FEDERAL COURT OF AUSTRALIA

Director of Consumer Affairs Victoria v Gibson (No 3) [2017] FCA 1148

ORDERS

THE COURT ORDERS THAT:

1.    The first respondent pay to the State of Victoria pecuniary penalties in respect of each of the five contraventions of s 21 of the Australian Consumer Law (Vic) found by the Court, in the following amounts:

(a)    for the first contravention concerning the app sales donation claims, a penalty of $90,000;

(b)    for the second contravention concerning the company earnings donation claims, a penalty of $90,000;

(c)    for the third contravention concerning the app launch donations claim, a penalty of $50,000;

(d)    for the fourth contravention concerning the Schwarz family app donations claim, a penalty of $150,000; and

(e)    for the fifth contravention concerning the Mother’s Day event donations claim, a penalty of $30,000,

in the total sum of $410,000.

2.    The first respondent be granted leave to apply to the Court, on or before 4 pm on 5 October 2017, for orders that she pay the penalties imposed by paragraph 1 of these orders by way of instalments.

3.    Any such application filed pursuant to paragraph 2 of these Orders be supported by affidavit setting out a proposed repayment schedule, the reasons why an order for instalments should be made, and the first respondent’s financial circumstances.

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

REASONS FOR JUDGMENT

MORTIMER J:

1    By orders made on 7 April 2017, the first and second respondents were found to have contravened s 18 of Australian Consumer Law (Vic) (the ACL (Vic)) and to have engaged in unconscionable conduct in contravention of s 21 of the ACL (Vic). The second respondent (Ms Gibson’s company) was also found to have contravened s 18 of the Australian Consumer Law (Cth) (the ACL) and s 21 of the ACL. The Court also granted injunctive relief against both respondents. These orders were made following publication of the Court’s findings and reasons a few weeks earlier: see Director of Consumer Affairs Victoria v Gibson [2017] FCA 240. I shall refer to that judgment as the “Liability Reasons”. These reasons should be read together with the Liability Reasons.

2    As I noted in both the Liability Reasons and the reasons given at the time of making the 7 April 2017 orders, Ms Gibson has not participated at all in the proceedings against her. That pattern of conduct continued in relation to the hearing and determination of the Director’s application for penalties and non-punitive publication orders (or adverse publicity orders) against her. The consequence of Ms Gibson’s non-appearance is a matter to which I return in these reasons.

3    A hearing in relation to the Director’s application for penalties and publication orders was held on 15 June 2017. The Director filed written submissions and, as well as relying on the findings in the Liability Reasons together with some of the evidence admitted during the liability stage of the proceeding, also relied on an affidavit of Ms Kathryn Bannon sworn on 19 May 2017. Due to some matters raised by the Court during the penalty hearing, the Director was given leave to file and serve additional submissions and evidence after the hearing, to address in particular the appropriateness of the publication orders sought. I deal with that issue at [107]-[109] below.

4    The orders sought by the Director at this stage of the proceeding are sought only against Ms Gibson personally, given that Ms Gibson’s company is in liquidation.

5    Pecuniary penalties are sought only in relation to Ms Gibson’s conduct in contravention of s 21 of the ACL (Vic), concerning donations she represented were being and would be made to charity through her company. That is because s 21 is a penalty provision, whereas s 18 is not. Publication orders, however, are sought in relation to both Ms Gibson’s contravening conduct about charitable donations and her contravening conduct regarding her cancer claims, and her claims about her pursuit of natural remedies to treat herself.

6    For the reasons I set out below, I have concluded that penalties in the sum of $410,000 should be imposed on Ms Gibson in relation to the charitable donations representations. I do not consider it is appropriate to make any publication orders.

Relevant Legislative Provisions

7    Section 224 of the ACL (Vic) relevantly provides:

224 Pecuniary penalties

(1)    If a court is satisfied that a person:

(a)    has contravened any of the following provisions:

(i)    a provision of Part 2-2 (which is about unconscionable conduct);

…

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.

(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; 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.

(3)    The pecuniary penalty payable under subsection (1) is not to exceed the amount worked out using the following table:

…

8    By s 134(2)(a) of the Australian Consumer Law and Fair Trading Act 2012 (Vic), any pecuniary penalty ordered by a court under s 224 of the ACL (Vic) to be paid to the State of Victoria must be paid into the Victorian Consumer Law Fund.

9    There is a power in s 226 of the ACL (Vic) to relieve a natural person in whole or in part from a pecuniary penalty. The pre-conditions to the exercise of this power are that the Court must be satisfied the person acted “honestly and reasonably”, and further be satisfied that having regard to all the circumstances of the case, the person “ought fairly to be excused”. It is apparent from both the Liability Reasons and what I say in these reasons that s 226 can have no application to Ms Gibson.

10    Section 246 of the ACL (Vic) empowers the Court to make “non-punitive orders”. It provides:

246 Non-punitive orders

(1)    A court may, on application of the regulator, make one or more of the orders mentioned in subsection (2) in relation to a person who has engaged in conduct that:

(a)    contravenes a provision of Chapter 2, 3 or 4; or

(b)    constitutes an involvement in a contravention of such a provision.

(2)    The court may make the following orders in relation to the person who has engaged in the conduct:

(a)    an order directing the person to perform a service that is specified in the order, and that relates to the conduct, for the benefit of the community or a section of the community;

(b)    an order for the purpose of ensuring that the person does not engage in the conduct, similar conduct, or related conduct, during the period of the order (which must not be longer than 3 years) including:

(i)    an order directing the person to establish a compliance program for employees or other persons involved in the person’s business, being a program designed to ensure their awareness of the responsibilities and obligations in relation to such conduct; and

(ii)    an order directing the person to establish an education and training program for employees or other persons involved in the person’s business, being a program designed to ensure their awareness of the responsibilities and obligations in relation to such conduct; and

(iii)    an order directing the person to revise the internal operations of the person’s business which led to the person engaging in such conduct;

(c)    an order requiring the person to disclose, in the way and to the persons specified in the order, such information as is so specified, being information that the person has possession of or access to;

(d)    an order requiring the person to publish, at the person’s expense and in the way specified in the order, an advertisement in the terms specified in, or determined in accordance with, the order.

Note:    The following are examples of orders that the court may make under subsection (2)(a):

(a)    an order requiring a person who has made false representations to make available a training video which explains advertising obligations under this Schedule;

(b)    an order requiring a person who has engaged in misleading or deceptive conduct in relation to a product to carry out a community awareness program to address the needs of consumers when purchasing the product.

(3)    This section does not limit a court’s powers under any other provision of this Schedule.

11    Section 247 of the ACL (Vic) empowers the Court to make “adverse publicity orders”. It provides:

247 Adverse publicity orders

(1)    A court may, on application of the regulator, make an adverse publicity order in relation to a person who:

(a)    has contravened a provision of Part 2-2 or Chapter 3; or

(b)    has committed an offence against Chapter 4.

(2)    An adverse publicity order in relation to a person is an order that requires the person:

(a)    to disclose, in the way and to the persons specified in the order, such information as is so specified, being information that the person has possession of or access to; and

(b)    to publish, at the person’s expense and in the way specified in the order, an advertisement in the terms specified in, or determined in accordance with, the order.

(3)    This section does not limit a court’s powers under any other provision of this Schedule.

12    The power in s 246 may be exercised in relation to Ms Gibson’s contraventions of both s 18 and s 21 of the ACL (Vic), whereas the power conferred by s 247 may only be exercised by the Court in relation to Ms Gibson’s contravention of s 21 of the ACL (Vic).

The Director’s Contentions

13    The Director contends the Court should find, based on the Liability Reasons, that for the purposes of the imposition of pecuniary penalties on Ms Gibson, there are five distinct contraventions of s 21 of the ACL (Vic). The Director relies on the conduct as identified in paragraph 5 of the Liability Orders made by the Court, with a qualification that the conduct identified in paragraph 5(b) (being an implied representation that donations from the sale of The Whole Pantry app would be made within a reasonable time of receipt) should not be treated as a distinct act or omission for the purposes of penalty. I accept the Director’s submission in relation to the number of contraventions and I return to those five contraventions, and the nature and quality of Ms Gibson’s conduct, at [55] below.

14    Pursuant to item 1 of s 224(3), the maximum pecuniary penalty payable under s 224(1) for a contravention of s 21 of the ACL (Vic) is, in relation to a natural person, $220,000. Accordingly, Ms Gibson is exposed, by reason of what I have determined to be five separate contraventions of s 21, to a maximum total penalty of $1,100,000.

15    Despite the High Court’s decision in Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482, that it was permissible for a regulator to make submissions to the Court concerning an appropriate civil penalty, in this proceeding the Director elected not to make any submissions to the Court concerning the appropriate penalty for each contravention. In terms of assisting the Court on the quantification of appropriate penalty, the Director’s submissions are limited to pointing out two financial aspects of the evidence, and otherwise rely on a number of general submissions about the appropriate characterisation of Ms Gibson’s conduct.

16    The Director submits, consistent with the Court’s findings in the Liability Reasons, that the gross receipts established by the evidence for sales of The Whole Pantry app and The Whole Pantry book totalled $440,500. That figure includes the advance paid to Ms Gibson’s company by Penguin Australia for The Whole Pantry book. The Director submits the evidence showed, and the Court found, that Ms Gibson’s company had made, in the financial year 2013/2014, a gross profit of $250,031. The Director submits, and I accept, that the report of net profit for that year was $156,939 (before tax). The Director submits that reported expenses for that year were $94,326 including $53,476 for “travel, accom & conference”. It is an inference readily available on the evidence, and one I am prepared to draw, that the majority of those expenses represents money Ms Gibson spent on herself by way of travel and accommodation and attendances at conferences.

17    The Director further contends:

Assuming (as is reasonable in the absence of other evidence) that the profit margins generated in financial year 2014 were generated “across the board” (ie on all funds received from sales of the Whole Pantry App and the Whole Pantry book, which total $440,500):

(a)    the amount of gross profit (applying the 78.1% gross profit margin figure) would be $344,030.50; and

(b)    the amount of net profit (applying the 49.1% figure) would be $216,285.50.

18    I note, and the Director accepts, that these figures do not include the $75,000 Ms Gibson was paid, on the evidence, to give the interview she gave to the 60 Minutes program: see [75] of the Liability Reasons.

19    The Director submits that although the substantial majority of the proceeds of sale of The Whole Pantry app and all of the proceeds of sale from The Whole Pantry book advance were received by Ms Gibson’s company, Ms Gibson was the sole director and shareholder of that company and the profits made by that company were controlled by her and economically belonged to her. The Director submits they may be treated as profits accruing to Ms Gibson, and I accept that submission.

20    This method of examining monies received by a respondent arising from the contravening conduct and then taking those amounts into account in determining penalty was an approach taken by Middleton J in Director of Consumer Affairs of Victoria v Hocking Stuart (Richmond) Pty Ltd [2016] FCA 1184 at [84]. The Hocking Stuart case is of considerable relevance to the approach I have taken and I return to it below.

21    The Director also contends that while there was no specific evidence of loss or damage suffered by others as a result of Ms Gibson’s contravening conduct, another way to view the receipts by Ms Gibson and her company was to look at the monies paid by the public for The Whole Pantry app (being at least $308,000) and the amount paid by Penguin in advance to Ms Gibson ($132,500) as loss or damage suffered by others.

22    The Director also places emphasis on the circumstances in which each act or omission constituting the contravening conduct occurred. In particular, the Director relied on the Court’s finding (see Liability Reasons at [240]-[242]) that Ms Gibson had played on the public’s desire to help those less fortunate both in the way she solicited donations and in the way she encouraged members of the public to buy The Whole Pantry app and The Whole Pantry book. Further, the Director submits that the contravening conduct occurred in circumstances where Ms Gibson’s company, at the time, had sufficient funds to make good on the charitable giving claims but did not. Instead Ms Gibson’s company made small donations in part satisfaction of the promises that had been made, and did so only once Ms Gibson’s story had been held up to public scrutiny.

23    In relation to the publication orders sought, and relying on the discussion in Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2) [2012] FCA 629, the Director submits the purpose of the orders is at least three fold:

(a)    alerting consumers to the fact that there has been misleading and deceptive conduct;

(b)    protecting the public interest by dispelling the incorrect or false impressions that were created by the wide and far reaching advertising campaign; and

(c)    supporting the primary orders and assisting in preventing repetition of the contravening conduct.

(Footnotes omitted.)

24    I note that TPG Internet was eventually the subject of a decision by the High Court (Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; 250 CLR 640), but the primary judge’s approach to the question of corrective advertising was not challenged.

25    The Director contends, given the findings of the Court on the Liability Reasons, that it is appropriate for the Court to order remedial steps to be taken by Ms Gibson “to protect the public and to dispel the false impressions that were made”. The Director additionally submits that, because publication orders can be made in relation to Ms Gibson’s health claims and her claims that she healed her own cancer through ensuing conventional treatments and pursuing natural remedies, there is a greater public interest in making those kinds of orders so that members of the public do not continue to be misled and deceived about these matters.

26    The Director also contends that that the pecuniary penalties imposed by the Court should be specifically included in the notice, as such an inclusion would advance the principles of general deterrence.

27    The Director sought publication orders of a notice in a form attached to the Director’s submissions. The Director submits the Court should order the notice to be published in the Herald Sun and The Australian. Following the penalty hearing, and questions asked by the Court of the Director’s counsel at that hearing, the Director proposed an amended form of notice in written submissions and evidence filed with the leave of the Court.

28    In the original form of proposed notice, the Director had submitted Ms Gibson should be ordered to make the following statement:

Belle Gibson apologises for her conduct and recognises that cancer is a serious illness which is best managed by a qualified medical practitioner. People should be wary of persons making claims that cancer can be managed, treated or healed in the absence of advice and treatment from qualified medical professionals.

29    In the amended proposed notice, this paragraph was omitted. The Director was correct to remove that paragraph, for reasons I discuss in more detail at [107] below.

30    The form of proposed notice the Director ultimately sought was as follows:

31    

PUBLIC NOTICE – ANNABELLE NATALIE GIBSON

Section 246 of the Australian Consumer Law (Victoria)

This Notice has been published pursuant to an Order of the Federal Court of Australia

Following legal proceedings commenced by the Director of Consumer Affairs Victoria, the Federal Court of Australia found that Annabelle Natalie Gibson engaged in misleading or deceptive conduct by making representations in the promotion of “The Whole Pantry” book and mobile applications concerning her health. The Federal Court also found that Ms Gibson engaged in misleading or deceptive conduct and unconscionable conduct by making claims in the promotion of the “Whole Pantry” book and app claiming that certain proceeds of sales of the book and app were being given to charities and good causes.

The Federal Court has ordered that Ms Gibson must pay a civil pecuniary penalty of [amount ordered by the Court].

The Federal Court found the following claims made by Ms Gibson were misleading and deceptive, that she:

(a)    had been diagnosed with brain cancer in 2009;

(b)    was given four months to live; and

(c)    had taken and rejected conventional cancer treatments in favour of embarking on a quest to heal herself naturally.

The Federal Court also found the following claims made by Ms Gibson were both misleading and unconscionable:

(a)    a portion of all revenue from the sales of the Whole Pantry App, and that a large part of everything her company earned, would be donated to charities or good causes within a reasonable time when that was not the case;

(b)    the proceeds of the sale of ‘virtual tickets’ to the launch of the Whole Pantry App would be donated to four specified causes when a donation was made to only one of those causes, and was made over a year later; and

(c)    the full amount of the sales of the Whole Pantry App for a week in December 2013 and May 2014 would be donated to a named family and other named charities within a reasonable time when that was not the case.

32    Again, following matters raised by the Court at the penalty hearing, in his supplementary submissions the Director identified at least one case where the Director had been ordered to publish corrective advertising. These orders were made by Daly AsJ in Director of Consumer Affairs Victoria v Australian Tourism Centre Pty Ltd [2010] VSC 571. It is unclear from the reported decision whether the Director had consented to such orders before Daly AsJ. The Director did not seek any such orders in this proceeding. In other words, having had this option drawn to his attention, the Director elected to press for orders that Ms Gibson publish and pay for corrective advertising, or that there be no such orders at all.

Consideration

Classification of the contravening conduct

33    As I have noted above, I accept the Director’s submission that it is appropriate to classify Ms Gibson’s conduct as involving five separate contraventions of s 21. This reflects the way her conduct was characterised in the Liability Reasons and in the Orders. As I have also noted above, the implied representation in paragraph 5(b) of the Liability Orders (and see [207]-[209] of the Liability Reasons) should, for the purposes of the imposition of the penalties, be seen as part of the first representation identified in paragraph 5(a) of the Orders: namely, that a portion of all revenue from the sales of The Whole Pantry app would be donated to charities or good causes.

34    I have discussed the approaches to determining whether a series of contraventions are, for the purposes of the imposition of penalties, properly to be seen as “one course of conduct” in Sayed v Construction, Forestry, Mining and Energy Union [2015] FCA 338 at [28]-[34]. An appeal was allowed from my orders in this matter on an issue that does not affect the principles I set out in these paragraphs: Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4; 239 FCR 336.

35    The kind of restraint evident in s 557(1) of the Fair Work Act 2009 (Cth) (as considered in Sayed) is also expressed in s 224(4) of the ACL (Vic). The underlying rationale is the same as that I have set out in Sayed. The Court must undertake a factual analysis to identify whether there is a close interrelationship between the legal and factual elements of two or more contraventions by respondents: see Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 at [127], citing Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; 194 IR 461 at [39] and [41]. The authorities I gathered in Sayed approached this matter from the perspective of the Court’s duty to ascertain and identify the conduct for which a penalty is being imposed, by analogy to criminal proceedings where the Court undertakes that exercise to ascertain and identify the conduct for which as a matter of justice a defendant should be separately punished. This was the approach, for example, taken in the Mornington Inn case, to which I referred in Sayed: see Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70; 168 FCR 383 at [41]-[42] (Stone and Buchanan JJ). Other judges have described the Court’s function in this respect as relating more to the need to ensure proportionality between the conduct and the penalty involved, drawing into the analysis the principle of totality: see, for instance, Australian Competition and Consumer Commission v Telstra Corporation Ltd [2010] FCA 790; 188 FCR 238 at [228]-[236] (Middleton J); Maritime Union of Australia and Another v Fair Work Ombudsman [2016] FCAFC 102; 247 FCR 154 at [39] (Tracey and Buchanan JJ); Registrar of Aboriginal and Torres Strait Islander Corporations v Matcham (No 2) [2014] FCA 27 at [292]-[294] (Jacobson J). Edelman J in particular has expressed the view that totality and the course of conduct analysis are not entirely distinct concepts: see Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (No 7) [2016] FCA 424 at [25]-[31], and Australian Competition and Consumer Commission v Multimedia International Services Pty Ltd [2016] FCA 439; 243 FCR 392 at [137]. I note that Edelman J’s application of the course of conduct principle was overturned in Australian Competition and Consumer Commission v Reckitt Benckiser [2016] FCAFC 181; 340 ALR 25 at [139]-[145], but the Full Court did not comment adversely on what his Honour had said in the passages to which I have referred.

36    For my own part, as is apparent from my approach in Sayed, I prefer an approach that does not mix the concepts. Proportionality performs a different function from the “single course of conduct” issue (which must come first) because a proportionality approach should ensure that each separate punishment for conduct is proportionate to the nature, quality and circumstances of the conduct. Further, totality is also distinct because it is a “check”, performed at the end of the reasoning process, to ensure that, where there is more than one penalty imposed for distinct conduct, the overall penalty to be imposed is, as a whole, not oppressive or unjust. This is a conceptual discussion into which is it unnecessary to enter in detail in the present proceeding. Whatever the analysis, the factual characterisation of the conduct is the task the Court must first perform.

37    In my opinion, there is no difficulty in characterising Ms Gibson’s conduct for the purposes of the imposition of penalty as five contraventions which ought each to be subject to the imposition of separate penalties. As the Director submits, two of those contraventions were of an ongoing nature, although they related to different subject matters. The first was the “app sales donation” claim, which was made on an ongoing basis on The Whole Pantry website, and on the Google Play store between October 2014 and March 2015: see Liability Reasons at [56] to [60]. This claim was that a portion of the revenue from the sales of the app was being, or would be, donated to good causes on a continuing basis. The second was the “company earnings donation” representation, which represented that a “large part of everything” was, contemporaneously with the representation, being “donated to charities and organisations which support global health and wellbeing, protect the environment and provide education”. This representation was contained in the introduction to The Whole Pantry book, which was published in October 2014: see Liability Reasons at [61] to [62].

38    Thus the first representation concerned what would happen with sales of The Whole Pantry app and the second concerned what would happen with sales from The Whole Pantry book. Different good causes were nominated, the representations were made at different times, and to different audiences. The intended outcomes were different: one representation was designed to encourage purchases of the app; the other designed to encourage purchases of the book. They should be treated separately.

39    The other three representations which were the subject of the Liability Orders should also be treated separately. The “app launch donations” representation (see Liability Reasons at [38]-[44]) appeared on a webpage on the website Eventbrite. Its purpose was to sell virtual tickets to the “virtual launch” of The Whole Pantry app. Members of the public were encouraged by Ms Gibson, through her company, to buy these virtual tickets with “proceeds going to the four charities: Birthing Kit Foundation One Girl Asylum Seeker Resource Centre and the Schwarz Family”. The representation was made to a different audience, at a specific time (in December 2013) and encouraged members of the public to donate to four specific causes by purchasing these “virtual tickets”. This representation also had a different quality for the reasons I set out at [87] below.

40    The remaining two pieces of contravening conduct also related to distinct events with different representations, made through different media and for different purposes. One was the “Mother’s Day event donations” (see Liability Reasons [51]-[55]). These representations related to Mother’s Day in 2014. They were made through a Facebook post on The Whole Pantry’s Facebook page (which was owned by Ms Gibson’s company) and signed off by Ms Gibson. In that post Ms Gibson proposed that during the period 11 May 2014 to 18 May 2014, the full amount of every Whole Pantry app purchase would be donated to The 2h Project and the Bumi Sehat Foundation, as well as an additional $1 donation made to those charities for each story posted on the topic “what ‘Family means to you’”. Amongst other differences, this representation was intended to induce members of the public to spend time and effort composing a story to be posted, in the expectation that if they did so, Ms Gibson and her company would make additional charitable donations.

41    The final piece of contravening conduct and in my opinion the most serious, is what has been called the “Schwarz Family app donation” representation: see Liability Reasons at [45]-[50]. This representation was made through Ms Gibson’s Instagram account, held by Ms Gibson’s company but operated by Ms Gibson. The representation is set out at [45] of the Liability Reasons. In summary, it encouraged members of the public to buy The Whole Pantry app because Ms Gibson represented she and her company would be donating 100% of app sales that week to the Schwarz family to help Joshua Schwarz, a little boy who had an inoperable brain tumour. In this representation, Ms Gibson expressly compared the terrible circumstances of young Joshua to her own, asserting she had the same kind of tumour as he did; a statement which was completely false. She did this to encourage members of the public to buy her product (The Whole Pantry app), to generate income for herself and her company, and generally to promote herself and her commercial activities. She consciously chose to use the terminal illness of a little boy in this way.

42    Given the separation in time, subject matter, audience, method of publication and purpose of each of these sets of claims or representations, I am comfortably satisfied it is appropriate to characterise them as five separate contraventions, each deserving of the imposition of a separate penalty.

Matters to be taken into account

43    Section 224(2) requires the Court to take into account three (non-exhaustive) matters:

(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.

44    The authorities have also identified other factors which may inform the identification of an appropriate penalty. A respondent’s capacity to pay is one such factor, although it has been recognised that the prospect of a respondent becoming insolvent because of having to pay a substantial penalty, or evidence that a respondent has no real ability to pay are not factors which ordinarily should persuade a court to refrain from fixing a penalty it otherwise considers appropriate: see Australian Competition and Consumer Commission v High Adventure Pty Limited [2005] FCAFC 247 at [11] (Heerey, Finkelstein and Allsop JJ); cf Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (in liquidation) [2007] FCAFC 146; 161 FCR 513 at [80]-[82] (Moore, Dowsett and Greenwood JJ).

45    In Hocking Stuart at [30]-[33], Middleton J made the following observation about the competing considerations at work when a court considers what capacity a respondent has to pay a penalty and how that should be factored into the appropriate penalty:

I accept that care must be taken in transplanting principles from criminal law directly to the area of civil penalties. However, as in criminal sentencing, sanctions in the form of fines or penalties should strive to impose equal effects on offenders with differing resources. Further, the imposition of a fine or penalty that is beyond the ability of a contravener to pay does not necessarily promote general deterrence.

As Kirby P has remarked in Smith v The Queen (1991) 25 NSWLR 1 at 21:

The imposition of a fine which is totally beyond the means of the person fined and which the Court, the prisoner and the community realise has no prospect whatever of being paid, does nothing for the deterrence of others. Such a fine is seen by the community for what it is: a symbolic act of the law without intended substance which neither coerces the particular prisoner nor convinces the community.

Therefore, the amount of penalty should, in general, be set having regard to an amount the contravener can realistically be expected to discharge and should not be unnecessarily oppressive. This is not determinative, but is a factor. Of course, if the contravener has organised his or her affairs to render themselves beyond sanction, different considerations will apply.

Nevertheless, a penalty should not be set so low that it does not meet the goal of general deterrence, even if that low penalty acts in the circumstances as a specific deterrent having regard to the individual financial circumstances of the contravener.

46    I respectfully agree with his Honour’s observations and would have been content to take an approach of this kind, had Ms Gibson adduced evidence about her financial circumstances. However, she has chosen not to participate in the penalty stage of this proceeding, as she chose not to participate in the liability stage. Accordingly, there is no evidence before the Court about Ms Gibson’s capacity to pay a penalty. The kind of approach which might otherwise have commended itself to the Court, being one that could well have worked in Ms Gibson’s favour, cannot be undertaken. Generally, the same outcome has occurred in other proceedings where a respondent has not participated: see Registrar of Aboriginal and Torres Strait Islander Corporations v Matcham (No 2) [2014] FCA 27; Re Idylic Solutions Pty Ltd; Australian Securities and Investments Commission v Hobbs [2013] NSWSC 106 (to which Jacobson J in Matcham referred); Commissioner for Consumer Protection v Unleash Solar Pty Ltd (in liq) (No 2) [2016] FCA 1177; Australian Competition and Consumer Commission v EDirect Pty Ltd (in liq) [2012] FCA 976; 206 FCR 160; Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) [2011] FCA 352; 195 FCR 1.

47    In Hocking Stuart at [45], Middleton J, citing Australian Competition and Consumer Commission v AGL Sales Pty Ltd [2013] FCA 1030; [2013] ATPR 42-449, referred to another non-exhaustive list of considerations which might be taken into account in fixing an appropriate penalty. Most of those considerations are more relevant to a corporate respondent than to a natural person. The list in AGL Sales was acknowledged by the Court to be one drawn from case law which preceded the introduction of s 224 of the ACL. That list was (AGL Sales at [52]):

(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))

48    See also Perram J’s judgment in Australian Competition and Consumer Commission v Singtel Optus Pty Ltd (No 4) [2011] FCA 761; 282 ALR 246 at [11], cited with approval by Allsop CJ in Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2015] FCA 330; 327 ALR 540 at [8].

49    Of course in determining an appropriate penalty, the Court cannot proceed simply by way of some kind of checklist. The breadth and fact dependency of the exercise means that factors of this kind may assume prominence in some cases and not in others, and there may be individual factors which appear on no list in any authority that need to be taken into account in a given case. This was the point being made by Allsop CJ in Coles Supermarkets at [9], where his Honour said:

These factors can be traced back to the decision of French J (as the Chief Justice then was) in Trade Practices Commission v CSR Ltd [1991] ATPR 41-076 at 52,152-52,153 and have been developed, in particular, through the decisions of the Full Court in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 292-294; 141 ALR 640 at 645-7 (NW Frozen Foods) and Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (in liq) (2007) 161 FCR 513; 244 ALR 300; [2007] FCAFC 146 [58]. There is a degree of overlap between these factors and the mandatory considerations in s 224(2). These factors do not necessarily exhaust potentially relevant considerations; nor do they regiment the discretionary sentencing function.

50    Factors which focus on the acceptance of responsibility, admission of liability and cooperation in a proceeding by a respondent, are also taken into account: see Mornington Inn at [72]-[78] (Stone and Buchanan JJ); NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; 71 FCR 285 at 293-294 (Burchett and Kiefel JJ; Carr J agreeing) and Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 7) [2016] FCA 484 at [148] (Yates J). These factors may mean, for example, that because of the respondent’s cooperation, less public resources (both in terms of the Court’s resources and those of the regulator) have been used than would otherwise have been the case, and the respondent should have this cooperation recognised in the determination of an appropriate penalty. Similarly, where a respondent accepts responsibility for the contravention, adduces evidence of steps taken to ensure such a contravention will not occur in the future, expresses remorse or contrition or otherwise indicates consciousness about the seriousness of the contravening conduct, these attitudes may persuade a court in a given circumstance that it is appropriate to impose a lower penalty than might otherwise be the case. Such attitudes might, for example, persuade a court that a greater penalty is not necessary for purposes of specific deterrence because a respondent has accepted her, his or its conduct was unlawful and should not be repeated.

51    Two further matters should be noted. The first is the observation repeated in all authorities dealing with the imposition of pecuniary penalties: that the importance of deterrence and in particular general deterrence must remain a core feature in the exercise of the Court’s penalties function: see NW Frozen Foods at 294-295; Hocking Stuart at [25]-[28] and the authorities there cited. In Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; 250 CLR 640, the plurality (French CJ, Crennan, Bell and Keane JJ) said at [65]:

General and specific deterrence must play a primary role in assessing the appropriate penalty in cases of calculated contravention of legislation where commercial profit is the driver of the contravening conduct.

52    The second matter is that reasonable judicial minds may differ on the appropriate penalty, in large part because arriving at a precise figure for a pecuniary penalty involves what is generally described as an “instinctive synthesis”. Despite that being a phrase drawn from criminal law, it is well-recognised as an appropriate description for what a court does in arriving at a figure for a pecuniary penalty: see Hocking Stuart at [42]-[43] and Australian Competition and Consumer Commission v Multimedia International Services at [74-]-[75] (Edelman J).

53    I note also the cautionary observations of the Full Court in Director of Consumer Affairs Victoria v Alpha Flight Services Pty Ltd [2015] FCAFC 118 at [43] (Barker, Katzmann and Beach JJ), applying the reasoning in Markarian v The Queen [2005] HCA 25; 228 CLR 357 to a civil penalty context, concerning methods which should not be adopted. These include any mathematical approach of increments or decrements from a predetermined range, commencing with a maximum penalty and making some sort of proportional deduction from that, determining an “objective penalty” and adjusting it by some purported mathematical value on the basis of factors such as cooperation or adding or subtracting items one by one from some “apparently subliminally derived figure”, so as to arrive at a final figure. Of course, approaches such as this are inconsistent with the well-established instinctive synthesis approach.

54    Finally, having identified what it considers to be the appropriate penalty for each separate contravention, the Court must also stand back and look at the total penalty to be imposed, in order to satisfy itself that the total penalty is just, appropriate and proportional to the contravening conduct when viewed as a whole: see Hocking Stuart at [47], referring to Registrar of Aboriginal and Torres Strait Islander Corporations v Matcham (No 2) at [128], [199]-[201], [274] and [292]-[293] (Jacobson J).

Applying these factors to Ms Gibson’s conduct

55    I turn now to say something about the nature and extent of each act and omission constituting the contraventions. To begin with, it is worthwhile recounting the relevant chronology during which the conduct occurred. The evidence of these events is set out in the Liability Reasons and all I propose to do here is to summarise the chronology to put the contravening conduct in an appropriate perspective.

56    The Whole Pantry Apple app went on sale around mid-2013. The Whole Pantry Android app went on sale a little later, around September 2013. Ms Gibson put her book proposal to Penguin around September 2013. From the middle of 2013 onwards there were regular posts on The Whole Pantry’s Facebook site and on Ms Gibson’s Instagram site about her struggle with cancer, and then from late 2013, also about her charitable giving. On the evidence, her posts continued to about the middle of 2014, although since the accounts were not taken down until March 2015, there may have been further activity. If there was, it was not in evidence before the Court. The Whole Pantry book went on sale in October 2014. Sales of The Whole Pantry app and the book were thus occurring from mid-2013 through to around March 2015 with the exception of the Android app, which was available until May 2016. The media training interview conducted by Penguin with Ms Gibson occurred in late September 2014. I return to that interview in more detail below. By early 2015, journalists were making enquiries about the veracity of Ms Gibson’s claims and activities. For example, it was a journalist who spoke to the Asylum Seeker Resource Centre (ASRC) concerning Ms Gibson’s claims about donations to that organisation and this occurred in February 2015. Newspaper articles started appearing around March 2015, doubting Ms Gibson’s story. Penguin withdrew The Whole Pantry book from sale in March 2015. The Whole Pantry Facebook and Instagram accounts were also taken down around March 2015. The Whole Pantry website is no longer publicly available, but as I say in the Liability Reasons at [80] it is unclear from the evidence when it was taken down. The Apple app was withdrawn from sale also in March 2015. In May 2015, Ms Gibson participated in an interview with the Australian Women’s Weekly in which she confessed she had never had brain cancer and said, as I extract in the Liability Reasons at [74], “None of it’s true”. Ms Gibson participated in an interview with Channel Nine’s 60 Minutes program which was aired in late June 2015. I deal with that interview at [75] of the Liability Reasons. As I note in [82] of the Liability Reasons, The Whole Pantry Android app was not withdrawn from the Google Play store until around May 2016.

57    Ms Gibson profited from her false statements about donating substantial portions of the proceeds from the sales of The Whole Pantry app and The Whole Pantry book over a period of about a year. During that time she made those representations repeatedly, and maintained them in various forms on social media, while carving out for herself a high public profile using her asserted charitable inclinations and activities as a cornerstone of shaping that profile.

58    I find that one of the clear demonstrations of the dishonesty and self-interest attending Ms Gibson’s conduct was the fact that she and the company she controlled did not in fact make any donations to the organisations she had mentioned in her publicity statements until public questioning of her claims and activities surfaced in the media in around February 2015. The only payment in evidence which was made during the period she was making false statements was a payment to Vestal Water, on behalf of Kinfolk Café, for the café’s water filtration systems, but this was not a payment which had featured in the representations found to have been contraventions of s 21 of the ACL (Vic). From this timing, I infer the donations which were made, and which fitted within the representations Ms Gibson had made, were a self-serving attempt to regain some level of credibility in relation to the representations she and her company had made in order to induce people to buy The Whole Pantry app and The Whole Pantry book. Those (proportionally small) donations should be seen as nothing more than an attempt to restore credibility to her conduct.

59    Leaving aside the Schwarz family (see [71]-[77] below) Ms Gibson and her company made only three donations. Of these, two occurred after her activities began to be publicly questioned. There was a donation of $1,000 to One Girl in March 2015. There was a donation of $5,000 to Bumi Sehat Foundation in July 2015. There was a donation of just over $4,800 to Vestal Water on behalf of Kinfolk Café, in April 2014, but as I have noted, neither Vestal Water nor Kinfolk Café were charities Ms Gibson had named and used to encourage people to buy her products. Additionally Ms Gibson’s partner, Mr Clive Rothwell, donated $1,000 to the ASRC in April 2014, but there is no evidence the source of that money was from proceeds of The Whole Pantry app sales or the proceeds of The Whole Pantry book. I found at [84] of the Liability Reasons that no funds were ever donated to the ASRC by Ms Gibson or by her company. In circumstances where Ms Gibson had made representations that “a large part of everything” from the sales of The Whole Pantry book would be donated to charity, the miserly donations that were in fact made, and only made once Ms Gibson’s falsities had been exposed, shows Ms Gibson in a singularly unfavourable light.

60    In terms of proportions, I found in the Liability Reasons at [233] that the company received over $420,000 from the sales of The Whole Pantry app and book and the advance from Penguin on the book. Of this figure, the evidence shows about $10,000 was donated, if one includes the donations unrelated to the charities identified in the representations, some of which received nothing. I also found:

That proportion does not represent a “large part of everything”, nor can it represent “routine” donations by the respondents of part of the proceeds of sale. The $10,000 did not go to, and was not divided between, all the people and organisations which Ms Gibson had identified as the charitable projects to which members of the community would see some of the sales proceeds donated. Rather the donations were sporadic, ad hoc and, as to some of them, opportunistic: apparently motivated by the disquiet emerging in early 2015 concerning the truthfulness of Ms Gibson’s claims.

61    As I find in [235] of the Liability Reasons, given the level of the company’s income over 2013 and 2014, there was no apparent financial reason that the representations about charitable giving could not have been fulfilled.

62    Another feature of the chronology and of Ms Gibson’s conduct which I specifically take into account is that she was clearly put on notice during the Penguin media training interview in September 2014 that there were likely to be real questions about her charitable giving representations. She could have admitted in the training interview that she and her company had not made good on their promises about charitable giving, and sought to rectify the situation. After that training interview, and after being put on notice about the questions over her behaviour, she could then have sought to make good on the promises she had made to the public about charitable giving. She chose to do neither. Instead, during and after the media training interview, she chose to perpetuate the fantasy and deception she had created.

63    There are a number of features of what Ms Gibson said during this interview which show her to be cavalier about the truth, unconcerned about following through with the representations she has made, and finally and most seriously, prepared to tell outright lies to Penguin about the charitable giving of herself and her company.

64    First, in the following extract Ms Gibson adopts a cavalier approach to her plans to making good on the representations she has been making to the Australian public for almost a year by the time she makes these statements:

MS B: Belle, one thing you’ve been very vocal about is giving a lot of the money to charity.

MS GIBSON: Yeah.

MS B: It could be that one of the financial newspapers wants to audit that.

MS GIBSON: Mm’hm.

MS B: Could you facilitate that process?

MS GIBSON: Yeah. At the moment, because we’ve just changed structures, we’re getting all our books tidied. Yeah, but probably could in six months, once I get my shit together.

MS B: Because if you’re saying that you’re giving money to the Asylum Seeker Resource Centre and One Girl and Birthing Kit Foundation, people want to know, you know, what’s going on.

MS GIBSON: Mm’hm.

MS B: So that’s something you could be asked too.

MS GIBSON: Yeah.

MS B: Yeah, about all that.

MS GIBSON: Easy.

65    For Ms Gibson to give the response “easy” in these circumstances is astonishing. Aspects of what Ms Gibson tells the Penguin interviewer, on the evidence, bear no relationship to reality. In one portion of the training interview, having told the interviewer that the ASRC is one of the Australian charities she and her company are donating to, Ms Gibson says that “we’re working on an event”. The evidence does not bear that out. Ms Gibson then goes on to talk about other plans, which again on the evidence bear no relationship to what in fact occurred. She says:

MS GIBSON: Yeah. But they’re- that’s about it. I want to start doing something in Palm Island which is nice, but lots of the families actually are – most of the families are Australian based and they’re nice stories to discuss.

MS A: Okay.

MS GIBSON: Because they’re really tangible, and they’d be willing to talk as well.

66    Nothing in the evidence suggests Ms Gibson or her company spent, or intended to spend, any money on any activities on Palm Island in Queensland, which is an Aboriginal community.

67    Some statements Ms Gibson makes to the Penguin media interview trainer are outright untruths. When she is speaking during this interview, Ms Gibson speaks in the present tense, clearly conveying to the interviewer that what she is describing are activities which are – in September 2014 – currently taking place. She says:

MS GIBSON: So so far we’ve given to nine charities and they’re chosen pretty much based on conversations that happen through our social media channels, tapping into what people are really passionate about at the moment, communities, organisations, families, people that they feel need functional support, you know. We don’t donate in typical ways. You know, a family might need $10,000 and they’ll go, ‘Oh, this family is doing a money-raising drive. They need $10,000,’ but I’ll be the one that reaches and go, ‘Well, what do you need that $10,000 for? Where do you need that support and where is it going?’ and in many ways it’s been, ‘Well, we need money for vitamin C injections for our son who’s living with cancer.’ ‘Great, we’ll pay the bills that come in for that,’ you know, or, ‘Our child has a brain tumour. He can’t regulate his own body temperature. We need an airconditioner.’ ‘Great. Here’s $6000 for airconditioning.’

(Emphasis added.)

68    Later in the interview, when Ms Gibson is ridiculing signs she described seeing in Bali from companies who talked about donating 1% of their profits, Ms Gibson says:

MS GIBSON: --- 1 per cent? On our worst month, where I think, like, our worst month where we made, like, $700 or something on the app, we still donated 25 per cent of that and the rest went to bills to fix the bugs.

MS A: Is that kind of normal, around 25 per cent?

MS GIBSON: No, like, some months- you know, our first quarter, it was like 95 per cent.

(Emphasis added.)

69    Hypothetically it is possible Ms Gibson made statements of that kind either not knowing or not caring whether they were true. Given she was principally and intimately involved in the running of her company and in the promotion of The Whole Pantry app and book, and the entire media profile she had acquired which went with those products, I am not prepared to give her the benefit of the doubt in that way. The only purpose of making those statements was to convey information about her and her company’s charitable giving activities. Ms Gibson was proffering specific percentages. She was proffering specific anecdotes about requests for funds. I am comfortably satisfied, even in the absence of evidence from Ms Gibson, that she made those statements to promote herself, her company and her products knowing they were not true, or at least not caring whether or not they were true.

70    During the Penguin media training interview, Ms Gibson was warned by the trainer on several occasions that she was likely to be publicly questioned about her charitable giving claims. It was in this context that Ms Gibson gave some of the responses to which I have just referred. The warnings and cautions fell on deaf ears. Ms Gibson was prepared to continue making a profit on the back of the goodwill of those members of the Australian public who are likely to have believed her representations, and bought her products at least in part because of them.

71    I turn now to deal with the nature of Ms Gibson’s conduct in relation to the Schwarz family which, in my opinion, is particularly unconscionable and deserving of separate emphasis. It is necessary to set out the findings I made in the Liability Reasons about Ms Gibson’s conduct in relation to the Schwarz family. At [45]-[50] I made the following findings:

45. In or about December 2013, a statement was also made on the Instagram account, in relation to donations to the Schwarz family. This statement was as follows:

Josh [Schwarz] has a similar malignant, inoperable brain tumour to the one I have. From the greatest ache and pains in my heart, I feel this little boys journey and story. Like I said last night - for the week, we chose this family to donate 100% of app sales to, in hopes to find them a medicine, holistic or happy miracle. If you’ve already bought the app, you can go to the link in my profile and buy a ‘virtual ticket’ to our ‘world changing events’ - this ‘ticket’ (donation) gives you power to give back to those without support, inspiration, education or the quality of life most of us are blessed with everyday.

46. It is unclear on the evidence how Ms Gibson came to know the Schwarz family. An article in evidence and published on 21 March 2015 by Rebekah Cavanagh in the Herald Sun, entitled “Family of desperately ill boy fear health guru Belle Gibson used their son to bolster her cancer claims”, stated:

Gibson, 23, befriended Ms Schwarz on social media in 2013 after hearing of Joshua’s fight for life with an anaplastic astrocytoma grade three (AA3), caused by a rare genetic disorder.

47. The article further quotes the boy’s mother as saying that Ms Gibson used to ask the family “heaps of questions about Joshy’s cancer and treatments. Was it to give her more credibility?” The family were reported as confirming they knew nothing of the fundraising promotion by Ms Gibson and received no donation from her.

48. Newspaper reports such as these offer little by way of probative evidence, even in a proceeding which is not defended. I place no weight on them for the purposes of any findings necessary to establish the contraventions alleged, and little weight on them even by way of background.

49. At [31(d)] of the annotated statement of claim, there is the following allegation:

Contrary to:

...

(d)     the Schwarz App Sales Donation Representation, the Schwarz family did not receive the proceeds of sale of the Whole Pantry App for a week;

50. The annotation to this allegation concedes the Director relies only on “inference from all donations – supporting evidence not supplied for this”. At best, the admission made by Ms Gibson through her solicitors is that $800 was paid to the Schwarz family. I return later in these reasons to whether that admission, compared to the representations alleged to have been made, can result in a contravention of the ACL (Vic).

72    What Ms Gibson said she would do appeared on her healing_belle Instagram account in December 2013. Ms Gibson and her company stated that “100% of app sales” for a week would be donated to the Schwarz family. As I found at [227] of the Liability Reasons, that representation was false. There was no evidence before the Court the Schwarz family received a cent from Ms Gibson or her company in relation to sales of The Whole Pantry app, although as I accepted, their son Joshua was truly seriously ill with brain cancer.

73    I noted at [228] of the Liability Reasons that, through her lawyers in answer to a s 126 Notice, Ms Gibson maintained that she collected $800 in a jar which she did give to the Schwarz family. Without evidence from Ms Gibson in the proceeding or direct evidence supporting such a claim, I was not prepared to accept that the amount of $800 or any other amount had in fact been donated. Further I was not prepared to find that in any event, the Schwarz family had received the money. It would have been a straightforward matter for Ms Gibson through her lawyers to proffer evidence of what the Schwarz family actually received. Finally, on her own account of this incident, it is clear most of the $800 came from other generous people at the event where the jar was passed around, not from Ms Gibson’s own funds: see [44] of the Liability Reasons.

74    Whether or not the $800 donation (mostly from others) occurred, on the evidence what did not occur was that 100% of the sales of The Whole Pantry app in the week in December 2013 was donated to the Schwarz family.

75    As the evidence demonstrates, the particularly disgraceful aspects of Ms Gibson’s conduct in relation to the Schwarz family, and Joshua Schwarz in particular, were that she sought to use the tragic terminal illness of a young boy for her own selfish purposes. She sought to promote herself by comparing herself and her asserted brain cancer with Joshua’s. She sought to garner sympathy for herself, her commercial causes and her products, through that comparison. She sought to engender sympathy in members of the Australian public to whom she promoted herself and her company. The image she sought to portray was one of generosity and selflessness towards Joshua and his family. From these images, she sought to make commercial profits.

76    As Allsop CJ said in Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50; 236 FCR 199 at [296]:

The evaluation [of conduct in the context of unconscionability] includes a recognition of the deep and abiding requirement of honesty in behaviour; a rejection of trickery or sharp practice; fairness when dealing with consumers; the central importance of the faithful performance of bargains and promises freely made; the protection of those whose vulnerability as to the protection of their own interests places them in a position that calls for a just legal system to respond for their protection, especially from those who would victimise, predate or take advantage; a recognition that inequality of bargaining power can (but not always) be used in a way that is contrary to fair dealing or conscience; the importance of a reasonable degree of certainty in commercial transactions; the reversibility of enrichments unjustly received; the importance of behaviour in a business and consumer context that exhibits good faith and fair dealing; and the conduct of an equitable and certain judicial system that is not a harbour for idiosyncratic or personal moral judgment and exercise of power and discretion based thereon.

(Emphasis added.)

77    If ever there is conduct deserving of the label unconscionable, it is Ms Gibson’s conduct in respect of Joshua.

78    I turn now to factors other than the nature and quality of each act and omission. As I have noted earlier in these reasons there is no specific evidence of any loss or damage to third parties arising from the contraventions, although the evidence demonstrates that many members of the public purchased The Whole Pantry app or The Whole Pantry book, or possibly both. As I have observed, it is likely many did so at least in part because of the charitable giving representations, thinking part of the money they were paying would go to a good cause. However, there is no admissible evidence before the Court from any third party to the effect that she or he would not have purchased either the app or the book if the true circumstances were known. There is no evidence before the Court concerning Penguin’s circumstances in relation to these events, and any damage or loss it may have suffered. Accordingly, there is no evidence going to this factor.

79    I have already discussed the circumstances of each contravention.

80    There is no evidence that Ms Gibson has previously been found by a Court to have engaged in any similar conduct, so this factor has no role to play in fixing appropriate penalties in this proceeding.

81    As I have noted above, there is no evidence before the Court about Ms Gibson’s current financial position.

82    Indeed there is no evidence about her historic financial position, aside from the evidence about the income of her company over the relevant period, and some evidence of some of those funds being spent on her personal expenses, including “travel, accom & conference” (see [16] of these reasons). The Court cannot speculate about such matters. Ms Gibson has consciously elected not to put any such evidence before the Court. Accordingly, her financial position is not a matter to which I can give any weight one way or the other in fixing an appropriate penalty, because there is simply no evidence before the Court about what her financial position is. I can neither find or infer that she has a capacity to pay a substantial penalty, nor can I find or infer she has no such capacity.

83    Ms Gibson’s absence from these proceedings does however enable the Court to find that Ms Gibson has elected not to take any public responsibility for her conduct, nor to acknowledge the Court’s findings in relation to the contraventions of ss 18 and 21 of the ACL (Vic). At least after the Court’s reasons on liability were published (and a copy sent to Ms Gibson), Ms Gibson had an opportunity to acknowledge her wrongdoing in the context of this proceeding. She chose not to do so. She has chosen not to explain her conduct. She has chosen not to apologise for it. This is despite the evidence to which I have referred that her conduct had drawn into her deceit of the public the family of a terminally ill child. It is also despite the fact that her conduct has drawn into her deceit several organisations of good repute and who do good works in the Australian and international communities. That is not to suggest that there is a basis in the evidence for finding any particular loss or damage to any of those individuals or organisations. Rather it is to acknowledge that their names have become part of the public narrative of these events, not of their own choosing, but because of Ms Gibson’s conduct.

84    Therefore, Ms Gibson’s choice not to take any part in these proceedings does have some consequences. In fixing the appropriate penalty for each contravention, and in looking at the total sum which is appropriate to make Ms Gibson pay, there can be no allowance made for contrition, remorse, apology or acceptance of responsibility by Ms Gibson. Once again, it appears she has put her own interests before those of anyone else. If there is one theme or pattern which emerges through her conduct, it is her relentless obsession with herself and what best serves her interests.

85    In my opinion the appropriate penalties for each of the five contraventions vary. I consider that the first and second contraventions (the app sales donation claims and the company earnings donation claims) each deserve a significant penalty. They each involved conduct spread over a longer period of time, by representations made on a continuous basis to the public at large, with a likely connection between those representations and the numbers of sales of both the app and the book. It is important for the Court to make clear that the ease with which social media can be used to make representations does not mean that people can be less careful, or less truthful, about what they say.

86    Although the virtual nature of social media may tend to place a distance between those who communicate and those who receive the communications, it does not affect the character of those communications if they are false or misleading. It is important that those considering making claims through social media for commercial purposes understand that they will be held to account if those claims, and their conduct, are to be found to be unconscionable. Whether or not there was a causal connection between the making of the representations and people purchasing The Whole Pantry app, it was from these two contraventions that, on the evidence, Ms Gibson and her company received the majority of the sum of $440,500. I am satisfied that at least a significant number of people were likely to have been influenced to buy the app because of what Ms Gibson said about charitable donations.

87    The app launch donations claim related to a specific event in December 2013 and was a relatively isolated piece of conduct. However, it had a particular quality which affects the penalty I have decided to impose. Unlike the circumstances of the other representations, the public received nothing for the monies paid to Ms Gibson and her company as a result of this representation. All that was on offer was “virtual tickets” to a virtual event. In other words, people who paid money as a result of this representation did so as a straight out donation to the charities identified, although the money actually went to Ms Gibson and her company. This representation also related to the Schwarz family, conduct I view most seriously.

88    The Mother’s Day event donations claim, the fifth contravention, was again a separate piece of conduct. It related to representations made over a comparatively short period of time, approximately seven days in May 2014. The income likely to have been derived from this was, in the circumstances, relatively small.

89    The fourth contravention, the Schwarz family app donations claim, is also a distinct contravention. It will be apparent from what I have said already in these reasons that I view that contravention as the most serious because of its subject matter and circumstances, and because of the way Ms Gibson sought to profit from the tragedy of a family to whom she otherwise had no connection.

90    I also take into account that some specific deterrence has already been achieved in relation to Ms Gibson. First there is the ongoing and adverse publicity to which she has been subject because of these proceedings. The fact of that publicity is not affected by her non-participation in the proceedings. The Court has issued injunctions in relation to any future conduct of Ms Gibson involving making certain claims in connection with the development, sale or promotion of health and well-being advice. On any view what has occurred to date as a result of these proceedings should provide some measure of specific deterrence to Ms Gibson and the penalties to be imposed should recognise the specific deterrence which is likely to have already occurred.

91    That said, there is no basis in the evidence (and in particular, I refer here to the responses of Ms Gibson both during the Penguin media training interview and during the 60 Minutes interview) for a great deal of confidence that aside from the injunctions, Ms Gibson, in pursuit of her own interests in the future, would refrain from inducing members of the public to purchase products she sells by making false claims. Ms Gibson’s responses during those two interviews show little insight into the wrongfulness of her behaviour. The injunctions as sought and granted are of limited scope. It is likely that the seriousness of Ms Gibson’s contraventions may only be brought home to her through the imposition of significant penalties, and that such significant penalties may be required to deter her from creating another scheme in the future which may not be caught by the terms of the injunctions.

92    I note also that Ms Gibson has already been ordered to pay a percentage of the Director’s legal costs of this proceeding, fixed at $30,000. The 60 days in which Ms Gibson was given to pay that sum expired prior to the penalty hearing. The Director adduced no evidence, one way or the other, whether those costs had been paid.

93    Based on the Director’s submissions, which I accept, if the income and expenditure figures, and the profit margins generated from them, are extrapolated across all the funds received by Ms Gibson and her company for sales of The Whole Pantry app and The Whole Pantry book totalling $440,500, then the amount of gross profit is (on the Director’s calculations) $344,030.50, and the net profit is $216,285.50.

94    To that could be added the $75,000 Ms Gibson received personally for doing the 60 Minutes interview. She was paid that money to tell her story only because the conduct constituting the contraventions had made her notorious.

95    Given the findings I have made, both in the Liability Reasons and in these reasons, that Ms Gibson applied funds assigned in the accounts for “expenses” to herself, in calculating appropriate penalties for the five contraventions it is relevant in my opinion to use the gross profit amounts, together with the $75,000 from the 60 Minutes interview, as at least some kind of indicator for an appropriate penalty amount. These amounts total $419,030.50. To impose penalties much below this would mean Ms Gibson nevertheless came out ahead financially in comparative terms, despite her unlawful conduct. To take that matter into account is not to suggest there should be any mathematical equivalence: rather, it is to note that to others looking at the penalties imposed, it may appear still worthwhile to break the law in this way. On the other hand, the evidence also discloses that most of those funds were spent in one way or another (which could not be ascertained through the evidence), so it is not the case that the Court can be satisfied Ms Gibson has funds from that period still available to her.

96    Taking all these matters into account, synthesising them as best I can, I consider the appropriate penalties for each contravention to be as follows:

(a)    For the app sales donation claims, a penalty of $90,000.

(b)    For the company earnings donation claims, a penalty of $90,000.

(c)    For the app launch donations claim, a penalty of $50,000.

(d)    For the Schwarz family app donations claim, a penalty of $150,000.

(e)    For the Mother’s Day event donations claim, a penalty of $30,000.

97    That gives a total penalty figure of $410,000.

98    Considering, as I must, whether this total figure represents a sum that is just and appropriate given the nature of the contravening conduct as a whole, together with the other circumstances known to the Court on the evidence, I am satisfied it is. It is a large sum of money to impose on an individual. However, it is not the first time a penalty of that size has been imposed on an individual: see, for example, Australian Competition and Consumer Commission v Halkalia Pty Ltd (No 2) [2012] FCA 535, which was a proceeding concerning ss 52 and 59 of the Trade Practices Act 1974 (Cth) but involved a manufacturing and product distribution business founded as a “charity concept” and involving volunteers who were retirees or semi-retirees manufacturing and packaging products to be sold through retail outlets.

99    If she is without considerable financial means (and as I have said, there is no evidence one way or the other), Ms Gibson may need to make arrangements to pay the penalty in instalments: that, it seems to me, may serve as a reminder for some time to come of the ramifications of engaging in unconscionable conduct.

100    The Director made no submissions whether the Court should impose a date by which the penalties needed to be paid. In the absence of any date in the orders, the penalties are due and payable within 14 days after the date of service of the order on the person: Federal Court Rules 2011 (Cth), r 39.02. In the absence of any application by the Director, or by Ms Gibson, the usual rule should apply.

101    Similarly, the Director made no submissions as to whether Ms Gibson should be ordered to pay any penalties imposed by way of instalments. Orders for payment of penalties by way of instalment may be made where the Court is satisfied that there is “sufficient financial information” to justify instalment arrangements: Australian Competition and Consumer Commission v Humax Pty Ltd [2005] FCA 706 at [12] (Merkel J), most recently reaffirmed in Australian Competition and Consumer Commission v Burden [2017] FCA 399 at [102] (Gilmour J). In those cases, the parties consented to the pecuniary penalties being paid by instalment, and to the specific instalment arrangements. Instalment orders were also made by Middleton J in the Hocking Stuart case, where the parties did not consent to a specific instalment arrangement: Director of Consumer Affairs Victoria v Hocking Stuart (Richmond) Pty Ltd (No 2) [2016] FCA 1435. There, his Honour allowed the respondent, Hocking Stuart, the opportunity to seek an order that it pay the pecuniary penalty by instalments. In that case, Hocking Stuart had participated in the case and made an application for instalment orders. Once again, Ms Gibson’s election not to participate in the proceeding means that the party who might have been expected to move for such orders has not done so, and there is otherwise no evidence of her financial circumstances to justify orders now being made for payment by instalments.

102    I will reserve leave to Ms Gibson to apply to pay the penalties by way of instalments, on the condition that any such application is made within seven days of the publication of these orders, and supported by affidavit.

The Director’s proposed publication orders

103    I do not propose to make the publication orders sought by the Director, nor any other kind of publication orders.

104    As the evidence demonstrates, the cost of this advertising is significant. The cost ranges between approximately $2,000 and $40,000, and although it exceeded the sums in the evidence, the Director sought an order for the cost of advertising in the sum of approximately $45,000. There is no evidence at all whether Ms Gibson has the capacity to pay such advertising costs. In orders of this nature there is no principle of general deterrence at work which might lead the Court to discount or ignore the capacity of a respondent to pay.

105    Here the situation is quite different. If, in fact, Ms Gibson has no capacity to pay for this advertising, then making orders of this kind sets up an inevitable situation of non-compliance. That is inappropriate first because it has the tendency to characterise the Court’s orders as ineffectual, and second because it may well expose Ms Gibson to prosecution for contempt, having in a way “set her up” to contravene the Court’s orders. In contrast, pecuniary penalties can be paid by arrangements (such as instalments) which can avoid non-compliance: see, for instance, Middleton J’s orders in Hocking Stuart (No 2).

106    If I had otherwise considered that publication orders were appropriate, it may be that in balancing the question of Ms Gibson’s capacity to pay, I may nevertheless have been persuaded it was appropriate to make such orders. However I do not consider the orders will serve the purposes the Director puts forward. There has already been considerable publicity about these proceedings. I consider the public are already well-informed, if they wish to be, about the consequences which have befallen Ms Gibson for engaging in the conduct she did. They will be additionally informed about how seriously the Court has viewed her conduct on publication of these reasons. Those members of the public who are interested will already know her claims were false and will no doubt have followed the exposure of their falsity and of her unconscionable conduct in the print and television media.

107    The original proposed notice had considerable difficulties, which I raised with counsel during the penalties hearing. First, it compelled Ms Gibson to apologise through the text of the proposed notice. Ms Gibson has had ample opportunity throughout the conduct of this proceeding to apologise and she has chosen not to do so. She could also have arranged for any number of media appearances, during the course of this proceeding, for the purpose of apologising and acknowledging responsibility for her conduct, but she has chosen not to. In a different context, I reviewed the law about compelling a person to apologise: see Wotton v State of Queensland (No 5) [2016] FCA 1457 at [1553]-[1584]. Generally, courts see it as inappropriate to compel a person to apologise where they are not prepared to do so voluntarily. Based on my view of the evidence, and her non-participation, I would have concerns about the sincerity of any apology issued by Ms Gibson after these proceedings and because of a court order, and that is another reason no apology should be ordered.

108    The original proposed notice also sought to compel Ms Gibson to make statements about the inefficacy of the treatments she asserted she underwent for her (supposed) cancer. As I pointed out to counsel for the Director, the Court was not asked to make any findings about the efficacy or otherwise of the treatments publicised by Ms Gibson, including her so-called dietary advice. The proposition that the pursuit of such remedies is hopeless, and that diet and the other “lifestyle” changes advocated by Ms Gibson have no effect on a person in fact suffering from cancer was no part of the Director’s case in this proceeding. It is inappropriate for this subject matter to be dealt with at all in any public notice arising from these proceedings.

109    In contrast, the amended proposed public notice does no more than describe the proceeding and set out the findings the Court has made. All of that material is available to those members of the public who wish to access it, both through the Court’s website, no doubt through the Director’s website in due course, and through public legal websites such as AustLII. I am satisfied these matters will also be well-reported when the Court’s penalty orders and reasons are published, as were the Court’s orders and reasons on liability. No extra or necessary information or words of caution are sounded through the publication of the proposed notice.

110    Finally, almost all of Ms Gibson’s contravening conduct occurred through social media. Those members of the public whom she reached with her representations were those who had access to social media and to technology available on mobile devices. Those persons who might be tempted to engage in similar conduct are also therefore likely to be regular users of social media. I am far from persuaded that those sections of the public will necessarily be any better informed about Ms Gibson’s conduct and the Court’s views of it by notices published in the print versions of the Herald Sun and The Australian.

111    For all of those reasons, I decline to make the publication orders sought by the Director.

Costs

112    The Director makes no submissions that any further orders as to costs should be made. Ms Gibson has already been ordered to pay $30,000 towards the Director’s costs. I have taken that order into account in fixing the penalty. I do not consider it is appropriate to make any further costs orders.

Some additional observations

113    There were other non-punitive orders the Director could have sought. As I have already noted, the Director himself could have chosen to publicise the findings on liability and penalty through a court-approved notice, and that would have removed at least some of the concerns identified.

114    More critically, the Court had available to it the powers in s 246(2)(a): namely, a power to direct a person to “perform a service that is specified in the order, and that relates to the conduct, for the benefit of the community or a section of the community”.

115    The Court could have been asked to direct Ms Gibson, for example, to perform a service at one or more of the charitable organisations to which she had promised she and her company would give money. The Court could have been asked to direct her to perform a service at one or more institutions caring for people who really do have cancer. Those would have been orders with tangible features of both specific and general deterrence. Pecuniary penalties may not operate as any real deterrent if people (whether those to whom the orders are directed or those who are the objects of general deterrence) have no capacity to pay, or are willing to do whatever they can to avoid paying, including becoming bankrupt. However, directing a person to give up her or his time, and to perform a service to the community, is an order that can be enforced more readily against any person, irrespective of financial capacity. And, in a case such as this, it is more likely to have brought home to Ms Gibson the impact of her conduct, and its offensiveness to members of the Australian community who really are struggling with cancer and its effects, whether on themselves, their families or their friends. Most Australians are, in one way or another, touched by cancer as a terrible illness.

116    Perhaps there were good reasons no such orders were sought. It is not possible to know.

117    The last matter is by way of observation. As I noted at the start of these reasons, by s 134(2)(a) of the Australian Consumer Law and Fair Trading Act 2012 (Vic), any pecuniary penalty ordered by a court under s 224 of the ACL (Vic) is to be paid into the Victorian Consumer Law Fund. If Ms Gibson were to actually pay the pecuniary penalties imposed (whether by instalments or otherwise), in the Court’s respectful opinion, and in the particular circumstances of these contraventions, it may be appropriate for consideration to be given to whether there is a mechanism by which the funds can be donated to some or all of the organisations, and people, which Ms Gibson had promised would receive donations. In that way, some good might still come for the vulnerable people, and the organisations supporting them, which were indirectly drawn into this unconscionable sequence of events.

Associate:

Dated:    28 September 2017