FEDERAL COURT OF AUSTRALIA
Australian Securities and Investments Commission v Accounts Control Management Services Pty Ltd [2012] FCA 1164
IN THE FEDERAL COURT OF AUSTRALIA | |
AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION Plaintiff | |
AND: | ACCOUNTS CONTROL MANAGEMENT SERVICES PTY LTD ACN 050 268 141 First Defendant ACM GROUP LTD ACN 127 181 097 Second Defendant |
DATE OF ORDER: | |
WHERE MADE: |
THE COURT ORDERS THAT:
1. The parties bring in short minutes of order to give effect to these reasons within 14 days.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
NEW SOUTH WALES DISTRICT REGISTRY | |
GENERAL DIVISION | NSD 684 of 2011 |
BETWEEN: | AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION Plaintiff
|
AND: | ACCOUNTS CONTROL MANAGEMENT SERVICES PTY LTD ACN 050 268 141 First Defendant ACM GROUP LTD ACN 127 181 097 Second Defendant
|
JUDGE: | PERRAM J |
DATE: | 26 OCTOBER 2012 |
PLACE: | SYDNEY |
REASONS FOR JUDGMENT
1 The second defendant, ACM Group Ltd, is a debt collector and the first defendant, Accounts Control Management Services Pty Ltd, is its predecessor entity. The second defendant assumed the conduct of the first defendant’s business in July 2009. Except where the context otherwise requires, I will refer to this business, regardless of which entity was conducting it at the relevant time, as ‘ACM’. ACM purchases outstanding debts from financial institutions such as the National Australia Bank (‘NAB’) and corporates such as Telstra. Having acquired those debts, it uses its workforce to seek to recover some portion of the face value of the debts in question. Because it buys the debts at a steep discount to their face value (typically a discount of between 79% and 99%), it does not need to recover very much before it is making a profit.
2 This case is concerned with the methods adopted by ACM to pursue recalcitrant debtors to make them pay up. Generally this was done by telephone call from an outward-bound call centre by employees of ACM. The plaintiff (‘ASIC’) alleges that, on a large number of occasions during those telephone calls, ACM employees said things which were not true (for example, that lawyers had been retained to sue the debtor when this was not so) or that the conversations were unduly harassing or coercive.
3 ACM recorded all of these calls. ASIC relied upon a large quantity of transcripts of the telephone calls together with the audio files from which those transcripts were drawn. It submitted that in a number of instances the hectoring tone of what took place could not wholly be grasped from the written word on the page.
4 Because it is illegal to engage in misleading or deceptive conduct or conduct which is unduly harassing or coercive, ASIC’s claimed relief against the defendants was that this Court should issue an injunction restraining them from engaging in such conduct in the future. Declaratory relief was also sought.
5 The defendants accepted that, in some of the instances upon which ASIC relied, misleading or deceptive conduct was established, but not in all of them. Whilst it accepted the accuracy of the recordings and transcripts, it disputed, at least in some instances, ASIC’s characterisation of the conduct as misleading or deceptive. Insofar as the allegations that the defendants had engaged in conduct which was unduly harassing or coercive were concerned, the defendants again accepted the factual substratum of ASIC’s case but denied in all cases that its conduct bore the characterisation which ASIC sought to put on it.
6 It was inherent in that defensive posture, at least so far as factual arguments were concerned, that some contraventions would be found. But, so the defendants submitted, relief would be withheld from ASIC for three related reasons. First, viewed in their full context the contraventions were minor and historical; secondly, this was particularly the case where the second defendant was a successor to the first defendant and where many of the breaches identified by ASIC related to the first defendant’s conduct and not its own; thirdly, the internal arrangements of ACM had been altered to overcome whatever systemic difficulties there had been in the past – staff manuals had been revised and the staff in question had moved on. Taken altogether, there was no need for relief to be granted because, to put the matter compendiously, nothing was now wrong.
7 Against the possibility that this line of defence might prove insufficient, ACM deployed a supplementary legal argument. It noted that ASIC’s claims for relief were premised, at least initially, on ss 12DA and 12DJ of the Australian Securities and Investments Commission Act 2001 (Cth) (‘the ASIC Act’). Both of these depended for their enlivenment upon whether the defendants could be said to be providing ‘financial services’ within the meaning of that Act. ACM submitted that its debt recovery activities could not plausibly be described as the provision of a financial service so that relief under the ASIC Act was unavailable.
8 ASIC, of course, denied this but with a weather eye invoked identical provisions in the former Trade Practices Act 1974 (Cth) (‘TPA’) which were not, however, dependent upon the presence of financial services for their enlivenment. To this the defendants countered that it was beyond ASIC’s statutory functions to seek a remedy under the former TPA. In short, the defendants submitted that the ASIC Act and the former TPA were stools which ASIC was betwixt but not upon.
9 Insofar as the facts were concerned, ASIC’s case was advanced in relation to eight debtors. I will refer to them as Debtors One to Eight to preserve their anonymity. I turn first to the relevant principles.
10 Only two areas of discourse are involved: misleading or deceptive conduct and conduct which is said to be unduly harassing or coercive.
11 As to the former there was no debate between the parties. ASIC’s case was simply that some of the things said by the call centre staff were not true or, if they related to future matters, lacked a reasonable basis. If those contentions be made good then, subject to the defendants’ more general arguments about the non-application of the ASIC Act and the former TPA, breaches of the relevant sections would be established. Those sections were s 12DA(1) of the ASIC Act (‘A person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive’) and s 52(1) of the former TPA (‘A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive’). Section 52 is the relevant provision rather than the corresponding provision in the Competition and Consumer Act 2010 (Cth) because the events in question antedate its commencement. It was agreed, correctly, that this was the effect of the transitional provisions to that legislation. The operation of those provisions is explained in Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No. 2) (2011) 279 ALR 609; [2011] FCA 382 at [5]-[6].
12 There was a minor debate between the parties as to how the question of undue harassment and coercion was to be approached. The relevant proscription is contained in s 12DJ(1) of the ASIC Act as follows:
A person contravenes this subsection if:
(a) the person uses physical force or undue harassment or coercion; and
(b) the person uses such force, harassment or coercion in connection with the supply or possibly supply of financial services to a consumer, or the payment for financial services by a consumer.
13 The relevant section of the former TPA, s 60, was as follows:
A corporation shall not use physical force or undue harassment or coercion in connection with the supply or possible supply of goods or services to a consumer or the payment for goods or services by a consumer.
14 In the present circumstance, the only words which matter are ‘use physical force or undue harassment or coercion’. The first matter which is clear is that the rule is against undue harassment rather than mere harassment. The content of the word ‘undue’ will vary with the circumstances. In the context which is the confronting business of debt collection, it is likely to have a significant impact. By definition, the class of person who find that they have fallen into the hands of a debt collection agency are likely to be those who, for whatever reason, have not met their legal obligations. The necessary context is one, therefore, in which the law of contract and the ordinary usages of lending have failed to secure compliance by the debtor with his or her obligation to repay. It is not to be expected in such cases that the debt collector must proceed as if at a prayer meeting. There are, of course, limits to everything. In Australian Competition and Consumer Commission v McCaskey (2000) 104 FCR 8 at 27 [48] French J thought that, in the context of debt collection, if the frequency, nature or content of approaches and communications from the debt collector were such that they were ‘calculated to intimidate or demoralise, tire out or exhaust a debtor rather than convey the demand and an associated legitimate threat of proceedings, the harassment will be undue’. This view was endorsed by Hill J in Australian Competition and Consumer Commission v Maritime Union of Australia (2001) 114 FCR 472 at 485 [60] and by Foster J in Ahmed v Harbour Radio Pty Ltd (2009) 180 FCR 313 at 321-323 [33]. It is with this test that I will assess the unduly harassing or coercive nature of the calls before me.
15 Turning then to coercion, there is some debate as to whether ‘undue’ qualifies only ‘harassment’ or whether, instead, it qualifies ‘coercion’ as well. For the reasons given by Hill J in Australian Competition and Consumer Commission v Maritime Union of Australia at 485 [58] it is likely that French J did regard ‘coercion’ as being governed by ‘undue’. Hill J reached the contrary view; that is, that ‘undue’ did not qualify ‘coercion’ (see 485-486 [59]-[62]). I agree with the views of Hill J to which I have nothing to add.
16 Consequently, all that is required is ‘coercion’. That, however, is a stronger word than harassment. It connotes, as Hill J observed in Australian Competition and Consumer Commission v Maritime Union of Australia at 485 [61], some negation of choice or freedom to act.
17 Of course, whether any particular discussion or conversation is revealed to be unduly harassing or coercive will depend not upon a line-by-line analysis but, rather, on the overall impression.
18 I turn then to the facts.
19 ASIC’s case based on misleading or deceptive conduct is premised on the claim that what ACM had told the debtors about the nature of its own business and its intended actions was false. For example, it was said that ACM was a ‘litigation firm’ or that it was about to commence proceedings. Before the correctness or otherwise of those claims may be assessed it is necessary to grasp, if only in broad outline, the day-to-day way in which ACM’s business was conducted.
20 ACM employs around 280 staff. Of these around 90% are ‘collections officers’. These staff work from ACM’s premises in Melbourne and Sydney. In Sydney there are two sets of offices – one in Elizabeth Street and the other in Castlereagh Street in the Central Business District. The collections officers are organised into teams presided over by a team leader.
21 Each collections officer had a portfolio of debtors. The debtors could fall into different categories: credit card debtors, personal loan debtors and corporate debtors (such as Telstra customers). According to one of ACM’s former employees who was called, a Mr Tompson, most of ACM’s debtors’ debts had been outstanding for a considerable time. The size of a collections officer’s portfolio fluctuated but it was not unusual for it to have 300 or so debtors (as Mr Tompson had).
22 The work involved was not easy. Many of the debtors, as might naturally be expected, were abusive. Others – up to 80% of the total – were evasive; that is, they did not return calls or became uncontrollable. The strategies used on debtors varied. The general aim was to get the debtor to pay the account in full or to agree to some kind of arrangement under which the debt would be paid off over time with interest. Sometimes an interest freeze might be offered. The details and history of each debtor was recorded in a computer system called DebtSmart. This allowed the collections officer to see the history of the debtor.
23 Perhaps as a result of the rather confrontational nature of the work, the turnover rate for collections officers was quite high, about 50% per annum. The work of the collections officers was always over the phone and never face-to-face. Nor was there sending of emails or letters by collections officers.
24 Upon being hired by ACM, each employee was given a training manual. At the time relevant to the events the subject of the present proceedings, the manual was in the form of Exhibit 2. The manual suggested various scripts which might be used to assist a debtor in coming to the decision that he or she should pay up. The manual made it very plain that debtors should be threatened with litigation. One of the responsibilities that a collections officer had was, according to the manual, to ‘use litigation when speaking to debtors’. The suggested litigation threats ranged from the relatively innocuous – ‘I wish to offer you the opportunity to settle this account before legal proceedings commence against you’ – through to more developed threats such as this one:
Mr/Mrs/Ms. (Surname), the reason for my call to you today is a courtesy call due to the fact that I have received your physical file this morning from our solicitors. I have unfortunately been requested by our solicitors to put forward a final recommendation in reference to the outstanding amount of $(Balance) and will need to finalise my recommendation by no later than (Note down the exact time on paper to refer back to in later part of conversation)… As I was looking through your file (give time) I have noticed here in your file is a Statement of Liquidated Claims which has been drawn and it is set for issuance at the local court in Sydney on (Give exact date) at (Give exact time). (Pause) Mr/Mrs/Ms. (Debtors Surname), Do you understand what a Statement of Liquidated claims is? (If the debtor answers YES, Ask the debtor to explain, so that you can confirm). (If the debtor answer NO, Explain by saying… it is a series of document basically called summons).
(Emphasis in original.)
25 Many other parts of the manual encouraged collections officers to make the strong suggestion that lawyers had already been involved in the account. For example there was this script:
IMPORTANT PHRASES
● I HAVE RECEIVED STRICT INSTRUCTIONS FROM MY SOLICITOR, TO PROCEED WITH LITIGATION…
…
● I DON’T EVEN KNOW WHERE YOUR MATTER IS UP TO AS OUR SOLICITORS HAVE YOU [sic] FILE…
● I HAVE JUST COME OUT OF A MEETING WITH THE SOLICITOR WITH RESPECT TO 3 MATTERS UNFORTUNATELY 1 WAS YOURS…
26 Or this one:
CLOSING A CALL
● IF I DON’T RECEIVE THE RECEIPT BY (time) THE ACCOUNT WILL BE DEEMED AS NOT PAID
…
● IF YOU DO NOT ADBIDE [sic] BY THIS AGREEMENT, UNFORTUNATELY I WILL HAVE TO HAND DOWN MY FINAL RECOMMENDATION TO THE SOLICITORS
27 Or this:
NEW LINES
● I CAN ONLY HELP YOU IF YOU HELP YOURSELF.
● MY SOLICITORS HAVE HAD A GOOD LOOK AT YOUR FILE AND HE HAS [sic] ADVISED ME TO ASSIST YOU.
…
● BY TOMORROW 3.00PM THIS ACCOUNT WILL ACCUMULATE $350.00 WORTH OF LEGALS [sic] FEES
● THIS IS YOUR LAST CHANCE BEFORE IT GOES TO COURT.
● YOUR ACCOUNT HAS BEEN BROUGHT FROM THE SOLICITORS OFFICE AND THEY ARE EXPECTING A RESPONSE FROM ME AS TO PROCEED WITH LITIGATION AT 2.30PM THIS AFTERNOON.
…
● JUST A REMINDER THAT OUR SOLICITORS HAVE GIVEN YOU ONE LAST CHANCE TO SETTLE THIS ACCOUNT.
28 It is true that the defendants did have a legal section which employed 4 or 5 people. It is also true that it was not completely unheard of for the defendants to pursue proceedings. That was, however, a fairly rare event. Mr Brabazon, ACM’s Chief Operating Officer, gave evidence that this would occur on the recommendation of a section manager and would result in a referral of the debtor to the legal section. After that section’s consideration, a matter then might be sent to external solicitors. The percentage of debtors who were subject to legal action was quite small. Mr Brabazon was shown Exhibit 18, which was a schedule of the total number of accounts for each month in the period September 2008 to January 2010. It also showed the number of accounts for which: (a) legal status was indicated; (b) judgment had been obtained; and (c) legal fees were charged. The month of March 2009 was typical: there were 489,752 open debtor accounts; 2071 of which were in legal status; 95 of which had been pursued to judgment; and 458 of which involved the charging of legal fees. One cannot be precise about such matters, but the percentage of debtor accounts which were sent to the Legal Department was less than 0.5% and the number in which legal fees were incurred less than 0.1%.
29 What should one take from this? Only this: the defendants did have a Legal Department but it was not in any sense a common part of its business to refer debtors to this section. Further, when matters were referred to the legal section, this was done on the recommendation of the section manager and not by individual collections officers. In no way were collections officers in a position to threaten to commence litigation (at least if that threat was to be accurate). What this means, of course, is that the manual which the first defendant had prepared was suggesting to collections officers that they should make statements which were not true. That misleading conduct then ensued is hardly surprising.
30 I turn to the statements which were actually made below. ASIC contended that I should make a number of specific factual findings about the defendants’ business. The specific findings formed the basis of its later claims that ACM had engaged in misleading or deceptive conduct. The particular matters were:
(a) The defendants did not employ ‘in-house’ lawyers
It will follow from what I have said above at [28]-[29] that this contention is not correct – the defendants did have a small legal section.
(b) The defendants did not specialise in commencing legal proceedings against debtors for the recovery of debts
I accept this contention. Whilst the defendants did very infrequently commence proceedings this was such a minor aspect of its business that it could not be described as a speciality.
(c) The defendants infrequently commenced legal proceedings against debtors, for the recovery of debts
For reasons already given I accept this proposition.
(d) The defendants did not utilise officers of the Sheriff of New South Wales to serve originating processes or to have affidavits sworn
At the trial no one was able to point to any practice in New South Wales by which service or the taking of evidence was effected in this manner. The ACM manual, however, encouraged collections officers to tell debtors that court documents would be served by Sheriff’s officers and to ‘stress that they are dressed like a police man [sic] and Come in a marked car’.
(e) The defendants were not in a position immediately to commence proceedings against debtors
Although ACM’s Legal Department was small and did not frequently cause proceedings to be commenced, this does not mean that the Legal Department was incapable of commencing proceedings against particular debtors, nor that they could not do so rapidly if necessary. I reject the proposition.
31 Above at paragraphs [24]-[27], I have referred to a manual distributed to collections officers. After ASIC began its inquiries, its chief operations manager, Mr Brabazon, decided to examine it a little more carefully. Mr Brabazon had commenced with ACM in 2008 so it is perhaps a little surprising that he had not acquainted himself with the manual until 2010 when ASIC began its inquiries, but little was made of this and it would not be appropriate to take this aspect of the matter any further.
32 In Mr Brabazon’s opinion, and mine also, many aspects of the manual encouraged collections officers to engage in misleading conduct. I have dealt with this already above. Perhaps the matter is best summarised by Mr Brabazon’s evidence at T106:
It’s the case, isn’t it, that collection officers weren’t involved in legal processes; is that correct? --- Sorry ---
Collection officers were not involved in legal processes? ---Not – no, not per se.
So in terms of the process that was adopted if there were legal proceedings that would involve others in the organisation; is that so?--- Yes.
33 Once he became aware of the problem, Mr Brabazon reviewed the manuals, as a result of which he produced a new manual with the misleading parts excised.
34 It should be noted that, while the earlier manual did encourage misleading or deceptive conduct, it did not encourage collections officers to engage in unduly harassing or coercive conduct in the way in which that behaviour is described at [12]-[17]. Indeed, the manual repeatedly instructed collections officers to conduct themselves in a professional manner.
35 The manual did not stand alone. Each collections officer was given a phase of initial training. Mr Brabazon gave evidence of a process of on-going training consisting of ad hoc sessions as well as any additional training that might arise from a collection officer’s reviews.
36 ASIC did not submit that these training arrangements were unsatisfactory, although comparison with other operators of call centres might have suggested that regular training could be more structured. Nevertheless this was not suggested and I say no more of it.
37 Mr Brabazon gave this evidence about call monitoring:
Now, how often – are you aware – how often are calls monitored? --- Calls are monitored regularly – monthly – and/or when complaints are made.
And who’s primarily responsible for reviewing or monitoring calls? --- The section managers do the calls on the staff but if there’s a complaint that comes through to Mr Oates’ office then he listens to the calls.
38 Again, ASIC did not submit that this level of call monitoring was inadequate. Although I will not decide the matter on this basis, it does seem to me quite unrealistic to expect much adherence to the procedures now specified in the manual if operators are monitored so infrequently.
39 The upshot of this is that, as a result of Mr Brabazon’s review, there is now a manual in place which does not encourage misleading behaviour, a training régime whose particular aspects were not subject to criticism and a system of call monitoring not alleged by ASIC to be inadequate. When pressed, counsel for ASIC conceded that, since the introduction of the new manual, there was no evidence of any new complaints. This is consistent with the inference I am minded to draw that the new manual has largely eliminated the difficulties which had been identified insofar as misleading or deceptive conduct is concerned.
40 ASIC submitted that it was significant that ACM’s compliance officer had not been called. But the fact is that its chief operations officer – who rewrote the manual – was called. I do not quite see how ASIC’s submission advances matters. Mr Brabazon was cross-examined about the old manual and he accepted that it was inappropriate in many ways. This was unsurprising evidence since it had already been elicited in chief. He was not challenged on his evidence about training or call monitoring. In the absence of such an attack it is difficult to know how I would go about rejecting Mr Brabazon’s evidence on these matters or how a failure to call the compliance manager might aid in that process.
41 In the circumstances, I conclude that:
(a) the misleading or deceptive conduct which occurred was largely a function of the manual which was in place; and
(b) the manual has now been replaced and there is no evidence of any repetition of the former conduct.
42 A second important factual matter concerns the structure of the ACM group. The current entity operating the business is the second defendant, ACM Group Ltd. The business was formerly operated by the first defendant, Australian Control Management Services Pty Ltd. Both entities are ultimately under the control of Mr Humberto Vieira. Mr Brabazon’s evidence was that it had been decided that the business would be floated by way of an initial public offering (‘IPO’) but that the IPO had not proceeded. It was an aspect of the IPO that the business should be transferred from the first defendant to the second defendant. To that end an undated deed was executed assigning all of the debts owned by the first defendant to the second defendant. Mr Brabazon’s evidence was that the deed was executed in July 2009.
43 ASIC was sceptical of this evidence, suggesting obliquely instead that it was a device for avoiding the granting of relief. More than scepticism, however, would be needed to put a case that this was what had occurred. The groundwork for such an argument was not, in my opinion, in place.
44 In those circumstances, I conclude that:
(a) the transfer of the business was an aspect of an IPO which was abandoned;
(b) it had no impact on the day-to-day running of the business; and
(c) the business remains under the control of Mr Vierira and the day-to-day management of Mr Brabazon.
45 ASIC’s case traced the trials and tribulations of eight debtors at the hands of ACM in some 96 separate calls. Each must be dealt with.
46 Before doing so it is useful to note some introductory matters about the evidence. ASIC is a regulator, of course, with compulsory powers of examination. It used that power extensively during its antecedent investigation. In particular, it examined a number of ACM’s employees including its call centre staff. Transcripts of these examinations, which were on oath, were taken. With only minor objection ASIC tendered the following transcripts (I have included a brief description of the employee’s position):
Wade Dennis | (Collections Officer) | Ex 8 |
Rebecca Thompson | (Collections Officer) | Ex 9 |
Alex Khalil | (Collections Officer and, later, Team Leader) | Ex 10 |
Ryan Clarke | (Collections Officer and, later, Team Leader and Section Manager) | Ex 11 |
Melissa Teuma | (Collections Officer and, later, Senior Staff Member) | Ex 12 |
Paul Brabazon | (Chief Operating Officer) | Ex 13 |
47 I did not find the way in which ASIC dealt with this material helpful. I was provided with a nine page document entitled ‘Important Passages of Employee Transcripts’ which contained 96 references. To give the flavour, one such entry read ‘Page 14, line 25 to page 16, line 17 – training’. There were 95 other such entries. What precisely I was meant to do with this sort of submission is unclear. In the end I have decided to ignore it. That luxury is not available in the case of the 96 telephone calls upon which both parties between them relied.
48 It is necessary then to deal with the position of each debtor.
49 It appears that Debtor One formerly had a credit card debt with the Commonwealth Bank. ACM purchased this debt which, by the time it came into ACM’s hands, was in the vicinity of $21,690.13. Debtor One was initially entered into the collections system on 14 May 2008. The ACM Ledger entry for Debtor One is 13 pages long and records the many discussions which took place between her and various collections officers at ACM between 14 May 2008 and 8 July 2009. She was married but her husband was unaware of the existence of the credit card debt.
50 Ultimately, ASIC relied upon 21 individual telephone discussions. ACM also relied upon a number itself. There were, broadly speaking, seven ways in which ASIC alleged that ACM had engaged in misleading or deceptive conduct. These were that ACM had represented to Debtor One, her husband, her neighbour and her friend that:
(a) ACM employed ‘in-house lawyers’ (which it did not);
(b) ACM specialised in commencing legal proceedings against debtors for the recovery of debt (when it did not);
(c) ACM frequently commenced legal proceedings against debtors for the recovery of debts (when it did not);
(d) the matter had been referred to ACM’s lawyers for the purpose of commencing legal proceedings (when it had not);
(e) ACM had decided to, could and would commence legal proceedings shortly against Debtor One (when it had not, could not and would not);
(f) ACM was going to send Sheriff’s officers to serve documents upon her (when this was not so); and
(g) ACM was going to commence bankruptcy proceedings against Debtor One (when it was not).
51 It will have been noted that, above at [30], I have already rejected (a) on the basis that ACM does employ in-house lawyers. I there also rejected (e) to the extent that it suggests that ACM could not commence legal proceedings rapidly.
52 Additionally, ASIC also submitted that ACM had engaged in undue harassment or coercion by:
(a) threatening to inform Debtor One’s husband about her indebtedness (where Debtor One had already told ACM that her husband did not know and that she did not want him to know);
(b) threatening to call Debtor One’s friends and employer until she repaid the debt;
(c) threatening to have Sherriff’s officers attend her house to effect service (when this was not going to happen);
(d) threatening immediately to commence bankruptcy proceedings (when this was not going to happen);
(e) calling third parties (her employer, neighbour and friend) with the expectation that they would tell Debtor One that ACM had contacted them; and
(f) making the representations outlined at [50].
53 I set out below those portions of the transcript of the various calls upon the parties rely. For present purposes, a few features should be noted:
(a) the persistent suggestion that her husband would be informed of the debt (either directly or, in one case, by the suggestion he would work it out once the marked cars were on-site);
(b) the discussions which took place with Debtor One’s neighbour;
(c) the constant threat of legal action of various kinds; and
(d) the offensive nature of some of the remarks.
54 I now turn to the conversations themselves. I should say that the parties created a colour-coded chart indicating their position on each of the calls. The parts of each call in issue were extracted, which was useful, and then coloured yellow (if relied upon by ASIC), pink (if relied upon by both parties) or blue (if relied upon by ACM). Neither party made submissions about why any particular call was misleading or deceptive or unduly harassing or coercive. ACM did admit some of ASIC’s allegations in a likewise colour-coded pleading (although it did not do so extensively). In the end, it has been necessary to assess each call.
55 In Debtor One’s case there were 28 relevant calls.
56 ASIC relied on this call. The following exchange took place:
Male speaker: [You will be receiving a letter soon] just about the transfer for your credit card outstanding debt to a litigation company, which is our company, ACM.
Debtor One: Okay.
Male speaker: Commonwealth [Bank] have sold a debt to us.
Debtor One: Okay
Male speaker: Okay. Now we are handling your affairs. We are a Legal Department, so basically Commonwealth Bank has exhausted all attempts to reclaim the amount. Now they’ve sent it to a Legal Department, which is our department.
…
Male speaker: It’s just that there is a legal case pending.
57 Two aspects of this are simply wrong. The recoveries officer was not in the ‘Legal Department’ of ACM, which was not a ‘litigation company’; there was no court case pending.
58 Misleading conduct is established.
59 Neither unduly harassing nor coercive conduct were established, however. As noted above at [14], unduly harassing conduct will be shown to exist where ‘the frequency, nature or content of approaches and communications from the debt collector were such that they were “calculated to intimidate or demoralise, tire out or exhaust a debtor”’. It will not be shown to exist where, as here, there is no more than a demand and a threat of legal proceedings. If, as here, legal proceedings are a legitimate option open to the creditor, I do not think that the mere communication of a threat of legal action, without more, can amount to unduly harassing conduct, even if the terms of the threat are misleading or deceptive. Furthermore, the conduct in Call 1 was not coercive because it did not attempt to remove Debtor One’s freedom to act: see [16] above.
60 Both ACM and ASIC relied upon Call 2, which took place after Debtor One received the letter referred to in Call 1. It included the following:
Quang: We are planning to take this matter legal.
Debtor One: Yes.
Quang: …because the Commonwealth Bank has sold it to our company.
Debtor One: Yes.
Quang: We specialise in litigation, so we will take this matter to Court, and the judge will ask you for receipt and your accounts details to see whether you are – you are – you can pay.
…
Quang: Now, [Debtor One], I need documents, of course, because we are a Legal Department; a stat dec. Can you get your hands on a stat dec?
…
Quang: They wouldn’t have sent it to a Litigation Department.
Debtor One: Okay.
Quang: Because we are not from the bank, we don’t…
Debtor One: Yes, I…
Quang: …deal with customer service.
Debtor One: Sure.
Quang: We just take debtors to court and have that dealt [with] there.
61 Although there were cases where ACM did escalate matters to its Legal Department this was not one of them; nor is there any evidence which suggests that as at this date there was any proposal to escalate the matter in that way. It was misleading to suggest that there was such a proposal, just as it was misleading to claim that ACM was a company specialising in litigation and that the caller was from the Legal Department. This was not the case.
62 The call was not unduly harassing or coercive for the reasons given in relation to Call 1.
63 Both ACM and ASIC relied upon Call 3. It included the following:
Male speaker: Have you spoke to your – I believe your husband [name given] – [name given]?
Debtor One: No.
Male speaker: No. Is he aware of – is he aware about your debt?
Debtor One: No.
Male speaker: Obviously you want this to be kept under the rug.
Debtor One: Oh, definitely, yes.
64 There was nothing misleading about this exchange, nor do I think there was anything unduly harassing or coercive about it, when considered in isolation. However, as will be seen, the information gleaned by ACM from this exchange, which was recorded in ACM’s Ledger Report for Debtor One, was used in subsequent calls to harass and coerce Debtor One. The call was not itself harassing or coercive, but it did lay the groundwork for subsequent unduly harassing and coercive conduct.
65 Both ACM and ASIC relied upon Call 4. It included the following:
Male speaker: Yes. I just need to know yes or no. If it’s no, then we might proceed with legal action.
66 This expressed as a remark about what might happen in the future. No attempt was made before me to submit that in Debtor One’s case there was any prospect of this. I accept that, in a small number of cases, litigation did occur, but it was not explained what the circumstances were which might trigger such action. In those circumstances I cannot find that this statement – admittedly couched in somewhat uncertain terms – had a reasonable basis. It was accordingly misleading.
67 The call was not unduly harassing or coercive for the reasons given in relation to Call 1.
68 ASIC relied upon this call. It included the following:
Male speaker: Yes, I understand. It’s just that this matter is on the brink of going legal, that’s why I’m giving you a call about that many times, but I’m – I’m willing to give you until the 27th…
…
Male speaker: It’s just that – it’s just that on the 27th I’ll tell the Legal Department if I don’t receive a result it will go legal.
Debtor One: Okay.
Male speaker: It is a big amount, [$]21,000. If this does go legal, we will serve a Statement of Liquidated Claims…
Debtor One: Okay.
Male speaker: …at your address, with two Sheriffs.
Debtor One: Okay.
Male speaker: So you can sign off the paper, and they’ll tell you when you – when the matter will be going to court, and it’s just that it – I know you don’t want your husband to know, but it’s just that when that happens, when there’ll be a marked – a marked car going down your driveway, to hand you those letters, I am sure he would finally realise there is a problem. Have you spoken to your husband about – maybe he can help you out.
…
Male speaker: …it’s just that our Legal Department knows that either the property that you have at – just let me pull your file – at [address given] belongs to …
Debtor One: Right.
Male speaker: …either you or your husband, so we know that you own property, and we also know that you work full time; so – do you know you are in a position to pay us that debt this – this debt you owe, and they will enforce – enforce that law on to you.
Debtor One: Okay.
Male speaker: Unfortunately.
Debtor One: I (indistinct).
Male speaker: Like I said, I’m just doing my – my – my job. I – I am not going to enforce it myself, but the lawyers here, the solicitors here, they are going to enforce it.
…
Male speaker: It’s just that we are not with a bank, we just require payment in a week or so, but I’ve been sticking my neck out for you, and I said, you know, ‘This lady’s genuine, just give her more time, I am sure she’ll come up with the money’.
…
Male speaker: Okay, I’ll put that on my notes [that you will be calling back on the 27th] and I’ll update our Legal Department in regards to that matter, all right?
69 This was misleading. The collections officer was not going to tell the Legal Department and it is not shown that the matter was about to ‘go legal’; a statement of claim was not about to be issued; the Sheriffs were not coming; the lawyers were not about to act; the speaker was not going to update the Legal Department.
70 The suggestion that there would be a marked car at Debtor One’s house with two Sheriff’s officers, when combined with the observation that the collection officer knew that the debtor did not want her husband to know of the situation, was, in effect, a tactic by which the officer sought to intimidate the debtor and suborn her will. It was thereby unduly harassing and coercive.
71 On the other hand, the references to Debtor One’s home ownership were neither unduly harassing nor coercive. Legal proceedings followed by enforcement against Debtor One’s property was a legitimate option for ACM: see [14].
72 ASIC relied upon this call. It included the following:
Quang: Yeah. The thing is, [Debtor One], listen, I’m being – I’ve been getting grilled by our legal team…
Debtor One: Yes, okay.
Quang: …last week and just the last couple of days…
Debtor One: Yes.
Quang: …asking why haven’t I proceeded with legal action against you.
…
Quang: …but I’m telling you the Legal Department will be overtaking this case…
Debtor One: Okay.
Quang: …maybe in three or four days. They’ve already conducted a land title search. They know that [name given], your husband…
Debtor One: Mmm-hmm.
Quang: …owns the property at, I believe, [address given]…
Debtor One: Mmm-hmm.
Quang: Yes, and now they are just gathering evidence whether it is more – more – more reasonable to take legal action against you.
…
Quang: Whether it will be over – overwritten by the Legal Department, I do not know.
…
Quang: Because it’s just that we litigate matters. We don’t operate like the bank, where we just provide customer service and, ‘Oh, yes, we’ll give you one week’, and then another week and another week. We just take it legal.
73 This was misleading. The collections officer was not being ‘grilled’ by the legal team and legal action was not imminent; nor was the Legal Department about to take over the case in 3 or 4 days. The image projected that what ACM did was to litigate matters was not correct: this is not how it did business.
74 In the context of the previous calls, the reference to the debtor’s husband was a veiled threat to expose her to him. For the reasons previously given it was unduly harassing and coercive. For the reasons given in relation to the previous call, however, the reference to home ownership was neither unduly harassing nor coercive.
75 Both ASIC and ACM relied upon Call 7. It included the following:
Quang: Yes. Legal action will commence in 48 hours, which Court documents will be drafted up against your name, have that…
Debtor One: Right.
Quang: …stamped in the Magistrates.
Debtor One: Right.
Quang: That becomes a legal document, and then we will serve it at your address with two Sheriff’s officers in a marked car.
76 This was misleading: legal action was not imminent. ‘The Magistrates’ had not stamped the process, nor were they going to. The Sheriff’s officers would not be there in a marked car.
77 For the reasons given in relation to Call 5, the references to Sheriff’s officers and marked cars was coercive.
78 ASIC relied upon Call 8. It included the following:
Quang: But, like the letter says, legal documents have been drafted up. It just needs my approval to go ahead and get it stamped at the Magistrate’s to become a Court document.
79 This was misleading for the same reasons as the previous call, but it was not unduly harassing or coercive for the reasons given in relation to Call 1.
80 Both ASIC and ACM relied upon Call 9. It was as follows
Quang: …and I’ve spoken to my Legal Department.
Debtor One: Please, just this one last chance, to Wednesday, please.
Quang: But, [Debtor One], don’t take this personally, it is not me who’s on the matter.
Debtor One: I know.
Quang: It’s our Legal Department.
…
Quang: I could suggest it, but if [the Legal Department] choose – they’ve already drafted up documents, they are just in the process of collecting more information on your property. Now, I’ll speak to them but, again, this is [a] $22,000 case.
…
Quang: …there’s a 90% likelihood that you will come back to me and say that you need more time, and that they are free to just do whatever with the case because that – they – they are looking at recovering that $22,000…
Debtor One: Yes.
Quang: …legally…
Debtor One: Yes.
Quang: …and they are quite confident, I’m telling you.
…
Quang: But, okay, look I’ll put up a suggestion. We are having a meeting today, just to vote on whether – how this case is going.
…
Quang: I’m just telling you right now, we – we do – we are just still ascertaining the legal documents. It’s just that if – if you’re, you know, delaying it more then the ball keeps rolling and soon it will snowball and, unfortunately, it will – it will not be in my hands…
81 This was misleading. Legal action was not imminent; the matter had not been referred to lawyers. It was not unduly harassing or coercive for the reasons given in relation to Call 1.
82 Both ASIC and ACM relied upon Call 10, though neither party drew my attention to any part of it. It was a call placed by ACM to a business where Debtor One apparently used to work, but whose employ she had left by the time of the call. I have reviewed the call and find nothing improper. ACM did not mislead the business, nor was it unduly harassing or coercive towards it. As Debtor One was unaware of the call, it cannot have misled her or unduly harassed or coerced her.
83 Both ASIC and ACM relied upon Call 11. It included the following:
Quang: Yes. Listen, I’ve kept up with my word. I’ve waited a long time. Unfortunately, I’m going to hand this case to my solicitors.
…
Quang: It is not a $2,000 or $200 case, it’s a $22,000 case, which you have a whole team waiting on my authority to…
Debtor One: I know.
Quang: …process legally.
…
Quang: [Debtor One], we’ve played it your way, can you play it my way? At least play with one – I’m not forcing you. Look, I can hold off legal action, I can hold off my authority to sign off to let our solicitors handle the case but I need a figure [that you can commit to paying by Friday].
…
Quang: If I take this back to my solicitors, I’m telling you, the whole room will be laughing at me because I – I – I am giving someone – someone who owes money, a debtor, so many chances when I know you are going to fall through, and our solicitors have been working in this industry for 20 years and we’ve seen so many excuses that – no kidding – that they always fall through.
…
Quang: Okay, and I’ll go back to my solicitors saying that I took a stat dec and I can hold you liable. In that way I could save my arse, and in that way you’ve – you’ve got your extension, so there’s a win/win situation there.
84 This was misleading. It implied a fictional interaction with the Legal Department.
85 For the reasons given in relation to Call 1, there was no unduly harassing or coercive conduct.
86 ASIC relied upon Call 12. It included the following:
Debtor One: Well, my husband’s just rang and said that someone – you’ve called.
Quang: Our litigation…
Debtor One: He’s talking…
Quang: One of our Litigation Department called.
87 I take from this that the collections officer had made good his threat to speak to the husband. This was not coercive. It was rather what occurs after coercion has failed. I have no doubt in this circumstance this was a species of harassment. The question is whether it was ‘undue’ harassment. In my opinion this was improper conduct. The debt was unrelated to the husband. The likely – although not inevitable – consequence of contacting the husband was marital strife. One does not need to determine whether it was wrong to interfere with the debtor’s relationship with her husband. It suffices instead to observe that it was certainly wrong to interfere with the husband’s relationship with the debtor. He was a third party who should not have been involved. This was undue harassment.
88 ASIC relied upon Call 13, in which ACM called one of Debtor One’s neighbours. It included the following:
Male speaker: Yes, hello. Is this the residence of – of [address given]?
Neighbour: Yes.
Male speaker: Yes. How are you going? Do you know the [surname given] family at [address given] – if their phone is working – the [surname given] residence?
Neighbour: [Surname given], yes.
Male speaker: Yes, if their phone is working, your neighbours?
Neighbour: Their phone?
Male speaker: I’m – I’m calling from ACM Group, the Litigation Department. I have an urgent civil message for them, and unfortunately the council advised me the phone is cut – is temporarily unavailable.
Neighbour: Oh.
Male speaker: Yeah, is it possible for you to pass on a message for me?
Neighbour: Yes, well, I can do that.
Male speaker: It’s quite – it’s quite urgent and we need an answer by five o’clock today.
…
Neighbour: ACM.
Male speaker: That’s correct.
Neighbour: Yes.
Male speaker: Legal Department.
Neighbour: Legal.
…
[The Male speaker asks the neighbour to pass a message on to Debtor One’s husband to call ACM]
Male speaker: Yes, that will be great. That’s my message. Very simple. Just for [Debtor One’s husband].
89 This was misleading. The call was not from the Legal Department. Contacting the debtor’s neighbour and asking him to pass a message to the debtor’s husband, as opposed to the debtor, was also a distinctly unsavoury tactic. It was both a species of harassment and coercion, showing that they are not dichotomous. It was quite unacceptable to be involving third parties in these machinations. It carried with the implicit suggestion that such exposures might be expected in the future. As harassment, it was undue.
90 ASIC relied upon Call 14. It included the following:
Quang: Yeah. The thing is [my supervisor, Connie,] told me, before she left [to go to a court meeting], that the instructions she gave you would stick; like, she says she spoke to you before that – I spoke to you a couple of days ago, that I’m handling the matter with our Legal Department, and I already passed on the file.
…
Debtor One: Yes, someone – someone has called [my husband], and I am not – someone’s called around and rang my next-door neighbour or something, and they’ve…
Quang: I believe that…
Debtor One: …told my husband.
Quang: No, we – I believe our investigation wasn’t telling your husband, it was just – we left a message to get in contact with you.
…
Quang: And now I believe your husband knows about it, the better, because you can inform him about the case together, and what you will do about it, in this account.
…
Quang: So, again, even though you don’t appreciate how our Investigation Department has gone about in contacting you, but as well – we – you know, we didn’t breach Privacy Act because we didn’t tell your husband about your debt, we just told him that it was an urgent matter.
…
Quang: So provide me with a stat dec on Monday, I’ll forward it to our Legal Department…
91 This was misleading insofar as it referred to the Legal Department. The provision of free marriage counselling was inappropriate, but neither unduly harassing nor coercive.
92 ASIC relied upon Call 15, in which Debtor One’s husband responded to the message left with his neighbour. It included the following:
Debtor One’s husband: Apparently a neighbour of mine got a call…
Shell: Yep.
Debtor One’s husband: …from a woman that was trying to contact me, but she managed to contact my neighbour, but I don’t – and he said it’s a civil matter, but I’ve got no idea what it’s about.
Shell: Okay. Can I just get your full name?
Debtor One’s husband: [Name given].
Shell: [Debtor One’s husband]. Okay. Okay. Okay, and what was your date of birth, [Debtor One’s husband]?
Debtor One’s husband: [Birth date given].
Shell: [She spells Debtor One’s husband’s name].
Debtor One’s husband: Yes.
Shell: Mmm.
Debtor One’s husband: Who am I talking to? Is this a company or…
Shell: We are a litigation company.
Debtor One’s husband: A what, sorry?
Shell: A litigation company.
Debtor One’s husband: Litigation?
Shell: Yes.
Debtor One’s husband: I can’t hear you, you’ve gone – your voice has gone really…
Shell: Can you hear me now?
Debtor One’s husband: Yes.
Shell: Yep. We are a litigation company.
Debtor One’s husband: Okay.
…
[Shell, who answered the call at ACM, transfers Debtor One’s husband to Quang]
Quang: Yes, I’m trying to get in contact with [Debtor One], but unfortunately I think her phone’s switched off. Is it possible I leave a message with you so you can pass it on to her?
…
Quang: It’s a legal matter…
Debtor One’s husband: Mmm-hmm.
Quang: …and due to – due to privacy reasons, I can’t really tell you, because I’ll be breaching certain articles of the Privacy Act…
Debtor One’s husband: Uh.
Quang: …but if you could leave her a – a message…
Debtor One’s husband: Mm-hmm.
Quang: …and get her to call us back…
Debtor One’s husband: Yes.
Quang: …that would be fantastic, but it’s a very urgent legal matter.
…
Quang: Because I’ve got – I’ve got strict instructions from our solicitors to pass the message on to her.
…
Quang: Okay. Well, she can call and speak to our Legal Department, and anyone there could just pick – pick up the call and handle her matter, or basically the person that is on the letter.
…
Quang: Yes, ACM Group, Litigation Department.
…
Quang: …okay, or within 48 hours, because it is an urgent matter and needs to be addressed with her.
93 This was misleading: ACM was not a litigation company; the speaker had no instructions (strict or otherwise) from the solicitors. It was also harassment of an undue kind to be contacting the husband for the reasons given in relation to Call 12.
94 ASIC relied upon Call 16. It included the following:
Quang: …if you can help yourself, and my solicitor’s had a good look at your file, and he has advised me to assist you and, again, you must understand how important it is that you pay this amount.
…
Quang: I need – I need to pass – I need to pass you on to one of my legal – legal advisors. Can I put you on hold, please?
Debtor One: Well, I have to go, but can I ring you back at 2.30. I have – I’ve got to go back to work now, so I’ll ring you back at – between two and three.
Quang: Well, look, I’ll – look, I’ll tell you what I’ll do. I’ll pass the file on to my legal advisor. Unfortunately, I can’t help you any more.
Debtor One: Please, just give me a little bit more time, Quang. I’m trying to get this all together.
Quang: Yes, I need you to speak to my legal advisor at the moment.
Debtor One: Yes, but I have to go to work. I will call you back. As I always said, I always do, you know…
Quang: Well, call – call back at 2.30…
Debtor One: Okay.
Quang: …and I’ll pass you on to my legal advisor…
Debtor One: All right.
Quang: …because I am not handling this account any more.
95 This was misleading. There were no legal advisers. It was not unduly harassing or coercive for the reasons given in relation to Call 1. However, as the next call shows, the collections officer was passing the matter on to someone else.
96 ASIC relied upon this call. Before setting the next call out it is worthwhile noting that the transcript does not capture the tone of Connie, who appears to have been Quang’s supervisor. By turns rude, condescending and vicious, no description of this call (and some of her later efforts) can adequately capture the offensiveness involved.
97 Call 17 included the following:
Connie: Is your husband a secondary cardholder on this?
Debtor One: No, no.
Connie: Does he know about this card?
Debtor One: No.
Connie: No. That’s why you are scared?
Debtor One: Yes.
…
Connie: The only time [a previous debtor] acted on her account, was when she was served with papers to take her home. Do you understand?
…
Connie: We are going to be serving you with papers.
Debtor One: Okay.
Connie: And we don’t necessarily have to serve you in person. We can then turn up to your family home and serve your husband with them papers, and then he will find out.
…
Connie: Right. And [your house is] in your name and [your husband’s name].
…
Connie: We are going to start legals, and you will be served at [address given].
…
Connie: But at the moment when you go to court, all the Magistrate’s going to see [is] that you’ve been nothing but promises, broken promises, and you know how much your – it’s – you know how much it’s for, this debt?
…
Connie: Right. Who’s Lisa [full name given]?
Debtor One: She’s a family friend.
Connie: We’ve actually even tried to get in touch with her to get this sorted out.
…
Connie: We never got through to her, but we’ve actually got a number here to ring her.
…
Connie: I would be on your red alert now, because if you really didn’t want you husband to know about it…
Debtor One: Yes.
…
Connie: …he’s not only going to find out about it, he’s going to lose his home over it, let me tell you.
…
Connie: And [your husband] will lose his house over it. That’s how – that’s how critical it is. I am not talking [$]2,000.
…
Connie: Mm. Okay. This gets more and more suspicious, this conversation. [You have given us a] PO Box [number, instead of an address], [you have told us that] you are staying here, [you have told us that] you are not working, [you have told us that] you are working casual. We are really, really going to have to subpoena you to court to tell us everything, I think.
…
Connie: But you have never done anything about [the debt]. We’ve – we’ve even got calls here recorded from [Commonwealth Bank] Collections, and the same story – you promised, you promised. They’ve even tried to contact your husband, did you know that?
…
Connie [Telephone number provided]. They tried to contact [name provided]. [Name provided] is your husband, isn’t he?
…
Connie: Yeah, well, there you go. Eventually…
Debtor One: I know, I know, and that’s – that’s what – I know I keep saying I know, and I’m sorry, because I just don’t know what else to say to you at this stage, but please – please, leave it with me, and I will – please, just give me the benefit of the doubt, and I will…
…
Debtor One: On Monday I’m going to get you a stat dec.
Connie: And what’s that stat dec going to say?
Debtor One: It’s – the stat dec is going to say that I promise to pay…
Connie: ‘I promise to pay’.
98 This exercise in unpleasantness conveyed several misleading statements: that papers were going to be served (they were not); that legal action was about to be commenced (it was not); that Magistrates would soon be involved (they would not).
99 It contained at least two threats: a threat to bring the debtor’s husband into the whole picture and a threat to bring a family friend into the matter. For reasons already given in relation to Calls 5 and 6, this was both undue harassment and coercion.
100 ASIC relied upon Call 18. It included the following:
Connie: What we are going to do is we are going to serve you with bankruptcy papers, okay?
…
Connie: I’m going to do it today. Probably in the next couple of days you will get them at the home address.
…
Connie: No, we’ve been giving you – this is the conversations that go on and on and on, that’s why Quang’s put it on to me because he’s just absolutely given up. Now, I’m following it through, I’m following it through. Okay? It was me that asked Quang to organise who your neighbour was, and to get in touch with your husband. We have to do something. We are not having any more broken promises. Do you understand, [Debtor One]?
…
Debtor One: I understand what you are saying.
…
Connie: We are back to square one, so how about I take the next step…
Debtor One: No, can’t you…
Connie: …and do the bankruptcy. That way you will have to…
Debtor One: We were discussing…
Connie: …do something about it.
…
Connie: There’s enough equity in the family home, I suggest you put it up for sale, the home, and you pay your debts, but in the meantime we’ll issue you with bankruptcy papers, therefore you will have no choice but to do that, okay?
101 This was misleading. Bankruptcy proceedings were not about to be commenced. For the reasons given in relation to Call 1, it was neither unduly harassing nor coercive.
102 ASIC relied upon Call 19, which was from ACM to a family friend of Debtor One’s, the ‘Lisa’ referred to in Call 17. It included the following:
Connie: That’s good. I was wondering whether you could help me. I’ve got an application form here in front of me regarding [Debtor One and her husband] – or [Debtor One]. Do you know of a [Debtor One]?
Lisa: Yes, I do.
Connie: I’m trying to locate her work. Do you know where she’s working at the moment?
Lisa: May I ask what this is about?
Connie: It’s a legal matter, a civil matter.
Lisa: Okay.
Connie: Yes, she’s put your name on the application form.
Lisa: Oh, okay. I’d have to talk to her about this, I think.
Connie: Oh, would you?
Lisa: Yes.
Connie: Okay. Because – what about [her husband], can you get [her husband] to give me a call as well, her – her husband?
…
Connie: Yes, sure, it’s Connie from ACM Legal Group in Sydney.
Lisa: ACM Legal…
Connie: Legal…
Lisa: Yes.
Connie: …Group, regarding a civil matter.
Lisa: Yes.
Connie: I’ve been in touch with her the last couple of weeks, but she’s not answering her mobile.
Lisa: Okay, yes.
Connie: I just wanted to know if she’s okay, firstly, but I need to talk to her urgently.
Lisa: Okay.
Connie: And if you could let her know that I’ve got your number too, to ring you whenever she – you know, she’s not available or whatever.
Lisa: So what am I to do about the matter…
Connie: No. Well, she’s put your name down on the application form.
…
Connie: Okay, because – yes, I need to talk to her urgently, or if you could let [her husband] know that Connie called. One or the other would be great.
103 This suggested, erroneously, that ACM was some kind of legal firm. In that way it was misleading. Although, by itself, I would not regard the reference to the matter being a ‘civil’ matter as by itself misleading, in the context of the reference to the ‘ACM Legal Group’ it was likely to convey an impression that litigation was involved and was therefore misleading. This is unsurprising given that this is what the manual suggested should be conveyed.
104 It is apparent that this call was to a third party. She was identified in the submissions to me as a friend of Debtor One’s. In my opinion it was not proper to contact a third party in this way. For the reasons given in relation to the call to Debtor One’s neighbour (Call 13), this was both unduly harassing and coercive.
105 ASIC relied upon Call 20, in which Connie called Debtor One’s neighbour and asked for a message to be left for her. It included the following:
Connie: I’m looking for [Debtor One] that lives next door to you.
Neighbour: Yes.
Connie: I’ve been trying to ring her home number, and it’s been engaged for days, and tonight it’s just ringing out. I was wondering whether you could let her know that I’ve been trying to call, but…
Neighbour: Yes. She should be home now though.
Connie: Yes, she’s not answering her home phone.
Neighbour: Isn’t she?
Connie: No. I’m really worried. I thought she would have answered.
Neighbour: Who – who’s – who are…
Connie: Do you want to give her a message for me?
Neighbour: Yes. Who’s – who’s speaking there?
Connie: Connie.
Neighbour: Connie. Are you related to her or…
Connie: No, it’s regarding a legal matter.
…
Connie: At ACM Legal Group.
Neighbour: ACM Legal…
Connie: Group. You can give it to herself or [name given], the husband, regarding a legal matter.
106 This was misleading. The combined effect of the reference to ‘ACM Legal’ and the ‘civil matter’ implied that ACM was a legal firm and that what was to be discussed was a species of litigation.
107 For reasons I have already given in relation to Call 13, contacting the neighbour and leaving such a misleading message was undue harassment. I should add that, although I cannot be sure and although no submissions were made to me on this point, it may be that this was a different neighbour to that featured in Call 13.
108 ASIC did not rely on Call 21 but ACM submitted that it assisted its case. The call involved Debtor One’s husband returning a call from Connie, but speaking to a woman called Tenille. The call was as follows:
Tenille: …she would need authorisation to speak with you.
Debtor One’s husband: From who, sorry?
Tenille: From [Debtor One].
Debtor One’s husband: I really don’t – I’m just returning this call, so.
Tenille: But the message – the call was for [Debtor One]…
Debtor One’s husband: Mmm-hmm.
Tenille: …and so we need [Debtor One] to call us back, and if – and if you want to speak to us, if she wants to – if she wants, like, you to speak with us, instead of…
Debtor One’s husband: Yes, she’s right here, she’s saying yes.
Tenille: Yes, well, that doesn’t matter, I need – I need…
Debtor One’s husband: Yes.
Tenille: …to put my supervisor on the phone, and then she needs to give verbal authorisation, and then we can speak to you.
Debtor One’s husband: Okay, go ahead and do that.
Tenille: Okay. Well can I speak to her?
Debtor One’s husband: She’s on another call.
Tenille: I don’t mind waiting. Like, if it’s…
Debtor One’s husband: Look, this is a bit silly. This Connie woman has rang here…
Tenille; Yes, I know that, and…
Debtor One’s husband: …before.
Tenille: …and the message was for [Debtor One]. Did she say your name, or did she say [Debtor One’s] name. She didn’t leave…
Debtor One’s husband: I didn’t say…
Tenille: …you a message, she left [Debtor One] a message.
Debtor One’s husband: Yes, but I didn’t say…
Tenille: So it’s not being silly. Due to the Privacy Act, we cannot talk to anyone but [Debtor One], until she says so, okay, so it’s not silly, it’s the law.
109 I accept that this was neither misleading nor harassing. I do not accept that it has any effect on the nature of the other calls.
110 ASIC relied upon Call 22, during which Debtor One spoke to both Quang and Connie. It included the following:
Quang: We are just proceeding with legal action against you, that’s all.
…
Quang: But, you know, there’s a lot of opportunity for you to backtrack and, you know, stop all the legal things going on.
…
Connie: We’ve started legal action from this morning. I’ve been in a meeting with you this morning, with our solicitors.
Debtor One: Okay.
Connie: And you will be served.
…
Connie: So, really, why don’t you just say you haven’t got the money, and we can serve you with bankruptcy papers? It’s simple. You will be finished in a couple of – four weeks it will be all over and done with.
…
Connie: Right. People that you know. So it’s okay if we come to your house and serve you with your husband there?
…
Connie: And do you know why we called your friend? Because we’ve got a list of people here we can call. Every time you avoid us, we’ll be calling somebody else.
…
Connie: …who do you want to go into it with, the Magistrate?
…
Connie: So we are going to make another note on your file and it’s only going to make you look worse when you go to court. You know that, don’t you?
…
Connie: Don’t think that [you’re going to get out of trouble] because you are calling us, that it’s going to keep us away from you. Like I said, we called your friend because you didn’t answer your phone. If you don’t answer your phone Wednesday, we will call your husband. That’s how it works…
…
Connie: [Debtor One], do you want me to ask your friends and relatives where you work? I’ve got a list here of people I can ring. How do you think we got Lisa’s number?
…
Connie: Oh, you are unbelievable. You are unbelievable. You are going to have to answer to a Magistrate; you know that, don’t you?
…
Connie: Or are you just stalling us, are you? Because I am going the whack another $2,000 legal fees on this account by the end of the week. It’ll go up to $25,000.
Debtor One: Okay.
Connie: Because you’ve wasted that much of mine and Quang and everybody else’s time that works here, and we’ve got nothing out of you, so what is the point of me waiting for Wednesday? Call you tell me that?
Debtor One: As I said to you…
Connie: ‘As I said’ – here we go again. ‘As I said, let’s stall a bit longer’. Well, guess what, I’m going to ring your husband today, and try and get out of him where you are working. Good day to you.
[End of telephone conversation]
111 This was certainly misleading. No legal action was proceeding; legal action had not been started in the morning; the operator had not been in a meeting with solicitors; the debtor was not going to be served; no bankruptcy papers were in preparation; and the ‘Magistrate’ was not going to be looking at the matter.
112 It was also unduly harassing and coercive. The operator was threatening to contact friends and relatives and (implicitly) to tell them of the debtor’s difficulties (although the chronology suggests that her husband was already aware). This was an attempt to intimidate Debtor One and negate her freedom of choice. I do not need to consider whether, having regard to the Privacy Act 1998 (Cth), this was a threat to engage in unlawful behaviour. Regardless, it was well beyond the bounds of legitimate conduct.
113 For completeness, the audio file for this call reveals Connie to use a hectoring and bullying tone. That manner augments the unduly harassing and coercive nature of the calls.
114 It was ACM and not ASIC which relied upon this call. It included this exchange:
Connie: I can offer you a settlement amount, which I can take some money off that…
Debtor One: Okay.
Connie: …if you put a goodwill of minimum $10,000…
Debtor One: Right.
Connie: …then your monthly repayments will have to be somewhere around the $500 - $600 a month.
Debtor One: Okay.
Connie: That way you are not paying so much interest.
115 There was no misconduct in this call.
Calls 24 – 27: 29 May 2009 – 9 June 2009
116 ACM relied on these four calls, which involved Debtor One and an ACM employee called Thomas, who described himself as a Section Manager. These calls apparently occurred after Debtor One contacted the Consumer Action Law Centre. My attention was drawn to the following passages:
Call 24
Thomas: I apologise, I know I was due to call you at 12, I got caught up in a meeting that went for a lot longer than expected. Is now okay to talk or…
Debtor One: Yes, sure
Thomas: Okay.
Debtor One: I’m sorry, where are you calling from again. It was Tom, wasn’t it?
Thomas: Yes, Tom, from ACM, regarding your [Commonwealth Bank] account. I had a message to give you a call.
Debtor One: Oh yes. Yes, Jillian, is that right?
Thomas: Sorry?
Debtor One: With Jillian? You’re – you’re one of the solicitors, is that right?
Thomas: No, I’m calling from ACM Group, so we are the…
Debtor One: Oh.
Thomas: …the people that purchased the [Commonwealth Bank] account…
Call 25
Thomas: Are you able to just call back when – we’ve received your fax [regarding the Consumer Action Law Centre], and obviously we want to provide an – an answer to you…
Debtor One: Okay.
Thomas: …obviously given that you’ve given us a – a sort of notice period, so I want to ensure that we are obliging at our end, so…
Debtor One: Okay.
Call 26
Thomas: …you know we – we really don’t have much – much more we can do…
Debtor One: I – I can…
Thomas: …do you know what I mean?
Debtor One: Yes.
Thomas: Yes, so I …
Debtor One: And thank you for being really nice, because, you know, like – yes, I am not going to go into details, but can I just ask you this – you said something about a goodwill payment.
Thomas: Yes.
Call 27
Thomas: No, but I’m – what I’m – what I’m asking is you’ve – you’ve made some inquires so when we speak tomorrow…
Debtor One: Yes.
Thomas: …we’ll be in a position to actually get something concrete happening, because obviously this has just been – I know you can’t talk right at the moment…
Debtor One: Yes, yes.
Thomas: …but obviously you don’t want to just keep going around and around in circles, we want to…
117 The conduct in these calls was appropriate. Thomas’ demeanour was measured and professional. I do not accept that this conclusion has any consequences for the calls in which the opposite conclusion has been reached.
118 Again, this was a call on which ACM rather than ASIC relied. It included the following:
Thomas: Yeah, I mean, can you even – like, in the short term, like just to try and get something started while we are getting this discussions, make some type of payment – you know, $500, $1,000, just to transfer into our account just so we’ve got something ticking over, because at the – I mean, at – at this stage, and as you can appreciate, you know, I know we’ve had ongoing conversations, but during that whole process, you know, the solicitors, and our solicitors have been asking us, and particularly me, as to why we haven’t proceeded with any further action.
…
Thomas: …that’s probably not going to be enough for me to hold off on legal action, and that’s – that’s like – I’m going to need something from you…
119 I do not think that this assists ACM. The reference to solicitors and legal action was misleading. Because ASIC did not rely upon it, however, I disregard this aspect of it. Apart from that the call does not take matters far one way or the other. It was not unduly harassing or coercive.
120 Debtor One’s debt was marked on the ACM Ledger as ‘settled in full’ in June 2009 following a payment by her husband of $19,000. This represented a $3,607.21 discount because, at the time of payment, Debtor One’s debt of $21,690.13 had been increased by $917.08 as a result of interest and late fees. If ACM paid 21% or less of the face value of the debt to acquire it (as Mr Brabazon said was typical), the $19,000 it received was still substantially more than it had paid, which would have been less than $4,600.
121 There is no doubt that over the period 27 March 2009 to 11 June 2009 ACM, through several operators, persistently engaged in misleading conduct by implying to Debtor One (or her acquaintances or relations) that:
(a) ACM was a firm which specialised in commencing legal proceedings for the recovery of debt (when it was not);
(b) ACM frequently commenced such proceedings (when it did not);
(c) the matter had been referred to ACM’s lawyers for the purpose of commencing legal proceedings (when it had not);
(d) ACM had decided to commence legal proceedings against Debtor One (when it had not);
(e) legal proceedings, including bankruptcy proceedings, would be commenced immediately (when they would not); and
(f) ACM would cause NSW Sheriff’s officers to attend her home to serve documents (when this was impossible).
122 I also accept that this was not isolated behaviour. It was, rather, the inevitable working through of the processes described in the manual.
123 On the other hand, whilst I accept that the operators did, from time to time, suggest that ACM had in-house lawyers, I cannot conclude that this was not misleading for it did, in fact, have a number of in-house lawyers. The same conclusion applies to the representations that ACM was in a position immediately to commence legal proceedings; the representations were made but, for the reasons at [30], they were not misleading.
124 I accept ASIC’s submission that, in several instances, the operators behaved towards Debtor One in a way which was unduly harassing and coercive. Specifically, I find that ACM engaged in unduly harassing or coercive conduct by:
(a) threatening to inform Debtor One’s husband about her indebtedness (where Debtor One had already told ACM that her husband did not know and that she did not want him to know);
(b) threatening to call Debtor One’s friends and employer until she repaid the debt;
(c) threatening to have Sherriff’s officers attend her house to effect service (when this was not going to happen); and
(d) calling third parties (her neighbour and friend) with the expectation that they would tell Debtor One that ACM had contacted them.
125 The operator Connie’s behaviour was quite unacceptable but, as I have said, it was not solely confined to her. The threats to speak with third parties were wholly inappropriate as, of course, was the carrying out of those threats. I also regard the threats, made in accordance with the manual, to have Sheriff’s officers come to serve documents in marked cars as unduly harassing and coercive. I reject ASIC’s contention that ACM’s misleading conduct and threats to commence legal proceedings (including bankruptcy proceedings) were also unduly harassing and coercive.
126 Debtor Two’s debt of $13,399.23 was initially owed to the National Australia Bank in respect of a Gold Visa card. It appears to have made its way into ACM’s hands on 15 May 2006. The ACM Ledger entry is 16 pages long and spans the period 15 May 2006 to 4 June 2009.
127 The conduct involving Debtor Two that I was taken to ranges from 22 December 2008 to 21 April 2009.
128 ASIC alleges that, in relation to Debtor Two, ACM engaged in misleading or deceptive conduct by representing to her that:
(a) ACM had commenced legal proceedings against Debtor Two (when it had not);
(b) ACM had arranged for Sheriff’s officers to serve documents on Debtor Two (when it had not); and
(c) in one call, the caller was a ‘senior legal adviser’ (when he was not).
129 ASIC further alleges that ACM engaged in unduly harassing or coercive conduct towards Debtor Two by:
(a) suggesting that both Debtor Two and her assets were being watched;
(b) representing that legal proceedings had been commenced by ACM against Debtor Two;
(c) representing that ACM had arranged for Sheriff’s officers to serve documents on Debtor Two;
(d) suggesting that Debtor Two was of limited intelligence and unable to manage her own affairs; and
(e) representing that, in one call, the caller was a ‘senior legal adviser’.
130 It was ACM which relied upon Call 29. It included the following:
Susanna: I’m just calling in regards to your Gold Visa card with the National Bank.
Debtor Two: Oh yeah, yeah, I’ve heard something about this. Yeah, look I’m going to have to get back [to] you next year about this because – I’ve really actually got no idea what’s going on so, you know, this sort of thing I’m just going to have to seek legal advice about because I think either you’ve got me confused with somebody else or something like that is going on, do you know what I mean? Like – but yeah, yeah, and so – the people I’ve actually spoken to have suggested that I, you know, just basically just seek legal advice, you know, over this, and yeah, to not really – you know to stress about it and to leave it until next year, and so what I’m going to do because – because there’s a situation that I’m in, is leave it to next year when everyone’s back from holidays and all the rest of it, you know, and – and then I’ll get in contact with youse. I’m still waiting to receive some sort of letter or anything like that about the whole situation, and then when – when I receive something in writing about it, then I can forward that to my solicitors and then they can sort of let me know what’s going on…
Susanna: Okay.
Debtor Two: …because nobody seems to have any idea what you’re talking about.
131 The point of ACM’s reliance on this call was, I think, to show that the debtors themselves engaged in a degree of misleading conduct. I accept this. Although not relevant to the question of whether ACM engaged in misleading or deceptive conduct, it does form part of the context in which meaning must be placed on the expression ‘undue harassment or coercion’.
132 ASIC relied upon Call 30. It included the following:
Alex: [Debtor Two], is that silver Holden Barina yours?
…
Alex: [I’m calling] regarding a legal matter. Look listen, I’ve got two Sheriff’s officers organised to come out to your home place to serve your court documents. When is the best time?
…
Alex: It seems like you’re a person that has no clue what they’re talking about. Is there an adult there by any chance, [Debtor Two]? Did you want to give me authorisation to speak to someone that might understand exactly what I’m talking about?
…
Alex: You heard exactly what I said. Would you – would you have anyone that can basically understand exactly what I’m talking about? Did you want to give me authorisation to speak to someone else?
…
Debtor Two: Whatever.
Alex: [Debtor Two], as I said, is there someone that would basically understand and will be up to my level when I speak to them, please.
…
Alex: I’m one of the supervisors, senior legal advisor, I can tell you that, ha-ha. So [Debtor Two], [Debtor Two], I can see here everything I’m telling you you’re taking as a joke, and I can see – I’ve flipped through your file, you’ve taken everything as a joke. I’m telling you right now, is there anyone that you want me to speak to that can understand exactly what I’m talking about? Maybe they can basically knock a bit of – a bit of, you know, sense and tell you this rather serious.
…
Alex: No, it’s a promise, I can tell you that. If I said I’m going to send someone out to serve your court documents, it’s a promise. I don’t make threats. You know, you might make threats, but I make promises.
133 This was misleading. There were no Sheriffs’ officers coming and the operator was not a senior legal advisor.
134 ASIC alleged that Alex represented that proceedings had already been commenced. I do not think that such a representation was made. ASIC did not allege that there was a misrepresentation that proceedings were about to be commenced and, consequently, I make no finding in this regard.
135 On the other hand, the exchange was certainly insulting. It was not thereby coercive, although it was certainly a species of harassment. The question of whether it was undue harassment is more difficult. Debtor Two’s previous discussion in Call 29 had included the spurious suggestion that she was not the debtor. It was obvious that asking her pleasantly for the money was unlikely to be an effective tactic. Whilst the behaviour of the collections officer was plainly in poor taste, having regard to the context, I am not prepared to say that the harassment was undue.
Calls 31 – 33: 19 March 2009 – 21 April 2009
136 It was ACM, not ASIC, which relied on Calls 31 to 33. These were as follows:
Call 31
Di: Oh okay, cool.
Debtor Two’s mother: Yeah.
Di: Well, if – if she like…
Debtor Two’s mother: I don’t see – see she’s in – going through legal proceedings at the moment.
Di: Yeah, I just need to talk to her, if she could give me a call, and maybe Monday I’ll be in the office till 8 pm, Sydney time, which is about 7.30 your time, I think. I think we’re half an hour ahead of South Australia.
Debtor Two’s mother: Yes, but I think you’ll find that she can’t contact you because she’s going through Victorian Legal Aid.
Call 32
Di: Good. I’m just calling in regards to the SIC that was served against you.
Debtor Two: Yep.
Di McIntyre: Okay, I’m just calling to see what your intentions are.
Debtor Two: I’ve already sent a letter of my defence today at Melbourne Magistrates Court.
Di McIntyre: Okay, so you’re dealing with a solicitor?
Debtor Two: Yeah. Well, I’m actually dealing with about three of them.
Di McIntyre: Oh, okay.
Call 33
Janine: So on what grounds do you not owe the interest? That’s what the courts are going to be asking you.
137 The point of these passages is that they show, in this case, that legal proceedings were on foot around March 2009. I find nothing inappropriate about them. I should note that Call 31 involved ACM calling and asking for Debtor Two. There was no suggestion that they were calling to speak to her mother.
138 Debtor Two was the only debtor in these proceedings against whom ACM actually commenced proceedings. The parties agreed that legal proceedings against Debtor Two were recommended on 6 February 2009 and approved by ACM’s Legal Department on 20 February 2009. The proceedings were commenced in the Magistrates’ Court of Victoria on 23 February 2009 and Debtor Two was served on 3 March 2009. Debtor Two settled her debt with ACM by way of a $20,000 payment on 29 April 2009. This represented a discount of $6,395.10 because the original debt of $13,399.23 had incurred $10,987.51 in interest, $990 in late fees and $998.36 in legal fees, according to ACM’s Ledger Report.
139 I accept that ASIC has established that in Call 30 ACM engaged in misleading conduct by implying that (a) Sheriff’s officers were going to serve court documents and (b) Alex was a senior legal officer. That conduct does not become reasonably based merely because in February of the following year proceedings were commenced.
140 On the other hand, I do not accept that Debtor Two was subject to undue harassment or coercion in any of the ways pleaded.
141 Debtor Three was first entered into ACM’s debt recovery system on 19 January 2005. His initial debt of $5,939.12 was owed to the National Australia Bank as a personal loan. Debtor Three’s ACM Ledger Report is 15 pages long and spans the period 19 January 2005 to 18 June 2009.
142 The calls involving Debtor Three commenced on 3 December 2008 and concluded on 15 April 2009.
143 ASIC alleges that ACM engaged in misleading or deceptive conduct by representing to Debtor Three that:
(a) ACM had commenced legal proceedings against Debtor Three (when it had not);
(b) ACM would cause Sheriff’s officers to attend Debtor Three’s home to serve documents and have affidavit evidence sworn (when it would not);
(c) ACM employed ‘in-house’ lawyers (when it did not);
(d) ACM specialised in commencing legal proceedings against debtors for the recovery of debt (when it did not);
(e) ACM frequently commenced legal proceedings against debtors for the recovery of debts (when it did not);
(f) the matter had been referred to ACM’s lawyers for the purpose of commencing legal proceedings (when it had not); and
(g) ACM had decided to, could and would commence legal proceedings shortly against Debtor Three (when it had not, could not and would not).
144 Above at [30], I have rejected the factual bases for (c) and (g) (insofar as it relates to the capacity of ACM to commence legal proceedings quickly).
145 ASIC also alleges that ACM engaged in unduly harassing or coercive conduct by:
(a) representing to Debtor Three that it had commenced proceedings;
(b) threatening to send Sheriff’s officers to serve documents; and
(c) making the representations outlined at [143](c)-(g).
146 Both parties relied upon Call 34. It included the following:
Faatu: Yeah, Nancy has, um, just passed on your file for me can sign off. I just want to confirm an address for legal files to be served at [address given], is that correct?
Debtor Three: I don’t live there.
Faatu: Sorry?
Debtor Three: I don’t live there.
Faatu: Yeah. So can I have an address on which we can serve you the legal documents?
…
Faatu: Do you know what? Don’t bother. We’ll just take this straight to the Magistrate and you can explain that to them, okay? Thank you, [Debtor Three], for your time.
147 The first thing to take from this is that Debtor Three was not co-operative. He would not give his address. He also denied the debt and threatened to contact ASIC.
148 The second thing to note is that, while the collections officer may have implied that proceedings were about to be commenced, she did not imply, as ASIC submitted, that proceedings had already been commenced. The misleading conduct pleaded has not, therefore, been made out. I do not accept that it was undue harassment or coercion for the reasons given in relation to Call 1.
149 Both parties relied on Call 35. It included the following:
Alex: Okay, I did say I’d give you a call back. Now I’ve got the power to place an injunction on the file, [Debtor Three], which means to hold off any further proceedings on this file. But I need to know what is your intention – intention on this matter, your personal loan account?
…
Alex: …a – [if I was] a wise man – if I – if I had basically [letters of demand in] my mail, addressed to myself, to my PO Box, telling me that I owe a debt and I claim that wasn’t mine, I’ll call up and follow-up the matter. Now this will be explained to the Magistrate. I will be more than happy to basically tell the Magistrate this is what happened.
…
Alex: I’m going to ask you this one more time. If you don’t answer it correctly, I will terminate the call. As I said, the debtor is more serious than my – in the Magistrate. I couldn’t care less. I’ve got a big pocket – I’ve got a big pocket to say…
Debtor Three: I really – to tell you the truth, I’m willing to go to court. It doesn’t worry me.
Alex: Okay, yeah, as I said, listen, I’ve got documentations.
Debtor Three: (Indistinct) yeah, I know, I know, I know.
Alex: I have got documentations here to prove the debt…
Debtor Three: (Indistinct) I know all about you.
Alex: As I said, we’ve got a big – big pocket here, mate. I’m not sure about you. I’m not sure about you, but we do…
Debtor Three: I haven’t got – mate, if I haven’t got the money to pay you back, I haven’t got it. That’s as simple as that, you know.
Alex: No, no, no, no, no, no, no. [Debtor Three], [Debtor Three] – you work full time. I’ll guarantee if I take legal action, I obtain judgment under – through the legal channel, obviously, I garnish your wage – I’ll tell you right now I’ll get something out of you.
…
Alex: Okay. Now, what I’m going to do is, I’m gunna allow my solicitors to do whatever they want to do, escalate it, send Sheriff’s – Sheriff’s officers out, serve you Court documents, but you got my number there. Don’t wait until it’s too late. Don’t wait until the Sheriffs come out.
150 This contained a threat that proceedings would be commenced and that Sheriff’s officers would effect service. On the other hand, it would be fair to say that Debtor Three was mostly unmoved, pointing out that he did not have the money and inviting ACM to go ahead and commence proceedings. In my opinion it was misleading but probably unsuccessful. I do not find undue harassment or coercion.
151 Both parties relied on Call 36. It included the following:
Geoff: [This is Geoff] from ACMS Legal Department.
…
Geoff: I am ringing from ACMS Legal Department.
Debtor Three: Yeah, but how do I know that? I don’t know that. You could be anyone ringing up.
Geoff: Well, it’s not a case that – that you need to know that. I’m telling you where I am from…
Debtor Three: I know that.
Geoff: …I am trying to contact…
Debtor Three: Well, I’d like…
Geoff: …[Debtor Three] in regards to an outstanding civil matter.
…
Geoff: I have told you I am Geoff from ACMS Legal Department.
…
Geoff: I have confirmed who I am. I am from – I am from ACMS Legal Department, and I’m wishing to speak to [Debtor Three]…
…
Geoff: Okay, well, if that’s the case then, there’s no use talking to you. I may as well take litigation against you straight away. So if you’re not prepared to actually assist me…
…
Geoff: I am from AS – ACMS Legal Department.
…
Geoff: I may as well just take litigation action straight away…
152 This contained an implication that the matter was in the hands of ACM’s lawyers, that litigation would be commenced and that ACM dealt in litigation. These implications were misleading. It also shows that Debtor Three could give as good as he got, as his challenges to the operator to identify himself show. I cannot discern undue harassment or coercion.
153 Both parties relied on Call 37. It included the following:
Nancy: Okay. The solicitors basically just want to give you one last courtesy call to see if there’s anything you want to do before it goes to Court, maybe you want to handle it outside court so you don’t have the legal costs to pay etc, etc, and if you do want to do something we’ve got two options at this particular time for where you…
…
Nancy: …However, the solicitors do need to know what you want to do, because if – if you really don’t know about – anything about the debt you really don’t want to deal with the consequences when the Magistrate looks back on all these calls and all – all the audit trail conversations and the recorded calls to see that we’ve actually tried to tell you about it…
…
Nancy: You know, where the – the Magistrate will see that we’ve tried to tell you about it, we’ve tried to talk to you about – you’ve done nothing about it. Now you are standing in court paying for legal costs, for what reason when you could have…
…
Nancy: Because Telstra doesn’t send you letter to let you know that the calls are getting recorded, incoming and outgoing. We are a Legal Department, we’re not telecommunications…
…
Nancy: …and you can take that up with the Magistrate.
154 I do not think that ACM obtains any benefit from this call. On the other hand, I do accept that it was misleading. Solicitors had not been engaged, Nancy was not from the Legal Department and proceedings were not imminent. I do not accept that it involved undue harassment or coercion for the reasons given in relation to Call 1.
155 Both parties relied upon Call 38. It included the following:
Nancy: Okay, that’s fine. So what we’ll do is we’ll take this to court and enter judgment.
…
Nancy: From what I can see last time, that’s the information that we had and that’s what they’ll go by, and the Sheriff’s officers will basically do the investigation, and the investigation team will get involved into it. It’s got nothing to do with us after that because it becomes into a Legal Department matter, where basically…
156 I assume that ACM’s reliance upon Call 38 was to show that this operator was not suggesting that the segment of the business in which she worked was a litigation centre. On the other hand, the first comment was misleading in that it suggested that proceedings would be commenced.
157 I do not find undue harassment or coercion for the reasons given in relation to Call 1.
158 Both parties relied on Call 39. It included the following:
Nancy: Okay. So if it’s – if it’s not you [who incurred this debt], then you wouldn’t be basically hesitant to be providing us with documents so you can prove – actually sign an affidavit to state that’s not you.
Debtor Three: Yeah whatever.
Nancy: All right. So do you want to pick up an affidavit or do you want us to send down a Sheriff so you can sign it?
…
Nancy: [An affidavit is] basically a legal binding contract where you declare, you know, this is not you or this is not your account.
Debtor Three: Yeah, so what’s that mean; like what’s it mean like?
Nancy: So if the Magistrate finds some other kind of evidence to prove that it is you, you can be prosecuted by the government basically. If it’s not you basically this account will get closed off as a fraud…
…
Nancy: All right. So you want me to send down a Sheriff with [the affidavit] and you can sign it then?
159 I do not think this was misleading, at least in the way in which ASIC put its case. Debtor Three was denying (falsely) that he was a debtor. The collections officer was attempting to get him to provide evidence to make good that proposition, a course which Debtor Three was resisting. It is true that the references to the Sheriff’s officers was, perhaps, a little wide of the mark but in the context I regard these as being in the nature of a flourish. Where Debtor Three’s responses included the enduringly popular expression ‘Yeah whatever’ plainly stronger words were necessary. In that context, I also reject the assertion that this call involved unduly harassing or coercive conduct.
160 ACM’s trail on Debtor Three appears to have gone cold. Letters sent to him were ‘returned as Bad Address’ in early June 2009 (though the Ledger Report for Debtor Three was printed out only three weeks later). Debtor Three appears never to have paid any money to ACM, with the last payment of $5,000 apparently having been made before ACM purchased the debt. At the date of the printing of the Ledger Report, Debtor Three’s original debt of $5,939.12 had been joined by $4,095.58 in interest and $1,190 in late fees.
161 I accept that ACM engaged in misleading or deceptive conduct by representing to Debtor Three that:
(a) ACM would cause Sheriff’s officers to attend Debtor Three’s home to serve documents (when it would not);
(b) ACM specialised in commencing legal proceedings against debtors for the recovery of debt (when it did not);
(c) ACM frequently commenced legal proceedings against debtors for the recovery of debts (when it did not); and
(d) ACM had decided to and would commence legal proceedings shortly against Debtor Three (when it had not, could not and would not).
162 I have found at [148] that there was no representation that proceedings had been commenced.
163 I think it very unlikely, however, that Debtor Three was actually misled.
164 I do not think that ACM’s conduct towards Debtor Three was unduly harassing or coercive.
165 Debtor Four’s debt of $4,199.11, which related to a NAB Visa card, first appeared in the ACM Ledger on 31 January 2005. Debtor Four’s Ledger Report, as tendered before me, was 20 pages long.
166 The calls involving Debtor Four range from 30 April 2009 to 11 December 2009.
167 ASIC alleges that, in those calls, ACM engaged in misleading or deceptive conduct by representing to Debtor Four, his partner and his employer that:
(a) ACM employed ‘in-house’ lawyers (when it did not);
(b) ACM specialised in commencing legal proceedings against debtors for the recovery of debt (when it did not);
(c) ACM frequently commenced legal proceedings against debtors for the recovery of debts (when it did not);
(d) the matter had been referred to ACM’s lawyers for the purpose of commencing legal proceedings (when it had not); and
(e) ACM had decided to, could and would commence legal proceedings shortly against Debtor Four (when it had not, could not and would not).
168 Furthermore, ASIC alleges that ACM engaged in misleading or deceptive conduct by seeking to obtain information about Debtor Four under false pretences.
169 ASIC also alleges that ACM engaged in unduly harassing or coercive conduct by:
(a) calling Debtor Four’s employer;
(b) suggesting to Debtor Four that his outstanding debt might adversely affect his partner’s application for the custody of her children from a previous relationship;
(c) saying that ACM was ‘ruthless’ when it came to collecting debt;
(d) suggesting that ACM was ‘tracking him down’; and
(e) making the representations referred to in [167] and [168].
170 ASIC relied upon Call 40. It included the following:
Tamalii: Okay. Look, the reason I am giving you a call, though, you know, being the last day of the month we have to settle accounts, we need to either close off or force for legal proceedings. Now, with your account we haven’t received a payment since November and we did manage to contact you, I mean, back in December and January and you said that you were going to start making your regular payments again, you were going to make another payment of $500 and then $100 a week but, yeah, we didn’t receive that either and we didn’t receive any notification or any phone calls advising us why, you know? You didn’t let us know…
Debtor Four: Yep.
Tamalii: …what was happening…
Debtor Four: Yep.
Tamalii: …pretty much. So now the account’s been sitting here and, you know, waiting for – for the legal proceedings to begin but…
…
Tamalii: …and find out what’s happening and then, you know, there’s nothing I can do but, you know, it – it hasn’t gone there yet, so, you know, I thought I’d give you a call, see what’s happening, see if I can speak to you. Look, what can you do now?
171 The comment that, at the end of the month, ACM would ‘close off or force for legal proceedings’ in respect of its accounts was misleading insofar as it suggested that ACM frequently commenced proceedings, that it specialised in doing so and that proceedings against Debtor Four were imminent. The assertion that ‘the account’s been sitting here and…waiting for…legal proceedings to begin’ suggested that, in Debtor Four’s case, legal proceedings were the next step. This was also misleading. I do not think this exchange was an example of undue harassment or coercion for the reasons given in relation to Call 1.
Calls 41 – 44: 25 June 2009 – 22 September 2009
172 It was ACM which relied upon these calls. They included the following:
Call 41
Danny: All right, well, you know, I’m – I’m – I’m going to – I’m – I’m trying to help you out as well, so I mean…
Debtor Four: No, no, that’s cool. I purely understand and…
Danny: You know. Yeah, yeah. So we – we’ll get that sorted next Friday, okay?
Debtor Four: Yep.
Danny: …the only reason why we would call but I mean, other than that, you know, we’ve got no reason to unless we can, you know, get in contact with you through the mobile.
Call 42
Tamalii: Yeah, no, we don’t actually have that address on file. So can you just spell the…
Debtor Four: Because, yeah, Dorelle…
Tamalii …suburb for me.
Debtor Four: ...because he – he said it – yeah, like, I’ve given my address, he said ‘Oh, yeah, no worries’ he wouldn’t carry on with some legal whatever.
Call 43
Sam: All right. So when can you start your payments?
Debtor Four: Next week would be good.
Sam: Okay. And how much are you looking at doing per week, per fortnight?
Debtor Four: Probably 200 a fortnight, 100 a week.
Sam: Okay. So to start that next week.
Debtor Four: Yep.
Call 44
Kim: 100 – just let me check. $100 a fortnight.
Debtor Four: Okay, yeah.
Kim: Yeah?
Debtor Four: Yeah, sure, that’s fine. Yeah.
Kim: So you need to come up with $500 first when you come back from Darwin. You need to pay $500 first, then I’ll be able to put you back on an arrangement for $100 a fortnight.
173 These exchanges do not contain any species of misconduct.
174 ASIC relied upon this call. It included the following:
Kimi: Okay, and I’ll grab the receipt number off you so I can show that to my solicitors that you actually made the payment and if that hasn’t come through by Monday I will get – have to get you to fax through that receipt.
175 This was misleading: there was no solicitor. On the other hand, there was nothing unduly harassing or coercive about this call.
176 ASIC relied upon Call 46, which ACM placed to Debtor Four’s employer. It included the following:
Ashleigh: Good morning, [name of employer], Ashleigh speaking.
…
Collections Officer: Yeah, I’m sorry. I’m actually calling from a financial institution in regards to a – a credit application that’s gone through and they’ve actually – the person that’s actually put it through has listed you guys as their employer. I’m wondering if I can speak to HR or resourcing or anything like that in regards to that person?
Ashleigh: Mmm-hmm. Yeah, you can speak to me if you like.
…
Collections Officer: Okay. And it says he works 30-plus hours a week. Is that correct?
Ashleigh: Yeah, definitely.
Collections Officer: Yeah, definitely. I would imagine in the contracting. Now, I can’t really – I’m trying to read his writing, that’s all. It says here he’s – we’ve got an annual here anywhere between – is it 55 or 50?
Ashleigh: Mmm.
Collections Officer: It looks like 55 to 60 to me.
Ashleigh: Right.
Collections Officer: Would you be able to confirm that or not?
Ashleigh: Yeah, just a moment. I’ll just have a look on his file. Yeah, around to – I’d say average, yeah, 50-plus.
Collections Officer: So we’ll stick down there 50, not 55.
…
Collections Officer: Okay. That’s not a worry. What I’ll do is I’ll give him a call. Let him know [how] his application went. Thanks so much for that.
177 This was misleading. Confidential information was elicited by a statement which was knowingly false, namely, that the call was for the purpose of processing a ‘credit application’. This, so it seems to me, is a reasonably serious matter.
178 I did not apprehend ASIC to advance a case that the company affected by this conduct had been subject to coercion. ASIC did advance a case, however, that calling Debtor Four’s employer was unduly harassing or coercive because ACM intended that the employer would ask Debtor Four questions about the call and Debtor Four would thereby discover that ACM was calling his employer. As is made apparent in Call 49, Debtor Four did find out that ACM had called his employer. I conclude that this case is made out and that ACM engaged in unduly harassing or coercive conduct.
179 ASIC relied upon Call 47, which was also placed to Debtor Four’s employer. It included the following:
Barbra: Good afternoon, [name of employer]. This is Barbra.
Collections Officer: Hi there, Barbra. I’m sorry to bother you. I’m actually looking to send some documents over to an employee of yours at – who’s working at [name of employer]; is that right?
Barbra: Yep.
Collections Officer: Yeah. I believe he’s always out on the job site. I’m just wondering would – I mean, is there any particular – because I know I need – I need to actually give him the documents in person. If I were to come in and – or post these documents through, would he be called in to collect them or would we have to…
Barbra: No.
Collections Officer: …out on site to do it?
Barbra: We just would give it to one of the guys who’s going down to whatever job…
Collections Officer: Okay.
Barbra: …site he’s on, so.
Collections Officer: Okay. I don’t want to say who it is. It’s just basically legal documents, so we just – we need them served to the actual person.
…
Collections Officer: Yeah, see, all I – if I gave you his name would you be able to keep that between you and me, just…
Barbara: Yeah.
Collections Officer: …because I really don’t want – I’ve already said a lot more than what I should have.
Barbara: Mmm.
Collections Officer: It’s just fairly urgent to send those documents. His name is [Debtor Four].
Barbara: Okay, yeah.
Collections Officer: Yeah, and I’ve been told he still – he works for the company and he’s on the job site and I was just wondering which job site that is and if someone were to come with papers would they – would they take – would someone take them down there or would they have – because we have to actually personally serve them see. So…
180 I do not accept that this is misleading or deceptive. The reference to legal documents is insufficient, in the context of this call, to infer the imminence of legal proceedings. For the reasons given in relation to Call 46, however, this call involved undue harassment or coercion.
181 ASIC relied upon this call, which was also to Debtor Four’s employer. It included the following:
Kerry: Morning, [name of employer], Kerry speaking.
Kush: Hi there, Kerry. My name is Kush. I’m wondering if I can leave a message for one of the employees there at all?
Kerry: So who’s calling?
Kush: So my name is Kush, I was wanting to leave a message for one of the employees that works there for you.
Kerry: Sure.
Kush: Yep. Can – his name is [Debtor Four].
Kerry: Yeah.
Kush: Yeah. Can you just let him know that I’m calling from a company in Sydney and one of our senior legal advisers, Dorelle, spelt D-O-R-E-L-L-E…
Kerry: Mmm-hmm.
Kush: …is expecting a call back by 3pm today. His direct – yep, sorry, and his direct number is…
…
Kush: Yep, need to call back by 3pm today. His direct number is [number given].
182 This was not misleading vis-à-vis the employer. The information was passed to them purely as a conduit to Debtor Four. On the other hand, I would accept that it was likely to suggest to Debtor Four that Dorelle was a senior legal advisor. This was misleading because it suggested that ACM employed lawyers who were looking into Debtor Four’s debt.
183 It was not, however, unduly harassing or coercive. Although again made to Debtor Four’s employer, this call can be distinguished from Calls 46 and 47 because ACM did no more than leave a message for Debtor Four, laced though it was with the misleading reference to the ‘senior legal adviser’.
184 Both parties relied on Call 49. It included the following:
Male speaker [prior to Debtor Four answering the phone]:
Just say ‘I’m transferring you to the legal manager’.
…
Dorelle: Yeah. What I’ll do. I’ll just place you on hold and I’ll get – I’ll speak to the manager, okay?
…
Dorelle: That’s good. [Debtor Four], Kush, one of my staff members, has been handling your account. She’s given it to me to take to court and I …
…
Debtor Four: Quite a bit, I’m the only breadwinner at the moment. We’re – we’re in court for custody of my partner’s children – she’s got two girls – so…
…
Dorelle: Yeah. Well, won’t look good on your case if they know that there’ll be – debt collectors – ah – chasing you…
Debtor Four: Yeah.
Dorelle: …for debt. It’s not going to look good on her case if she’s using you as a – as support income. I now understand she’s left her job, your partner, she doesn’t work at that place anymore, so…
Debtor Four: Yeah, all right.
Dorelle: Yeah, so.
Debtor Four: You’ve been calling up there too?
Dorelle: Well, we have been tracking you down, mate, because (indistinct)…
…
Dorelle: Yeah. We’ve already spoken to your pay for – payroll and they understand that your income is around 50k a year; is that correct?
Debtor Four: I beg your pardon?
Dorelle: We’ve already spoken to payroll officer and we understand that your pay is around 50k a year. Is that correct?
Debtor Four: Mate, that’s a privacy, you’ve just fuckin’ breach privacy. You can’t…
…
Dorelle: Yes, we can, because I tell you when we go to court and we garnish your wages and – and the courts – we show the courts this is how much you make we will leave [you] with the bare minimum of $239.74 less and we will get the rest. That’s why – this is how serious the matter is now. Trust me, [Debtor Four], you know, once I said the matter’s going legal, you think it’s just going to go to court, the Magistrate’s going to tell you ‘How come you didn’t pay your debt?’ and they’re going to slap you on the wrist and put you on some instalment order? [Debtor Four], it’s not like that mate. We’re ACM Group. We’re the number one debt collection agency in Australia, all right? We – we’re ruthless, mate.
…
Dorelle: …put our – you put our name [into Google], mate, there’s a lot of people who regret it that we went to ever talk to – went to court, okay? So I’m going to give you a final opportunity, mate, okay? You need to come up with a goodwill payment. You need to come up with at least 50 per cent of the debt, then I’ll put you back on the arrangement.
Debtor Four: Oh, really? Oh, really?
Dorelle: Yeah. Yeah. Or I serve you the papers mate…and get a garnishee order.
…
Dorelle: Yeah, it’s called a judgment. It’s a court judgment. So we’ll have judgment for 12 years, which means that for the next 12 years ACM Group will be able to do any sort of legal enforcement action to recover the debt and your $10,000 account…
…
Dorelle: Yeah, well, you know, you’ve got to the weekend. So I don’t know have to – I don’t have to proceed on this matter till 3pm on Monday. So you’ve got till then to see what you can come up with. If you come close to it I’ll take it into consideration because you have made $1,100 worth of payments, so I’ll take that into consideration. So you’ve got till Monday and this was – Kush will just give me a call…
…
Dorelle: (Laughs.) Watch your language, [Debtor Four]. We’ll still take you to court and we’ll get judgment for 12 years.
…
Dorelle: Yeah, you’ve got to understand that I stuck out my neck for you, right, and I look like a fool. Now I have to go back and recommence court proceedings against you right, after you gave me your word that you will stick to this agreement and that you’ll make your payment. And the thing is, mate, right, I’m a family man and I understand everyone’s got debts to pay. I can understand that kids are very expensive to take care of, right, but…
Debtor Four: Yes, (indistinct) they are.
Dorelle: …if I’ve put a – promise something – yeah, if I want to promise something, I want to keep to it. If I can’t, I would keep – call up and say ‘Listen, I can’t make this payment, look, can we reduce the payments?’ but, mate you have not been in contact with us, you’ve been avoiding us, okay? We’ve contacted your number so many times and you still haven’t replied back to any of our calls and messages. It’s only when Kush, right, had to go to the point where she had to investigate the matter on you and is threatening you with legal proceedings, right, that’s when you called back. That’s when you – got your attention.
…
Dorelle: And [the debt is] only going to get bigger due to – due to our legal…fees as well.
Debtor Four: Sorry you lost what?
Dorelle: And I only advise you that it’s only going to get bigger due to our late – our – our legal fees as well.
…
Dorelle: Hold on. Hey, Kush, has the legal fees been added on to this account?
…
Dorelle: Yeah, but me looking at the file, me preparing it and me going to court on Monday, that’s – all costs money mate. I haven’t added those charges yet, so right now you owe $8,969.97 but on Monday it will be a different story, mate.
185 This was misleading. Dorelle was not a legal manager; he was not about to take the matter to court; papers were not about to be served; judgment and garnishment were not imminent; the case was not going to court on Monday.
186 Although there may be questions about the lawfulness of the manner by which ACM came to know Debtor Four’s salary, I do not see why, once armed with that information, it was harassing or coercive to use it with Debtor Four.
187 ASIC also alleged in relation to this call that it was unduly harassing or coercive to:
(a) suggest that the debt would threaten the custody application;
(b) say that ACM was ‘ruthless, mate’; and
(c) say ‘we are tracking you down’.
188 Although this is close to the line, I think that, in the context of the debt recovery business, this escapes, perhaps by a very narrow margin, being characterised as unduly harassing or coercive conduct.
189 Both parties relied upon Call 50, which was made by ACM to Debtor Four’s partner. It included the following:
Kush: And this will be followed by a $100 weekly arrangement from the 29th of October, where they’ll review it in about three months. What [one of our legal managers] also stated very clearly was that in accordance with this agreement they will hold up any legal proceedings unless the arrangement is in default. So basically what’s happened is – I don’t know if [Debtor Four] told you or not, but the same legal adviser spoke to him last week…
Debtor Four’s partner: Mmm-hmm.
Kush: …advising him that he had a deadline of 3pm today – $4,000 payment for us to put him on an arrangement or we’ll be signing off on the legal documents.
…
Kush: No agreement.
Debtor Four’s partner: No agreement today.
Kush: This is what I’m trying to explain to you. This has gotten to the point where he has not made a payment for over a year and we left him many, many messages on his phone. We tried and tried and tried and we said to him ‘Call us back, we just want to talk to you’ and the only time we got a call back was when we said to him we were going to go legal and that is the only time we got a call back and my manager, like, just stuck his neck out and now we have to go back to our solicitors and they’re not happy with it. This is what I’m trying to tell you and this is why…
…
Kush: …they’re just ready to sign off and I don’t want that to happen to him. I’ve – you know, (indistinct) explained me the situation.
…
Kush: …he’s the solicitor, I can’t say nothing, I can’t overrule him. I’m just doing my job.
…
Kush: Okay, yeah. No worries. What we’re going to do is – basically what happens is that a (indistinct) is ordered so that means a summons is ordered. It’s served to him either at work or at home, either way, or someone can take it on his behalf. Once he’s been served he’s got 28 days to act. So what happens there is there’s a couple of options. He can either payment – pay – do a payment in full…
…
Kush: …the thing is we’ve got enough – basically what’s happened is you’re just going to – this is – I’m telling you straight up, right. The judge is going to say ‘Okay, when was the last payment made?’ We’ll say ‘Okay, the 7th of the 8th 2009’. And they’ll said ‘Okay, what was the deal?’ and we’ll go ‘We’ve got it in writing, we’ve got a signature, we’ve got phone conversations saying that he would pay $500 over two months followed by $100 weekly’. ‘How many payments did you get?’ ‘We got $1,000’. ‘Where did the weekly payment go?’ ‘We don’t know’. ‘Okay. So what have you done in order to get in contact with him?’ ‘We’ve tried to call him. We’ve left messages. We found out where he’s working. He’s moved addresses. We’ve had to locate him. We’ve left messages. He’s never responded. It got to the stage where it got to legal. Once we said we were going legal, we finally got a call back. When we demanded a certain amount of the balance in order for that to go away he has rejected it. He’s come back with $500’. They’ll say ‘Okay, fine, it’s been a year. There has been no payment’. Bang, done, sealed.
…
Kush: [Debtor Four] said to us that he did not want to pay and the my – my solicitor explained to him exactly what I just said to you – ‘This is what’s going to happen’.
Debtor Four’s partner: Yeah.
Kush: ‘This is what is going to happen’ and he did not like that and he – my solicitor said to him ‘I’m sorry, but this is what they want to do’. He’s just passing on the message.
…
Kush: I’ve got a meeting in about – about 3.30. What I’ll do is I’ll give you a call back – should only take me about five minutes – I’ll give you a call back on [Debtor Four’s] mobile.
Debtor Four’s partner: Yeah.
Kush: I will speak to the solicitors, I’ll see what they have to say and I’ll just let you know.
190 This was misleading. Lawyers were not involved and they were not considering proceedings. There was no prospect of a judge saying anything about the debt. It was, however, wholly inappropriate to be dealing with Debtor Four’s partner. This was a species of improper tactic – it was unduly harassing for the reasons given in relation to Call 12.
191 Both parties relied upon Call 51, which was also between ACM and Debtor Four’s partner. Again, ACM placed the call. It included the following:
Kush: Hey, it’s Kush calling from ACM Group. Just literally walked out of the meeting now. I’ll tell you exactly…
Debtor Four’s partner: Yeah.
Kush: …what they’ve said to me, okay. They’re happy to hold off legal.
…
Kush: Yeah, I need to punch it in before then, otherwise they’re just going to go ‘Nah’ because basically they just said end of business today, that’s what they’ve said to me, so.
…
Kush: Okay. What I’ll do is I’ll give you all the – it’s just this one time I need it done, that’s all, because I don’t want them to go any further on it, okay? I’m sorry but they’ve given me specific orders and I can only follow…
…
Debtor Four’s partner: …and what guys are allowed to do. But were (indistinct) known that you’re not allowed to contact our work at any time.
Kush: Not unless it hasn’t been re – and we’re more than – we’re allowed to contact your work unless we’ve been told specifically not to and we never have been told because I won’t have the (indistinct)…
Lisa: And request information…
Kush: (Indistinct).
Lisa: And request information about that.
Kush: No, all I said to her was I said I was doing – she asked me where I was from, I said…
Lisa: Yeah
Kush: …‘I’m from a financial institution’, which we are.
Lisa: Yes.
Kush: She asked – I asked if I could ask some questions in regards to [Debtor Four], she said…
Lisa: Mmm-hmm.
Kush: …‘that’s fine’. I did ask her a few questions, whether she answered them or not I can’t say but she couldn’t – she only gave me basic information. Basically it wasn’t HR and it wasn’t anything like that. I asked a few questions, I did not do it under any pretences. She just – I asked her the questions, I said ‘Could you answer them or not?’ she said she’d try and I asked her. Simple as that. I didn’t…
Lisa: Yeah, but you weren’t allowed to do that; reading on the actual signed itself, unless – unless you’ve had written consent you’re not allowed to and that’s (indistinct).
Kush: Yeah, but I didn’t …
Lisa: (Indistinct).
Kush: …voluntarily – she volunteered the information, that’s the thing. I didn’t ask her straight up ‘I want to know about this person’.
192 This was misleading. The operator gave the impression that there was a legal team involved and the proceedings were only just in abeyance. The operator also said that, when she called Debtor Four’s employer, she didn’t speak to human resources or ‘anything like that’ and that she ‘did not do it under any pretences’. This is not true. In Call 46, the caller (who I infer was Kush from the similarity of the voices and from the fact that Kush admitted to calling Debtor Four’s employer): (a) asked to speak to human resources and was told by Ashleigh that she could assist, and (b) said that she was calling in relation to a credit application. This was misleading.
193 For the reasons given in relation to Call 50, this was unduly harassing. ACM had no business seeking to strongarm Debtor Four through his partner.
194 ASIC relied upon this call. It included the following:
Debtor Four: Yeah, that’s me. Who’s this?
Danny: Yeah, [Debtor Four] – [Debtor Four], it’s Danny calling from the ACM Legal Department. How are ya?
…
Danny: Mate, it doesn’t matter if you’ve paid the money. I’m calling from the Legal Department. Do you not understand that?
…
Danny: It – it depends. It depends how you made the payment. If you made a payment, you know – like, you can – if you’ve made a payment online or at the bank or whatever, it can take anywhere from 24 to 48 hours, you know, but the reason why I’m calling you, [Debtor Four], is because I don’t want any legal proceedings going on, you know, if you’ve done the right thing by us, you know what I mean? That’s why I’m giving you a courtesy call. I’m not calling to argue with you at all.
…
Danny: …I would like – I actually need a hard copy [of the receipt of payment] because my – I’ve got – I would actually take it to my solicitors, if you know what I mean, you know. It’s just a company protocol. So what I’ll do, like – you – I know you’re at work at the moment, so I won’t – you know, I won’t get you to go to the post office and, like, fax it over but if I haven’t received it on Monday, then I’ll give you a call…
195 This was misleading to the extent it suggested the involvement of the Legal Department; also to the extent it suggested that a solicitor had been retained and that litigation would be commenced if the payment was not forthcoming. I do not think this was unduly harassing or coercive for the reasons given in relation to Call 1.
196 The printout of Debtor Four’s Ledger Report is dated 18 February 2010 and shows activity up to and on that day. As at that point, the $4,199.11 initial debt had incurred interest of $5,370.35 and $990 in late fees. Debtor Four had, to that point, made $2,036.10 in repayments, meaning that he was $8,523.36 in arrears. His last payment of $148 had been made approximately five weeks earlier. The Ledger Report notes ‘Status: Arrangement Broken’.
197 It is reasonably clear that the operators engaged in misleading deceptive conduct in relation to Debtor Four. Specifically, I find that ACM engaged in misleading or deceptive conduct by:
(a) representing that ACM specialised in commencing legal proceedings against debtors for the recovery of debt;
(b) representing that ACM frequently commenced legal proceedings against debtors for the recovery of debts;
(c) representing that the matter had been referred to ACM’s lawyers for the purpose of commencing legal proceedings (when it had not);
(d) representing that ACM had decided to and would commence legal proceedings shortly against Debtor Four (when it had not, could not and would not); and
(e) seeking to obtain information about Debtor Four from his employer under false pretences.
198 For the reasons given at [30], I reject ASIC’s claims that ACM engaged in misleading or deceptive conduct by representing that:
(a) ACM employed ‘in-house’ lawyers; and
(b) ACM could commence legal proceedings shortly against Debtor Four.
199 I also find that ACM engaged in unduly harassing conduct in calls placed to Debtor Four’s employer and partner.
200 Debtor Five’s debt was incurred on a Visa card issued by the National Australia Bank. It first appeared on ACM’s system on 4 June 2004. The Ledger Report is 21 pages in length and covers the period from 4 June 2004 to 15 April 2010.
201 My attention was drawn to 17 calls.
202 ASIC alleges that, in those calls, ACM engaged in misleading or deceptive conduct by representing to Debtor Five and her father that:
(a) ACM employed ‘in-house’ lawyers (when it did not);
(b) ACM specialised in commencing legal proceedings against debtors for the recovery of debt (when it did not);
(c) ACM frequently commenced legal proceedings against debtors for the recovery of debts (when it did not);
(d) the matter had been referred to ACM’s lawyers for the purpose of commencing legal proceedings (when it had not);
(e) ACM had decided to, could and would commence legal proceedings shortly against Debtor Five (when it had not, could not and would not); and
(f) ACM would arrange for Sheriff’s officers to serve documents on Debtor Five (when it had not).
203 ASIC also alleges that ACM engaged in unduly harassing or coercive conduct by making such representations.
204 Both parties relied upon Call 53, in which ACM, calling for Debtor Five, spoke to her father. It included the following:
Mafa: It’s Mafa. I’m calling from ACMS Legal Department in Sydney.
…
Mafa : It’s in regards to a legal matter, in regards to credit.
…
Mafa: Yep. Legal Department in Sydney.
…
Mafa: …we’ll be proceeding with litigation and taking this matter to court.
205 This was misleading. The operator was not calling from the Legal Department and it was not about to proceed to litigation. On the other hand, it was not unduly harassing or coercive.
Calls 54 – 57: 3 December 2008 – 6 January 2009
206 ASIC relied on Calls 54 to 57, which were all voicemail messages left for Debtor Five. They included the following:
Call 54
Mafa: [Debtor Five], you must call ACMS Legal Department…
Call 55
Mafa: …calling from ACMS Legal Department in Sydney.
…
Mafa: …failure to call us will result in a Sheriff being sent out to your address, [address given].
Call 56
Mafa: …give us a call as the account is pending legal.
Call 57
Celine: Hi [Debtor Five]. This is Celine calling from ACM Legal Department. If you could contact me on [number given] and quote your legal file number.
207 This was misleading: the calls were not from the Legal Department; failure to return the calls would not result in a visit from the Sheriff; and the file was not pending legal.
208 It was not, however, unduly harassing or coercive. Although I have concluded in some cases that conversations in which a threat to bring in the Sheriff was made were unduly harassing or coercive, I do not think, in its relatively limited context, that Call 55 was.
209 Both parties relied upon Call 58. It included the following:
Mafa: Hi, my name is Mafa. I’m calling from ACMS Legal Department in Sydney.
Debtor Five: Yep. Yep.
Mafa: Look, I’m just calling in regards to your NAB credit card account.
Debtor Five: Yes.
Mafa: Now, I’m not quite sure if you’re aware that it’s been forwarded to us to proceed with the litigation.
Debtor Five: Okay.
Mafa: And at this stage they’re in the process of preparing documents to proceed this account in court.
Debtor Five: Right.
Mafa: Now, I actually advised them to hold the account while I get in contact – try and get in contact with you…
…
Mafa: But because the account is pending legal, they are just preparing the documents to take down to the courts and stamp them and serve them to you.
…
Mafa: …maybe I can work with you on that, but I can’t go back to them and say ‘Look, can you just stop it, because, you know, she’s just had a baby’ and they’re going to say, ‘Well – like, what does she want to do?’
…
Mafa: Once I get [a statement of the kind of repayments you can afford], I will take it down to management and solicitors and talk to them about it and see if they’ll accept it. I’ll give you a call back.
210 This was misleading: it suggested, erroneously, that ACM was about to commence proceedings. There was no litigation which was about to occur; documents were not about to be stamped. On the other hand, I accept that this call was not an example of undue harassment or coercion.
211 ASIC relied upon Call 59. It included the following:
Speaker: [Debtor Five], contact ACM Legal Department on [number given] quoting reference number [number given] in regards to an urgent legal matter.
212 This was misleading to the extent that the call was not from the Legal Department. I do not think that it conveyed the existence or imminence of proceedings. It was not unduly harassing or coercive.
213 ASIC relied upon Call 60. It included the following:
Speaker: Hi [Debtor Five], it’s (indistinct) calling from ACM Group Legal Department in Sydney. Please contact me on [number given] and quote your legal file number which is [number given].
…
Mafa: Hi [Debtor Five], it’s Mafa calling from ACM Group Legal Department in Sydney. Just calling in regards to your NAB credit card account. If you can just call me back in regards to – I need to find out if the Sheriff has been out to your address yet, so if you can call me back ASAP on [number given], quoting reference number [number given] in regards to an urgent matter.
214 This was misleading: whatever the nature of the ‘legal file’ involved, the reference to the Sheriff would have created the incorrect impression that proceedings were at hand. It was not unduly harassing or coercive for similar reasons to those given in relation to Call 55.
215 ASIC relied upon Call 61. It included the following:
Mafa: [Debtor Five], can you contact ACM Legal Department on [number given], quoting reference number [number given] in regards to an urgent matter that needs to be discussed.
216 This was misleading for the same reasons as Call 59. Similarly, it was neither unduly harassing nor coercive.
217 Both parties relied upon Call 62. It included the following:
Leena: …therefore, [Mafa] signed your account off a month ago and request for legal proceedings.
…
Leena: So what – I’m the person that authorises the legal action. So I just want to know, basically, what’s happening? Why is the agreement broken before I accept this legal procedures to happen?
…
Leena: But, look, at this stage I need a definite answer. If you want me to do – if you said that you can definitely come up with the funds and therefore we have – at the moment the management is looking into a writ of execution. What it means is (indistinct) go down to where you live. They confiscate goods, like TV, computers and stuff, and if you state this belongs to your partner, or anyone else in the house, they need to provide the receipt. If they can’t provide the receipt, we can confiscate it. I’m pretty sure you don’t want that to happen to yourself.
…
Leena: …arrangement, the solicitor’s going to ask why are you putting these people on [repayment] arrangements instead of proceeding with legal…
…
Leena: …you don’t have the money, but this is your last courtesy call in relation to this account.
218 This was misleading. It suggested that proceedings were imminent when there is no evidence they were. On the other hand, although strongly expressed, I do not think it was unduly harassing or coercive for the reasons given in relation to Call 1.
219 ACM relied upon Call 63.
220 Although ACM contended that it was relying on this call, it did not point to any particular part of it. I have reviewed it and consider that no part of it was misleading or unduly harassing or coercive.
221 Both parties relied upon Call 64. It included the following:
Hala: …so it’s just basically I need to review your file for legal action.
…
Hala: …I don’t want to be the one who has to stamp your file [Debtor Five], and request it legal.
…
Hala: This account will still be referred to the Legal Department for review. The possibility, concerning your history with us of six arrangements just alone in 2009, is not going to do you any good at all.
Debtor Five: Yep.
Hala: I’m going to be honest with you, because I know that you’re going to appreciate that. So, at the moment – so, yeah, just – I suppose do the best you can to get yourself out of the situation before it does go into the legal process. Okay?
Debtor Five: Okay. Yeah, no, that sounds fine.
Hala: Okay. Sorry to burden you with this but you know you need to actually be informed of what you’ve unfortunately put yourself in, so…
Debtor Five: Yep.
Hala: And by all means, if you want to make a payment, we will sort that out. Please do, because you’re only going to be helping yourself.
Debtor Five: Mmm-hmm.
Hala: Other than that, I suppose we would have to achieve – we have to collect this fund through the legal process, through the New South Wales legal process.
222 This was misleading. It suggested the involvement of the Legal Department and the imminence of proceedings. It was not unduly harassing or coercive for the reasons given in relation to Call 1.
223 ACM relied upon Call 65.
224 Although ACM contended that it was relying on this call, it did not point to any particular part of it. I have reviewed it and consider that no part of it was misleading or unduly harassing or coercive.
225 ASIC relied upon Call 66. It included the following:
Victoria: …I’m actually based in the Legal Department. I’m just reviewing files at this stage.
…
Victoria: Now, I’ve been given strict instructions from my solicitor at this stage for files that gain two years plus, that needs to be closed, meaning, [Debtor Five] this amount of $2,423 must be closed today.
…
Victoria: I have to decide (indistinct) once you’ve signed off, I take it to the solicitor, he takes it to court and once it’s taken to court, it’s stamped and you get served. So it’s an actual legal document.
…
Victoria: Yeah. Well, the agent, in uniform, will serve your payroll officer because they are going to go with the garnishee. They are going to garnishee your wages, which leaves you approximately $300.
…
Victoria: …The only thing that I can say to possibly help you out, [Debtor Five], is to provide you [with a] discount. The only amount that I can approve at this point is 30 per cent, which is pretty good, though. I mean, better than you paying the full amount, which you’re liable for, because it’s your debt. But the Legal Department, I can just approve 30 per cent.
…
Victoria: And your reference number, your legal reference number, and then if you could get back to me in a few minutes. I just need an answer.
…
Victoria: …signing the file off, will be 3 o’clock, but I need a call before 2.30 to let me know if it’s a yes or no, and then we’ll proceed from there.
226 This was misleading: Victoria was not based in the Legal Department, she had not been given ‘strict instructions’ from the solicitor, a uniformed agent was not about to serve the payroll officer and Debtor Five’s wages were not about to be garnished. Taken altogether it left the impression that proceedings were imminent. It was not unduly harassing or coercive. A threat to serve a garnishee notice on a third party is not the same kind of conduct as, for example, serving a person at their workplace, which involves direct embarrassment.
227 ASIC relied upon Call 67. This call occurred after Debtor Five contacted ASIC for advice. It included the following:
Debtor Five: And [ASIC have] basically said to me that I don’t have to pay up today, because it’s not – it’s not in the guidelines, whatever, so that’s a breach of guidelines. So they said to me that I should be able to just organise with you to stay my agreement.
Victoria: Okay. Do – do you understand the New South Wales legal practice, because what it sounds like, I don’t believe they do understand the New South Wales legal practice. Sure enough, [Debtor Five], if you want to go by that, that’s fair enough, we will leave you as it is, but I’ll have to sign the file off and then they’ll have to take you to court and get it signed off and you’ll get served. I just need to know what time to serve you, please?
…
Victoria: You’ll be at your work. You’re going to get served at work. Sorry, I’m just the messenger.
228 The request for the time of service conveyed, inaccurately, that proceedings were about to be commenced when they were not. The threat to serve the debtor at work was a species of coercion. It was a false threat to humiliate the debtor in front of her colleagues.
229 Both parties relied upon Call 68. It included the following:
Mafa: The reason why accounts are only frozen is because they are going into legal action.
…
Mafa: And letters have been sent out. But, yeah, look, at this stage, the account’s going into legal action. I can see here – do you mind holding while I get your – like your physical file?
…
Mafa: Now, okay, we’ve actually got – they were supposed to get their documents – this is a legal file. They were suppose to get the documents last Friday, but something was in the delay of it, possibly might be this Friday. This Friday’s where they are looking at (indistinct) to proceed.
Debtor Five: Mmmm-hmmm. Okay.
Mafa: There’s some pages missing here, but I don’t know what they might be. Yeah. So, at this stage, that’s what’s happening with the account. That’s why – because I haven’t come across it yet. You’ve just called now and I’ve just found out. What happens is when the account’s fallen into broken arrangement, all the broken arrangements – it’s not just your account, it’s like, everyone within the company, all the broken arrangements accounts go straight down to our solicitor’s department.
…
Mafa: Okay, what happens, once the documents are stamped, that puts legal fees added onto the account.
Debtor Five: Yeah, ok.
Mafa: Which is about a thousand dollars. What happens then is a Sheriff, a uniformed Sheriff in an unmarked car comes out to the address and has to serve it to you.
Debtor Five: Yep.
Mafa: Or anyone at the house.
Debtor Five: Okay.
Mafa: Now, those documents will show you the date and what the actual case is about for you appearing in court.
Debtor Five: Yep.
Mafa: And then when you go to court, you’ll have your say.
…
Mafa: Once both of those – both payments have fallen in, what I’ll do, I’ll ask solicitors just to hold it off until next week, until you get the five hundred paid.
…
Mafa: Yeah, that’s ok. What I’ll do, I’ll (indistinct) and I’ll go and speak to solicitors just to hold off until next week until we get that first payment.
230 This abundantly hinted at the commencement of proceedings and was thereby misleading. The references to the involvement of solicitors and Sheriff’s officers were also misleading, as was the suggestion that ‘all the broken arrangements accounts go straight down to our solicitor’s department’. I do not think it was unduly harassing or coercive.
231 ACM relied on this call.
232 Although ACM contended that it was relying on this call it did not point to any particular part of it. I have reviewed it and consider that no part of it was misleading or unduly harassing or coercive.
233 Debtor Five was still making fortnightly repayments of $100 when the Ledger Report in evidence was printed. To her original debt of $3,863.31 had been added $1,471.38 in interest and $450 in late fees. She had made repayments totalling $3,530, so her outstanding balance was $2,254.69.
234 I am satisfied that ACM did engage in misleading or deceptive conduct in relation to Debtor Five and, in Call 67, in unduly harassing or coercive conduct. Specifically, I find that ACM engaged in misleading or deceptive conduct by representing that:
(a) the matter had been referred to ACM’s lawyers;
(b) ACM had decided to and would commence legal proceedings shortly against Debtor Five; and
(c) ACM would arrange for Sheriff’s officers to serve documents on Debtor Five.
235 I am not satisfied that ACM misleadingly represented that:
(a) ACM employed ‘in-house’ lawyers;
(b) ACM specialised in commencing legal proceedings against debtors for the recovery of debt;
(c) ACM frequently commenced legal proceedings against debtors for the recovery of debts; and
(d) ACM could commence legal proceedings shortly against Debtor Five.
236 Debtor Six’s debt originally accumulated on a Gold Visa card issued by the National Australia Bank. It appears to have been transferred to ACM’s debt collection system on 29 September 2003. At that time it was in the sum of $17,118.29.
237 The three calls touching upon this debtor to which I was referred commenced on 16 December 2008 and continued to 23 December 2008.
238 ASIC alleges that ACM engaged in misleading or deceptive conduct by representing to Debtor Six that:
(a) ACM employed ‘in-house’ lawyers (when it did not);
(b) ACM specialised in commencing legal proceedings against debtors for the recovery of debt (when it did not);
(c) ACM frequently commenced legal proceedings against debtors for the recovery of debts (when it did not);
(d) the matter had been referred to ACM’s lawyers for the purpose of commencing legal proceedings (when it had not); and
(e) ACM had decided to, could and would commence legal proceedings shortly against Debtor Six (when it had not, could not and would not).
239 ASIC also alleges that ACM engaged in unduly harassing or coercive conduct by:
(a) making the representations referred to in the previous paragraph;
(b) threatening to ‘proceed with an examination summons’;
(c) threatening to issue a warrant for Debtor Six’s arrest;
(d) threatening to take action that would result in Debtor Six’s taxi licence being revoked;
(e) threatening to take action that would result in Debtor Six being unable to travel overseas; and
(f) making statements that Debtor Six had previously left Australia to avoid the debt.
240 Both parties relied upon Call 70. Call 70 was in these terms:
Selin: Then it’s not going to be too good. Because the reason why I’m today actually calling you is, see, we’re a Legal Department, ok? We’re just here to go ahead with legal proceedings, okay but…
…
Selin: Yes, I understand you, sir. But, like I said to you, we are actually here to go ahead with legal proceedings and just – immediately.
…
Selin: Yeah, yeah. Yeah, I understand that, but you know – the thing you don’t understand is I have to tell my solicitor something by tomorrow…
Debtor Six: Sorry what is that?
Selin: I have to tell my lawyer something tomorrow.
…
Selin: …was that – just – just for – just a courtesy call, do you understand?
Debtor Six: Right.
Selin: They actually want to go ahead with legal proceedings. They want to take you to court.
…
Selin: You will – if we take you to court…
Debtor Six: Right
Selin: …we will serve you with judgment, which lasts for 12 years.
…
Selin: I need you to do something tomorrow. Because like I said to you today, the reason why I was calling was to let you know that we’re going to start signing it off.
…
Selin: I’m going to go tell my solicitors that ‘he can’t find the money so you sign his papers off’.
…
Selin: Like if I was the lawyer, I’d stop it for you, but I’m not the lawyer. So (indistinct)…
Debtor Six: (Indistinct) I mean, you are being fair – I don’t tell you you are wrong or anything. The only thing is I’m in the bad position, you know.
Selin: Yeah, I understand you, believe me I do, but like I said, it’s – I can’t do anything about it, because then they’re going to – they’re going to be angry at me, saying ‘Why aren’t you giving us an answer?’
…
Selin: Make sure, please call me on Thursday, before 3 o’clock, because that’s when solicitors are going to come and say to me, at 3 o’clock, ‘Look, what’s going on?’ and I have to give them an answer. So call – make sure you call me before 3 o’clock, not 3 o’clock on the dot, before 3 o’clock. At least 2, 2:30.
241 This was misleading. It suggested that Selin was in the Legal Department, that he had to report to the solicitor the next day and that proceedings would be commenced shortly. On the other hand, it was not unduly harassing or coercive for the reasons given in relation to Call 1.
242 Both parties relied upon Call 71. It included the following:
Kurt: Should we proceed with an examination summons and you – you do not appear, we can issue a warrant for your arrest. So we need – we need to get you a fixed address.
…
Kurt: Do you understand if we force you into bankruptcy and this goes legal…
Debtor Six: Right.
Kurt: …you are at the risk of losing your [taxi driver’s] licence?
…
Kurt: …to a collection agency. The debt’s now reached the Legal Department of that collection agency.
Debtor Six: Right.
Kurt: And basically, when we purchase these debts, [Debtor Six], it’s purely for the purpose of litigation. So basically, the reason why Ali’s giving you this courtesy call – and you’re lucky to be getting a phone call like this…
…
Kurt: It’s just that your deadline for this account is this Friday, 3pm. Like I said, the solicitors have requested the full outstanding balance. Should you not be able to – we need to work something out, because if they force you into bankruptcy you are at the risk of losing your [taxi] licence.
…
Kurt: If you can’t confirm an address by Friday, we’re proceeding with legal action against you.
243 This was misleading. The matter had not reached the Legal Department. Debtor Six was not about to be made bankrupt, was not about to be arrested and was not about to lose his taxi licence. ACM’s purpose was not solely, or even modestly, ‘litigation’; there were no solicitors.
244 I also regard the threats to have Debtor Six arrested and to have his taxi licence revoked as unduly harassing on the basis that they were calculated to intimidate Debtor Six. ASIC also submitted that the threat to ‘proceed with an examination summons’ was unduly harassing or coercive conduct. I reject this. It was nothing more than a threat of legitimate legal proceedings: see [14]. ASIC further submitted that, during this call, ACM engaged in unduly harassing or coercive conduct by alleging that Debtor Six had previously left Australia dishonestly to avoid his debt. No such allegation was contained in the passages to which I was directed.
245 Both parties relied upon this call. It included the following:
Selin: Hi, it’s Selin calling from ACMS Legal Department.
Debtor Six: Sorry, who?
Selin: Selin, from ACMS Legal?
…
Selin: No, I can’t wait that long. I can’t wait that long. I can’t wait that long, because my solicitors are asking for something off me. You can’t keep telling me to keep waiting.
…
Selin: Yes, and you will go bankrupt. Do you want to go bankrupt?
Debtor Six: I don’t know…
Selin: You think it’s very easy going to this court. ‘Oh, I don’t have money and they can’t do anything to me’. It’s not that simple.
…
Selin: This is my job. I’m not even supposed to be making an arrangement with you, [Debtor Six]. I’m just supposed – because we’re a Legal Department. We just take you straight to court.
…
Selin: Yeah, the Court will decide – listen to your friend. The court will decide and they will give you a better payment. Believe me. They will ask for full payment off you. That’s fine. You don’t want negotiate with us, that’s fine.
…
Selin: Yeah, but – but, see, this is my last day. I’m finished today. I’m not going to be in after this. So today, I have to sign off all papers before I leave.
…
Selin: I’m just going to sign the papers off, end of story, finished.
…
Selin: Yeah, you don’t know about our rules. You don’t know about the legal system either, and you are just talking like court is just like a playground that you walk into.
…
[Debtor Six was transferred to Selin’s supervisor, Ryan]
Ryan: Your file will be signed off this afternoon if we haven’t received payment.
…
Ryan: Yes, today. Well, then you will be getting served unfortunately. You will be getting served at [address given].
…
Ryan: Well, then I am telling you you are going to be served. We are going to force you into bankruptcy, your passport may be taken. You will be unable to travel…
…
Ryan: Can you hold a taxi licence when you are bankrupt? I don’t think you can.
…
Debtor Six: You guys are harassing me.
Ryan: Harassing you?
Debtor Six: You take me to the court. Yes.
Ryan: How are we harassing you?
Debtor Six: You are telling me ‘We’re going to take you to the court. We’re going to cancel you’ – you are not Government. You are the debt collector, okay? I spoke to the ASIC, and I have got a – I have got an appointment with the…
…
Ryan: So you are saying this is fraud now. Do I need to get the police involved?
Debtor Six: (Indistinct) credit.
Ryan: Do I need to get the police involved? Is this a fraud matter, [Debtor Six]?
…
Ryan: Well then I’m telling you right now we are proceeding.
Debtor Six: Well, it’s up to you.
Ryan: Okay? It is up to me, and that’s what I have decided. What do you want to do?
246 This was misleading in many ways. Neither operator was from the Legal Department; service was not about to occur; bankruptcy was not at hand; and Debtor Six’s passport and taxi licence were not at risk. The comment that the Legal Department ‘just take you straight to court’ also implied, erroneously, that ACM specialised in commencing proceedings against debtors and did so frequently. I also think that the threats relating to Debtor Six’s passport and taxi licence were ‘calculated to intimidate’ (see [14] above) and, therefore, unduly harassing.
247 As at 8 May 2009, when the Ledger Report for Debtor Six in evidence was printed, Debtor Six’s original debt of $17,118.29 had increased to $21,292.10 thanks to $4,094.81 in interest and $180 in late fees. One part of the Ledger Report says that the last payment made by Debtor Six was in the order of $2,300 on 8 August 2007, but another part says that no payment had ever been made. I do not know what to make of that.
248 I accept that ACM engaged in misleading or deceptive conduct in relation to Debtor Six as well as undue harassment or coercion. Specifically, I find that ACM engaged in misleading or deceptive conduct by representing that:
(a) ACM specialised in commencing legal proceedings against debtors for the recovery of debt (when it did not);
(b) ACM frequently commenced legal proceedings against debtors for the recovery of debts (when it did not);
(c) the matter had been referred to ACM’s lawyers for the purpose of commencing legal proceedings (when it had not); and
(d) ACM had decided to and would commence legal proceedings shortly against Debtor Six (when it had not, could not and would not).
249 I find that ACM did not misleadingly represent (a) that it employed ‘in-house’ lawyers and (b) that it could commence proceedings immediately because, as a matter of fact, it did and it could: see [30].
250 I also find that ACM engaged in unduly harassing or coercive conduct by:
(a) threatening to issue a warrant for Debtor Six’s arrest;
(b) threatening to take action that would result in Debtor Six’s taxi licence being revoked; and
(c) threatening to take action that would result in Debtor Six being unable to travel overseas.
251 Debtor Seven’s Visa card, which was issued by the National Australia Bank, appears to have incurred a debt of $6,431.75 before that debt was transferred to ACM on 30 December 2002.
252 My attention was drawn to seven calls involving Debtor Seven. In those seven calls, ASIC alleges that ACM engaged in misleading or deceptive conduct by representing to Debtor Seven and his mother that:
(a) ACM had commenced legal proceedings against Debtor Seven, obtained judgment and was proceeding to bankrupt Debtor Seven, a process that would involve Debtor Seven’s house being repossessed (when nothing of the sort had occurred);
(b) ACM employed ‘in-house’ lawyers (when it did not);
(c) ACM specialised in commencing legal proceedings against debtors for the recovery of debt (when it did not);
(d) ACM frequently commenced legal proceedings against debtors for the recovery of debts (when it did not);
(e) the matter had been referred to ACM’s lawyers for the purpose of commencing legal proceedings (when it had not); and
(f) ACM had decided to, could and would commence legal proceedings shortly against Debtor Seven (when it had not, could not and would not).
253 ASIC also alleged that ACM had engaged in unduly harassing or coercive conduct by making the representations referred to in the previous paragraph.
254 ASIC relied upon Call 73. It included the following:
Charmaine: All right. I’ll let you know what’s happening now. At the moment your account’s pending legal. Your credit rating hasn’t been listed yet but it looks like your account’s due to go legal on the 12th and they’re defaulting your credit rating on the 5th.
Debtor Seven: I don’t want that.
Charmaine: Yeah. So unless, you know, you can either come up with something for the account, otherwise it’s just going to keep on proceeding.
…
Charmaine: Are you able to tell me where you’re getting the funds from? I – I need to know this because if I know all the facts on your account, then when I have a meeting with the solicitors about it I can tell – like, I can be honest with them…
…
Charmaine: That’s what I mean, your account is pending legal and it looks they’re proceeding with bankruptcy.
…
Charmaine: And you – you own [address given], don’t you?
Debtor Seven: Yeah.
Charmaine: You’re a part owner of it, aren’t you?
Debtor Seven: That’s right.
…
Charmaine: Yeah. Do you understand if they do go for bankruptcy the house can get repossessed?
Debtor Seven: No. I didn’t know that and, ahh, shit.
…
Charmaine: A lot of zeros, yeah. I just – until then – I’ve got to see when my next meeting is. I’ve got a meeting today at 4.30 on your file and I’ll just explained to them what’s happened.
255 ASIC’s only pleading of misleading or deceptive conduct that related to this call alleged that ACM had represented that legal proceedings had already been commenced, that judgment had been obtained and that ACM was proceeding to bankrupt Debtor Seven, which would involve repossession. I do not accept that the first two of these representations were made, although I accept that the third was. I conclude that this aspect of the misleading or deceptive conduct case is made out. I do not find unduly harassing or coercive conduct for the reasons given in relation to Call 1.
256 ASIC relied upon Call 74, which was between ACM and Debtor Seven’s mother. It included the following:
Jade: And you are aware…
Debtor Seven’s mother: And…
Jade: …that we’re not a bank and we don’t do hardship?
…
Jade: Well I’m letting you know that we’re not a bank, we don’t do hardship. So, you know…
…
Debtor Seven’s mother: Because I’m being…
Jade: …NAB bank can’t…
Debtor Seven’s mother: …threatened by you people.
Jade: …actually do – you’re not, we’re not threatening you, [Debtor Seven’s mother].
…
Jade: This is your son’s debt. So we’re not threatening you.
Debtor Seven’s mother: That’s (indistinct) ill. He’s ill.
Jade: We’re not threatening you.
Debtor Seven’s mother: He’s not capable of any…
…
Jade: Oh, you sound really upset, [Debtor Seven’s mother]. I mean, you know, just – I’m not going to be making special considerations just for one person.
…
Jade: Look, do you mind holding? I’m just going to speak with my solicitors. Won’t be a moment. Are you there, [Debtor Seven’s mother]?
…
Jade: Okay. Well by all means, I mean, if [the National Australia Bank are] going to buy the debt back, that’s totally up to them but, you know, I’m not going to discuss anything with them if they’re not, you know, planning on buying the debt back because, you know, I can’t accept arrangements. The solicitors just won’t...
…
Jade: Well, you’re saying you’re in hardship as well.
…
Debtor Seven’s mother: …personally. I think that’ll really put him into a chaos then. He’s got agoraphobia at the moment as well, which means he can’t leave the house. That’s been half his problem. He had a car accident at the end of the – end of last year…
…
Debtor Seven’s mother: Yeah. [Charmaine, another collections officer] didn’t seem to want to know [about Debtor Seven’s problems] and started threatening and all sorts of things and I don’t need that at the moment either. I’m on stress tablets as well because I’m finding it very difficult to process well.
Jade: Look, I’ll just one thing. You know, I don’t think Charmaine would have threatened you, she’s not that type of person.
Debtor Seven’s mother: Well, she did. She (indistinct).
Jade: No, no, no. Charmaine – Charmaine would never threaten anybody, she’s not that type of person, that’s not how she, you know, works. She’s not a threatening person at all.
Debtor Seven’s mother: Well, (indistinct).
Jade: She would have only just mentioned to you what – what may happen.
Debtor Seven’s mother: Well, to sell a home.
Jade: Well, you know, she’s just looking out for your best interest, you know what I mean? She doesn’t want [Debtor Seven] to get a bad credit, so it if means selling your home and paying the debt, I’m sure she was just…
Debtor Seven’s mother: What, for $6,000?
Jade: …giving you options.
Debtor Seven’s mother: No, no. That’s what – she didn’t say that to me. She said – we’ve got a $700,000 house and she said she could sell and force us to sell our house to pay the debt.
257 The correct characterisation of this is as an argument, the heat of which is not adequately captured by the transcript. Debtor Seven’s mother had taken exception to ACM’s methods. Nevertheless, some aspects of it were misleading. The reference to the solicitors being involved was apt to suggest that legal action was pending or likely; this was incorrect. Was it a species of harassment that their house might be sold to settle their son’s $6,000 debt? In some circumstances it might be, but my impression was that the mother did not believe this at all. I find this call involved misleading and deceptive conduct but not undue harassment or coercion.
258 I should also note that, although ACM placed this call to Debtor Seven’s mother, the opening exchanges made it clear that the operator and Debtor Seven’s mother had spoken before. I do not know who initiated contact (ACM or Debtor Seven’s mother), so can make no finding that ACM’s communication with her was improper.
259 Both parties relied on this call between ACM and Debtor Seven’s mother. It included the following:
Jade: Okay. I understand that, [Debtor Seven’s mother], but you’ve got to understand that I am going to do my best to try and stop all legal proceedings but unfortunately…
…
Jade: Not to say they’re going to take those measures but they can happen.
Debtor Seven’s mother: Well, I have been in touch with people who said that it’s bullying a pensioner and his family and that’s what I have been told…
…
Debtor Seven’s mother: …and I was on the phone again this morning to [the hardship department at the National Australia Bank]. They know the urgency. They know it. They’ve got all of your – they’ve got your 48-hour demand.
260 This was misleading. Proceedings were not imminent. It was not unduly harassing or coercive of the mother for the same reasons as given in relation to Call 74.
261 ASIC relied upon Call 76, but did not refer me to any particular passage. The call was a particularly heated discussion between Jade and Debtor Four’s mother. Neither of them conducted themselves in what might be called a civil manner, but there was nothing misleading, unduly harassing or coercive.
262 ASIC relied upon Call 77, which took place shortly after Call 76 and between the same parties. It included the following:
Jade: I don’t appreciate being hung up on, [Debtor Seven’s mother].
…
Jade: Well, guess what [Debtor Seven’s mother], I’m drawing up the Court papers right now. If [the National Australia Bank] don’t contact me today I will send – I will be serving the order.
…
Debtor Seven’s mother: Well, you can do what you like because we’re…
Jade: …at your address.
Debtor Seven’s mother: …not involved with you anymore, so (indistinct).
Jade: As far as I’m concerned, you still are.
Debtor Seven’s mother: You can do what you like. Don’t threaten me…
Jade: I will, I’ll serve [Debtor Seven].
Debtor Seven’s mother: …with court papers.
Jade: I will serve [Debtor Seven] at [address given].
Debtor Seven’s mother: No, you won’t.
Jade: Yes, I will.
Debtor Seven’s mother: And I’m ringing [the National Australia Bank] and I’m telling them. Also I’m ringing the Banking Ombudsman and telling him.
Jade: Ring the Banking Ombudsman.
263 This was misleading. No court papers were being drawn up and service was not about to happen. Despite being, again, a highly uncivil conversation, it was not unduly harassing or coercive. The rudeness went in both directions.
264 ASIC relied upon Call 78, which also took place between Jade and Debtor Seven’s mother on the same day. It included the following:
Debtor Seven’s mother: Right. I just went in touch - got in touch with [the National Australia Bank], spoke to gentlemen there. He said it has been passed over to [the National Australia Bank], they have it but he said it takes two weeks to come across and he said someone will be ringing today your compliance manager in there and advising them to stop all action on the account and that’s what they have informed me this morning.
…
Debtor Seven’s mother: You’re – you’re filing something in court that not – should not be there.
Jade: Did I say that? Did I say that? You’re putting words in my mouth now. What I did say was…
…
Jade: I said I was drawing up the papers, yes, I was.
Debtor Seven’s mother: Right. Well, that’s what I said. If…
Jade: Doesn’t mean it’s going to go to court straightaway.
265 This was misleading and deceptive – there were no papers being drawn up. I do not find undue harassment or coercion. I must say, though, that the rudeness from both parties, by this time, had reached significant levels. I found the following remarks from Jade particularly distasteful:
Debtor Seven’s mother: Please, be reasonable. I’m not to know [that the National Australia Bank have not yet contacted ACM to notify you that they are buying the debt back]. I don’t know how long things take. I’m in a – a retail furniture store. I’m home on a rostered day off today. I’ve got my son vomiting his heart up out there since – because he heard about what you said about…
Jade: Oh, look, [Debtor Seven’s mother], you telling me your son’s vomiting his heart out because what I’m telling you…
Debtor Seven’s mother: (Indistinct).
Jade: …it’s totally irrelevant.
Debtor Seven’s mother: Isn’t irrelevant. He’s got…
Jade: Give him a bucket, then. Him vomiting’s got nothing to do with me.
Debtor Seven’s mother: That’s why he’s doing it because he’s stressed, he’s got a mental depression.
Jade: I don’t care – [Debtor Seven’s mother], unfortunately your son vomiting has got nothing to do with what we are talking about…
266 ASIC relied upon Call 79. It included the following:
Jade: And that’s fine. All I’m saying to you is I can’t stop any legal proceedings until [the National Australia Bank] contact me.
…
Jade: It’s not my fault your son is vomiting.
Debtor Seven’s mother: He is stressed, mentally ill, stressed.
Jade: And that’s unfortunate.
Debtor Seven’s mother: For (indistinct).
Jade: It’s not – you’ve got to understand, [Debtor Seven’s mother]. It’s not me, I’m not the solicitor.
267 This was misleading: there were no legal proceedings and no solicitor. It was not, however, unduly harassing or coercive conduct.
268 Debtor Seven’s debt was ultimately bought back by the National Australia Bank, apparently at the urging of his mother. I was told at trial that this was for reasons of hardship which, as has been seen, fell on deaf ears at ACM.
269 I conclude that ACM engaged in misleading and deceptive conduct in relation to Debtor Seven. Specifically, I find that ACM engaged in misleading or deceptive conduct by representing that:
(a) ACM was proceeding to bankrupt Debtor Seven, a process that would involve his house being repossessed;
(b) the matter had been referred to ACM’s lawyers; and
(c) ACM had decided to and would commence legal proceedings shortly against Debtor Seven.
270 I can see no representations in the passages I was taken to to the effect that:
(a) ACM specialised in commencing legal proceedings against debtors for the recovery of debt; and
(b) ACM frequently commenced legal proceedings against debtors for the recovery of debts.
271 Despite the claims by Debtor Seven’s mother about her son’s medical condition, I am not prepared to use that as a basis for a conclusion about undue harassment or coercion.
272 Debtor Eight is a public servant. She owed three debts that were transferred to ACM:
(a) a debt of $4,531.55 owed on a National Australia Bank MasterCard, which first appeared on the ACM Ledger Report on 11 February 2008;
(b) a debt of $658.94 owed on a National Australia Bank Visa card, which first appeared on the ACM Ledger Report on 8 October 2008; and
(c) a debt of $9,935.11 that was initially owed to the Commonwealth Bank in respect of a Variable Rate Personal Loan. This debt first appeared on the ACM Ledger Report on 30 April 2009.
273 ACM were seeking to extract, therefore, a total of $15,125.60 (plus any interest and late fees that might accrue) from Debtor Eight.
274 My attention was drawn to seventeen calls. ASIC alleged that, in those calls, ACM had engaged in misleading or deceptive conduct by representing to Debtor Eight, her mother and her father that:
(a) ACM employed ‘in-house’ lawyers (when it did not);
(b) ACM specialised in commencing legal proceedings against debtors for the recovery of debt (when it did not);
(c) ACM frequently commenced legal proceedings against debtors for the recovery of debts (when it did not);
(d) the matter had been referred to ACM’s lawyers for the purpose of commencing legal proceedings (when it had not); and
(e) ACM had decided to, could and would commence legal proceedings shortly against Debtor Eight (when it had not, could not and would not).
275 ASIC also alleged that ACM engaged in unduly harassing or coercive conduct by:
(a) calling Debtor Eight’s mother in an attempt to put pressure on Debtor Eight, including by threatening to commence legal proceedings; and
(b) making the representations referred to in the previous paragraph.
276 ASIC relied upon Call 80. This was a voicemail message left by ACM which included the following:
Clarizze: Please be advised this is in regards to a civil matter that requires your urgent attention.
277 I do not regard this as misleading, although it teeters on the brink. It was not unduly harassing or coercive.
278 ASIC relied upon Call 81. It was another voicemail message that included this:
Female Voice: …please contact ACM Group in regards to a very, very urgent legal matter that we need to discuss.
279 Again, I do not regard this as misleading, although it is close. It was not unduly harassing or coercive.
280 ACM relied upon Call 82, in which ACM called Debtor Eight’s father. It was not submitted to me by ASIC that there was anything inappropriate about that fact. The call included the following:
Rachel: All right, no problem.
Debtor Eight’s father: Now we’re square, aren’t we?
Rachel: Pardon?
Debtor Eight’s father: She’s square with you now?
Rachel: Yes, yes.
Debtor Eight’s father: Well, that’s the important thing.
Rachel: Yes, everything is fine at our end.
Debtor Eight’s father: Thank you. You’ve been very professional.
281 There is nothing inappropriate in this exchange.
282 ASIC relied upon Call 83. This was another voicemail message that was left for Debtor Eight and included this:
Female Voice: …regarding your reference number [number given], and it’s an urgent legal matter.
283 This was not misleading. It was not unduly harassing or coercive.
284 ASIC relied upon Call 84, another voicemail message. It included the following:
Female Voice: …in regards to an urgent legal matter.
285 This was not misleading or unduly harassing or coercive.
286 Both ASIC and ACM relied upon Call 85, in which ACM called Debtor Eight’s mother. It included the following:
Emily: Yes, hi, is that [Debtor Eight’s mother]?
…
Emily: Well, [ACM is] a credit management group. In relation to account – it’s a legal matter, I really can’t discuss it with you due to the Privacy Act.
…
Emily: Well, it’s got to do with one of her accounts and it’s pending…
Debtor Eight’s mother: What sort of account?
Emily: …for legal action.
Debtor Eight’s mother: Sorry?
Emily: It’s pending for legal action. It has been passed on to us…
…
Debtor Eight’s mother: How soon is this legal action – are you allowed to say the vicinity of the amount?
Emily: No. You can ask her, she’s your…
Debtor Eight’s mother: You’re not after her for a dollar, are you?
Emily: Sorry?
Debtor Eight’s mother: Are you going to be after her for a dollar?
Emily: What do you mean ‘after her for a dollar’? No, we’re talking about…
Debtor Eight’s mother: The point is are we talking about the general vicinity?
Emily: We’re talking about several thousand.
Debtor Eight’s mother: Huh?
Emily: We’re talking about several thousand.
Debtor Eight’s mother: Okay.
287 This was misleading in that there was no ‘pending’ legal action. It was not unduly harassing or coercive. The context of the call included the fact of an earlier non-objectionable discussion with the father and the operator’s initial reluctance to discuss the matter.
288 ASIC relied upon Call 86, which was another voicemail message. It included the following:
Female Voice: …regarding an urgent legal matter…
289 This was not misleading or deceptive or unduly harassing or coercive.
290 ASIC relied upon Call 87, which was another voicemail message. It included the following:
Female Voice: Hi [Debtor Eight]. Just to let you know our fax number for your stat declaration form is [number given]. Again, that’s [number given], and I’m expecting that stat dec by 5pm tomorrow. Okay then. Great, thank you, bye.
291 This was not misleading or deceptive or unduly harassing or coercive.
292 ASIC relied upon Call 88, but did not specify any particular passage in it. I have reviewed the call and find nothing improper.
293 ACM relied upon Call 89, in which Debtor Eight called ACM. It included the following:
John Okay, all right.
Debtor Eight: I have kind of disclosed everything in the fax there, if you read it. I suffer from a psychiatric illness, which is what has caused the problem in the first place.
John: All right, okay.
Debtor Eight: Now that that has stabilised, I’m somewhat overcommitted, do you know what I mean?
John: Yeah, it takes you a while to get back on your feet after something like that, doesn’t it?
Debtor Eight: Yeah, and I need to make sure that I leave enough for my medication and also my health cover as well, that covers me for psychiatric, so it’s important from a health perspective. Otherwise, I’ll go off the rails completely. So I just want to put something that’s in good faith that I know I can commit to and then if down the track I make a different arrangement, I’ll do that. You can see I’ve made a lump sum in the past.
John: Yeah.
294 There was nothing inappropriate about this.
295 ASIC relied upon Call 90 but, again, did not specify any particular part. I have reviewed the call and find nothing inappropriate.
296 Both ACM and ASIC relied upon Call 91. It included the following:
Debtor Eight: …because I suffer from severe case of bipolar…
…
Greg: Okay. Well, we can’t stop you from paying your account, but I consider this is one of our legal accounts now and the amount you owe is [$]10,283.
…
Greg: Yeah, I can’t put you back on the arrangement, I’m sorry because from what I can see, this is to go to legal (indistinct).
…
Greg: Well, that’s your choice, but this account has been marked for legal action, so I can’t help ya.
…
Greg: I can give you a fax number, it’s on every letter that you received from us.
Debtor Eight: Okay. Can you provide that to me again?
Greg: But what’s the difference? What are you trying to achieve, I don’t understand, by you writing that you have bipolar or something like that? Is that what you’re trying to write to us?
…
Greg: It’s what is requested by solicitors on this file, from what I can see, and I’m only relaying the message back.
…
Greg So why then don’t you just go bankrupt?
Debtor Eight: Pardon?
Greg: Why don’t you just go bankrupt?
…
Greg: But you do realise if the company goes legal and if they proceed with bankruptcy, it’s going to be an issue at a later stage, don’t you think?
297 It was misleading because legal action was not about to commence and solicitors were not involved. Whilst it was certainly insensitive to suggest that Debtor Eight’s mental illness was irrelevant, I do not think, all things considered, that it was unduly harassing or coercive.
298 ASIC relied upon Call 92, but did not draw my attention to any particular part of it. I have reviewed it and there is nothing inappropriate.
299 Both ACM and ASIC relied upon Call 93. It included the following:
Debtor Eight: Okay. I’m not planning for either of these things to happen, but aside from any of that, I would also just like an indication of what the status of the matter is at the moment, like where it is with you guys and at what point, what date, that you have set for it to to be referred to civil action.
Freg: I can’t give you a date.
Debtor Eight: Why not?
Greg: Because I haven’t signed off on [legal action] yet.
…
Greg: Well, being honest with you, if you’re going to make the payment by the 30th, there is no reasonable agreement that has been reached by the 30th of this month, then I will be signing that off.
…
Debtor Eight: …will stay any further proceedings, I will then be able to assess which option I can take and I will take those promptly.
…
Greg: …The offer one is 50 per cent of the debt and no legal proceedings go on, if you don’t breach the arrangement. That’s how it works anywhere.
…
Greg: (Indistinct) I work up to 9 o’clock. If I have to go to court, I come back, that’s it.
…
Greg: I can’t give you a day [that legal action will commence] because I haven’t signed off on it.
…
Greg: How can someone provide you with a date if it hasn’t been issued yet, do you know what I mean? (indistinct) to everyone else to get it stamped and then we can only advise of you a date.
…
Greg: Which I will go and speak to my solicitors and see if they will approve it by the 30th. If not, then nothing is going to happen about it.
…
Debtor Eight: But once a demand for legal action has been made…
Greg: Yeah.
Debtor Eight: …there is usually a required time frame, a reasonable time frame.
Greg: 2009 (indistinct) 12, that’s the time frame, the write-off date.
Debtor Eight: So I don’t even understand what I am having a conversation with you, what the status of this matter is, and that’s all that I want to know.
Greg: I just don’t understand what you – you wanted a settlement offer, I gave you settlement offer.
Debtor Eight: Okay, and you’re going to include on there that if that’s not paid by 30 June…
Greg: It’s voided, yeah.
Debtor Eight: …you’ll then sign off on the legal action; is that right?
Greg: I’m going to say it’s voided, that’s what I’m going to put on there.
300 This was misleading: the operator did not have to go to Court; there were no solicitors; compendiously, the inference that proceedings were at hand was not correct. It was not unduly harassing or coercive for the reasons given in relation to Call 1.
301 ASIC relied upon Call 94. It included the following:
Jasmina Yes. Your case manager is just in a legal meeting at the moment…I’m going to take a message. Okay?
302 This was misleading albeit only in a minor way – there was no legal meeting. It was not unduly harassing or coercive for the reasons given in relation to Call 1.
303 Both ACM and ASIC relied upon Call 95, in which ACM called Debtor Eight’s father. It included the following:
Debtor Eight’s father: The first I’ve heard about all of this is a couple of days ago. She’s rung me up, very upset, and I didn’t know anything of this. But, apparently she’s had an arrangement with you to repay her debt at $100 a month and she has been a few days late.
Greg: Mmm-hmm.
Debtor Eight’s father: And you’re now threatening to take her to court, declare her bankrupt, et cetra, et cetra. Is that about right?
…
Greg: Now the account has hit the legal status. What that means is legal recovery action may commence on the account if we can’t come to some sort of amicable agreement.
Debtor Eight’s father: Yep.
Greg: Now, the amount owing is $10,283. The solicitors have advised that they are willing to take the offer of $8,700 to close off the account or she can come up with a 50 per cent amount of the actual debt owing and then she can be placed back on the arrangement.
…
Debtor Eight’s father: So hopefully this will cure the situation. Greg, can you do this for me. Can you go to your solicitors and say if this were to be settled shortly, forthwith, is eight-seven is their absolute bottom line.
Greg: Yep. I can assure you, [Debtor Eight’s father], that is it because I actually spoke personally, I know one of guys personally here, and I do sympathise with her circumstances and I put it all down on the line, I did put my head towards it, and that is the lowest amount that they will go, because [$]10,283, it’s a large amount, and for them to drop to – usually they’ll give a couple of hundred dollars, $500 max, not 8,700 to close off the account.
Debtor Eight’s father: Yeah.
Greg: It’s nothing, [Debtor Eight’s father], believe me. I’ve been in this industry for a while and being honest with you, they now have to do it.
304 This was misleading: no solicitors were involved; the inference that proceedings were close at hand was not correct. It was not, however, unduly harassing or coercive for the reasons given in relation to Call 1.
305 ACM relied upon Call 96. It included the following:
Rebecca: [Debtor Eight’s father], it’s Rebecca from ACM Group. How are you today?
Debtor Eight’s father: Hello Rebecca. Have we spoken before?
Rebecca: No, we haven’t. You were dealing with Greg.
Debtor Eight’s father: No, I know that, but I mean last year on another matter to do with my daughter?
Rebecca: What was your daughter’s name?
Debtor Eight’s father: [Debtor Eight].
Rebecca: No, not that I can recall speaking to you, no.
Debtor Eight’s father: Okay.
Rebecca: And I’m the only Rebecca that works in this department as well.
306 There is nothing untoward about this.
307 Debtor Eight’s three Ledger Reports (one for each debt) were all printed on 11 November 2010. By that time:
(a) the debt of $4,531.55 owed on the National Australia Bank MasterCard had increased to $4,544.31 due to the addition of $12.76 in interest;
(b) the debt of $658.94 owed on the National Australia Bank Visa card had been joined by $11.52 in interest and $30 in late fees, leaving a total debt of $700.46; and
(c) the debt of $9,935.11 that was initially owed to the Commonwealth Bank in respect of the Variable Rate Personal Loan had increased to $10,743.75 because $763.64 in interest and $45 in late fees had been added.
308 All three debt accounts were marked as ‘Settled in Full’, however. Debts (a) and (b) were settled by a payment of $4,800 made by Debtor Eight’s father on 17 July 2009 (representing a $444.77 discount). Debt (c) was settled on 25 June 2010 when Debtor Eight’s father made a payment (apparently on his own credit card) of $8,700. It seems that a total of $9,160 was paid by Debtor Eight (or on her behalf) to settle debt (c).
309 I have found that, in relation to Debtor Eight, ACM did engage in misleading or deceptive conduct, though not to the extent alleged by ASIC. Specifically, I find that ACM engaged in misleading or deceptive conduct by representing that:
(a) the matter had been referred to ACM’s lawyers; and
(b) ACM had decided to and would commence legal proceedings shortly against Debtor Eight.
310 I do not think that it has been shown that ACM misleadingly represented that:
(a) ACM employed ‘in-house’ lawyers;
(b) ACM specialised in commencing legal proceedings against debtors for the recovery of debt;
(c) ACM frequently commenced legal proceedings against debtors for the recovery of debts; and
(d) ACM could commence legal proceedings shortly against Debtor Eight.
311 Furthermore, I do not think that it has been shown that ACM engaged in unduly harassing or coercive conduct.
312 I turn then to the legal issues.
V. Whether there should be a grant of declaratory relief
313 I do not consider in this section whether the defendants’ argument relating to financial services (see infra at Section VII) should be accepted. Instead, in this section, I consider the following matters:
(a) whether the contraventions were small in scope and hence whether declaratory relief should be declined on that basis;
(b) whether a change in the defendant’s manuals now means that there would be little point in granting declaratory relief; and
(c) whether the alteration in the ownership of the business means that it is no longer useful to grant declaratory relief.
314 It is useful to consider the issue of misleading or deceptive conduct first.
Misleading or deceptive conduct
(a) Significance of the contraventions
315 At least insofar as the question of misleading and deceptive conduct is concerned, there is not really any doubt in my mind that the conduct was widespread. Indeed, the constant references to litigation were not an accident. They were the intended outcome of a house manual which promoted threatening litigation as a means to achieving recoveries. The operators were told to make references to legal proceedings and lawyers and it is only natural that this is what they did. For example, many faithfully drew on the imagery, referred to in the manual, of the uniformed Sheriff’s officer arriving in a marked car (see [30]). What occurred was not just widespread, it was systemic.
316 When Mr Brabazon became aware of the manual’s contents (as a direct result of ASIC’s enquiries), he had it changed. Since it has been changed, there was no evidence of any further contraventions. Accepting that to be so does not alter the need to be clear about what has happened in the past. It may provide grist for an argument that the risk of future repetition is low. Indeed, I am inclined to accept that view of things but, even so, I do not think that it provides good reason in itself to decline relief.
317 I accept that in or about July 2009, the business of the first defendant was transferred to the second defendant. The evidence of Mr Brabazon was that the restructuring had occurred as part of the aborted preparations for an IPO. At the level of formality, the majority of the conduct which has been identified was not conduct of the new entity but only its predecessor.
318 It was said, in those circumstances, that the utility of declaring that an entity no longer engaged in business had engaged in misleading and deceptive conduct was limited.
319 I do not agree. Of the 96 calls to which I was referred, 36 occurred after 1 July 2009 and the most recent (Call 96) took place on 21 June 2010. The last instance of misleading or deceptive conduct was Call 95 on 18 June 2010 and the last instance of unduly harassing or coercive conduct was Call 67 on 19 March 2010 – both well after July 2009. There may be some circumstances in which the fact that an entity has ceased to trade may provide good reason not to make declaratory orders. Here I think this is not so. The purpose of the declaration will be to identify for the business community a species of unacceptable behaviour. It will also serve the purpose of vindicating ASIC’s claims.
320 In those circumstances, and subject to the legal issues still to be resolved, the discretionary considerations favour the granting of declaratory relief against both defendants.
321 I would not, however, be willing to make declarations in the form proposed by ASIC. These ran to 66 pages, and dealt, in detail, with the position of each of the debtors. Although I am prepared to entertain further debate, at present it seems to me that an appropriate declaration would be that:
The Defendants engaged in misleading and deceptive conduct by informing debtors who they pursued on unpaid accounts they had acquired from third party creditors that:
(a) they were about to sue them; or
(b) the file was in the hands of their lawyers; or
(c) a decision had been made to sue them; or
(d) they would shortly be served with Court process by the Sheriff
when none of this was true.
322 I turn then to the question of whether it should be declared that the defendants engaged in conduct which was unduly harassing or coercive.
Unduly harassing or coercive conduct
(a) Significance and nature of the contraventions
323 Here the question is more difficult. The examples of this behaviour are more limited. This conduct occurred but, because it was not a result of the manual which was in place (as to which, see [34]), it was not systemic. The defendants submit that it is best viewed as a series of isolated examples resulting from errant operators. There will always be, so the argument runs, a few bad employees and this is particularly so when the defendants employ several hundred staff with a large turnover.
324 No doubt this behaviour is to be seen as qualitatively different to the misleading and deceptive conduct because it is not the result of the manual. However, just because there is no evidence that ACM suggested this conduct to its employees does not mean that it is not responsible for it. Although there was some evidence that the operators were occasionally monitored, the evidence did not suggest, and I do not find, that this was done on a regular basis. I was taken to no evidence which would have shown that the call monitors had been given specified matters to watch out for; that individual operators were counselled or disciplined; or that there were in place basic systemic guidelines to ensure compliance with consumer protection requirements.
325 This consideration influences the decision of whether to make declarations of unduly harassing or coercive conduct in the same way that it did misleading or deceptive conduct.
326 In those circumstances, I do not think it would be right to withhold declaratory relief against the first defendant. Again, I would not embrace the declarations suggested by ASIC. Instead I would declare that:
The Defendants engaged in unduly harassing and coercive conduct while recovering debts from debtors which had been purchased from third party creditors by:
(a) heaping personal abuse upon them; or
(b) blackmailing them by threatening to reveal their positions as debtors to relatives, friends, employers or neighbours.
VI. Whether there should be a grant of INJUNCTIVE relief
327 ASIC also sought injunctive relief. In the case of the unduly harassing and coercive conduct I think such relief should be granted. Its occurrence is more the result of a certain mindset amongst some of its employees. The only way that sort of bullying will stop is if the second defendant makes it stop. I do not think a declaration by itself will serve that end sufficiently. Without expressing a concluded view, the appropriate form of that injunctive relief is likely to be directed to the second defendant’s procedures, such as call monitoring, rather than a bare order not unduly to harass or coerce. I will hear the parties on this question, however, if necessary. The situation with the misleading and deceptive conduct case is less clear. That conduct was the result of the earlier manual and that manual has now been revised. ASIC did not point to any contraventions since that revision. Notwithstanding, I have concluded that injunctive relief should be granted. It will ensure that the second defendant gives effect to its manual. I see no utility in granting injective relief against the first defendant. ASIC’s vindication in relation to it will be properly served by the declaratory relief I have indicated.
328 I turn then to the central question in the case, namely, whether the relief claimed by ASIC is legally foreclosed to it.
VII. Can the claims under the ASIC Act be maintained?
329 ASIC’s claims under the ASIC Act related to misleading and deceptive conduct (s 12DA(1)) and undue harassment and coercion (s 12DJ(1)). In both cases the conduct must be connected to ‘financial services’. In the case of s 12DA(1) the misleading and deceptive conduct must be ‘in relation to financial services’. In the case of s 12DJ(1) the undue harassment or coercion must be ‘in connection with the supply or possible supply of financial services to a consumer or the payment for financial services by a consumer’.
330 In both cases the defendants’ challenge to ASIC is straightforward: the business of extracting money from overdue debtors did not involve the provision of a financial service.
331 ASIC submitted that the situation of the defendants was covered by s 12BAB(1)(g) which provided:
For the purposes of this Division…a person provides a financial service if they:
…
(g) provide a service that is otherwise supplied in relation to a financial product
332 The ‘financial product’ involved was said to be the loan contracts and credit card contracts which had previously existed between each debtor and his or her original creditor (that is, in this case the NAB or the Commonwealth Bank). These contracts had been assigned to ACM. The service which was provided to the debtors in relation to these financial products was said to be the provision to the debtors of on-going credit.
333 I accept that the loan and credit card contracts between the debtors and the original creditors were ‘financial products’. There are two steps in this conclusion. The first is that these contracts would be a ‘credit facility’ within the meaning of reg 2B of the Australian Securities and Investments Commission Regulations 2001 (Cth). The pertinent parts of the regulation are thus:
(1) For paragraph 12BAA(7)(k) of the Act, each of the following is a credit facility:
(a) the provision of credit:
(i) for any period; and
(ii) with or without prior agreement between the credit provider and the debtor;
(iii) whether or not both credit and debit facilities are available
…
(3) In this regulation:
credit means a contract, arrangement or understanding:
(a) under which:
(i) payment of a debt owed by one person (a debtor) to another person (a credit provider) is defined; or
(ii) one person (a debtor) incurs a deferred debt to another person (a credit provider); and
(b) including any of the following:
(i) any form of financial accommodation;
…
(iii) credit provided for the purchase of goods and services;
…
(v) an article known as a credit card or charge card;
…
(ix) a financial benefit arising from or as a result of a loan;
(x) assistance in obtaining a financial benefit arising from or as a result of a loan.
334 Most of the original debts had arisen from credit card accounts between the debtors and the NAB. There were also personal loans: one from NAB and one from the Commonwealth Bank. These all fell within the definition of a credit facility within reg 2B. All of those contracts were assigned to ACM. I do not think that altered their character as credit facilities. All that occurred at the moment of assignment to ACM was that the identity of one of the parties changed – all other rights remained the same.
335 The second step in reaching the conclusion that these contracts (now exposed as credit facilities under reg 2B) were financial products are the challenging terms of s 12BAA(7)(k) of the ASIC Act, which relevantly tells anyone who has got this far that:
Subject to subsection (8), the following are financial products for the purposes of this Division:
…
(k) a credit facility (within the meaning of the regulations)
336 Since we know that the contracts are credit facilities, the challenges which s 12BAA(7)(k) presents are not obvious. They lie, however, in the relatively innocuous opening words ‘Subject to subsection (8)’.
337 Section 12BAA(8) tells one some things which are not ‘financial products’. Section 12BAA(8)(e) and (f) include on this list:
(e) a facility that is a designated payment system for the purposes of the Payment Systems (Regulation) Act 1998;
(f) a facility for the exchange and settlement of non-cash payments (see subsection (b)) between providers of non-cash payment facilities
338 On 11 April 2001 the Reserve Bank of Australia designated the credit card schemes operated by Bankcard, Mastercard and Visa as a ‘payment system’ under s 11 of the Payment Systems (Regulation) Act 1998 (Cth).
339 I do not think that the individual contracts in question are themselves a facility which is a designated payment system. No doubt they are part of a payment system but that is not what (e) requires. Likewise the individual contracts are not, by themselves, a facility for exchange and settlement between the banks involved; they are at best merely part of such a system.
340 It follows that the carve-outs in s 12BAA(8)(e) and (f) are not engaged. The contracts between ACM/ACM Group and the debtors are therefore ‘financial products’.
341 The question then becomes whether, as ASIC submitted, defendants had, to use the language of s 12BAB(1)(g), ‘provid[ed] a service that is otherwise supplied in relation to a financial product’ (if so, it will be recalled, they would be taken to provide a financial service).
342 ASIC submitted that by providing on-going credit to the debtors the defendants were providing a ‘service’ and that ‘service’ was supplied ‘in relation to a financial product’ viz the loan and credit card contracts. I accept the latter submission given the breadth of the words ‘in relation to’. Attention can, therefore, be confined to whether the defendants provided a ‘service’ consisting of on-going credit.
343 ‘Service’ is defined in s 12BA(1) to include ‘any rights (including rights in relation to, and interests in, real or personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce’, subject to some irrelevant exceptions.
344 I accept that the granting to each debtor of more time to pay was the granting of a right (namely, the right to relieved of the immediate obligation to pay) and that this occurred in trade or commerce. An essential part of each collections officer’s job was to get the debtors on to payment plans. Necessarily, the provision of a payment plan was, albeit in an unusual sense, the provision of credit. No doubt it is difficult to view the unpleasant calls the debtors received as a service but those calls were not the service but rather merely an encouragement to take the service up.
345 It follows that I conclude that there was a provision of a financial service to each debtor on each occasion that more time was extended.
346 This brings one back, at length, to ss 12DA(1) and s 12DJ(1). The former requires the misleading conduct to occur ‘in relation to’ financial services. I am satisfied that the misleading conduct I have identified was ‘in relation to’ the provision of the financial services I have identified and hence, as s 12BA(1) requires, in relation to those financial services.
347 It also follows that the unduly harassing or coercive conduct which I have identified can be said to be ‘in connection with the supply or possible supply of financial services to a consumer’ within the meaning of s 12DJ(1).
348 In those circumstances, ASIC is entitled to pursue the defendants under these two provisions.
349 ASIC also pursued its relief under the equivalent provisions of the former TPA. The defendants submitted that ASIC had no authority to pursue relief under that Act. Since I have concluded that ss 12DA(1) and s 12DJ(1) apply, the resolution of that debate presently lacks utility and its resolution is not necessary.
350 ASIC is entitled to the relief I have indicated. The defendant’s should pay ASIC’s costs. The parties should bring in short minutes of order giving effect to these reasons within 14 days. If this cannot be agreed then the matter will be relisted to resolve any remaining debates.
I certify that the preceding three hundred and fifty (350) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. |
Associate:
