Federal Court of Australia

Australian Competition and Consumer Commission v Employsure Pty Ltd (No 2) [2021] FCAFC 157

ORDERS

THE COURT ORDERS THAT:

1.    It be declared that between 10 August 2016 and 31 August 2018, Employsure Pty Ltd (Employsure) has, in trade or commerce, in connection with the supply or possible supply of advisory services, by its use of the Google Ads service and through the six Google Ads identified in the schedules to the reasons for judgment of the Full Court dated 13 August 2021 which appeared on the screens of the computers, laptops or smartphones of business owners in response to their Google searches for “fair work ombudsman”, “fair work commission”, “fair work australia” and other related search terms, represented to business owners that Employsure is, is affiliated with, or is endorsed by a government agency when, in fact, Employsure is a private company that has no affiliation with, and is not endorsed by, any government agency; and Employsure thereby:

(a)    engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18(1) of the Australian Consumer Law (ACL) in Schedule 2 to the Competition and Consumer Act 2010 (Cth); and

(b)    made a false or misleading representation that:

(i)    its services are of a particular standard or quality in contravention of s 29(1)(b) of the ACL; and

(ii)    it has government sponsorship or approval in contravention of s 29(1)(h) of the ACL.

2.    The proceeding be remitted to the primary judge for hearing as to the injunctive relief sought.

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

REASONS FOR JUDGMENT

THE COURT:

1    On 13 August 2021 the Full Court allowed the appeal herein by the Australian Competition and Consumer Commission (ACCC): Australian Competition and Consumer Commission v Employsure Pty Ltd [2021] FCAFC 142. The Court held that during the period from 10 August 2016 to 31 August 2018 (the relevant period) the respondent, Employsure Pty Ltd (Employsure), by its use of the Google Ads service and through the six Google Ads identified in the schedules to the reasons for judgment of the Full Court, which advertisements appeared on the screens of the computers, laptops or smartphones of business owners in response to their Google searches for “fair work ombudsman”, “fair work commission”, “fair work australia” and other related search terms, represented to business owners that Employsure is, is affiliated with, or is endorsed by a government agency when, in fact, Employsure is a private company that has no affiliation with, and is not endorsed by, any government agency. It held that Employsure thereby:

(a)    engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18(1) of the Australian Consumer Law (ACL) in Schedule 2 to the Competition and Consumer Act 2010 (Cth); and

(b)    made a false or misleading representation that:

(i)    its services are of a particular standard or quality in contravention of s 29(1)(b) of the ACL; and

(ii)    the Respondent has government sponsorship or approval in contravention of s 29(1)(h) of the ACL.

2    The Court set aside the orders of the primary judge and directed the ACCC and Employsure to confer in an endeavour to agree the form of any declaration and injunction that should be made in relation to the subject matter of the appeal, failing which the parties were required to provide short submissions to the Court on or before 20 August 2021. The matter was then to be remitted to the primary judge for decision in relation to the application for pecuniary penalties for the contraventions of ss 29(1)(b) and (h), and the costs of the proceeding below.

3    The parties have conferred and have been unable to agree as to whether a declaration or injunction should be made, nor as to their form in the event that they are to be made. As directed, they have filed short submissions. For the reasons we briefly explain, we consider it appropriate to make a declaration and to remit to the primary judge the question as to whether an injunction should be granted, and if so in what form.

Declaratory relief

4    The ACCC sought declaratory relief in its Amended Originating Application, including by identifying the terms of the proposed declaration, and it maintained its application for such relief in the Notice of Appeal. The appeal having been decided in its favour, the ACCC now seeks an order for a declaration in those terms.

5    Employsure contends that the Full Court should not make a declaration, and that the question of whether to grant such relief and its terms should be remitted to the primary judge for hearing, along with the question of whether to impose a pecuniary penalty which was remitted in the substantive judgment in the appeal. It says, and we accept, that pursuant to an order of the primary judge made on 11 February 2019, the question of liability was tried separately and in advance of the determination of any relief to be granted. On that basis Employsure says that it has not yet had the opportunity to lead evidence on matters concerning relief, and there has been no hearing as to relief.

6    Employsure accepted that it is inevitable that a declaration will be made having regard to the decision of the Full Court, but it contends that in light of the order splitting the trial of liability and relief, the appropriate course is for all questions of relief to be remitted to the primary judge. It argues that the primary judge is best placed to adjudicate on disputes as to the wording of the declaration, and that in a case such as this it is appropriate for relief to be considered as a whole, rather than for questions of relief to be split, citing Australian Competition and Consumer Commission v Valve Corporation (No 4) [2016] FCA 382 at [1]-[4] (Edelman J).

7    In the event that (contrary to its primary submission) the Court is minded to make a declaration, Employsure proposed that a declaration be made in a form different to that proposed by the ACCC. The material differences from the ACCC’s proposed declaration are that it refers to the six Google Ads identified in the schedule to the Full Court judgment and states that the representations were made to “business owners” rather than to “consumers”.

8    We do not consider the question of whether to grant declaratory relief turns on any further evidence that Employsure might seek to adduce. It has now had the opportunity to make submissions in relation to declaratory relief, and it accepted that it is inevitable that a declaration will be made. In our view the Full Court, rather than the primary judge, is in the best position to decide the wording of the declaration given that it heard the appeal and reached a conclusion different to that of the primary judge. The present case can be readily distinguished from Valve Corporation (No 4).

9    We can see no good reason why the Full Court should not make the proposed declaration now when, amongst other things, the relevant contraventions have been found, the preconditions for declaratory relief have been met, and the proposed declaration records and is reflective of the Full Court’s disapproval of the contravening conduct. We have considered the parties’ competing submissions and concluded that it is appropriate to make a declaration in a form which includes elements of each of the parties’ proposals.

Injunctive relief

10    The ACCC submits that there is no impediment to the Full Court exercising its discretion and awarding the injunctive relief sought against Employsure, noting that the power to award an injunction under s 232 of the ACL is broad; is not limited to considerations at general law; and does not depend on the expectation that the conduct may be continued or engaged in again: s 232(4) of the ACL. It contends that in the circumstances of the present case the appropriateness of a grant of injunctive relief does not depend upon Employsure having an opportunity to put on any additional evidence beyond the material in the appeal, which the parties have already had the opportunity to address as part of the appeal.

11    The ACCC seeks a five year injunction in the form it proposed in the Amended Originating Application. It submits that an injunction is necessary to deter Employsure from a repetition of similar contravening conduct, noting that rather than injuncting a precise formulation of words it would operate to restrain Employsure from representing that it is, or that it has an affiliation with, government. It says that such an injunction will serve the public interest by protecting consumers viewing Employsure’s Google Ads and its other forms of marketing. It also submits that injunctive relief is appropriate in circumstances where Employsure waited some time after these proceedings commenced before changing its Google Ads to include the name “Employsure” (which on the ACCC’s case reduced their tendency to mislead).

12    In our view, in light of the primary judge’s order of 11 February 2019, the appropriate course is that the question of whether to grant injunctive relief be remitted to the primary judge. It will be for the ACCC to demonstrate that the proposed injunction will serve a purpose; and procedural fairness requires that Employsure has an opportunity to lead evidence and argument to meet the ACCC’s case, including any evidence about changes in Employsure’s advertising since August 2018. Unlike the position in relation to declaratory relief, it is not inevitable that an injunction will be made in circumstances where the period of contravening conduct ended three years ago, there have been changes in Employsure’s advertising since the relevant period, and there is no suggestion of any further infringements of the ACL by Employsure: see Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2007] FCAFC 146; 161 FCR 513 at [111] (Moore, Dowsett and Greenwood JJ).

13    Further, the question of whether to impose a pecuniary penalty on Employsure has been remitted to the primary judge. The ACCC contends that an injunction is appropriate because of the deterrent effect it will have on Employsure, and deterrence, both specific and general, will also be relevant to the primary judge’s consideration in relation to penalty: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate & Ors [2015] HCA 46; 258 CLR 482 at [55] (French CJ, Kiefel (as her Honour then was), Bell, Nettle and Gordon JJ). Whether an injunction should be granted to restrain Employsure from a repetition of similar conduct may be tied up with whether a penalty is to be imposed to deter it from such conduct, and if so in what amount. In light of this it is appropriate that both issues be decided by the primary judge.

14    The question as to whether to grant injunctive relief and if so in what terms shall be remitted to the primary judge for hearing.

Associate:

Dated:    27 August 2021