Clean Energy Regulator v E Connect Solar & Electrical Pty Ltd
[2023] FCA 1082
•13 September 2023
FEDERAL COURT OF AUSTRALIA
Clean Energy Regulator v E Connect Solar & Electrical Pty Ltd [2023] FCA 1082
File number: QUD 468 of 2022 Judgment of: DERRINGTON J Date of judgment: 13 September 2023 Catchwords: ENERGY AND RESOURCES – actions by regulator under Renewable Energy (Electricity) Act 2000 (Cth) – contravention by installer of solar energy electricity units when preparing certifications – breaches admitted – penalty to be imposed – principles concerning agreed penalty referred to
CORPORATIONS – leave to proceed again company in liquidation – action by regulator seeking imposition of penalty – relevant considerations and principles explained
Legislation: Competition and Consumer Act 2010 (Cth)
Corporations Act 2001 (Cth)
Evidence Act 1995 (Cth)
Federal Court of Australia Act 1976 (Cth)
Renewable Energy (Electricity) Act 2000 (Cth)
Renewable Energy (Electricity) Regulations2001 (Cth)
Companies Act 1862, 25 & 26 Vict, c 89
Cases cited: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564
Altinova Nominees Pty Ltd v Leveraged Capital Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2) [2009] FCA 42
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157
Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450
Australian Competition and Consumer Commission v ACN 135 183 372 (Administrators Appointed) (formerly known as Energy Watch Pty Ltd) [2012] FCA 586
Australian Competition and Consumer Commission v ACN 135 183 372 (in liquidation) (formerly known as Energy Watch Pty Ltd) [2012] FCA 749
Australian Competition and Consumer Commission v Advanced Medical Institute Pty Limited (Administrator Appointed) (No 3) [2011] FCA 348
Australian Competition and Consumer Commission v Artorios Ink Co Pty Ltd [2013] FCA 753
Australian Competition and Consumer Commission v Australian Institute of Professional Education Pty Ltd (in liq) [2017] FCA 521
Australian Competition and Consumer Commission v Australian Medical Association Western Australian Branch (2001) 114 FCR 91
Australian Competition and Consumer Commission v Birubi Art Pty Ltd (No 2) [2018] FCA 1785
Australian Competition and Consumer Commission v Bupa Aged Care Australia Pty Ltd [2020] FCA 602
Australian Competition and Consumer Commission v Campbell (No 2) [2019] FCA 1487
Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd (2015) 327 ALR 540
Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405
Australian Competition and Consumer Commission v Cornerstone Investment Aust Pty Ltd (in liq) (No 5) [2019] FCA 1544
Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (in liq) (2007) 161 FCR 513
Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liq) (No 3) [2017] FCA 1018
Australian Competition and Consumer Commission v Lactalis Australia Pty Ltd (No 2) [2023] FCA 839
Australian Competition and Consumer Commission v Link Solutions Pty Ltd (2008) 68 ACSR 561
Australian Competition and Consumer Commission v Medibank Private Ltd (2020) 146 ACSR 181
Australian Competition and Consumer Commission v Phoenix Institute of Australia Pty Ltd (subject to deed of company arrangement) (2016) 116 ACSR 353
Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2020] FCA 474
Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25
Australian Competition and Consumer Commission v Samsung Electronics Australia Pty Ltd [2022] FCA 875
Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 7) [2016] FCA 484
Australian Competition and Consumer Commission v SIP Australia Pty Ltd (2003) ATPR ¶41-937
Australian Competition and Consumer Commission v The Vales Wine Company Pty Ltd (1996) ATPR ¶41-528
Australian Competition and Consumer Commission v We Buy Houses Pty Ltd (No 2) [2018] FCA 1748
Australian Competition and Consumer Commissioner v MSY Technology Pty Ltd (2012) FCR 378
Australian Pipe & Tube Pty Ltd v QBE Insurance (Australia) Limited [2015] FCA 1135
Australian Securities and Investments Commission v ACBF Funeral Plans Pty Ltd [2022] FCA 871
Australian Securities and Investments Commission v Australian Mines Limited [2023] FCA 9
Australian Securities and Investments Commission v Axis International Management Pty Ltd (2009) 178 FCR 485
Australian Securities and Investments Commission v Axis International Pty Ltd (No 7) [2011] FCA 812
Australian Securities and Investments Commission v Colonial First State Investments Limited [2021] FCA 1268
Australian Securities and Investments Commission v Dixon Advisory & Superannuation Services Ltd [2022] FCA 1105
Australian Securities and Investments Commission v General Commercial Group Pty Ltd [2023] FCA 24
Australian Securities and Investments Commission v Westpac Banking Corporation (2018) 132 ACSR 230
Buckingham v Pan Laboratories (Australia) Pty Ltd (in liq) (2004) 136 FCR 102
Clean Energy Regulator v MT Solar Pty Ltd [2013] FCA 205
Commissioner of Taxation v International Indigenous Football Foundation Australia Pty Ltd (in liq) [2017] FCA 538
Commonwealth of Australia v Davis Samuel Pty Ltd (No 5) (2008) 164 ACTR 1
Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
Eopply New Energy Technology Co Ltd v EP Solar Pty Ltd [2013] FCA 356
Executive Director of the Department of Conservation and Land Management v Ringfab Environmental Structures Pty Ltd [1997] FCA 1484
Fair Work Ombudsman v Blue Sky Kids Land Pty Ltd (in liquidation) [2020] FCA 718
Fair Work Ombudsman v Foot & Thai Massage Pty Ltd (in liquidation) [2019] FCA 1601
Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421
Hastie Group Ltd (in liq) v Multiplex Constructions Pty Ltd (Formerly Brookfield Multiplex Constructions Pty Ltd) (No 2) (2021) 155 ACSR 217
Hu v PS Securities Pty Ltd as trustee of the Joseph Family Trust [2011] NSWSC 303
Hundy (Liquidator); In the Matter of Enviro Friendly Products Pty Ltd (In Liq) [2013] FCA 852
J & J Richards Super Pty Ltd ATF the J & J Richards Superannuation Fund v Linchpin Capital Group Ltd (in liq) [2020] FCA 1772
JJ Leonard Properties Pty Ltd v Leonard (WA) Pty Ltd (in liq) (1986) 11 ACLR 224
King v Yurisich (2006) 59 ACSR 598
Meehan v Stockmans Australian Cafe (Holdings) Pty Ltd (1996) 22 ACSR 123
Milardovic v Vemco Services Pty Ltd (No 2) (2016) 242 FCR 492
Minister for Environment v Northern Seafoods Pty Ltd [2022] FCA 656
Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR ¶41-993
Murphy v Astute Projects Pty Ltd [2018] FCA 2118
NW Frozen Foods Pty Ltd v Australian Consumer and Competition Commission (1996) 71 FCR 285
OD Transport (Australia) Pty Ltd (in liq) v OD Transport Pty Ltd (1997) 80 FCR 290
Phoenix Institute of Australia Pty Ltd v Australian Competition and Consumer Commission [2017] FCAFC 155
QNI Resources Pty Ltd v Park (2016) 116 ACSR 321
Re AJ Benjamin Ltd (in liq) (1969) 90 WN (Pt 1) (NSW) 107
Re Atlantic Computer Systems Plc [1992] Ch 505
Re David Lloyd & Co (1877) 6 Ch D 339
Re Gordon Grant & Grant Pty Ltd [1983] 2 Qd R 314
Re Renewable Energy Traders Pty Ltd (in liq) (2019) 140 ACSR 466
Rushleigh Services Pty Ltd v Forge Group Ltd (In Liq) (Receivers and Managers Appointed); In the Matter of Forge Group Ltd (In Liq) (Receivers and Managers Appointed) [2016] FCA 1471
Secretary, Department of Health and Ageing v Prime Nature Prize Pty Ltd (in liquidation) [2010] FCA 597
Speiser v Locums Financial Management Pty Ltd (1996) 22 ACSR 478
Swaby v Lift Capital Partners Pty Ltd (in liq) (2009) 72 ACSR 627
Tax Practitioners Board v Caolboy [2020] FCA 1559
Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150
Tolhurst Druce & Emmerson v Maryvell Investments Pty Ltd [2007] VSC 271
Trade Practices Commission v Allied Mills Industries Pty Ltd (No 5) (1981) 60 FLR 38
Vagrand Pty Ltd (in liq) v Fielding (1993) 41 FCR 550
Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission (2021) 284 FCR 24
Water Efficiency Labelling and Standards Regulator v Renaissance Traditional Bathrooms Pty Ltd [2020] FCA 1757
Zempilas v JN Taylor Holdings Limited (in prov liq) (No 3) (1991) 55 SASR 108
ZOLL Medical Australia, in the matter of Cardiac Defibrillators Australia Pty Ltd (in liq) v Cardiac Defibrillators Australia Pty Ltd (in liq) [2022] FCA 167
Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Number of paragraphs: 110 Date of hearing: 23 March 2023 Counsel for the Applicant: Mr A Hartnett Solicitor for the Applicant: Norton Rose Fulbright Australia Counsel for the Respondents: Ms S Philippou Solicitor for the Respondents: Twomey Dispute Lawyers ORDERS
QUD 468 of 2022 BETWEEN: CLEAN ENERGY REGULATOR
Applicant
AND: E CONNECT SOLAR & ELECTRICAL PTY LTD ACN 625 797 337
First Respondent
BENJAMIN AIREY
Second Respondent
QUINTON DOODY
Third Respondent
ORDER MADE BY:
DERRINGTON J
DATE OF ORDER:
13 SEPTEMBER 2023
THE COURT ORDERS THAT:
1.The applicant has leave pursuant to s 471B of the Corporations Act 2001 (Cth) to continue these proceedings against the first respondent, subject to the undertaking in Annexure A.
THE COURT DECLARES THAT:
2.Between 9 January 2019 and 10 December 2019, the first respondent contravened s 24B(1) of the Renewable Energy (Electricity) Act 2000 (Cth) (REE Act) on 38 occasions in that:
(a)through its agents, it provided small-scale technology certificate (STC) assignment documents and other information to either One Stop Warehouse Pty Ltd ABN 46 161 849 323 (One Stop) or Formbay Trading Pty Ltd ACN 146 464 995 (Formbay) in relation to the installation of each of the solar power generation systems specified in rows 1 to 38 of the table at Annexure B (the installations);
(b)the assignment documents and other information falsely claimed that each of the systems had been installed by a person who:
(i)was accredited to perform those installations under the Clean Energy Council (CEC) accreditation scheme; and
(ii)complied with the CEC’s Code of Conduct and the Installation Guidelines Version 12 or 13;
(c)One Stop and Formbay relied upon that information to create STCs in relation to the installations that they were not entitled to create; and
(d)it could reasonably have been expected that One Stop and Formbay would rely upon the false and misleading information in that way.
3.Between 29 August 2019 and 10 December 2019, the second respondent contravened s 24B(1) of the REE Act on 17 occasions in that:
(a)he provided STC assignment documents and other information to either One Stop or Formbay in relation to 17 of the installations;
(b)the assignment documents and other information falsely claimed that each of the systems had been installed by a person who:
(i)was accredited to perform those installations under the CEC accreditation scheme; and
(ii)complied with the CEC’s Code of Conduct and the Installation Guidelines Version 12 or 13;
(c)One Stop and Formbay relied upon that information to create STCs in relation to the 17 installations that they were not entitled to create; and
(d)it could reasonably have been expected that One Stop and Formbay would rely upon the false and misleading information in that way.
4.Between 9 January 2019 and 10 December 2019, the third respondent contravened s 24B(1) of the REE Act on 21 occasions in that:
(a)he provided STC assignment documents and other information to either One Stop or Formbay in relation to 21 of the installations;
(b)the assignment documents and other information falsely claimed that each of the systems had been installed by a person who:
(i)was accredited to perform those installations under the CEC accreditation scheme; and
(ii)complied with the CEC’s Code of Conduct and the Installation Guidelines Version 12 or 13;
(c)One Stop and Formbay relied upon that information to create STCs in relation to 21 of the installations that they were not entitled to create; and
(d)it could reasonably have been expected that One Stop and Formbay would rely upon the false and misleading information in that way.
AND THE COURT ORDERS THAT:
Pecuniary penalty
5.The first respondent pay to the Commonwealth of Australia a pecuniary penalty in the sum of $200,000.
6.The second respondent pay to the Commonwealth of Australia a pecuniary penalty in the sum of $20,000.
7.The third respondent pay to the Commonwealth of Australia a pecuniary penalty in the sum of $20,000.
Injunctive relief
8.Pursuant to s 154S(2) of the REE Act:
(a)the second and third respondents shall take all reasonable steps to obtain the consent of the owners of the systems the subject of the installations for the purposes of having a CEC-accredited person inspect the installations and carry out testing and commissioning tests in accordance with section 11 of the Installation Guidelines Version 13 dated 2 November 2019 (the inspections);
(b)if any of the inspections identifies any defects with an installation, the second and third respondents shall take all reasonable steps to arrange for the installation of a new system or to remedy any identified defect;
(c)the second respondent must take reasonable steps to ensure that any company in respect of which he is an executive officer, or the conduct of which he is in a position to influence, does not provide false or misleading information to any person in relation to the creation of renewable energy certificates associated with the installation of any solar power generation system by that company; and
(d)the third respondent must take reasonable steps to ensure that any company in respect of which he is an executive officer, or the conduct of which he is in a position to influence, does not provide false or misleading information to any person in relation to the creation of renewable energy certificates associated with the installation of any solar power generation system by that company.
Other orders
9.The second and third respondents pay the applicant’s costs of the proceedings, fixed in the sum of $30,000, with the second respondent liable for the applicant’s costs in the sum of $15,000 and the third respondent liable for the applicant’s costs in the sum of $15,000.
10.The amount of $35,000 ordered against the second respondent by Orders 6 and 9 above be paid by way of instalments as follows:
(a)$17,500 within three months of the date of these orders; and
(b)$17,500 within six months of the date of these orders.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Annexure A
UNDERTAKING BY THE APPLICANT
In accordance with Order 1 of the Orders of the Hon. Justice Derrington dated 23 March 2023 and made in Federal Court of Australia proceeding No. QUD 468 of 2022, the Applicant, the Clean Energy Regulator, undertakes to the Court that it will not enforce any monetary relief against the First Respondent, E Connect Solar & Electrical Pty Ltd (in liquidation) ACN 625 797 337 while in liquidation, without the leave of the Court.
Annexure B
No. Date of Installation Installation Address 1. 9 January 2019 1 ANZAC Street, Nrth St Marys NSW 2760 2. 10 January 2019 5 Corunna Avenue, Leumeah NSW 2560 3. 12 January 2019 8 Spinebill Place, Cranebrook NSW 2749 4. 22 August 2019 14 Jonquil Close, Toronto NSW 2283 5. 22 August 2019 63 Tarragon Way, Chisholm NSW 2322 6. 22 August 2019 25 Derribong Street, Wongarbon, NSW 2831 7. 22 August 2019 121 Cobbora Road, Dubbo NSW 2830 8. 23 August 2019 19 Hazelwood Drive, Dubbo 2830 9. 26 August 2019 6 Bay Street, Balcolyn NSW 2264 10. 26 August 2019 16 Morton Parade Rankin Park, NSW 2287 11. 26 August 2019 13 Aspley Crescent, Dubbo NSW 2830 12. 28 November 2019 25 Hillcrest Drive, Gillieston Heights NSW 2321 13. 28 November 2019 230 Webbers Creek, Paterson NSW 2421 14. 28 November 2019 11 Kennewell Parade, Tuncurry NSW 2428 15. 29 November 2019 21 Russell Street, Clarence Town NSW 2321 16. 29 November 2019 22 Llewellyn Street, Saratoga NSW 2251 17. 2 December 2019 16 Endeavour Close, Woodrising NSW 2284 18. 2 December 2019 144 Lakes Boulevard Wooloweyah NSW 2464 19. 3 December 2019 96 Jubilee Street, Townsend NSW 2463 20. 3 December 2019 19 Roderick Street, Maclean NSW 2463 21. 3 December 2019 9 Tranquil Place, Alexandra Headland Q 4572 22. 4 December 2019 Unit 2, 31 Orion Drive, Yamba NSW 2464 23. 4 December 2019 1 Oxley Close, Raymond Terrace NSW 2324 24. 5 December 2019 63 Freyberg Street, New Lambton NSW 2305 25. 5 December 2019 101 River Street, Maclean NSW 2463 26. 5 December 2019 79 Wharf Street, Maclean NSW 2463 27. 5 December 2019 100 Dawson Road, Raymond Terrace NSW 2324 28. 6 December 2019 360 James Creek Road, Maclean NSW 2463 29. 6 December 2019 40 Wilton Drive, East Maitland NSW 2323 30. 7 December 2019 22 Ford Street, Oxley Vale NSW 2340 31. 9 December 2019 19 Daniels Close, Rushforth NSW 2460 32. 9 December 2019 24 Jean Norman Close, Wyoming NSW 2250 33. 9 December 2019 16 Garwood Street Rutherford, NSW 2320 34. 9 December 2019 28 The Patio Street, Hillvue NSW 2340 35. 10 December 2019 Unit 2, 16 Eskdale Drive, Raymond Terrace NSW 2324 36. 10 December 2019 10 Rosetta Close, Raymond Terrace NSW 2324 37. 10 December 2019 76 Kelly Street, South Grafton NSW 2460 38. 10 December 2019 2 Jill Street, South Tamworth NSW 2340 REASONS FOR JUDGMENT
DERRINGTON J:
Introduction
By an Originating Application filed on 15 December 2022, the Clean Energy Regulator (the CER) applied for orders, including the imposition of pecuniary penalties, against E Connect Solar & Electrical Pty Ltd (E Connect) and its directors at the material times, Mr Benjamin Airey and Mr Quinton Doody, in relation to certain contraventions of the Renewable Energy (Electricity) Act 2000 (Cth) (REE Act). The alleged contraventions related to the signing of certain written statements by Mr Airey and Mr Doody, on behalf of E Connect, which were used to assign rights to create “small-scale technology certificates” (STCs) to two companies, One Stop Warehouse Pty Ltd (One Stop) and Formbay Trading Pty Ltd (Formbay). After One Stop and Formbay had purported to exercise those rights, it was revealed that information in the written statements was false or misleading, such that the companies had not in fact been assigned any valid entitlements to create STCs.
The parties, with the exception of E Connect (which is now in liquidation), are agreed as to the factual circumstances in which the alleged contraventions occurred, the principles that the Court should apply in imposing pecuniary penalties in such circumstances and, subject to the Court’s discretion, the quantum of the penalties and the other orders to be made. Although the Court must exercise its discretion in relation to the appropriate penalties and other orders independently of the parties, it is appropriate to accord a degree of weight to the position taken by the CER in respect of those matters. It can be expected that, in circumstances where a civil penalty is proposed by consent, the regulator will provide to the Court thoughtful and careful submissions that draw upon and reflect its unique understanding of, and expertise in, the area of business activity that it is responsible for monitoring. In the present case, where it is apparent that some diligence has been brought to the task of proposing to the Court agreed penalties for the relevant contraventions, a measure of deference can properly be accorded to the CER’s opinion.
The facts
The facts on which the Court is to make its determination are set out in the Statement of Agreed Facts and Admissions filed by the parties (other than E Connect) on 21 March 2023. The relevant parts of that document are extracted below, with some alterations to its formatting and minor corrections to its content:
11 At all material times to this proceeding the CER:
(a)is, and was, the Clean Energy Regulator established by s 11 of the Clean Energy Regulator Act 2011 (Cth) (CER Act); and
(b)is, and was, capable of commencing civil penalty order proceedings under the REE Act because:
(i)the REE Act is [a] climate change law pursuant to s 4 of the CER Act;
(ii)the CER has such functions as [are] conferred on it by [a] climate change law pursuant to s 12 of the CER Act;
(iii)the REE Act defines “Regulator” as “the Clean Energy Regulator” pursuant to s 5; and
(iv) s 154C(1) of the REE Act expressly provides that only the Regulator, being the CER, may apply for a civil penalty order.
12 At all material times to this proceeding E Connect:
(a)is, and was, a company duly incorporated according to the laws of Australia;
(b) is, and was, capable of suing and being sued in its own name;
(c) had, and has, as its director Mr Airey from 26 April 2018;
(d) had as its director Mr Doody for the period of 26 April 2018 through to 14 February 2022;
(e) employed persons, including Mr Airey and Mr Doody, or contracted persons, to carry out solar panel system installations;
(f) is, and was, liable for the acts and omissions of Mr Airey and Mr Doody because Mr Airey and Mr Doody had the actual or apparent authority of E Connect;
(g) was placed under external administration on 8 February 2023; and
(h) was placed into liquidation on 10 March 2023.
13 At all material times to this proceeding Mr Airey:
(a)is, and was, a natural person, capable of suing and being sued in his own name;
(b) is, and was, [a] director of E Connect;
(c) had, and has, the actual or apparent authority of E Connect;
(d) is, and was, the holder of an electrical mechanic and fitter class licence with licence number 127140; and
(e) is, and was, the holder of the following accreditation from [the] Clean Energy Council (CEC):
(i) Grid-connect Install only of photovoltaic power systems;
(ii) Accreditation A6053971; and
(iii) Period of accreditation of 8 October 2018 to 15 May 2021.
14 At all material times to this proceeding Mr Doody:
(a)is, and was, a natural person, capable of suing and being sued in his own name.
(b) was [a] director of E Connect [for the period of] 26 April 2018 through to 14 February 2022;
(c) had, during his period [as] director, the actual or apparent authority of E Connect;
(d) is, and was, the holder of an electrical mechanic and fitter class licence with licence number 126847; and
(e) is and was the holder of the following accreditation from CEC:
(i) Grid-connect Design & Install of photovoltaic power systems;
(ii) Accreditation A9183829; and
(iii) Period of accreditation of 15 September 2016 to 26 May 2021.
C. THE USE OF SMALL-SCALE TECHNOLOGY CERTIFICATES
15When a CEC-accredited holder accredits an installation, the owner of the installed device, here small-generation units (SGUs), is entitled to create a REC [renewable energy certificate] with the CER.
16 RECs created for SGUs are defined as “small-scale technology certificates” (STCs). The REE Act regulates how many STCs might be created per installation, as well as allowing for the assignment of STCs from homeowners to companies or other persons.
17 The CER is responsible for managing and regulating the creation, trading, and selling of STCs after installation of SGUs.
18 The holders of STCs, being SGU owners themselves or those assigned their rights, can trade or sell them within the Clearing House established by the CER or on the private market. The current Clearing House price is $40.00. There is, therefore, an economic incentive to create STCs, commercialise and profiteer from their trade.
19 The assignment of the right to create STCs from the homeowner to another company often occurs in consideration for the reduction of installation costs and associated fees. Sometimes, a third party, often the actual installer, acts as an intermediary between the SGU owner and the entity to whom the STC rights are being assigned. As discussed from paragraph 24, that happened in this matter. The intermediary is paid to act for facilitating the assignment of STC rights.
D. BACKGROUND TO THE CONTRAVENTIONS
Installation of 38 Solar Panel Systems
20 Between 9 January 2019 and 10 December 2019 E Connect, Mr Airey and Mr Doody caused thirty-eight (38) solar panel systems to be installed at properties throughout north-east New South Wales and south-east Queensland (collectively, the installations). [The dates and locations of each of the installations are described in the table at Annexure B to the orders accompanying these reasons.]
21 Each of the solar panel systems installed was a SGU because they were devices that generated electricity whose source of energy:
(a) had a kW rating of no more than 100 kW; and
(b) had a capacity to generate no more than 250 MWh of electricity each year.
22 Because each of the installations [was] installed after 1 April 2001, [an] STC [could] be created after the [SGU was] installed.
23 The owners of the installed SGUs had a right, arising on the installation date:
(a) to create STCs arising from the installations; and/or
(b) [to] assign their right … to create STCs to a third party.
Assignment of Right to Create [STCs]
24 For the installations, each of the SGU owners assigned their right to create STCs to either:
(a) One Stop Warehouse Pty Ltd ABN 46 161 849 323; or
(b) Formbay Trading Pty Ltd ACN 146 464 995.
25Each of the assignments occurred by the SGU owners signing an assignment document assigning their right to create an STC to One Stop or Formbay. Pursuant to the assignment documents, Formbay and One Stop were assigned [rights] to create STCs.
26 E Connect was paid by Formbay and One Stop to facilitate the assignment of the SGU owners’ right[s] to create STCs to Formbay and One Stop.
27 Between 22 August 2019 and 30 January 2020 Formbay and One Stop paid E Connect the sum of $173,118.40.
Accreditations of Installations
28Pursuant to s 20AC(5) of the Renewable Energy (Electricity) Regulations2001 (Cth), in the version of the Regulations that was in effect from period 13 March 2019 through to 10 March 2020, before Formbay or One Stop could register the information in the assignment documents for the purposes of creating the STCs, they were each respectively required to obtain a written statement from the installer of the SGUs at each of the installations stating:
(a) the name of the designer and of the installer of the SGU;
(b) the CEC’s accreditation scheme classification and accreditation number of the installer and designer of the SGU;
(c) that the installer has public liability insurance of at least $5 million; and
(d) that the installer:
(i) is bound by the CEC’s Code of Conduct; and
(ii)has complied with that Code of Conduct for the installation of the [SGU].
CEC Code of Conduct and Installation Guidelines
29There were two versions of the CEC’s Code of Conduct that covered the period of the installations between 9 January 2019 and 10 December 2019.
30 For the period of 29 February 2012 through to 1 November 2019, the CEC Code of Conduct Version 1 applied.
31 From 2 November 2019 to date, the CEC Code of Conduct Version 2 applied.
32 Both the Code of Conduct Version 1 and the Code of Conduct Version 2 provided that:
All Clean Energy Council-accredited installers are bound by our code of conduct
33Both the Code of Conduct Version 1 and the Code of Conduct Version 2 also provided that:
All persons holding any form of Clean Energy Council accreditation shall observe and conform to all relevant Australian Standards and all relevant Clean Energy Council Accreditation guidelines, and all applicable laws, ordinances, regulations and codes of practice.
34Installers installing SGUs between the period of 9 January 2019 and 10 December 2019 were required to comply with the following CEC Guidelines:
(a)For the period from 1 January 2019 to 30 June 2019, Version 12 of the “Clean Energy Council Install and Supervise Guidelines for Accredited Installers” (Installation Guidelines Version 12) applied.
(b) For the period from 1 July 2019 to date, Version 13 of the “Clean Energy Council Install and Supervise Guidelines for Accredited Installers” (Installation Guidelines Version 13) applied.
35 Section 6 of the Installation Guidelines Version 12 provided:
6 RESPONSIBILITIES OF ACCREDITED PERSON
6.1 An accredited person shall sign-off on systems where they have:
6.1.1 Undertaken the installation; or
6.1.2 Supervised the installation by others
6.1.3 Supervision includes visiting the site at:
Job set up
Mid-installation check-up
Testing and commissioning
6.1.4 Sign-off is defined as the installer or supervisor performing the testing and commissioning requirements stated in section 11.
6.1.5 The date of sign-off is the day that the installer or supervisor performs the testing and commissioning requirements.
36 Section 11.1.1 of the Installation Guidelines Version 12 provided that:
The commissioning sheets provided with these guidelines (or similar document) shall be completed by the accredited installer or the accredited supervisor (with suitably licensed person).
37 Section 6 of the Installation Guidelines Version 13 provided:
6 RESPONSIBILITIES OF ACCREDITED PERSON
6.1 Signing Off as an Accredited Person
6.1.1 An Accredited Person shall only sign off on systems where they have:
·Undertaken the installation; or
·Supervised the installation by others
Supervision includes attending the site during:
·job set up;
·mid-installation check-up; and
·testing and commissioning
6.1.2 Sign off is defined as the installer or supervisor performing the testing and commissioning requirements stated in Section 14.
6.1.3 The date of sign off is the day that the installer or supervisor performs the testing and commissioning requirements.
Accreditation by Mr Airey and Mr Doody
38For seventeen (17) of the installations, Mr Airey signed written statements, which formed part of the assignment documents for the installations, accrediting those installations.
39 Mr Airey represented in his written statements that:
(a)he was the accredited CEC installer that completed the SGU installation at the address; and
(b) he installed the system at the address; and
(c) the system complied with CEC accreditation guidelines.
40 For twenty-one (21) of the installations, Mr Doody signed written statements, which formed part of the assignment documents for the installations, accrediting those installations.
41 Mr Doody represented in his written statements that:
(a)he was the accredited CEC installer that completed the SGU installation at the address; and
(b) he installed the system at the address; and
(c) the system complied with CEC accreditation guidelines.
Creation of [STCs]
42Formbay and One Stop relied on the information contained within the written statements signed by Mr Airey and Mr Doody to exercise their entitlement to create STCs.
43To create STCs, representatives from One Stop and Formbay were required to register the information contained within the assignment documents, which included the written statements signed by Mr Airey and Mr Doody, to the Renewable Energy Certificate Registry.
44Between 14 January 2019 and 31 December 2019, a representative or representatives from One Stop and Formbay registered the information contained within the assignment documents in the Renewable Energy Certificate Registry.
45Between 14 January 2019 and 31 December 2019, 4487 STCs were passed by the CER based on the information registered from One Stop from the assignment documents.
Respondents Overseas
46At the times at which the thirty-eight (38) installations as described in [the table at Annexure B to the orders accompanying these reasons] were purportedly carried out, Mr Airey and Mr Doody were either overseas, or in transit overseas.
47 Relevantly, Mr Airey and Mr Doody were overseas, or in transit overseas:
(a) between 23 December 2018 and 13 January 2019;
(b) between 22 August 2019 and 26 August 2019; and
(c) between 28 November 2019 and 10 December 2019.
False or Misleading Accreditations
48By reason of the matters set out in this Statement at paragraphs 28 to 37 (inclusive), 39, 46 and 47, the written statements signed by Mr Airey were false or misleading in a material particular because Mr Airey did not comply with the Code of Conduct Version 2 and Version 3 in that he did not “conform [to]” all [relevant] Clean Energy Council Accreditation guidelines because he did not comply with the Installation Guidelines [Version] 12 and [Version] 13 because:
(a)he signed off on installations he did not complete, install or supervise, within the meaning of Installation Guidelines [Version] 12 and [Version] 13; and
(b)he did not sign off the installation[s] by performing the testing and commission requirements.
49By reason of the matters set out in this Statement at paragraphs 28 to 37 (inclusive), 40, 46 and 47, the written statements signed by Mr Doody were false or misleading in a material particular because Mr Doody did not comply with the Code of Conduct Version 2 and Version 3 in that he did not “conform [to]” all [relevant] Clean Energy Council Accreditation guidelines because he did not comply with the Installation Guidelines [Version] 12 and [Version] 13 because:
(a)he signed off on installations he did not complete, install or supervise, within the meaning of Installation Guidelines [Version] 12 and [Version] 13; and
(b)he did not sign off the installation[s] by performing the testing and commission requirements.
No Valid Entitlement to Create Certificates
50By reason of the matters set out in this Statement from paragraphs 28 to … 49 (inclusive), neither Formbay nor One Stop held an entitlement to create STCs because the written statements obtained from Mr Airey and Mr Doody were false or misleading.
E. GROUNDS OF RELIEF
51 By reason of the matters set out in this Statement at paragraphs 28 to 50 (inclusive), E Connect, Mr Airey and Mr Doody contravened s 24B(1) [of] the REE Act because:
(a)Mr Airey and Mr Doody were representatives of E Connect and had the actual or apparent authority of E Connect;
(b) the information in the written statements signed by Mr Airey and Mr Doody was provided to One Stop or Formbay;
(c) the information in the written statements signed by Mr Airey and Mr Doody was in relation to [SGUs];
(d) by reason of the matters set out in this Statement at paragraphs 28 to 41 (inclusive) [and] 46 to 49 (inclusive) the information contained in the written statements signed by Mr Airey and Mr Doody [was] false and misleading;
(e) by reason of the matters set out in this Statement at paragraphs 42 to 45 (inclusive):
(i)agents of One Stop and Formbay relied on the information contained in the written statements signed by Mr Airey and Mr Doody; and
(ii)it could have been expected the agents of One Stop and Formbay would rely on the information contained in the written statements signed by Mr Airey and Mr Doody; and
(f)neither One Stop nor Formbay [was] entitled to create the certificates they did because the written statements obtained from Mr Airey and Mr Doody were false or misleading.
F. THE ALLEGED HARM SUFFERED BY THE CER
52 Invalidly created STCs impacts on the efficacy of the Renewable Energy Target scheme administered by the CER. This impact comes in the form of a distortion of the number of STCs within the market. That distortion results in the number of STCs eligible for purchase by a liable entity in a quarter and on an annual basis … being incorrect or inflated.
53 A liable entity may, for a given period, have a renewable energy shortfall which is an obligation imposed on them that must be discharged. There are two types of renewable energy shortfall, a large-scale generation shortfall, or a small-scale technology shortfall:
(a)[if] a liable entity has a large-scale generation shortfall for a year, large-scale generation shortfall charge is payable in respect of the shortfall; [and]
(b)[if] a liable entity has a small-scale technology shortfall for a year, small-scale technology shortfall charge is payable in respect of the shortfall.
54 RECs, which include STCs and large-scale generation certificates, are used to avoid or reduce the amount of renewable energy shortfall charge that liable entities who acquire electricity must pay. The liable entities will generally acquire the [RECs] by purchasing them.
55 A liable entity may discharge a renewable energy shortfall obligation through the surrender of STCs (or other RECs); if they do not have enough certificates, the liable entity must pay a renewable energy charge.
56 The REC scheme is directed toward:
(a)encouraging the additional generation of electricity from renewable sources;
(b) reducing emissions of greenhouse gases in the electricity sector; and
(c) ensuring that renewable energy sources are ecologically sustainable.
57 As s 3 of the REE Act explains, these objectives are achieved:
… through the issuing of certificates for the generation of electricity using eligible renewable energy sources and requiring certain purchasers (called liable entities) to surrender a specified number of certificates for the electricity that they acquire during a year.
58 The REC scheme assists in achieving the Renewable Energy Target.
59 The Renewable Energy Target is an Australian Government scheme designed to reduce emissions of greenhouse gases in the electricity sector and encourage the additional generation of electricity from sustainable and renewable sources.
60 A liable entity’s obligations under the REE Act are determined by calculating the amount of relevant electricity acquired by the entity during the year. [Section 35] of the REE Act provides [that] “a person who, during a year, makes a relevant acquisition of electricity is called a liable entity.” [Section 31] of the REE Act sets out what is a relevant acquisition.
61 The relevant acquisition of electricity is critical to determining a renewable energy shortfall. For present purposes, Part 4, Division 1, Subdivision C of the REE Act sets out how a small-scale technology shortfall is calculated.
62 A liable entity’s annual small-scale technology shortfall is calculated by adding together the quarterly shortfalls. Each quarterly [shortfall is calculated in accordance with the steps set out in s 38AE of the REE Act]. For example, the first quarter is calculated by:
(a)Firstly, working out 35% of the previous year’s reduced acquisitions, [multiplying] this by the small-scale technology percentage for the assessment year and [rounding] the result to the nearest MWh (rounding 0.5 upwards). The result is the required surrender amount.
(b) Secondly, adding together:
(i) the total value, in MWh, of [STCs] surrendered, under Subdivision A of Division 1 of Part 5, by the liable entity during the surrender period for the first quarter; and
(ii) the amount of any quarterly surplus that the liable entity has for the fourth quarter of the previous year.
The result is the surrendered amount.
(c) Thirdly, subtracting the surrendered amount from the required surrender amount.
(d) [Finally]:
(i)if the result is greater than zero, the liable entity has a quarterly shortfall for the first quarter of the assessment year equal to the result; or
(ii)if the result is zero, the liable entity does not have a quarterly shortfall for the first quarter of the assessment year.
(iii)If the result is less than zero, the liable entity has a quarterly surplus for the first quarter of the assessment year equal to the result (expressed as a positive).
63 Part 4, Division 1, Subdivision C of the REE Act sets out the methodology for subsequent quarters.
64 As above, the calculated renewable energy shortfall is an obligation the REE Act imposes on liable entities to discharge. Its discharge is fulfilled through the surrender of RECs, or payment of a charge. The RECs that a liable entity surrenders can, and invariably [do], include RECs it has purchased on the REC market. The costs of these purchases are passed on by liable entities to retail and domestic consumers within the market.
65 All of the STCs created by One Stop and Formbay have been surrendered by liable entities to the CER.
G. ANY OTHER RELEVANT MATTERS
Co-operation with the CER’s investigation
66 E Connect, Mr Airey and Mr Doody have been co-operative in the investigations of the contraventions against the REE Act. This co-operation has included:
(a) voluntarily providing documents at the request of CER investigators;
(b) offering to provide the CER with enforceable undertakings;
(c) offering to provide an audit to be taken by Mr Airey and Mr Doody to identify further sites (if any) where either Mr Doody or Mr Airey may have signed off on the installation of SGUs installed by installers who are not CEC-accredited; and
(d) [joining] with the CER in presenting evidence by way of agreed facts.
No previous similar conduct
67 E Connect, Mr Airey [and] Mr Doody have not previously been found by a court to have contravened the REE Act.
Where appropriate, the defined terms used in the above passage have been adopted in these reasons.
The continuation of proceedings against E Connect
As E Connect was placed into liquidation on 10 March 2023, it was necessary to consider at the hearing of this matter whether the CER should be granted leave pursuant to s 471B of the Corporations Act 2001 (Cth) (Corporations Act) to continue the proceedings against it. It was relevant to the determination of that issue that the CER had offered an undertaking to the Court not to enforce any penalty imposed on E Connect without leave.
On the basis of that undertaking, leave to proceed was granted. The following paragraphs set out the reasons for that grant of leave.
The CER has alleged that E Connect contravened s 24B(1) of the REE Act by the conduct of its directors and agents, Mr Airey and Mr Doody. Those persons have admitted that their conduct, in providing certain information in relation to the installation of SGUs that was false or misleading, contravened the REE Act. There is no doubt as to E Connect’s liability for the actions that they took in the course of carrying out their roles as directors and agents. That liability is established on the facts as they have been agreed and presented to this Court.
Section 471B of the Corporations Act provides as follows:
471BStay of proceedings and suspension of enforcement process
While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with:
(a) a proceeding in a court against the company or in relation to property of the company; or
(b) enforcement process in relation to such property;
except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.
The section is closely analogous to ss 440D(1), 444E(3) and 500(2) of the Corporations Act, and the case law makes apparent that essentially the same principles apply to all four provisions. Given the frequency with which these “leave to proceed” provisions come before the courts, it is no surprise that the relevant principles have been substantially synthesised and summarised on numerous occasions.
The purpose of such provisions was explained some time ago by McPherson J (with whom Campbell CJ and Sheahan J agreed) in the oft-cited case of Re Gordon Grant & Grant Pty Ltd [1983] 2 Qd R 314 (Re Gordon Grant & Grant), where his Honour identified at 316 that “without the relevant restriction, a company in liquidation would be subjected to a multiplicity of actions which would be both expensive and time-consuming, as well in some cases as unnecessary”. Similar observations were made much earlier in relation to the cognate section of the Companies Act 1862, 25 & 26 Vict, c 89 by James LJ in Re David Lloyd & Co (1877) 6 Ch D 339 at 344, which continue to be cited both in England and in Australia: see, eg, Re Atlantic Computer Systems Plc [1992] Ch 505, 520 – 521; JJ Leonard Properties Pty Ltd v Leonard (WA) Pty Ltd (in liq) (1986) 11 ACLR 224, 226; Australian Competition and Consumer Commission v Phoenix Institute of Australia Pty Ltd (subject to deed of company arrangement) (2016) 116 ACSR 353, 377 [87] (ACCC v Phoenix Institute) (this aspect of the judgment not being challenged on appeal: Phoenix Institute of Australia Pty Ltd v Australian Competition and Consumer Commission [2017] FCAFC 155 [15] (Phoenix Institute v ACCC)).
The leave to proceed requirement has elsewhere been explained as serving “to ensure that the assets of a company being wound up are administered in accordance with the relevant statutory provisions and no person obtains an advantage to which he or she is not properly entitled under those provisions”, and “to enable the court to supervise claims brought against the company being wound up”: Zempilas v JN Taylor Holdings Limited (in prov liq) (No 3) (1991) 55 SASR 108, 109 – 110; Altinova Nominees Pty Ltd v Leveraged Capital Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2) [2009] FCA 42 [18]; Australian Competition and Consumer Commission v Campbell (No 2) [2019] FCA 1487 [6] (ACCC v Campbell (No 2)). However, it has been doubted whether the former of those characterisations can properly be said to express a “major” or “principal” purpose of the requirement, since neither the commencement of proceedings nor the entry of judgment will normally confer an advantage on a creditor, and the prohibition imposed by the relevant provisions is not directed only at proceedings by creditors but includes proceedings by shareholders and others: Commonwealth of Australia v Davis Samuel Pty Ltd (No 5) (2008) 164 ACTR 1, 4 – 5 [13] – [14] (Commonwealth v Davis Samuel (No 5)).
In Re Gordon Grant & Grant, McPherson J explained the practical effect and usual function of leave to proceed provisions at 317, as follows:
What is substituted for litigation in the ordinary form is a procedure by which a claimant lodges a verified proof of debt with the liquidator, who admits or rejects it wholly or in part, and from whom an appeal lies to a judge, who determines that appeal de novo primarily on affidavit material … There can be no doubt that ordinarily such a procedure is, and is designed to be, much more expeditious and less expensive than ordinary proceedings by way of action. …
The question whether a claimant should be permitted to proceed by action, or should be required to submit his proof of debt and, if dissatisfied, appeal to a judge, is therefore reduced largely to one of choosing between alternative forms of procedure. … It, of course, follows that it is quite impossible to state in an exhaustive manner all the circumstances in which leave to proceed may be appropriate, but in the past they have been said to include factors such as the amount and seriousness of the claim, the degree of complexity of the legal and factual issues involved, and the stage to which the proceedings, if already commenced, may have progressed.
This passage was quoted with apparent approval by the Full Court of this Court, comprising Wilcox, Burchett and Beazley JJ, in Vagrand Pty Ltd (in liq) v Fielding (1993) 41 FCR 550 (Vagrand) at 555 – 556. It suggests that the starting point when considering an application for leave under s 471B will be that the applicant must lodge a proof of debt unless it can demonstrate that there is good reason to depart from that procedure: Swaby v Lift Capital Partners Pty Ltd (in liq) (2009) 72 ACSR 627, 631 [26] (Swaby). See also OD Transport (Australia) Pty Ltd (in liq) v OD Transport Pty Ltd (1997) 80 FCR 290, 294; Eopply New Energy Technology Co Ltd v EP Solar Pty Ltd [2013] FCA 356 [22]. The applicant, in this sense, bears the onus of establishing a case for leave to be granted.
It was recognised by the Full Court in Vagrand, at 553, that the question of leave under provisions like s 471B “is always a matter of discretion”. However, as the terms of the provision indicate, the legislation is silent as to the principles to be applied in determining an application for leave: Rushleigh Services Pty Ltd v Forge Group Ltd (In Liq) (Receivers and Managers Appointed); In the Matter of Forge Group Ltd (In Liq) (Receivers and Managers Appointed) [2016] FCA 1471 [14]. The discretion is accordingly unconfined: Secretary, Department of Health and Ageing v Prime Nature Prize Pty Ltd (in liquidation) [2010] FCA 597 [15] (Secretary v Prime Nature Prize). Indeed, some have gone so far as to describe it as “absolute”, albeit that it must be exercised fairly and judicially: see King v Yurisich (2006) 59 ACSR 598, 600 [13]; Commonwealth v Davis Samuel (No 5) at 6 [19]; Australian Securities and Investments Commission v Axis International Pty Ltd (No 7) [2011] FCA 812 [8]; QNI Resources Pty Ltd v Park (2016) 116 ACSR 321, 331 [46]. In other cases, however, it has been described in apparently conflicting terms as “broad but not absolute”: see Swaby at 631 [23]; Hu v PS Securities Pty Ltd as trustee of the Joseph Family Trust [2011] NSWSC 303 [20]; Australian Pipe & Tube Pty Ltd v QBE Insurance (Australia) Limited [2015] FCA 1135 [8].
Notwithstanding the breadth of the discretion, it is possible to identify certain factors that might generally inform its exercise — as is apparent, for instance, from the final sentence of the passage from the judgment of McPherson J in Re Gordon Grant & Grant extracted above. Although lists of such factors have at this point been compiled, quoted and reformulated in a significant number of cases, it must always be borne in mind that each application is ultimately to turn upon its own facts and the question of leave cannot be approached by treating the factors as comprising as “shopping list” to be worked through routinely by litigants: Australian Competition and Consumer Commission v Advanced Medical Institute Pty Limited (Administrator Appointed) (No 3) [2011] FCA 348 [5] (ACCC v Advanced Medical Institute (No 3)); Murphy v Astute Projects Pty Ltd [2018] FCA 2118 [5] – [7]; Hastie Group Ltd (in liq) v Multiplex Constructions Pty Ltd (Formerly Brookfield Multiplex Constructions Pty Ltd) (No 2) (2021) 155 ACSR 217, 220 [8]. That having been said, the Court may be guided by previous decisions when identifying the factors that are to be considered in the case before it, having regard, also, to the underlying purpose served by the leave to proceed requirement, as explained above: Secretary v Prime Nature Prize [15]; ACCC v Phoenix Institute at 377 [87].
In the present case, several relevant factors were identified in the CER’s submissions in support of its application for leave. Given the fact-specific nature of the inquiry, and prior judicial warnings against approaching the principles concerning leave to proceed too prescriptively, it was appropriate for such an attempt to be made to define the matters most pertinent to the exercise of discretion in this case. There can be little utility, by contrast, in an applicant distilling from the vast library of authorities concerning s 471B and its analogues, and presenting to the Court, a lengthy consolidated list of all matters that might historically have had some bearing on the question of leave in other cases, each of which it then endeavours to address. A degree of judgment must be brought to the task of deciding what ought and ought not to be considered.
It is apparent from the CER’s submissions on this point, and no doubt correct as a matter of principle, that the question of leave in this case is affected to a substantial extent by the fact that these proceedings involve the pursuit of pecuniary penalties, declarations and injunctions by a regulator. This gives rise to a relatively distinctive list of matters of foremost relevance to the exercise of the discretion under s 471B, between which there is some degree of overlap. Those matters can be set out as follows:
(a)Whether the applicant has established that there is a serious question to be tried: Vagrand at 556; Executive Director of the Department of Conservation and Land Management v Ringfab Environmental Structures Pty Ltd [1997] FCA 1484. An applicant must generally establish that it has a good claim with a solid foundation, but it is perhaps unnecessary to establish a prima facie case: J & J Richards Super Pty Ltd ATF the J & J Richards Superannuation Fund v Linchpin Capital Group Ltd (in liq) [2020] FCA 1772 [8]; Buckingham v Pan Laboratories (Australia) Pty Ltd (in liq) (2004) 136 FCR 102, 109 [68]. It follows that the applicant need not prove every element of the claim that it wishes to make out, though mere assertion will not suffice: Commonwealth v Davis Samuel (No 5) at 7 [29], citing Tolhurst Druce & Emmerson v Maryvell Investments Pty Ltd [2007] VSC 271 [157] – [164].
(b)Whether the relief sought is not otherwise available in the liquidation process, particularly by the lodging of a proof of debt: Australian Competition and Consumer Commission v Link Solutions Pty Ltd (2008) 68 ACSR 561, 565 [11] (ACCC v Link Solutions); Australian Competition and Consumer Commission v Australian Institute of Professional Education Pty Ltd (in liq) [2017] FCA 521 [21], [23] – [24] (ACCC v AIPE); Australian Competition and Consumer Commission v Birubi Art Pty Ltd (No 2) [2018] FCA 1785 [15] (ACCC v Birubi (No 2)). The inability to obtain relief by that process, including the imposition of pecuniary penalties and the grant of declarations and injunctions, is a significant factor favouring the grant of leave to proceed.
(c)Whether there is a public interest in enforcing compliance with, and preventing conduct that is in contravention of, a statutory scheme: ACCC v Advanced Medical Institute (No 3) [5] – [6], [20]; Australian Competition and Consumer Commission v ACN 135 183 372 (Administrators Appointed) (formerly known as Energy Watch Pty Ltd) [2012] FCA 586 [6]; ACCC v Phoenix Institute at 377 – 378 [89]; ACCC v Birubi (No 2) [9]. If there is, this may favour the grant of leave to proceed, though the weight to be afforded to this factor will turn upon a consideration of all of the circumstances of the particular case: see, eg, ACCC v Link Solutions at 566 [16] – [17].
(d)Whether there is a public interest in allowing the applicant to fulfil a statutory duty, particularly for the purpose of obtaining orders that give effect to the objective of general deterrence: Australian Competition and Consumer Commission v Artorios Ink Co Pty Ltd [2013] FCA 753 [10] – [11] (ACCC v Artorios Ink); ACCC v Campbell (No 2) [13]; Fair Work Ombudsman v Foot & Thai Massage Pty Ltd (in liquidation) [2019] FCA 1601 [15]; Fair Work Ombudsman v Blue Sky Kids Land Pty Ltd (in liquidation) [2020] FCA 718 [11].
(e)The stage to which the proceedings have progressed, and the extent to which the applicant has expended time, effort and money in prosecuting its claim: Re Gordon Grant & Grant at 317; Meehan v Stockmans Australian Cafe (Holdings) Pty Ltd (1996) 22 ACSR 123, 127; Speiser v Locums Financial Management Pty Ltd (1996) 22 ACSR 478, 482 – 483; ACCC v Artorios Ink [12]. The nearer the proceedings are to completion, and the greater the expenditure on them, the more appropriate the grant of leave to proceed may be on the balance of convenience.
(f)Whether the claims in the proceedings raise complex questions of fact that are more appropriate for determination by the Court rather than under a proof of debt procedure: Phoenix Institute v ACCC [154]. It must be borne in mind, however, that requiring a liquidator to engage in complex litigation has the potential to distract inappropriately from the liquidation process and reduce the funds available to meet the claims of creditors. This outcome would seem to run contrary to the purpose intended to be served by the requirement of leave to proceed, as explained in Re Gordon Grant & Grant and other cases.
(g)The potential for creditors of the company to suffer prejudice: Re AJ Benjamin Ltd (in liq) (1969) 90 WN (Pt 1) (NSW) 107, 110; Swaby at 631 – 632 [29]; ZOLL Medical Australia, in the matter of Cardiac Defibrillators Australia Pty Ltd (in liq) v Cardiac Defibrillators Australia Pty Ltd (in liq) [2022] FCA 167 [25]. This prejudice can be alleviated by an undertaking not to enforce any relief without the Court’s leave: ACCC v Phoenix Institute at 386 [127]; Commissioner of Taxation v International Indigenous Football Foundation Australia Pty Ltd (in liq) [2017] FCA 538 [15]; Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2020] FCA 474 [9]; Australian Securities and Investments Commission v ACBF Funeral Plans Pty Ltd [2022] FCA 871 [14]. However, it should not be thought that the giving of such an undertaking materially advances the case for leave to proceed; it is typical for courts to condition the grant of leave by imposing on the applicant a requirement that such an undertaking be provided: Water Efficiency Labelling and Standards Regulator v Renaissance Traditional Bathrooms Pty Ltd [2020] FCA 1757 [47].
(h)Finally, the fact that the company has no ability to pay a penalty sought in the proceedings does not weigh against the grant of leave: ACCC v AIPE [26]; ACCC v Birubi (No 2) [10], [14]. As explained below, there may still be utility in a regulator progressing claims for pecuniary penalties and other relief against a company in liquidation where to do so would advance the objective of general deterrence.
There is no need to consider and address in any great detail the extent to which the above principles apply in the present case. Their application, on the agreed facts as they stand, leads inexorably to the conclusion that leave should be granted. First, the CER has established a clear case that E Connect has contravened the REE Act. The directors of the company have admitted the facts necessary to support the regulator’s allegations. Secondly, the relief sought against E Connect is not recoverable by way of a proof of debt, as it requires the Court to determine whether or not to impose the relevant pecuniary penalties and to make orders in relation to the declarations and injunctions sought by the CER. Thirdly, there is clearly a strong public interest in the enforcement of the REE Act against contravenors, including E Connect, so as to further the policy objectives advanced by the legislation and to deter others from contemplating non-compliance with its provisions. Finally, there will be no prejudice to the creditors of E Connect, as the CER has undertaken not to enforce any monetary relief against E Connect while it remains in liquidation without the Court’s leave. It is also relevant to note that the liquidator does not oppose the making of the orders sought by the CER.
For these reasons, it was concluded at the hearing of this matter that it was appropriate to make an order, pursuant to s 471B of the Corporations Act, that the CER have leave to continue the present proceedings against E Connect.
The statutory context in which the contraventions occurred
Despite having been in operation for some time, the REE Act has been the subject of relatively limited judicial consideration. A helpful summary of the legislative scheme was provided by Foster J in Hundy (Liquidator); In the Matter of Enviro Friendly Products Pty Ltd (In Liq) [2013] FCA 852 [14] – [24], which was drawn upon more recently by Griffiths J in Re Renewable Energy Traders Pty Ltd (in liq) (2019) 140 ACSR 466, 468 – 469 [4] – [15]. Justice Foster provided a somewhat similar summary in Clean Energy Regulator v MT Solar Pty Ltd [2013] FCA 205 [18] – [39] (MT Solar), where his Honour also specifically addressed the consequences that followed from contraventions of the civil penalty provisions in s 24B.
MT Solar appears to be the only other occasion on which the CER has brought proceedings seeking the imposition of pecuniary penalties for contraventions of the REE Act. However, although that case also concerned s 24B(1), the contraventions in question there did not arise in quite the same way as the contraventions at present. There is accordingly some utility in considering the specific statutory context within which the contravening conduct occurred in this case. Whilst that context has been explained in part in the Statement of Agreed Facts and Admissions, it is useful to explore in more detail the precise obligations that the respondents are agreed to have breached.
The starting point is pt 2, div 4 of the REE Act, which is entitled “Creation of renewable energy certificates”. Section 17B explains, at the outset of that division, that there are two types of RECs with which the division deals: large-scale generation certificates and STCs. STCs for SGUs are addressed more specifically in sub-div BA. Within that subdivision, s 23A(1A) has at all relevant times provided as follows:
23A When a certificate may be created
…
(1A) The regulations:
(a) may provide that certificates cannot be created in relation to a small generation unit unless particular conditions are satisfied in relation to the small generation unit or its installation; and
(b) without limiting paragraph (a), may:
(i) require information or documents to be given to the Regulator in relation to a small generation unit or its installation; and
(ii) provide that information or documents required to be given to the Regulator must be verified by statutory declaration.
It follows that the CER has established an entitlement to the declaratory relief that it sought in relation to the contraventions by the respondents, as set out in the orders proposed to the Court.
Injunctive relief pursuant to s 154S(2) of the REE Act
The CER also sought injunctive relief pursuant to s 154S(2) and (3) of the REE Act. Those provisions relevantly provide:
154SInjunctions
…
(2) If:
(a) a person has refused or failed, is refusing or failing, or is about to refuse or fail, to do a thing; and
(b) the refusal or failure is, or would be:
(i) an offence against this Act or the regulations; or
(ii) a contravention of a civil penalty provision;
the Federal Court may, on the application of the Regulator or any other aggrieved person, grant an injunction requiring the person to do the thing.
(3) The power of the Federal Court to grant an injunction may be exercised:
(a)whether or not it appears to the Court that the person intends to engage, or to continue to engage, in conduct of that kind; and
(b)whether or not the person has previously engaged in conduct of that kind.
The first injunction sought by the CER, and with which the respondents agree, requires Mr Airey and Mr Doody to take steps to obtain the consent of the owners of the systems the subject of the installations in respect of which the contraventions occurred for the purposes of having a CEC-accredited person inspect the installations and carry out testing and commissioning in accordance with the requirements of the relevant guidelines. In effect, the injunction will require steps to be taken to remediate any potential harm to homeowners flowing from the contraventions committed by the respondents. It is appropriate to grant that relief.
The second injunction follows from the first. It requires remedial action to be taken in respect of any defects identified in the installations that were certified improperly by Mr Airey and Mr Doody, following the inspections mandated by the first injunction. Again, that relief is appropriate, given that it is directed to the rectification of any damage that the contraventions may have caused.
The remaining two injunctions impose upon Mr Airey and Mr Doody the obligation to take reasonable steps to ensure that any company in respect of which they are executive officers, or the conduct of which they are in a position to influence, does not engage in the conduct that has been found to have contravened the REE Act in these proceedings. That is, they are required to take reasonable steps to prevent any such company from providing false or misleading information to any person in relation to the creation of renewable energy certificates associated with the installation of any solar power generation system by that company. Similar injunctions were granted in MT Solar.
In the present circumstances, such injunctions are appropriate to prevent any repetition of the offending conduct by other companies over which Mr Airey and Mr Doody might come to exert control or influence. Whilst, at first glance, the injunctions might seem to do no more than require Mr Airey and Mr Doody to obey the law, the value of the relief may lie in the fact that, if Mr Airey and Mr Doody do happen to engage again in the same contravening conduct, they will then be in breach of both the REE Act and the orders of this Court, such that they may face more serious repercussions.
Costs
The parties agreed upon the orders to be made in relation to costs. Those orders require that Mr Airey and Mr Doody together pay the CER’s costs of these proceedings, fixed in the sum of $30,000. They are each individually liable for those costs in the sum of $15,000.
It is apparent that Mr Airey has reached an agreement with the CER as to the manner in which he will pay the $35,000 total amount (comprising the $20,000 penalty and $15,000 in costs) that he has been ordered to pay in accordance with these reasons. A further order should be made to recognise that agreement.
I certify that the preceding one hundred and ten (110) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington. Associate:
Dated: 13 September 2023
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