FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2017] FCA 1251

ORDERS

THE COURT DECLARES THAT:

1.    The First Respondent, MSY Technology Pty Ltd (MSY Technology), during the period from January 2013 to March 2015 operated, maintained and controlled the website www.msy.com.au (MSY Website) used to promote MSY Technology, M.S.Y. Technology (NSW) Pty Ltd (MSY NSW); MSY Technology (QLD) Pty Ltd (MSY QLD), MSY Technology (SA) Pty Ltd (MSY SA) and MSY Technology (WA) Pty Ltd (MSY WA) (together, for the purposes of this Declaration, MSY):

(a)    in trade or commerce, in connection with the supply or possible supply of computer parts, computer peripherals and computer software (Computer Products) or in connection with the promotion of the supply of Computer Products to consumers;

(b)    by displaying and publishing on the MSY Website terms and conditions (Terms and Conditions) which, in relation to faulty Computer Products supplied by MSY, expressly or impliedly represented to consumers who accessed those Terms and Conditions that consumers:

(i)    had to return the Computer Product to MSY within 7 days of receiving it to obtain a remedy;

(ii)    were only entitled to a refund or replacement remedy on a case by case basis and at the relevant MSY company's discretion;

(iii)    were only entitled to a Return-to-Base warranty on Computer Products sold by any MSY company and that the remedy to be provided was at the MSY company's discretion;

(iv)    may incur an administrative fee if the Computer Product was not under warranty; and

(v)    were not entitled to a remedy with respect to faulty software,

(c)    and therefore:

(i)    engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the Australian Consumer Law, Sch 2 to the Competition and Consumer Act 2010 (Cth) (ACL);

(ii)    made false or misleading representations in relation to the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy in contravention of s 29(1)(m) of the ACL; and

(iii)    made false or misleading representations in relation to a requirement to pay for a contractual right that is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy in contravention of s 29(1)(n) of the ACL,

(d)    by reason of the fact that:

(i)    Div 1 of Pt 3-2 of the ACL provides consumers with guarantees for goods supplied in trade or commerce which are non-excludable under s 64 of the ACL; and

(ii)    the availability of ACL remedies for goods supplied to a consumer that fail to comply with the consumer guarantees, which are available under Div 1 of Pt 5-4 of the ACL:

A.    are not dependent on the return of goods within 7 days of receipt;

B.    are not at MSY's discretion and are otherwise available as specified in the ACL;

C.    are not limited to the remedies proposed by MSY or otherwise at MSY's discretion;

D.    do not require a fee to be paid by the consumer; and

E.    apply to software.

2.    The Second Respondent, MSY Group Pty Ltd (MSY Group), during the period from March 2015 to January 2016 operated, maintained and controlled the MSY Website used to promote MSY Technology, MSY NSW, MSY QLD, MSY SA, MSY WA and MSY Technology (Tas) Pty Ltd, (together, MSY):

(a)    in trade or commerce, in connection with the supply or possible supply of Computer Products or in connection with the promotion of the supply of Computer Products to consumers;

(b)    by displaying and publishing on the MSY Website Terms and Conditions which, in relation to faulty Computer Products supplied by MSY, expressly or impliedly represented to consumers who accessed those Terms and Conditions that consumers:

(i)    had to return the Computer Product to MSY within 7 days of receiving it to obtain a remedy;

(ii)    were only entitled to a refund or replacement remedy on a case by case basis and at the relevant MSY company's discretion;

(iii)    were only entitled to a Return-to-Base warranty on Computer Products sold by any MSY company and that the remedy to be provided was at the MSY company's discretion;

(iv)    may incur an administrative fee if the Computer Product was not under warranty; and

(v)    were not entitled to a remedy with respect to faulty software,

(c)    and therefore:

(i)    engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the ACL;

(ii)    made false or misleading representations in relation to the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy in contravention of s 29(1)(m) of the ACL; and

(iii)    made false or misleading representations in relation to a requirement to pay for a contractual right that is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy in contravention of s 29(1)(n) of the ACL,

(d)    by reason of the fact that:

(i)    Div 1 of Pt 3-2 of the ACL provides consumers with guarantees for goods supplied in trade or commerce which are non-excludable under s 64 of the ACL; and

(ii)    the availability of ACL remedies for goods supplied to a consumer that fail to comply with the consumer guarantees, which are available under Div 1 of Pt 5-4 of the ACL:

A.    are not dependent on the return of goods within 7 days of receipt;

B.    are not at MSY’s discretion and are otherwise available as specified in the ACL;

C.    are not limited to the remedies proposed by MSY or otherwise at MSY’s discretion;

D.    do not require a fee to be paid by the consumer; and

E.    apply to software.

3.    The Third Respondent, MSY NSW, operated MSY branded stores in NSW for the retail supply of Computer Products to consumers and on 27 April 2015, 28 April 2015 and 29 April 2015:

(a)    in trade or commerce in connection with the supply or possible supply of Computer Products, or in connection with the promotion of the supply of Computer Products to consumers;

(b)    by and through the conduct of MSY NSW employees who, when dealing with a consumer who had purchased a faulty Computer Product from MSY NSW, made both oral and email representations that:

(i)    the ACL remedy available to the consumer depended upon recourse against the manufacturer, and impliedly represented that MSY NSW was not required to provide a remedy to consumers;

(ii)    were silent in response to the consumer's reference to their specific ACL rights and impliedly represented that MSY NSW was not required to provide an ACL remedy to consumers; and

(iii)    the applicable consumer guarantee only applied for an unreasonably short time period,

(c)    and therefore:

(i)    engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the ACL; and

(ii)    made false or misleading representations in relation to the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy in contravention of s 29(1)(m) of the ACL,

(d)    by reason of the fact that:

(i)    Div 1 of Pt 3-2 of the ACL provides consumers with guarantees for goods supplied in trade or commerce which are non-excludable under s 64 of the ACL; and

(ii)    the availability of ACL remedies for goods supplied to a consumer that fail to comply with the consumer guarantees, which are available under Div 1 of Pt 5-4 of the ACL:

A.    are not dependent on the manufacturer of the goods;

B.    are not confined to an unreasonably short time period; and

C.    are required to be provided to consumers as specified in the ACL.

4.    The First Respondent, MSY Technology, operated MSY branded stores in Victoria for the retail supply of Computer Products to consumers and on 22 July 2015:

(a)    in trade or commerce in connection with the supply or possible supply of Computer Products, or in connection with the promotion of the supply of Computer Products to consumers;

(b)    by and through the conduct of MSY Technology employees who, when dealing with a consumer who had purchased a faulty Computer Product from MSY Technology, made oral representations that:

(i)    the relevant consumer guarantee only applied for an unreasonably short time period; and

(ii)    for the consumer to obtain a remedy for faulty Computer Products, the goods had to be returned to the MSY Technology store in original packaging,

(c)    and therefore:

(i)    engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the ACL;

(ii)    made false or misleading representations in relation to the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy in contravention of s 29(1)(m) of the ACL,

(d)    by reason of the fact that:

(i)    Div 1 of Pt 3-2 of the ACL provides consumers with guarantees for goods supplied in trade or commerce which are non-excludable under s 64 of the ACL; and

(ii)    the availability of ACL remedies for goods supplied to a consumer that fail to comply with the consumer guarantees, which are available under Div 1 of Pt 5-4 of the ACL:

A.    are not confined to an unreasonably short time period; and

B.    are not dependent on the goods being returned to the supplier in their original packaging.

5.    The First Respondent, MSY Technology, operated MSY branded stores in Victoria for the retail supply of Computer Products to consumers and on 27 November 2015:

(a)    in trade or commerce in connection with the supply or possible supply of Computer Products or in connection with the promotion of the supply of Computer Products to consumers;

(b)    by and through the conduct of MSY Technology employees who, when dealing with a consumer who had purchased a faulty Computer Product from MSY Technology, made oral representations that the remedy available to the consumer depended upon recourse against the manufacturer, and impliedly represented that MSY was not required to provide a remedy to consumers,

(c)    and therefore:

(i)    engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the ACL;

(ii)    made false or misleading representations in relation to the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy in contravention of s 29(1)(m) of the ACL,

(d)    by reason of the fact that:

(i)    Div 1 of Pt 3-2 of the ACL provides consumers with guarantees for goods supplied in trade or commerce which are non-excludable under s 64 of the ACL; and

(ii)    the availability of ACL remedies for goods supplied to a consumer that fail to comply with the consumer guarantees, which are available under Div 1 of Pt 5-4 of the ACL are not dependent on the manufacturer of the goods.

THE COURT ORDERS THAT:

6.    Each of MSY Technology and MSY Group, whether by itself, its servants, its agents or otherwise, for a period of five years from the date of this Order, in trade or commerce be restrained from publishing or causing to be published on any website operated, maintained and controlled by MSY Technology or MSY Group, written statements representing to consumers that the consumers' rights or remedies for faulty Computer Products purchased from any MSY business, are in any way limited, restricted or varied from those conferred on consumers under the ACL.

7.    Each of MSY Technology and MSY NSW, whether by itself, its servants, its agents or otherwise, for a period of five years from the date of this Order, in trade or commerce be restrained from making representations to consumers who approach MSY Technology or MSY NSW in relation to faulty goods or services purchased from any MSY business, to the effect that the consumers' rights or remedies from MSY Technology and MSY NSW are in any way limited, restricted or varied from those conferred on consumers under the ACL.

8.    Within 90 days of these Orders:

(a)    MSY Group pay a pecuniary penalty to the Commonwealth of Australia in respect of contraventions of ss 29(1)(m) and (n) of the ACL in the amount of $200,000;

(b)    MSY NSW pay a pecuniary penalty to the Commonwealth of Australia in respect of contraventions of s 29(1)(m) of the ACL in the amount of $50,000; and

(c)    MSY Technology pay a pecuniary penalty to the Commonwealth of Australia in respect of contraventions of ss 29(1)(m) and (n) of the ACL in the amount of $500,000.

9.    MSY Technology and MSY Group:

(a)    within 5 days of these Orders agree the terms of a notice of the outcome of these proceedings with the Applicant (Notice);

(b)    within 7 days of these Orders, at their expense, publish a colour copy of the Notice on the MSY Website homepage (http://www.msy.com.au/home.php) and ensure the Notice is:

(i)    viewable immediately on a computer screen on access to the MSY Website homepage;

(ii)    published directly above the location and contact details for the stores on the MSY website homepage;

(iii)    published in a box of a size equal to the banner advertising display box viewable above the location and contact details for the stores on the MSY website homepage (but replacing the current banner advertising display box);

(iv)    static (i.e. not scrolling such that the notice remains on the page and does not scroll across the page or scroll in rotation with other advertising);

(v)    crawlable (i.e. its contents may be indexed by a search engine); and

(vi)    maintained on the MSY Website homepage for a period of 90 days from the date of these Orders;

(c)    within 15 days of these Orders, agree the terms of a webpage titled "Your ACL Rights" with the Applicant, being a sufficiently detailed description of the consumer guarantee rights conferred on consumers under the ACL and available from any MSY company (Your ACL Rights material);

(d)    within 30 days of these Orders, include an accessible and prominent hyperlink labelled "Your ACL Rights" located on the MSY Website homepage, linking through to a section of the MSY Website containing the Your ACL Rights material;

(e)    within 30 days of these Orders ensure that any "Terms and Conditions" or "Terms of Trade":

(i)    published on the MSY Website contain a hyperlink labelled to the Your ACL Rights material; and

(ii)    made available at any MSY store they operate attach and include a copy of the Your ACL Rights material,

(f)    within 90 days of these Orders:

(i)    publish, or cause to be published, at their expense, on the MSY Website in a prominent position on the MSY Website homepage a phone number that consumers can use to raise consumer guarantee issues with a senior MSY Group, MSY Technology or MSY NSW employee; and

(ii)    ensure the person nominated under Order 9(f)(i) to respond to consumer guarantee issues raised by consumers has attended the training referred to in Order 11(a) below, and has had specific annual training for 3 years on the application of Div 1 of Pt 3-2 of the ACL and Div 1 of Pt 5-4 of the ACL.

10.    MSY Group, MSY NSW and MSY Technology at their own expense:

(a)    within 90 days of these Orders establish and implement a Compliance and Education/Training Program (Compliance Program), which in all respects complies with the requirements set out in Annexure A to these Orders;

(b)    maintain and continue to implement the Compliance Program referred to in Order 10(a) above for a period of three years from the date of these Orders; and

(c)    provide any documents to be provided to the Applicant pursuant to Annexure A.

11.    MSY Group, MSY NSW and MSY Technology at their own expense:

(a)    within 90 days of these Orders ensure that their employees, the Compliance Officer appointed in accordance with Annexure A, and any MSY Group, MSY NSW and MSY Technology directors attend and undertake ACL compliance training with particular emphasis on the responsibilities and obligations of suppliers under ss 18 and 29, Div 1 of Pt 3-2, and Div 1 of Pt 5-4 of the ACL;

(b)    ensure the training referred to in Order 11(a) is administered annually to the persons referred to in Order 11(a) for a period of three years from the date of these Orders; and

(c)    ensure the training referred to in Order 11(a) is to be administered by a qualified compliance professional or legal practitioner with expertise in the ACL.

12.    The Director of MSY Group, MSY NSW and/or MSY Technology provide an affidavit deposing to compliance with:

(a)    Order 9, to be filed in the proceeding within 10 days of complying with each obligation specified in Orders 9(a) to 9(f);

(b)    Order 10, to be filed in the proceeding within 10 days of complying with each obligation specified in Orders 10(a) and 10(b); and

(c)    Order 11, to be filed in the proceeding within 10 days of complying with each obligation in Orders 11(a) and 11(b).

13.    MSY Group, MSY NSW and MSY Technology together, within 30 days of these Orders, pay the Applicant’s costs of the proceeding in the amount of $50,000.

14.    The proceeding be otherwise dismissed.

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

Annexure A

COMPLIANCE AND EDUCATION/TRAINING PROGRAM

1.    MSY Group, MSY NSW and MSY Technology must establish a Consumer Compliance Program (Compliance Program) that complies with each of paragraphs 2 to 18 of this Annexure A, and must undertake and complete each of the requirements specified.

Appointments

2.    Within 30 days of the date of these Orders, appoint a director or a senior manager with suitable qualifications or experience in corporate compliance as a Compliance Officer with responsibility for ensuring the Compliance Program is effectively designed, implemented and maintained (Compliance Officer).

Risk Assessment

3.    Within 90 days of the date of these Orders, MSY Group, MSY NSW and MSY Technology:

(a)    appoint a suitably qualified, external, compliance professional with demonstrated expertise in Australian Consumer Law (ACL), comprising Schedule 2 to the Competition and Consumer Act 2010 (Cth) (Compliance Advisor);

(b)    instruct the Compliance Advisor to:

(i)    undertake an ACL risk assessment covering the areas where MSY Group, MSY NSW and MSY Technology are at risk of contravening ss 18 and 29 of the ACL and any gaps in the existing procedures and documentation for managing these risks; and

(ii)    provide recommendations for any action to be taken having regard to the outcome of the risk assessment described in paragraph 3(b) of this Annexure A to the Director(s) and senior management of the MSY Companies (Risk Assessment Report);

(c)    review and implement the findings and recommendations of the Compliance Advisor as recorded in the Risk Assessment Report.

Compliance Policy

4.    Within 30 days of the date of the Orders of the Court, issue a policy statement outlining MSY Group, MSY NSW and MSY Technology’s commitment to compliance with the ACL (Compliance Policy), which policy must contain:

(a)    a statement of commitment to compliance with the ACL;

(b)    an outline of how the commitment to ACL compliance will be realised by MSY Group, MSY NSW and MSY Technology; and

(c)    a requirement for all staff of MSY Group, MSY NSW and MSY Technology to report any Compliance Program issues and ACL compliance concerns to the Compliance Officer.

Complaints Handling System

5.    Ensure that the Compliance Program includes a competition and consumer law complaints handling system (Complaints Handling System) which is consistent with AS/ISO 10002:2006 Customer satisfaction - Guidelines for complaints handling in organizations.

6.    Ensure that MSY Group, MSY NSW and MSY Technology staff and any customers making an ACL inquiry of any of their staff are made aware of the Complaints Handling System.

Staff Training

7.    Ensure that MSY Group, MSY NSW and MSY Technology staff receive the training referred to in Order 11 of the Orders of the Court, including ensuring that this training forms part of the induction of all new directors, officers, employees, representatives and agents.

Compliance officer reports to Director(s) and Senior Management

8.    Ensure that the Compliance Officer reports to the Director(s) and senior management of MSY Group, MSY NSW and MSY Technology every six months on:

(a)    whether any improvements to the Compliance Program are required;

(b)    whether staff require additional or refresher training on MSY’s ACL obligations; and

(c)    all consumer guarantee issues reported under the Compliance Handling System or otherwise communicated to MSY Group, MSY NSW and MSY Technology by consumers in writing (including by email, via social media, or otherwise) over the last six months.

Compliance Program Review

9.    MSY Group, MSY NSW and MSY Technology undertake, at their own expense, an annual review of the Compliance Program (Review) to be carried out in accordance with each of the following requirements:

(a)    Scope of Review – the Review should be broad and rigorous enough to provide MSY Group, MSY NSW and MSY Technology and the ACCC with:

(i)    a verification that the requirements specified in Orders 9(c), 9(e) and 9(f) of the Orders of the Court have been complied with;

(ii)    a verification that MSY Group, MSY NSW and MSY Technology have put in place a Compliance Program that complies with each of the requirements detailed in paragraphs 2, 4, 5, 6, 7 and 8 of this Annexure A; and

(iii)    the Compliance Reports detailed at paragraph 11 of this Annexure A.

(b)    Independent Reviewer – ensure that each Review is carried out by a suitably qualified, independent compliance professional with demonstrated expertise in Australian Consumer Law (Reviewer).

(c)    The Reviewer will qualify as:

(i)    a suitable expert where he or she advises on ACL matters on an ongoing and regular basis and has done so for at least 3 years.

(ii)    independent on the basis that he or she:

(A)    did not design or implement the Compliance Program;

(B)    is not a present or past staff member or director of any of MSY Group, MSY NSW and MSY Technology or any other MSY entity;

(C)    has not acted and does not act for, and does not consult and has not consulted to, MSY Group, MSY NSW and MSY Technology or any other MSY entity in any competition and consumer law related matters, other than performing Reviews under the Orders of the Court; and

(D)    has no significant shareholding or other interests in any of MSY Group, MSY NSW and MSY Technology or any other MSY entity.

(d)    Evidence – use its best endeavours to ensure that each Review is conducted on the basis that the Reviewer has access to all relevant sources of information necessary to carry out the review, including without limitation:

(i)    the ability to make enquiries of any officers, employees, representatives and agents of any of MSY Group, MSY NSW and MSY Technology;

(ii)    documents relating to the risk assessment referred to in paragraph 3(b)(i) of this Annexure A, including the Risk Assessment Report;

(iii)    documents relating to the Compliance Program, including documents relevant to the Compliance Policy, Complaints Handling System, staff training and induction program; and

(iv)    any reports made by the Compliance Officer to the Board or senior management regarding the Compliance Program.

10.    Ensure the Review is completed within one year of the date of the Orders of the Court, and that a subsequent Review is completed annually for three years.

Compliance Report

11.    Use its best endeavours to ensure that within 30 days of the completion of a Review, the Reviewer includes the Review findings and recommendations in a report provided to the Director(s) and senior management of MSY Group, MSY NSW and MSY Technology (Compliance Report).

12.    Ensure the Compliance Report covers whether:

(a)    the Compliance Program includes all the elements detailed in in paragraphs 2, 4, 5, 6, 7 and 8 of this Annexure A, and if not, what elements need to be included or further developed;

(b)    the Compliance Program adequately covers matters identified in the risk assessment referred to in paragraph 3(b)(i) of this Annexure A, and if not, what needs to be further addressed;

(c)    the staff training and induction is effective, and if not, what aspects need to be further developed;

(d)    the Complaints Handling System is effective, and if not, what aspects need to be further developed; and

(e)    there are any deficiencies in the Compliance Program, or whether there are or have been any instances of non-compliance with the Compliance Program, and if so, the recommendations for rectifying the deficiencies identified.

Response to Compliance Report

13.    Within 30 days of MSY Group, MSY NSW and MSY Technology receiving the Compliance Report, implement promptly and with due diligence any recommendations made by the Reviewer in the Compliance Report.

14.    Ensure that the Compliance Officer within 30 days of the requirement in paragraph 13 of this Annexure A reports to the Director(s) and senior management of MSY Group, MSY NSW and MSY Technology confirming whether the Compliance Report recommendations have been implemented or remain outstanding, and continues to do so until the recommendations have been implemented.

Reporting to the ACCC

15.    Within 90 days of the Director(s) and senior management of MSY Group, MSY NSW and MSY Technology receiving the Compliance Report, the Reviewer is to provide a report to the ACCC on:

(a)    steps taken to implement the recommendations made by the Reviewer in the Compliance Report; or

(b)    any outstanding steps required to implement the Compliance Report recommendations and will then inform the ACCC once those steps have been implemented.

Provision of Compliance Program documents to the ACCC

16.    MSY Group, MSY NSW and MSY Technology to maintain a record of and store all documents relating to and constituting the Compliance Program for a period not less than five years.

17.    If requested by the ACCC during the period of five years following the date of the Orders of the Court, at its own expense, cause to be produced and provided to the ACCC copies of all documents constituting the Compliance Program, including:

(a)    the Compliance Policy;

(b)    the Risk Assessment Report;

(c)    an outline of the Complaints Handling System;

(d)    staff training materials and induction materials;

(e)    all Compliance Reports that have been completed at the time of the request; and

(f)    copies of the reports to the Board and/or senior management referred to in paragraphs 3(b)(ii), 8, 11, 14 and 15 of this Annexure A.

ACCC Recommendations

18.    MSY Group, MSY NSW and MSY Technology to implement promptly and with due diligence any recommendations that the ACCC may make that the ACCC deems reasonably necessary to ensure that MSY Group, MSY NSW and MSY Technology maintain and continue to implement the Compliance Program in accordance with the requirements of the Orders of the Court.

REASONS FOR JUDGMENT

MARKOVIC J:

1    MSY Technology Pty Ltd (MSY Technology), MSY Group Pty Ltd (MSY Group) and M.S.Y. Technology (NSW) Pty Ltd (MSY NSW), the first, second and third respondents respectively to this proceeding (collectively, Respondents), operate a retail business supplying computers, computer parts, computer peripherals and computer software (Computer Products) to consumers via MSY branded retail stores and an online store.

2    The Australian Competition and Consumer Commission (ACCC) commenced this proceeding by the filing of an originating application and concise statement dated 30 November 2016 in which it alleged that the Respondents engaged in conduct that contravened ss 18, 29(1)(m) and 29(1)(n) of the Australian Consumer Law (ACL), being Sch 2 to the Competition and Consumer Act 2010 (Cth) (CCA), in relation to the consumer guarantees mandated by the ACL. In a concise response dated 23 December 2016 and in a statement of agreed facts and admissions dated 23 May 2017 prepared by the parties for the purpose of this proceeding (SoAFA) the Respondents admit the allegations in the concise statement.

3    The ACCC and the Respondents have agreed upon the relief that should be granted and the orders that should be made by the Court. The question that arises is whether the Court should grant the relief upon which the parties are agreed and which is contained in a document titled “Minutes of Proposed Order” (Proposed Orders).

4    It is well-established that the question of relief is in the discretion of the Court. The parties’ agreement on the Proposed Orders does not relieve the Court of the obligation to satisfy itself that those orders are appropriate. The Court must be satisfied that it has the power to make the orders and that they are appropriate: see Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 at [1].

5    While it is the Court’s duty to scrutinise the appropriateness of orders that parties propose by consent, once the Court is satisfied that orders are appropriate, it should be slow to impede final settlement of the matter in circumstances such as the present, where the parties are represented and able to understand and evaluate the desirability of the settlement. In Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79; [1999] FCA 18 (ACCC v REIWA) French J said at [20]-[21]:

20    … In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 141 ALR 640, Burchett and Kiefel JJ observed in their joint judgment (at 644):

There is an important public policy involved. When corporations acknowledge contraventions, very lengthy and complex litigation is frequently avoided, freeing the courts to deal with other matters, and investigating officers of the Australian Competition and Consumer Commission to turn to other areas of the economy that await their attention. At the same time, a negotiated resolution in the instant case may be expected to include measures designed to promote, for the future, vigorous competition in the particular market concerned. These beneficial consequences would be jeopardised if corporations were to conclude that proper settlements were clouded by unpredictable risks. 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.

21    Similarly in relation to proposed consent orders and undertakings the court will not simply substitute its own view of the orders or undertakings which it would have made if those proffered fall within the range of an appropriate disposition of the case.

6    In support of the Proposed Orders the parties have prepared and filed the SoAFA and joint submissions. In Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 the High Court confirmed that joint (and separate) submissions as to quantum of a pecuniary penalty can be received and, if appropriate, accepted in contested civil proceedings: at [46] and [60] (per French CJ, Kiefel, Bell, Nettle and Gordon JJ), [68] (per Gageler J) and [79] (per Keane J). The plurality said the following about such submissions:

    it is the function of the relevant regulator to regulate industry in order to achieve compliance and, accordingly, it is to be expected that the regulator will be in a position to offer informed submissions as to the effects of contravention on the industry and the level of penalty necessary to achieve compliance: at [60];

    a regulator’s submissions will be considered on their merits in the same way as those of a respondent and subject to being supported by findings of fact based upon evidence, agreement or concession: at [61]; and

    it is consistent with the purposes of civil penalty regimes and therefore with the public interest that a regulator take an active role in attempting to achieve the penalty which it considers to be appropriate and thus a regulator’s submissions as to the terms and quantum of a civil penalty can be treated as a relevant consideration: at [64].

The claims made by the ACCc and the respondents’ response

7    The ACCC alleges that the relevant conduct involved the Respondents making misleading or deceptive and false or misleading representations on the website at www.msy.com.au (MSY Website) and in oral and email (in-store) communications to consumers that sought to limit or vary consumers’ guarantee rights and remedies provided under the ACL. The ACCC alleges that the conduct relating to the representations made on the MSY Website occurred in the period from January 2013 to February 2016 and that the conduct relating to the in-store representations occurred on 27, 28 and 29 April 2015, 22 July 2015 and 27 November 2015.

8    More specifically, in relation to representations made on the MSY Website, the ACCC alleges that MSY Technology, for the period between January 2013 and March 2015, and MSY Group, for the period between March 2015 and February 2016, in trade or commerce in the supply of Computer Products to consumers, published terms and conditions on the MSY Website (Website Terms and Conditions) that represented to consumers across Australia that they:

(1)    had to return the goods to the relevant MSY store within seven days of receiving it in order to obtain a remedy;

(2)    were only entitled to a refund or replacement on a case-by-case basis and at the relevant MSY company’s discretion;

(3)    were only entitled to a return-to-base warranty on goods sold by any MSY company and that the remedy to be provided was at the MSY company’s discretion;

(4)    may incur an administrative fee if the goods were not under warranty; and

(5)    were not entitled to any remedy whatsoever with respect to software,

(collectively, Website Representations).

9    The ACCC further alleges that, by making the Website Representations, MSY Technology and MSY Group:

(1)    engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the ACL;

(2)    made false or misleading representations in connection with the supply, possible supply and/or promotion of Computer Products concerning the existence, exclusion or effect of any condition, warranty, guarantee right or remedy in contravention of s 29(1)(m) of the ACL; and

(3)    made false or misleading representations in connection with the supply, possible supply and/or promotion of Computer Products concerning a requirement to pay for a contractual right that is wholly or partly equivalent to any condition, warranty, guarantee right or remedy in contravention of s 29(1)(n) of the ACL,

because the Website Representations expressly or impliedly represented to consumers that their rights were limited to those set out in the Website Terms and Conditions when that was not the case. That is alleged to be so because Pts 3-2 and 5-4 of the ACL confer rights and remedies on consumers which cannot be excluded or modified by MSY Technology and MSY Group.

10    In relation to the in-store representations the ACCC alleges that MSY NSW, on 27, 28 and 29 April 2015, and MSY Technology, on 22 July 2015 and 27 November 2015, in trade or commerce in the supply of Computer Products to consumers who attended MSY NSW and MSY Technology stores, made the following express or implied representations to consumers:

(1)    that the remedy available to the consumer depended upon recourse against the manufacturer and thus impliedly represented that the relevant MSY company was not required to provide a remedy to consumers;

(2)    were silent in response to a consumer’s reference to his or her specific ACL rights and impliedly represented that the relevant MSY company was not required to provide a remedy to consumers;

(3)    that for the consumer to obtain a remedy the goods had to be returned to the relevant MSY store in their original packaging; and

(4)    that the relevant consumer guarantee only applied for an unreasonably short time period,

(collectively, In-store Representations).

11    The ACCC further alleges that, by making the In-store Representations, MSY NSW and MSY Technology:

(1)    engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the ACL; and

(2)    made false or misleading representations in connection with the supply, possible supply and/or promotion of Computer Products concerning the existence, exclusion or effect of any condition, warranty, guarantee right or remedy in contravention of s 29(1)(m) of the ACL,

because the In-store Representations expressly or impliedly represented to consumers that their rights were limited when that was not the case. That is alleged to be so because Pts 3-2 and 5-4 of the ACL confer rights and remedies on consumers which cannot be excluded or modified by MSY Technology and MSY NSW.

12    In the SoAFA and the Respondents’ concise response, MSY Technology and MSY Group admit the conduct and contraventions in relation to the Website Representations and, in the SoAFA, MSY NSW and MSY Technology admit the conduct and contraventions in relation to the In-store Representations.

Legislative framework

13    Division 1 of Pt 3-2 of the ACL headed “Consumer Guarantees” provides consumers who acquire goods from a supplier with certain mandatory statutory guarantees. Those guarantees cannot be excluded, modified or limited by contract. Section 64 of the ACL relevantly provides:

64     Guarantees not to be excluded etc. by contract

(1)     A term of a contract (including a term that is not set out in the contract but is incorporated in the contract by another term of the contract) is void to the extent that the term purports to exclude, restrict or modify, or has the effect of excluding, restricting or modifying:

(a)     the application of all or any of the provisions of this Division; or

(b)     the exercise of a right conferred by such a provision; or

(c)     any liability of a person for a failure to comply with a guarantee that applies under this Division to a supply of goods or services.

(2)     A term of a contract is not taken, for the purposes of this section, to exclude, restrict or modify the application of a provision of this Division unless the term does so expressly or is inconsistent with the provision.

14    Division 1 of Pt 5-4 of the ACL sets out the specific statutory remedies available to consumers where there is non-compliance with a statutory guarantee in relation to goods supplied in trade or commerce to consumers.

15    The ACCC alleges breaches of ss 18, 29(1)(m) and 29(1)(n) of the ACL. Those sections provide:

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); or

(n)     make a false or misleading representation concerning a requirement to pay for a contractual right that:

(i)     is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3‑2); and

(ii)     a person has under a law of the Commonwealth, a State or a Territory (other than an unwritten law).

The proposed orders

16    The parties seek by consent the following relief in the Proposed Orders:

(1)    declarations pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) of breach by the Respondents, as applicable, of ss 18, 29(1)(m) and 29(1)(n) of the ACL by reason of the Website Representations and/or the In-store Representations;

(2)    injunctions pursuant to s 232 of the ACL;

(3)    an order pursuant to s 224 of the ACL for payment by the Respondents of pecuniary penalties in the total sum of $750,000;

(4)    a non-punitive order pursuant to s 246 of the ACL requiring the Respondents to comply with publication orders in the form set out in the Proposed Orders and to implement a compliance program and undertake staff compliance training; and

(5)    payment by the Respondents of a contribution to the ACCC’s costs pursuant to s 43 of the Federal Court Act in the sum of $50,000.

a summary of the agreed facts

17    The SoAFA has been prepared pursuant to s 191 of the Evidence Act 1995 (Cth) (Evidence Act) and is signed by the legal advisers for the parties. As a result, evidence is not required to prove the existence of the facts set out in the SoAFA: s 191(2) of the Evidence Act. I set out below a summary of the facts taken from the SoAFA.

The MSY business

18    The MSY business, which involves the retail sale of Computer Products, consists of seven companies:

    MSY Technology;

    MSY Group;

    MSY NSW;

    MSY Technology (QLD) Pty Ltd (MSY QLD);

    MSY Technology (SA) Pty Ltd (MSY SA);

    MSY Technology (WA) Pty Ltd (MSY WA); and

    MSY Technology (TAS) Pty Ltd (MSY TAS),

(collectively, MSY).

19    The MSY group of companies operate a large and successful retail business with a national footprint and a well-known website. Mr Andrew Shiau has been the group general manager and sole director of the MSY business since it commenced operation in 1996. MSY Group is now the entity responsible for the overall management and strategic direction of the MSY business, having taken that role over from MSY Technology. MSY Technology continues to manage certain centralised functions such as the call centre and the management information system department.

20    For the purposes of the retail sale of Computer Products to consumers, each MSY company, with the exception of MSY Group, has a warehouse; a system assembly department; a service department; and at least one MSY-branded retail store. MSY Group (and previously MSY Technology) operates the MSY Website, which contains an online store.

21    At all relevant times, consumers who wished to purchase Computer Products from the MSY business could do so by visiting the MSY Website or one of the MSY-branded stores operating across Australia in the CBDs of each of the States and the Australian Capital Territory (MSY Stores). The MSY Website publishes a detailed product list of the Computer Products available for sale via the website or from MSY Stores and at all relevant times was accessible by consumers throughout Australia.

The ACCC’s dealings with the MSY business

22    The ACCC raised its concerns about compliance with the ACL with the MSY business over a number of years:

(1)    on 19 March 2010 the ACCC wrote to MSY Technology about consumer complaints and its concerns that certain terms and conditions on the MSY Website might misrepresent the rights of consumers to obtain a remedy for faulty products;

(2)    as a result, MSY Technology’s lawyers drafted amended MSY terms and conditions (Amended Terms and Conditions) in consultation with the ACCC. The Amended Terms and Conditions were published on the MSY Website until approximately January 2013;

(3)    the ACCC continued to receive consumer complaints about MSY companies. Upon investigating, the ACCC became concerned about notices displayed in a number of MSY Stores;

(4)    on 28 October 2010 the ACCC commenced a proceeding for contraventions of ss 52 and 53 of the then Trade Practices Act 1974 (Cth) (Trade Practices Act) (First MSY Proceeding);

(5)    the First MSY Proceeding related to in-store notices, pamphlets, price lists and receipts displayed in a number of MSY Stores between 28 July 2010 and 28 October 2010 which contained statements disclaiming or excluding MSY’s responsibility for providing warranties to consumers for goods sold by MSY;

(6)    on 2 May 2011 this Court:

(a)    imposed penalties of $55,500 on MSY Technology; $37,000 on MSY NSW; $18,500 on MSY QLD; $37,000 on MSY SA; and $55,500 on MSY WA; and

(b)    ordered five-year injunctions, a compliance program and a corrective advertising regime: see Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No 2) [2011] FCA 382 (ACCC v MSY (No 2)) at [98];

(7)    on 19 April 2012, in an appeal brought by the ACCC from ACCC v MSY (No 2), declarations of breach were made by a Full Court of this Court: see Australian Competition and Consumer Commission v MSY Technology Pty Ltd (2012) 201 FCR 378;

(8)    in the meantime, on 27 September 2011 the ACCC sent another letter to MSY Technology concerning further complaints received by it in relation to statements made to consumers. The letter referred to the First MSY Proceeding and noted potential further contraventions of the ACL. In its letter the ACCC advised that it did not intend to take action at that stage;

(9)    on 14 October 2011 MSY Technology responded to the ACCC’s letter, indicating that it was willing to make the changes required to ensure compliance with the ACL;

(10)    according to the ACCC, on 18 December 2014 it sent a further letter to MSY Technology referring to complaints it had received. MSY Technology says that it did not receive that letter;

(11)    on 19 February 2016, after receiving a consumer complaint specifically related to the Website Terms and Conditions and subsequently reviewing other complaints, the ACCC issued a notice under s 155 of the CCA to MSY Technology (Section 155 Notice), putting it on notice of the ACCC’s investigation. Following further investigations, in December 2016 the ACCC commenced this proceeding; and

(12)    shortly after receipt of the Section 155 Notice, MSY removed the Website Terms and Conditions from its website and reinstated the Amended Terms and Conditions. The ACCC has no concern with the versions of the terms and conditions that have appeared on the MSY Website since late February 2016.

Conduct relating to the Website Terms and Conditions

23    At all relevant times the MSY Website listed the Computer Products that were available for sale by MSY to consumers across Australia and contained a hyperlink at the bottom of its homepage which referred to the “Terms of Trade” and linked to a page setting out terms and conditions. Prior to March 2015, MSY Technology was responsible for the terms and conditions published on the MSY Website. After March 2015 MSY Group took over that responsibility.

24    In or shortly before January 2013 the Amended Terms and Conditions were replaced by the Website Terms and Conditions. MSY says, and the ACCC accepts, that its representative acted without the knowledge or approval of its senior management in replacing the Amended Terms and Conditions with the Website Terms and Conditions.

25    As a result of the replacement of the Amended Terms and Conditions, for the period between January 2013 and February 2016, the Website Terms and Conditions were published by MSY Technology and later MSY Group. Mr Shiau accepts that he was ultimately responsible for the terms and conditions appearing on the MSY Website in this period. The Website Terms and Conditions included the following clauses, the first three of which acknowledged the ACL consumer guarantees and the balance of which were misleading or deceptive or false or misleading:

(1)    cl 2 stated that the terms and conditions applied to “… all our sales for all branches”, where “our” referred to MSY and “branches” referred to the MSY Stores;

(2)    cl 3, under the subheading “Consumer Guarantees: mandatory”, stated that all goods sold by MSY Technology came with guarantees that could not be excluded under the ACL;

(3)    cl 4, under the subheading “Consumer Guarantees: mandatory”, stated, in effect, that customers were entitled to a replacement or a refund for a major failure and that customers were entitled to have the goods replaced or repaired if the goods failed to be of acceptable quality and the failure did not amount to a major failure;

(4)    cl 32, under the subheading “Returns, Refunds & Exchange”, stated:

If you purchased goods, which has (sic) been shown to have been defectively manufactured, we will replace it only if we still have the same goods, and if we do not, where possible, we will offer you a refund or exchange for similar goods. This is decided on a case-by-case basis. However, you must return to us the goods within 7 days of receiving your item. If not, this warranty does not apply.

(5)    cl 39, under the subheading “General Warranty”, relevantly stated, in effect, that MSY provided consumers with a 12 month from purchase date (return-to-base) warranty on goods sold by it and that MSY would repair the goods or, at its option, replace the goods if it considered them to be defective;

(6)    cl 42, under the subheading “General Warranty”, stated:

If goods which you returned to us because it (sic) appears faulty and later found not be so or if the goods is (sic) faulty and where the goods is NOT under warranty, you may incur an administrative fee.

(7)    cl 47, under the heading “General Warranty”, stated, in effect, that consumers could not return software claimed to be defective because MSY provided “no warranty whatsoever” with respect to software.

26    The Website Terms and Conditions were accessible by Australian consumers and those customers who accessed them were entitled to consider that MSY relied on them in its dealings with customers.

27    As noted at [22(12)] above, in or about late February 2016, the Website Terms and Conditions were removed and replaced with the Amended Terms and Conditions.

The MSY Website, price lists and tax invoices

28    Following the First MSY Proceeding this Court ordered MSY to publish on the MSY Website materials informing consumers of their ACL rights for a period of three years. Accordingly, in the period from January 2013 to February 2016, the MSY Website contained at the bottom of its homepage a “Your Rights” hyperlink to two documents which were produced by the ACCC in or around 2011 and were titled “Australian Consumer Law Refunds and Returns – Goods” and “Australian Consumer Law Refunds and Remedies – Services”. MSY has continued to maintain the “Your Rights” hyperlink on the MSY Website following expiration of the three-year period specified in the order made in the First MSY Proceeding.

29    Between January 2013 and February 2016 MSY’s price lists and invoices contained the following statements:

(1)    the price lists included “MSY provides statutory warranties in relation to all goods or services sold”;

(2)    notebook price lists included “[a]ll notebooks we sell come with guarantees that cannot be excluded under the Australian Consumer Law”; and

(3)    invoices for the purchase of goods included “[o]ur goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund for a major failure and for compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure”.

Conduct relating to in-store statements and email communications

30    The In-store Representations were made on specific dates to three consumers described as witnesses A, B and C.

Witness A

31    On 30 April 2014 witness A purchased RAM and certain other computer parts for personal use from the MSY Ultimo store, which is owned and operated by MSY NSW. After installation, the RAM caused witness A’s computer to crash intermittently. By late April 2015 the crashes increased in frequency such that witness A’s computer became unusable. Tests carried out by witness A on the RAM indicated that it had developed a fault.

32    On 27 April 2015 witness A returned to the MSY Ultimo store. He informed a store representative that the RAM had developed a fault and requested a refund or replacement. In response witness A was told, in effect, that MSY could not replace the RAM as it did not have the same make and model in stock, nor could it exchange the RAM for another brand and that he would need to make a warranty claim through the manufacturer. When witness A pointed to the in-store signs that referred to his ACL rights, the store representative told him that his entitlement to an exchange or refund under the ACL did not apply because the RAM had survived for a reasonable time. In response to a query from witness A as to what amounted to a reasonable time the store representative said, in effect, that a reasonable time for the warranty process was one to two months.

33    Later that day witness A returned to the MSY Ultimo store. He spoke to the same MSY Ultimo store representative and specifically referred to his view that he was entitled to a remedy under the ACL. In response the MSY Ultimo store representative said, in effect, that MSY would not provide a remedy.

34    Between 27 April 2015 and 4 May 2015 witness A exchanged emails with the MSY Ultimo branch sales team about the RAM that he had purchased from the MSY Ultimo store:

(1)    on 28 April 2015, in response to witness A’s email requesting a refund for the faulty RAM, witness A received an email which indicated that MSY wanted to test the RAM but otherwise informed him that, if a refund or replacement were required, MSY would provide the refund but only if the manufacturer confirmed that the RAM was faulty and covered by the manufacturer’s warranty (First Email Statement);

(2)    on 29 April 2015, in a follow-up email to witness A, the Ultimo branch sales team once again made a statement to the effect of the First Email Statement; and

(3)    MSY NSW offered to send the RAM to the manufacturer at its cost and indicated to witness A that during that time he could buy new RAM, which would be refunded if the manufacturer covered the faulty RAM or if the manufacturer did not cover the faulty RAM.

35    Witness A elected not to have MSY NSW ship the RAM to the manufacturer for assessment because of the time involved and his lack of trust in MSY.

36    On failing to obtain an ACL remedy from MSY NSW in respect of the faulty RAM witness A purchased new RAM from another supplier.

Witness B

37    On 10 June 2015 witness B attended the MSY Clayton store and requested a specific brand and type of computer memory (Requested RAM) as well as certain other computer parts for personal use for his son’s computer. An MSY Clayton store representative located and sold witness B computer memory that was the same brand as that requested but of a different type (Purchased RAM), along with a number of other products.

38    In or around mid-July 2015, after witness B installed the Purchased RAM, his computer was unable to boot-up and was inoperable.

39    On or around 22 July 2015 witness B returned to the MSY Clayton store and informed two store representatives that he had, when purchasing the RAM, specifically asked for the Requested RAM but had been sold the Purchased RAM; that his computer would not start with the Purchased RAM installed; and that he required a replacement for the Purchased RAM. In response one of the store representatives said that no refund was possible as the product packaging had been opened and that MSY’s policy was not to exchange items after 30 days.

40    Witness B next met with and discussed his concerns with a person who identified himself as the MSY Clayton store manager and who made statements to the effect that:

(1)    there was nothing MSY could do and that MSY did not give refunds or exchanges after 30 days; and

(2)    because the product packaging had been opened and 30 days had passed since the RAM had been purchased, MSY could not provide a refund.

41    After 22 July 2015, on failing to obtain a remedy from MSY Technology, witness B was unable to use the Purchased RAM.

Witness C

42    On 26 November 2015 witness C purchased an internal hard-drive from the MSY Clayton store for personal use. When installing the new hard drive, witness C noted that the plastic shroud protecting the SATA cable pins, which connect the hard-drive to the computer, was damaged, making the hard-drive unusable.

43    Accordingly, on 27 November 2015 witness C went to the MSY Malvern store, informed a store representative that the plastic shroud was faulty and requested a replacement. Witness C attended the MSY Malvern store rather than the MSY Clayton store, where he had originally purchased the hard-drive, because it was easier for him to get to the Malvern store.

44    In response the MSY Malvern store representative made oral statements to the effect that MSY could not replace the hard-drive and that it would need to be sent to the manufacturer as a warranty claim, which would take two weeks.

45    Because witness C needed a replacement hard-drive immediately, he returned to the MSY Clayton store. At that store witness C met and discussed the faulty hard-drive with a person who said that he was the MSY Clayton store manager. In response to witness C’s request for a replacement hard-drive the MSY Clayton store manager said, in effect, that MSY could not replace the hard-drive and that it would need to be sent to the manufacturer as a warranty claim, which would take two weeks.

46    When witness C referred to his ACL rights and arranged for a Consumer Affairs Victoria representative to speak with the MSY Clayton store manager, the Consumer Affairs Victoria representative indicated by phone to witness C that MSY claimed that there was damage to the hard-drive that had to be assessed under warranty and that MSY would not provide witness C with a replacement. The Consumer Affairs Victoria representative recommended that witness C give the hard-drive to MSY Technology, have it assessed under the manufacturer’s warranty and await the outcome.

47    Witness C was not happy with the result because he considered that he was entitled to a replacement for a hard-drive that had suffered a major failure but, given the MSY Clayton store’s refusal to provide him with an ACL remedy, he left the hard-drive at the MSY Clayton store. Because witness C could not afford to be without a hard-drive for two weeks he purchased another hard drive from the MSY Clayton store.

48    On 22 February 2016, after witness C had again contacted Consumer Affairs Victoria and made a complaint about MSY, the MSY Clayton store offered to repair the hard-drive. About two weeks later the MSY Clayton store offered to and did provide a replacement hard-drive to witness C.

The extent of the acts of and omissions by the Respondents

49    The Website Representations were made to Australian consumers generally over a three year period and misled consumers about their ACL rights. They may have denied or delayed consumers obtaining a remedy in respect of faulty Computer Products purchased from and supplied by companies within the MSY group.

50    The In-store Representations were made to one consumer in NSW and two consumers in Victoria. As a result of those representations two consumers failed to obtain a remedy available under the ACL for their faulty Computer Products. The third consumer had to wait an unreasonably long period for a remedy and, as a result, purchased a replacement product at his own cost.

The circumstances in and period over which the conduct took place

51    As set out at [22] above, the Website Representations and In-store Representations took place during a period when MSY Technology, MSY Group and MSY NSW had been informed by the ACCC on at least two occasions that it had received complaints regarding MSY’s compliance with ACL consumer guarantee rights and remedies and that, therefore, the ACCC was concerned with MSY’s compliance with the ACL. The ACCC sent two notifications between January 2013 and February 2016, although it appears that MSY Technology did not receive the first such notification, being the letter dated 18 December 2014.

52    The Website Representations, which have been admitted, were made between January 2013 and February 2016, over a period of three years and one month. This period coincided with the period during which the injunctions ordered by this Court in the First MSY Proceeding were in force (see [22(6)] above). The In-store Representations were made in April 2015, July 2015 and November 2015.

Culture of compliance

53    By orders made in the First MSY Proceeding, MSY Technology and MSY NSW, among other entities, were required to implement a trade practices compliance program, including employee training. Those orders were satisfied by arranging for third party trade practices training for senior management in 2011 and by the appointment of a compliance officer. Employee compliance training was delivered at the state and branch level on the job by managers. MSY accepts that its compliance program did not prevent the occurrence of the misleading Website Representations or In-store Representations.

54    Since service of the Section 155 Notice, the Respondents have taken the following steps to improve compliance by companies within the MSY group:

(1)    ACL consumer guarantee compliance training has been delivered to the Respondents’ director and senior management of MSY Technology and MSY Group. Following that training, updated materials containing further guidance for ACL compliance were distributed throughout the MSY group companies;

(2)    MSY Technology and MSY NSW have established a new customer feedback and complaint computer in each store, allowing customers to lodge feedback and complaints in-store. Filing a complaint via the customer complaint computer will send the complaint to MSY’s headquarters for review and resolution by the operations manager. If the complaint cannot be resolved by the operations manager it will be escalated to the general manager;

(3)    the purchasing manager has been appointed as the new compliance manager for the MSY business;

(4)    additional copies of the “Your Rights” document located on the MSY Website have been printed and displayed in-store and elsewhere;

(5)    Mr Shiau, the director, issued a written instruction on 10 November 2016 directing all MSY employees to comply with the ACL and stating that failure to comply may lead to termination; and

(6)    since 8 December 2016 MSY Group has voluntarily included a further statement of consumer rights under the ACL in a scrolling web banner interspersed with advertising on the front page of the MSY Website which is in the following terms:

Dear Valued Customers

You can buy from us with peace of mind. All our goods come with guarantees that cannot be excluded under the Australian Consumer Law. Further details about your rights under the Australian Consumer Law, please visit https://www.accc.gov.au/consumers/consumer-rights-guarantees/consumer-guarantees.

If you have any enquires about your rights, please contact us via feedback@msy.com.au.

55    MSY Technology and MSY NSW have also agreed to implement a more rigorous ACL compliance program in the terms set out in the Proposed Orders and have confirmed to the ACCC that, while the relevant order, if made, will apply to MSY Technology, MSY NSW and MSY Group, the program will be implemented across all companies in the MSY group.

Mr Shiau’s evidence

56    In an affidavit affirmed by Mr Shiau he extends an apology on behalf of each of the Respondents and on his own behalf for the infringing conduct the subject of this proceeding. He deposes that he is “deeply sorry” that the conduct took place and accepts the need to work further to ensure compliance. His apology is extended to the Court, the Australian public and the ACCC. He notes that his goal is to ensure that MSY complies with the ACL so that customers are aware of and able to exercise their rights under the ACL. Mr Shiau also indicates that he has directed all MSY companies to implement the compliance program and that his hope is that MSY can work with the ACCC in the future.

relief

57    The parties seek the relief in the Proposed Orders and have jointly submitted that, in relation to the contravening conduct of the Respondents, the declarations and orders described at [16] above should be made by the Court.

Declarations

58    The Court has a wide discretionary power to make declarations under s 21 of the Federal Court Act: Forster v Jododex Australia Pty Limited (1972) 127 CLR 421 (Forster v Jododex) at 437-438; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-582.

59    Before making a declaration the Court should be satisfied that the question in dispute is a real and not a hypothetical or theoretical one; that the applicant has a real interest in raising the issue; and that there is a proper contradictor: Forster v Jododex at 437-438 (per Gibbs J).

60    The parties have jointly submitted, and I accept, that each of those requirements is satisfied here:

(1)    the proposed declarations relate to conduct that contravenes the ACL. The issue, being the contraventions of the ACL by the Respondents, is real and not hypothetical or theoretical;

(2)    it is in the public interest for the ACCC, the regulator under the CCA, to seek to have the declarations made and for the declarations to be made. There is a significant legal controversy in the case which is being resolved in this proceeding; and

(3)    the Respondents are proper contradictors, notwithstanding their consent. Each Respondent has a genuine interest in resisting the grant of relief; is a person who contravened, or was involved in contraventions of, the ACL; and is the subject of the declarations: see Australian Competition and Consumer Commission v Sampson [2011] FCA 1165 at [13]-[18] (per Tracey J).

61    Further, the declarations sought in this proceeding are appropriate because they serve to record the Court’s disapproval of the contravening conduct; vindicate the ACCC’s claim that the Respondents contravened the ACL; assist the ACCC in the future in carrying out the duties conferred on it by the CCA; assist in clarifying the law; and act as a deterrent to other persons and corporations from contravening the ACL: see Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 (ACCC v Coles Supermarkets) at [78] (per Gordon J).

62    The proposed declarations contain sufficient indication of how and why the conduct complained of contravenes the ACL: see BMW Australia Ltd v Australian Competition and Consumer Commission (2004) 207 ALR 452; [2004] FCAFC 167 at [35]. The admissions set out in the Respondents’ concise response and the SoAFA further develop the basis for the making of the declarations and the facts set out in the SoAFA provide a sufficient factual foundation for the making of the declarations: ACCC v Coles Supermarkets at [79].

63    I will make declarations in the terms sought in the Proposed Orders.

Injunctions

64    The ACCC seeks injunctions restraining the Respondents from engaging in conduct, either by publishing material on any website or making other written statements or by making representations to consumers, to the effect that consumers’ rights or remedies for faulty Computer Products or for goods or services purchased from any MSY business are in any way limited, restricted or varied from those conferred on consumers under the ACL for a period of five years. The terms of the injunctions sought are set out in the Proposed Orders. The parties jointly submit that it is appropriate for the Court to order the proposed injunctions.

65    Section 232 of the ACL empowers the Court to grant an injunction in such terms as it considers appropriate if the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute, relevantly, a contravention of a provision of Ch 2, which includes s 18, or Ch 3, which includes s 29, of the ACL.

66    In ACCC v REIWA at [26] French J noted that there are practical issues to be considered in the formulation of, relevantly, consent injunctions. His Honour said that orders must be “formulated with precision so that they are capable of being readily obeyed” and that orders that are “likely to involve vague evaluative judgments or significant debates on their interpretation are not likely to be given the court’s sanction”. Similarly, orders that are likely to require the Court’s ongoing supervision of the conduct of the parties to them will “raise serious questions as to their appropriateness”.

67    In Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 at 203-204 Merkel J identified at least three limitations on the Court’s power in determining whether an injunction under s 80 of the Trade Practices Act was appropriate. Those limitations also inform whether it is appropriate to make an injunction pursuant to s 232 of the CCA as follows:

(1)    the power is confined by reference to the scope and purpose of the ACL, in particular s 232, and the relief should be designed to prevent a repetition of the conduct for which the relief is sought;

(2)    because the jurisdiction to grant an injunction is enlivened by an alleged or actual contravention of Ch 2, 3 or 4 of the ACL, among other things, there must be a sufficient nexus or relationship between the contravention and the injunction granted; and

(3)    there is the constitutional limitation that requires that the injunction granted be related to the case or controversy the subject of the proceeding.

68    The injunctions sought in the instant case are designed to prevent the Respondents from making false or misleading representations in the future in the nature of those that constitute the contravening conduct; are expressed in terms that are closely tied to the terms in which the Respondents have admitted their contraventions of the ACL; and arise from the circumstances of this proceeding.

69    The injunctions sought in the Proposed Orders are within power and are appropriate to deter the Respondents’ repetition of the contraventions by attaching to any such repetition the sanctions available for contempt of court: see ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248 at 268 (per French J). The injunctions therefore have practical utility and also serve the public interest because the relief appropriately reinforces the need for businesses generally to take care to comply with the ACL: see Australian Competition and Consumer Commission v Breast Check Pty Ltd (No 2) [2014] FCA 1068 at [44] (per Barker J).

70    I will make the injunction orders in the form set out in the Proposed Orders.

Non-punitive orders

Publication order

71    The parties seek a non-punitive order requiring the Respondents to publish on the MSY Website a notice informing consumers accessing that website that MSY Technology, MSY Group and MSY NSW have admitted to contraventions of the ACL in the form set out in the Proposed Orders. The parties have jointly submitted that the purpose of this order is directed to redressing the harm caused by a contravention of the ACL by providing information to businesses and consumers.

72    In the circumstances, it is appropriate that the Court make the publication order.

Compliance program and training

73    The parties seek non-punitive orders requiring the Respondents to implement and undertake an ACL compliance training program.

74    Section 246(2) of the ACL empowers the Court to make orders for the purpose of ensuring that a person does not engage in the conduct, similar conduct or related conduct during the period of the order, including, among other things, directing the person to establish a compliance program for employees or other persons involved in the person’s business and directing the person to establish an education and training program for employees or other persons involved in the person’s business. The purpose of such programs is expressed to be to ensure the awareness of those employees or persons of the responsibilities and obligations in relation to the contravening conduct. Orders of that nature can be made in relation to a person who has engaged in conduct that, relevantly, contravenes a provision of Ch 2, which includes s 18, or a provision of Ch 3, which includes s 29.

75    The parties jointly submitted that the orders for the implementation of compliance and training programs are directed to achieving a change in the Respondents’ organisational and corporate culture in order to prevent any further repetition of the contraventions and to ensure future self-regulation.

76    In circumstances where the Respondents admit that their previous compliance training failed to prevent the conduct the subject of this proceeding, the purpose of the proposed program is to ensure company-wide awareness of the Respondents’ ACL responsibilities and obligations and to ensure that there is not a future repetition of such conduct. In my opinion, it is appropriate for the Court to make orders in the form sought in the Proposed Orders addressing compliance and training programs. The orders, which are detailed in their terms, set out what is required of the Respondents by way of compliance with them.

Pecuniary penalties

77    The parties seek orders imposing pecuniary penalties pursuant to s 224 of the ACL in the amount of:

(1)    $500,000 on MSY Technology for its contravening Website Representations and its contravening In-Store Representations;

(2)    $200,000 on MSY Group for its contravening Website Representations; and

(3)    $50,000 on MSY NSW for its contravening In-Store Representations.

78    Section 224(1)(a)(ii) provides that if a court is satisfied that a person has contravened a provision of Pt 3-1 of the ACL then it may order the person to pay such pecuniary penalty, in respect of each act or omission by the person to whom s 224 applies, as the court determines to be appropriate. Section 29 is in Pt 3-1. No pecuniary penalty applies to a contravention of s 18 of the ACL.

79    Pursuant to s 224(3), Item 2, the maximum penalty for a contravention of a provision of Pt 3-1 of the ACL for a body corporate is $1.1 million. However, a person is not liable to more than one pecuniary penalty in respect of the same conduct: s 224(4)(b).

80    Section 224(2) provides that in determining the appropriate pecuniary penalty the Court must have regard to all relevant matters including:

(1)    the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission;

(2)    the circumstances in which the act or omission took place; and

(3)    whether the person has previously been found by a court in proceedings under Ch 4 or Pt 5-2 of the ACL to have engaged in any similar conduct.

81    Section 224 of the ACL is in substantially identical terms to the former s 76E of the Trade Practices Act. In Australian Competition and Consumer Commission v Pepe’s Ducks Ltd [2013] FCA 570 (ACCC v Pepe’s Ducks) at [16] Bromberg J noted that a number of judgments of the Court had confirmed that, with some exception, the guiding principles relevant to the imposition of a civil penalty under former s 76 of the Trade Practices Act had application to s 76E(2) of the Trade Practices Act. His Honour further noted that, given the substantial identicality of s 224(2) and the former s 76E(2) of the Trade Practices Act, the guiding principles developed for the former s 76 of the Trade Practices Act are of relevance to s 224(2).

82    In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 (NW Frozen Foods) at 292 Burchett and Kiefel JJ, as her Honour then was, set out a checklist of matters that their Honours regarded as being of assistance in considering “the circumstances in which the act or omission took place” in the assessment of a pecuniary penalty under s 76 of the Trade Practices Act. In Australian Competition and Consumer Commission v Singtel Optus Pty Ltd (No 4) (2011) 282 ALR 246; [2011] FCA 761 (Singtel Optus (No 4)) Perram J at [10]-[12] updated the checklist of guiding considerations for the purposes of s 76E of the Trade Practices Act. That updated checklist was referred to without demur on appeal: see Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249; [2012] FCAFC 20 (Singtel Optus v ACCC) at [37]. The non-mandatory considerations identified by Perram J in Singtel Optus (No 4) as relevant to the Court’s assessment of the appropriate penalty are:

(1)    the size of the contravening conduct;

(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 some lower level;

(4)    whether the contravener has a corporate culture conducive to compliance with the ACL, 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 ACL 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.

83    Before considering the application of the mandatory and non-mandatory factors in the circumstances of this case and the appropriateness or otherwise of the proposed pecuniary penalties, it is relevant to note, as the authorities well establish, that the principal objective of a pecuniary penalty is deterrence, both general and specific: see ACCC v Pepe’s Ducks at [18].

84    In NW Frozen Foods Burchett and Kiefel JJ said at 294-295:

There are, of course, limits to the approach accepted in these cases. The Court should not leave room for any impression of weakness in its resolve to impose penalties sufficient to ensure the deterrence, not only of the parties actually before it, but also of others who might be tempted to think that contravention would pay, and detection lead merely to a compliance program for the future.

85    In Singtel Optus v ACCC a Full Court of this Court (Keane CJ, Finn and Gilmour JJ) said at [62]:

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. …

86    It is also appropriate to say something about the approach to take in relation to what are, in effect, agreed penalties.

87    The parties jointly submitted that, provided the Court is satisfied that their terms are appropriate, it is in the public interest for the Court to make orders on the terms that have been agreed between the parties. That submission reflects the following statements from the joint judgment of Burchett and Kiefel JJ in NW Frozen Foods at 291:

There is an important public policy involved. When corporations acknowledge contraventions, very lengthy and complex litigation is frequently avoided, freeing the courts to deal with other matters, and investigating officers of the Australian Competition and Consumer Commission to turn to other areas of the economy that await their attention.

88    Further, at 298-99 their Honours held:

We agree with the statement made in several of the cases cited that it is not actually useful to investigate whether, unaided by the agreement of the parties, we would have arrived at the very figure they propose. The question is not that; it is simply whether, in the performance of the Court's duty under s 76, this particular penalty, proposed with the consent of the corporation involved and of the Commission, is one that the Court should determine to be appropriate. In our opinion, it is appropriate.

89    NW Frozen Foods was considered by a Full Court of this Court in Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72. At [51] the Full Court set out the propositions that emerged from the reasoning in NW Frozen Foods as follows:

(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 contravenor 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.

90    At [54] their Honours referred to the sixth proposition. They held that that proposition did not mean that the Court must commence its reasoning with the proposed penalty and limit itself to considering whether that penalty is within the permissible range but that, while a court may wish to take that approach, it is also open “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”.

91    The process of arriving at an appropriate sentence for a criminal offence was considered by the High Court in Makarian v The Queen (2005) 228 CLR 357. That process has also been held to be applicable to civil penalty proceedings and involves an intuitive or instinctive synthesis of all relevant factors: see Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd (2015) 327 ALR 540; [2015] FCA 330 (ACCC v Coles) at [6]. In Australian Competition and Consumer Commission v Fisher & Paykel Customer Services Pty Ltd [2014] FCA 1393 at [85] Wigney J summarised the approach as one where the Court should have regard to “all relevant facts and circumstances and arrive at a result which takes due account of, and balances, the many different and conflicting features”.

92    With those principles in mind I now turn to consider both the mandatory considerations to be taken into account and the non-mandatory considerations that may be taken into account for the purpose of determining a penalty pursuant to s 224(2) of the ACL.

The nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission: s 224(2)(a)

93    MSY Technology and MSY Group made the Website Representations in the period from January 2013 to February 2016 via the MSY Website, which was accessible to the general public across Australia. The Website Representations were expressed to apply to “all our sales for all branches” where “our” refers to MSY and “all branches” refers to the MSY stores located throughout Australia. The effect of the Website Representations was that MSY Technology and MSY Group represented to consumers who accessed the MSY website that their ACL consumer guarantee rights and remedies were limited, excluded or subject to MSY’s discretion.

94    MSY Technology and MSY NSW made the In-store Representations on particular dates in April 2015, July 2015 and November 2015. The In-store Representations were made directly to consumers by MSY representatives when consumers returned to MSY branches to exercise their statutory rights in relation to faulty products supplied by MSY and to obtain a statutory remedy. The effect of the In-store Representations was that MSY Technology and MSY NSW represented to consumers that their ACL consumer guarantee rights and remedies were limited, excluded or subject to MSY’s discretion.

95    The parties jointly submitted, and I accept, that the nature, extent and duration of the Respondents’ contravening conduct is serious. The following matters support that conclusion:

(1)    the Website Representations were directed to the general public and communicated via the internet, which is widely accessible. Thus, the Website Representations had the potential to mislead a wide range of consumers about the availability of their consumer guarantee rights and remedies;

(2)    the Website Representations were expressed to apply to all MSY sales for all MSY stores across Australia and had the potential to detrimentally impact consumers who purchased Computer Products from MSY stores and who had returned to one of those stores with faulty products seeking to exercise their ACL rights and obtain a consumer guarantee remedy;

(3)    MSY Group and MSY Technology admit that some consumers who accessed the Website Representations may have failed to obtain a remedy in respect of faulty Computer Products supplied in the period during which MSY made the Website Representations;

(4)    the In-store Representations resulted in consumers being deprived of their statutory consumer guarantee rights and remedies and thus occasioned actual consumer detriment because consumers were in fact deprived of those rights;

(5)    both the Website Representations and the In-store Representations were made in circumstances where consumers’ statutory rights and remedies in relation to faulty products have been available since 1974, as updated by amendments to the Trade Practices Act in 2010;

(6)    following the amendments to the Trade Practices Act in 2010 the ACCC engaged in a public awareness campaign to ensure that companies were aware of and provided consumers with their statutory entitlements. The ACCC has actively taken a significant number of proceedings in respect of contraventions of the consumer guarantee regime, accompanied by media releases, such that companies should be cognisant of the risks of failing to comply with the ACL consumer guarantee regime; and

(7)    the In-store Representations deprived actual customers of the opportunity to make properly informed decisions because they were misled into believing that they were not entitled to a remedy on the failure of products purchased from MSY. The Website Representations might have deprived both actual and potential customers of the opportunity to make properly informed decisions about their remedies consequent on the failure of products purchased from MSY.

The circumstances in which the act or omission took place: s 224(2)(b)

96    The parties jointly submitted that the contravening conduct took place in circumstances where:

(1)    the ACCC had, over a number of years, corresponded with MSY Technology and expressed its concerns about its compliance with the ACL;

(2)    the ACCC had, in the period from 19 March 2010 to 18 December 2014, received consumer complaints in relation to MSY and its compliance with the ACL; and

(3)    injunctions ordered by this Court in the First MSY Proceeding for a period of five years were in place and overlapped with the period of the conduct the subject of this proceeding.

97    It is evident that the parties accept that the ACCC had made efforts over a period of years, including by way of the commencement of the First MSY Proceeding, to ensure that MSY complied with its obligations under the ACL and, prior to that, the Trade Practices Act.

98    On the other hand, as is evident from the SoAFA, during the period of the Website Representations, MSY made efforts to ensure compliance with the ACL. The Website Terms and Conditions contained references to ACL rights; the MSY Website included links to ACCC information on consumer rights on its homepage; and price lists and invoices issued to customers contained references to ACL rights.

99    Notwithstanding the efforts made and referred to in the preceding paragraph, MSY Group and MSY Technology admit that the Website Representations were misleading or deceptive and false or misleading.

Whether the person has previously been found by a court in proceedings under Ch 4 or Pt 5-2 of the ACL to have engaged in any similar conduct: s 224(2)(c)

100    This is the second occasion upon which two of the Respondents, MSY Technology and MSY NSW, have been found to have engaged in contravening conduct in relation to the mandatory provision of consumer guarantees. The First MSY Proceeding concerned five MSY group companies, including MSY Technology and MSY NSW, and related to representations made via in-store notices, pamphlets, price lists and receipts displayed in a number of MSY stores between 28 July 2010 and 28 October 2010. Those representations disclaimed or excluded MSY’s responsibility for providing warranties to consumers for goods sold by the respondent MSY companies.

101    The respondents to the First MSY Proceeding, MSY Technology, MSY NSW, MSY QLD, MSY SA and MSY WA, were held to have contravened the Trade Practices Act and the Court imposed total pecuniary penalties of $203,500 on those companies, of which a penalty of $55,500 was imposed on MSY Technology and a penalty of $37,000 was imposed on MSY NSW.

102    The parties jointly submitted that the facts of the current proceeding are similar to those in the First MSY Proceeding. That is so. Both proceedings relate to contraventions of the ACL, in the case of this proceeding, and the Trade Practices Act, in the case of the First MSY Proceeding, involving false or misleading representations in relation to the consumer guarantee provisions. Both proceedings involve representations to the effect that the respondents in each case are not responsible for remedying faulty goods supplied by them to consumers. In addition, not only are the facts of this proceeding and the First MSY Proceeding similar, but there is a temporal overlap between the period in which some of the relief granted in the First MSY Proceeding operated and the occurrence of the conduct the subject of this proceeding.

103    In Australian Competition and Consumer Commission v AGL South Australia Pty Ltd [2015] FCA 399 White J considered the impact of previous contraventions pursuant to s 224(2)(c). His Honour noted at [44] that the previous contraventions of the respondent in that case and another related company were “very significant in the imposition of penalty”. At [46] his Honour said:

The significance of a previous record in the sentencing process was addressed by the High Court in Weininger v The Queen [2003] HCA 14; (2003) 212 CLR 629 at [32]. The plurality said:

[32]     … A person who has been convicted of, or admits to, the commission of other offences will, all other things being equal, ordinarily receive a heavier sentence than a person who has previously led a blameless life. Imposing a sentence heavier than otherwise would have been passed is not to sentence the first person again for offences of which he or she was earlier convicted or to sentence that offender for the offences admitted but not charged. It is to do no more than give effect to the well-established principle (in this case established by statute) that the character and antecedents of the offender are, to the extent that they are relevant and known to the sentencing court, to be taken into account in fixing the sentence to be passed. Taking all aspects, both positive and negative, of an offender's known character and antecedents into account in sentencing for an offence is not to punish the offender again for those earlier matters; it is to take proper account of matters which are relevant to fixing the sentence under consideration.

104    There is both a factual and temporal overlap between the First MSY Proceeding and this proceeding. That overlap is significant and goes to the question of deterrence generally and to specific deterrence. While MSY Technology and MSY NSW cannot be penalised again for their previous contraventions, those contraventions serve to indicate that personal deterrence is particularly important in the present case.

The amount of profit gained, loss or damage caused

105    There is no evidence that any consumer relied upon the Website Representations and the parties are unable to ascertain the number of consumers who relied upon them. Accordingly, the parties are unable to quantify the amount of profit, if any, gained by MSY Technology and MSY Group by reason of their contraventions of ss 29(1)(m) and 29(1)(n) of the ACL. Similarly, the parties are unable to quantify any non-pecuniary loss to consumers caused by the Website Representations.

106    In ACCC v MSY (No 2) Perram J was also faced with a position where neither party was aware whether any actual loss or damage was caused by the contravening conduct. At [79] his Honour said:

… In cases where, as here, it is easy to imagine detriment to consumers I would accept that the absence of any evidence of suggested harm should be regarded as a mitigating factor. The reason for this is no more than commonsense: if harm is likely to have been suffered by reason of the contravening conduct but no evidence is led which suggests that it was, the respondent is entitled to be sentenced on the basis that the conduct has not caused harm which, plainly enough, will be a mitigating circumstance.

107    The parties jointly submitted that, given the Respondents’ admissions, it is arguable that some consumers might have lost the opportunity to obtain a remedy to which they were otherwise entitled under the ACL consumer guarantee regime. That possibility is admitted by the Respondents. However, as was the case in ACCC v MSY (No 2), in the circumstances of the Website Representations which grounded the contravening conduct, although it is easy to imagine that there could have been detriment to consumers, no evidence to that effect has been led. The absence of any evidence of harm to consumers is a mitigating factor.

108    In contrast, there is evidence of actual reliance on the In-store Representations by one consumer in relation to the conduct of MSY NSW and two consumers in relation to the conduct of MSY Technology. That conduct is admitted. The consumers who relied on those representations did suffer loss or damage; on at least two occasions the consumers ultimately acquired a replacement product when they would not otherwise have needed to do so. However, the parties are unable to quantify the amount of profit, if any, made by MSY NSW and MSY Technology as a result of their contraventions of s 29(1)(m) of the ACL.

The size of the contravening company and its financial position

109    Evidence was admitted, which is subject to an order pursuant to ss 37AB, 37AF(1)(b) and 37AG(1)(a) of the Federal Court Act preventing its publication, that sets out the total revenue, gross profit, net profit, total assets and net assets for, relevantly, each of MSY Technology and MSY NSW for the financial years ended 30 June 2015 and 30 June 2016. A more limited set of figures is also provided for MSY Group, which was only incorporated in 2015 to take over various administrative functions for the MSY business.

110    As the parties jointly submitted, and as is borne out by the content of the confidential exhibit, the Respondents have the capacity to pay the proposed pecuniary penalties.

Deliberateness of the contravening conduct

111    There is no evidence, either in relation to the Website Representations or the In-store Representations, that the Respondents deliberately intended to misrepresent the application of the consumer guarantee provisions or their effect.

112    The parties jointly submitted that the Website Representations were published to consumers for over three years without any review or check by senior management in circumstances where MSY group companies had previously been found to have contravened the ACL. The SoAFA discloses that an MSY representative acted without the knowledge or approval of MSY senior management in replacing the Amended Terms and Conditions with the offending Website Terms and Conditions.

113    In Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd trading as Bet365 (No 2) [2016] FCA 698 (ACCC v Hillside) Beach J accepted that the contravening conduct there occurred as the result of an error. At [58] his Honour said that, while he accepted that the contravention did not arise out of an active decision by senior management, “the fact that the conduct was allowed to occur for a significant period demonstrated serious systemic and unacceptable deficiencies. Senior management were responsible for the design and implementation of such inadequate systems”.

114    The same can be said here. The Website Representations which contravened ss 29(1)(m) and 29(1)(n) were not deliberate. However, they were allowed to continue for a considerable period of time which, as was the case in ACCC v Hillside, demonstrated serious systemic and unacceptable deficiencies and inadequate systems for which senior management were responsible.

115    In relation to the In-store Representations, the parties referred me to Australian Competition and Consumer Commission v Bunavit Pty Ltd [2016] FCA 6 at [29], where Dowsett J expressed doubt about whether every statement made by a retailer to a consumer that may mislead the consumer as to his or her rights will constitute conduct in breach of the ACL. However, the parties submitted that, in this case, MSY Technology and MSY NSW admit the contraventions of the ACL in relation to the In-store Representations and that the Court ought to proceed on the basis of those admissions.

116    In my opinion, the In-store Representations that contravened s 29(1)(m) of the ACL were made in circumstances which, while not deliberate or intentional, are admitted as involving a contravention of the ACL. They demonstrate failures within MSY Technology and MSY NSW to ensure that their representatives complied with the ACL and that they did not misrepresent consumers’ rights and remedies under the ACL.

Participation of senior management

117    Mr Shiau was at all relevant times the director of the Respondents. There is no evidence, and it is not suggested, that Mr Shiau participated in the contravening conduct by making the false or misleading representations. However, Mr Shiau accepted that, given his position, he was ultimately responsible for the Website Terms and Conditions in the period during which the contravening conduct took place.

Culture conducive to compliance with the ACL

118    At the time of the contravening conduct the Respondents did not have a satisfactory culture of compliance with the ACL. That is apparent from the fact that, despite the orders made in the First MSY Proceeding, which included the implementation of a compliance program, there was a real and significant failure by the Respondents’ internal systems and procedures to ensure compliance with the ACL.

119    Following the service of the Section 155 Notice and the commencement of this proceeding, the Respondents took steps to improve the compliance processes and procedures of the MSY businesses as set out at [54] above. In addition, MSY Technology and MSY NSW have agreed that the ACL compliance program will be extended to all MSY businesses and will not be limited to the Respondents.

Disposition to co-operate with the authorities

120    The Respondents have shown a disposition to co-operate and have in fact co-operated with the ACCC. Following the commencement of this proceeding, the Respondents indicated a desire to achieve an early settlement of the matter in respect of the Website Representations and admitted liability for those representations in their concise response. After receiving further material in relation to the alleged In-store Representations the Respondents agreed to admissions in respect of those representations.

121    The parties jointly submitted that, by their cooperation and in acknowledging the seriousness of the matters the subject of the ACCC’s investigation, the Respondents have shown contrition. I accept that submission. I also accept that the Respondents’ cooperation in resolving the proceeding is a significant matter to be taken into account in favour of the Respondents and one which entitles them to credit for their cooperation: see Australian Competition and Consumer Commission v Mitsubishi Electric Australia Pty Ltd [2013] FCA 1413 at [118]-[120].

What are the appropriate pecuniary penalties?

122    Having considered the proposed pecuniary penalties I am satisfied that they are appropriate having regard to the applicable principles for the setting of pecuniary penalties and the circumstances of this case.

123    The proposed penalties achieve the dual objectives of specific and general deterrence. In particular, given MSY Technology’s and MSY NSW’s previous contraventions, it is necessary that the penalties imposed on those entities are of a sufficient magnitude to achieve specific deterrence.

124    The maximum penalty in relation to each contravention of a provision of Pt 3-1 of the ACL for a body corporate is $1.1 million but, as specified by s 224(4), a person is not liable to more than one pecuniary penalty in respect of the same conduct. Here, the conduct may be viewed as a course of conduct, rather than by identifying the particular instances of contravention. To engage in the latter exercise may be difficult, if not impossible, particularly in relation to the Website Representations, where it could be that the prolonged publication of the false or misleading representations resulted in an extremely large number of contraventions of the ACL.

125    The better approach is to determine the penalty on the basis that there were a certain number of courses of conduct: see ACCC v Coles at [17]-[18]. In that regard, MSY Technology engaged in two courses of conduct, one for its contravening Website Representations and one for its contravening In-store Representations; MSY Group engaged in one course of conduct for its contravening Website Representations; and MSY NSW engaged in one course of conduct for its contravening In-store Representations.

126    The approach adopted by Allsop CJ in ACCC v Coles at [18] is the one that I would adopt in the present circumstances. There his Honour said:

Put simply, the position of the parties was that there were so many contraventions it was not helpful to seek to make a finding as to the precise number or to calculate a maximum aggregate penalty by reference to such a number. Rather, the better approach was to determine the penalty assisted by understanding the extent to which there was a certain number of courses of conduct leading to potentially a huge number of contraventions. The instinctive synthesis endorsed by the High Court in Markarian should then be conducted by reference to a recognition of the multiplicity of breaches, a broad view of the course or courses of conduct, and an assessment of the overall extent and seriousness of offending, together with all other relevant considerations, in particular deterrence. The comments of the Full Court in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; 287 ALR 249 at 262-263 [52]-[55] support this approach.

127    The proposed penalties are, in my opinion, within the range of penalties a Court would order having regard to the application of the relevant principles, the joint submissions of the parties and the contravening conduct. They are appropriate in the circumstances of this case.

costs

128    The parties have proposed that the Respondents pay the ACCC’s costs of this proceeding in the amount of $50,000 within 30 days of the Court making orders. There is no reason not to make such an order and it is appropriate to be made in the circumstances of this case.

conclusion

129    I will make declarations and orders in terms of the Proposed Orders.

Associate:

Dated:    25 October 2017