Australian Securities and Investments Commission v Select AFSL Pty Ltd (No 3)
[2023] FCA 723
•4 July 2023
FEDERAL COURT OF AUSTRALIA
Australian Securities and Investments Commission v Select AFSL Pty Ltd (No 3) [2023] FCA 723
File number(s): NSD 1447 of 2019 Judgment of: ABRAHAM J Date of judgment: 4 July 2023 Catchwords: CORPORATIONS – conflicted remuneration – consumer law – banking and financial institutions – directors’ duties – contraventions by corporate defendants and individual defendant – numerous breaches of Corporations Act 2001 (Cth) and Australian Securities and Investments Commission Act 2001 (Cth) – assessment of pecuniary penalties and other relief – where individual defendant did not give evidence during liability hearing – where defendants did not deliberately contravene laws – where defendants sought to downplay seriousness of conduct – where insufficient evidence to determine financial position of defendants – where defendants have no prior contraventions of similar conduct – where failures in compliance system to be seen in context of competitive sales environment – where deterrence must be dominant consideration – advertising orders not made – declarations, restraining orders, probation order and disqualification order made – pecuniary penalties imposed
COSTS – where defendants sought apportionment of costs – usual order as to costs made
Legislation: Australian Securities and Investments Commission Act 2001 (Cth) ss 12CB(1), 12DA, 12DB(1)(a), 12DB(1)(d), 12DB(1)(e), 12DB(1)(g), 12DB(1)(i), 12DJ(1), 12GBA, 12GD, 12GLA(2)(b), 19
Competition and Consumer Act 2010 (Cth) Sch 2 s 13
Corporations Act 2001 (Cth) ss 79, 180, 206C, 206E, 912A(1)(a), 912A(1)(c), 963E, 963F, 963J, 963K, 1317E, 1317G(1), 1317G(1E), 1317G(1F), 1324
Corporations Amendment (Life Insurance Remuneration Arrangements) Act 2017 (Cth)
Evidence Act 1995 (Cth) s 55
Federal Court of Australia Act 1976 (Cth) s 21, 43
Cases cited: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) [2009] HCA 41; (2009) 239 CLR 27
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; (2018) 262 CLR 157
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 399 ALR 599
Australian Communications and Media Authority v Limni Enterprises Pty Ltd [2022] FCA 795
Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd [1997] FCA 450; (1997) 145 ALR 36
Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2017] FCAFC 159; (2017) 258 FCR 312
Australian Competition and Consumer Commission v Dimmeys Stores Pty Ltd [2011] FCA 372
Australian Competition and Consumer Commission v Dimmeys Stores Pty Ltd [1999] FCA 1175
Australian Competition and Consumer Commission v High Adventure Pty Ltd [2005] FCAFC 247; (2006) ATPR 42-091
Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd t/a Bet365 (No 2) [2016] FCA 698
Australian Competition and Consumer Commission v Leahy Petroleum (No 2) [2005] FCA 254; (2005) 215 ALR 281
Australian Competition and Consumer Commission v Origin Energy Limited [2015] FCA 55
Australian Competition and Consumer Commission v Reckitt Benckiser Pty Ltd [2016] FCAFC 181; (2016) 349 ALR 25
Australian Competition and Consumer Commission v Uber B.V. [2022] FCA 1466
Australian Competition and Consumer Commission v Ultra Tune Australia Proprietary Limited [2019] FCA 12
Australian Competition and Consumer Commission v Unique International College Pty Ltd (Imposition of Penalty) [2019] FCA 1773
Australian Competition and Consumer Commission v Valve Corporation (No 7) [2016] FCA 1553
Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73; (2018) 262 FCR 243
Australian Securities and Investments Commission v Australian Property Custodian Holdings Limited (Receivers and Managers appointed) (in liquidation) (Controllers appointed) [2014] FCA 1308; (2014) 322 ALR 45
Australian Securities and Investments Commission v Axis International Management Pty Ltd (No 5) [2011] FCA 60; (2011) 81 ACSR 631
Australian Securities and Investments Commission v Forex Capital Trading Pty Ltd [2021] FCA 570
Australian Securities and Investments Commission v Forge [2007] NSWSC 1489
Australian Securities and Investments Commission v Healey (No 2) [2011] FCA 1003; (2011) 196 FCR 430
Australian Securities and Investments Commission v One Tech Media (No 6) [2020] FCA 842
Australian Securities and Investments Commission v Select AFSL Pty Ltd (No 2) [2022] FCA 786
Australian Securities and Investments Commission v Vines [2006] NSWSC 760; (2006) 58 ACSR 298
Australian Securities and Investments Commission v Vocation Limited (In Liquidation) (No 2) [2019] FCA 1783; (2019) 140 ACSR 382
Australian Securities and Investments Commission v Westpac Banking Corporation (Omnibus) [2022] FCA 515; (2022) 407 ALR 1
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482
Construction, Forestry, Maritime, Mining and Energy Union v Fair Work Ombudsman (The Botany Cranes Case) [2023] FCAFC 40
Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; (2010) 269 ALR 1
Cruickshank v Australian Securities and Investments Commission [2022] FCAFC 128; (2022) 403 ALR 67
Director of Consumer Affairs Victoria v Wens Bros Trading Pty Ltd [2019] FCA 39
Fair Work Ombudsman v Austrend International Pty Ltd (No 2) [2020] FCA 1193
Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union (Kiama Aged Care Centre Appeal) [2023] FCAFC 63
Fair Work Ombudsman v Lam [2021] FCA 205; (2021) 390 ALR 39
HIH Insurance (in prov liq) and HIH Casualty and General Insurance Ltd (in prov liq), Re; Australian Securities and Investments Commission v Adler [2002] NSWSC 483; (2002) 42 ACSR 80
Idylic Solutions Pty Ltd, Re; Australian Securities and Investments Commission v Hobbs [2013] NSWSC 106; (2013) 93 ACSR 421
J McPhee & Son (Australia) Pty Ltd v Australian Competition & Consumer Commission [2000] FCA 365; (2000) 172 ALR 532
Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357
Mayfair Wealth Partners Pty Ltd v Australian Securities and Investments Commission [2022] FCAFC 170
Medical Benefits Funds of Australia Ltd v Cassidy [2003] FCAFC 289; (2003) 135 FCR 1
Mill v The Queen [1988] HCA 70; (1988) 166 CLR 59
NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355
Re Vault Market Pty Ltd [2014] NSWSC 1641
Registrar of Aboriginal and Torres Strait Islander Corporations v Murray [2015] FCA 346
Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129
Royal v El Ali (No 3) [2016] FCA 1573
Rushcutters Bay Smash Repairs Pty Ltd v H McKenna Netmakers Pty Ltd [2003] NSWSC 670
Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249
SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) 262 CLR 362
Thiess Watkins White Construction Ltd (in liq) v Witan Nominees (1985) Pty Ltd [1992] 2 Qd R 452
Trade Practices Commission v Carlton United Breweries Ltd (1990) 24 FCR 532
Trade Practices Commission v CSR Ltd [1990] FCA 762; (1991) ATPR 41-076
Ultra Tune Australia Pty Ltd v Australian Competition and Consumer Commission [2019] FCAFC 164
Valve Corporation v Australian Competition and Consumer Commission [2017] FCAFC 224; (2017) 258 FCR 190
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Number of paragraphs: 312 Date of hearing: 23 March 2023 and 19 April 2023 Counsel for the Plaintiff: Ms N Sharp SC with Ms G Walker SC Solicitor for the Plaintiff: Australian Securities and Investments Commission Counsel for the Defendants: Mr A Cheshire SC with Mr S Jayasuriya Solicitor for the Defendants: Kardos Scanlan ORDERS
NSD 1447 of 2019 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Plaintiff
AND: SELECT AFSL PTY LTD (ACN 151 931 618)
First Defendant
BLUEINC SERVICES PTY LTD (ACN 109 789 077)
Second Defendant
INSURANCE MARKETING SERVICES PTY LTD (ACN 160 307 979) (and another named in the Schedule)
Third Defendant
ORDER MADE BY:
ABRAHAM J
DATE OF ORDER:
4 JULY 2023
DEFINITIONS:
In these orders, the following terms mean:
ASIC means the Australian Securities and Investments Commission.
ASIC Act means the Australian Securities and Investments Commission Act 2001 (Cth).
BlueInc Services means the Second Defendant.
Corporations Act means the Corporations Act 2001 (Cth).
FCA Act means the Federal Court of Australia Act 1976 (Cth).
IMS means the Third Defendant.
Sales Agent means an agent who primarily made outbound telephone calls to, and answered inbound telephone calls from, potential consumers for the purpose of selling insurance products.
Select means the First Defendant.
Liability Judgment means the Court’s reasons for judgment dated 8 July 2022 (Australian Securities and Investment Commission v Select AFSL Pty Ltd (No 2) [2022] FCA 786).
Retention Agent means an agent who primarily dealt with existing customers.
PURSUANT TO S 1317E OF THE CORPORATIONS ACT AND S 21 OF THE FCA ACT, THE COURT DECLARES THAT:
1.Select separately contravened s 963E of the Corporations Act on each occasion that a representative for whom it was the responsible licensee accepted the following conflicted remuneration:
(a)the 15 representatives identified in [158] of the Liability Judgment accepted conflicted remuneration in the form of a four-night cruise package to the Gold Coast in July 2015 (Cruise);
(b)the one representative identified in [166] of the Liability Judgment accepted conflicted remuneration in the form of a brand new Vespa scooter on 1 July 2015 (Vespa);
(c)the eight representatives identified in [179] of the Liability Judgment accepted conflicted remuneration in the form of a seven-day holiday package to Las Vegas in the United States of America in April 2016 (Las Vegas Trip);
(d)the nine representatives identified in [191] of the Liability Judgment accepted conflicted remuneration in the form of a seven-night holiday package to Hawaii in the United States of America in December 2017 (Hawaii Trip).
2.Select separately contravened s 963F of the Corporations Act by failing to take reasonable steps to ensure that each individual representative of its financial services licence for whom it was the responsible licensee did not accept the following conflicted remuneration:
(a)the 15 representatives identified in [158] of the Liability Judgment who accepted conflicted remuneration in the form of the Cruise;
(b)the one representative identified in [166] of the Liability Judgment who accepted conflicted remuneration in the form of the Vespa;
(c)the eight representatives identified in [179] of the Liability Judgment who accepted conflicted remuneration in the form of the Las Vegas Trip;
(d)the nine representatives identified in [191] of the Liability Judgment who accepted conflicted remuneration in the form of the Hawaii Trip,
with a separate contravention occurring each time a representative accepted the Cruise, the Vespa, the Las Vegas Trip or the Hawaii Trip.
3.BlueInc Services separately contravened s 963J of the Corporations Act on each occasion that it gave its employees who were representatives under Select’s financial services licence the following conflicted remuneration:
(a)the Cruise, to the 14 employees identified in [158] of the Liability Judgment;
(b)the Vespa, to the one employee identified in [166] of the Liability Judgment;
(c)the Las Vegas Trip, to the seven employees identified in [179] of the Liability Judgment;
(d)the Hawaii Trip, to the nine employees identified in [191] of the Liability Judgment.
4.Russell Howden was involved within the meaning of s 79 of the Corporations Act in:
(a)each of the contraventions of ss 963E and 963F of the Corporations Act by Select referred to in declarations 1 and 2 above; and
(b)each of the contraventions of s 963J of the Corporations Act by BlueInc Services referred to in declaration 3 above.
PURSUANT TO S 1317E OF THE CORPORATIONS ACT, THE COURT DECLARES THAT:
5.Russell Howden contravened s 180(1) of the Corporations Act by failing to exercise his powers and discharge his duties owed to Select with the degree of care and diligence that a reasonable person would exercise by:
(a)knowing of, conceiving of, planning, promoting and/or approving incentive programs for each of the Cruise, Vespa, Las Vegas Trip and Hawaii Trip and failing to take reasonable or any steps to ensure that Select’s representatives did not accept those benefits;
(b)failing to take reasonable or any steps to prevent Select from engaging in contraventions of ss 963E and 963F of the Corporations Act; and
(c)exposing Select to a foreseeable risk of harm, being contravention of the conflicted remuneration provisions and exposure to the risk of reputational harm, litigation and/or regulatory action.
6.Russell Howden contravened s 180(1) of the Corporations Act by failing to exercise his powers and discharge his duties owed to BlueInc Services with the degree of care and diligence that a reasonable person would exercise by:
(a)knowing of, and participating in, BlueInc Services’ provision of each of the Cruise, Vespa, Las Vegas Trip and Hawaii Trip to its employees and failing to take reasonable or any steps to ensure that BlueInc Services did not give its employees those benefits;
(b)failing to take reasonable or any steps to prevent BlueInc Services from engaging in contraventions of s 963J of the Corporations Act; and
(c)exposing BlueInc Services to a foreseeable risk of harm, being contravention of the conflicted remuneration provisions and exposure to the risk of reputational harm, litigation and/or regulatory action.
PURSUANT TO S 21 OF THE FCA ACT, THE COURT DECLARES THAT:
Contraventions relating to Kathy Marika
7.During a telephone call made to Kathy Marika on 9 September 2015 by a Sales Agent who was employed by BlueInc Services, and who was also an agent of Select, each of BlueInc Services and Select:
(a)contravened s 12DB(1)(i) of the ASIC Act by the Sales Agent making a false and/or misleading representation to Kathy Marika that there were no exclusions to the Let’s Insure Funeral Cover, optional accidental death cover (ADC) or optional accidental serious injury cover (AIC) save for a criminal activity-based exclusion to the AIC, when in fact there were significant exclusions to each of the ADC and AIC;
(b)contravened s 12DB(1)(a) of the ASIC Act by the Sales Agent making a false and/or misleading representation to Kathy Marika that Let’s Insure would pay the total amount of benefits to each beneficiary of ADC and AIC, when in fact only payments totalling the amount of benefits would be paid per insured person under the policy;
(c)contravened s 12DB(1)(i) of the ASIC Act by the Sales Agent making a false and/or misleading representation to Kathy Marika that ADC, AIC and Household Expenses Cover (HEC) were not optional extras and/or were a standard component of the insurance policy, when in fact they were all optional extras that a consumer could elect not to add to Let’s Insure Funeral Cover (Standard Cover Representation);
(d)contravened s 12DB(1)(g) of the ASIC Act by the Sales Agent making a false and/or misleading representation to Kathy Marika that the HEC was offered as a gift and/or “just to help out”, when in fact the HEC was an optional extra for which she would be charged an additional premium amount;
(e)contravened s 12DB(1)(g) of the ASIC Act by the Sales Agent making a false and/or misleading representation to Kathy Marika that the insurance premium remained the same throughout the duration of the policy, when in fact the premium for Let’s Insure Funeral Cover was stepped and would therefore increase over the life of the policy;
(f)contravened s 12DJ(1) of the ASIC Act by the Sales Agent coercing Kathy Marika into purchasing two Let’s Insure Funeral Cover policies, each with ADC and AIC, and providing her direct debit payment details over the telephone;
(g)engaged in unconscionable conduct towards Kathy Marika in contravention of s 12CB(1) of the ASIC Act.
8.During the period 16 September 2015 to 11 August 2016, by Retention Agents who were employed by BlueInc Services, and who were also agents of Select, each of BlueInc Services and Select:
(a)contravened s 12DJ(1) of the ASIC Act by unduly harassing Kathy Marika by continuing to contact Kathy Marika to seek payment of her insurance premiums;
(b)engaged in unconscionable conduct towards Kathy Marika in contravention of s 12CB(1) of the ASIC Act by failing to permit Kathy Marika to cancel her two Let’s Insure Funeral Cover policies, each with ADC and AIC, and continuing to seek payment for the policies from Kathy Marika.
Contraventions relating to David Mirrawana
9.During a telephone call made to David Mirrawana on 23 March 2015 by a Sales Agent who was employed by BlueInc Services, and who was also an agent of Select, each of BlueInc Services and Select:
(a)contravened s 12DB(1)(i) of the ASIC Act by the Sales Agent making a false and/or misleading representation to David Mirrawana that there were no exclusions to the Let’s Insure Funeral Cover, ADC and AIC save for limited sporting-based exclusions to the AIC, when in fact there were significant exclusions to each of the ADC and AIC (Limited Exclusions Representation);
(b)contravened s 12DB(1)(a) of the ASIC Act by the Sales Agent making a false and/or misleading representation to David Mirrawana that Let’s Insure would pay $16,000 to each beneficiary of a Let’s Insure Funeral Cover policy, when in fact only payments totalling of $16,000 per insured who passed away would be paid;
(c)contravened s 12DB(1)(i) of the ASIC Act by the Sales Agent making the false and/or misleading Standard Cover Representation to David Mirrawana;
(d)contravened s 12DB(1)(g) of the ASIC Act by the sales agent making a false and/or misleading representation to David Mirrawana that the insurance premium remained the same throughout the duration of the policy, when in fact the premium for Let’s Insure Funeral Cover was stepped and would therefore increase over the life of the policy;
(e)contravened s 12DJ(1) of the ASIC Act by the Sales Agent coercing David Mirrawana into purchasing Let’s Insure Funeral Cover, ADC, AIC and HEC, and providing his direct debit details over the telephone;
(f)engaged in unconscionable conduct towards David Mirrawana in contravention of s 12CB(1) of the ASIC Act.
Contraventions relating to Jennifer Yalamul
10.During a telephone call made to Jennifer Yalumul on 29 May 2015 by a Sales Agent who was contracted to IMS, and who was also an agent of Select, each of IMS and Select:
(a)contravened s 12DB(1)(i) of the ASIC Act by the Sales Agent making a false and/or misleading representation to Jennifer Yalumul that there were no exclusions to the FlexiSure Life Cover and optional accidental death and accidental serious injury cover (FlexiSure AC) save for intentional or self-inflicted injury and participating in professional sports, when in fact there were significant exclusions to the FlexiSure AC;
(b)contravened s 12DB(1)(i) of the ASIC Act by the Sales Agent making a false and/or misleading representation to Jennifer Yalumul that FlexiSure AC was not an optional extra and/or was a standard component of the insurance policy, when in fact it was an optional extra that a consumer could elect not to add to FlexiSure Life Cover;
(c)engaged in unconscionable conduct towards Jennifer Yalumul in contravention of s 12CB(1) of the ASIC Act.
11.During the period 1 February 2016 to 28 August 2017, by Retention Agents who were contracted to IMS or employed by BlueInc Services, and who were also agents of Select, each of IMS, BlueInc Services and Select engaged in unconscionable conduct towards Jennifer Yalumul in contravention of s 12CB(1) of the ASIC Act by failing to permit Jennifer Yalumul to cancel her FlexiSure Life Cover with FlexiSure AC.
Contraventions relating to Zondani Mtawale
12.During a telephone call made to Zondani Mtawale on 14 April 2015 by two Sales Agents, one who was contracted to IMS and the other who was employed by BlueInc Services, and who were also agents of Select, each of IMS, BlueInc Services and Select:
(a)contravened s 12DB(1)(i) of the ASIC Act by the Sales Agents making the false and/or misleading Limited Exclusions Representation to Zondani Mtawale;
(b)contravened s 12DB(1)(a) of the ASIC Act by the Sales Agents making a false and/or misleading representation to Zondani Mtawale that Let’s Insure would pay the total amount of benefits to each beneficiary of a Let’s Insure Funeral Cover policy, when in fact only payments totalling the amount of benefits would be paid per insured person under the policy;
(c)engaged in unconscionable conduct towards Zondani Mtawale in contravention of s 12CB(1) of the ASIC Act.
Contraventions relating to Teubiti Tapera
13.During a telephone call made to Teubiti Tapera on 7 May 2015 by a Sales Agent who was employed by BlueInc Services, and who was also an agent of Select, each of BlueInc Services and Select contravened s 12DB(1)(i) of the ASIC Act by representing to Teubiti Tapera that Select could only send him the policy information once the insurance policy had commenced and/or once he had provided his payment details, when in fact neither of those events were necessary in order to provide written policy information to a consumer.
14.During telephone calls made to Teubiti Tapera on 6 and 7 May 2015 by Sales Agents who were contracted to IMS or employed by BlueInc Services, and who were also agents of Select, each of IMS, BlueInc Services and Select:
(a)contravened s 12DJ(1) of the ASIC Act by coercing Teubiti Tapera into purchasing FlexiSure Life Cover insurance and providing his credit card details over the telephone;
(b)engaged in unconscionable conduct towards Teubiti Tapera in contravention of s 12CB(1) of the ASIC Act.
Contraventions relating to Dawnetta Yeatman
15.During a telephone call made to Dawnetta Yeatman on 17 June 2015 by a Sales Agent who was contracted to IMS, and who was also an agent of Select, each of IMS and Select:
(a)contravened s 12DB(1)(e) of the ASIC Act by the Sales Agent making a false and/or misleading representation to Dawnetta Yeatman that the minimum level of cover of the FlexiSure Life Cover was $35,000, when in fact the minimum level of cover for FlexiSure Life Cover was $15,000;
(b)contravened s 12DB(1)(e) of the ASIC Act by the Sales Agent making a false and/or misleading representation to Dawnetta Yeatman that she would save $50 per month and have an additional coverage of $20,000, and doing so 11 times, when there were no reasonable grounds for making the representations;
(c)engaged in unconscionable conduct towards Dawnetta Yeatman in contravention of s 12CB(1) of the ASIC Act.
16.During the period 7 September 2015 to 7 October 2015, by Retention Agents who were employed by BlueInc Services, and who were also agents of Select, each of BlueInc Services and Select contravened s 12DJ(1) of the ASIC Act by unduly harassing Dawnetta Yeatman by continuing to contact Dawnetta Yeatman on multiple occasions to seek payment of her insurance premiums.
Contraventions relating to Josephine Shadforth
17.During a telephone call made to Josephine Shadforth on 26 June 2015 by a Sales Agent who was employed by BlueInc Services, and who was also an agent of Select, each of BlueInc Services and Select:
(a)contravened s 12DB(1)(i) of the ASIC Act by the Sales Agent making the false and/or misleading Limited Exclusions Representation to Josephine Shadforth;
(b)contravened s 12DB(1)(i) of the ASIC Act by the Sales Agent making a false and/or misleading representation to Josephine Shadforth that ADC and AIC were not optional extras and/or were a standard component of the insurance policy, when in fact they were both optional extras that a consumer could elect not to add to Let’s Insure Funeral Cover;
(c)engaged in unconscionable conduct towards Josephine Shadforth in contravention of s 12CB(1) of the ASIC Act.
18.By Retention Agents who were contracted to IMS or employed by BlueInc Services, and who were also agents of Select, each of IMS, BlueInc Services and Select:
(a)contravened s 12DB(1)(i) of the ASIC Act by the Retention Agents making false and/or misleading representations to Josephine Shadforth on 18 September 2015 and 15 October 2015 that the Let’s Insure Funeral Cover with optional ADC and AIC could only be cancelled in writing because the insurance policies were a financial product, when in fact there was no such requirement by virtue of the insurance policies being a financial product;
(b)contravened s 12DJ(1) of the ASIC Act by unduly harassing Josephine Shadforth during the period 17 September 2015 to 15 October 2015 by pursuing payment of insurance premiums in circumstances where Josephine Shadforth wanted to cancel the policy and could not cancel in writing;
(c)engaged in unconscionable conduct towards Josephine Shadforth in contravention of s 12CB(1) of the ASIC Act during the period 26 June 2015 to 15 October 2015 by refusing to reasonably assist Josephine Shadforth to cancel her Let’s Insure Funeral Cover with optional ADC and AIC with the result that premium payments were charged to her despite her requests to cancel the policy, and then pursuing payment in the manner that occurred.
Contraventions relating to Georgina Gaykamangu
19.During a telephone call made to Georgina Gaykamangu on 7 July 2015 by a Sales Agent who was employed by BlueInc Services, and who was also an agent of Select, each of BlueInc Services and Select:
(a)contravened s 12DB(1)(i) of the ASIC Act by the Sales Agent making the false and/or misleading Limited Exclusions Representation to Georgina Gaykamangu;
(b)contravened s 12DB(1)(i) of the ASIC Act by the Sales Agent making the false and/or misleading Standard Cover Representation to Georgina Gaykamangu;
(c)contravened s 12DJ(1) of the ASIC Act by coercing Georgina Gaykamangu into purchasing Let’s Insure Funeral Cover, ADC, AIC and HEC, and providing her direct debit payment details over the telephone;
(d)engaged in unconscionable conduct towards Georgina Gaykamangu in contravention of s 12CB(1) of the ASIC Act.
Contravention relating to Geraldine Campbell
20.During a telephone call made to Geraldine Campbell on 2 September 2015 by a Sales Agent who was employed by BlueInc Services, and who was also an agent of Select, each of BlueInc Services and Select engaged in unconscionable conduct towards Geraldine Campbell by signing up Geraldine Campbell to FlexiSure Life Cover with optional CC and taking direct debit payment details from her in contravention of s 12CB(1) of the ASIC Act.
Contraventions relating to Edmund Nundhirribala
21.During a telephone call made to Edmund Nundhirribala on 4 September 2015 by a Sales Agent who was employed by BlueInc Services, and who was also an agent of Select, each of BlueInc Services and Select:
(a)contravened s 12DB(1)(i) of the ASIC Act by the Sales Agent making the false and/or misleading Limited Exclusions Representation to Edmund Nundhirribala;
(b)contravened s 12DB(1)(i) of the ASIC Act by the Sales Agent making the false and/or misleading Standard Cover Representation to Edmund Nundhirribala;
(c)engaged in unconscionable conduct towards Edmund Nundhirribala in contravention of s 12CB(1) of the ASIC Act.
Contraventions relating to Irshad Hussain
22.During a telephone call made to Irshad Hussain on 4 November 2015 by a Sales Agent who was employed by BlueInc Services, and who was also an agent of Select, each of BlueInc Services and Select:
(a)contravened s 12DB(1)(i) of the ASIC Act by the Sales Agents making the false and/or misleading representation to Irshad Hussain that there were no exclusions to the Let’s Insure Accident Cover (Let’s Insure AC) save for professional or motor sport-based exclusions, when in fact there were significant exclusions to the Let’s Insure AC;
(b)contravened s 12DB(1)(g) of the ASIC Act by the Sales Agent making a false and/or misleading representation to Irshad Hussain that the insurance premium remained the same throughout the duration of the policy, when in fact the premium for Let’s Insure Funeral Cover was stepped and would therefore increase over the life of the policy;
(c)engaged in unconscionable conduct towards Irshad Hussain in contravention of s 12CB(1) of the ASIC Act.
23.During a telephone call made to Irshad Hussain on 11 November 2016 by a Retention Agent who was employed by BlueInc Services, and who was also an agent of Select, each of BlueInc Services and Select contravened s 12DB(1)(i) of the ASIC Act by the Retention Agent making a false and/or misleading representation to Irshad Hussain that the Let’s Insure AC could only be cancelled in writing because it was a financial product, when in fact there was no such requirement by virtue of it being a financial product.
24.During the period 24 October 2016 to 4 April 2017, by Retention Agents who were employed by BlueInc Services, and who were also agents of Select, each of BlueInc Services and Select engaged in unconscionable conduct towards Irshad Hussain in contravention of s 12CB(1) of the ASIC Act by failing to permit Irshad Hussain to cancel his Let’s Insure AC and requiring Irshad Hussain to provide a written document bearing his signature before permitting him to cancel his policy.
Contraventions relating to Freddie Lewis
25.During a telephone call made to Freddie Lewis on 25 November 2015 by a Sales Agent who was contracted to IMS, and who was also an agent of Select, each of IMS and Select:
(a)contravened s 12DA of the ASIC Act by the Sales Agent making a misleading or deceptive representation to Freddie Lewis that it would be difficult for him to contact FlexiSure, when in fact Freddie Lewis could have contacted FlexiSure by calling an inbound sales number;
(b)contravened s 12DA of the ASIC Act by the Sales Agent making a misleading or deceptive representation to Freddie Lewis that Select required his bank account details for the purpose of paying benefits to him, when in fact it was so that it could debit money from that account for payment of FlexiSure Life Cover premiums;
(c)engaged in unconscionable conduct towards Freddie Lewis in contravention of s 12CB(1) of the ASIC Act.
26.During the period 9 December 2015 to 9 February 2016, by Retention Agents who were employed by BlueInc Services, and who were also agents of Select, each of BlueInc Services and Select:
(a)contravened s 12DJ(1) by unduly harassing Freddie Lewis by not permitting Freddie Lewis to cancel the policy over the telephone, pressing him to keep the policy and continuing to seek payment from him;
(b)engaged in unconscionable conduct towards Freddie Lewis in contravention of s 12CB(1) of the ASIC Act by failing to permit Freddie Lewis to cancel his FlexiSure Life Cover and continuing to seek payment from him.
Contraventions relating to Cynthia Mirniyowan
27.During telephone calls made to Cynthia Mirniyowan on 28 April 2016 by a Sales Agent who was employed by BlueInc Services, and who was also an agent of Select, each of BlueInc Services and Select:
(a)contravened s 12DB(1)(i) of the ASIC Act by the Sales Agent making a false and/or misleading representation to Cynthia Mirniyowan that there were no exclusions to the Let’s Insure Funeral Cover, ADC or AIC save for limited professional sporting-based and criminal activity exclusions to the AIC, when in fact there were significant exclusions to each of the ADC and AIC;
(b)contravened s 12DB(1)(d) of the ASIC Act by the Sales Agent making a false and/or misleading representation to each of Cynthia Mirniyowan and her partner Derek Wurrawilya that each of them were “really happy” with the quote provided for the purchase of the Let’s Insure Funeral Cover with AIC and ADC;
(c)contravened s 12DB(1)(i) of the ASIC Act by the Sales Agent making a false and/or misleading representation to Cynthia Mirniyowan that ADC and AIC (including the ADC booster) were not optional extras and/or were a standard component of the insurance policy, when in fact they were both optional extras that a consumer could elect not to add to Let’s Insure Funeral Cover;
(d)engaged in unconscionable conduct towards Cynthia Mirniyowan in contravention of s 12CB(1) of the ASIC Act.
28.During the period 19 May 2016 to 6 February 2017, by Retention Agents who were employed by BlueInc Services, and who were also agents of Select, each of BlueInc Services and Select:
(a)contravened s 12DJ(1) of the ASIC Act by unduly harassing Cynthia Mirniyowan by continuing to contact Cynthia Mirniyowan to seek payment of her insurance premiums;
(b)engaged in unconscionable conduct towards Cynthia Mirniyowan in contravention of s 12CB(1) of the ASIC Act by failing to permit Cynthia Mirniyowan to cancel her Let’s Insure Funeral Cover policy, with ADC, AIC and ADC booster, and continuing to seek payment from her.
Contraventions relating to Deepak Shrestha
29.During a telephone call made to Deepak Shrestha on 22 August 2017 by a Sales Agent who was contracted to IMS, and who was also an agent of Select, each of IMS and Select:
(a)contravened s 12DB(1)(g) of the ASIC Act by the Sales Agent making a false and/or misleading representation to Deepak Shrestha that the insurance premium remained the same throughout the duration of the Let’s Insure Easy Life Insurance policy, when in fact the premium was stepped and would therefore increase over the life of the policy;
(b)engaged in unconscionable conduct towards Deepak Shrestha by signing up Deepak Shrestha to Let’s Insure Easy Life Insurance with optional Easy Life AC and taking credit card details from him in contravention of s 12CB(1) of the ASIC Act.
PURSUANT TO S 21 OF THE FCA ACT, THE COURT DECLARES THAT:
30.In the period January 2015 to May 2017, Select contravened s 912A(1)(a) of the Corporations Act by failing to do all things necessary to ensure that the financial services covered by its financial services licence were provided efficiently, honestly and fairly as:
(a)the Refer a Friend program (Refer a Friend Program or Program) was devised and executed unfairly, as at a time that Select’s Sales Agents were also participating in additional incentive programs for sales volume-based benefits, in particular the Cruise, Vespa, and Las Vegas Trip, it enabled those Sales Agents to:
(i)solicit from newly-acquired customers contact details for their friends or family, in circumstances where those customers did not have the opportunity to decline to participate in the Refer a Friend Program and could not reflect on the implications of providing contact details of friends or family members, were incentivised to provide such details, and the Program did not require consent to be sought from the referred persons or afford the newly-acquired customers the opportunity to obtain the referred persons’ consent;
(ii)impliedly suggest to the referred persons by “name-dropping” that the customer who had provided their contact details had encouraged Select’s contact of the referred person and/or endorsed or approved of Select’s insurance policies;
(b)Select did not take adequate steps to ensure that the Refer a Friend Program was not abused by failing to:
(i)adequately monitor the telephone calls of Sales Agents soliciting contact details from newly-acquired customers for the purpose of the Refer a Friend Program, or the telephone calls of Sales Agents made to persons whose contact details were obtained through the Program; and
(ii)identify that the use of the Refer a Friend Program would, or was causing or contributing to, a spike in sales in postcodes with a high proportion of Aboriginal and/or Torres Strait Islander populations in the period from January 2015 to October 2015.
31.Russell Howden was involved, within the meaning of s 79 of the Corporations Act, in the contravention of s 912A(1)(a) of the Corporations Act by Select referred to in declaration 30 above.
32.Select separately contravened s 912A(1)(c) of the Corporations Act when it failed to comply with the financial services laws in Chapter 7 of the Corporations Act on each occasion that:
(a)a representative for whom it was the responsible licensee accepted conflicted remuneration in contravention of s 963E, as referred to in declaration 1 above; and
(b)it failed to take reasonable steps to ensure that a representative of its financial services licence did not accept conflicted remuneration in contravention of s 963F, as referred to in declaration 2 above.
33.Russell Howden was involved within the meaning of s 79 of the Corporations Act in each of the contraventions of s 912A(1)(c) of the Corporations Act by Select referred to in declaration 32 above.
34.Select contravened s 912A(1)(c) of the Corporations Act when it failed to comply with the financial services laws in Division 2 of Part 2 of the ASIC Act on each occasion when:
(a)it engaged in unconscionable conduct in contravention of s 12CB(1) of the ASIC Act, as referred to in declarations 7(a), 8(b), 9(f), 10(c), 11, 12(c), 14(b), 15(c), 17(c), 18(c), 19(d), 20, 21(c), 22(c), 24, 25(c), 26(b), 27(d), 28(b) and 29(b) above;
(b)it made representations that were misleading or likely to mislead in contravention of s 12DA of the ASIC Act, as referred to in declarations 25(a) and 25(b) above;
(c)it made false or misleading representations in contravention of s 12DB(1)(a) of the ASIC Act, as referred to in declarations 7(b), 9(b) and 12(b) above;
(d)it made false or misleading representations in contravention of s 12DB(1)(d) of the ASIC Act, as referred to in declaration 27(b) above;
(e)it made false or misleading representations in contravention of s 12DB(1)(g) of the ASIC Act, as referred to in declarations 7(d), 7(e), 9(d), 22(b) and 29(a) above;
(f)it made false or misleading representations in contravention of s 12DB(1)(i) of the ASIC Act, as referred to in declarations 7(a), 7(c), 9(a), 9(c), 10, 10(b), 12(a), 13, 17(a), 17(b), 18(a), 19(a), 19(b), 21(a), 21(b), 22(a), 23, 27(a) and 27(c) above;
(g)it coerced consumers in contravention of s 12DJ of the ASIC Act, as referred to in declarations 7(f), 9(e), 14(a) and 19(c) above;
(h)it unduly harassed consumers in contravention of s 12DJ of the ASIC Act, as referred to in declarations 8(a), 16, 18(b), 26(a) and 28(a) above.
THE COURT ORDERS THAT:
Disqualification and restraining orders in relation to Mr Howden
35.Pursuant to s 206E of the Corporations Act, Russell Howden is disqualified from managing corporations for 5 years.
36.Pursuant to s 1324 of the Corporations Act, Mr Howden is restrained, in respect of companies of which he is a director and which hold a financial services licence (and/or which employ representatives of a financial services licensee), from causing or permitting those companies to give conflicted remuneration to their representatives.
Pecuniary penalties in relation to contraventions of the Corporations Act
37.Select pay to the Commonwealth a pecuniary penalty pursuant to s 1317G(1E) of the Corporations Act in the sum of $1,200,000.
38.BlueInc Services pay to the Commonwealth a pecuniary penalty pursuant to s 1317G(1E) of the Corporations Act in the sum of $900,000.
39.Mr Howden pay to the Commonwealth a pecuniary penalty pursuant to s 1317G(1) of the Corporations Act in the sum of $100,000.
Pecuniary penalties in relation to contraventions of the ASIC Act
40.Select pay to the Commonwealth a pecuniary penalty pursuant to s 12GBA of the ASIC Act in the sum of $6,500,000.
41.BlueInc Services pay to the Commonwealth a pecuniary penalty pursuant to s 12GBA of the ASIC Act in the sum of $3,500,000.
42.IMS pay to the Commonwealth a pecuniary penalty pursuant to s 12GBA of the ASIC Act in the sum of $1,400,000.
Restraining orders in relation to Select, BlueInc Services and IMS
43.Pursuant to s 1324 of the Corporations Act:
(a)BlueInc Services is restrained from giving conflicted remuneration to its employees in contravention of Part 7.7A of Chapter 7 of the Corporations Act;
(b)Select is restrained from accepting, and failing to take reasonable steps to ensure that representatives of its financial services licence do not accept, conflicted remuneration in contravention of Part 7.7A of Chapter 7 of the Corporations Act.
44.Pursuant to s 12GD of the ASIC Act, each of BlueInc Services, Select and IMS, and their employees and agents, are restrained from:
(a)pressing a consumer to purchase an insurance policy over the telephone during the same call, in circumstances where the consumer has asked for time to consider the transaction;
(b)selling an insurance policy to a consumer over the telephone during the first substantive outbound telephone call to the consumer about the insurance policy;
(c)selling an insurance policy to a consumer without taking genuine and reasonable steps to confirm that the consumer has received and considered a written product disclosure statement and a written financial services guide in relation to the policy;
(d)selling an insurance policy to a consumer without taking genuine and reasonable steps to ensure that the consumer understands the coverage offered by the policy, the exclusions to the policy and the cost of the policy over the duration of that policy;
(e)making false or misleading representations in relation to the coverage offered by the insurance policy, the exclusions to the policy and the cost of the policy over the duration of that policy;
(f)requiring an insurance policy to be cancelled in writing where that policy has been sold during a telephone call.
Probation order
45.Pursuant to s 12GLA(2)(b) of the ASIC Act, Select, BlueInc Services and IMS are to, at their own expense, establish a compliance, education and training, and internal operations review program (Compliance Program) set out in the Annexure to these orders.
Costs
46.Pursuant to s 43 of the FCA Act, the defendants are to pay ASIC’s costs, to be agreed or assessed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ANNEXURE – COMPLIANCE PROGRAM
Select AFSL Pty Ltd (ACN 151 931 618) (Select), BlueInc Services Pty Ltd (ACN 109 789 077) and Insurance Marketing Services Pty Ltd (ACN 160 307 979) (together, the Entities; each, an Entity) shall establish a compliance, education and training, and internal operations review program (Compliance Program) that complies with each of the below requirements.
For the purpose of this Annexure, the reference to “staff” is a reference to employees, contractors and/or other representatives or agents of the relevant Entity.
A. GENERAL
(1)The Entities will pay all costs associated with implementing the Compliance Program, including but not limited to the appointment of the Consultant (defined at [4] below).
B. APPOINTMENTS
(2)Within the later of either seven (7) days after the date of the order of the Court pursuant to s 12GLA(2)(b) of the ASIC Act (Court Order) or 14 days prior to the date of commencement of any agreements entered into by the Entities for the marketing, distribution or administration of insurance policies (with the relevant date being referred to as the Commencement Date), the Entities will appoint a responsible senior manager, with suitable qualifications or experience in corporate compliance, of their business as a Compliance Officer with responsibility for ensuring that the Compliance Program is effectively established, implemented and maintained in accordance with the Court Order (Compliance Officer).
(3)On the second and third annual anniversary of the Commencement Date, the Compliance Officer will report to ASIC as to whether:
(a)the Compliance Officer has taken reasonable steps to ensure that the Entities’ policies, procedures and systems for managing the risks identified in the course of the Initial Review and Compliance Review referred to at [8(a)] below and – including those policies, procedures and systems adopted as a result of the recommendations made in the course of the Compliance Review referred to at [21] below – are appropriate and adequate; and
(b)nothing has come to the Compliance Officer’s attention during the previous 12 months to suggest that the Compliance Program is not appropriate, to the extent reasonably possible, to address the risks set out in [8(a)] below; or
(c)any matters that have come to their attention during the previous 12 months that would indicate that the Compliance Program is not appropriate to ensure that the risks set out in [8(a)] below have been or will be adequately addressed, and what steps the Entities have taken or will take to address those matters (including any relevant timeframes).
(4)Within fourteen (14) days of the date of the Commencement Date, the Entities will engage, jointly and severally, one expert (Consultant) who:
(a)has the necessary expertise, experience and operational capacity to perform the role contemplated by the Court Order; and
(b)has had no prior or existing contractual, employment or other commercial relationship with the Entities, their related bodies corporate and their officers at the time of the appointment; and
(c)will at all material times be capable of exercising objective and impartial judgement,
whose:
(d)terms of appointment are to be based on the matters set out in [7] and [23] below; and
(e)whose appointment and terms of appointment are to be approved by ASIC in writing, such approval not to be unreasonably withheld.
(5)If one Consultant cannot address all of the risks set out in [8(a)] below, two or more Consultants may be engaged.
(6)If the Consultant becomes unable to proceed with the engagement as a result of physical impediment, conflict of interest or becoming aware of information that adversely affects their ability to exercise objective and impartial judgment, the Consultant must notify each of the Entities and ASIC of the same, and a different Consultant may be engaged in accordance with the process set out in [4] above within 14 days of the first Consultant’s notice.
C. INITIAL STEPS AND REVIEW
a. Initial Review
(7)The Entities will instruct the Consultant to conduct an initial review and risk assessment in accordance with [8]-[9] below (Initial Review), including to prepare the Initial Review Report (defined in [9] below), to be completed within three (3) months of the date of the Commencement Date (or such further time as the Consultant requires, with any extension of time to be approved by ASIC, such approval not to be unreasonably withheld).
(8)The Initial Review must, at a minimum:
(a)identify areas where each Entity is at risk of breaching:
(i)Pt 2, Div 2, Subdivisions C and D of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act); and
(ii)Ch 7, Pt 7.6, Division 3 and Pt 7.7A, Division 4 of the Corporations Act 2001 (Cth) (Corporations Act).
(b)assess the likelihood of these risks occurring;
(c)identify where there may be gaps in each Entity’s existing policies, procedures and systems for managing these risks, including, but not limited to the Entities’ policies, procedures and systems around induction and training;
(d)provide recommendations for action.
(9)The Consultant will prepare a written report (Initial Review Report) setting out:
(a)a description of the methodology, parameters, limitations, qualifications and assumptions applicable to the Initial Review, including evidence gathered and examined;
(b)the findings of the Initial Review, including the reasons for each of the Consultant’s opinions; and
(c)recommendations made as a consequence of the Initial Review.
(10)Select, on behalf of the Entities, will provide a copy of the Initial Review Report to ASIC within five (5) days of receiving it from the Consultant.
(11)Each Entity will implement promptly and with due diligence any recommendations made by the Consultant as a result of the Initial Review, within 30 days of receiving the Initial Review Report (or such further time as the Entity requires, with any extension of time to be approved by ASIC, such approval not to be unreasonably withheld).
b. Compliance Policy
(12)Within 30 days of the issuance of the Initial Review Report, each Entity will issue a compliance policy (Compliance Policy) that:
(a)is written in plain language;
(b)contains a statement of commitment to compliance with the Corporations Act and the ASIC Act, including in particular to ensuring appropriate sales and retention conduct and not providing conflicted remuneration to staff;
(c)contains a strategic outline of how the commitment at [12(b)] above will be realised within the Entity;
(d)addresses each of the recommendations made by the Consultant in the Initial Review and what steps it has taken or is taking to implement the recommendations;
(e)contains a requirement for all staff to report any Compliance Program related issues, including any concerns regarding sales and retention conduct and conflicted remuneration to the Compliance Officer; and
(f)refers staff to its Complaints Handling System (as referred to in [14] below).
(13)Each Entity will provide a copy of their Compliance Policy to ASIC and the Entity’s staff within five (5) days of issuing it.
c. Complaints Handling System
(14)Within four (4) months of the date of the Commencement Date, each Entity will ensure that it has a complaints handling system:
(a)that addresses each of the recommendations made by the Consultant in the Initial Review to the extent those recommendations relate to complaints handling;
(b)that at a minimum, is capable of identifying, storing and responding to consumer complaints; and
(c)of which staff and consumers are made aware.
(15)Each Entity will provide a copy of any policies and procedures regarding the complaints handling system to ASIC and the Entity’s staff within five (5) days of issuing them.
d. Education and training
(16)Each Entity will introduce regular (at least once a year) practical training for all staff of each Entity whose duties could result in them being concerned with conduct that may contravene Ch 7, Pt 7.6, Division 3 and Pt 7.7A, Division 4 of the Corporations Act and Pt 2, Div 2, Subdivisions C and D of the ASIC Act.
(17)Each Entity must ensure that its training is:
(a)designed and conducted by a suitably qualified compliance professional (Compliance Trainer) with expertise in compliance with the Corporations Act and ASIC Act; and
(b)addresses any matters, and/or adopts recommendations made in the Initial Review Report by the Consultant.
(18)In relation to training scheduled in the three (3) year period following the date of the Commencement Date, each Entity must provide to its Compliance Trainer, for the purposes of conducting training for the Entity’s staff, a copy of:
(a)the Court Order;
(b)the Compliance Policy of each Entity;
(c)any policies and procedures regarding the complaints handling system; and
(d)all reports prepared by the Consultant as at the date the training is scheduled.
(19)Each Entity will ensure that awareness of the Compliance Policy and complaints handling system form part of the induction of all new staff, including directors, officers, employees, consultants, contractors and other representatives of the Entity.
D. COMPLIANCE REVIEW AND RECOMMENDATIONS
a. Compliance Review
(20)Within the period of four (4) to five (5) months of receiving the Initial Review Report from the Consultant, each Entity will instruct the Consultant to conduct a further review of the Compliance Program (Compliance Review) to be carried out in accordance with [21]-[22] below, including to prepare the Compliance Review Report (defined in [22] below), to be completed within 12 months of the Commencement Date (or such further time as the Consultant requires, with any extension of time to be approved by ASIC, such approval not to be unreasonably withheld).
(21)The Compliance Review must, at a minimum:
(a)review the extent to which each Entity’s Compliance Program adequately addresses the matters identified and recommendations made in the Initial Review or any subsequent review; including:
(i)the adequacy of each Entity’s sales and retention conduct, including with respect to identifying and dealing with potentially vulnerable consumers;
(ii)the adequacy of each Entity’s remuneration practices as relevant to the prohibition on conflicted remuneration;
(iii)the adequacy and effectiveness of each Entity’s complaints handling system; and
(iv)the adequacy and effectiveness of each Entity’s policies, procedures, scripts and staff training;
(b)make recommendations for rectifying any deficiencies in [21(a)(i)]-[21(a)(iv)] above that the Consultant considers are reasonably necessary to ensure that each Entity has the required policies, procedures and training in place to ensure effective on-going compliance with Ch 7, Pt 7.6, Division 3 and Pt 7.7A, Division 4 of the Corporations Act and Pt 2, Div 2, Subdivisions C and D of the ASIC Act.
(22)The Consultant will prepare a written report (Compliance Review Report) setting out:
(a)a description of the methodology, parameters, limitations, qualifications and assumptions applicable to the Compliance Review, including evidence gathered and examined;
(b)the findings of the Compliance Review, including the reasons for each of the Consultant’s opinions; and
(c)recommendations made as a consequence of the Compliance Review.
(23)Select, on behalf of the Entities, will provide a copy of the Compliance Review Report to ASIC within five (5) days of receiving it from the Consultant.
b. Recommendations
(24)Each Entity shall implement promptly and with due diligence any recommendations made by the Consultant as a result of the Compliance Review within 30 days of receiving the Compliance Review Report (or such further time as the Entity requires, with any extension of time to be approved by ASIC, such approval not to be unreasonably withheld).
(25)Each Entity shall, in the event that the Compliance Review Report identifies any recommendations or actions that have not been implemented by that Entity, provide ASIC with a written plan (Remedial Action Plan) setting out the actions the Entity proposes to take to ensure that those recommendations and actions are implemented.
(26)Each Entity will provide its Remedial Action Plan to ASIC within 14 days of the Compliance Review Report being provided to ASIC.
(27)Each Entity will implement promptly and with due diligence any Remedial Action Plan within the 30 days referred to in [24] above, except that if ASIC requires any reasonable modifications to any Remedial Action Plan, then the Entity will implement the Remedial Action Plan as so modified.
E. REASONABLE ASSISTANCE TO THE CONSULTANT
(28)Each Entity shall:
(a)permit the Consultant access to its books and to interview current employees, contractors, representatives and/or agents to the extent that it is reasonable having regard to the requirements of this Court Order;
(b)give the Consultant any information or explanation reasonably requested of any matter connected with the Compliance Program;
(c)provide the Consultant access to all customer data required to enable it to fulfil its obligations under this Court Order and the Compliance Program; and
(d)otherwise give all reasonable assistance to the Consultant to enable the Consultant to carry out the terms of their engagement and to produce the Initial Review Report and the Compliance Review Report.
F. OTHER
(29)If requested by ASIC, each Entity will, at their own expense and within a reasonable period, provide ASIC with copies of documents and information in respect of matters that are the subject of the Compliance Program.
(30)Each Entity acknowledges that ASIC may from time to time publicly refer to the content of any of the Initial Review Report, the Entity’s Compliance Policy, the Compliance Review Report, the Entity’s Remedial Action Plan and/or the Compliance Program and may make public a summary of that material or a statement that refers to the content of that material.
(31)Each Entity will notify ASIC as soon as reasonably practicable, and in any event within ten (10) days of becoming aware, of any failure by any of the Entities to comply with the terms of the Court Order.
REASONS FOR JUDGMENT
ABRAHAM J:
These reasons relate to the determination of the relief to be imposed for the contraventions found by this Court in Australian Securities and Investments Commission v Select AFSL Pty Ltd (No 2) [2022] FCA 786 (Liability Judgment or LJ) and should be read in conjunction with the Liability Judgment. Unless otherwise stated, terms defined in the Liability Judgment have the same meaning in these reasons.
The Corporate Defendants are to be dealt with for the following:
(a)Select AFSL Pty Ltd (Select), for contraventions of the conflicted remuneration provisions of the Corporations Act 2001 (Cth) (Corporations Act) and of the consumer protection provisions of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act);
(b)BlueInc Services Pty Ltd (BlueInc Services), for contraventions of the conflicted remuneration provisions of the Corporations Act and the consumer protection provisions of the ASIC Act; and
(c)Insurance Marketing Services Pty Ltd (IMS), for contraventions of the consumer protection provisions of the ASIC Act.
Mr Howden is to be dealt with for his involvement in contraventions of the conflicted remuneration provisions the Corporations Act, breaches of the general obligations provisions imposed on a holder of an AFSL under ss 912A(1)(a) and (c) of the Corporations Act, and his directors’ duties contraventions of s 180 of the Corporations Act.
There is no dispute between the parties that declarations ought to be made. That said, there is dispute between the parties as to: the quantum of any pecuniary penalties imposed; the form of the declarations; whether Mr Howden should have a disqualification order made against him; and whether advertising orders ought to be made. The dispute, in large part, is underpinned by a dispute as to the assessment of the seriousness of the contravening conduct.
The plaintiff, the Australian Securities and Investments Commission (ASIC) sought the following total penalties (having also identified what it submitted is the appropriate penalty for each contravention or course of conduct):
(a)for contraventions of the conflicted remuneration provisions of the Corporations Act:
(i)that Select pay a pecuniary penalty in the sum of $1,800,000;
(ii)that BlueInc Services pay a pecuniary penalty in the sum of $1,700,000;
(b)for contraventions of the consumer protection provisions of the ASIC Act:
(i)that Select pay a pecuniary penalty in the sum of $11,450,000;
(ii)that BlueInc Services pay a pecuniary penalty in the sum of $6,850,000;
(iii)that IMS pay a pecuniary penalty in the sum of $3,150,000.
In respect to Mr Howden, ASIC sought, inter alia: a pecuniary penalty of $100,000; and disqualification from managing corporations for various alternate periods, the longest being 10 years.
The Corporate Defendants submitted that the appropriate penalties were:
(a)for their contraventions of the conflicted remuneration provisions of the Corporations Act:
(i)the sum of $300,000 being payable by Select;
(ii)the sum of $200,000 being payable by BlueInc Services;
(b)for their contraventions of the consumer protection provisions of the ASIC Act:
(i)the sum of $1,000,000 being payable by Select;
(ii)the sum of $500,000 being payable by BlueInc Services;
(iii)the sum of $200,000 being payable by IMS.
In respect to Mr Howden, he submitted that he should not be disqualified at all and conceded that, if no disqualification order is made, he should pay a pecuniary penalty of $20,000.
For the reasons below, I impose the following penalties:
(a)for contraventions of the conflicted remuneration provisions of the Corporations Act:
(i)Select is to pay a pecuniary penalty in the sum of $1,200,000;
(ii)BlueInc Services is to pay a pecuniary penalty in the sum of $900,000;
(b)for contraventions of the consumer protection provisions of the ASIC Act:
(i)Select is to pay a pecuniary penalty in the sum of $6,500,000;
(ii)BlueInc Services is to pay a pecuniary penalty in the sum of $3,500,000;
(iii)IMS is to pay a pecuniary penalty in the sum of $1,400,000.
In respect to Mr Howden, he is disqualified from managing corporations for a period of five years and is to pay a pecuniary penalty of $100,000.
Legal principles
The principles to be applied are largely not in issue. They are well-established. Rather, the issue is with their application.
At the outset, it is appropriate to address the maximum penalties for each of the contraventions:
(a)for each Conflicted Remuneration Contravention it is $1 million: s 1317G(1F) of the Corporations Act (as it was prior to March 2019);
(b)with respect to:
(i)all of the contraventions in relation to David Mirrawana, Zondani Mtawale and Teubiti Tapera;
(ii)the sales contraventions in respect of Jennifer Yalumul, Dawnetta Yeatman, Josephine Shadforth, and Georgina Gaykamangu; and
(iii)part of the retention contraventions in respect of Josephine Shadforth,
being those contraventions which occurred prior to 31 July 2015, for each contravention it is $1.7 million: s 12GBA(3) of the ASIC Act (which, it may be noted, is significantly higher than the comparable penalties under the ACL at the time);
(c)save for the contraventions referred to in [12(d)] below, the balance of the Consumer Contraventions occurred between 31 July 2015 to 30 June 2017, and it is $1.8 million: s 12GBA(3) of the ASIC Act; and
(d)with respect to the retention contraventions relating to Jennifer Yalumul and all contraventions in respect of Deepak Shrestha, each of which occurred after 1 July 2017, for each contravention it is $2.1 million: s 12GBA(3) of the ASIC Act.
In regard to the relevance of a maximum penalty, in Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357, the majority observed at [31]:
[31]… careful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick …
In a civil penalty context, the relevance of a prescribed maximum penalty as a yardstick was explained by the Full Court of the Federal Court in Australian Competition and Consumer Commission vReckitt Benckiser Pty Ltd [2016] FCAFC 181; (2016) 349 ALR 25 (Reckitt Benckiser) at [155]-[156] as follows:
[155]The reasoning in Markarian about the need to have regard to the maximum penalty when considering the quantum of a penalty has been accepted to apply to civil penalties in numerous decisions of this Court both at first instance and on appeal (Director of Consumer Affairs, Victoria v Alpha Flight Services Pty Ltd [2015] FCAFC 118 at [43]; Australian, Competition and Consumer Commission v BAJV Pty Ltd [2014] FCAFC 52; (2014) ATPR 42-470 at [50]-[52]; Setka v Gregor (No 2) [2011] FCAFC 90; (2011) 195 FCR 203 at [46]; McDonald v Australian Building and Construction Commissioner [2011] FCAFC 29; (2011) 202 IR 467 at [28]-[29]). As Markarian makes clear, the maximum penalty, while important, is but one yardstick that ordinarily must be applied.
[156]Care must be taken to ensure that the maximum penalty is not applied mechanically, instead of it being treated as one of a number of relevant factors, albeit an important one. Put another way, a contravention that is objectively in the mid-range of objective seriousness may not, for that reason alone, transpose into a penalty range somewhere in the middle between zero and the maximum penalty. Similarly, just because a contravention is towards either end of the spectrum of contraventions of its kind does not mean that the penalty must be towards the bottom or top of the range respectively. However, ordinarily there must be some reasonable relationship between the theoretical maximum and the final penalty imposed.
This passage was more recently cited with approval in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 399 ALR 599 (Pattinson) at [53].
The primary purpose of any civil penalty regime is to ensure compliance with the statutory regime by deterring future contraventions: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482 (Agreed Penalties Case) at [24]. The principal object of an order that a person pay a pecuniary penalty is deterrence. That is, specific deterrence of the contravenor and, by his or her example, general deterrence of other would-be contravenors: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; (2018) 262 CLR 157 at [116]. Civil pecuniary penalties are “primarily if not wholly protective in promoting the public interest in compliance [with the statute]”: Agreed Penalties Case at [55] and [59], [68], [110]. This point was emphasised more recently in Pattinson at [15]-[16], [43], and [45] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ.
The deterrent effect “must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business”: Pattinson at [17], citing Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 (Singtel Optus) at [62].
The assessment of a penalty of appropriate deterrent value will have regard to a number of factors including: (1) the nature and extent of the contravening conduct; (2) the amount of loss or damage caused; (3) the circumstances in which the conduct took place; (4) the size of the contravening company; (5) the degree of power the contravening company has, as evidenced by its market share and ease of entry into the market; (6) the deliberateness of the contravention and the period over which it extended; (7) whether the contravention arose out of the conduct of senior management or at a lower level; (8) whether the contravening company has a corporate culture conducive to compliance, as evidenced by educational programs or other corrective measures in response to an acknowledged contravention; and (9) whether the contravening company has shown a disposition to co-operate with the authorities responsible for the enforcement of the relevant Act in relation to contravention: Pattinson at [18], referring to the Trade Practices Commission v CSR Ltd [1990] FCA 762; (1991) ATPR 41-076 (TPC v CSR) at 52,152-52,153. These are not to be considered to be a rigid list of factors to be ticked off (Pattinson at [19]), but rather are to inform a multifactorial consideration that leads to a result arrived at by a process of “instinctive synthesis” addressing the relevant considerations (Reckitt Benckiser at [44]).
In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285 (NW Frozen Foods) at 292, Burchett and Kiefel JJ (Carr J agreeing) explained that these factors may be regarded as elaborations of the statutory requirement to consider the circumstances in which the act or omission took place. At 297, their Honours then expanded the relevant considerations to include: whether the contravenor has engaged in similar conduct in the past; and the contravenor’s financial position. In J McPhee & Son (Australia) Pty Ltd v Australian Competition & Consumer Commission [2000] FCA 365; (2000) 172 ALR 532 at [163], the relevant considerations were also expanded to include whether the conduct was systematic, deliberate or covert.
In Pattinson at [46], the majority explained that an appropriate penalty is one that “strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case”.
Ordinarily, separate contraventions arising from separate acts should attract separate penalties. However, where separate acts give rise to separate contraventions that are inextricably interrelated, they may be regarded as a “course of conduct” for penalty purposes: Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73; (2018) 262 FCR 243 at [234]. This avoids double punishment for those parts of the legally distinct contraventions that involve overlap in wrongdoing: see, for example, Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; (2010) 269 ALR 1 at [39] and [41]. Whether the contraventions should be treated as a single course of conduct is fact specific, having regard to all of the circumstances of the case.
Characterising a number of contraventions as one course of conduct does not mean that the course of conduct is capped at the maximum penalty for one contravention. The maximum penalty for the course of conduct is not restricted to the prescribed statutory maximum penalty for any single contravening act: Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd t/a Bet365 (No 2) [2016] FCA 698 at [24]. It does not proceed as if it is only one contravention: Australian Competition and Consumer Commission v Unique International College Pty Ltd (Imposition of Penalty) [2019] FCA 1773 at [52]. The penalties ultimately imposed are of an appropriate deterrent value, having regard to the actual, substantive wrongdoing.
The principle of totality requires the Court to make a “final check” of the penalties to be imposed on a wrongdoer, considered as a whole, to ensure that the total penalty does not exceed what is proper or appropriate for the entire contravening conduct: Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd [1997] FCA 450; (1997) 145 ALR 36 at 53, citing Mill v The Queen [1988] HCA 70; (1988) 166 CLR 59.
I will return to address the legal principles relevant to some of the other orders sought against the Corporate Defendants and Mr Howden (together, the Defendants), when considering the relevant submissions.
Evidence
The evidence at the liability hearing stands as evidence admitted for the purpose of the relief hearing.
In addition, ASIC, read the affidavit of Cameron Luke Villarosa affirmed on 4 October 2022, and tendered the annexures to it. ASIC also tendered an amended statement of further agreed background facts and extracts of the transcripts of the examinations conducted pursuant to s 19 of the ASIC Act.
For the Defendants, Mr Howden read an affidavit, in his own name, sworn 22 November 2022. The Defendants also read two character references for Mr Howden: an affidavit of Thomas Noel Grogan sworn 18 November 2022 (with its annexure); and an affidavit of Mark Wallis Willock sworn 22 November 2022 (with its annexure). Further, the Defendants tendered: extracts of the transcripts of the examinations conducted pursuant to s 19 of the ASIC Act (to which ASIC objected on the ground of relevance); a bundle of documents comprising the deed of settlement establishing the Howden family’s trust and share certificates; an email from ASIC to the Defendants regarding costs; the documents annexed to Mr Howden’s affidavit; and a compilation of training documents and BlueInc Group Pty Ltd’s (BlueInc Group) training register from its access database.
It is necessary to consider Mr Howden’s evidence in more detail.
Evidence of Mr Howden
Although Mr Howden did not give evidence in the liability hearing, he sought to read a lengthy affidavit on this hearing. ASIC objected to passages of the affidavit, generally on the basis they canvassed matters already addressed at the liability hearing and of which findings have been made, and in relation to some passages, more specifically, on the basis that they cavil with findings in the Liability Judgment. The parties agreed that those objections could be ruled on in this judgment. I note that some, albeit limited paragraphs were not pressed by the Defendants after objection was taken, being part of [59] and [185]-[186], which plainly cavilled with my findings.
As to the remaining objections on the basis the affidavit cavils with my findings in the Liability Judgment, some of the passages do cavil with those findings. For example, the remaining words of [59] and [95(c)], [95(d)].
In respect to [95(c)] and [95(d)] regarding certain practices, it was submitted by the Defendants that it would be unfair to Mr Howden to exclude the evidence given that he was cross-examined on his role in setting the culture of the Corporate Defendants and his knowledge of the culture. However, those paragraphs are inconsistent with the LJ at [22], [24], [94]. Moreover, given my findings, including the frequency with which Mr Howden walked the floor, that his office was on the sales floor, and that he was a micromanager, I do not accept that he was not aware of that conduct. In that context, the statement at [59] that he was not concerned with Sales Agents’ sales or calls also cavils with my conclusion in the LJ at [1390].
In respect to [36(h)], [71], [97], [106], [167], whilst perhaps not strictly cavilling with my findings, they involve a selective recitation of the events and the roles of persons in the companies. Although I admit the paragraphs on the basis described below at [37], it is difficult to understand how they advance the Defendants’ case, when the aspects omitted relate to findings in the Liability Judgment.
Similarly, I admit [168] on the same basis. That said, although I accept the imposition of a penalty mechanism in the Incentives schemes was intended to be aimed at compliance, I do not accept that it had the level of significance referred to. If that was so, for example, Mr Howden and others of senior management would have considered the appropriateness of: a compliance system which only assessed one in 10 calls at that time in 2015; implementing the Las Vegas and Hawaii Incentives after Mr Howden was aware of an issue as to the use of the Refer a Friend program in relation to certain Indigenous communities in 2015 (regarding which Mr Hoey was given an informal warning); and implementing the Hawaii Incentive, after Mr Howden had acknowledged the spike in sales to the postcodes identified as having a high concentration of Indigenous residents (the spike) was contributed to by an overall increase in sales at the time that the Cruise Incentive and the Vespa Incentive were being conducted. Each of these details are considered further below.
In respect to [99] and [101], they are said to reflect Mr Howden’s understanding that the functions of Retention Agents were being performed in accordance with the instructions of St Andrew’s. However, as at the time of swearing the affidavit, that could not be his understanding, for if it was, it ignores the findings in the Liability Judgment.
The remainder of the objections to Mr Howden’s evidence by ASIC were put on the basis that, in substance, if a matter was dealt with in the liability phase, as a matter of principle and a matter of fairness, a defendant that has made a deliberate choice not to give evidence for strategic reasons should not then be provided with the opportunity to give their version of events at the penalty phase. In effect, the submission is that the ship has sailed.
In Mayfair Wealth Partners Pty Ltd v Australian Securities and Investments Commission [2022] FCAFC 170 at [194]-[195], the Court observed:
[194]In Finance Sector Union of Australia v Commonwealth Bank of Australia [2005] FCA 1847; (2005) 224 ALR 467 at [6] Merkel J took a stricter view based on the interest in the finality of litigation and related discretionary considerations, saying:
… During the course of the penalty hearing the respondents sought to raise a number of matters relating to liability that had not been raised at the hearing on liability. In so far as those matters could have been tested or met by FSU adducing, or challenging, evidence in relation to those matters, it is not appropriate to allow them to be raised at the penalty hearing: see Park v Brothers [2005] HCA 73 at [33]–[34]. As a consequence, at the penalty hearing I ruled that the evidence filed by the respondents for the purposes of that hearing, which was also capable of being relevant to liability, was to be received only in relation to the quantum of any penalty, and not in relation to the liability of CBA in respect of that penalty. The main reason for that ruling was that the issue of liability had been determined in the reasons for judgment on the basis of the pleadings and evidence before the Court at trial, as well as on the basis of the manner in which the respective parties chose to conduct their cases at trial. In those circumstances, it would be unfair to FSU if the respondents’ evidence at the penalty hearing was able to be relied upon, directly or indirectly, in relation to liability, absent applications to amend the pleadings and to re-open the respondents’ case. No such applications were made.
[195]We prefer the approach in Finance Sector Union to that in Forge. It would have been unfair to ASIC and contrary to the interests of justice to permit the appellants to challenge facts found in the liability hearing in the penalty hearing when they made a deliberate forensic decision not to appear in the liability hearing.
I propose to adopt this approach, and admit the remaining evidence of Mr Howden objected to, on the penalty hearing only. It is appropriate to note here that Mr Howden has been cross-examined. The issue is one of the weight to be attached to the evidence. As noted above, some of the material in the affidavit is selective, which fails to grapple with the findings made.
Mr Howden also addressed the effect of a disqualification order, noting that: he was the only person “running these corporate structures”, and accordingly could not continue as an employee while a management team continued to do so; given his age and being a manager in the financial services industry, he would not be employed elsewhere in the market; and if such an order were not limited to any industry, he could not be involved in his self-managed superannuation fund.
Ultimately, he submitted that he should not be subject to a disqualification period, but if it were to be ordered, it should be short and only in relation to the financial services industry.
Most of these submissions have been addressed above. For example, the compliance system, and the adequacy thereof is referred to above at [135]-[156]. Mr Howden’s submission as to his approach on finding out about these contraventions is not accepted in the manner asserted, for the reasons given above: see, for example, [47]-[48]. In evidence, Mr Howden repeatedly use the phrase “with the benefit of hindsight”. However, in the context of those findings above, there is no evidence that Mr Howden turned his mind to whether the compliance system was sufficient: see also, for example, [147]-[148] and [153]-[155]above. The submission that he could not have known about the effect of the Refer a Friend program has been addressed above at [52]-[55].
One matter on which Mr Howden’s evidence is silent, is why he approved sales scripts which meant that the Referred Customer did not consent before their details were provided and where Referring Customers were not asked they wished to participate in the program: see above at [54]. That was in circumstances where Select dictated that the script be followed, and a failure to do so, at least theoretically, resulted in a fail if that was one of the calls assessed: see above at [147]. Because of the manner in which their details were elicited, it meant that Referred Customers were cold called, and Sales Agents could put pressure on them by the use of the name dropping.
As noted above, Mr Howden submitted that to disqualify him would deprive him of the ability to earn a living. There is no evidence to support that submission, nor is there any reason to suppose that would be so. It might be that he wishes to work in the manner he previously has, but given his background, there is no basis to suggest that he will be unable to do so as an employee or contractor. I also note that Mr Howden has provided no information about his personal financial circumstances and therefore no information as to his ability to support himself from his existing assets.
I refer also to the discussion at [249] below.
In those circumstances, and given his lack of real appreciation for what occurred (see, for example, above at [40]), pursuant to s 206E, I disqualify Mr Howden from managing corporations for a period of five years. Each of the criteria in s 206E is satisfied and, given the purpose of a disqualification order, I am satisfied that such an order is justified. I note that in reaching that conclusion, I have accepted the approach set out at [232] above.
Pecuniary penalty
ASIC submitted that, for his contraventions of s 180 of the Corporations Act, Mr Howden should also pay a pecuniary penalty of $100,000. Mr Howden submitted that, if no disqualification order is made, it would be appropriate for him to pay a pecuniary penalty of $20,000. He submitted that if a disqualification order were to be made, that would be sufficient punishment and no pecuniary penalty should be ordered.
It is not in issue that the same principles as apply to the Corporate Defendants on the question of pecuniary penalty apply to a pecuniary penalty ordered pursuant to s 1317G.
Mr Howden submitted that his contravention of s 180 is at the lower end of the scale, and does not share the aggravating features of the two other cases where contraventions of the conflicted remuneration provisions have been dealt with by this Court. The incentivisation provided was said to effectively be the same as that provided by the payment of commission, which was legal. He also submitted that any penalty should fall into the “lower range” category identified by Santow J in HIH Insurance as this conduct was said to have features within that category, namely: remorse and contrition; repayment of the funds in question; seeking to save costs in the proceeding by his conduct in not requiring the Consumers to be available for cross-examination; the offences did not involve dishonesty but negligence or carelessness; the previous unblemished character of Mr Howden; and the fact that further contraventions are unlikely.
Mr Howden chose not to provide evidence of his personal financial position: see above at [202].
ASIC submitted that Mr Howden’s contraventions have resulted in Select and BlueInc Services engaging in the Conflicted Remuneration Contraventions, for which ASIC seeks penalties totalling $3.5 million and costs. It also submitted that the contraventions have led the companies to incur very significant legal costs in the course of the proceedings and accepted that reputational damage has occurred. ASIC also took issue with the submission as to incentivisation, and submitted that the incentivisation provided was prohibited because of the inherent conflict between the interests of the Sales Agent in maximising the number of sales, and the interests of consumers. ASIC further submitted that Mr Howden even now holding this attitude reinforces the need for specific deterrence.
ASIC also submitted that the Incentives were directed to maximising revenue, which resulted in benefit to the Corporate Defendants and, through the ownership structure, to Mr Howden and his family.
I accept that the power to order a pecuniary penalty in s 1317G(1)(b) is enlivened on the bases that the contraventions materially prejudiced the interests of the corporation and were serious.
I do not accept that this conduct is in the lower range identified in HIH Insurance. I note in that regard, the typical features of such conduct include that the defendant has no immediate or discernible intention to hold a position as a manager of a company, acted on the advice of professionals and had not contested the proceedings, none of which apply in this case. Mr Howden’s submissions on this topic fail to appreciate the seriousness of the conduct and, as explained above, involve an attempt to distance himself from that conduct and to minimise its seriousness. So much is evident from his submission as to the incentivisation. That submission fails to recognise his obligations under the AFSL, and the irresponsibility of his actions and ignorance in that context. As previously explained: Mr Howden did not consult Select’s Head of Compliance and Quality Assurance before implementing the Incentives (see [45] above); he approved the scripts for the Refer a Friend program which was to run at the same time as the Incentives (see LJ at [344] and above at [54], [154], [238]); and he was aware of an issue of concern in 2015 about the use of the Refer a Friend program in relation to certain Indigenous communities, but continued to use it, while offering further Incentives (see [47] above). Mr Howden showed limited insight as to his role in the contraventions.
Injunction
ASIC sought an injunction against Mr Howden in a similar form to that sought against the Corporate Defendants, restraining the provision against conflicted remuneration. It is not opposed. I agree that the order sought is appropriate, in the terms sought by ASIC.
Totality
The principle of totality is described above at [23].
ASIC submitted that the penalties it suggested in respect of the contraventions (or courses of conduct) give due regard to the principle of totality. ASIC also submitted: that totality principles do not arise on the question of disqualification, as a single determination is required under ss 206C(1)(b) and 206E(1)(b) as to whether a disqualification is justified; and that, in relation to ss 206E(1)(a)(i) and (ii), there must be multiple contraventions, but there is a single determination of disqualification, meaning no occasion arises to apply the principle of totality (citing Re Vault Market Pty Ltd [2014] NSWSC 1641 at [81]; cf Hobbs at [159] and [317] and Australian Securities and Investments Commission v Forge [2007] NSWSC 1489 at [77]-[78]).
The Defendants emphasised that the principle of totality operates to ensure that the penalties to be imposed, considered as a whole, are just and appropriate. An aspect of the principle was said to be that the ultimate penalty must not be crushing. The Corporate Defendants submitted that the contraventions were not such that as a result they should cease to exist. The application of the totality principle was said to mean, amongst other things, that the pecuniary penalty imposed on each of the Corporate Defendants should be set at a level that they can pay and survive. Mr Howden submitted that in formulating the appropriate pecuniary penalty to be imposed on him, the Court should have regard to the fact that both contraventions of s 180 arose out of the same conduct, and have regard to the principle of totality.
In relation to the Corporate Defendants’ submission as to the effect of a penalty, I note the principles referred to above at [119]-[122]. I also note: the consideration of the Corporate Defendants’ financial position at [108]-[118] and [123]-[125] above; and that Mr Howden did not provide evidence of his financial position (see [202] above).
I have taken the principles of totality into account in assessing the penalties imposed.
Conclusion
I have considered the submissions of the parties, the evidence relied on and the relevant principles.
Based on what it submitted were the circumstances of the various contraventions, the Defendants have sought to downplay the seriousness of the contravening conduct. That is in circumstances where Mr Howden has demonstrated a lack of insight into and acceptance of responsibility for aspects of that conduct.
As previously explained, it may be accepted that: the Defendants did not deliberately contravene the relevant laws (although the underlying acts constituting the contravening conduct were deliberate); and it is not contended that those contraventions arose in circumstances of dishonesty. If the conduct had those characteristics it would aggravate its seriousness. Regardless, deterrence has an important role to play in this case. The provisions which have been contravened are protective of consumers.
The importance of deterrence is also in a context where the Defendants’ approach to their obligations was distinctly irresponsible. One illustration of that being Mr Howden, the holder of the AFSL, considering that he did not need to consult his compliance manager as to the Incentives schemes before they were implemented. Rather, he considered it was sufficient that the schemes be implemented and if the compliance manager had any concerns as to their unlawfulness (upon seeing the relevant promotional materials), he would raise them.
That approach reflected an attitude to their obligations which, for example: did not address an issue as to use of the Refer a Friend program in relation to certain Indigenous communities that Mr Howden was aware of in 2015 (instead choosing to continue the program without any investigation or consequences for the senior Sales Agent whose conduct raised the concern); required the involvement of St Andrew’s in 2016 to have Select conduct an investigation, and in 2017 to have the conduct reported to ASIC; attempted to limit responsibility by attributing the conduct in relation to the Refer a Friend program to “rogue” Sales Agents (in particular, two Sales Agents); attempted to attribute responsibility for the Consumer Contraventions to the conduct of Agents; and deliberately included an approach in the sales script as to the Refer a Friend program that meant that the Referred Customer was not asked if they wanted to be referred and the Referring Customer was not asked whether they wished to participate in the program. This was all in a competitive environment which rewarded top Sales Agents, and at times belittled or ridiculed the less successful. It was also in relation to a work force which comprised a high proportion of backpackers and other temporary visitors to Australia, with a high turnover. The failures of the compliance systems in place must be seen in this context.
Having systems in place to properly and appropriately monitoring compliance is essential. Further, holding an AFSL brings with it legal obligations which must be taken seriously and carried out responsibly. The contravening conduct must be seen in the context of those obligations.
That the Defendants were not aware of the applicable laws (as was said to be the case in relation to the Conflicted Remuneration Contraventions), or the extent of the issues regarding use of the Refer a Friend program (in circumstances where they failed to investigate upon becoming aware of an issue in 2015 and the sales scripts described above were approved), or that its compliance program was not adequate for purpose, only serve to highlight the importance of deterrence. Any penalty imposed must be sufficient to ensure that it is not regarded by the Defendants or others as an acceptable cost of doing business.
Mr Howden’s and the Corporate Defendants’ lack of insight as to the seriousness of the contraventions reflects that specific deterrence also has a role to play in any penalty imposed.
I also note the nature and circumstances of the Consumer Contraventions found against the Corporate Defendants. Contraventions of unconscionability, coercion, undue harassment and making false or misleading representations, are, by their very nature objectively serious. The Consumer Contraventions found are particularly egregious examples of such conduct (the seriousness being self-evident from my findings in the Liability Judgment). Although each Consumer must be considered separately, as explained in the Liability Judgment, there are common features to the conduct. The Agents knew, or ought to have known, of the vulnerability of 11 of the Consumers, or at least that they were in a weaker bargaining position, and that the other three Consumers were in a weaker bargaining position: see [74] above. The conduct towards all of the Consumers, (particularly those 11 Consumers), took advantage of and exploited their vulnerabilities or weaknesses. Their interests were disregarded. I described some of the common features of the calls in the LJ at [337]:
… The Agents ask leading questions in the calls designed to elicit affirmative responses. Policy amounts were put to the Consumers without any questions as to their need or appropriateness. The Agents gave no opportunity to the Consumers to ask questions or reflect on what was occurring. In a number of cases, the Consumer barely speaks, except to provide the details elicited (for example banking details for direct debit). In some cases where questions were asked they were not answered. The Sales Agents just continued or pushed forward through the call, to sign the Consumer up to a policy. There were no reasonable attempts made to ensure the Consumers understood what was occurring. Often, the Sales Agents used the approach of endorsing or reinforcing the appropriateness of what was occurring (that is the sale of the insurance to them) by referring to the Consumers’ relatives, who they said had referred them for this policy. These features also were common in the retention calls, with the Retention Agents pushing ahead to achieve their agenda, regardless of what was being said by the Consumers.
Misrepresentations were made. High pressure tactics were applied. Sales tactics were used to overbear the free will of Consumers. Having made the sales, Retention Agents ignored the express wishes of the Consumers to cancel policies and acted so as to wear them down.
The assessment of loss or damage is in the context of Select’s focus on the low to middle income market and the Defendants’ awareness that some consumers may accordingly have certain vulnerabilities: see [133] above. In that context, the nature of the product may have the result that a lower monetary figure is involved (when compared with some other cases involving contraventions of the same provisions), but the relative impact on the consumer is necessarily higher (noting also that the impact of the conduct is not confined to financial loss). Again this highlights the importance of general and specific deterrence.
Further, general deterrence of similar conduct in similar businesses (namely, businesses marketing and distributing through call centres and businesses selling life insurance and related financial products) is important.
I also note that, accepting that each of the Corporate Defendants have committed contraventions, I am nonetheless mindful in imposing penalties of the relationship between the companies, as discussed above and in the Liability Judgment. Recalling also that it is Select who holds the AFSL.
I have taken into account the matters advanced in mitigation as referred to above, but given the factual bases of each of the contraventions, considered in the context of this statutory scheme, deterrence (and the protective element that brings) must be the dominant consideration.
Weighing all the relevant factors as explained above, bearing in mind the protective and deterrent purpose of a pecuniary penalty, as applied to the facts of this case, I am satisfied that the pecuniary penalties set out below are appropriate for each of the contraventions.
The declarations have significant utility as the circumstances of the contraventions call for marking of the Court’s disapproval of the contravening conduct. I am satisfied that it is in the interests of justice to make the declarations. I have taken this into account when considering the appropriate pecuniary penalties.
As explained above, I am not satisfied in the circumstances that an advertising order is appropriate. However, I make the probation, disqualification and restraining orders as explained above. I have also taken that relief into account when considering the appropriate pecuniary penalties.
Pecuniary penalty orders
Conflicted Remuneration Contraventions
As explained above, there are three courses of conduct. I impose the following penalties.
In relation to Select:
(a)Cruise Incentive and Vespa Incentive, $400,000.
(b)Las Vegas Incentive, $400,000.
(c)Hawaii Incentive, $400,000.
In relation to BlueInc Services:
(a)Cruise Incentive and Vespa Incentive, $300,000.
(b)Las Vegas Incentive, $300,000.
(c)Hawaii Incentive, $300,000.
That is a total of $1,200,000 for Select and $900,000 for BlueInc Services. Taking into account the principle of totality, in my view they are appropriate.
Consumer Contraventions
As explained above, the contraventions for each Consumer are treated as one course of conduct. As apparent from the penalties below, I consider that those sought by ASIC were generally too high, particularly given the common factual substratum resulting in multiple contraventions. Care must be taken to avoid double punishment. On the other hand, those said to be appropriate by the Corporate Defendants do not recognise the seriousness of the contraventions and the circumstances in which they were committed.
I also note that both parties approached the assessment on the basis of the individual Consumers, such that different penalties were suggested in relation to different Consumers. The maximum penalties also vary, depending on the date of the contraventions, and the number of contraventions in the course of conduct.
The conduct is detailed in the Liability Judgment, and it is unnecessary to repeat.
In relation to Ms Marika, the contraventions relate to sales and retention conduct. The conduct generally is described in the LJ at [422]-[442] and [479]-[483], the five contraventions for false and/or misleading representations in the LJ at [454]-[470], the two contraventions for unconscionability in the LJ at [471] and [489]-[497], the contravention for coercion in the LJ at [472]-[478] and the contravention for undue harassment in the LJ at [484]-[488]. In relation to that conduct, for Select, I impose a penalty of $700,000, and for BlueInc Services $400,000.
In relation to Mr Mirrawana, the contraventions relate to sales conduct. The conduct generally is described in the LJ at [515]-[540], the four contraventions for false and/or misleading representations in the LJ at [543]-[553], the contravention for unconscionability in the LJ at [541], and the contravention for coercion in the LJ at [554]-[558]. In relation to that conduct, for Select, I impose a penalty of $500,000, and for BlueInc Services, $300,000.
In relation to Ms Yalumul, the contraventions relate to sales and retention conduct. The conduct is generally described in the LJ at [578]-[591] and [610]-[627], the two contraventions for false and/or misleading representations in the LJ at [592]-[596] and the two contraventions for unconscionability in the LJ at [597]-[604] and [628]-[635]. In relation to that conduct, for Select, I impose a penalty of $500,000, for BlueInc Services $175,000 and for IMS $300,000.
In relation to Mr Mtawale, the contraventions relate to sales conduct. The conduct generally is described in the LJ at [651]-[677], the two contraventions for false and/or misleading representations in the LJ at [678]-[697] and the contravention for unconscionability in the LJ at [698]-[706]. In relation to that conduct, for Select, I impose a penalty of $300,000, for BlueInc Services $150,000 and for IMS $150,000.
In relation to Mr Tapera, the contraventions relate to sales conduct. The conduct generally is described in the LJ at [725]-[739], the contravention for a false and/or misleading representation in the LJ at [744]-[745], the contravention for unconscionability in the LJ at [746]-[759] and the contravention for coercion in the LJ at [760]-[767]. In relation to that conduct, for Select, I impose a penalty of $350,000, for BlueInc Services, $175,000 and for IMS, $175,000.
In relation to Ms Yeatman, the contraventions relate to sales and retention conduct. The sales conduct generally is described in the LJ at [778]-[789], the two contraventions for false and/or misleading representations in the LJ at [793]-[798], the contravention for unconscionability at [799]-[809] and the contravention for undue harassment at [816]-[827]. In relation to that conduct, for Select, I impose a penalty of $450,000, for BlueInc services $175,000 and for IMS $275,000.
In relation to Ms Shadforth, the contraventions relate to sales and retention conduct. The conduct generally is described in the LJ at [844]-[865], the three contraventions for false and/or misleading representations in the LJ at [866]-[870], the two contraventions for unconscionability in the LJ at [881]-[895] and [911]-[916], and the contravention for undue harassment in the LJ at [903]-[910]. In relation to that conduct, for Select, I impose a penalty of $550,000, for BlueInc services $300,000 and for IMS $250,000.
In relation to Ms Gaykamangu, the contraventions relate to sales conduct. The conduct generally is described in the LJ at [929]-[938], the two contraventions for false and/or misleading representations in the LJ at [943]-[947], the contravention for unconscionability in the LJ at [948] and the contravention for coercion in the LJ at [949]-[955]. In relation to that conduct, for Select, I impose a penalty of $400,000, and for BlueInc Services, $250,000.
In relation to Ms Campbell, the contravention relates to sales conduct. The conduct generally is described in the LJ at [968]-[971] and the contravention for unconscionability in the LJ at [972]-[979]. In relation to that conduct, for Select, I impose a penalty of $300,000, and for BlueInc Services, $175,000.
In relation to Mr Nundhirribala, the contraventions relate to sales conduct. The conduct generally is described in the LJ at [995]-[998], the two contraventions for false and/or misleading representations in the LJ at [1005]-[1008] and the contravention for unconscionability in the LJ at [1009]-[1014]. In relation to that conduct, for Select, I impose a penalty of $350,000, and for BlueInc Services $200,000.
In relation to Mr Hussain, the contraventions relate to sales and retention conduct. The conduct generally is described in the LJ at [1034]-[1043] and [1068]-[1071], the three contraventions for false and/or misleading representations in the LJ at [1048]-[1053] and [1072]-[1076] and the two contraventions for unconscionability in the LJ at [1054]-[1067] and [1078]-[1087]. In relation to that conduct, for Select, I impose a penalty of $600,000, and for BlueInc Services, $350,000.
In relation to Mr Lewis, the contraventions relate to both sales and retention conduct. The conduct generally is described in the LJ at [1100]-[1106] and [1137]-[1142], the two contraventions for unconscionability in the LJ at [1121]-[1130] and [1146]-[1156] and the contravention for undue harassment in the LJ at [1143]-[1145]. In relation to that conduct, for Select, I impose a penalty of $500,000, for BlueInc services $250,000 and for IMS, $250,000.
In relation to Ms Mirniyowan, the contraventions relate to both sales and retention conduct. The conduct generally is described in the LJ at [1176]-[1185] and [1212]-[1223], the three contraventions for false and/or misleading representations in the LJ at [1189]-[1200], the two contraventions for unconscionability in the LJ at [1201] and [1231]-[1235] and the contravention for undue harassment in the LJ at [1224]-[1230]. In relation to that conduct, for Select, I impose a penalty of $650,000, and for BlueInc Services, $400,000.
In relation to Mr Shrestha, the contraventions relate to sales conduct. The conduct generally is described in the LJ at [1246]-[1263], the contravention for a false and/or misleading representation in the LJ at [1264]-[1267] and the contravention for unconscionability in the LJ at [1268]-[1272]. In relation to that conduct, for Select, I impose a penalty of $350,000, and for IMS $200,000.
In relation to the Consumer Contraventions, this amounts to a total of $6,500,000 for Select, $3,500,000 for BlueInc Group and $1,400,000 for IMS. Taking into account the principle of totality, in my view they are appropriate.
Directors’ Duty Contraventions
In relation to Mr Howden, as explained above, I disqualify him managing corporations for a period of five years. Taking that into account, for the contraventions of s 180(1) (LJ at [1370]-[1398]), I impose a pecuniary penalty of $100,000.
Costs
Submissions
ASIC seeks its costs of the proceeding. It submitted that there is no reason to depart from the usual order as to costs, with the Defendants being jointly and severally liable.
The Defendants submitted that the Court’s power to award costs under s 43 of the Federal Court of Australia Act 1976 (Cth) is broad and unfettered, recognising that it is to be exercised judicially and in accordance with well-established principles. They submitted that ASIC’s costs should be apportioned between the Defendants in this case, citing as an example, Australian Securities and Investments Commission v Vocation Limited (In Liquidation) (No 2) [2019] FCA 1783; (2019) 140 ACSR 382 (Vocation) at [89]-[90]. They also submitted that apportioning costs between unsuccessful parties is not a precise science, but rather Courts do the best they can as a matter of impression.
In particular, Mr Howden submitted that the contraventions against him were more limited. In relation to the Conflicted Remuneration Contraventions and the contravention of 912A(1)(a) (pertaining to the Refer a Friend program) Mr Howden’s liability was said to be dependent on ASIC establishing the primary contravention against Select and/or BlueInc Services. It was submitted that once that contravention was established, there was little further evidence or submissions relied on to establish Mr Howden’s liability. As such, it was submitted that he should not be liable for the costs of ASIC establishing the primary contravention. In relation to his contraventions of s 180, it was submitted that Mr Howden’s liability was dependent on ASIC establishing that the Incentives constituted conflicted remuneration and that little further evidence or submissions were relied on to establish Mr Howden’s liability. Mr Howden submitted that there was no allegation against him in relation to the Consumer Contraventions, which was the most time consuming part of the proceedings. It was therefore submitted that it would be seriously unjust for Mr Howden to be liable for these costs.
Mr Howden also submitted that the limited nature of his contraventions is reflected in the differences in penalties sought by ASIC. It was submitted that five percent of the overall proceeding can be attributed to him, and that he should be liable for five percent of ASIC’s costs of the proceeding as assessed or agreed.
As between the Corporate Defendants, it was submitted that it is appropriate that Select, the AFSL holder, bears the largest costs liability. Having regard to the contraventions established against it, the way the case against it was conducted, and the penalties sought, it was submitted that 50 percent of the overall proceeding can be attributed to Select, and that it should be liable for 50 percent of ASIC’s costs of the proceeding as agreed or assessed. Having regard to the same factors, it was submitted that: 25 percent of the overall proceeding can be attributed to BlueInc Services and it should be liable for 25 percent of ASIC’s costs of the proceeding as agreed or assessed; and 20 percent of the overall proceeding can be attributed to IMS and it should be liable for 20 percent of ASIC’s costs of the proceeding as agreed or assessed.
The Defendants also submitted that ASIC has estimated its recoverable litigation costs to the end of the relief hearing as being in the approximate range of $2.3 million to $3.1 million.
ASIC took issue with the Defendants’ approach. It submitted that the Defendants face a high bar in seeking to persuade the Court to depart from the usual order as to costs with joint and several liability, as “special circumstances” must be established to do so: citing Royal v El Ali (No 3) [2016] FCA 1573 (Royal) at [53]-[55]. ASIC submitted that the Defendants have not discharged that onus.
First, ASIC submitted that, save for a handful of Consumer Contraventions, ASIC made out its case on all claims against all of the Defendants. The Defendants’ reliance on Vocation was accordingly said to be misplaced.
Second, ASIC submitted that there is sufficient commonality between each of the Defendants, including a significant commonality of evidence, issues and in the substratum of facts in relation to the impugned conduct, to exclude departure from the general rule: citing Rushcutters Bay Smash Repairs Pty Ltd v H McKenna Netmakers Pty Ltd [2003] NSWSC 670 at [17]; Royal at [53]-[55]. It was submitted that: each Corporate Defendant was involved in the Consumer Contraventions; the use of the Refer a Friend program and the Incentives fed into those contraventions; and Mr Howden was involved in the Refer a Friend program and the Incentives. Further, the Incentives and the Refer a Friend program were said to be integers in some of the unconscionable conduct claims and Mr Howden was found to be liable by the Court in relation to those matters. Accordingly, it was submitted that it would be artificial to attempt to split out such aspects.
Third, ASIC submitted that there were no circumstances of the Defendants conducting separate and distinct defences where the costs incurred could not be attributed to the joint conduct of the Defendants in the defence of the action: citing Thiess Watkins White Construction Ltd (in liq) v Witan Nominees (1985) Pty Ltd [1992] 2 Qd R 452 at 454. The Corporate Defendants and Mr Howden were said to have elected to defend the proceeding, with each Defendant putting ASIC to proof in respect of the claims against them.
Fourth, ASIC submitted that the Defendants’ contention that Mr Howden should not bear the costs of the process of ASIC establishing the primary allegations against the Corporate Defendants fails to acknowledge: the general principle that where there is a common factual and legal underpinning of a case against multiple defendants, they should be jointly and severally liable for those costs; the reality that ASIC could have chosen to run the case against Mr Howden alone, and would have had the same task of proving Select and BlueInc Services’ liability even in their absence as defendants to the proceeding; ASIC was required to establish the matters against Mr Howden personally in any event because it could not use the Corporate Defendants’ admissions against him personally (because he elected to maintain his privilege against self-exposure to penalty, and because the case against him for a breach of s 180 was not reliant on findings that the Corporate Defendants had engaged in conflicted remuneration and did not depend on findings of corporate liability); Mr Howden elected not to make any admissions, with the consequence of exposure to an adverse costs order; and Mr Howden’s control over the Corporate Defendants and the conduct of the case against them was unequivocal.
ASIC also submitted that it was relevant that Mr Howden was the sole controlling mind of the three Corporate Defendants, and determined how the Defendants would respond to the proceeding. Further, ASIC submitted that in so far as the interests of justice are to be weighed in determining whether to apportion costs, the Court should take into account that Mr Howden has recently taken steps to disable at least one of the Corporate Defendants from honouring a costs order (referring to the $6 million trailing commission discussed above at [114]-[118]).
Consideration
As a starting point, costs are compensatory to a successful party, and the ordinary rule is that there is joint and several liability of all defendants for a costs liability. That purpose is in contrast to the deterrent purpose of a penalty.
There is an artificiality in the Defendants’ submissions on the topic of costs. As ASIC correctly submitted, it needed to establish the primary conduct to establish Mr Howden’s accessorial liability. To approach the assessment on any other basis does not reflect the reality of the conduct of the proceedings. I note also in this context that ASIC could not use the Corporate Defendants’ admissions against Mr Howden, and as he chose to maintain his privilege against self-exposure to penalty. Moreover, although it was not alleged that Mr Howden was involved in the Consumer Contraventions, matters such as the Refer a Friend program, which was the basis of his contravention of s 912A(1)(a), were also an integer of some of them. There is a common substratum of facts. Further, as ASIC correctly submitted, the difference in the penalties sought must be seen in the context where different maximum penalties were faced by the Corporate Defendants and Mr Howden, and a disqualification order was also sought against Mr Howden. The suggestion that Mr Howden was only involved in 5 percent of the proceedings is entirely unrealistic.
There is also a commonality in the proceedings as Mr Howden was the sole controlling mind of the Corporate Defendants. He accepted in cross-examination that he gave instructions as to how the Corporate Defendants would conduct the proceedings. That, in itself, might be considered sufficient commonality to exclude departure from the general rule. The Corporate Defendants took a common approach to the conduct of this proceeding, which generally involved putting ASIC to proof.
The Defendants’ reliance on Vocation, does not assist. It does no more than provide an example of a case where an order was made apportioning costs between the defendants. There, three individuals faced contraventions, and the case against one was more extensive and more successful than in relation to the other two, such that the Court concluded that one should be required to pay a greater proportion of ASIC’s costs. That is very different to the case here. Every case is fact specific.
The Defendants have not established that in this case, there is good reason to depart from the usual order as to costs.
I certify that the preceding three hundred and twelve (312) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Abraham. Associate:
Dated: 4 July 2023
SCHEDULE OF PARTIES
NSD 1447 of 2019 Defendants
Fourth Defendant:
RUSSELL HUGH HOWDEN
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