FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Mandurvit Pty Ltd [2014] FCA 464

THE COURT DECLARES THAT:

1.    The Respondent made the following oral statements to a consumer on about 10 February 2012 in the course of discussions about problems with a camera supplied by the Respondent to a consumer, and the consumer's attempts to obtain a refund or remedy:

(a)    when asked about the camera being fixed, "Your camera is currently with the repairer and you will need to pay $88 before they'll send it back to us … [Panasonic] will only return it if you pay the $88. The $88 is a charge by Panasonic to cover postage and handling"; and

(b)    when the sales representative that made the statement at para 1(a) above telephoned the consumer in respect of the $88 charge by Panasonic, "I have spoken to Panasonic and they will not waive the $88 fee… The Manager is away for a few weeks. I doubt the Manager would be able to do anything. It's up to Panasonic. There are two things you can do. You could phone Panasonic to see if you can get them to waive the charges, or you could lodge a complaint with the ACCC",

and, by doing so, the Respondent has, in trade or commerce:

(c)    made representations in connection with the supply or possible supply of goods or services that were false or misleading and concerned the existence, exclusion or effect of any guarantee, right or remedy available under the consumer guarantee provisions in Div 1 of Pt 3-2 of Sch 2 of the Competition and Consumer Act 2010 (Cth) (ACL), and/ or other remedies relating to those guarantees in Pt 5-4 ACL in contravention of s 29(1)(m) ACL; and

(d)    thereby engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 ACL.

THE COURT ORDERS THAT:

Injunction

2.    Pursuant to s 232 ACL, for a period of three years from the date of these Orders, the Respondent is restrained (whether by itself, its servants, agents or otherwise howsoever) from making representations (whether oral or written) to any customer to the effect:

(a)    that the Respondent does not have any obligation, regardless of the circumstances and the consumer guarantee provisions of Div 1 of Pt 3-2 and/or the remedies relating to those guarantees in Pt 5-4 ACL (Consumer Guarantee Provisions), to pay any fee for postage and handling charged by the relevant manufacturer or other repairer in circumstances where:

   (i)    goods supplied by the Respondent are not or may not be of acceptable quality (within the meaning of that expression in s 54 ACL); and

   (ii)    such goods have been sent to the relevant manufacturer or repairer by the Respondent;

(b)    that the Respondent does not have to return a good supplied by it to a consumer, in the circumstances detailed at para 2(a) above, unless that consumer exercises one of only three options, being:

   (i)    to pay any fee for postage and handling charged by the relevant manufacturer or repairer;

   (ii)    to arrange for the manufacturer or repairer to waive the fee; or

   (iii)    to make a complaint to the ACCC;

(c)    that a consumer in relation to goods supplied by the Respondent, is obliged to pay any fee for postage and handling charged by the relevant manufacturer or other repairer in circumstances where:

   (i)    goods supplied by the Respondent are not or may not be of acceptable quality (within the meaning of that expression in s 54 ACL); and

   (ii)    such goods have been sent to the relevant manufacturer or repairer by the Respondent; and

(d)    that a consumer in relation to goods supplied by the Respondent, in order to obtain the return of goods left for inspection or repair with the Respondent, must exercise one of three options being:

   (i)    to pay any fee for postage and handling charged by the relevant manufacturer or repairer;

   (ii)    to arrange for the manufacturer or repairer to waive the fee; or

   (iii)    to make a complaint to the ACCC.

Pecuniary penalty

3.    Pursuant to s 224(1)(a)(ii) and s 228 ACL, within 28 days of the date of these Orders, the Respondent is to pay to the Commonwealth a pecuniary penalty in respect of the contraventions of s 29(1)(m) ACL in the amount of $25,000.00.

Costs

4.    Each party is to bear its own costs of the proceeding and all previous costs orders against either party in the proceeding are to be vacated.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

overview

1    The applicant (ACCC) and the respondent (Mandurvit) jointly make submissions in relation to the disposition of these proceedings. Mandurvit admits for the purposes of the proceedings that on or about 10 February 2012 it engaged in conduct that contravened s 18 and s 29(1)(m) of the Australian Consumer Law (ACL) (being Sch 2 of the Competition and Consumer Act 2010 (Cth) (CCA)). Mandurvit made two statements to a consumer and by those two statements made representations concerning the existence, exclusion or effect of a warranty, guarantee, right or remedy within the meaning of the words of s 29(1)(m) ACL (Oral Statements).

2    The ACCC commenced proceedings WAD 183 of 2013 on 11 June 2013 (Proceedings). In its application filed on that date, the ACCC sought, inter alia, a declaration that Mandurvit, by making the Oral Statements to a consumer in February 2012, had contravened s 18 and s 29(1)(m) ACL. The ACCC also sought other consequential orders.

3    The parties, for their part, are agreed as to the appropriate penalty and while recognising that the question of relief remains at the discretion of the Court, have asked the Court to (a) make declarations pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) (FCA); (b) grant injunctive relief pursuant to s 232 ACL; and (c) order payment by Mandurvit of a penalty in the amount of $25,000 pursuant to s 224 ACL.

4    The main issue requiring examination is the process of agreeing and recommending a civil penalty in light of recent authority.

THE KEY FACTS

5    The following facts are agreed for the purposes of s 191 of the Evidence Act 1995 (Cth).

6    Mandurvit, trading as Harvey Norman AV/IT Superstore Mandurah, was at all material times:

(a)    a body corporate duly incorporated pursuant to the Corporations Act 2001 (Cth);

(b)    a trading corporation within the definition of ‘corporation’ in s 4 CCA;

(c)    capable of being sued in its corporate name;

(d)    engaged in trade or commerce within the meaning of s 18 and s 29(1)(m) ACL;

(e)    a franchisee of a subsidiary of Harvey Norman Holdings Ltd (HNHL); and

(f)    up to about 31 May 2013, operating as a single retail outlet or store in Mandurah, Western Australia, under the name of ‘Harvey Norman AV/IT Superstore Mandurah’, selling electronic products and after-sales services in respect of those products (Store).

The Oral Statements and their circumstances

7    On or about 8 October 2011, an identified customer purchased a Panasonic Lumix DMC-S1 camera from Mandurvit.

8    On or about 14 December 2011, the customer took the camera back to the Store and spoke to a sales representative of Mandurvit about a problem she was having with the camera, namely, that some photos taken with the camera had a milky appearance when viewed on her computer and the camera became warm when being used. She left the camera at the Store for repairs. The sales representative told the customer that it would take four to six weeks to repair the camera.

9    On or about 10 February 2012, the customer attended the Store and spoke to a different sales representative of Mandurvit and enquired about the camera. In response to her enquiries, the sales representative made an oral statement to this effect (First Oral Statement):

Your camera is currently with the repairer and you will need to pay $88 before they'll send it back to us ... [Panasonic] will only return it if you pay the $88. ... The $88 is a charge by Panasonic to cover postage and handling.

10    Later on the same day, the same sales representative of Mandurvit as referred to in the preceding paragraph telephoned the customer and made an oral statement to this effect (Second Oral Statement):

I have spoken to Panasonic and they will not waive the $88 fee... The Manager is away for a few weeks. I doubt the Manager would be able to do anything. It's up to Panasonic... There are two things you can do. You could phone Panasonic to see if you can get them to waive the charges, or you could lodge a complaint with the ACCC.

11    In late March 2012, Mandurvit provided a replacement camera to the customer.

The representations constituted by the Oral Statements

12    By the First Oral Statement, Mandurvit in trade or commerce:

(a)    represented in effect that:

   (i)    the customer would have, and had an obligation, to pay a fee of $88 charged by Panasonic for postage and handling before she could have the camera returned to her; and

   (ii)    further and alternatively, Mandurvit would not, and did not have any obligation to, pay that $88 fee or return the camera to her; and

(b)    thereby made a representation that was false or misleading under Pt 5-4 and Pt 3-2 ACL (Consumer Guarantee Provisions) in that:

   (i)    under the Consumer Guarantee Provisions, the customer may not have had any obligation to pay the $88 fee and it was possible that she was entitled to recover the camera without her paying such a fee; and

   (ii)    a supplier such as Mandurvit:

     (A)    could be obliged to pay charges, including a charge such as the fee of $88 for postage and handling, incurred in relation to the repair of goods it supplied, including the camera, where those goods were not of acceptable quality;

     (B)    could be obliged to return the camera to the customer without her paying that fee; and

     (C)    possibly had such obligations in relation to the camera.

13    By the Second Oral Statement, Mandurvit in trade or commerce:

(a)    represented in effect that:

   (i)    the customer had only two options if she wished to recover the camera without paying the $88 fee, namely, having Panasonic waive the fee or making a complaint to the ACCC; and

   (ii)    further and alternatively, Mandurvit would not, and did not have any obligation to, pay that $88 fee or return the camera to the customer if that fee was not paid by her or waived by Panasonic; and

(b)    thereby made a representation that was false or misleading under the Consumer Guarantee Provisions in that:

   (i)    under the Consumer Guarantee Provisions, the customer may have had other options available to her including having the camera returned by Mandurvit after it had assumed any liability in relation to payment of the $88 fee or bringing proceedings against Mandurvit for recovery of the camera or damages for detinue or conversion of the camera or recovering the $88 fee from Mandurvit; and

   (ii)    a supplier such as Mandurvit:

     (A)    could be obliged to pay a fee for postage and handling charged by the manufacturer or repairer where the goods were not of acceptable quality;

     (B)    could be obliged to return the camera to the customer without her paying that fee; and

     (C)    possibly had such obligations in relation to the camera.

Other considerations

Whether conduct deliberate and period over which conduct extended

14    On the basis of these facts there is no evidence that the Oral Statements were made with an intention to mislead or deceive or with an intention to misrepresent the Consumer Guarantee Provisions. The Oral Statements were both made on 10 February 2012 to one consumer by one sales representative.

Whether loss to consumer

15    There is no evidence of loss or damage to the consumer in this proceeding, arising from the contravening conduct of Mandurvit.

Cooperation with the ACCC

16    Retail stores in Australia trading under the ‘Harvey Norman’ banner do so under franchise arrangements between subsidiaries of HNHL and numerous companies unrelated to each other or to HNHL or its subsidiaries. The subsidiaries are the franchisors. Each franchisee company owns and operates a retail store.

17    On 12 June 2013, the ACCC commenced proceedings against Mandurvit. The Proceedings were commenced by the ACCC following a period of broad discussions between the ACCC and HNHL in relation to complaints to the ACCC made by consumers about statements made by a number of sales representatives in a number of stores. The discussions were focussed on the potentially misleading nature of the statements and did not identify any particular store, including Mandurvit’s store, as being the subject of a complaint. Before commencing legal action against Mandurvit in respect of the conduct that constitutes the contraventions the subject of these proceedings, the ACCC did not inform Mandurvit or HNHL about that conduct or any other specific conduct of Mandurvit.

18    At an early stage in these proceedings, Mandurvit (through its solicitors) proposed a settlement meeting with the ACCC following which a settlement was reached by the parties.

19    Mandurvit’s co-operation has saved the ACCC and the Court (and ultimately the community) the cost and burden of litigating a fully contested hearing.

Whether prior contravention of the ACL

20    Mandurvit has not been previously found by a court to have contravened any provision of the ACL or to have engaged in similar conduct to that described in the statement of agreed facts.

Size and Financial Position of Respondent

21    Mandurvit operated a single retail store at Mandurah in Western Australia until it ceased trading on about 31 May 2013 and does not to intend re-commence a business of any kind.

22    Mandurvit has had no employees since it ceased trading on about 31 May 2013.

23    For the financial years ended 30 June 2012 and 30 June 2013 Mandurvit’s sales revenue and net profit were:

24    The net profit figures take no account of income tax because Mandurvit carried on its business through a family trust structure (Trust). Income tax on the profits of the business was paid by beneficiaries to whom the profits were distributed each year.

25    As at 30 June 2013, the net assets (assets less liabilities) held by Mandurvit (as trustee) were $10.

26    Mandurvit conducted its business pursuant to a franchise agreement between it and a subsidiary of HNHL until Mandurvit ceased to trade on about 31 May 2013. Mandurvit and the Trust are not related entities of HNHL or its subsidiaries.

Compliance Training

27    Mandurvit was incorporated on 30 November 2010 and commenced business on 1 August 2011. The compliance training, in relation to the consumer law provisions of the Trade Practices Act 1974 (Cth) (TPA) now known as the CCA (Consumer Law), comprised at least the following until Mandurvit ceased trading on about 31 May 2013:

(a)    Staff attended a face-to-face Consumer Law training session presented by an external professional trainer engaged by a subsidiary of HNHL.

(b)    Staff watched a DVD received from the franchisor explaining the Consumer Law provisions.

(c)    A memorandum received from the franchisor (a subsidiary of HNHL) on the Consumer Law was read and discussed at Mandurvit’s regular staff meetings.

(d)    Consumer Law discussions were a fixed agenda item at weekly staff meetings where staff discussed their experiences with customers relating to Consumer Law.

STATUTORY FRAMEWORK

28    By s 131 CCA, the ACL applies as a law of the Commonwealth to the conduct of corporation and in relation to contraventions of Chs 2, 3 and 4 ACL by corporations (other than in relation to financial services). Section 138 CCA confers jurisdiction on this Court in relation to any matter arising under the ACL in respect of which a civil proceeding has been instituted. Jurisdiction is also conferred as a result of s 39B(1A) of the Judiciary Act 1993 (Cth).

29    The two provisions concerned, s 18 and s 29(1)(m) ACL, relevantly provide as follows:

18    Misleading or deceptive conduct

(1)    A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

(2)    Nothing in Part 3 1 (which is about unfair practices) limits by implication subsection (1).

29    False or misleading representations about goods or services

(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 the promotion by any means of the supply or use of goods or services:

…

(m)    make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3 2); …

30    Several statutory guarantees relating to the supply of goods to consumers are set out in Pt 3-2, Div 1, subdiv (a) ACL. Section 54 ACL within those, provides a guarantee as to the acceptable quality of goods, providing relevantly as follows:

54    Guarantee as to acceptable quality

(1)    If:

(a)    a person supplies, in trade or commerce, goods to a consumer; and

(b)    the supply does not occur by way of sale by auction;

there is a guarantee that the goods are of acceptable quality.

(2)    Goods are of acceptable quality if they are as:

(a)    fit for all the purposes for which goods of that kind are commonly supplied; and

(b)    acceptable in appearance and finish; and

(c)    free from defects; and

(d)    safe; and

(e)    durable;

as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3).

(3)    The matters for the purposes of subsection (2) are:

(a)    the nature of the goods; and

(b)    the price of the goods (if relevant); and

(c)    any statements made about the goods on any packaging or label on the goods; and

(d)    any representation made about the goods by the supplier or manufacturer of the goods; and

(e)    any other relevant circumstances relating to the supply of the goods.

…

31    A consumer has various forms of recourse in circumstances of a breach of the Consumer Guarantee Provisions. Section 259 ACL establishes the actions the consumer may take, providing:

259    Action against suppliers of goods

(1)    A consumer may take action under this section if:

(a)    a person (the supplier) supplies, in trade or commerce, goods to the consumer; and

(b)    a guarantee that applies to the supply under Subdivision A of Division 1 of Part 3-2 (other than sections 58 and 59(1)) is not complied with.

(2)    If the failure to comply with the guarantee can be remedied and is not a major failure:

(a)    the consumer may require the supplier to remedy the failure within a reasonable time; or

(b)    if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time—the consumer may:

(i)    otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or

(ii)    subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection.

(3)    If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may:

(a)    subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection; or

(b)    by action against the supplier, recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods.

(4)    The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.

(5)    Subsection (4) does not apply if the failure to comply with the guarantee occurred only because of a cause independent of human control that occurred after the goods left the control of the supplier.

(6)    To avoid doubt, subsection (4) applies in addition to subsections (2) and (3).

(7)    The consumer may take action under this section whether or not the goods are in their original packaging.

32    In addition s 260 ACL determines when a failure to comply with a guarantee is a ‘major failure’. In circumstances other than a major failure, s 261 outlines the measures that a supplier may take to rectify a failure to comply with the guarantee, relevantly providing:

261    How suppliers may remedy a failure to comply with a guarantee

If, under section 259(2)(a), a consumer requires a supplier of goods to remedy a failure to comply with a guarantee referred to in section 259(1)(b), the supplier may comply with the requirement:

(a)    if the failure relates to title—by curing any defect in title; or

(b)    if the failure does not relate to title—by repairing the goods; or

(c)    by replacing the goods with goods of an identical type; or

(d)    by refunding:

(i)    any money paid by the consumer for the goods; and

(ii)    an amount that is equal to the value of any other consideration provided by the consumer for the goods.

33    By s 262 ACL there are limits imposed on a consumer’s ability to reject goods under s 259 ACL. None of those limits were applicable to the representations made by Mandurvit. In circumstances where the failure to comply with a guarantee cannot be remedied or is a major failure and the consumer rejects the goods, s 263 ACL applies. It sets out what the supplier must do to remedy the failure, relevantly providing:

263    Consequences of rejecting goods

…

(4)    The supplier must, in accordance with an election made by the consumer:

(a)    refund:

(i)    any money paid by the consumer for the goods; and

(ii)    an amount that is equal to the value of any other consideration provided by the consumer for the goods; or

(b)    replace the rejected goods with goods of the same type, and of similar value, if such goods are reasonably available to the supplier.

APPLICATION OF THE AGREED FACTS

34    Mandurvit, by making the two oral statements, made two representations as follows:

(a)    in relation to the First Oral Statement:

(i)    the customer would have, and had an obligation, to pay a fee of $88 charged by Panasonic for postage and handling before the customer could have the camera returned;

(ii)    further and alternatively, Mandurvit would not, and did not have any obligation to pay that $88 fee or return the camera to the customer; and

(b)    in relation to the Second Oral Statement, that:

(i)    the customer had only two options if she wished to recover the camera without paying the $88 fee, namely, having Panasonic waive the fee or making a complaint to the ACCC; and

(ii)    further and alternatively, Mandurvit would not, and did not have any obligation to, pay that $88 fee or return the camera to the customer if that fee was not paid by the customer or waived by Panasonic.

35    I accept the joint submissions that these representations were false and misleading under the Consumer Guarantee Provisions as follows:

(a)    in relation to the First Oral Statement, because:

(i)    the customer may not have had any obligation to pay the $88 fee and it was possible that she was entitled to recover the camera without her paying such a fee; and

(ii)    a supplier such as Mandurvit:

(A)    could be obliged to pay charges, including a charge such as the fee of $88 for postage and handling, incurred in relation to the repair of goods it supplied, including the camera, where those goods were not of acceptable quality;

(B)    could be obliged to return the camera to the customer without her paying that fee; and

(C)    possibly had such obligations in relation to the camera; and

(b)    in relation to the Second Oral Statement, because:

(i)    the customer may have had other options available to her including having the camera returned by Mandurvit after it had assumed any liability in relation to payment of the $88 fee or bringing proceedings against Mandurvit for recovery of the camera or damages for detinue or conversion of the camera or recovering the $88 fee from Mandurvit; and

(ii)    a supplier such as Mandurvit:

(A)    could be obliged to pay a fee for postage and handling charged by the manufacturer or repairer where the goods were not of acceptable quality;

(B)    could be obliged to return the camera to the customer without her paying that fee; and

(C)    possible had such obligations in relation to the camera.

36    By reason of these matters, Mandurvit has admitted two contraventions, namely, that it:

(a)    made two representations in connection with the supply or possible supply of goods or services that were false or misleading and concerned the existence, exclusion or effect of any guarantee, right or remedy available under the Consumer Guarantee Provisions in contravention of s 29(1)(m) ACL; and

(b)    in doing so, engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 ACL.

ORDERS PROPOSED BY AGREEMENT

37    I will shortly deal with the law as it applied prior to the recent High Court decision in Barbaro v The Queen (2014) 88 ALJR 372 delivered two days before the joint submissions were filed. It is necessary, however, to say something about that decision.

High Court decision in Barbaro

38    I sought submissions from the parties as to whether the High Court decision in Barbaro should bear upon the approach this Court should take in relation to agreed penalty submissions. Those submissions have been supplied and as I am satisfied that they are both helpful and largely correct I propose to adopt them in substantial measure. (I have indicated where I would depart from the submissions.)

39    In Barbaro the High Court dismissed two appeals from the Victorian Court of Appeal on sentences imposed on Barbaro and Zirilli who had both pleaded guilty to serious drug offences and were sentenced to life and 26 years imprisonment respectively. The appellants argued they had been denied procedural fairness as the sentencing judge refused to hear the prosecution’s submissions on the appropriate sentencing range. Her Honour imposed sentences that were higher than those recommended by the prosecution. The Court of Appeal rejected that argument as did the High Court.

40    The High Court rejected the arguments that the prosecution is permitted or required to make any submission on sentencing ranges. It held that such submissions are not submissions of law, but merely a statement of opinion, which the sentencing judge may or may not take into account in deciding on the appropriate sentence. A refusal to hear the prosecution on the available sentencing ranges did not amount to a failure to take account of a material consideration in fixing the sentences.

41    The ACCC and Mandurvit submit that:

(a)    the approach the Court should take in relation to joint submissions on the quantum of civil pecuniary penalties is relevantly distinguishable from the approach which should be taken in relation to criminal penalties and sentencing; and

(b)    in this case, the Court is bound to follow the approach taken by the Full Court in NW Frozen Foods Pty Ltd v Australian Competition & Consumer Commission (1996) 71 FCR 285, a decision that was further considered and affirmed in Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 and has been consistently applied in a succession of subsequent cases in this Court. Under that approach:

(i)    the parties to proceedings under the TPA and its successor legislation may make submissions as to the quantum of pecuniary penalty that the parties agree is appropriate in the circumstances of their case; and

(ii)    the Court recognises that, provided that it considers the proposed amount is appropriate, there is a strong public interest in ordering that amount, even if the Court may have otherwise ordered a different amount: NW Frozen Foods (at 290-291 and 298).

42    While the plurality judgment in Barbaro contains statements of principle that are potentially applicable beyond the facts of that case, ACCC and Mandurvit contend that those statements, which were made in the particular context concerning a specific criminal prosecutorial practice, and were not expressed to apply beyond that context, should not be applied broadly, particularly where the effect of such a reading would be to overrule well-established appeal court authority.

43    The ACCC and Mandurvit argue that the reasoning in Barbaro is specific to the particular facts of that case. They contend that the plurality judgment in Barbaro addresses the appropriateness of a particular practice of criminal prosecutors in Victoria. That practice arose after the Victorian Court of Appeal held in R v MacNeil-Brown (2008) 20 VR 677 that, subject to certain conditions, criminal prosecutors may make submissions in relation to the ‘available range’ within which a sentence should be fixed in order to promote consistency of sentencing and to reduce the risk of appealable error (MacNeil-Brown (at [4]) per Maxwell P, Vincent and Redlich JJA).

44    I do not consider that Barbaro is so confined. While the reasoning in Barbaro is directed to that particular prosecutorial practice, there are statements of principle in the plurality judgment that are more broadly applicable.

45    The plurality judgment in Barbaro states (at [7]):

The prosecution's statement of what are the bounds of the available range of sentences is a statement of opinion. Its expression advances no proposition of law or fact which a sentencing judge may properly take into account in finding the relevant facts, deciding the applicable principles of law or applying those principles to the facts to yield the sentence to be imposed. That being so, the prosecution is not required, and should not be permitted, to make such a statement of bounds to a sentencing judge.

46    This statement of principle is potentially capable of broad application.

47    However, statements of principle in judgments should not be applied as if they were the words of a statute. Rather, such statements should be applied with the benefit of careful reading of the reasoning relevant to the making of the statement. This is the process recently described by the High Court in Comcare v PVYW [2013] HCA 41 (at [12]-[16]).

48    The complete reasoning expressed in the plurality judgment does not indicate that application of this principle to civil pecuniary penalty cases was an intended consequence of the statement. In particular, paras 20 to 28 of the judgment contain reasoning that directly addresses the practice of offering a ‘sentencing range’ that was in issue in Barbaro, and the reasons why that practice was ‘wrong in principle’.

49    Those paragraphs address the tendency of ‘available range’ submissions to convey, or purport to convey, the boundaries between sentences that are manifestly inadequate or excessive.

50    ACCC and Mandurvit contend that it is unlikely that the High Court intended such a broad application of its reasoning in Barbaro, given that:

(a)    the plurality in Barbaro included:

(i)    French CJ, who as a member of the Federal Court, delivered several judgements following NW Frozen Foods (see, for example, Australian Competition & Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 95 FCR 114 and Australian Competition & Consumer Commission v Econovite Pty Ltd [2003] FCA 964 (at [11])), including Australian Competition & Consumer Commission v Real Estate Institute of Western Australia Inc, in which his Honour stated (at 131):

It is not the function of the Court to impede settlements between parties legally represented and able to understand and evaluate the desirability of agreeing to a settlement nor to refuse to give effect to terms of settlement by refusing to make orders or to accept undertakings where they are within the Court’s jurisdiction and are otherwise unobjectionable.

(ii)    Kiefel J, who was a member of the majority in NW Frozen Foods; and

(b)    the High Court has had recent opportunity to express concern or opposition to the practice of regulators making submissions as to the appropriate quantum of a civil pecuniary penalty, but has not done so. ln Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; at first instance Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2) [2012] FCA 629 (at [57]), the ACCC made submissions to the trial judge as to the appropriate quantum of penalty if TPG was found liable. That submission expressed the appropriate penalty as a range. The High Court did not express any concern or opposition to the practice.

51    While I note these observations, as to (a), it would be wrong in principle to assume that every view expressed by a judge while sitting as a single judge in one court will necessarily be replicated when sitting as one of a number of other judges in a higher court at a later date in different circumstances. So far as I am aware, the issue considered by the High Court in Barbaro had not previously arisen in that Court. Secondly, as to (b), the fact that an opportunity arose to say something in another case is not the same as the issue being squarely raised for determination.

52    More specifically, ACCC and Mandurvit agree that I am, as a single judge, bound by NW Frozen Foods, a Full Court authority directly on this specific issue.

53    In NW Frozen Foods, the ACCC had reached agreement with the respondent regarding the relevant facts and the parties made joint penalty submissions in support of a stated quantum of penalty.

54    The Full Court held that the proposed penalty was reasonable. Burchett and Kiefel JJ stated that (at 290-291):

Because the fixing of the quantum of a penalty cannot be an exact science, the Court, in such a case, does not ask whether it would without the aid of the parties have arrived at the precise figure they have proposed, but rather whether their proposal can be accepted as fixing an appropriate amount...

A proper figure is one within the permissible range in all the circumstances. The Court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case.

55    The reasoning in NW Frozen Goods included consideration of:

(a)    the policy consideration that, typically, when corporations acknowledge contraventions of consumer protection legislation, it frequently enables lengthy and complex litigation to be avoided; and

(b)    the distinction between the role of the Court and the role of a regulator, noting that the Court will accept the assistance of the regulator (in this case, the ACCC in its role as the competition regulator).

56    The joint judgment of Kiefel and Burchett JJ in NW Frozen Foods contains a review of the relevant authorities, and concludes that the practice of parties providing submissions on the quantum of penalty in settled cases has received unanimous support in both Australia and New Zealand courts. The joint judgment includes reasons why the practice performs a valuable function in the administration of justice.

57    In Mobil Oil, the Full Court considered the reasoning in NW Frozen Foods in light of criticisms of that approach. The Full Court did not consider that the criticisms of NW Frozen Foods warranted a departure from the principles set out in that case. It was satisfied that a court has adequate powers to ensure that it discharges its statutory responsibilities appropriately in civil penalty proceedings involving agreed penalties (at [79]).

58    However, in Australian Securities and Investments Commission v Ingleby [2013] VSCA 49, the Victorian Court of Appeal (Weinberg and Harper JJA and Hargrave AJA) held that the approach to considering whether pecuniary penalty orders should be made following agreement between the parties adopted by the Full Court in NW Frozen Foods and Mobil Oil was incorrect.

59    Notwithstanding Ingleby, the reasoning of the Full Court in NW Frozen Foods and Mobil Oil continues to be applied in the Federal Court in relation to civil pecuniary penalties for contraventions of the CCA (see, for example, Australian Competition and Consumer Commission v Hewlett-Packard Australia Pty Ltd [2013] FCA 653; Australian Competition and Consumer Commission v HP Superstore Pty Ltd [2013] FCA 1317; and Australian Competition and Consumer Commission v AGL Sales Pty Ltd [2013] FCA 1030). Recently in AGL Sales, Middleton J held that he was bound by the Full Court reasoning in NW Frozen Foods and Mobil Oil but went further to state (at [42]):

No one suggests a court at first instance in determining a penalty is to undertake an “appellate function” upon being given a range or agreed figure. I accept that there is a danger this may occur if the court becomes blinkered by approaching the determination by reference to an agreed position or agreed penalty. However, provided the Court has, as it should, an overall view of the considerations relevant to the making of appropriate orders, being given any indication of an agreed position on penalty can be of assistance. This assistance could be given preferably by the providing of an ‘agreed range’, or by separate submission of the parties. In asking whether an agreed figure falls within the range of penalties reasonably available does not mean the court does not need to consider independently the appropriate penalty. It must do so in order to determine whether the range is in fact appropriate. As no one precise penalty figure is necessarily the only appropriate figure, the court will often consider the matter in terms of a permissible range in arriving at a final penalty. Of course, no agreed position, whether it be to a range or agreed figure, can be binding on the court.

60    I respectfully agree with these views.

61    ACCC and Mandurvit contend further that submissions as to the appropriate penalty differ from submissions as to the ‘available range’.

62    Unlike the practice that attracted the Court’s concern in Barbaro, the submission of the ACCC and Mandurvit in this case does not purport to define the ‘available range’ of the penalty. Rather, the submission of the ACCC and Mandurvit in this case, and of the ACCC and respondents in other pecuniary penalty cases before the Federal Court, states the parties' agreed position as to a quantum of penalty that has an appropriate deterrent effect. Further, it involves the ACCC, as the specialist regulator, explaining why a proposed penalty amount would have the necessary deterrent effect within the relevant industry. It does not involve the ACCC stepping into the shoes of the Judge to identify the outer limits of a permissible penalty.

63    The parties submit that:

(a)    this is an important distinction because a substantial portion of the High Court’s reasoning in Barbaro concerns an aspect of ‘available range’ submissions that is not present in the parties’ joint submission in this case; and

(b)    the ‘error of principle’ that is the focus of the reasoning in paras 20-28 of Barbaro arises because an ‘available range’ purports to define the boundaries within which a sentence is neither manifestly excessive nor manifestly inadequate. The plurality judgment in Barbaro makes clear that these are considerations for an appeal court, not for a prosecutor. As noted by the plurality (at [27]):

… the essentially negative proposition that a sentence is so wrong that there must have been some misapplication of principle in fixing it cannot safely be transformed into any positive statement of the upper and lower limits within which a sentence could properly have been imposed.

64    In short, a submission as to an appropriate quantum of penalty does not carry a suggestion of the appeal concepts of manifest excess or inadequacy. It states the remedy sought by the parties, acknowledging that determining the quantum of penalty is a matter for the Court.

65    A further contention for ACCC and Mandurvit is that criminal law principles should not be applied automatically to civil pecuniary penalty cases. While principles may properly be drawn from criminal law sentencing, there are important and relevant differences between:

(a)    the respective objects of civil and criminal penalties; and

(b)    the respective roles of criminal prosecutors and regulators seeking civil remedies.

66    The joint judgment in Barbaro (at [38]) refers to ‘carrying out the sentencing task in accordance with proper principle’ (emphasis added). Among the authorities cited in relation to this task is Markarian v The Queen (2005) 228 CLR 357 (at 373-375).

67    The process endorsed in Markarian has been consistently applied by this Court to the assessment of pecuniary penalties under s 76 and s 76E of the former TPA and the equivalent provisions of the CCA and the ACL: Australian Competition & Consumer Commission v Liquorland (Australia) Pty Ltd (2005) ATPR 42-070; Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No 2) (2011) 279 ALR 609 per Perram J (at [73]); Australian Competition & Consumer Commission v Gullyside Pty Ltd [2005] FCA 1727 per Kiefel J (at [32]); Australian Competition & Consumer Commission v Marksun Australia Pty Ltd [2011] FCA 695 per Gilmour J (at [90]-[91]); Australian Competition and Consumer Commission v Dimmeys Stores Pty Ltd [2011] FCA 372 per Gordon J (at [36]); Australian Competition and Consumer Commission v Kingisland Meatworks & Cellars Pty Ltd (2013) 99 IPR 548 (at 554); Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) (2011) 195 FCR 1 per Gordon J (at 28-29).

68    However, differences in approach as well as similarities were highlighted recently by Lander J in Australian Competition and Consumer Commission v Jewellery Group Pty Limited (No 2) [2013] FCA 14 his Honour stated (at [39] to [41]):

39    In ACCC v Liquorland (Australia) Pty Ltd (ACN 007 512 419) [2005] ATPR 42-070 at [68], Gyles J, and in Australian Competition and Consumer Commission v Dimmeys Stores Pty Ltd [2011] FCA 372 at [36], Gordon J, and more recently in Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2) [2012] FCA 629 at 140, Murphy J, said that in considering a pecuniary penalty the Court should proceed in accordance with the principles identified in Markarian v The Queen (2005) 228 CLR 357.

40    I do not disagree with that proposition but, of course, it must be remembered that Markarian v The Queen involved an accused who had pleaded guilty to knowingly taking part in the supply of a commercial quantity of heroin, which was an offence that attracted a maximum period of imprisonment of 20 years. There are elements of a sentence in the criminal law which are not relevant to the appropriate assessment of a pecuniary penalty; for example, retribution.

41    However, I do not disagree that a Court in assessing a pecuniary penalty can determine that penalty by proceeding in a similar manner to that suggested by the High Court for a sentence in the criminal law.

69    French J (as his Honour then was), made the following observations in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076, in relation to the differences between proceedings for civil penalties for contraventions of Pt IV TPA and criminal prosecutions:

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 IV. 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, and I think probably the only, object of the penalties imposed by s76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.

70    The parties' joint submission on the quantum of penalty addresses this particular primary object of civil penalties under the ACL. The parties have informed the Court of the penalty that they regard as having appropriate deterrent effect, and the reasons for that conclusion.

71    The parties jointly contend that the relevant differences between the ACCC’s role as a civil litigant and the role of a criminal prosecutor include:

(a)    the provisions of the CCA and the ACL confer on the ACCC a range of administrative, advisory, investigative and enforcement powers and functions. Many of these powers and functions are of a different character, purpose and scope than the powers and functions of a prosecutor. For example, criminal prosecutors perform no function that is analogous to the ACCC's power to accept court enforceable undertakings under s 87B CCA. The ACCC's role requires it to engage with, educate, research and consult with market participants in accordance with the specific objects of the CCA and ACL. The ACCC's civil enforcement role is closely related to these other functions. The ACCC generally investigates the conduct that gives rise to the proceedings. It may have conducted that investigation, and commenced proceedings according to its own enforcement priorities, which may be affected by its analysis of particular market conduct or function. Those enforcement priorities may cause it to settle proceedings on a compromise basis rather than proceed to trial. The outcome of enforcement actions has an impact on the ACCC's other roles and vice versa. This gives the ACCC a particular interest as a party to civil enforcement proceedings, particularly in relation to the quantum of penalty, because the deterrent effect of a penalty is a powerful tool in securing the regulator's goal of compliance. By contrast, a criminal prosecutor representing the State in a criminal trial must act with fairness and detachment being concerned with the attainment of justice, not the securing of convictions: Whitehorn v The Queen (1983) 152 CLR 657 (at 663-664) per Deane J and McCullough v The Queen (1982) 6 A Crim R 274 (at 285);

(b)    both the nature of the relief sought and the litigant's role in seeking it are relevantly and materially different in the criminal and civil penalty spheres. The ACCC must choose to plead and pursue the particular relief (including pecuniary penalties) it seeks in the application. By contrast, the prosecutor does not seek a sentence as the relief to which it, as a party, claims to be entitled. Rather, the prosecution presents the case that may result in a conviction, and the Court passes sentence as a consequence of that outcome. Thus, the ACCC has a more engaged role in relation to the pecuniary penalty than a prosecutor has in relation to a sentence. This should afford a different approach in relation to the submissions that address that relief.

72    While I largely accept these contentions, it is not to be forgotten that just as a prosecutor has well-established duties, the ACCC is also expected to function as a ‘model litigant’ even though it is involved in civil litigation by which it seeks to advance and discharge its statutory function. With that qualification, I accept that this particular role as an industry regulator was expressly relevant to the decision in NW Frozen Foods (per Burchett and Kiefel JJ (at 298)).

73    That said, this has not apparently been the universal view. In Australian Competition and Consumer Commission v Flight Centre Limited (No 3) [2014] FCA 292 Logan J referred to Barbaro and declined (as he was entitled to do) to accept the parties’ submissions as to the appropriate range within which a penalty should be ordered. His Honour stated (at [56]):

Both the Commission and Flight Centre proffered, by reference to the numerous earlier cases in which penalties had been imposed in respect of contraventions of Pt IV of the TPA, what they submitted was the applicable range within which penalty should be imposed. Flight Centre's submission was made in the alternative and on the assumption that its primary submission that it was neither necessary nor appropriate to impose any penalty was not accepted. These submissions were made prior to the disapproval by the High Court, in Barbaro v The Queen (2014) 88 ALJR 372, of such a practice in respect of criminal cases. Here, too, in my view, there is a relevant analogy to be drawn from the practice in the criminal jurisdiction in a civil proceeding for the recovery of a pecuniary penalty. The imposition and assessment of a penalty involves the exercise of a discretion by a judge, not the parties. I have not therefore taken into account the ranges respectively submitted.

74    This aspect of his Honour’s decision appears to have been made without the benefit of argument from the parties. It follows that if the issue was argued or more fully considered in another case in which a contrary conclusion was reached, I should give greater weight to the latter until appellate authority directs otherwise: CSR Ltd v Eddy (2005) 226 CLR 1 (at [13]-[14]). (In saying that, I also note that I have not had the benefit of a contradictor).

75    Two other decisions in relation to civil pecuniary penalty submissions, delivered since Barbaro, have considered the application of Barbaro to civil pecuniary penalty cases, but concluded that it was not necessary to decide the issue in the circumstances of the case: Commissioner for Consumer Protection v Susilo [2014] WASC 50 and Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2014] FCA 160.

76    On 31 March 2014, in Grocon v Construction, Forestry, Mining and Energy Union (No 2) [2014] VSC 134, the Victorian Supreme Court considered the application of Barbaro to fines for contempt of court. In submissions, the parties agreed with Cavanough J’s preliminary conclusion that Barbaro requires the Court to disregard completely all submissions that suggested particular figures or ranges for the penalty to be imposed. His Honour decided in accordance with that agreed position (at [70]). However, the ACCC and Mandurvit contend and I accept that the approach taken in that case should not be applied here because:

(a)    the decision concerned penalties for contempt of court (largely criminal contempt), which requires consideration of principles that are more closely related to the criminal law than conduct in contravention of the ACL;

(b)    this Court in this case is bound to follow the Full Court authority of NW Frozen Foods, unless it has been, in effect, displaced by Barbaro.

77    On 4 April 2014, in Australian Competition and Consumer Commission v Energy Australia Pty Ltd [2014] FCA 336, Middleton J considered the potential application of the principles in Barbaro to civil pecuniary penalties and held that:

(a)    Barbaro does not implicitly overrule the Full Court authority of NW Frozen Foods and the cases that have followed it (at [115]);

(b)    he was bound by the principles propounded by the Full Court in NW Frozen Foods and Mobil Oil (at [152]).

78    His Honour accordingly received the parties' submissions as to penalty, and made orders in accordance with the ‘agreed penalties’ set out by the parties in their joint submissions. In reaching that conclusion, his Honour provided detailed reasons in which he:

(a)    examined the statements of principle in Barbaro in the context of the particular circumstances of that proceeding and observed that, in that case, the High Court was only concerned with the refusal of the trial judge to receive a statement from the prosecution about the range of sentences thought by the prosecution to be appropriate (at [122]);

(b)    observed that, unlike the situation in Barbaro, where the judge was provided with a ‘bare’ statement as to the penalty, he had the benefit of the parties' submissions of law and a statement of agreed facts (at [130]);

(c)    observed that there are differences between a criminal prosecution and a civil penalty proceeding brought by a civil regulator which need to be considered, and which necessarily impact upon the appropriate processes and practices to adopt in each respective jurisdiction (at [138]);

(d)    held that he did not need to follow the approach taken by Logan J in Flight Centre (at [151]); and

(e)    held that the approach taken by Cavanough J in Grocon did not relevantly touch upon the correct approach to undertake in the case before his Honour (at [152]).

79    Once again, I would respectfully agree with this approach.

Conclusion on Barbaro

80    For those reasons, I intend to apply the established authority of NW Frozen Foods and:

(a)    receive the parties' joint submissions in relation to the quantum of penalty; and

(b)    provided that I consider the proposed amount is appropriate in the circumstances of this case, order that amount, even if I may have otherwise ordered a different amount. In doing so, I recognise that there is a strong public interest in promoting settlement of litigation.

RELEVANT PRINCIPLES

General considerations concerning orders proposed by agreement

81    The latter point leads me to the observations of French  J in Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79 (at 86):

The Court has a responsibility to be satisfied that what is proposed is not contrary to the public interest and is at least consistent with it … Consideration of the public interest, however, must also weigh the desirability of non-litigious resolution of the enforcement proceedings.

82    I am satisfied that the Court has the power to make the orders and that the orders are appropriate given that the parties are both legally represented and able to understand and evaluate the desirability of the settlement which has been put before the Court. The authorities make it clear that judicial restraint is desirable. There is no doubt that there is substantial public interest for litigation under the ACL to be concluded in the shortest timeframe that is consistent with justice being done between the parties.

Declarations

83    The Court has a wide discretionary power to make declarations under s 21 FCA. There is no doubt that the question concerned is real and not hypothetical or theoretical, the ACCC has a real interest in raising it and there is a proper contradictor. The declarations made in the present situation (a) record the Court’s disapproval of the contravening conduct; (b) vindicate the ACCC’s claim that Mandurvit contravened the ACL; (c) assist the ACCC to carry out duties conferred on it by the CCA; (d) inform customers of the dangers arising from Mandurvit's contravening conduct; and (e) deter other corporations from contravening the ACL.

84    There is sufficient factual basis for making the declarations.

Injunctions

85    There is no doubt that the Court is empowered by s 232 ACL to grant the injunctive relief. It is not vague or imprecise and does not require continuing supervision by the Court. There is no multiplicity of overlapping injunctions that may give rise to confusion about the scope of the obligations being imposed and the injunctions are appropriate to deter repetition of the conduct.

Pecuniary penalty

86    Section 224 ACL came into effect on 1 January 2011 and by s 224(1)(a)(ii) relevantly empowers the Court in respect of contraventions of provisions of Div 1 of Pt 3-1 ACL (which includes s 29) to order the contravener to pay such pecuniary penalty in respect of ‘each act or omission’ as the Court determines to be appropriate. Penalties are not provided in the ACL for contraventions of s 18.

87    Section 224 ACL was preceded by s 76E TPA. The principle applicable to determining pecuniary penalties under s 76E TPA are the principles which have been applied in determining pecuniary penalties under s 76 TPA (now s 76 CCA) for contraventions of the restricted trade practices provisions, unless the context of the infringements makes it plain that it cannot be so: MSY Technology per Perram J (at 624-625). Perram J’s reasoning in this regard was not disturbed by the Full Court on appeal. MSY Technology was cited with approval by the Full Court in Global One Mobile Entertainment Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 134 (at [119]).

88    By s 224(2) 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; (b) the circumstances in which it took place; and (c) whether the person has previously been found by a court in proceedings under Ch 4 or Pt 5-2 ACL to have engaged in any similar conduct.

89    The principal object of a penalty under s 224 ACL is deterrence. The Full Court made this clear in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249 (at [62]) where Keane CJ, Finn and Gilmour JJ said:

There may be room for debate as to the proper place of deterrence in the punishment of some kinds of offences, such as crimes of passion; but in relation to offences of calculation by a corporation where the only punishment is a fine, the punishment must be fixed with a view to ensuring that the penalty is not such as to be regarded by that offender or others as an acceptable cost of doing business. The primary judge was right to proceed on the basis that the claims of deterrence in this case were so strong as to warrant a penalty that would upset any calculations of profitability. The purpose of Optus' conduct was to generate sales, and hence, profits. The advertising deployed by Optus was calculated to win business from its rivals. The same share of business might not have been attracted by a more balanced presentation of the advantages of the plans. There is no reason to doubt that Optus knows its business sufficiently well that it is safe to proceed on the footing that its course of conduct in the campaign reflected informed calculation. While one cannot isolate the profits attributable to the campaign, it is necessary and desirable to impose a penalty which is apt to affect in a substantial way the profitability of Optus' misconduct.

90    Deterrence has two aspects, specific deterrence in respect of the actual contravener and general deterrence of others who may be disposed to engage in prohibitive conduct of a similar kind. The parties have pointed to factors to be taken into account when assessing penalty as recently summarised by Middleton J in AGL Sales (at [51]-[52) as follows:

51    The ACL requires me to consider the nature and extent of the breaches of the law and any loss or damage suffered as a result of the breach, the circumstances of the breaches of the law, and whether there has been any similar previous conduct: s 224(2).

52    Furthermore, the case law concerning s 76E of the TPA which preceded s 224 of the ACL established a number of further factors which should be considered (relevant to this proceeding):

(1)    The size of the contravening company;

(2)    The deliberateness of the contravention and the 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 legislation as evidenced by educational programs 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 the enforcement of the applicable legislation in relation to the contravention;

(6)    Whether the contravener has engaged in similar conduct in the past;

(7)    The financial position of the contravener; and

(8)    Whether the contravening conduct was systematic, deliberate or covert.

(See eg TPC v CSR Ltd (1991) ATPR ¶41 076 per French J at 52, 152-153, NW Frozen Foods at 292-4 and J McPhee & Son (Aust) Pty Ltd v ACCC (2000) 172 ALR 532, [150] ff (Black CJ, Goldberg and Lee JJ))

91    When the penalties have been agreed by the parties, the correct approach is that described by the Full Court (Branson, Sackville and Gyles JJ) in Mobil Oil (at [51]):

51    The following propositions emerge from the reasoning in NW Frozen Foods:

(i)    It is the responsibility of the Court to determine the appropriate penalty to be imposed under s 76 of the TP Act in respect of a contravention of the TP Act.

(ii)    Determining the quantum of a penalty is not an exact science. Within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another.

(iii)    There is a public interest in promoting settlement of litigation, particularly where it is likely to be lengthy. Accordingly, when the regulator and contravener have reached agreement, they may present to the Court a statement of facts and opinions as to the effect of those facts, together with joint submissions as to the appropriate penalty to be imposed.

(iv)    The view of the regulator, as a specialist body, is a relevant, but not determinative consideration on the question of penalty. In particular, the views of the regulator on matters within its expertise (such as the ACCC’s views as to the deterrent effect of a proposed penalty in a given market) will usually be given greater weight than its views on more “subjective” matters.

(v)    In determining whether the proposed penalty is appropriate, the Court examines all the circumstances of the case. Where the parties have put forward an agreed statement of facts, the Court may act on that statement if it is appropriate to do so.

(vi)    Where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure is, in the Court’s view, appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if within the permissible range.

92    The Full Court made some additional observations (at [53], [54] and [58]), including:

53    First, the rationale for giving weight to a joint submission on penalty is said by the Court to be the savings in resources for the regulator and the Court, as well as the likelihood that a negotiated resolution will include measures designed to promote competition. As Jeremy Thorpe points out, a related advantage is that the savings in resources can be used by the regulator to increase the likelihood that other contraveners will be detected and brought before the courts. This has the effect of increasing deterrence which is one of the principal justifications, if not the only justification for imposing civil penalties under the TP Act or the Sites Act: J Thorpe, “Determining the Appropriate Role for Charge Bargaining in Part IV of the Trade Practices Act” (1996) 4 Comp & Cons LJ 69, at 72-74. Of course the arguments in favour of negotiated settlements have to take account of the fact that it is the Court that bears the ultimate responsibility for determining the appropriate penalty.

54    Secondly, the sixth proposition drawn from the reasoning in NW Frozen Foods does not mean, in our opinion, that the Court must commence its reasoning with the proposed penalty and limit itself to considering whether that penalty is within the permissible range. A Court may wish to take that approach. However, it is open to a Court, consistently with the reasoning in NW Frozen Foods, first to address the appropriate range of penalties independently of the parties’ proposed figure and then, having made that judgment, determine whether the prepared penalty falls within the range.

58    Fifthly, there is nothing in NW Frozen Foods that is inconsistent with any of the following propositions:

(i)    The Court, if it considers that the evidence or information before it is inadequate to form a view as to whether the proposed penalty is appropriate, may request the parties to provide additional evidence or information or verify the information provided. If they do not provide the information or verification requested, the Court may well not be satisfied that the proposed penalty is within the range.

(ii)    If the absence of a contradictor inhibits the Court in the performance of its duties under s 76 of the TP Act, s 13 of the Sites Act, or similar legislation, it may seek the assistance of an amicus curiae or of an individual or body prepared to act as an intervenor under FCR, O 6 r 17.

(iii)    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.

93    There are several cases in which the Court has imposed penalties different from those agreed by the parties, but in most cases the penalty sought by consent or agreement between the parties has been accepted by the courts. The Full Court in Mobil Oil followed the observations of Sheppard J in Trade Practices Commission v Allied Mills Industries Pty Ltd (1981) 37 ALR 256 where his Honour said (at 259):

It is, of course, true that the penalty has been suggested to me by the agreement of the parties. Uninformed of their agreement, I may have selected a different figure, but I am satisfied that it would not have been very different from theirs. There is from time to time, amongst members of the profession and amongst the public, discussion concerning plea bargaining. Sometimes it is suggested that it involves disreputable conduct. It is my opinion that that is so if it at all implicates the court in private discussions as to what the court's attitude will or would be likely to be if a particular course is taken. In this case nothing of that kind has occurred. The parties have made their own agreement and put it to the court for approval, not knowing what its attitude was likely to be. That was the course adopted, perhaps in a less positive way, in a customs prosecution heard in the original jurisdiction of the High Court: Chipp (Minister for Customs) v. Campbell Beaumont Trading Pty. Ltd (22 December 1969, unreported). The court there accepted the parties' view of the matter. This, of course, is not a criminal case; the liability is civil only. But, even in the most serious criminal cases, it is not unusual for the prosecution to accept a plea to a lesser charge, subject always to the approval of the court. I have said what I have only to explain that the course which the parties have adopted is both proper and not uncommon, even though perhaps novel in the comparatively new field of trade practices.

94    This Court has applied the process in arriving at a particular penalty as set out by the High Court in Markarian where Gleeson CJ, Gummow, Hayne and Callinan JJ held:

(a)    assessment of the appropriate penalty is a discretionary judgment based on all relevant factors (at [27]);

(b)    careful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick (at [31]);

(c)    it will rarely be appropriate for a Court to start with the maximum penalty and proceed by making a proportional deduction from that maximum (at 31]);

(d)    the Court should not adopt a mathematical approach of increments or decrements from a predetermined range, or assign specific numerical or proportionate value to the various relevant factors (at [37] citing Wong v The Queen (2001) 207 CLR 584 per Gaudron, Gummow and Hayne JJ (at [74]-[76]);

(e)    it is not appropriate to determine an ‘objective’ sentence and then adjust it by some mathematical value given to one or more factors such as a plea of guilty or assistance to authorities (at [37] citing Wong (at [74]-[76]);

(f)    the Court may not add and subtract item by item from some apparently subliminally derived figure to determine the penalty to be imposed (at [39]);

(g)    since the law strongly favours transparency, 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 that end, it does not apply where there are numerous and complex considerations that must be weighed (at [39]).

APPLICATION OF RELEVANT PRINCIPLES

Nature, extent and duration of conduct

95    The conduct concerned comprised two oral statements, both by one sales representative, made to the customer in relation to one potentially faulty camera that had been supplied to the customer. The conduct occurred over the course of one day, being 10 February 2012.

96    There is no evidence that the oral statements were made with an intention to mislead or deceive the consumer or to misrepresent the existence, exclusion or effect of any warranty, guarantee, right or remedy.

97    On the other hand, a great number of electrical appliances are bought by customers from retailers such as Mandurvit in Australia every day. It is not unusual for customers to return new electrical appliances to retailers on the basis of a fault in the goods or out of concern that the goods were not of acceptable quality when they purchased them.

98    Part of doing business, and a cost of doing business, is the requirement to have processes to ensure that if goods are not of acceptable quality when sold to customers they can obtain a remedy for those faulty goods. Retailers are required to incur costs to maintain a culture of compliance with the ACL, including by supervision of their staff. The penalty should take into account the need to deter other retailers from encouraging, permitting or risking similar contraventions of the ACL.

Amount of loss caused

99    There is no evidence of loss or damage to the customer arising from the contravening conduct of Mandurvit.

Whether similar prior conduct

100    There is no such conduct.

Involvement of senior employees and management

101    There is no such involvement.

Size and financial position

102    There is some indication from the agreed facts as to the size and financial position of Mandurvit. The joint submission of the parties is that the proposed penalty of $25,000, which they are submitting to the Court is an appropriate penalty, takes proper account of Mandurvit’s size and financial position.

Culture of compliance and corrective measures in response to contravention

103    ACL compliance training engaged in by Mandurvit before and after the relevant conduct is set out in the agreed facts above (at [26]).

104    Mandurvit ceased trading on or about 31 May 2013 and does not intend to recommence a business of any kind. No ongoing compulsory compliance training is sought by the ACCC, nor would it be appropriate.

Cooperation and contrition/discount

105    Mandurvit has admitted liability for the contraventions without a contested hearing. A more complex and costly contested trial has been avoided.

Deterrence

106    The penalty should not be so high as to be oppressive, but it is a relevant factor that the penalty should be of a sufficient magnitude to operate as a general deterrence to other corporations making representations to customers about their rights under the ACL.

Maximum penalties in one transaction/one course of conduct principle

107    The maximum penalty for a body corporate for each act or omission that contravenes a provision of Div 1 of Pt 3-1 ACL, which includes s 29, is $1.1 million by virtue of item 5 of s 224(3) ACL. The maximum penalty is important, firstly, because the legislature has prescribed it. Secondly, it invites comparison between the worst possible case and the case before the Court at the time of imposing a penalty. Additionally, it provides a yardstick taken and balanced with all of the other relevant factors. It is relevant to take into account in the present situation, in my view, the ‘one transaction’ or ‘one course of conduct’ principle as discussed by the majority of the Full Court in Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1 (at [39] and [41] per Middleton and Gordon JJ):

39    As the passages in Williams 262 ALR 417 explain, a “course of conduct” or the “one transaction principle” is not a concept peculiar to the industrial context. 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 enquiry. 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.

…

41    ... In other words, where two offences arise as a result of the same or related conduct that is not a disentitling factor to the application of the single course of conduct principle but a reason why a Court may have regard to that principle, as one of the applicable sentencing principles, to guide it in the exercise of the sentencing discretion: Johnson v The Queen (2004) 205 ALR 346 at [3] – [4] and [34] and Attorney-General v Tichy (1982) 30 SASR 84 at 92 – 93. It is a tool of analysis (Tichy 30 SASR 84 at 93) which a Court is not compelled to utilise: Royer v Western Australia [2009] WASCA 139 at [21]-[34] and [153]-[156].

108    In the present situation, the two oral statements, each constituting one contravention of s 29(1)(m) ACL for which a penalty may be imposed, were made over the course of a day in the course of enquiries made by one customer about the problems she was having with one camera she had purchased from Mandurvit. The parties have jointly submitted and I accept that the preferable view is that the two contraventions occurred in the one course of conduct.

Totality principle

109    It is unnecessary to consider the totality principle which would arise if the contravening conduct were construed as being two distinct contraventions.

Conclusion as to the appropriate penalty

110    The parties submit that a pecuniary penalty pursuant to s 224 ACL in the sum of $25,000 is appropriate (and within the permissible range) for the contraventions which Mandurvit has admitted. In my view, the penalty is appropriate and within the permissible range, taking into account all the relevant factors.

111    There are balancing features. In particular, I would observe that the penalty may seem substantial considering the conduct. However, against that, the maximum penalty available is much greater and while no loss was occasioned in this instance, conduct of the nature in issue could cause loss to consumers and occur many times unchecked unless there is appropriate general deterrence.

Costs

112    The Court has a wide discretion as to costs. In the present circumstances the parties have cooperated in bringing about a conclusion which is in the public interest. They are agreed that each party should bear its own costs. That approach is appropriate.

CONCLUSION

113    For the foregoing reasons I am satisfied with the orders proposed by parties. The following orders are made:

1.    The Respondent made the following oral statements to a consumer on about 10 February 2012 in the course of discussions about problems with a camera supplied by the Respondent to a consumer, and the consumer's attempts to obtain a refund or remedy:

(a)    when asked about the camera being fixed, "Your camera is currently with the repairer and you will need to pay $88 before they'll send it back to us … [Panasonic] will only return it if you pay the $88. The $88 is a charge by Panasonic to cover postage and handling"; and

(b)    when the sales representative that made the statement at para 1(a) above telephoned the consumer in respect of the $88 charge by Panasonic, "I have spoken to Panasonic and they will not waive the $88 fee… The Manager is away for a few weeks. I doubt the Manager would be able to do anything. It's up to Panasonic. There are two things you can do. You could phone Panasonic to see if you can get them to waive the charges, or you could lodge a complaint with the ACCC",

and, by doing so, the Respondent has, in trade or commerce:

(c)    made representations in connection with the supply or possible supply of goods or services that were false or misleading and concerned the existence, exclusion or effect of any guarantee, right or remedy available under the consumer guarantee provisions in Div 1 of Pt 3-2 of Sch 2 of the Competition and Consumer Act 2010 (Cth) (ACL), and/or other remedies relating to those guarantees in Pt 5-4 ACL in contravention of s 29(1)(m) ACL; and

(d)    thereby engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 ACL.

THE COURT ORDERS THAT:

Injunction

2.    Pursuant to s 232 ACL, for a period of three years from the date of these Orders, the Respondent is restrained (whether by itself, its servants, agents or otherwise howsoever) from making representations (whether oral or written) to any customer to the effect:

(a)    that the Respondent does not have any obligation, regardless of the circumstances and the consumer guarantee provisions of Div 1 of Pt 3-2 and/or the remedies relating to those guarantees in Pt 5-4 ACL (Consumer Guarantee Provisions), to pay any fee for postage and handling charged by the relevant manufacturer or other repairer in circumstances where:

(i)    goods supplied by the Respondent are not or may not be of acceptable quality (within the meaning of that expression in s 54 ACL); and

(ii)    such goods have been sent to the relevant manufacturer or repairer by the Respondent;

(b)    that the Respondent does not have to return a good supplied by it to a consumer, in the circumstances detailed at para 2(a) above, unless that consumer exercises one of only three options, being:

(i)    to pay any fee for postage and handling charged by the relevant manufacturer or repairer;

(ii)    to arrange for the manufacturer or repairer to waive the fee; or

(iii)    to make a complaint to the ACCC;

(c)    that a consumer in relation to goods supplied by the Respondent, is obliged to pay any fee for postage and handling charged by the relevant manufacturer or other repairer in circumstances where:

(i)    goods supplied by the Respondent are not or may not be of acceptable quality (within the meaning of that expression in s 54 ACL); and

(ii)    such goods have been sent to the relevant manufacturer or repairer by the Respondent; and

(d)    that a consumer in relation to goods supplied by the Respondent, in order to obtain the return of goods left for inspection or repair with the Respondent, must exercise one of three options being:

(i)    to pay any fee for postage and handling charged by the relevant manufacturer or repairer;

(ii)    to arrange for the manufacturer or repairer to waive the fee; or

(iii)    to make a complaint to the ACCC.

Pecuniary penalty

3.    Pursuant to s 224(1)(a)(ii) and s 228 ACL, within 28 days of the date of these Orders, the Respondent is to pay to the Commonwealth a pecuniary penalty in respect of the contraventions of s 29(1)(m) ACL in the amount of $25,000.00.

Costs

4.    Each party is to bear its own costs of the proceeding and all previous costs orders against either party in the proceeding are to be vacated.

Associate:

Dated:    12 May 2014