| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : COMMISSIONER FOR CONSUMER PROTECTION -v- REALGOLD CORPORATION PTY LTD [2014] WADC 51 CORAM : KEEN DCJ HEARD : 8 APRIL 2014 DELIVERED : 24 APRIL 2014 FILE NO/S : CIV 2567 of 2012 BETWEEN : COMMISSIONER FOR CONSUMER PROTECTION Plaintiff
AND
REALGOLD CORPORATION PTY LTD
First defendant
PETER VUKMIROVIC
Second defendant
Catchwords: Consumer protection - Misleading or deceptive conduct in trade - Enforcement and remedies - Declarations, injunctions, pecuniary penalties - Principles to be applied - Jurisdiction of the District Court Legislation: Nil Result: Proposed settlement approved
Declarations, injunctions and pecuniary penalties imposed
Representation: Counsel:
Plaintiff : Mr J L Derby
First defendant : Ms J Pivac
Second defendant : Mr J Pivac
Solicitors:
Plaintiff : Department of Commerce
First defendant : GG Legal
Second defendant : GG Legal
Case(s) referred to in judgment(s):
Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169
Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146
Australian Competition and Consumer Commission v P & N Pty Ltd [2014] FCA 6
Australian Competition and Consumer Commission v Rural Press Ltd [2001] FCA 1065
Australian Competition and Consumer Commission v SMS Global [2011] FCA 855
Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54, 66; (2013) 304 ALR 186
Australian Securities and Investment Commission v Ingleby [2013] VSCA 49
Barbaro v The Queen [2014] HCA 2; (2014) 305 ALR 323
De Vries v Smallridge [1928] 1 KB 482
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89
Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421
Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82
Hamilton v Whitehead (1988) 166 CLR 121
Hondros & Tholet v Chesson [1981] WAR 146
Markarian v The Queen (2005) 228 CLR 357
Matthews v Bayview Holiday Village Pty Ltd (1990) 2 WAR 167
Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993
NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249
Trade Practices Commission v CSR Ltd (1991) ATPR 41-076
1 KEEN DCJ: This is an action brought by the Commissioner by reason of false or misleading representations or the engaging in misleading or deceptive conduct by the first defendant publishing advertisements representing that it was a member of the Master Builders Association of Western Australia (MBA) and against the second defendant for knowingly being concerned in those contraventions.
2 Subject to court approval, the parties have agreed terms as to the declarations to be made by the court relating to the conduct alleged, injunctions to restrain such conduct in the future and the payment of pecuniary penalties.
Relevant law 3 The Fair Trading Act 2010 (the FTA) by s 18 and s 19 incorporates the Australian Consumer Law (WA) text (ACL) found in sch 2 Competition and Consumer Act 2010 (Cth). 4 The provisions of the ACL apply from 1 January 2011. By reason of the agreed facts in the current case, to which I will come, the ACL applies to the conduct alleged against the defendants for the purposes of granting relief. 5 I will come to further provisions of the FTA and the ACL in due course, but first it is appropriate that I deal with matters of jurisdiction to show how this court has jurisdiction to deal with the current proceedings.
Jurisdiction 6 As I have noted, the Commissioner seeks declaratory relief, injunctions and pecuniary penalties. 7 Section 18 in ch 2 of the ACL, by way of general protection, relevantly, provides that '[a] person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive'. 8 Section 232 of the text provides, relevantly: (1) A court may grant an injunction, in such terms as the court considers appropriate if the court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute: (a) a contravention of a provision of Chapter 2; … (e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision … 9 Section 228 of the ACL makes provision for civil action for recovery of pecuniary penalties in the following terms: (1) The regulator may institute a proceeding in a court for the recovery on behalf of the Commonwealth, a State or a Territory, as the case may be, of a pecuniary penalty referred to in section 224. 10 Section 22 FTA defines 'regulator' to mean the Commissioner. 11 Section 224 provides: (1) If a court is satisfied that a person: (a) has contravened any of the following provisions: … (e) has been in any way, directly or indirectly, knowingly concerned in or party to the contravention by a person of such a provision …, the court may order the person to pay to the Commonwealth, State or Territory as the case may be, such pecuniary penalty, in respect of each act or omission by the person to which this section applies, as the Court determines to be appropriate. 12 In pt 3.1 of ACL, s 29 by way of specific provisions relevantly provides: (1) A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with a promotion by any means of the supply or use of goods or services: 13 The Commissioner relies upon s 50 District Court of Western Australia Act 1969 to ground the jurisdiction of this court to deal with the current matter. That section provides that 'the Court has all of the powers and authority that the Supreme Court has and may exercise from time to time in relation to all personal actions where the amount, value or damages sought to be recovered is not more than the jurisdictional limit …'. In her statement of claim the Commissioner has limited her claim for a pecuniary penalty as not exceeding $750,000 – the upper limit of the jurisdiction of the District Court. 14 The Commissioner argued that the power to grant an injunction arises under s 99 FTA. That section, relevantly, provides: (1) The Supreme Court or the District Court, on the application of the Minister, the Commissioner or any other person, may grant an injunction in whatever terms the Court determines to be appropriate where the Court is satisfied that a person – 15 It is submitted that by the words 'of this Act' that includes the incorporated ACL and it follows that the District Court has specific jurisdiction to grant injunctions. 16 In respect of the declaratory relief sought the Commissioner relies upon s 55 District Court of Western Australia Act which provides: The Court or a District Court judge has, as regards any action or matter within its or his jurisdiction for the time being, power – (a) to grant, and shall grant, in the action or matter such relief, redress or remedy, or combination of remedies, either absolute or conditional; and (b) to make any order that could be made in regard to any action or matter, and shall in each such action or matter give such and the like effect to every ground of defence or counterclaim equitable or legal, in a full and ample manner as might and ought to be done in the like case by the Supreme Court or a judge thereof. 17 I am satisfied that a pecuniary penalty pursuant to s 224 of the ACL in respect of a corporation engaging in misleading or deceptive conduct or a person knowingly concerned in and party to or aiding and abetting such conduct is a personal action within the meaning of s 50 District Court of Western Australia Act. In the present case the amount claimed by the Commissioner does not exceed the jurisdictional limit of the court. 18 The power to give injunctive relief is expressed in the FTA. 19 The power to grant declaratory relief is a power granted as ancillary relief. Ancillary relief to a claim within the jurisdiction of the court may be granted: Hondros & Tholet v Chesson [1981] WAR 146, 147, citing De Vries v Smallridge [1928] 1 KB 482, 488; Matthews v Bayview Holiday Village Pty Ltd (1990) 2 WAR 167, 170. The claim within the jurisdiction to which the proposed declaration is ancillary is the claim by way of a personal action in respect of the pecuniary relief sought. 20 For those reasons I am satisfied the court has jurisdiction to entertain this claim.
The claim 21 By her re-amended statement of claim the Commissioner alleges that the first defendant was at all material times incorporated under the Corporations Act 2001 (Cth), was the registered proprietor of the business name 'Repave SprayOn Paving' and carried on business in trade or commerce by providing sprayon paving services. The second defendant is and was at all material times the sole director, secretary and sole shareholder of the first defendant. 22 The Commissioner alleges that on 14 February 2006 the first defendant was registered as a member of the MBA. It is alleged that in or about August 2010 or no later than 2 November 2010 the first defendant ceased to be a member of MBA by reason of failing to pay membership fees for the 2010/2011 financial year. 23 The Commissioner then goes on to aver that on various dates, as set out in the schedule to the statement of claim, the first defendant represented in various publications, being The West Australian newspaper and Community Newspapers, in trade or commerce, in connection with the supply of services, that it was a member of the MBA. The representation was by means of the inclusion of the MBA logo in advertisements. 24 By reason of matters set out in par 5 of the statement of claim, it is alleged that each of the representations was false or misleading or deceptive. 25 Whilst the pleading dealt with representations that are alleged to have occurred prior to 1 January 2011, the Commissioner has limited her claim to those arising between 1 April 2011 and 7 February 2012. On that basis the Commissioner alleges that the first defendant, in trade or commerce, engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, contrary to s 18(1) of the ACL and further, or alternatively, in connection with the promotion of the supply of services, false or misleading in that the first defendant had an affiliation with MBA and contrary to s 29(1)(h) of the ACL. 26 The statement of claim went on to allege that the second defendant was responsible for communications with The West Australian newspaper and the Community Newspapers, had requested the creation of the advertisements and approved their publication, and had paid the invoices raised by the newspapers in relation to the advertisements. It is said by reason of that conduct the second defendant was knowingly concerned in and a party to, further or alternatively aided and abetted, the first defendant's contraventions of the ACL. 27 It is not necessary for me to go into great detail on the defence that has been filed because the matter has been settled by agreement between the parties subject to court approval. Nevertheless it is relevant to note that whilst the first defendant made a number of admissions in the defence, it did not admit contraventions of the ACL and alleged that any such contraventions were due to the act or default of the MBA and/or due to some other cause beyond the defendants' control. 28 The defence further alleges that any contraventions of the ACL were caused by a reasonable mistake on the part of the first defendant in that it held a reasonable belief that it was a current and paid member of the MBA and/or further, alternatively, as a result of the MBA's failure to properly notify the first defendant that its membership of the MBA was up for renewal, or alternatively had lapsed. The second defendant repeats and relies upon those averments.
Agreed facts 29 As part of the proposed resolution to this matter the court has received as exhibit 1 a statement of agreed facts. Those facts are in the following terms: PARTIES 1. The Plaintiff is the regulator for the purposes of the Australian Consumer Law (WA)(ACL). 2. The First defendant is, and was at all material times: 3. The Second Defendant is, and was at all material times, the sole director, secretary and shareholder of Realgold. FIRST DEFENDANT'S MEMBERSHIP OF THE MBA 4. The First Defendant was registered as a member of the Master Builders Association of Western Australia (MBA) on 14 February 2006. 5. Membership of the MBA is obtained by application approved by the Board of the MBA. 6. Membership of the MBA runs from 1 July to 30 June of the following year. 7. Only members of the MBA are entitled to display its logo in advertising material. 8. A member of the MBA may renew that membership by payment of the annual renewal fee before 31 July of the relevant year. 9. The First Defendant failed to pay its annual renewal fee by 31 July 2010 in respect of the 2010-11 membership year. 10. On 12 October 2010, the Board of the MBA endorsed the First Defendant's removal from the list of members of the MBA. 11. In 2010 the MBA sent correspondence to the wrong address for the First Defendant. 12. Up until September 2011 the First Defendant received continual emails from the [sic MBA] … First Defendant was not directly informed that it was not an MBA member until April 2011. 13. In about April 2011, an employee of the MBA contacted the Second Defendant, on behalf of the First Defendant, and informed him that the First Defendant was no longer a member of the MBA. 14. In June 2011, the Second Defendant, on behalf of the First Defendant, submitted an application form for membership of the MBA. 15. On 27 June 2011, the Board of MBA rejected the First Defendant's application for membership. 16. On 11 July 2011, the Second Defendant, on behalf of the First Defendant, had a telephone conversation with Michael McLean, the Executive Director of the MBA. The Second Defendant requested that the Board of MBA review its decision and requested to send in further information. Mr McLean agreed to present any information to the Board at its next meeting. 17. The First Defendant did not submit any further information. 18. On 9 August 2011, the Board of the MBA met and noted that no further information had been provided by the First Defendant. 19. The First Defendant is not, and has not been since 12 October 2010, a member of the MBA. FIRST DEFENDANT'S CONDUCT 20. From 1 April 2011 to 7 February 2012, the First Defendant published a total of 514 advertisements for the Business, as follows: 21. Each Advertisement contained the MBA logo under which was the word 'Member'. 22. The Advertisements published in The West Australian newspaper were in the form set out in Attachment A to these Agreed Facts. (Attachment A can be found as annexure DT1 to an affidavit of Anna Turnbull sworn 25 February 2014). 23. The Advertisements published in the Community Newspapers were in the form set out in Attachment B to these Agreed Facts. (Attachment B can be found as annexures IH4 to IH7 to an affidavit sworn by Ian Hancock on 24 February 2014). SECOND DEFENDANT'S CONDUCT 24. In respect of the Advertisements, the Second Defendant: DEFENDANT'S FINANCIAL CIRCUMSTANCES 25. The First Defendant made the following profits before tax in recent financial years: 26. The Second Defendant had the following taxable incomes in recent financial years: 26.1 $35,708 in 2010-11; and 26.2 $78,338 in 2011-12. 27. The Second Defendant owns a half share of the property at 40 The Corniche, Hillarys. The property is under construction and in the Second Defendant's view has an approximate value of $850,000 and there is a mortgage in respect of that property the outstanding amount of which is $843,000.00.
Proposed orders by consent 30 It is declared that: 1. From 1 April 2011 to 7 February 2012, by publishing advertisements in community newspapers and The West Australian newspaper that contained the MBA logo the First Defendant represented that it was a member of the MBA in circumstances where the First Defendant was not a member of the MBA the First Defendant: 2. From 1 April 2011 to 7 February 2012, by authorising the publication by the First Defendant of advertisements in community newspapers and The West Australian newspaper that contained an express representation that the First Defendant was a member of the Master Builders' Association in circumstances where the First Defendant was not a member of the MBA the Second Defendant: AND IT IS ORDERED THAT: 3. Pursuant to sections 232 of the ACL, the First Defendant is restrained for a period of 3 years from: 3.1 publishing any advertisement containing the MBA logo; and 3.2 publishing any advertisement or document that contains a statement, whether by words, pictures or otherwise, that represents that the First Defendant is: 3.2.1 a member of the Master Builders' Association; or 3.2.2 a member of, or affiliated with, any association, group, body or society that represents the interest of providers of building, or building related, services; unless and until the First Defendant is: 3.3 a member of the MBA; or 3.4 a member of, or affiliated with, any association, group, body or society that represents the interest of providers of building, or building related, services that the First Defendant represents that it is a member of or is affiliated with. 4. Pursuant to sections 232 of the ACL, the Second Defendant is restrained for a period of 3 years from: 4.1 authorising or being knowingly concerned in or party to the publication by any person or entity of any advertisement that contains the MBA logo; and 4.2 authorising or being knowingly concerned in or party to the publication of any advertisement or document that contains a statement, whether by words, pictures or otherwise, that represents that any person or entity is: 4.2.1 a member of the MBA; or 4.2.2 a member of, or affiliated with, any association, group, body or society that represents the interest of providers of building, or building related, services; unless and until the person or entity is: 4.3 a member of the MBA; or 4.4 a member of, or affiliated with, any association, group, body or society that represents the interests of providers of building, or building related, services that the person or entity that it is a member of or is affiliated with. AND IT IS FURTHER ORDERED THAT: 5. Pursuant to section 224(1) of the ACL, the First Defendant pay to the State of Western Australia a pecuniary penalty of $10,000. 6. Pursuant to section 224(1) of the ACL, the Second Defendant pay to the State of Western Australia a pecuniary penalty of $10,000. AND IT IS FURTHER ORDERED THAT: 7. There be no orders as to costs and any unsatisfied costs orders be vacated.
Submissions by the parties 31 It is important and appropriate that I acknowledge and recognise the very helpful submissions that have been filed on behalf of the Commissioner. In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285, 298, Burchett and Kiefell JJ remarked: … [I]n discharging its responsibilities, the court greatly accepts all proper help, and the views of the specialist bodies set up to protect the public interest in the maintenance of economically healthy competition are plainly relevant, for example, to the question whether a proposed penalty will be sufficient to deter anticompetitive behaviour in a particular market. 32 I cannot do better than echo those sentiments. The submissions are full, detailed and persuasive and if imitation is the sincerest form of flattery no apology is necessary for having adopted parts of those submissions in my reasons. 33 Having made these comments I add that I am also grateful to defence counsel for the submissions made on behalf of the defendants. 34 In making submissions each side has placed a particular slant on the evidence in this case or argued for a particular position that arises from a consideration of that evidence. Putting that to one side, there are the agreed facts. 35 After hearing oral submissions it was left that a further hearing would be called if it became necessary for further argument because the differing positions of the parties gave rise to any question on whether or not the proposed consent orders were appropriate or otherwise. 36 The evidence in this matter comprised affidavits filed on behalf of both sides to which no objection was taken and no cross-examination of deponents was sought. 37 It seems to me that it is not necessary for me to explore and be satisfied of the underlying conduct as in fact constituting misleading or deceptive conduct. Whilst that is not admitted on the defendants' pleadings, it seems to me from the agreed facts that such a conclusion would be reasonably maintainable. 38 Section 224 of the ACL, which deals with pecuniary penalties, at s 224(2) provides: In determining the appropriate pecuniary penalty, the court must have regard to all relevant matters including: (a) the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission; and (b) the circumstances in which the act or omission took place; and (c) whether the person has previously been found by a court in proceedings under Chapter 4 or this Part to have engaged in any similar conduct. 39 The court will need to determine whether the agreed facts are sufficient to support the relief sought in the final orders and whether or not the final orders proposed are appropriate. 40 I will come to the relevant principles, as outlined by the Commissioner, that are applicable to the determination of the penalty and to the ancillary relief that is sought. In the meantime it is appropriate that I give consideration to the matters set out in s 224(2) ACL. 41 In her submissions, the Commissioner referred to the target audience for the advertisements. It was said that that target audience, at its widest, would be the readers of the newspapers in which the advertisements were published. It is argued that a reasonable consumer would conclude that the first defendant was a member of the MBA at the time of advertising and would labour under that misapprehension and would have been misled by reason of the fact that at the relevant time the first defendant was not a member of MBA. 42 The Commissioner cited Australian Competition and Consumer Commission v SMS Global [2011] FCA 855 [44] as authority for the proposition that the inclusion of an industry body logo carries the implication that its bearer is a member. It is said that the first defendant has made a false or misleading representation about that affiliation contrary to s 29(1)(h) ACL. 43 It is argued that the second defendant, Mr Vukmirovic, was knowingly concerned in the contravention because his actions were in fact the actions of the company and it follows that he must be knowingly concerned: Hamilton v Whitehead (1988) 166 CLR 121, 127 - 8. 44 Defence submissions included submissions as to the target audience. It was said in written submissions that the target audience could have been minimal to no audience given the specific nature of the first defendant's business. With respect, I do not agree. Whilst the circulation of the newspapers may be relevant to see the scope of the potential audience, the real audience would be somewhat less. Not all readers of the newspapers would be in the slightest bit interested in the services being offered by the first defendant. However there would be a section that would have been interested and misled by the advertisement. To say that there would have been minimal to no audience would be to deny the purpose for the advertising in the first place and its continuance on a regular basis. There would be no purpose if it was as worthless as suggested on the first defendant's part. However I am unable to make any finding as to the extent of the target audience as such. 45 The agreed facts show that between the dates now relied upon by the Commissioner there was a total of 514 advertisements in The West Australian newspaper and various community newspapers which contained the logo of MBA. The affidavit of Anna Turnbull sworn 25 February 2014 notes that the first defendant advertised in the Trades and Services Directory of The West Australian newspaper between 10 August 2010 and 8 November 2011. Approximately 210,000 copies are distributed across the State. The defendants published advertisements in the 'south of the river' editions with approximately 81,000 copies distributed across the State. 46 Ian Hancock affirmed an affidavit on 24 February 2014. He is employed by Community Newspaper Group Ltd as credit manager. In his affidavit he said that Community Newspapers distribute 730,000 newspapers weekly and went on to refer to the advertisements published on behalf of the first defendant in various periods. 47 Accordingly, one can see that the potential audience is or was large but it is difficult to assess with any degree of accuracy what the actual target audience was for such specialist services. Nevertheless, I repeat, such an audience must have existed. There is only one affidavit from a consumer, John William Gadenne, affirmed 30 August 2013. His evidence was in relation to contacting the first defendant and receiving a quotation which included the MBA logo. However his inquiries for such services were not identified other than he said that he had checked the internet. 48 There is no direct evidence of any loss or damage suffered by any person or entity as a result of the actions of the defendants. 49 There is controversy as to the circumstances in which the contravention occurred. It is the defendants' position, as demonstrated by the affidavits of Peter Vukmirovic sworn 1 April 2014, that the first defendant had been a member of MBA and had paid invoices for renewal of that membership each year. 50 In late 2009 the company moved its address from unit 2, 172 Elliott Road, Scarborough to unit 9, 178 Elliott Road, Scarborough. Mr Vukmirovic says that he notified all entities and individuals who dealt with the first defendant of this change. 51 It is his case that by reason of that change of address he did not receive a renewal form from MBA. It is his case that he never received invoices for his membership to continue. Once he was notified that he was no longer a member he attempted to reinstate membership and believed it was simply a procedural step and that a further invoice would be issued to cover the period when the first defendant was not a financial member of MBA. 52 It is said that the first defendant attempted to contact the MBA but had the wrong email address and as a result the first defendant was not reinstated. However it is said that it continued to receive emails and other material from the MBA and believed it was still a member but needed to reinstate financially. 53 However the submissions also are to the effect that the first defendant took all necessary steps to desist using the MBA logo. It contacted the newspapers concerned with a view to carrying that out and the affidavit of Mr Vukmirovic sworn 14 April 2014 touches on this. 54 It is difficult to accept the proposition that the defendants thought that the first defendant was still a member and yet at the same time took steps to remove the logo from its stationery and from the advertisements. 55 It is said that the actions of the defendants were not deliberate actions or covert. 56 Nevertheless, as the agreed facts reveal it is quite clear that between the dates now relied upon by the Commissioner the first defendant was displaying the logo of the MBA in advertising material and it had been made aware that it was no longer financial. That is the gravamen of the contravention of the provisions of the ACL. As has been noted in the Commissioner's submission, intention or belief is irrelevant to whether objectively conduct is misleading or deceptive: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 197. Further, it was noted in Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82, 88, that contravention (in that case of s 52 Trade Practices Act) did not depend upon an intention or belief concerning the accuracy of the statements but whether the statement in fact contains or conveys a meaning which was false, that is to say a misrepresentation. 57 I am satisfied that the defendants were unfinancial and therefore the first defendant ceased to be a member of the MBA by reason of some oversight in payment of the renewal account. That is the case whether or not the oversight arises by reason of default on the part of the MBA or the defendants. I am also satisfied that the defendants were made aware of this position and therefore were aware that the first defendant was not a member of the association at the relevant times. 58 I am satisfied that Mr Vukmirovic had the view that reinstatement was merely procedural but, nevertheless, his actions in continuing to use the MBA logo at a time when he was not a member were deliberate. However, I am satisfied that there was nothing covert about this.
The relevant principles relating to the court's approval of the compromise 59 It is for the court to decide whether or not the penalty proposed is an appropriate penalty. 60 It is argued by the Commissioner that this court should follow the approach adopted by the Federal Court in NW Frozen Foods. The defendants supported that assertion. 61 In Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993, [51] – [58], the Full Court of the Federal Court of Australia distilled the following approach to agreed penalties from NW Frozen Foods: 1. It is the responsibility of the court to determine the appropriate penalty. 2. Determination of the quantum of the penalty is not an exact science. 3. There is a public interest in promoting the settlement of litigation. A regulator and contravener may present a statement of facts and opinion as to those facts together with joint submissions on penalty. 4. The view of the regulator, as a specialist body, is a relevant but not determinative consideration. 5. In determining whether the proposed penalty is appropriate, the court examines all the circumstances of the case. Where appropriate the court may act on that statement. 6. Where parties jointly propose a penalty the court does not determine whether it would have arrived at the same precise figure but considers whether it is within the permissible range in all the circumstances. 7. The court is not required to, but may, commence its reasoning with the proposed penalty and limit itself to considering whether that penalty is within the permissible range. 8. The regulator should always explain to the court the process of reasoning that justifies a discounted penalty. 9. If the court considers that the evidence or information before it is inadequate to form a view as to whether the proposed penalty is appropriate, it may request the parties to provide additional evidence or information or verify the information provided. 10. If necessary, the court may seek the assistance of an amicus curiae. 11. If the court is disposed not to impose the penalty proposed by the parties, it may be appropriate, depending on the circumstances, for each of them to be given the opportunity to withdraw consent to the proposed orders and for the matter to proceed as a contested hearing. 62 NW Frozen Foods was not followed by the Court of Appeal of the Supreme Court of Victoria in Australian Securities and Investment Commission v Ingleby [2013] VSCA 49. That involved proceedings for a civil penalty under the provisions of the Corporations Act. Weinberg J at [29], citing earlier observations, considered the approach in NW Frozen Foods to be 'misconceived' noting that it endorses the 'somewhat undesirable practice' of the regulator presenting to the court an agreed pecuniary penalty to be, normally, 'rubber stamped'. 63 At [24], again citing earlier observations, his Honour noted the public interest in the settlement of cases under the TPA and noted that the court should ensure that any consent order was within its power and appropriate. His Honour went on to note that in the final analyses it is for the court, not the parties, to determine the amount of the pecuniary penalty. 64 It seems to me that whatever else was of concern to his Honour, that final observation is not at odds with the approach in NW Frozen Foods or Mobil Oil. 65 Notwithstanding the position in Ingleby, the Federal Court has continued to apply criteria set out in NW Frozen Foods and also in Mobil Oil: see Australian Competition and Consumer Commission v P & N Pty Ltd [2014] FCA 6 [3], in which Besanko J, whilst acknowledging the force of arguments in Ingleby, followed NW Frozen Foods noting that the approach in that case was still being followed by single judges of the Federal Court and that the differences between the two approaches were not significant because, in the case before the court, his Honour considered the proposed penalty is appropriate rather than being within a range. 66 It is the Commissioner's submission that that Federal Court authority should be followed. Firstly, the Commissioner argues that there should be comity unless a court is convinced that the interpretation is plainly wrong: Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89. Further, the decision in NW Frozen Foods concerned the predecessor to the ACL whereas Ingleby concerned a different legislative scheme. 67 It is further argued that as NW Frozen Foods and Mobil Oil continue to be followed in the Federal Court in actions brought by the Commonwealth regulator under the ACL (Cth), any departure by this court would result in a different approach between Commonwealth and State regulators to proceedings under essentially similar legislation in the Commonwealth and State versions of the ACL. That would undermine the uniformity of the application of the national scheme. 68 Apart from this it is said that the principles in NW Frozen Foods and Mobil Oil strike an appropriate balance between recognising the proper role of the court in determining the final penalty to be imposed and the public interest in reducing the use of ever scarcer public resources by the settlement of litigation. Allied to this it is argued that the approach in Ingleby does not provide sufficient incentive for defendants to cooperate with the regulator and therefore increases the likelihood of matters being unnecessarily contested without any appreciable likelihood that the penalties imposed by the court, without the benefit of negotiation of an agreement between the parties, will better achieve the purpose of such penalties. It is also argued that the paramount role of the court in determining the final penalty is reinforced by the necessity for the parties to provide the court with proper assistance in putting forward agreed facts and penalties. 69 The Federal Court has held that the submissions of a specialist regulator as to an appropriate penalty are relevant. I have already noted the complimentary words used by Burchett and Keifell JJ in NW Frozen Foods regarding the help and assistance given by the specialist body. 70 Allied to this issue is the issue that arises in Barbaro v The Queen [2014] HCA 2; (2014) 305 ALR 323. There the High Court determined that the prosecution in criminal proceedings was not entitled to make a submission as to the 'available range' of sentences. It has been suggested that that decision may require the Federal Court to review the approach set out in NW Frozen Foods and Mobil Oil: Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2014] FCA 160 (Fair Work case). That was a case involving contraventions of the Fair Work Act2009 (Cth) and the imposition of agreed pecuniary penalties under that legislation. 71 InFair Work White J at [23] referred to the approach in NW Frozen Foods and Mobil Oil and set out the propositions to which I have previously referred. His Honour at [26] noted the decisionin Barbaro and observed that the majority of the High Court had held that the prosecution should not be permitted to make a submission to a sentencing judge as to the specific penalty, or the range of penalties, which would be appropriate in the case. At [27] his Honour observed that Barbaro would appear also to have relevance to the imposition of civil penalties and the Federal Court may have to review the approach set out in NW Frozen Foods and Mobil Oil. 72 As I have noted, Fair Work involved the imposition of pecuniary penalties under the relevant legislation. Notwithstanding his earlier comments, his Honour at [63] considered that the penalties proposed by the parties could be regarded as 'appropriate'. 73 The Commissioner submits that Barbaro is concerned with prosecution submissions as to an available range of sentencing options whereas an agreed penalty provides a figure the court is required to assess to determine whether it is within an available range. The court's role in determining the available range is preserved. It is also argued that the reasoning in Barbaro expressly refers to and considers only the process of criminal sentencing. Whilst acknowledging that there are similarities between the process for the assessment of a civil penalty and the imposition of a criminal sanction, it is argued that there are differences. In support the Commissioner cited French J in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076, where his Honour said: 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 Part 4. Nor, if it be necessary to say so, is there any compensatory element in the penalty fixing process – Trade Practices Commission v Mobil Oil Australia Ltd (1984) 4 FCR 296 at 298 (Toohey J). The principal, I think probably the only, object of the penalties imposed by section 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act. 74 For those reasons the Commissioner argues that the dicta in Barbaro should not be applied to the process or approach relating to agreed penalties. 75 I am of the view that the approach adopted by the Federal Court ought to be adopted in preference to that of the Court of Appeal in Victoria until overruled by higher authorities. I accept all of the submissions made on behalf of the Commissioner and the comments of Besanko J in P & N Pty Ltd in this regard. It seems to me that it is important that there should be consistency of approach amongst those whose duty it is to determine matters arising under either the Commonwealth or State versions of the ACL. 76 Further, the approach by Besanko J as to whether the proposed penalty is appropriate appears to be the touchstone and it would not offend the general principle that it is for the court to determine the appropriate penalty. Further, with respect, the decision of the Court of Appeal of Victoria is in respect of different legislation and can be distinguished. 77 I also accept the submissions made by the Commissioner that Barbaro should be seen in the light of it relating to purely criminal matters. The case clearly involved criminal law and the sentencing principles to be applied. In that case the sentencing judge had refused to receive submissions from the prosecution about the available range of sentences. 78 The court noted that in relation to criminal matters various factors were required to be taken into account as set out in the relevant sentencing statutes. It is for the judge to find the facts and proceed to sentence. The court noted at [37] that a bare statement of a range does not inform the judge of the conclusions or assumptions upon which the range depends. A properly informed judge, from submissions made to him, will have all the information necessary to decide the appropriate sentence without the need for an available range being proffered. It was said that such a range would not assist the judge in carrying out the sentencing task in accordance with proper principle. 79 At [40] the court noted that consistency of sentencing is important but the consistency sought is consistency in the application of relevant legal principles, not numerical equivalents. 80 The court observed that an available range of sentencing is a statement of opinion, not a submission of law: [42]. The available range of sentences is a conclusion which depends upon identifying the facts and circumstances relevant to the offence. 81 Ultimately, the focus of the decision was upon the sentencing judge's refusal to receive submissions about a range of sentences ([44]) which did not deny procedural fairness. The court noted that the task of sentencing was still that of the judge: [48]. 82 It seems to me that if one adopts the approach in NW Frozen Foods and Mobil Oil that would not undermine the function of the court because the principal factor is that it is the responsibility of the court to determine the appropriate penalty. Notwithstanding any agreement on penalty, it is still a matter for the court to determine whether that penalty is 'appropriate'. A proposed penalty is either appropriate or not. It is not a case of receiving a range of penalties established by other cases. The court may accept or reject the proposed penalty. In this sense the procedure adopted in the Federal Court in respect of these civil penalties may be distinguished from the imposition of criminal penalties or sanctions as was the case in Barbaro. 83 It also seems to me that the submission of the Commissioner that there is work for the regulator to do to assist the court exercising its jurisdiction under the ACL is correct and the remarks of Burchett and Keifell JJ in NW Frozen Foods are particularly apposite in their reference to the views of the specialist body set up to protect the public interest in the maintenance of economically healthy competition and them being plainly relevant particularly in relation to the question whether a proposed penalty would be sufficient to deter anticompetitive behaviour in a particular market. At the very least those views are likely to be highly persuasive. However they are not determinative: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146 [59].
The consent orders sought
The pecuniary penalty 84 I am satisfied that the principles referred to by the Commissioner and distilled from Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 [13] and Markarian v The Queen (2005) 228 CLR 357 should be applied. Those principles comprise: 1. Assessment of the appropriate penalty by the court is a discretionary judgment based on relevant factors. 2. Attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all the other factors, a yardstick. 3. It will rarely be appropriate for a court to start with the maximum penalty and proceed by making proportional deduction from that maximum. 4. The court should not adopt a mathematical approach of increments or decrements from a predetermined range, or assigned specific numerical or proportionate value to the various relevant factors. 5. Accessible reasoning is necessary in the interests of all, and, while there may be occasions where some indulgence in an arithmetical process will better serve the end, it does not apply where there are numerous and complex considerations to be applied. 85 The Commissioner's submissions are to the effect that the primary object of the pecuniary penalty is deterrence, both specific and general: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [60]. 86 Further, the penalty 'must be fixed with a view to ensuring that the penalty is not such as to be regarded by the offender or others as an acceptable cost of doing business … [T]hose engaged in trade and commerce must be deterred from the cynical calculation involved in weighing up the risk of penalty against the profits to be made from contravention': Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54 [66]; (2013) 304 ALR 186, referring to Singtel Optus. 87 Guidance as to the quantum of the pecuniary penalty can be found from a number of factors considered by French J in Trade Practices Commission v CSR Ltd [52], and including: 1. The size of the contravening company. 2. The deliberateness of the contravention and period over which it extended. 3. Whether the contravention arose out of the conduct of senior management of the contravener or at a lower level. 4. Whether the contravener has a corporate culture conducive to compliance with the ACL (TPA), as evidenced by educational programmes and disciplinary or other corrective measures in response to an acknowledged contravention. 5. Whether the contravener has shown a disposition to cooperate with the authorities responsible for enforcement of the ACL. 6. The financial position of the contravener. 7. Whether the contravening conduct was systematic, deliberate or covert. 8. The contravener's position of influence and importance in its industry sector. 9. Whether the defendant has engaged in similar conduct in the past. 10. The financial position of the defendants. 88 It is also argued that cases of multiple breaches can be dealt with by the imposition of one penalty for all contraventions: Australian Competition and Consumer Commission v Rural Press Ltd [2001] FCA 1065 [19]. However it was noted in ABB at [38] that there are decisions to the contrary effect. The penalty in the aggregate must be just and appropriate: Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169 [39]. Where there are multiple contraveners there must be parity recognising the extent of similarity or difference in the conduct of the contraveners: ABB [40]. 89 In this case the proposed penalty is $20,000 payable as to $10,000 by each of the first and second defendants. 90 I am satisfied that these penalties are appropriate. I am able to reach that level of satisfaction on the agreed facts before me, notwithstanding that there are some aspects of the evidence before the court on which there are elements of controversy. However I do not consider it necessary to have a trial of issues in respect of those matters and I have already in these reasons made certain findings about the culpability of the defendants in relation to the continued advertising once the first defendant was made aware it was no longer a financial member of the MBA. The agreed facts show that the first defendant, whilst financially viable, is not a large corporation. Its profits before tax were modest in the years 2010/11 and 2011/12. I do not require further returns for 2012/13 in order to assist me. This is a small business and there is no doubt that a penalty of $10,000 will be a substantial impost upon the company and will act as a punishment and deterrence to it. It will also serve as a general deterrent for other similar small businesses not to flout the consumer laws. 91 The maximum penalties under the ACL in respect of a corporation is $1,100,000 and in respect of an individual, $220,000. Having regard to what was said in Markarian, this offending behaviour is not the most serious or anywhere near the most serious behaviour in contravention of the legislation. Notwithstanding the scope of publication of the newspapers and the potential target audience, it seems to me that it is at the lower end of conduct deserving of punishment. 92 It is deserving of punishment because, as I have noted, the contravention was deliberate even though it was attended by misunderstanding on the part of the defendants as to the manner in which reinstatement could occur. 93 It is not necessary in a case such as this, involving a company such as the first defendant and its director the second defendant, to go through all of the factors expressed by French J in CSR. I will merely touch on some of them. Some I have already dealt with, but I should note that the defendants did not cooperate with the authorities, notwithstanding that an offer to attend for an interview was made. The defendants say that such an offer did not reach them. I am not prepared to accept that bald statement when clearly there was other involvement or communication between the Commissioner and the defendants. 94 I have already indicated I do not consider the conduct to have been covert. It was deliberate to the extent that I have mentioned and it was systematic in that it continued on a regular basis by way of advertisements in the newspapers. 95 There is no suggestion that these defendants have engaged in similar conduct in the past. There is also no suggestion that these defendants have any position of influence and importance in that sector of commerce or industry in which they are involved. 96 I have referred to the financial position of the first defendant. Very little is known of the financial position of the second defendant other than as is set out in the agreed facts. The taxable income disclosed is not large and the only property said to be owned by the second defendant is a half interest in partly constructed property in which there appears to be very little equity. 97 Having satisfied myself that the overall penalty of $20,000 is appropriate, I am satisfied, having regard to matters of parity, that it should be charged equally against the defendants.
Declaratory relief 98 Earlier in these reasons I noted that the court does have jurisdiction to grant declaratory relief as ancillary relief to the pecuniary penalty. 99 It seems to me that this is an appropriate case in which to grant the declaratory relief agreed. Such declarations are necessary to reinforce the deterrent element of the pecuniary penalty. Without the declarations the penalty that is imposed might be seen in a vacuum. Without knowing the conduct for which the penalty was imposed it is difficult to see how that penalty can have a deterrent effect on others. 100 The questions before the court are not merely theoretical but real and the Commissioner has a real interest in raising the questions and the defendants are proper contradictors: Forster v Jododex Australia Pty Ltd(1972) 127 CLR 421, 437 – 8. 101 I accept the Commissioner's submissions that these declarations are appropriate because they: 1. Are an appropriate vehicle to record the court's disapproval of the contravening conduct. 2. Are capable of vindicating the regulator's claim. 3. Are of assistance to a consumer regulator in performing statutory duties and functions in promoting and enforcing compliance with relevant legislation. 4. Inform consumers of the dangers arising from the defendants' contravening conduct. 5. Deter others from contravening the legislation. 102 Accordingly, I am satisfied that the declarations as sought are appropriate and ought to be made.
Injunctions 103 I have already noted that the court has power under the FTA to grant such injunctions. The injunctions are limited in time and I am informed by counsel for the Commissioner that this is usual practice. It seems to me that a limitation in time is appropriate because it is unlikely that these defendants will contravene in this manner again, particularly having regard to the consequences of the current contravention. 104 Nevertheless, under s 232(4)(a) ACL it is appropriate to grant the injunction to reinforce the findings of the court and to provide the necessary protections to the community against such contravening conduct in the future.
Conclusion 105 For all the reasons I have expressed, I am satisfied that the consent orders should be made. They are both appropriate and have utility in the current circumstances. 106 Accordingly, there will be orders in terms of the minute of consent orders.
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