
1. The parties bring in short minutes of order to give effect to these reasons within 14 days.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
In those circumstances, and subject to the legal issues still to be resolved, the discretionary considerations favour the granting of declaratory relief against both defendants.(d) Form of declaration I would not, however, be willing to make declarations in the form proposed by ASIC. These ran to 66 pages, and dealt, in detail, with the position of each of the debtors. Although I am prepared to entertain further debate, at present it seems to me that an appropriate declaration would be that:The Defendants engaged in misleading and deceptive conduct by informing debtors who they pursued on unpaid accounts they had acquired from third party creditors that:(a) they were about to sue them; or(b) the file was in the hands of their lawyers; or(c) a decision had been made to sue them; or(d)they would shortly be served with Court process by the Sheriff when none of this was true. I turn then to the question of whether it should be declared that the defendants engaged in conduct which was unduly harassing or coercive.Unduly harassing or coercive conduct(a) Significance and nature of the contraventions Here the question is more difficult. The examples of this behaviour are more limited. This conduct occurred but, because it was not a result of the manual which was in place (as to which, see [34]), it was not systemic. The defendants submit that it is best viewed as a series of isolated examples resulting from errant operators. There will always be, so the argument runs, a few bad employees and this is particularly so when the defendants employ several hundred staff with a large turnover. No doubt this behaviour is to be seen as qualitatively different to the misleading and deceptive conduct because it is not the result of the manual. However, just because there is no evidence that ACM suggested this conduct to its employees does not mean that it is not responsible for it. Although there was some evidence that the operators were occasionally monitored, the evidence did not suggest, and I do not find, that this was done on a regular basis. I was taken to no evidence which would have shown that the call monitors had been given specified matters to watch out for; that individual operators were counselled or disciplined; or that there were in place basic systemic guidelines to ensure compliance with consumer protection requirements.(b) Change in ownership This consideration influences the decision of whether to make declarations of unduly harassing or coercive conduct in the same way that it did misleading or deceptive conduct. In those circumstances, I do not think it would be right to withhold declaratory relief against the first defendant. Again, I would not embrace the declarations suggested by ASIC. Instead I would declare that:The Defendants engaged in unduly harassing and coercive conduct while recovering debts from debtors which had been purchased from third party creditors by:(a)heaping personal abuse upon them; or(b)blackmailing them by threatening to reveal their positions as debtors to relatives, friends, employers or neighbours.VI. WHETHER THERE SHOULD BE A GRANT OF INJUNCTIVE RELIEF