Commissioner for Consumer Affairs v Lukeleo Pty Ltd - [2017] SASC 168

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Civil)
COMMISSIONER FOR CONSUMER AFFAIRS v LUKELEO PTY LTD
[2017] SASC 168
Judgment of The Honourable Justice Blue
17 November 2017
TRADE AND COMMERCE - COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION - ENFORCEMENT AND REMEDIES - PENALTY - PRINCIPLES OF ASSESSMENT - CONSUMER PROTECTION CONTRAVENTIONS
TRADE AND COMMERCE - COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION - CONSUMER PROTECTION - MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS
TRADE AND COMMERCE - COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION - ENFORCEMENT AND REMEDIES - INJUNCTIONS
Action for civil pecuniary penalties and other remedies for misleading representations in breach of s 29 of the Australian Consumer Law.
The first defendant carried on business as a publisher of an online business and government directory. The second defendant is its sole director and shareholder. The first defendant has ceased trading and does not have substantial assets.
Between June and December 2013, in contravention of s 29(1)(d) of the Australian Consumer Law, telemarketers engaged by the first defendant telephoned six educational institutions and said words calculated to lead them to believe that they were being asked to renew an existing arrangement for paid advertisements when in truth they were being asked to authorise a new arrangement. The second defendant was knowingly concerned in these contraventions because he had drafted the call script used by the telemarketers.
Between June and December 2013, in contravention of s 29(1)(h) and/or (i) of the Australian Consumer Law, the first defendant’s staff telephoned three of those customers together with a seventh prospective customer and said words calculated to lead them to believe that entry in the directory was free or would be paid for by the Education Department and not the educational institution in question. The second defendant was not concerned in these additional six contraventions.
Five of the prospective customers paid a fee for a paid entry in the directory of $995 and one also paid a renewal fee of $1,495. After institution of the action, in April 2015 the first defendant refunded those amounts.
The plaintiff seeks declarations of contraventions, injunctions, civil pecuniary penalties and an order disqualifying the second defendant from managing corporations for a defined period.
Held:
1. Declaration made that the second defendant procured the first defendant to make misleading representations in respect of the six contraventions in which he was knowingly concerned (at [61]).
2. Injunction granted restraining the second defendant from procuring a corporation to make false or misleading representations that a person has agreed to acquire goods or services from a supplier in relation to online advertising (at ([63]).
3. Civil penalties imposed in respect of the first defendant totalling $90,000 (at (98)].
4. Civil penalties imposed in respect of the second defendant totalling $30,000 (at [112]).
5. The second defendant is disqualified from managing corporations for 12 months (at ([119]).
Competition and Consumer Act 2010 (Cth) Sch 2 (29 232(1), 224 and 248); Criminal Law (Sentencing) Act 1988 18A, referred to.
House v The King (1936) 55 CLR 499, applied.
Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd trading as Bet365 (No 2) [2016] FCA 698; Australian Securities and Investment Commission v Adler (2002) 42 ACSR 80; Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482, discussed.

COMMISSIONER FOR CONSUMER AFFAIRS v LUKELEO PTY LTD
[2017] SASC 168
Civil
BLUE J:

This is an action for civil pecuniary penalties and other remedies for misleading representations in breach of section 29 of the Australian Consumer Law. [1]
[1] As enacted by the Fair Trading Act 1987 (SA) section 14 and comprising Schedule 2 to the Competition and Consumer Act 2010 (Cth). The action also relies on breaches of section 18 (misleading conduct) insofar as the Commissioner seeks injunctive relief and disqualification of Mr Farrell. However it is unnecessary to refer to section 18 given the admissions made by the defendants that their conduct breached section 29.
The plaintiff Commissioner for Consumer Affairs brings the action against Lukeleo Pty Ltd (Lukeleo) alleging 12 contraventions of subsection 29(1) of the Australian Consumer Law and against its director and shareholder Luke Farrell for procuring six of those contraventions.
Lukeleo admitted all of the contraventions. The action initially proceeded to trial against Mr Farrell but on the second day of trial he admitted the six contraventions alleged against him. The matter then proceeded to a hearing on the appropriate remedies.
Lukeleo trading as BIG Pages commenced carrying on business as a publisher of an online business and government directory in March 2011. Mr Farrell is its sole director and shareholder.
Between June and December 2013 telemarketers engaged by Lukeleo telephoned six educational institutions and said words calculated to lead them to believe that they were being asked to renew an existing arrangement for paid advertisements in the directory when they were actually being asked to authorise a new arrangement. Lukeleo thereby made misleading representations that the institutions had agreed to acquire services in breach of section 29(1)(d) of the Australian Consumer Law. Mr Farrell was knowingly concerned in the contraventions because he had drafted the call script used by the telemarketers.
Over the same period persons engaged by Lukeleo telephoned three of the six prospective customers together with a seventh prospective customer and said words calculated to lead them to believe that entry in the directory was free (in one case) or would be paid for by the Education Department and not the educational institution in question. Lukeleo thereby made misleading representations that it had sponsorship, approval or affiliation with the State in breach of section 29(1)(h) and/or made a false representation with respect to the price of services in contravention of section 29(1)(i) of the Australian Consumer Law.
A declaration of contravention and injunction restraining future contraventions was granted by the Court against Lukeleo in October 2015. The Commissioner seeks similar orders against Mr Farrell.
The Commissioner seeks orders for the payment of civil pecuniary penalties by each of Lukeleo and Mr Farrell. The Commissioner also seeks an order disqualifying Mr Farrell from managing a corporation for a specified period.
Background
In July 2010 Lukeleo was incorporated by Mr Farrell. Mr Farrell is and at all material times was Lukeleo’s sole director and shareholder.
In March 2011 Lukeleo trading under the registered business name “BIG Pages” commenced producing the BIG Pages (the directory), an online directory for businesses and government enterprises. Lukeleo obtained data from an external source that provided the names and details of 17,000 business and government enterprises. It incorporated basic details for those enterprises (name and contact details) into the initial version of the directory. This was done at no charge to and without prior consultation with the enterprises.
Mr Farrell was the manager of the business. Lukeleo employed an office manager. Mr Farrell initially acted as the supervisor. Lukeleo engaged up to four telemarketing staff to work under the supervision of the supervisor. Telemarketing was undertaken by the telemarketing staff and the supervisor. These persons were paid a fixed base rate plus commissions on sales. Mr Farrell undertook the initial training of the telemarketing staff.
Lukeleo charged a fee to customers for including fulsome details (as opposed to the basic details provided without fee) in the directory for 12 months (a paid entry). That fee was generally $995 inclusive of GST.
Mr Farrell drafted a call script for staff to follow when making initial telephone calls to prospective customers (the initial call script). These were usually enterprises whose basic details were already included in the directory. The initial call comprised the following:
STEP 1
Good Morning/Afternoon, it’s _________ calling from the BIG Pages. Could you please put me through to the correct person who CAN PROOF READ AND AUTHORISE YOUR Company’s directory listing for the next edition?
We are currently processing entries for the next edition of the directory; I’d like to check all of your company details to ensure they are current and correct and then fax it through to get the authorisation to go ahead with the next edition.
You are the correct person to talk to this year, and what is your position there?
YES– continue to step 2
NO– go back to step 1
Okay, can I grab your full name and position?
STEP 2
Great, we have your company details as (refer to lead and confirm) Great– we have you details as: (address) is that correct? And your phone details here as (ph number) and your fax as (fax number) is that right? Can I just confirm your internet address _____? And your email ______?
I will be sending through a proposal for a listing via fax, if you could acknowledge the terms and conditions stating the cost of insertion and also proof read that, tick each line to make sure it’s all correct and current, and no spelling mistakes on my behalf. Then sign and reverse fax it to me this Morning/Afternoon and I will file it as completed at my end.
So I’ll get that through to you now, is that definitely you signing off on the paperwork?
Great, so I will go down to the fax room to send that to you in about 10 minutes, are you in a position to check that and fax that back to me?
Great, I’ll get that straight through to you.
Mr Farrell drafted a list of common questions/objections with standard answers (the answer script). The answer script included the following questions and answers:
Has this been authorised?
No, that is what i am sending through now, the paperwork to have it authorised. We do nothing without written approval.
Did we pay?
No, we previously provided you with a complimentary data listing and this is why we are calling you this year to offer you the opportunity to upgrade to a paid entry.
Are we in it, were we in it before?
No, you previously haven’t been a paid customer. However we gave you a complimentary data listing under the ________ classification, so as an annual directory we call through each 12 months to ensure your details are correct and to offer you the opportunity to upgrade to a full paid entry.
Does it cost us?
Yes, its $995.00 is [sic] for the full 12 months, which includes your logo, email and website in the Big Pages internet directory if you proceed with the advertising offer.
Mr Farrell drafted a pro forma proposal/order confirmation to be sent by a telemarketer to a recipient where applicable. It was in the form of a letter signed by the telemarketer addressed to the customer. It set out the paid entry that would appear in the directory. The substance of the proposal/order confirmation was as follows:
THIS IS A SOLICITATION, NOT A TAX INVOICE FOR A DEBT INCURRED BY YOU.[2]
In relation to our telephone conversation of today, please find below the [classification] directory advertisement for [name] for the upcoming edition of the Business Indigenous & Government Pages. Your entry in the directory will appear in the following section-
[section – eg education - and reproduction of listing]
The cost of the directory listing is $995 (GST Inc.). The Terms & Conditions at apply. You must read those Terms & Conditions before proceeding. Upon signing this Proposal/Order confirmation form you agree to place the above advertisement and acknowledge that you have read and agree to our Terms & Conditions. If you agree, please check, sign and fax back to [facsimile number].
[2] This was changed after around 2011/2012 to read “THIS IS NOT A BILL. YOU ARE NOT REQUIRED TO PAY ANY MONEY. YOU WILL ONLY RECEIVE AN INVOICE IF YOU SIGN AND RETURN THIS AGREEMENT”.
The practice was that a telemarketer sent the proposal/order confirmation to the customer within 10 minutes of the end of the telephone call. The supervisor telephoned the recipient 30 minutes after transmission of the proposal/order confirmation. The purpose of the call by the supervisor was to ensure that the recipient had received the proposal/order confirmation, go through it, ensure that the recipient understood it and encourage the recipient to sign and send it back.[3]
[3] The Commissioner invited me to find that there was no practice of the supervisor making a follow-up 30 minute call. I am satisfied that this practice existed partly because Mr Farrell gave sworn evidence about it and partly because it was in the interest of Lukeleo to make such a follow-up call to maximise the prospect of a successful sale and partly because there is no reason to reject Mr Farrell's evidence in this respect.
The practice was that approximately one week later Lukeleo issued a tax invoice to the customer for the annual fee for the paid entry.
Lukeleo obtained legal advice concerning the content of the proposal/order confirmation and other legal documentation. It did not obtain legal advice concerning the initial call script or the answer script.
Sometime after the BIG Pages business had become operational, Lukeleo engaged another person to act as the supervisor. The supervisor took over from Mr Farrell responsibility for training new telemarketers. There was a relatively high turnover of telemarketers. At any one time Lukeleo employed between two and four telemarketers.
In March 2013 another person took over as the supervisor. The new supervisor engaged a new telemarketer T.
Also in March 2013 Mr Farrell was diagnosed as having a serious health condition. As a result he reduced his involvement in the day to day affairs of the business. Between June 2013 and August 2014 he lived overseas, returning to Australia for a few days once a month for visa purposes. During that period he had very limited involvement in the conduct of the business.
June-July misleading statements
St Mary’s Vietnamese School
On 12 June 2013 T sent an email to the principal of St Mary’s Vietnamese School attaching a proposal/order confirmation in the standard terms incorporating details of the School including the emblem and the name “Government of South Australia Department for Education and Child Development”. The email was not tendered. In the email, T said that a listing had been created for the School and requested the principal to make any necessary changes to the attached listing and return the attachment by fax or email (the St Mary’s representation).
The principal signed the proposal/order confirmation and returned it to T. Lukeleo issued an invoice to the School for $995 which was ultimately paid by the School.
The Commissioner alleged in the action and Lukeleo admitted that by T’s conduct Lukeleo misleadingly represented that it had sponsorship, approval or affiliation with the State in breach of section 29(1)(h) of the Australian Consumer Law.
School for Vision Impaired
On 18 June 2013 T telephoned the principal of the South Australia School for Vision Impaired Statewide Services and said that BIG Pages was updating its details for the School’s listing and checking that they had not changed, the School had been listed in the directory before and its listing was due for renewal and T would send a fax showing the details for the principal to check, sign and return (the Vision Impaired representation).
T sent by facsimile to the principal a proposal/order confirmation in the standard terms incorporating details of the School. The principal signed the proposal/order confirmation and returned it to T. Lukeleo issued an invoice to the School for $995.
The Commissioner alleged in the action and Lukeleo admitted that by T’s conduct Lukeleo misleadingly represented that a particular person had agreed to acquire services in breach of section 29(1)(d) of the Australian Consumer Law.
Mid-North Education Centre
On 18 June 2013 T telephoned the finance officer of the Mid North Education Centre and said that BIG Pages was checking the entry for the Centre in the directory, needed to confirm that its details were still correct and T would send a fax showing the details for the finance officer to check and return (the initial Mid-North representation).
The Commissioner alleged in the action and Lukeleo admitted that by T’s conduct Lukeleo misleadingly represented that a particular person had agreed to acquire services in breach of section 29(1)(d) of the Australian Consumer Law.
T sent by facsimile to the finance officer a proposal/order confirmation in the standard terms incorporating details of the Centre.
On 18 June 2013 the finance officer telephoned T and queried the cost of $995 shown in the proposal/order confirmation. T said that she need not worry about payment as the cost was met by the Department of Education, all schools were being listed in the BIG Pages and the Centre would not be required to pay for the listing (the subsequent Mid North representation).
The principal signed the proposal/order confirmation and returned it to T. Lukeleo issued an invoice to the Centre for $995 which was paid by the Centre.
The Commissioner alleged in the action and Lukeleo admitted that by T’s conduct Lukeleo falsely represented that it had sponsorship, approval or affiliation with the State in breach of section 29(1)(h) and made a false representation with respect to the price of services in contravention of section 29(1)(i) of the Australian Consumer Law.
Whyalla Special School
On 20 June 2013 T telephoned the principal of the Whyalla Special School and said that BIG Pages was checking the entry for the School in the directory, needed to confirm that its details were still correct and T would send a fax showing the details for the principal to check, sign and return (the Whyalla representation).
T sent by facsimile to the principal a proposal/order confirmation in the standard terms incorporating details of the School. The principal signed the proposal/order confirmation and returned it to T. Lukeleo issued an invoice to the Centre for $995.
The Commissioner alleged in the action and Lukeleo admitted that by T’s conduct Lukeleo misleadingly represented that a particular person had agreed to acquire services in breach of section 29(1)(d) of the Australian Consumer Law.
Unley Primary School
On 4 July 2013 a female representative of Lukeleo telephoned the principal of the Unley Primary School and said that BIG Pages was checking the School’s entry in the BIG Pages, wanted to confirm that that they had not changed, provided details which the principal corrected and she would send a fax showing the details for the principal to check, sign and return (the Unley representation).
T sent by facsimile to the principal a proposal/order confirmation in the standard terms incorporating details of the School. The principal signed the proposal/order confirmation and returned it to T. Lukeleo issued an invoice to the School for $995 which was paid by the School.
The Commissioner alleged in the action and Lukeleo admitted that Lukeleo misleadingly represented that a particular person had agreed to acquire services in breach of section 29(1)(d) of the Australian Consumer Law.
October misleading statements
Dernancourt Kindergarten
On 17 October 2013 a different telemarketer M telephoned the director of Dernancourt Kindergarten. He said that BIG Pages was updating its directory and needed to confirm that its details for the Kindergarten were still correct, M would send a fax showing the details for the director to confirm and he would wait in the fax room for her to sign and return it (the initial Dernancourt representation).

The Commissioner alleged in the action and Lukeleo admitted that by M’s conduct Lukeleo misleadingly represented that a particular person had agreed to acquire services in breach of section 29(1)(d) of the Australian Consumer Law.
M sent by facsimile to the principal a proposal/order confirmation in the standard terms incorporating details of the School.
The director telephoned M and asked whether the government paid the cost of the advertising services provided by BIG Pages. M said that the government would cover the costs of the listing, there would be no charge to the Kindergarten and the listing would be free (the subsequent Dernancourt representation).
The principal signed the proposal/order confirmation and returned it to M. Lukeleo issued an invoice to the Kindergarten for $995.
The Commissioner alleged in the action and Lukeleo admitted that by M’s conduct Lukeleo falsely represented that it had sponsorship, approval or affiliation with the State in breach of section 29(1)(h) and made a false representation with respect to the price of services in contravention of section 29(1)(i) of the Australian Consumer Law.
Naracoorte North Kindergarten
On 25 October 2013 a male representative (who I infer was M) of Lukeleo telephoned the acting director of Naracoorte North Kindergarten and said that he wanted her to confirm the Kindergarten’s details, provided details which she confirmed and said that he would send a fax for her to check, sign and return.
M sent by facsimile to the acting director a proposal/order confirmation in the standard terms incorporating details of the Kindergarten. M wrote on the cover sheet a request to the acting director to check the details, make revisions if needed and fax it back to him.
A representative of Lukeleo (which I infer was the supervisor) telephoned the acting director, asking why the proposal/order confirmation had not been returned, said she was waiting by the fax machine and asked her to send it through immediately.
As a result of the conduct referred to in paragraphs 47 to 48 above (the Naracoorte representation), the acting director signed the proposal/order confirmation and returned it to M. Lukeleo issued an invoice to the Kindergarten for $995 which was paid by the Kindergarten.
The Commissioner alleged in the action and Lukeleo admitted that by its conduct Lukeleo falsely represented that a particular person had agreed to acquire services in breach of section 29(1)(d) of the Australian Consumer Law.
December misleading statements
Whyalla Special School
On 5 December 2013 a telemarketer employed by Lukeleo sent by facsimile to the principal of the Whyalla Special School a proposal/order confirmation referring to a final “extra classification directory” listing, the cost of which was $1,495. The proposal/order confirmation was not tendered.
On 6 December 2013 a representative of Lukeleo telephoned the principal, asking her to sign and return the proposal/order confirmation. The principal queried the cost of $1,495 and the representative said that there would be no cost. The finance administrator of the School spoke by telephone to a representative of Lukeleo, who told the finance administrator that the School would not receive a bill for the advertisement as this was the final entry.
Induced by the representations made by the Lukeleo representatives on 6 December (the subsequent Whyalla representations), the principal signed the proposal/order confirmation and returned it to Lukeleo. Lukeleo issued an invoice to the School for $1,495 which was paid by the School.
The Commissioner alleged in the action and Lukeleo admitted that by its conduct Lukeleo made a false representation with respect to the price of services in contravention of section 29(1)(i) of the Australian Consumer Law.
The proceeding
In July 2014 the Commissioner wrote to BIG Pages in relation to several complaints received about unsolicited telemarketing calls requesting certain information and documents. Lukeleo’s solicitors responded to the letter providing the requested information and documents and denying any wrongdoing.
In March 2015 the Commissioner instituted the action alleging that, by the conduct summarised above, Lukeleo had engaged in misleading conduct within the meaning of section 18 and made misleading representations concerning certain matters listed in section 29 of the Australian Consumer Law in its dealings with the seven educational institutions in question. The Commissioner alleged that Mr Farrell was knowingly concerned in the contraventions. The Commissioner sought an order for the payment of civil pecuniary penalties, injunctions and an order that Mr Farrell be disqualified from managing corporations for a specified period.
Lukeleo admitted all of the contraventions alleged. Mr Farrell ultimately denied that he was knowingly concerned in the contraventions. In October 2015 the Court made a declaration that Lukeleo had made false or misleading representations and granted an injunction restraining Lukeleo from making false or misleading representations of the type made to the seven educational institutions as summarised above.
The trial of the action against Mr Farrell commenced on 3 April and continued on 4 April 2017. Before trial the Commissioner had discontinued his allegations that Mr Farrell was knowingly concerned in the St Mary’s representation or subsequent Mid-North, Dernancourt and Whyalla representations. The Commissioner’s case was entirely documentary.
Mr Farrell tendered two affidavits, gave oral evidence and was cross-examined by the Commissioner. During his cross-examination, Mr Farrell informed the Court that he now admitted that he was knowingly concerned in the six contraventions involving the initial contact with the six educational institutions except St Mary’s Vietnamese School.
On 5 May and 2 June 2017 the parties made submissions concerning appropriate remedies. On the hearing of those submissions further evidence was tendered including three further affidavits by Mr Farrell and an affidavit by each of his accountants Mr Cordner and Mr Murphy and his solicitor Ms Waldron.
Declaration & injunction
The Commissioner seeks a declaration that Mr Farrell procured Lukeleo to make false or misleading representations being the initial representations except the St Mary’s representation. M Farrell does not oppose the making of a declaration. I will hear the parties as to the precise terms of the declaration to be made.
Subsection 232(1) of the Australian Consumer Law provides that, if a court is satisfied amongst other things that a person has engaged in conduct that constitutes a contravention of a provision of Chapter 3, the court may grant an injunction in such terms as the court considers appropriate.
The Commissioner seeks an injunction restraining Mr Farrell from procuring Lukeleo or any other corporation to make false or misleading representations that a person has agreed to acquire goods or services from a supplier in relation to online advertising. Mr Farrell does not oppose the grant of an injunction. I will hear the parties as to the precise terms of the injunction to be granted.
Pecuniary penalty
Subsection 224(1) of the Australian Consumer Law provides that, if a court is satisfied that a person has contravened amongst others a provision of Part 3-1, the court may order the person to pay to (relevantly) the State such pecuniary penalty, in respect of each act or omission by the person to which the section applies, as the court determines to be appropriate.
Subsection 224(3) provides that the maximum penalty for a body corporate is $1.1 million and for any other person is $220,000.
The purpose of the imposition of a penalty is the protection of the public, giving rise to considerations of specific and general deterrence, and not punishment or retribution.[4]
[4] Commonwealth v Director, Fair Work Building Industry Inspectorate[2015] HCA 46; 258 CLR 482 at [53]-[55] per French CJ, Kiefel, Bell, Nettle and Gordon JJ.
In Commonwealth v Director, Fair Work Building Industry Inspectorate,[5] French CJ, Kiefel, Bell, Nettle and Gordon JJ said:
Civil penalty proceedings are civil proceedings and therefore an adversarial contest in which the issues and scope of possible relief are largely framed and limited as the parties may choose, the standard of proof is upon the balance of probabilities and the respondent is denied most of the procedural protections of an accused in criminal proceedings.
…
No less importantly, whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:
"Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]... " [6]
[5] (2015) 258 CLR 482.
[6] At [53], [55]. (Footnote omitted).
Factors relevant to penalty include:
1.     the nature and extent of the act or omission[7] including:
[7]    Australian Consumer Law section 224(2)(a).
(a)     the deliberateness of the contravention;[8]
[8]    Trade Practices Commission v CSR Limited [1991] ATPR 41–076 at 52,152 per French J (in the context of contraventions of section 46 and Part IV of the Trade Practices Act 1974 (Cth) but subsequently applied in other decisions to contraventions of section 53 and Part V); Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [103] per Dowsett, Greenwood and Wigney JJ; Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (in liq) [2007] FCAFC 146, (2007) 161 FCR 513 at [61] per Moore, Dowsett and Greenwood JJ.
(b)    whether the contravening conduct was systematic or covert;[9]
[9]    Australian Competition and Consumer Commission v Singtel Optus Pty Ltd (No 4) [2011] 282 ALR 246 at [11] per Perram J; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [103] per Dowsett, Greenwood and Wigney JJ.
(c)     the period over which the contravention extended;[10]
[10] Trade Practices Commission v CSR Limited [1991] ATPR 41–076 at 52,152 per French J; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [103] per Dowsett, Greenwood and Wigney JJ.
2.the circumstances in which the act or omission took place[11] including whether the contravention arose out of the conduct of senior management of the contravener or at some lower level;[12]
[11] Australian Consumer Law section 224(2)(b).
[12] Trade Practices Commission v CSR Limited [1991] ATPR 41–076 at 52,152 per French J; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [103] per Dowsett, Greenwood and Wigney JJ.
3.the contravener’s antecedents including:
(a)     whether the contravener has previously been found by a court in proceedings under Chapter 4 or Part 5.1 to have engaged in any similar conduct;[13]
[13] Australian Consumer Law section 224(2)(c).
(b)    whether the contravener has engaged in similar conduct in the past;[14]
[14] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [104] per Dowsett, Greenwood and Wigney JJ.
4.the nature and extent of any loss or damage suffered as a result of the act or omission;[15]
5.the prospect of future contraventions by the contravener including:
(a)     whether the contravener has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention;[16]
(b) whether the contravener has a corporate culture conducive to compliance with the Australian Consumer Law as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention;[17]
6.the characteristics of the contravener including:
(a)the size of the contravener;[18]
(b)     the financial position of the contravener;[19]
7.     the maximum penalty;[20]
8.     specific and general deterrence.[21]
[15] Australian Consumer Law section 224(2)(a).
[16] Trade Practices Commission v CSR Limited [1991] ATPR 41–076 at 52,152 per French J; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [104] per Dowsett, Greenwood and Wigney JJ.
[17] Trade Practices Commission v CSR Limited [1991] ATPR 41–076 at 52,152 per French J; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [104] per Dowsett, Greenwood and Wigney JJ.
[18] Trade Practices Commission v CSR Limited [1991] ATPR 41–076 at 52,152 per French J; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [104] per Dowsett, Greenwood and Wigney JJ.
[19] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [104] per Dowsett, Greenwood and Wigney JJ.
[20] Australian Competition and Consumer Commission v Coles Supermarkets Pty Ltd [2015] FCA 330 at [6] per Allsop CJ; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 at [106] per Dowsett, Greenwood and Wigney JJ.
[21] Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54, (2013) 250 CLR 640 at [64]-[65] per French CJ, Crennan, Bell and Keane JJ.
All relevant factors are to be synthesised in the same manner as when sentencing for a criminal offence.[22] Many of the factors relevant to determining an appropriate penalty are the same as determining an appropriate sentence.[23] However, there are also important differences, including that inability to pay the penalty does not preclude its imposition.[24]
[22] Australian Competition and Consumer Commission v EnergyAustralia Pty Ltd [2015] FCA 274 at [103]-[104] per Gordon J; Australian Competition and Consumer Commission v Woolworths Ltd [2016] FCA 44 at [130] per Edelman J.
[23] Compare the factors relevant to determining an appropriate penalty under section 224 of the Australian Consumer Law with factors enumerated in the Criminal Law (Sentencing Act 1988 (SA) subsection 10(1).
[24] Australian Competition and Consumer Commission v High Adventure Pty Ltd [2005] FCAFC 247, (2006) ATPR 42-091 at [11] per Heerey, Finkelstein and Allsop JJ. Compare Criminal Law (Sentencing Act 1988 (SA) s13.
It appears that there is no power to impose a single penalty for multiple contraventions in the manner permitted on sentencing by section 18A of the Criminal Law (Sentencing) Act 1988 (SA) or subsection 4K(4) of the Crimes Act 1914 (Cth).[25]
[25] See the discussion by White J in relation to analogous provisions of the Australian Securities and Investments Commission Act 2001 (Cth) and National Consumer Credit Protection Act 2009 (Cth) in Australian Securities and Investments Commission v Kobelt [2017] FCA 387 at [76]-[88].
Section 224(4) of the Australian Consumer Law provides:
If conduct constitutes a contravention of 2 or more provisions referred to in subsection (1)(a):
(a) a proceeding may be instituted under this Schedule against a person in relation to the contravention of any one or more of the provisions; but
(b) a person is not liable to more than one pecuniary penalty under this section in respect of the same conduct.
It is relevant to take into account whether multiple contraventions are independent acts or arise out of one course of conduct.[26] Where multiple contraventions arise out of one course of conduct, the maximum penalty for one contravention may, depending on the circumstances, be a guide to (but is not a limit on) the total of the penalties for the contraventions.[27] However there is no fixed rule because contraventions arising out of one course of conduct may be as serious as or more serious than the same number of contraventions comprising independent acts.[28]
[26] Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; (2010) 269 ALR 1 at [41] per Middleton and Gordon JJ; Australian Competition and Consumer Commission v Woolworths Limited [2016] FCA 44 at [120]-[121] per Edelman J.
[27] Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1 at [41] per Middleton and Gordon JJ; Australian Competition and Consumer Commission v Woolworths Limited [2016] FCA 44 at [120]-[121] per Edelman J.
[28] Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd trading as Bet365 (No 2) [2016] FCA 698 at [24]-[25] per Beach J; Australian Competition and Consumer Commission v Valve Limited (No 7) [2016] FCA 1553 at [13] per Edelman J.
In Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd trading as Bet365 (No 2),[29] Beach J said:
In determining the appropriate penalty for multiple contraventions, there are two related principles to consider: the “totality” principle and the “course of conduct” principle.
As I have explained, the totality principle requires that the total penalty for related offences not exceed what is proper for the entire contravening conduct involved taking into account all factors. The principle operates to ensure that the penalties to be imposed, considered as a whole, are just and appropriate.
Contrastingly, the “course of conduct” principle gives consideration to whether the contraventions arise out of the same course of conduct to determine whether it is appropriate that a single overall penalty should be imposed that is appropriate for the course of conduct. It has a narrower focus. The principle was explained in Construction, Forestry, Mining and Energy Union v Cahill per Middleton and Gordon JJ:
It is a concept which arises in the criminal context generally and one which may be relevant to the proper exercise of the sentencing discretion. The principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality. That requires careful identification of what is “the same criminality” and that is necessarily a factually specific inquiry. Bare identity of motive for commission of separate offences will seldom suffice to establish the same criminality in separate and distinct offending acts or omissions. (emphasis in original)
But even if the contraventions are properly characterised as arising from a single course of conduct, I am not obliged to apply the principle if the resulting penalty fails to reflect the seriousness of the contraventions. The principle does not restrict my discretion as to the amount of penalty to be imposed for the course of conduct. Further, the maximum penalty for the course of conduct is not restricted to the prescribed statutory maximum penalty for any single contravening act or omission (i.e. $1.1 million); the respondents’ submission to the contrary is rejected.
Further, the “course of conduct” principle does not have paramountcy in the process of assessing an appropriate penalty. It cannot of itself operate as a de facto limit on the penalty to be imposed for contraventions of the ACL. Further, its application and utility must be tailored to the circumstances. In some cases, the contravening conduct may involve many acts of contravention that affect a very large number of consumers and a large monetary value of commerce, but the conduct might be characterised as involving a single course of conduct. Contrastingly, in other cases, there may be a small number of contraventions, affecting few consumers and having small commercial significance, but the conduct might be characterised as involving several separate courses of conduct. It might be anomalous to apply the concept to the former scenario, yet be precluded from applying it to the latter scenario. The “course of conduct” principle cannot unduly fetter the proper application of s 224.[30]
[29] [2016] FCA 698.
[30] At [21]-[25]. (Citations omitted)

A totality principle applies in fixing penalties for multiple contraventions akin to the totality principle in criminal sentencing so that the total of the penalties should be proportionate to the totality of the contraventions.[31]
[31] Construction, Forestry, Mining and Energy Union v Cahill(2010) 269 ALR 1 at [45] and [47] per Middleton and Gordon JJ; Director Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59; (2015) 229 FCR 331 at [46] per Dowsett, Greenwood and Wigney JJ.
Lukeleo
The Commissioner and Lukeleo make comprehensive submissions about the appropriate penalties. Each suggests the amount of the penalties that it submits would be appropriate. It is common ground that the principle of totality should be applied to reduce the total of the penalties below the sum of the separate penalties that would be appropriate if each contravention were considered in isolation. It is common ground that this reduction should be achieved by a uniform reduction across all contraventions in the same class.
Same conduct/course of conduct
The defendants submit that all contraventions arose out of a single course of conduct and in the alternative that all contraventions comprise the same conduct within the meaning of section 224(4)(b) of the Australian Consumer Law.
In the case of the Mid-North and Dernancourt subsequent representations, there are two contraventions in each case because a single representation related to two different paragraphs in subsection 29(1), namely that Lukeleo had sponsorship, approval or affiliation with the State (paragraph (h)) and with respect to the price of services (paragraph (i)). However in each case there was a single representation that happened to have these two dimensions. The gravamen of the conduct was the representation that the cost would be met by the Education Department and not the educational institution. The contraventions comprise the same conduct within the meaning of section 224(4)(b) and Lukeleo is not liable to more than one pecuniary penalty in respect of that conduct. I will impose one penalty for these pairs of contraventions.
The initial and subsequent Mid-North representations were made on the same day albeit by different conversations. I will reduce the penalty in respect of each by 33%. The same applies to the initial and subsequent Dernancourt representations.
Although Lukeleo made two representations to the Whyalla Special School on 6 December 2013, the Commissioner accepts that they comprise the same conduct within the meaning of section 224(4)(b).
The defendants submit that all contraventions arise out of a single course of conduct. The Commissioner submits that there are at least two courses of conduct, being the conduct encompassing the renewal representations and the conduct encompassing the no cost representations (as defined in the next paragraph) and there may be more than two courses of conduct. All parties accept however that merely characterising contraventions as arising out of a course of conduct is not determinative. In the present case, while I conclude that there are two courses of conduct, I consider that the course of conduct issue is largely academic and the appropriate penalties will be determined by application of the totality principle rather than course of conduct principles.
Classes of contraventions
The Commissioner submits that there are two classes of contravention. The first class comprises the initial representations to six customers apt to lead them to believe that they were renewing an existing arrangement for paid entries which comprised contraventions of section 29(1)(d) (the renewal representations). The second class comprises the initial representation to St Mary’s Vietnamese School that Lukeleo had sponsorship, approval or affiliation with the State in breach of section 29(1)(h) (the affiliation representation) and the subsequent representations to Whyalla Special School that there would be no cost to it which comprised contraventions of section 29(1)(i) and to the Mid-North Educational Centre and Dernancourt Kindergarten that there would be no costs to them and the cost would be met by the Education Department which comprised contraventions of section 29(1)(h) and (i) (the no cost representations).
The Commissioner submits that the renewal contraventions are more serious and should attract a higher penalty because they arose out of the conduct of senior management, namely Mr Farrell, and were systematic and fundamental to Lukeleo’s business model whereas Mr Farrell had no knowledge of and had not approved the affiliation and no cost contraventions and they were opportunistic and not fundamental to Lukeleo’s business model.
While I accept the existence of the distinctions drawn by the Commissioner, after taking into account all of the relevant factors referred to below I have concluded that there are six contraventions or groups of contraventions in respect of which it is appropriate to impose the same penalty, namely four renewal representations, one affiliation representation and one no cost representation and it is appropriate to impose a different penalty in respect of the Mid-North and Dernancourt representations for the reasons given above.
In respect of the renewal representations, the initial call script was misleading because it was apt to lead the recipient of the call to believe that the educational institution had purchased a paid entry in the directory for the prior year and the current process involved a renewal of the current arrangement when this was not the case. However, whether the dealings by the Lukeleo representative and supervisor considered as a whole were misleading depended on the individual interaction between the Lukeleo callers and the educational institution representative. For the reasons given below when addressing the penalties to be imposed on Mr Farrell, while he knew that the initial call script was liable to mislead prospective customers, I find that he did not intend that by the end of the process when the customer signed the proposal/order confirmation the customer would remain deceived. It was the combination of the initial call script used by Lukeleo and the individual interaction between the callers and the educational institution representative in question that resulted in the customers being deceived. While Mr Farrell as senior management bears responsibility for the initial misleading resulting from the use of the initial call script, he does not bear responsibility for the ultimate deception.
The affiliation and no cost representations were blatantly false. In the case of the Whyalla Special School they involved a false statement that the School would not be charged for the entry; in the case of the Mid-North Educational Centre and Dernancourt Kindergarten they involved the false statement that the cost would be met by the Education Department and not by the individual educational institution; and in the case of St Mary’s Vietnamese School they involved a false statement that Lukeleo had affiliation with the State.
Relevant factors
Turning to factors relevant to the amount of the penalties to be imposed, the nature of the contraventions by the renewal representations was that they were apt to lead to a prospective customer agreeing to a paid entry in the belief that this was merely a renewal of a current arrangement The nature of the contraventions by the no cost representations was that they were apt to lead to a prospective customer agreeing to an entry in the belief that the cost would not be met by the customer. The nature of the contraventions by the affiliation representations was that Lukeleo had affiliation with the State.
The contraventions involved six customers on a one-off basis and in the case of the Whyalla Special School involved both an initial entry and a renewal. The total period over which the contraventions extended was six months from June to December 2013. The contraventions were deliberate. They were systematic in the sense that they were repeated in respect of several customers but they appear to have been confined to two telemarketers and one supervisor. They were not “covert” in the sense used by the authorities.
I have already considered above the extent to which Mr Farrell as senior management was involved in the contraventions.
The Commissioner accepts that Lukeleo and other entities owned or controlled by Mr Farrell have not been involved in similar conduct in the past.
The loss suffered by the customers was $995 each in the case of St Mary’s Vietnamese School, Mid-North Education Centre, Unley Primary School and Naracoorte North Kindergarten and $2,490 in the case of Whyalla Special School. Lukeleo refunded these amounts to the educational institution in question in April 2015. Dernancourt Kindergarten and South Australia School for Vision Impaired Statewide Services did not pay the invoices issued to them. Lukeleo submits that the loss was offset to some degree by the benefit of an entry in the directory. I do not accept that submission because the customers demonstrated by their ultimate conduct that they did not wish to have a paid entry in the directory. However, equally I accept that there was no ultimate loss because of the restitution made by Lukeleo.
The Commissioner accepts that Lukeleo has ceased trading and will not trade again. Lukeleo did not have in place adequate educational programs and corrective measures to prevent the contraventions occurring. However it submitted a compliance, education and training program to the Commissioner in August 2015. I find that the measures it took after the event greatly reduced the risk of similar future contraventions.
While Lukeleo responded to the Commissioner’s initial letter by denying any wrongdoing, after the action was instituted Lukeleo admitted every alleged contravention without qualification. Based on my assessment of Mr Farrell as a witness, his conduct after the action was instituted and the submissions made by his counsel in relation to penalty, I assess the prospect of future contraventions of the Australian Consumer Law by him or entities owned or controlled by him as small.
Lukeleo was of relatively small size in the Australian market compared to many of the entities that are the subject of actions for civil penalties. Its revenue from the BIG Pages business in the year ending June 2014 (being the year during which the contraventions occurred) was $375,000.[32] Its total income for that year included management fees of $292,000 charged to businesses conducted by other entities owned and controlled by Mr Farrell and was $684,000. Its profit before tax was $204,000. It had total assets of $473,000 and net assets of $302,000. It made a profit on the paid entries of about $400 each.
[32] All revenue, profit, asset and net asset figures herein are rounded to the nearest thousand dollars.
Lukeleo’s financial statements for the year ended June 2016 show total assets of $59,000 and a net asset deficiency of $141,000. It has ceased to trade.
It is common ground that it is unlikely that Lukeleo is in a financial position to pay a substantial penalty but it is also common ground that financial inability to pay a penalty is not necessarily a reason to impose a lesser penalty than would otherwise be imposed.
The maximum penalty for each contravention is $1.1 million. The Commissioner accepts that, because Lukeleo is no longer trading, specific deterrence is not a primary consideration. However, it still has a role to play because Mr Farrell as its owner and controller can use an alternative corporate entity to carry on a similar business. I accept the Commissioner’s submission that general deterrence is an important factor in fashioning an appropriate penalty.
The parties cite decisions in the Federal Court on penalty in a number of cases. I have had regard to those decisions but it is neither possible nor appropriate to transpose the penalty imposed in one case to a different case involving different circumstances.
Taking into account all relevant circumstances, and in particular having regard to the totality principle and fixing total penalties proportionate to the total contraventions, I fix a penalty of $10,000 for each of the five contraventions comprising the initial representations except the Mid-North and Dernancourt representations, $10,000 for the contravention comprising the subsequent Whyalla representations, and $7,500 for each of the four contraventions comprising the initial and the pairs of subsequent Mid-North and Dernancourt Kindergarten representations. The total of the penalties is $90,000.
Mr Farrell
Mr Farrell admits that he was knowingly concerned in the six contraventions by Lukeleo involving the initial representations except St Mary’s Vietnamese School.
On hearing submissions on penalty, the question arose whether Mr Farrell’s culpability is confined to his devising the initial call script which he knew to be misleading or encompasses also the dialogue between the telemarketer and the supervisor on behalf of Lukeleo and the representative of the educational institution in question in each case.
For the purpose of the submissions, the Commissioner tendered tables showing certain details of complaints made to the Commissioner or to the Australian Competition and Consumer Commission (ACCC) in relation to the conduct of Lukeleo.
The table of complaints to the Commissioner shows that seven complaints were made of conduct by Lukeleo that led the complainant’s staff member to believe that a renewal as opposed to an initial paid entry was being considered. These complaints all related to the period July to November 2013.[33] The table of complaints made to ASIC shows that 11 such complaints were made. These complaints all related to the period July 2013 to June 2014.[34]
[33] There were also complaints of misleading conduct in other ways. However, where dates were supplied, these all related to the period during which Mr Farrell was absent from the BIG pages business.
[34] There were also complaints of misleading conduct in other ways (including representations of the types the subject of the subsequent representations and variations on the themes). However, the dates of the complaints all fell within the period during which Mr Farrell was absent from the BIG Pages business.
The tables tendered by the Commissioner cannot prove any contraventions other than those the subject of the action and obviously the defendants are not to be penalised for any conduct other than the conduct the subject of the action. However, it is significant that there are no allegations of any contravening conduct before June 2013 and there are no complaints of any such conduct. This coincides with the time when Mr Farrell left to reside overseas and had no involvement in the day-to-day operations of Lukeleo.
Taking into account also Mr Farrell’s evidence, I infer that while Mr Farrell was the manager of the business up to March/May 2013, notwithstanding that the initial call script was inherently misleading the interaction between Lukeleo’s telemarketers and supervisor on the one hand and prospective customers on the other was such that by the time the prospective customer came to consider whether to sign a proposal/order confirmation the customer was not or was no longer under the belief that the customer was merely renewing an existing arrangement for a paid entry. I infer that in June 2013 that interaction changed such that multiple customers (namely the seven customers the subject of the action) were led to believe as a result of the interaction that they were merely being asked to renew an existing arrangement for a paid entry.
Notwithstanding this finding, by his admissions Mr Farrell accepts that he was knowingly concerned in the misleading conduct as a result of telemarketers following the initial call script that he devised. His culpability is to be assessed on the basis that this was in effect or analogous to “bait advertising” under which the prospective customer was lured into considering a paid entry by the initial belief that the customer was only considering renewal of an existing arrangement but Mr Farrell did not intend that the customer be misled at the point of signing the proposal/order confirmation.
Most of the matters considered above in the context of Lukeleo are relevant also to determining appropriate penalties in respect of Mr Farrell. While the Commissioner acknowledges some amelioration of specific deterrence considerations in the case of Lukeleo because it no longer trades, this amelioration (such as it is) does not apply to Mr Farrell.
Mr Farrell was born in 1984. He left school in 2001 and over the next nine years worked for several different directory and telephone marketing businesses.
Turning to Mr Farrell’s financial circumstances, he received wages and dividend income from Lukeleo totalling approximately $800,000 over the three years from 1 July 2013 to 30 June 2016.
Mr Farrell owns a unit. He purchased it for $550,000 in March 2015 and it is subject to a mortgage loan with a current balance outstanding of approximately $400,000. One of his companies is leasing a Toyota Camry motor vehicle in respect of which there is a final balloon liability of approximately $10,000. He has approximately $15,000 in two bank accounts. He has a tax liability of approximately $75,000.
Mr Farrell is the owner and controller of Directory.listings.com.au Pty Ltd and Directory Services Australia Pty Ltd.[35] The most recent financial statements for those companies tendered were for the year ending June 2015. They showed that Directory.listings.com.au Pty Ltd had net assets of approximately $350,000 and Directory Services Australia Pty Ltd a very small net asset deficiency. They showed combined revenue of approximately $570,000 and combined net profit before tax of approximately $150,000.
[35] Mr Farrell gave evidence that a third company, Corporate Directory of Australia Pty Ltd, ceased to trade in 2016. Apparently it is no longer registered. He also gave evidence that he had traded under the business name Australian Telephone Directory but in his most recent affidavit he gave evidence that he no longer trades as a sole trader and does not have any plans to do so in the future.
I also take into account the fact that Mr Farrell will be disqualified from managing a corporation for the following 12 months (see below).[36]
[36] See Australian Competition and Consumer Commission v Safety Compliance Pty Ltd (in liq) (No 2) [2015] FCA 1469 at [31] per Farrell J.
Taking into account all relevant circumstances, and in particular having regard to the totality principle and fixing total penalties proportionate to the total contraventions, I fix a penalty of $5,000 for each of the six contraventions comprising the initial representations. The total of the penalties is $30,000.
Disqualification
Subsection 248(1) of the Australian Consumer Law provides that, if a court is satisfied amongst other things that a person has engaged in conduct that constitutes a contravention of a provision of Part 3-1, the court may, on application of the regulator, make an order disqualifying a person from managing corporations for a period that the court considers appropriate.
The Commissioner seeks an order for disqualification. Mr Farrell accepts that the preconditions that he engaged in conduct in contravention of Part 3-1 and an application be made by the regulator have been satisfied but submits that in the exercise of the discretion a disqualification order should not be made.
Subsection 248(2) provides that the court may have regard to the person's conduct in relation to the management, business or property of any corporation as well as any other matters that the court considers appropriate.
In Australian Securities and Investment Commission v Adler,[37] Santow J said:
[37] [2002] NSWSC 483, (2002) 42 ACSR 80.
The cases on disqualification gave orders ranging from life disqualification to 3 years. The propositions that may be derived from these cases include:
(i)Disqualification orders are designed to protect the public from the harmful use of the corporate structure or from use that is contrary to proper commercial standards;
(ii)The banning order is designed to protect the public by seeking to safeguard the public interest in the transparency and accountability of companies and in the suitability of directors to hold office;
(iii)Protection of the public also envisages protection of individuals that deal with companies, including consumers, creditors, shareholders and investors;
(iv)The banning order is protective against present and future misuse of the corporate structure;
(v)The order has a motive of personal deterrence, though it is not punitive;
(vi)The objects of general deterrence are also sought to be achieved;
(vii)In assessing the fitness of an individual to manage a company, it is necessary that they have an understanding of the proper role of the company director and the duty of due diligence that is owed to the company;
(vii)Longer periods of disqualification are reserved for cases where contraventions have been of a serious nature such as those involving dishonesty;
(viii)In assessing an appropriate length of prohibition, consideration has been given to the degree of seriousness of the contraventions, the propensity that the defendant may engage in similar conduct in the future and the likely harm that may be caused to the public;
(ix)It is necessary to balance the personal hardship to the defendant against the public interest and the need for protection of the public from any repeat of the conduct;
(x)A mitigating factor in considering a period of disqualification is the likelihood of the defendant reforming;
(xi)The eight criteria to govern the exercise of the court’s powers of disqualification set out in Commissioner for Corporate Affairs (WA) v Ekamper have been influential. It was held that in making such an order it is necessary to assess:
-      character of the offenders;
-      nature of the breaches;
-      structure of the companies and the nature of their business;
-      interests of shareholders, creditors and employees;
-      risks to others from the continuation of offenders as company directors;
-      honesty and competence of offenders;
-      hardship to offenders and their personal and commercial interests; and
-      offenders’ appreciation that future breaches could result in future proceedings.[38]
[38] At [54]. (Citations omitted) On appeal see Re HIH Insurance Ltd (in prov liq) and HIH Casualty and General Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler [2003] NSWCA 131; (2003) 46 ACSR 504.

Most of the matters considered above in the context of pecuniary penalty are relevant also to determining whether to make a disqualification order and if so its length. I take them into account together with the prospective effect of an order on Mr Farrell particularly given his directorship of Directory.listings.com.au Pty Ltd and Directory Services Australia Pty Ltd and his future intentions of which he gave evidence.
On the one hand the contraventions and the circumstances in which they occurred are sufficiently serious that it is appropriate to make a disqualification order. On the other hand, for the reasons given above I consider that the prospects that Mr Farrell will be involved in future contraventions of the Australian Consumer Law are small and there are other mitigating factors suggesting that the disqualification order should be for a relatively short period.
Taking into account all relevant factors, it is appropriate to disqualify Mr Farrell from managing a corporation for 12 months.
Costs
The Commissioner seeks an order that the defendants pay his costs of action on a party/party basis. The defendants do not oppose an order that they pay a proportion of the Commissioner’s costs but submit that there should be a reduction on account of allegations that were abandoned and that each should pay a proportion of the total costs given that there were two defendants and different issues and in Mr Farrell’s case mitigating circumstances. I will hear the parties further before making an appropriate costs order.
Conclusion
As against Lukeleo, I fix a penalty of $10,000 for each of the five contraventions comprising the initial representations except the initial Mid-North and Dernancourt representations, $10,000 for the contravention comprising the subsequent Whyalla representations and $7,500 for each of the four contraventions comprising the initial and the pairs of subsequent Mid-North and Dernancourt Kindergarten representations. The total of the penalties is $90,000.
As against Mr Farrell, I will grant a declaration and an injunction in appropriate terms. I fix a penalty of $5,000 for each of the six contraventions in which he was knowingly concerned. The total of the penalties is $30,000. I will make an order disqualifying Mr Farrell from managing corporations for 12 months.
I will hear the parties as to the precise form of the orders to be made to reflect my reasons for judgment and as to costs.