FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 7) [2016] FCA 484

ORDERS

THE COURT ORDERS THAT:

1.    The first respondent, SensaSlim Australia Pty Ltd (in liquidation), pay to the Commonwealth of Australia a pecuniary penalty of:

(a)    $1,100,000 in respect of the conduct referred to in paragraphs 1, 2, 3, 10 and 12 of the orders made on 26 September 2014 (the SensaSlim officers representations);

(b)    $1,100,000 in respect of the conduct referred to in paragraphs 4, 5(a) and (b), and 6 of the orders made on 26 September 2014;

(c)    $1,100,000 in respect of the conduct referred to in paragraphs 5(c), (d) and (e) of the orders made on 26 September 2014 (which conduct together with the conduct identified in subparagraph (b) above is called the worldwide trial representations); and

(d)    $250,000 in respect of the conduct referred to in paragraphs 7, 8 and 9 of the orders made on 26 September 2014 (the earnings potential representations).

2.    The applicant not take steps against the first respondent to enforce Order 1 hereof without further leave of the Court.

3.    The second respondent, Peter Clarence Foster, pay to the Commonwealth of Australia a pecuniary penalty of:

(a)    $220,000 in respect of his involvement in the making of the SensaSlim officers representations, which involvement is referred to in paragraphs 15, 16, 17, 19 and 20 of the orders made on 26 September 2014;

(b)    $220,000 in respect of his involvement in the making of the worldwide trial representations (in relation to the conduct identified in paragraphs 4, 5(a) and (b), and 6 of the orders made on 26 September 2014), which involvement is referred to in paragraph 18 of the said orders; and

(c)    $220,000 in respect of his involvement in the making of the worldwide trial representations (in relation to the conduct identified in paragraphs 5(c), (d) and (e) of the orders made on 26 September 2014), which involvement is also referred to in paragraph 18 of the said orders.

4.    The second respondent be disqualified permanently from managing corporations from the date of these orders.

5.    The second respondent be restrained from being directly or indirectly knowingly concerned in or party to any conduct in trade or commerce by a corporation that involves the promotion or supply, by any means, of goods or services represented as having weight loss or related health benefits.

6.    The second respondent be restrained from being directly or indirectly knowingly concerned in or party to the conduct by a corporation of a business system in which the corporation as franchisor grants a franchise to a franchisee and in respect of which system an industry code for the purposes of Pt IVB of the Competition and Consumer Act 2010 (Cth) (the CCA) applies, in circumstances where the second respondent’s identity and nature of involvement in the business system have not been disclosed in writing by the corporation to each person who is a prospective franchisee.

7.    The second respondent pay the applicant’s costs of and incidental to this proceeding as against him.

8.    The third respondent, Peter Leslie O’Brien, pay to the Commonwealth of Australia a pecuniary penalty of $55,000 in respect of his involvement in the making of the SensaSlim officers representations, which involvement is referred to in paragraphs 23 and 24 of the orders made on 26 September 2014.

9.    The third respondent be disqualified from managing corporations for a period of 10 years from the date of these orders.

10.    The third respondent pay the applicant’s costs of and incidental to this proceeding as against him.

11.    The fifth respondent, Michael Anthony Boyle, pay to the Commonwealth of Australia a pecuniary penalty of $75,000 in respect of his involvement in the making of the SensaSlim officers representations, which involvement is referred to in paragraphs 25 and 26 of the orders made on 26 September 2014.

12.    The fifth respondent be disqualified from managing corporations for a period of three years from the date of these orders.

13.    The fifth respondent file and serve any submissions he wishes to make on the question of costs by 20 May 2016, such submissions not to exceed three pages.

14.    The applicant file and serve any written submissions in response to any submissions on costs made by the fifth respondent by 27 May 2016, such submissions not to exceed three pages.

15.    The question of costs as between the fifth respondent and the applicant be determined on the papers.

16.    The reasons for judgment published as Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 5) [2014] FCA 340 be sealed and retained on the Court file for the purposes of s 83 of the Trade Practices Act 1974 (Cth) and s 137H of the CCA.

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

REASONS FOR JUDGMENT

YATES J:

1    I have published reasons for judgment in which I have found that the first, second, third and fifth respondents (SensaSlim, Mr Foster, Mr O’Brien and Mr Boyle, respectively) have contravened various provisions of the Trade Practices Act 1974 (Cth) (the TPA), (now the Competition and Consumer Act 2010 (Cth) (the CCA)) and Sch 2 of the CCA (the ACL): Australian Competition and Consumer Commission v SensaSlim Australia Pty Limited (in liq) (No 5) (2014) 98 ACSR 347; [2014] FCA 340 (the liability reasons). These findings were made following a hearing on liability conducted over a number of days in September and October 2012, with final submissions being made on 21 December 2012 (the liability hearing). Following a hearing on 14 July 2014, I granted declaratory relief in respect of the contraventions I had found: Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 6) [2014] FCA 1035. In these reasons, it is convenient to refer to each declaration by reference to the relevant paragraph number of the orders made on 26 September 2014 in which the declaration was made, so that the declaration made in paragraph 1 of the orders will be referred to as Declaration 1, and so on.

2    The applicant, the Australian Competition and Consumer Commission, submits that pecuniary penalties under s 76E(1) of the TPA (repealed with effect from 1 January 2011 but not in respect of acts or omissions occurring before that date) and s 224(1) of the ACL should now be imposed on:

    SensaSlim for contraventions of ss 53(a), 53(d) and 59(2) of the TPA and s 29(1)(a) and s 29(1)(g) of the ACL;

    Mr Foster as an accessory to contraventions by SensaSlim of ss 53(a), 53(d) and 59(2) of the TPA and s 29(1)(a) and s 29(1)(g) of the ACL;

    Mr O’Brien as an accessory to contraventions by SensaSlim of s 53(d) and s 59(2) of the TPA; and

    Mr Boyle as an accessory to a contravention by SensaSlim of s 53(d) of the TPA.

3    The applicant also submits that disqualification orders and injunctions should be made against Mr Foster, Mr O’Brien and Mr Boyle.

4    These reasons deal with these matters and should be read against the background provided by the liability reasons.

5    At the outset, it is necessary to record certain matters relating to the conduct of the proceeding since the publication of the liability reasons on 8 April 2014.

6    First, on 22 June 2014, unbeknown to the applicant and the Court, SensaSlim was deregistered. On 9 March 2015, on the applicant’s application, I made an order under s 601AH(2) of the Corporations Act 2001 (Cth) (the Corporations Act) that the Australian Securities and Investments Commission reinstate SensaSlim’s registration: Australian Competition and Consumer Commission v Australian Securities and Investments Commission, in the matter of SensaSlim Australia Pty Ltd (In Liq) [2015] ATPR 42-500; [2015] FCA 258.

7    Secondly, neither Mr Foster nor Mr O’Brien appeared at the hearing to which these reasons relate. It is convenient to refer to this hearing as the penalty hearing. At [97]-[124] of the liability reasons, I recorded a number of matters relating to the conduct of the proceeding to that time. Mr Foster has played no active role in this proceeding since he sent an email to my Associate on 28 October 2012 (see [124] of the liability reasons). Mr O’Brien has played no active role in this proceeding since its commencement on 15 July 2011, other than for appearances on his behalf at an interlocutory hearing on 27 July 2011, at a hearing of a notice of motion on 17 August 2011, and at a directions hearing on 5 December 2011.

8    Mr Boyle appeared at the penalty hearing. He was represented by counsel and his solicitor.

9    Thirdly, the applicant advanced submissions at the penalty hearing as to the amount of the penalties that should be imposed. Following the penalty hearing, the Full Court gave judgment in Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) 229 FCR 331; [2015] FCAFC 59 in which it was held, on the basis of the High Court’s decision in Barbaro v The Queen (2014) 253 CLR 58; [2014] HCA 2 (Barbaro), that it was inappropriate in civil penalty proceedings (such as the present) for a court to receive an agreed or other submission as to the amount of the penalty to be imposed. The applicant and Mr Boyle disagreed as to effect of the Full Court’s decision in relation to submissions advanced with respect to disqualification orders and injunctions. The applicant’s position was that the Full Court’s reasons were confined to pecuniary penalties and should not be taken as extending to disqualification orders and injunctions. Mr Boyle suggested otherwise. I relisted the matter to provide an opportunity to the applicant and Mr Boyle to make submissions on that question. After further submissions were made, the High Court gave judgment in Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 326 ALR 476; [2015] HCA 46 in which it was held that the decision in Barbaro does not apply to civil penalty proceedings and a court is not precluded from receiving and, if appropriate, accepting an agreed or other civil penalty submission. The upshot of these developments is that I have received and considered the applicant’s submissions on the basis originally advanced at the penalty hearing.

Relevant legal principles

Pecuniary penalties

Relevant considerations

10    Section 76E(1) of the TPA and s 224(1) of the ACL provide for the imposition of a pecuniary penalty where a contravention of a relevant provision has been found. Section 76E(2) of the TPA and s 224(2) of the ACL require the Court to have regard to “all relevant matters” when determining the appropriate pecuniary penalty. However, each provision directs the Court’s attention to three specific matters, namely:

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

    the circumstances in which the act or omission took place; and

    whether the person has previously been found by a Court in proceedings under a relevant part of the TPA or ACL, as the case might be, to have engaged in similar conduct.

11    Section 76 of the TPA, which is the key provision in respect of penalties for contraventions of the competition provisions of the TPA/CCA, is in similar terms. It requires the Court to have regard to “all relevant matters” when determining the appropriate pecuniary penalty but, once again, directs attention to the three specific matters noted immediately above.

12    The following matters were identified by French J (when in this Court) in Trade Practices Commission v CSR Limited [1991] ATPR 41-076; [1990] FCA 762 (CSR) at 52,152-52,153 as relevant considerations to be taken into account in determining an appropriate penalty under s 76 of the TPA:

    the size of the contravening company;

    the degree of power a corporation has, as evidenced by its market share and ease of entry into the market;

    the deliberateness of the contravention in the period over which it extended;

    whether the contravention arose out of the conduct of senior management or at a lower level;

    whether the company has a corporate culture conducive to compliance with the TPA, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention; and

    whether the company has displayed a disposition to cooperate with the authorities responsible for the enforcement of the TPA in relation to the contravention.

13    The considerations identified in CSR were endorsed by the Full Court in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285; [1996] FCA 1134 (NW Frozen Foods) at 292, which regarded them as elaborations of the statutory requirement to consider “the circumstances in which the act or omission took place”.

14    In Australian Competition and Consumer Commission v NW Frozen Foods Pty Ltd [1996] ATPR 41-515; [1996] FCA 670, Heerey J, at 42,444-42,445 added the following considerations to those articulated by French J in CSR:

    the respondent’s financial position; and

    the deterrent effect of the proposed penalties.

15    On appeal, the Full Court in NW Frozen Foods did not disagree with the proposition that these additional considerations should also be taken into account.

16    The principles underlying the application of s 76 of the TPA/CCA can be taken as also applying generally to the determination of a penalty under s 76E(1) of the TPA and s 224(1) of the ACL, notwithstanding that these provisions are directed not to contraventions of the competition provisions of the TPA/CCA but to contraventions of the consumer protection provisions: Australian Competition and Consumer Commission v Gourmet Goody’s Family Restaurant Pty Ltd [2010] FCA 1216 at [6]; Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No 2) (2011) 279 ALR 609; [2011] FCA 382 (MSY) at [68]-[69]; and Australian Competition and Consumer Commission v Global One Mobile Entertainment Limited [2011] ATPR 42-358; [2011] FCA 393 (Global One) at 43,928.

17    The principal object of a penalty under s 76 of the TPA/CCA is deterrence, both general and specific. This has been made clear in a number of cases, some of which are discussed in NW Frozen Foods at 291-295.

18    The same is true of penalties under s 76E(1) of the TPA and s 224(1) of the ACL: see, for example, Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249; [2012] FCAFC 20 (Singtel Optus) at [62].

19    In Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54—a case concerning contraventions of s 52 and s 53C of the TPA—French CJ, Crennan, Bell and Keane JJ observed (at [65]-[66]):

65    General and specific deterrence must play a primary role in assessing the appropriate penalty in cases of calculated contravention of legislation where commercial profit is the driver of the contravening conduct. TPG’s campaign was conducted over approximately thirteen months at a cost to TPG of $8.9 million. It generated revenue of approximately $59 million, and an estimated profit of $8 million. TPG’s customer base grew from 9,000 to 107,000 during this period, although it cannot be said that this was at the expense of TPG’s competitors.

66    The pecuniary penalty fixed by the primary judge did not exceed that which might reasonably be thought appropriate to serve as a real deterrent both to TPG and to its competitors. As was said in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission, the penalty for contravention of the TPA:

“must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business … [T]hose engaged in trade and commerce must be deterred from the cynical calculation involved in weighing up the risk of penalty against the profits to be made from contravention.”

The financial position of the respondents

20    A particular consideration arising in the present case is the capacity of SensaSlim to pay the pecuniary penalty that the applicant seeks. It is almost certain that SensaSlim does not have the capacity to pay a pecuniary penalty of any significance. It has been in liquidation since before the commencement of the proceeding. Certainly, there is no evidence to suggest that it has any assets to meet penalties in the amounts sought by the applicant.

21    The applicant submits that, as a matter of general principle, the potential incapacity of a contravener to pay a pecuniary penalty should not limit the principal objective of general deterrence.

22    In Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281; [2005] FCA 254 at [9], Merkel J observed:

The size of the contravening companies and their respective capacities to pay a penalty were relied upon as factors in mitigation in the present case. Plainly, such factors can be relevant to the penalty that is necessary to deter the company from contravening the TPA in the future. Size may also be relevant to general deterrence because other potential contraveners are likely to take notice of penalties imposed on companies of a similar size. However, a contravening company's capacity to pay a penalty is of less relevance to the objective of general deterrence because that objective is not concerned with whether the penalties imposed have been paid. Rather, it involves a penalty being fixed that will deter others from engaging in similar contravening conduct in the future. Thus, general deterrence will depend more on the expected quantum of the penalty for the offending conduct, rather than on a past offender's capacity to pay a previous penalty. I therefore respectfully agree with the observation of Smithers J, referred to by Burchett and Kiefel JJ in NW Frozen Foods, to the effect that, a penalty that is no greater than is necessary to achieve the object of general deterrence, will not be oppressive. I have approached the issue of corporate penalties on that basis. The penalties in relation to the individuals may need to be tempered by personal considerations.

23    In Australian Competition and Consumer Commission v High Adventure Pty Ltd [2006] ATPR 42-091; [2005] FCAFC 247 at 44,564, the Full Court observed:

The second observation is that by focusing on the detriment to the respondents the judge ignored both the seriousness of the contravention as well as the need to fix upon an appropriate penalty by reference to the need to deter future contraventions. As the cases to which the judge was referred show, the principal, if not the sole, purpose for the imposition of penalties for a contravention of the antitrust provisions in Part IV is deterrence, both specific and general. This rule is so well entrenched that citation of authority is unnecessary. Moreover, as deterrence (especially general deterrence) is the primary purpose lying behind the penalty regime, there inevitably will be cases where the penalty that must be imposed will be higher, perhaps even considerably higher, than the penalty that would otherwise be imposed on a particular offender if one were to have regard only to the circumstances of that offender. In some cases the penalty may be so high that the offender will become insolvent. That possibility must not prevent the Court from doing its duty for otherwise the important object of general deterrence will be undermined.

24    In Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (in liquidation) (2007) 161 FCR 513; [2007] FCAFC 146 (Dataline) the Full Court said (at [21]) that no general principle can be stated about whether or not a penalty should be imposed on a company in liquidation. Nevertheless, the Full Court went on to say that the bare fact that a company was in liquidation was not, itself, “an immutable reason” for not imposing a penalty. Earlier, at [20], the Full Court observed:

… a court may impose a penalty on a company in liquidation if, to do so, would clearly and unambiguously signify to, for example, companies or traders in a discrete industry that a penalty of a particular magnitude was appropriate (and was of a magnitude which might be imposed in the future) if others in the industry sector engaged in the same or similar conduct. This was exemplified in the judgment of O’Loughlin J in The Vales Wine Company Pty Ltd decision [1996] ATPR 41-528.

25    In Australian Competition and Consumer Commission v The Vales Wine Company Pty Ltd [1996] ATPR 41-528; [1996] FCA 854, O’Loughlin J said (at 42,776):

The company is now in liquidation and I have been informed that there would be no hope of any penalties or costs being recovered. This state of affairs should not, however, dissuade a court from assessing appropriate penalties. Even though they may not be recovered, they will serve as a warning throughout the wine industry and elsewhere of the attitude of the Court to offences of this nature.

26    This approach was followed by Goldberg J in Australian Competition and Consumer Commission v SIP Australia Pty Limited [2003] ATPR 41-937; [2003] FCA 336 where, at 47,077-47,078, his Honour said:

… The fact that SIP is in liquidation and that an order has been made for its winding up is no bar to an order being made against it for the payment of penalties. However consistently with the order I made on 10 July 2002, no proceeding can be taken for the recovery of that penalty without further order of the Court. Even though SIP is in liquidation, it is still appropriate to order that it pay penalties for its contraventions of the Act as a measure of the Court’s disapproval of the contraventions established and as a measure of the seriousness with which the Court regards those contraventions. If the principal object of the imposition of penalties is deterrence, not only of the participants, but also others who might be influenced to contravene the Act, then it is quite appropriate to order that a company in liquidation pay pecuniary penalties for contraventions of the Act. If general deterrence is to have any meaning, a company in liquidation which has contravened the Act must be ordered to pay an appropriate pecuniary penalty as a deterrent to others who might be tempted to engage in similar conduct: Australian Competition and Consumer Commission v The Vales Wine Company Pty Ltd (1996) ¶ATPR 41-528 at 42,776.

27    In Australian Competition and Consumer Commission v ACN 135 183 372 (in liq) (formerly known as Energy Watch Pty Ltd) [2012] ATPR 42-405; [2012] FCA 749, Marshall J said that the Court should not be deterred from imposing an appropriate penalty by reason of the fact that the contravener in that case was in liquidation. His Honour reasoned (at 45,635) that to do otherwise would be to pay insufficient attention to the very important consideration of general deterrence. In that connection, his Honour (at 45,635) referred to Dataline and said:

… It does not matter that the $1.95 million penalty which the Court will impose on Energy Watch will never be paid. The penalty will serve as a warning to all business people who engage in energy brokering services, not to replicate the conduct recorded in the declarations.

28    Similarly, in Australian Competition and Consumer Commission v EDirect Pty Ltd (in liq) (2012) 206 FCR 160; [2012] FCA 976, Reeves J imposed a total penalty of $2.5 million on a contravener notwithstanding his Honour’s satisfaction that the contravener was unlikely to have any capacity to pay such a penalty. His Honour said (at [70)]:

… I consider that while EDirect is unlikely to have any capacity to pay the pecuniary penalty that is imposed upon it, general deterrence requires that a sufficiently high level of penalty should be imposed to deter others from even contemplating taking a risk of contraventions of a similar kind.

29    Each of the above cases concerned contraventions of the consumer protection provisions of the TPA by a corporation that was, at least at the time that penalties were imposed, in liquidation. Thus, in the present case, the applicant submits that the fact that SensaSlim is in liquidation is not a bar to the imposition of the substantial penalties it seeks, having regard to what it describes as the egregious nature of SensaSlim’s conduct and the fact that a clear message should be sent to any company with a propensity to engage in similar conduct that such conduct will not be tolerated and will be severely punished.

30    It is convenient to note that somewhat similar considerations arise in relation to Mr Boyle, having regard to the evidence of his present financial position (to which I will refer below at [145]) and the amount of the pecuniary penalty that the applicant seeks against him.

31    There is no evidence as to Mr Foster’s financial position or Mr O’Brien’s financial position or the capacity of either of them to pay the pecuniary penalties the applicant seeks.

The relevance of loss or damage

32    Another consideration arising in the present case is the extent of loss or damage suffered as a result of the acts or omissions giving rise to the relevant contraventions.

33    In MSY, Perram J rejected a submission that the absence of loss or damage is not a mitigating factor in the imposition of a penalty. His Honour reasoned (at [79]) that, in cases where it is easy to imagine detriment to consumers by reason of the impugned conduct, the absence of any evidence of such harm suggests that no harm was caused and that this must be taken as a mitigating circumstance.

34    His Honour applied that reasoning in Australian Competition and Consumer Commission v Singtel Optus Pty Ltd (No 4) (2011) 282 ALR 246; [2011] FCA 761 at [28]. However, in that case, his Honour also said that it is important to distinguish the inability to prove loss or damage from the inability to quantify loss or damage; see also in that connection the observations made by Bennett J in Global One at 43,931. The case before his Honour involved conduct in an advertising campaign in which the “broadband speed” in respect of internet plans providing “peak” and “off-peak” allowances was misrepresented. At [29], Perram J said:

In this case, there is no doubt that a misleading advertisement would be expected to cause consumers loss and damage consisting, at least, of their purchase of a plan of 24 months duration which, but for the commercials, they might never have acquired. This is not, therefore, a case like [Australian Competition and Consumer Commission v Roche Vitamins Australia Pty Ltd [2001] ATPR 41-809; [2001] FCA 150]. There are difficulties in assessing the loss or damage ensuing from such a state of affairs but that, of course, is a different question.

35    On appeal, in Singtel Optus, the Full Court said (at [58]):

… the very existence of s 76E(2)(a) suggests that a contravention which has caused substantial loss or damage to consumers should, all other things being equal, attract a more severe penalty than a contravention which has not. The absence of loss or damage to consumers is a circumstance which would usually attract a less severe penalty than if substantial harm had been inflicted on consumers. We would respectfully adopt the conclusion of the primary judge that the absence of such evidence, in a case such as this, constitutes a factor in mitigation of penalty and we do so for the reasons referred to by the primary judge in his earlier decision in ACCC v MSY Technology Pty Ltd (No 2) (2011) 279 ALR 609; [2011] FCA 382 at [77]-[80].

36    In the present case, the applicant submits that relevant loss or damage was suffered having regard to the fact that Area Managers acquired a product (the SensaSlim product) whose efficacy as a weight loss product had not been established by a worldwide trial as represented. Moreover, Area Managers were not given the opportunity to earn the weekly income represented in the various newspaper advertisements directed to prospective franchisees. Further, the business opportunity that was offered to prospective franchisees was one associated with Mr Foster which, had that association been known, would not have been, generally speaking, an opportunity that a prospective franchisee would have taken up in light of Mr Foster’s reputation as a conman. Thus, the applicant submits, real loss or damage was suffered by Area Managers because of the fraud perpetrated on them.

37    To support these submissions, the applicant referred to aspects of the evidence given at the liability hearing by Mr Driscoll, Mr Coffey, Ms Stanistreet, Mr Evans, Mr James and Mr Cook. In general terms, this evidence covered complaints concerning a lack of marketing and advertising of the SensaSlim product by SensaSlim, and the failure by SensaSlim to provide marketing materials, as promised. This evidence also covered the delay by SensaSlim in launching the SensaSlim product by the originally planned launch date. The difficulty with this evidence is that, whatever promises might have been made and broken in that regard, they were not advanced at the liability hearing as representations or conduct that contravened the TPA or the ACL, and no findings of contravention in that regard have been made.

38    The applicant also referred to evidence given by Mr Driscoll, Ms Stanistreet, Mr Evans and Mr Cook to the effect that they failed to achieve the earnings projected for a SensaSlim franchise and, in fact, receive little revenue from being a SensaSlim Area Manager. The difficulty with this evidence is that, in each case, the evidence was given at a high level of generality and the applicant has not shown that the Area Manager’s failure to derive the projected revenue represented to him or her was caused by or related to the contravening representations or conduct.

39    Further, the evidence given by Mr Driscoll, Ms Stanistreet, Mr Evans and Mr Cook does not enable me to draw any specific conclusions about the financial impact of the contravening representations and conduct on other Area Managers. The applicant did seek to adduce “victim impact statements” from four other Area Managers, who had not given evidence at the liability hearing. I rejected that evidence based on its form and for discretionary reasons arising under s 135 of the Evidence Act 1995 (Cth): see Transcript page 11, lines 16 to 41 of the penalty hearing.

40    It is convenient to record here that the applicant has abandoned its claim for compensation orders under s 87AAA of the TPA or s 239 of the ACL.

41    Nonetheless, as I have found at [62] of the liability reasons, there is no evidence in this proceeding of any study or trial that establishes that the SensaSlim product has efficacy as a weight loss product or that it possesses any of the benefits asserted in the SensaSlim DVD used to promote the SensaSlim product to prospective franchisees. Significantly, there is no reason to believe on established objective grounds that the SensaSlim product is an efficacious weight loss product or has the benefits asserted in the SensaSlim DVD.

42    I am satisfied that had, for example, Mr Driscoll, Ms Stanistreet, Mr Evans and Mr Cook known that the efficacy of the SensaSlim product as a weight loss product or that its benefits asserted in the SensaSlim DVD had not been established, as represented, or that Mr Foster was the person behind the SensaSlim business and that Mr Boyle and Mr O’Brien only had, as I have found, roles calculated to create a façade of respectability for that business, then they would not have become Area Managers and parted with the substantial sums they paid to purchase stock of the SensaSlim product and associated point of sale material (the franchise fee). Common sense suggests that this conclusion would apply, generally, to all prospective franchisees who acquired a SensaSlim franchise and became an Area Manager. That was certainly the tenor of the evidence given by other Area Managers at the liability hearing.

43    Although no specific submissions were addressed on the matter, I do not leave out of consideration the likelihood of loss or damage, more generally, to ultimate consumers who purchased the SensaSlim product in the fraudulently induced belief that its efficacy as a weight loss product had been demonstrated, as represented. Consumers are, equally, victims of the scam perpetrated on the Area Managers. Even though I do not know the number of units involved, I have no reason to think, in the absence of evidence to the contrary, that a substantial quantity of the SensaSlim product that was foisted on Area Managers found its way onto retail shelves and, ultimately, into the homes of consumers. This, after all, was the intended destination of the product in question.

44    I am satisfied that the contravening representations and conduct caused loss or damage to consumers which, whilst not quantified, is nevertheless real and significant. In this connection, I am satisfied that it would be unlikely that consumers would have been induced to part with money to purchase the SensaSlim product (the recommended retail price was said to be $59.95 per unit) had they known that the product did not have the qualities or attributes of trial and efficacy that had been represented or, indeed, had they known that the product was a weight loss product associated with Mr Foster.

45    At this point it is convenient to note the size, in money terms, of the business activity with which the contraventions were concerned. The evidence establishes that the scam perpetrated on Area Managers yielded for SensaSlim, and ultimately those standing behind it, revenue of approximately $6.3 million (the evidence of the revenue varies, but this figure is the lowest point in the range and is most likely the correct figure). Approximately $4.54 million was paid before 2 December 2010, the date of Mr Boyle’s resignation as a director of the company.

Course of conduct

46    A pecuniary penalty may be imposed in relation to each relevant act or omission giving rise to a contravention: s 76E(1) of the TPA and s 224(1) of the ACL. Nevertheless, a person is not liable to more than one pecuniary penalty in respect of the same conduct: see s 76E(4)(b) of the TPA and s 224(4)(b) of the ACL. The provisions of s 76E(1) of the TPA apply to conduct after 15 April 2010 up to and including 31 December 2010: TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277; [2012] FCAFC 190 (TPG) at [76]. Section 76E(1) of the TPA can be regarded as the predecessor provision to s 224(1) of the ACL.

47    For the purpose of assessing penalties, the applicant identified SensaSlim’s contravening conduct as comprising three separate categories of contravention, which the applicant termed:

    the SensaSlim officers representations (Declarations 1-3; 10 and 12);

    the worldwide trial representations (Declarations 4-6); and

    the earnings potential representations (Declarations 7-9).

48    The applicant submits that the SensaSlim officers representations occurred as two separate courses of conduct, as follows:

    in the Area Manager Proposal, Disclosure Document, Welcome letter and KMB letter, to prospective franchisees/Area Managers to encourage them to pay the first instalment (approximately $30,000) of the franchise fee; and

    in Newsletter No 1 and Newsletter No 2, which were provided to Area Managers to encourage them to pay the second instalment (approximately $30,000) of the franchise fee.

49    The applicant submits that the worldwide trial representations occurred as three separate courses of conduct, as follows:

    in the Area Manager Proposal and SensaSlim DVD, which were provided to prospective franchisees to encourage them to become Area Managers and to pay the first instalment of the franchise fee;

    in Newsletter No 30, which was an internal SensaSlim document provided to existing Area Managers; and

    in the advertorials and on the SensaSlim website, which were representations made to the public at large.

50    The applicant submits that the earnings potential representations occurred as two separate courses of conduct, as follows:

    in The Courier Mail, The Sydney Morning Herald and The Age, which were directed to inducing prospective franchisees to make further enquiries about SensaSlim; and

    in the Area Manager Proposal, which were directed to inducing prospective franchisees to sign-up as Area Managers and pay their first instalment of the franchise fee.

Assessment of penalty

51    The process to be applied in arriving at a particular pecuniary penalty was discussed by the Full Court in TPG at [145]-[146], where their Honours said:

145    The process to be applied in arriving at a particular penalty figure was considered in the context of criminal sentencing by the High Court in Markarian v The Queen (2005) 228 CLR 357. That process is also applicable to the assessment of pecuniary penalties under s 76 of the Act: see Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd [2005] 27 ATPR 42-070 at [68].

146    In Markarian, Gleeson CJ, Gummow, Hayne and Callinan JJ held:

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

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

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

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

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

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

(g)    since the law strongly favours transparency, accessible reasoning is necessary in the interests of all, and, while there may be occasions where some indulgence in an arithmetical process will better serve the end, it does not apply where there are numerous and complex considerations that must be weighed (at [39]).

52    The Court must have regard to the “totality principle” to ensure that the total penalties imposed are just and appropriate: Australian Competition and Consumer Commission v Telstra Corporation Ltd (2010) 188 FCR 238; [2010] FCA 790 at [228]-[236] and the cases there cited.

Injunctions

53    The applicant relies on s 232(1) of the ACL as the source of power to grant injunctions in the present case. Section 232(1) of the ACL is relevantly the same as s 80(1) of the TPA/CCA and the authorities on the latter provision provide useful guidance.

54    In Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) (2011) 195 FCR 1; [2011] FCA 352 (Yellow Page Marketing), Gordon J referred to the power under s 232(1) of the ACL as “broad” but nevertheless subject to three limitations. These limitations find expression in Merkel J’s reasons for judgment in Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197; [1997] FCA 871 at 203-204 (Z-Tek) with reference to s 80 of the TPA. First, the power is confined by reference to the scope and purpose of the TPA. In Z-Tek Merkel J said, and in Yellow Page Marketing Gordon J repeated, that the relief should be designed to prevent a repetition of the conduct for which the relief is sought. Secondly, there must be a sufficient nexus or relationship between the contravention and the injunction granted. Thirdly, there is a constitutional limitation which requires the injunction to be related to the case or controversy the subject of the proceeding.

55    It is to be noted that Merkel J’s and Gordon J’s observations on the first of these limitations must be considered by reference to s 232(4) of the ACL which provides that the power of the Court to grant an injunction under s 232(1) restraining a person from engaging in conduct may be exercised whether or not it appears to the Court that the person intends to engage again, or to continue to engage, in conduct of the kind referred to in s 232(1). A similar qualification appears in s 80(4) of the TPA/CCA with respect to injunctions granted under s 80(1). Thus, in my respectful view, it is not necessarily the case that the injunction to be granted must be designed to prevent a repetition of the conduct in question. The cases recognise, for example, that an injunction under s 80(1) of the TPA/CCA can be granted when it is in the public interest to do so, such as to mark the Court’s disapproval of a respondent’s behaviour: Trade Practices Commission v Mobil Oil Australia Ltd (1984) 4 FCR 296; [1984] FCA 403 at 299-300; or to reinforce to the market place that the restrained behaviour is unacceptable: Australian Competition and Consumer Commission v 4WD Systems Pty Ltd (2003) 200 ALR 491; [2003] FCA 850 at [217]; see also Dynamic Supplies Pty Limited v Tonnex International Pty Limited (No 2) [2011] FCA 675 at [23].

Disqualification orders

56    Section 248(1) of the ACL provides for the imposition of disqualification orders in an appropriate case. Before making such an order, the Court must be satisfied that the person against whom the order is sought has contravened or attempted to contravene one or more of certain identified consumer protection provisions of the ACL or has been involved in such a contravention, and that the Court is satisfied that the disqualification is justified.

57    Section 86E(1) of the CCA (and, formerly, the TPA) is in similar terms and provides for the imposition of disqualification orders in similar circumstances involving the contravention or attempted contravention, or involvement in the contravention, of certain identified competition provisions of the CCA/TPA. Previously, s 86E included s 86E(1B). Like s 76E(1) (see [46] above), s 86E(1B) of the TPA applied to conduct after 15 April 2010 up to and including 31 December 2010. Section 86E(1B) fulfilled the role now provided by s 248(1) of the ACL. It was repealed with effect from 1 January 2011, but not in respect of acts or omissions occurring before that date.

58    These provisions provide that, in determining whether a disqualification order is justified, the Court may have regard to the person’s conduct in relation to the management, business and property of any corporation and any other matters that the Court considers to be appropriate. It is accepted that disqualification orders under the TPA/CCA and ACL have been modelled on similar provisions in the Corporations Act. In ACCC v Halkalia Pty Ltd (No 2) [2012] ATPR 42-399; [2012] FCA 535 (which involved the application of s 86E(1B) of the TPA), Tracey J (at 45,531) noted that the principles which had been developed in respect of disqualification orders under the Corporations Act were distilled by Santow J in Re HIH Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler (2002) 42 ACSR 80; [2002] NSWSC 483 (Adler). Tracey J said that there is no reason to doubt that those principles provide useful guidance when the Court is considering s 86E of the TPA (which, by extension of reasoning, would now include s 248(1) of the ACL).

59    In Adler, Santow J at [56] said:

The cases on disqualification gave orders ranging from life disqualification to 3 years. The propositions that may be derived from these cases include:

(i)    Disqualification orders are designed to protect the public from the harmful use of the corporate structure or from use that is contrary to proper commercial standards: Australian Securities and Investments Commission v Hutchings (2001) 38 ACSR 387 at 395; Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd (2002) 41 ACSR 561; Australian Securities Commission v Forem-Freeway Enterprises Pty Ltd (1999) 30 ACSR 339 at 349–50; Australian Securities Commission v Donovan (1998) 28 ACSR 583 at 602; Australian Securities Commission v Roussi (1999) 32 ACSR 568 at 570–1; Re Strikers Management Pty Ltd; Australian Securities Commission v Dimitri (unreported, Fed C of A, Burchett J, No NG 3789 of 1996, 7 May 1997, BC9702133); Re Tasmanian Spastics Association; Australian Securities Commission v Nandan (1997) 23 ACSR 743 at 751.

(ii)    The banning order is designed to protect the public by seeking to safeguard the public interest in the transparency and accountability of companies and in the suitability of directors to hold office: Australian Securities Commission v Roussi, above, at 570; Re Gold Coast Holdings Pty Ltd; Australian Securities and Investments Commission v Papotto (2000) 35 ACSR 107 at 112.

(iii)    Protection of the public also envisages protection of individuals that deal with companies, including consumers, creditors, shareholders and investors: Australian Securities Commission v Roussi at 570; Re Gold Coast Holdings Pty Ltd, above, at 112; Re Tasmanian Spastics Association, above, at 751.

(iv)    The banning order is protective against present and future misuse of the corporate structure: Australian Securities Commission v Donovan, above, at 603.

(v)    The order has a motive of personal deterrence, though it is not punitive: Re Magna Alloys & Research Pty Ltd (1975) 1 ACLR 203 at 205; Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd, above; Australian Securities Commission v Donovan at 607; Re Tasmanian Spastics Association at 751.

(vi)    The objects of general deterrence are also sought to be achieved: Australian Securities Commission v Donovan at 602.

(vii)    In assessing the fitness of an individual to manage a company, it is necessary that they have an understanding of the proper role of the company director and the duty of due diligence that is owed to the company: Australian Securities Commission v Donovan at 607.

(viii)    Longer periods of disqualification are reserved for cases where contraventions have been of a serious nature such as those involving dishonesty: Australian Securities Commission v Donovan at 605-7.

(ix)    In assessing an appropriate length of prohibition, consideration has been given to the degree of seriousness of the contraventions, the propensity that the defendant may engage in similar conduct in the future and the likely harm that may be caused to the public: Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd; Australian Securities and Investments Commission v Parkes (2001) 38 ACSR 355 at 386; Australian Securities Commission v Forem-Freeway Enterprises; Australian Securities Commission v Roussi at 570–1.

(x)    It is necessary to balance the personal hardship to the defendant against the public interest and the need for protection of the public from any repeat of the conduct: Australian Securities Commission v Donovan at 607; Australian Securities and Investments Commission v Parkes, above, at 386.

(xi)    A mitigating factor in considering a period of disqualification is the likelihood of the defendant reforming: Australian Securities Commission v Forem-Freeway Enterprises at 351.

(xii)    The eight criteria to govern the exercise of the court's powers of disqualification set out in Commissioner for Corporate Affairs (WA) v Ekamper (1987) 12 ACLR 519 have been influential. It was held that in making such an order it is necessary to assess:

•    character of the offenders;

•    nature of the breaches;

•    structure of the companies and the nature of their business;

•    interests of shareholders, creditors and employees;

•    risks to others from the continuation of offenders as company directors;

•    honesty and competence of offenders;

•    hardship to offenders and their personal and commercial interests; and

•    offenders’ appreciation that future breaches could result in future proceedings.

Australian Securities Commission v Roussi at 570-1; Re Gold Coast Holdings Pty Ltd at 111;

(xiii)    Factors which lead to the imposition of the longest periods of disqualification (that is disqualifications of 25 years or more) were:

•    large financial losses;

•    high propensity that defendants may engage in similar activities or conduct;

•    activities undertaken in fields in which there was potential to do great financial damage such as in management and financial consultancy;

•    lack of contrition or remorse;

•    disregard for law and compliance with corporate regulations;

•    dishonesty and intent to defraud;

•    previous convictions and contraventions for similar activities.

Australian Securities and Investments Commission v Hutchings; Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd; Australian Securities Commission v Parkes;

(xiv)    In cases in which the period of disqualification ranged from 7-12 years, the factors evident and which lead to the conclusion that these cases were serious though not “worst cases”, included:

•    serious incompetence and irresponsibility;

•    substantial loss;

•    defendants had engaged in deliberate courses of conduct to enrich themselves at others’ expense, but with lesser degrees of dishonesty;

•    continued, knowing and wilful contraventions of the law and disregard for legal obligations;

•    lack of contrition or acceptance of responsibility, but as against that, the prospect that the individual may reform;

Australian Securities Commission v Forem-Freeway Enterprises; Australian Securities Commission v Donovan; Australian Securities Commission v Roussi; Re Strikers Management Pty Ltd; Re Gold Coast Holdings Pty Ltd.

The difficulty with Roussi’s case is that disqualification for 10 years was ordered, as this was the period of disqualification that the ASC had sought. Had a longer period been applied for, Einfeld J may have considered giving a longer period: Australian Securities Commission v Roussi at 571;

(xv)    The factors leading to the shortest disqualifications, that is disqualifications for up to 3 years were:

•    although the defendants had personally gained from the conduct, they had endeavoured to repay or partially repay the amounts misappropriated;

•    the defendants had no immediate or discernible future intention to hold a position as manager of a company;

•    in Donovan’s case, the respondent had expressed remorse and contrition, acted on advice of professionals and had not contested the proceedings;

Australian Securities Commission v Donovan; Re Tasmanian Spastics Association.

60    In Rich v Australian Securities and Investments Commission (2004) 220 CLR 129; [2004] HCA 42, the High Court made it clear that a disqualification order can be imposed by way of punishment and not merely as a protective measure, thereby qualifying Santow J’s proposition (v) in Adler.

61    In the case of disqualification orders imposed under the Corporations Act, the usual approach is to decide whether, and if so on what terms, such an order should be imposed before deciding the question of whether a pecuniary penalty should be imposed: see, for example, Australian Securities and Investments Commission v Australian Property Custodian Holdings Ltd (recs and mgrs apptd) (in liq) (controllers appointed) (2014) 322 ALR 45; [2014] FCA 1308 at [79], and the cases there cited. However, in Australian Competition and Consumer Commission v Safety Compliance Pty Ltd (in liq) (No 2) [2015] FCA 1469, Farrell J observed (at [41]) that this has not been the universal practice of this Court in proceedings under the TPA or ACL.

62    In the present case I am satisfied that, given the nature of the contraventions that have been found, and the seriousness of those contraventions, both disqualification orders and pecuniary penalties should be imposed on Mr Foster, Mr O’Brien and Mr Boyle. In these circumstances, I do not think that it is necessary to follow the approach of first considering the imposition of disqualification orders. The totality principle requires the Court to consider the appropriateness of both the disqualification order and the pecuniary penalty or penalties imposed on each individual to ensure that the total penalty that is imposed on that person is appropriate in the circumstances: Kerkhoffs v Registrar of Aboriginal and Torres Strait Islander Corporations [2014] FCAFC 66 at [17]-[21].

The assessment of the appropriate Pecuniary penalty

Introduction

63    The applicant submits that it would be appropriate for the Court to proceed on the basis that the maximum penalty payable for a contravening act or omission for a corporation is $1.1 million and for an individual, $220,000.

64    The applicant submits that it would be appropriate for the Court to consider the respondents to have engaged in the following courses of conduct in contravention of the TPA and/or the ACL:

    for SensaSlim, seven separate courses of conduct (namely, those identified at [48]-[50] above), resulting in a maximum pecuniary penalty of $7.7 million;

    for Mr Foster as an accessory, five courses of conduct (namely, those identified at [48]-[49] above), resulting in a maximum pecuniary penalty of $1.1 million;

    for Mr O’Brien as an accessory, one course of conduct (namely, that identified in [48] above concerning the Disclosure Document), resulting in a maximum pecuniary penalty of $220,000; and

    for Mr Boyle as an accessory, one course of conduct (namely, that identified in [48] above concerning the Welcome letter and the KMB letter), resulting in a maximum pecuniary penalty of $220,000.

SensaSlim

The applicant’s submissions

65    As I have noted, the applicant submits that SensaSlim’s contraventions should be viewed as seven separate courses of conduct. So viewed, the applicant submits that the appropriate penalty should be $6.6 million. In advancing this penalty, the applicant does not explain how this penalty relates to each separate course of conduct on which it relies.

66    The applicant’s submissions in support of the penalty can be summarised as follows. SensaSlim’s conduct was “widespread, egregious and deliberate”. The company was incorporated to serve the object of conducting a very complex, orchestrated scam to defraud Area Managers of (approximately) $60,000 each. The company had no other business. Over 80 Area Managers purchased 110 franchise areas. The scam yielded revenue of approximately $6.3 million for SensaSlim and those standing behind it. In order to induce prospective franchisees to make inquiries about the business, SensaSlim published newspaper advertisements that represented that intending participants in the advertised business could earn $4,000 per week. There was no basis for that representation. Further, prospective franchisees and Area Managers were told that Mr Boyle and Mr O’Brien were the managers of the business, when in fact they were not. Mr Foster’s role as controlling mind of the business was “painstakingly concealed at all times”. The prospective franchisees and Area Mangers were told that the SensaSlim product had been the subject of an extensive worldwide trial involving over 10,000 participants. The Institute that is said to have been involved in the conduct of the trial did not exist. The trial was fabricated. These fraudulent representations were repeated in advertorials, the Disclosure Document, the Area Manager Proposal, the SensaSlim DVD, internal newsletters, and letters to Area Managers from both SensaSlim and in the KMB letter.

67    The applicant says that the corporate culture of SensaSlim “was the product of [Mr Foster’s] systemic non-compliance with the TPA/CCA and was inherently fraudulent”.

68    The applicant submits that a penalty of $6.6 million is appropriate having regard to the nature of the conduct, the need for general deterrence, the fact that the scam extracted approximately $6.3 million from franchisees, and that SensaSlim’s existence and operations were directed to no other purpose or business activity.

Consideration and conclusion

69    I accept that it is appropriate to consider SensaSlim’s contravening conduct as comprising three separate categories of contravention. I do not accept, however, that it is appropriate to impose penalties on SensaSlim on the basis that there are seven separate courses of conduct.

70    In my view, the SensaSlim officers representations constitute one course of conduct, for which one penalty should be imposed. The penalty covers contraventions of s 59(2) and s 53(d) of the TPA, as referred to in Declarations 1, 2, 3, 10 and 12. My findings are at [565]-[590] of the liability reasons. I also refer to [652]-[669] of the liability reasons. Although these particular paragraphs deal with Mr Boyle’s intention to resign, they also explain the importance of SensaSlim representing Mr Boyle as the founder of SensaSlim Australia and as its “Senior Director”.

71    I am satisfied that, in respect of this course of conduct, the maximum penalty of $1.1 million should be imposed.

72    One of the critical elements of the scam was the need to mask Mr Foster’s association with SensaSlim, even though the SensaSlim business was, in substance, Mr Foster’s venture and SensaSlim was Mr Foster’s corporate vehicle to conduct the venture. As I have found at [565] of the liability reasons, Mr Foster controlled and directed, in an executive capacity, the way in which the SensaSlim business was carried on; he was the puppeteer who pulled all the strings.

73    However, it was essential that Mr Foster not be publicly associated with SensaSlim or its business. Mr Foster’s self-assessment was that his name was “mud” and that he could not be seen to be connected to a weight loss product: [134] and [570] of the liability reasons. Mr Foster’s bad reputation was supported by other evidence in the proceeding.

74    At [573] of the liability reasons, I suggested another reason why Mr Foster’s association with SensaSlim needed to be masked. At the time of the contravening conduct, Mr Foster was subject to an order of this Court restraining him from, amongst other things, being directly or indirectly knowingly concerned in the promotion or conduct by a corporation of any business relating to weight loss, cosmetic or health industry products or services of any kind: Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (in liquidation) [2005] FCA 1212. I will refer to this proceeding as the Chaste proceeding.

75    The mask was provided by Mr O’Brien and Mr Boyle. Their roles were critical.

76    Mr O’Brien was represented as SensaSlim’s Operations Director. However, as I have found at [585] of the liability reasons, Mr O’Brien had no active, or indeed meaningful, role in the SensaSlim business as Operations Director in the way described, for example, in the Disclosure Document. He was no more than a front man for Mr Foster, appearing where required to maintain the fiction that he (Mr O’Brien) was the Operations Director of SensaSlim. “Mr O’Brien” was, in fact, Mr Foster’s alter ego.

77    Mr Boyle, as I have noted, was portrayed as the founder of SensaSlim in Australia, and as its Senior Director. He provided the veneer of respectability for the business, especially through his role as an associate director of UBS Australia. His role at UBS Australia, with its obvious suggestion that Mr Boyle possessed business acumen that would be of significant benefit to the company—thereby providing significant comfort to prospective franchisees who were contemplating becoming Area Managers, and to those who had become Area Managers—was played to great effect in the company’s promotional material and in its communications with Area Managers.

78    I accept the applicant’s submission that the deployment of Mr O’Brien and Mr Boyle as the faces of SensaSlim was directed to achieving the result that prospective franchisees would pay the first instalment of the franchise fee and that, upon becoming Area Managers, would pay the remaining instalment that was due at the time of the Area Managers’ Conference.

79    SensaSlim’s conduct was deliberate, covert and fraudulent to a high degree. It was clearly directed to obtaining money by deceit. Its objective was to conceal the activities of an avowed and notorious conman, Mr Foster. As I have found at [42] above, had prospective franchisees and Area Managers known that Mr Foster was the person behind the SensaSlim business and that Mr Boyle and Mr O’Brien only had roles calculated to create a façade of respectability for the business, then it is unlikely that they would have become Area Managers and parted with the substantial sums they paid for their franchises.

80    In my view, the worldwide trial representations constitute two courses of conduct, for which separate penalties should be imposed. The conduct concerns contraventions of s 59(2) and s 53(a) of the TPA, and s 29(1)(a) and s 29(1)(g) of the ACL, as referred to in Declarations 4, 5 and 6. One course of conduct was directed to prospective franchisees and Area Managers (paragraphs 4, 5(a) and (b) and 6 of the declarations made on 26 September 2014); the other to the public (paragraphs 5(c), (d) and (e) of the declarations). My findings are at [591]-[612] of the liability reasons.

81    I am satisfied that, in respect of each course of conduct, the maximum penalty of $1.1 million should also be imposed.

82    The representation that a worldwide trial had been conducted and had established, scientifically, the efficacy of the SensaSlim product as a weight loss product, was obviously critical to the scam. The level of deception practised in this regard is breathtaking. It involved not only the concoction of the story that a worldwide trial had taken place, but also the fabrication of evidence that was intended to deceive, and did deceive, those who sought to verify the existence of the trial and its alleged results. I will not repeat the detail of my findings in that regard. They are set out comprehensively in the liability reasons. It is sufficient for me to record that the steps taken to deceive prospective franchisees, Area Managers and, consumers, involved employing actors to make false claims in the SensaSlim DVD and advertorials, fabricating the existence of the Institute said to have been involved in the conduct of the trial (including creating a false website on which pilfered images of actual medical practitioners were used), fabricating and disseminating a report which had the appearance of a genuine scientific report (the Strebel report) and engaging in deceptive correspondence using false identities when answering inquiries from prospective franchisees.

83    Like the SensaSlim officers representations, the worldwide trial representations were directed to achieving the result that prospective franchisees and Area Managers would pay the two instalments of the franchise fee. However, the worldwide trial representations were also directed to achieving sales of the SensaSlim product to consumers. Once again, SensaSlim’s conduct was deliberate and fraudulent to a high degree, and was clearly directed to obtaining money by deceit. It involved the deception of prospective franchisees, Area Managers and the public at large. It is inconceivable that prospective franchisees and Area Managers would have paid anything for their franchises had they known that claims made about the SensaSlim product were bogus. Similarly, it is inconceivable that, with that knowledge, members of the public would have been willing to buy such a product. Nothing less than the maximum pecuniary penalty would suffice in respect of each course of conduct.

84    In my view, the earnings potential representations constitute one course of conduct concerning the earnings potential of a SensaSlim franchise. This course of conduct covers contraventions of s 59(2) of the TPA, as referred to in Declarations 7, 8 and 9. These contraventions are based on my finding that no reasonable grounds existed for making the representations in light of the application of s 51A of the TPA. My findings are at [613]-[628] of the liability reasons.

85    The degree of culpability involved in this course of conduct is significantly less than in relation to the SensaSlim officers representations and the worldwide trial representations. Nevertheless, the conduct involved the deception of over 80 Area Managers. I have no reason to doubt that the Area Managers were influenced, in no small measure, to acquire their SensaSlim franchises on the faith of the earnings potential representations and in the expectation that they had been made on reasonable grounds.

86    In my view, the appropriate penalty for the contraventions involved in this course of conduct is $250,000.

87    The total penalties imposed on SensaSlim will be $3.55 million. Looking at the degree of misconduct involved, I am satisfied that this sum is just and appropriate for the entirety of the contravening conduct I have found. The fact that, in respect of three courses of conduct, the maximum penalty has been imposed and that, in respect of the fourth, a significant penalty has been imposed, reflects the seriousness of the conduct involved and the need to deter others from engaging in conduct of that kind, notwithstanding SensaSlim’s impecuniosity.

Mr Foster

The applicant’s submissions

88    The applicant submits that Mr Foster’s involvement in SensaSlim’s contraventions, and his liability to pecuniary penalties for that involvement, should be viewed as five separate courses of conduct concerning the SensaSlim officers representations and the worldwide trial representations. The applicant submits that Mr Foster should be ordered to pay the maximum pecuniary penalty ($220,000) for the five separate courses of conduct, resulting in a total penalty of $1.1 million.

89    The applicant submits that the scope of Mr Foster’s conduct puts him at the very highest end of culpability in terms of the objective seriousness of the contraventions. The applicant submits that Mr Foster was the controlling mind behind the entire scam. He was (although carefully and dishonestly hidden) at the centre of every aspect of the SensaSlim business, including the making of the SensaSlim DVD, the making of the advertorials, the recruitment of Area Managers, the giving of instructions to Sales Managers and the production of documents used in connection with the SensaSlim business, including those to which I have made special reference in the liability reasons.

90    The applicant submits that Mr Foster’s conduct was systematic, deliberate and covert. He went to extraordinary lengths to give the SensaSlim business “the façade of legitimacy”. The applicant submits that the Court should have regard to the dishonest and protracted nature of his conduct, which included Mr Foster:

    meticulously concealing his involvement in the business;

    recruiting Mr Boyle and Mr O’Brien to be the face of the business;

    assuming the identity of “Mr O’Brien” during numerous telephone conversations, and in numerous emails, with Area Managers;

    fabricating the existence of the worldwide trial, the Institute that is said to have been involved in the trial, and the Strebel report;

    creating a fictional website for the Institute; and

    creating the fictional character René Desbois from SensaSlim Suisse, whose persona was used by Mr Foster in emails to prospective franchisees who had made enquiries about the SensaSlim business.

91    The applicant submits that all this conduct was designed to deceive prospective franchisees and Area Managers into thinking that the SensaSlim business was legitimate and run by genuine businessmen who had no association or affiliation with Mr Foster. Further, Area Managers were led to believe that the efficacy of the SensaSlim product had been tested and proven when, in fact, this was not the case. The efficacy of the product was relevant to the assessment by prospective franchisees of the overall profitability and desirability of investing (approximately) $60,000 in a SensaSlim franchise.

92    The applicant submits that Mr Foster conducted a “huge” business, in several states, on the basis of lies, large scale deception and the assumption of other people’s identities. Without remorse, he drew in unsuspecting investors and was careless as to potential damage to them. The applicant submits that Mr Foster “lied endlessly and continuously to do so”.

93    The applicant refers to the amount of approximately $6.3 million derived from these activities. The applicant points to evidence which shows that Mr Foster and members of his family controlled the bank accounts through which these funds passed.

94    The applicant also points to the fact that Mr Foster has previously been found to have contravened the TPA and to have breached injunctions placed upon him in that regard: Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (No 3) [2013] FCA 984.

95    Moreover, Mr Foster has a lengthy criminal history in Australia and elsewhere. Some details of this history are provided in Australian Competition and Consumer Commission v Chaste Corporation (No 1) (2003) 127 FCR 418; [2003] FCA 180 at [42]-[57]. In that case, Spender J referred to Mr Foster’s past conduct as “a sad and lengthy history of dishonesty, deception and evasion”, including direct involvement in marketing schemes which have resulted in the misappropriation of assets.

96    On 7 December 2007, Mr Foster pleaded guilty to an offence under s 400.4(1) of the Criminal Code, namely money laundering where the value of money was greater than $100,000. He was sentenced to four-and-a-half years imprisonment with a non-parole period of two years and three months. He was also ordered to pay reparation in the sum of $214,138.47. The circumstances of this offence are set out in R v Foster [2009] 1 Qd R 53; [2008] QCA 90. Of present relevance is the recording of Mr Foster’s antecedents at [2]-[5]:

2    The prosecutor at sentence provided the following information about Mr Foster. He was aged 44 and 45 during the period of the offending. He had a relevant criminal history in Australia, UK and the USA.

3    In 1987 in the Southport Magistrates Court he was fined A$1,000 for an offence concerning the management of Slimway Tea Company Pty Ltd whilst an undischarged bankrupt. In 1989 in the Municipal Court of Los Angeles, California he was dealt with for two counts of false advertising and one count of violating the Californian Health and Safety Code. The penalty was four months suspended imprisonment and three years probation. He was also ordered to pay restitution of US$228,000 and investigation costs of US$10,000 and prohibited from selling in California any tea or other products which purported to have health benefits. In 1994 in the Crown Court, Warwick, England, he was fined a total of £21,000 and ordered to pay £8,000 costs for five counts of offering to supply, and one count of supplying, goods to which a false trade description applied. In 1995 in the Crown Court, Liverpool, England, he was sentenced for conspiracy to supply goods to which a false trade description applied. On appeal, his sentence was reduced to 18 months imprisonment and the original recommendation for deportation was set aside.

4    In 1996 in the Southport Magistrates Court he was convicted and fined A$4,000 for again managing a corporation whilst insolvent. He was also sentenced to 18 months imprisonment to be released after five months for three offences of inducing a witness to give false testimony and to lesser concurrent terms of imprisonment for two counts of imposition and one count of possessing a falsified foreign passport. In 1998 in the Melbourne Magistrates Court he was sentenced to six months imprisonment to be released after serving 10 days for two counts of imposition, damaging Commonwealth property, escaping from lawful custody, two counts of assaulting police and one count of resisting arrest. In 2000 in the Crown Court, St Albans, England, he was sentenced to 33 months imprisonment and disqualified from being a company director in the UK for five years for three counts of using a false instrument.

5    On 2 February 2007 in Vanuatu he was sentenced for being a prohibited immigrant to six weeks imprisonment, fined A$15,180 and ordered to pay prosecution costs of A$632.50 or, in default, be imprisoned for an additional two months.

97    The applicant submits that there are no mitigating factors in relation to Mr Foster’s conduct which, it says, is at the most serious end of the scale of wrongdoing.

Consideration and conclusion

98    I do not accept that Mr Foster’s liability to pecuniary penalties should be viewed as five separate courses of conduct. In light of my conclusion that SensaSlim’s contraventions involved four separate courses of conduct, Mr Foster’s involvement must been seen in the same light and, therefore, as involving three courses of conduct, namely involvement in the SensaSlim officers representations (one course of conduct) and in the worldwide trial representations (two courses of conduct).

99    Apart from that matter, I accept the applicant’s submissions in so far as they concern the extent of Mr Foster’s involvement in SensaSlim’s contravening conduct and the degree of culpability that attaches to him. Those submissions are based on the numerous findings of fact I have made in the liability reasons. My findings in relation to the case brought against Mr Foster are to be found, principally, at [670]-[714] of the liability reasons. However, these specific findings must be considered against the background of a substantial number of other findings concerning Mr Foster which are to be found in other passages of the liability reasons.

100    I note that Mr Foster’s conduct was in breach of this Court’s orders made against him in the Chaste proceeding, although the pecuniary penalties now sought should not reflect punishment for that contempt. Mr Foster has been separately punished in that regard: Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (No 6) (2013) 223 FCR 426; [2013] FCA 1112

101    However, I take into account the fact that, based on his antecedents, Mr Foster is a person who has not only previously contravened the TPA but, more generally, is a person who, over many years, has, without compunction, made a career of engaging in deceptive practices in the marketing and sale of consumer products, particularly those that are said to have weight loss or other related dietary benefits. It appears to be a career in which he revels—I refer, in particular, to Mr Foster’s “official website”: [571] of the liability reasons—when in fact he should wear that history as a cloak of shame. His involvement in SensaSlim’s contravening conduct is yet a further episode in that history.

102    Based on the evidence before me, I accept that Mr Foster and, at his behest, members of his family, were the principal beneficiaries of the funds obtained from Area Managers in respect of their franchises.

103    I also accept that there are no mitigating circumstances.

104    I have no hesitation in concluding that, in respect of each course of conduct, the maximum pecuniary penalty of $220,000 should be imposed. Therefore, the total penalties to be imposed on Mr Foster will be $660,000.

105    In arriving at this assessment, and in considering its appropriateness, I have taken into account the other orders I propose to make against Mr Foster, which are dealt with in later paragraphs of these reasons.

Mr O’Brien

The applicant’s submissions

106    The applicant submits that Mr O’Brien’s involvement in SensaSlim’s contraventions, and his liability to pecuniary penalties for that involvement, should be viewed as one course of conduct in relation to the SensaSlim officers representations attracting a maximum total penalty of $220,000. However, the applicant submits that the appropriate pecuniary penalty, in Mr O’Brien’s case, is $150,000, for the following reasons.

107    The applicant submits that Mr O’Brien’s involvement in the SensaSlim business was deliberate and covert. He provided the necessary cover for Mr Foster’s involvement and was aware of how his (Mr O’Brien’s) identity was being used to conceal Mr Foster’s involvement in the business. Mr O’Brien knew that Mr Foster controlled and directed the SensaSlim business and that it was for this purpose that Mr Foster had assumed Mr O’Brien’s identity. Mr O’Brien knew that he was being represented as the Operations Director of the company and he signed the solvency statement in the Disclosure Document which represented him as such.

108    The applicant submits that, importantly, Mr O’Brien was aware of the representation that no persons other than himself and Mr Boyle were involved as officers of SensaSlim and that the failure to disclose Mr Foster as an officer of SensaSlim was a material matter, particularly affecting the interests of Area Managers. The applicant refers, more particularly, to my findings at [585] of the liability reasons:

I am satisfied, based on all the evidence I have summarised, but in particular Dr Waters’ and Mr Emerton’s evidence, that, on a day-to-day basis, Mr O’Brien had no active, or indeed meaningful, role in the SensaSlim business as Operations Director in the way described in the Disclosure Document. I am satisfied that it was never intended that he would have such a role. I am satisfied that, in fact, he was no more than a front man for Mr Foster, appearing where required to maintain the fiction that he (Mr O’Brien) was the Operations Director of SensaSlim. For example, Mr O’Brien made himself available for some photo opportunities associated with the business, including with Mr Adams. He attended the Area Managers’ Conference. He also attended a lunch with Mr Driscoll and others, at a time when Mr Driscoll was seeking to ventilate the dissatisfaction of a number of Area Managers with respect to certain aspects of the way in which the SensaSlim business was (or was not) being carried on: see at [383]–[384]. Even then, Mr O’Brien’s participation in that meeting appears to have been no more than a “walk on role”, without any real participation. I am satisfied that Mr O’Brien attended that meeting at Mr Foster’s instigation because Mr Foster realised that “Peter O’Brien” could no longer put off meeting Mr Driscoll. At the same time, Mr Foster must have realised that he could not risk his own association being revealed by a public appearance as “Peter O’Brien”.

109    The applicant submits that Mr O’Brien did not co-operate with the applicant. It would, perhaps, be more appropriate to say that there is no evidence that Mr O’Brien did co-operate with the applicant.

110    The applicant submits that Mr O’Brien’s conduct places him at the high end of the penalty range. Nevertheless, the applicant says that Mr O’Brien is entitled to a discount because there is no evidence that, overall, he benefited financially from the SensaSlim business and a significant disqualification order is sought against him, as to which see [156]-[158] below.

111    The applicant submits that, in the circumstances, a penalty of $150,000 achieves the objectives of specific and general deterrence.

Consideration and conclusion

112    My findings in relation to the case brought against Mr O’Brien are to be found, principally, at [715]-[730] of the liability reasons.

113    I accept that Mr O’Brien’s liability to a pecuniary penalty should be viewed as one course of conduct, consistently with my conclusion that the SensaSlim officers representations constitute one course of conduct.

114    However, despite other findings of fact that I have made concerning the extent of Mr O’Brien’s involvement in SensaSlim’s business, it must be borne in mind that the case for which he has been found liable, and which attracts the imposition of a pecuniary penalty, does not cover all the SensaSlim officers representations for which SensaSlim is liable or, indeed, all of Mr O’Brien’s conduct in relation to the SensaSlim business. For example, at [726] of the liability reasons, I found that Mr O’Brien was also involved in SensaSlim’s contravening conduct in relation to the SensaSlim officer representations to the extent that they concerned Mr Foster’s involvement in the SensaSlim business. However, the pleaded contravening conduct was limited to a contravention of s 52 of the TPA and/or s 18 of the ACL (SOC para 146), for which no pecuniary penalty lies.

115    So far as concerns my consideration of the imposition of pecuniary penalties, Mr O’Brien’s involvement is limited to his involvement in the pleaded contraventions of s 59(2) and s 53(d) of the TPA I have found at [730] of the liability reasons arising from the fact that Mr O’Brien signed the solvency statement in the Disclosure Document in the stated capacity of a director of SensaSlim.

116    Mr O’Brien was, of course, a director of SensaSlim. However, the Disclosure Document also represented that Mr O’Brien was SensaSlim’s Operations Director. Amongst other things, I have found that Mr O’Brien knew that SensaSlim would issue the Disclosure Document to prospective franchisees; that the function of the Disclosure Document was to provide information that a prospective franchisee would need in order to make an informed decision about whether to enter into a franchise agreement with SensaSlim; and that Mr O’Brien’s identification as Operations Director and the description of his role in the Disclosure Document was a material representation that he was actively involved in the SensaSlim business in that capacity, when that was not the case.

117    Mr O’Brien’s involvement, in this regard, which supported the representation concerning his supposed role as Operations Director, constitutes, in the circumstances of this case, serious misconduct for which a significant pecuniary penalty should be imposed. However, I do not think that the penalty sought by the applicant is appropriate. In my view, the appropriate penalty is $55,000. In making this assessment, I take into account the applicant’s submission that, overall, there is no evidence that Mr O’Brien benefitted from the SensaSlim business. I also take into account the fact that he has not previously contravened the TPA or ACL and the fact that I propose to make a disqualification order against him providing for a significant period of disqualification.

Mr Boyle

Evidence

118    Mr Boyle made a statement which, subject to certain rulings, was admitted into evidence at the penalty hearing. The statement was verified orally by Mr Boyle. He was not cross-examined on it.

119    The following medical and psychological reports were tendered: Dr Roy (medical practitioner) 5 December 2014; Dr Willinge (clinical psychologist) 5 December 2014; and Dr Lyndon (consulting psychiatrist) 12 December 2014.

120    The medical and psychological evidence shows that, for some time, Mr Boyle has experienced mental health issues. Dr Willinge has been involved in Mr Boyle’s psychological assessment and treatment since 2011. Dr Lyndon has been involved in Mr Boyle’s psychiatric assessment and treatment since early 2012.

121    Over several years—it seems well prior to Mr Boyle’s involvement with SensaSlim—Mr Boyle has suffered recurrent bouts of significant depression interspersed with very brief periods of mood elevation and increased energy. Dr Lyndon’s initial diagnosis in 2012 was that Mr Boyle was suffering depressive illness. Dr Lyndon also considered that Bipolar II Disorder may have been possible, but a definitive diagnosis could not be made. On review in 2014, Dr Lyndon noted that, despite the medication he had been taking, Mr Boyle continued to suffer from mood irritability with mixed features of depression and agitation, irritability and hyperactivity. In his report, Dr Lyndon expressed the opinion that Mr Boyle’s illness had progressed over time, leading Dr Lyndon to be more convinced that Mr Boyle suffers from Bipolar II Disorder and had been suffering from this disorder for many years. According to Dr Lyndon, this is now likely to be a lifelong disorder for Mr Boyle but, in Dr Lyndon’s opinion, Mr Boyle understands the nature of his disorder, is insightful and has shown a commitment to treatment. Dr Lyndon said:

The effect of his illness is that when depressed, he becomes inactive and unable to manage his work and there is the ongoing risk of suicide in such a depressed state. When his mood is elevated he is likely to experience some degree of increased ability and performance but is also likely to be impulsive, have poor judgment and to have poor concentration as a result of uncontrolled rapid thinking.

122    Dr Lyndon also said:

It is not possible for me to say with any certainty whether Mr Boyle’s condition had any effect on his decision-making ability during 2010 and subsequently. The nature of his illness, however, means that it is possible that his judgment would have been adversely affected. His history clearly suggests that the course of his illness was worsened by his business difficulties and subsequent court proceedings, with the result that he developed a more profound and sustained period of depression. He is likely to remain susceptible to the stress associated with the court proceedings. His condition is also likely to be negatively affected if as a result of the court proceedings he is to suffer further financial loss or loss of earning capacity.

123    In September 2011, Mr Boyle’s employment with UBS Australia was terminated on the ground of redundancy. Mr Boyle believes that his association with SensaSlim, and the public embarrassment this has caused, was a contributing factor. Some months later, as a result of personal connections, Mr Boyle obtained employment with his current employer. A letter from a director of Mr Boyle’s current employer, and his employment contracts with that employer, were tendered. The employment contracts were tendered by the applicant. Mr Boyle’s day-to-day duties include the provision of financial advice to a range of corporate clients, across various industries. This advice is aimed at assisting clients to better formulate and understand their overall funding requirements, including the options available to them for fundraising and the general structuring parameters required to achieve that funding. His employer is aware of this proceeding. It has expressed the view that, should a disqualification order be made against Mr Boyle, it would have to “consider its position” with regard to its present employment arrangement.

124    The evidence before me is that Mr Boyle’s weekly income, after expenses, leaves him with a surplus of $51.39. He has significant debts, largely attributable to the legal costs he has incurred in this and other proceedings relating to his involvement with SensaSlim. He has minimal assets. At the time of the penalty hearing, Mr Boyle and his wife were expecting their first child. To the extent that her work ceases or is suspended, Mr Boyle’s wife will no longer be able to make a contribution to their living expenses.

The applicant’s submissions

125    The applicant submits that Mr Boyle’s involvement in SensaSlim’s contraventions, and his liability to pecuniary penalties for that involvement, should be viewed as one course of conduct attracting a maximum total penalty of $220,000. However, the applicant submits that the appropriate pecuniary penalty, in Mr Boyle’s case, is $180,000 for the following reasons.

126    The applicant submits that Mr Boyle’s involvement with the SensaSlim business provided it with the veneer of legitimacy. Mr Boyle was portrayed as an experienced commercial investment banker who was giving the business his own personal stamp of approval. Mr Boyle entered into the business for financial gain, knowing that Mr Foster’s involvement would be concealed, when knowledge of Mr Foster’s involvement would have been relevant to Area Managers. Mr Boyle agreed, at Mr Foster’s behest, to delay announcing his intention to resign as a director of SensaSlim until after the Area Managers had attended the Area Managers’ Conference in November 2010, when they were required to pay the second instalment of their franchise fees.

127    The applicant submits that Mr Boyle’s conduct was “deliberate and covert”.

128    The applicant refers to the fact that Mr Boyle signed copies of the Welcome letter and negotiated the terms of the KMB letter, which he knew would be given to prospective franchisees. The Welcome letter and the KMB letter each represented that Mr Boyle controlled and directed the SensaSlim business and was actively involved in it, when that was not the case. To exemplify the importance to prospective franchisees and Area Managers of Mr Boyle’s presence in the business, the applicant refers, by way of example, to Mr Driscoll’s evidence (at [377]-[378] of the liability reasons) that he was impressed by the fact that Mr Boyle, as one of the directors of SensaSlim, worked at UBS which, on Mr Driscoll’s understanding, had a “reputation in investment banking”.

129    The applicant also refers to my findings at [658]-[661] of the liability reasons dealing with Mr Boyle’s intention to resign as a director of SensaSlim, and Mr Foster’s apparent concern about that prospect:

658    The reason for Mr Foster’s apparent concern is obvious. It was necessary to delay Mr Boyle’s resignation until 30 November 2010 because that was the date on which the Area Managers’ Conference was to be held. Indeed, Mr Foster said as much to Mr Boyle when Mr Boyle, Dr Waters and Mr Foster discussed Mr Boyle’s “need to resign” at the Carrara house in November 2010: see [159]. It was vital to the success of the venture, which included collecting the balance of the moneys owing by Area Managers for the purchase of products and point of sale materials, that Mr Boyle continue to be seen as the person who controlled and directed the conduct of the SensaSlim business, assisted by Mr O’Brien as Operations Director. I am satisfied that Mr Boyle knew this at the time. As events transpired, Mr Boyle was able to “stall them”. I am satisfied that, in doing so, he was complying with Mr Foster's wishes in that regard.

659    Mr Boyle attended the Area Managers’ Conference on 30 November 2010. He conducted a “meet and greet”. He even spoke briefly at the Conference. He expressed words of welcome, and even “thanked Peter O’Brien for all his work”, even though he must have known that Mr O’Brien had no active involvement in the SensaSlim business and had done no meaningful work as SensaSlim’s apparent Operations Director. I am satisfied that, by this charade, Mr Boyle perpetuated the perception of Area Managers that he controlled and directed the conduct of the SensaSlim business, assisted by Mr O’Brien as Operations Director, and that his (Mr Boyle’s) position in SensaSlim and his involvement in the SensaSlim business would continue into the foreseeable future.

660    Mr Boyle resigned as a director on 2 December 2010. None of the Area Managers knew of his intention to do so.

661    The evidence shows that one factor inducing Mr Boyle to comply with Mr Foster’s wishes in delaying his resignation was that he retained what he saw as a substantial financial investment in SensaSlim and did not want to “compromise” that investment. It should not go unstated that Mr Boyle's financial investment in SensaSlim ($35,000) was substantially less than each Area Manager’s financial investment in the SensaSlim business ($59,950) for products and point of sale materials. Mr Boyle’s thoughts and concerns were directed primarily to his own financial well-being, apparently without significant regard to the situation of the Area Managers.

130    With respect to the question of co-operation with the applicant, the applicant refers to Mr Boyle’s examination under s 155(1)(c) of the TPA on 20 June 2011. In the course of that examination, Mr Boyle indicated that he was not aware of Mr Foster’s involvement in the SensaSlim business, saying:

Look, I think probably like the general public I was aware of his name in the context of his history but insofar as SensaSlim there was no mention in any way, shape or form in regards to him until basically this has all been kicked up.

131    Later, in a record of interview conducted on 2 February 2012, Mr Boyle told the truth about his knowledge of Mr Foster’s involvement in SensaSlim. I note that Mr Boyle has been punished, separately, for the false statements he made: Australian Competition and Consumer Commission v Boyle [2015] FCA 1039.

132    The applicant submits that Mr Boyle’s conduct in concealing Mr Foster’s involvement, for his own financial gain at the expense of Area Managers, places him at the high end of the penalty range. The applicant submits that Mr Boyle is entitled to a small discount because he has expressed remorse for his conduct and a significant disqualification order is sought against him, as to which: see [159] below.

133    The applicant submits that, although Mr Boyle has provided material to the Court that establishes his limited financial resources, it would be a constraint on the objective of general deterrence to have regard, in any significant way, to those circumstances in setting the appropriate pecuniary penalty. The applicant submits that a penalty of $180,000 is appropriate and achieves the aims of specific and general deterrence.

Mr Boyle’s submissions

134    Mr Boyle submits that his involvement was a minor part of the overall SensaSlim business. That involvement did not result in any benefit for him (he says he lost $10,000); it has also adversely affected his health. In this connection, Mr Boyle points, generally, to the matters I have summarised at [120]-[122] above. Mr Boyle also points to his prosecution for making false statements (see [130] above) and the fact that he remains potentially liable for claims which might be brought against him by “investors in SensaSlim”. He submits that each of these matters should be taken into account in mitigation of the overall penalty for which he would otherwise be liable.

135    More specifically with respect the pecuniary penalties, Mr Boyle submits that the applicant’s submissions grossly overstate the involvement actually found against him. Mr Boyle submits that this involvement was limited in both scope and time. He argues that, at trial, only the evidence of Mr Driscoll, Mr Evans, Ms Stanistreet, Mr Bubb, Mr James, Mr Coffey and Mr Cook was tendered against him and, of those persons, only $269,775 in total was paid for franchise fees in the period up to his resignation as a director on 2 December 2010. Of these, only $148,875 was paid in the period from early October 2010 when Mr Boyle formed the intention to resign as a director. Mr Boyle argues that, as his involvement was only one factor relied upon by “investors”, it cannot reasonably be suggested that he “would be liable for the entirety of the $148,875 lost”.

136    Mr Boyle compared the penalty sought by the applicant ($180,000) to the amount of the revenue earned by the scam (Mr Boyle referred to a figure of approximately $6.37 million), and suggested that the penalty represented 2.83% of the “loss”. Applying this percentage to the amounts of $148,875 and $269,775 (see [135] above), Mr Boyle argued that the appropriate penalty would fall within the range of $4,241 to $7,626.

137    In his statement, Mr Boyle said that he would be able to pay a penalty of $5,000 if given two years to pay. He said that if he were ordered to pay a substantial pecuniary penalty, he could not do so from his own funds and that such an order would lead to his bankruptcy. He expressed his belief that, if he were to become bankrupt, he would not be employable as a stockbroker or financial adviser.

138    Finally, he referred to, and relied on, the applicant’s acceptance that he had shown contrition.

Consideration and conclusion

139    My findings in relation to the case brought against Mr Boyle are to be found, principally, at [767]-[827] of the liability reasons.

140    I accept that Mr Boyle’s liability to a pecuniary penalty should be viewed as one course of conduct, once again consistently with my conclusion that the SensaSlim officers representations constitute one course of conduct.

141    As with Mr O’Brien, it must be borne in mind that the case for which Mr Boyle has been found liable, and which attracts the imposition of a pecuniary penalty, does not cover all the SensaSlim officers representations for which SensaSlim is liable or all of Mr Boyle’s conduct in relation to the SensaSlim business. For example, at [827] of the liability reasons, I found that Mr Boyle was involved in SensaSlim’s contravening conduct in failing to disclose to Area Managers, until after the holding of the Area Managers’ Conference on 30 November 2010, Mr Boyle’s intention to resign as a director of SensaSlim. However, once again, the pleaded contravening conduct was limited to a contravention of s 52 of the TPA (SOC para 124), for which no pecuniary penalty lies.

142    So far as concerns my consideration of the imposition of pecuniary penalties, Mr Boyle’s involvement is limited to his involvement in the pleaded contraventions of s 53(d) of the TPA I have found at [819]-[820] of the liability reasons arising from the fact that Mr Boyle, at least on some occasions, signed the Welcome letter and was involved in obtaining the KMB letter, including negotiating its contents. The KMB letter was used in “sales packs” to be given to prospective franchisees. Mr Boyle knew that the Welcome letter and the KMB letter represented that he controlled and directed the SensaSlim business and that he was actively involved in the business, when that was not the case.

143    Mr Boyle’s involvement, in this regard, constitutes, in the particular circumstances of this case, serious misconduct for which a significant penalty should be imposed. His submissions seek to marginalise the significance attaching to the contraventions I have found. I view his conduct as more egregious than Mr O’Brien’s corresponding conduct, in that the representations concerning Mr Boyle would have conveyed, more pointedly, to prospective franchisees and Area Managers that the SensaSlim business was, truly, in the safe hands of reputable businessmen. For example, the KMB letter referred to Mr Boyle as the Managing Director and the founder of SensaSlim in Australia with whom KMB had a close working relationship (that is, in the SensaSlim business), when plainly that was not the case. The KMB letter also extolled Mr Boyle’s virtues as a man of good character, who was honest, conscientious and reliable. Mr Boyle’s conduct demonstrated otherwise. This conduct took place in the context of SensaSlim playing on Mr Boyle’s role as an associate director of UBS Australia, which obviously gave the SensaSlim business a cachet it did not deserve. Mr Boyle was aware that his role at UBS Australia would be used by SensaSlim in its marketing to prospective franchisees and Area Managers, although, when the matter came to the attention of executives at UBS Australia, Mr Boyle urged Mr Foster, unsuccessfully, to downplay that association. I am satisfied that the only reason Mr Boyle did so was because of the friction this created for him at UBS Australia. He was only acting in his interests, not the interests of prospective franchisees and Area Managers. Further, the sending of the Welcome letter to Area Managers would have perpetuated what was, no doubt, the false sense of security into which they had been lulled by the supposed presence of Mr Boyle at SensaSlim in his represented capacity, and certainly would have been instrumental in ensuring that Area Managers paid the second instalment of the fee for their franchises.

144    Mr Boyle’s submissions in respect of the somewhat limited evidence tendered against him, compared to the evidence tendered against the other respondents, seem to me to be based on a misunderstanding of the import of that evidence. The factors that Mr Boyle relies on in no way diminish the findings of fact that have been made against him. Moreover, the calculations he has performed in an attempt to show that the appropriate penalty range is between $4,241 to $7,626 are nonsensical.

145    On the other side of the coin, Mr Boyle’s personal circumstances should be taken into account. His mental health issues are significant and ongoing. In her report, Dr Willinge described Mr Boyle’s ongoing significant psychosocial stress, including his depressed mood and levels of anxiety. It is not necessary for me to go into more detail on those matters. These difficulties have no doubt been exacerbated by this proceeding although, on the available evidence, they appear to have deeper causes. Based on Dr Lyndon’s report, it seems to be at least possible that Mr Boyle’s now known mental health problems might have contributed to a lack of judgment at the time when he decided to become involved with SensaSlim and Mr Foster. I am prepared to consider that possibility as a real one.

146    Mr Boyle’s financial circumstances should also be taken into account with respect to his capacity to pay a fine of any significant amount. Plainly, he has significant debts with little surplus income (after what seem to me to be relatively modest living expenses). He has no assets to speak of.

147    I recognise that Mr Boyle has now suffered a penalty in respect of his conviction for giving false evidence in his examination pursuant to s 155 of the TPA. However, that conduct is separate from the conduct for which I must now assess an appropriate penalty.

148    I take into account the fact that Mr Boyle has shown contrition, although the degree of contrition he has shown must be considered against what seems to be his failure to realise the true import of his conduct. He continues to regard himself as a minor player in the events that unfolded, when that is certainly not the case. I also take into account that he has not previously contravened the TPA or ACL and that other orders of a punitive nature will be made against him.

149    Taking all these matters into account, I conclude that the appropriate penalty is $75,000. But for Mr Boyle’s personal circumstances, the pecuniary penalty would have been much greater. I do not think that Mr Boyle is a person who is likely to re-offend. Therefore, specific deterrence does not rank highly in my assessment. But, general deterrence requires that a condign penalty be imposed.

Disqualification orders

Mr Foster

150    The applicant seeks an order pursuant to s 86E(1B) of the TPA and s 248(1) of the ACL that Mr Foster be disqualified from managing corporations for a period of 20 years from the date of the Court’s order.

The applicant’s submissions

151    The applicant submits that Mr Foster’s conduct and circumstances meet “all of the factors leading to the highest disqualification order” and that a disqualification period of 20 years is appropriate.

152    The applicant repeats a number of the submissions I have already summarised at [88]-[97] above. In addition, the applicant submits that Mr Foster has demonstrated a complete disregard for the law and his legal obligations as an officer of SensaSlim. His conduct was in breach of this Court’s earlier orders and was engaged in dishonestly with the intent to defraud Area Managers of (approximately) $60,000 each. The applicant submits that, given Mr Foster’s “compulsive history of running fraudulent businesses” there is a high degree of likelihood that he may engage in similar conduct in the future. The applicant submits that a disqualification order will protect consumers and serve both a specific and general deterrent function.

Consideration and conclusion

153    In Adler, Santow J noted that disqualification orders are designed to protect the public from the harmful use of the corporate structure or from use that is contrary to proper commercial standards. Such an order serves to safeguard the public interest in the transparency and accountability of companies and in the suitability of directors to hold office. Such an order is protective against present and future misuse of the corporate structure and is also directed to achieving personal and general deterrence.

154    Mr Foster is not fit to be an officer of a corporation or to manage the affairs of a corporation. I have no doubt that he understands perfectly well the duties and responsibilities that are required of an officer of a corporation, as well as the standards of proper commercial behaviour that are generally accepted by right-minded people. The simple fact is that Mr Foster chooses not to adhere to those standards and shuns those duties and responsibilities. Indeed, he preys on the right-mindedness of others to cheat and deceive. In the present case, he lurked behind SensaSlim precisely for that purpose. He is beyond redemption.

155    I do not accept that the period of disqualification sought by the applicant is sufficient. Here, the protection of the public is paramount. In my view, Mr Foster should be permanently disqualified from managing corporations. It may be that disqualification for 20 years is, in Mr Foster’s case, tantamount to permanent disqualification. But the order should, in terms, reflect that fact.

Mr O’Brien

156    The applicant seeks an order pursuant to s 86E(1B) of the TPA and s 248(1) of the ACL that Mr O’Brien be disqualified from managing corporations for a period of 10 years from the date of the Court’s order.

The applicant’s submissions

157    The applicant submits that Mr O’Brien has demonstrated serious irresponsibility as a director of SensaSlim. At Mr Foster’s behest, he allowed his identity to be assumed by Mr Foster to enable the scam to take place. The applicant points to the fact that Mr O’Brien has taken no real part in this proceeding. The applicant submits that his lack of participation indicates a complete lack of contrition or acceptance of responsibility for the part he played in the scam. He has given the Court no reason to consider that, in the future, he would not equally be amenable to complying with Mr Foster’s will and certainly no reason why he would not be likely to re-offend. The applicant repeats a number of the submissions I have already summarised at [106]-[111] above. The applicant submits that a disqualification order will protect consumers and will have both a specific and general deterrent effect.

Consideration and conclusion

158    I accept that a disqualification order should be imposed and that the appropriate period of disqualification is 10 years. The evidence against Mr O’Brien at the liability hearing shows him to be Mr Foster’s stooge who, whilst holding the office of director, was willing to misrepresent, in a fundamentally important way, the true nature of his role in that capacity. I have no confidence that, in the future, he would not be willing to play the same role, if asked. His conduct was fraudulent. A substantial period of disqualification is required to protect the public and to serve the purposes of specific and general deterrence.

Mr Boyle

159    The applicant seeks an order pursuant to s 86E(1B) of the TPA and s 248(1) of the ACL that Mr Boyle be disqualified from managing corporations for a period of 5 years from the date of the Court’s order.

The applicant’s submissions

160    The applicant repeats a number of the submissions I have summarised at [125]-[129] above. It submits that Mr Boyle’s conduct was deliberate and aimed at enriching himself at the expense of Area Managers. Nevertheless, the applicant submits that Mr Boyle’s conduct places him “slightly below” the “serious” conduct contemplated by Santow J’s proposition (xiv) in Adler. Accordingly, the applicant submits that disqualification for a period of 5 years is appropriate.

Mr Boyle’s submissions

161    Mr Boyle submits that his conduct is better fitted to that described by Santow J’s proposition (xv) in Adler. He argues that a substantial period of disqualification would be inappropriate because it would be a penalty that is out of proportion to the nature of the findings that have been made against him and would not achieve the objective of protecting consumers because, in the circumstances of this case, there is no reasonable likelihood that he will engage in further conduct of the kind found against him.

Consideration and conclusion

162    I do not accept Mr Boyle’s submission that the period of disqualification sought by the applicant is out of proportion to the nature of the findings that have been made against him. I do accept, however, that it is unlikely that he will engage in the same or similar conduct in the future. Nevertheless, his conduct fell far below the standards of propriety expected of someone fulfilling the role of a director of a corporation, and no doubt far below the expectations of Area Managers who placed their faith in Mr Boyle’s guidance as Senior Director of SensaSlim. The simple fact is that Mr Boyle duped them. I refer, in particular, to my findings at [625]-[669] and [826] of the liability reasons. While Mr Foster was, no doubt, the mastermind behind the misrepresentation that Mr Boyle controlled and directed SensaSlim, and that Mr Boyle would continue to do so into the foreseeable future, Mr Boyle was a willing and active participant in the making of that misrepresentation and in the deception of prospective franchisees and Area Managers. Mr Boyle must bear responsibility for his role in that deception.

163    In my view, a disqualification order is certainly warranted. However, the appropriate period is three years. This will serve the objective of general deterrence, whilst having due regard to Mr Boyle’s personal circumstances, which are not the same as Mr Foster’s or Mr O’Brien’s circumstances.

Injunctions

Mr Foster

164    The applicant seeks the following injunctions in respect of Mr Foster:

3.    Pursuant to section 232 of the ACL, Foster be restrained indefinitely from the date of the court’s order, whether by himself, his agents, servants or howsoever otherwise, in trade or commerce, from being involved, either directly or indirectly, in a business system that is substantially in the nature of a franchise system (as defined in the Trade Practices (Industry Codes – Franchising) Regulations 1998 (Cth)).

4.    Pursuant to section 232 of the ACL, Foster be restrained indefinitely from the date of the court’s order, whether by himself, his agents, servants or howsoever otherwise, in trade or commerce, from being involved, either directly or indirectly, in the supply of goods or services:

(i)    by which or in connection with which persons are invited to invest money or perform work in relation to a business activity and representations are made to the effect that the business, once acquired by a purchaser, has the potential to generate earnings for the purchaser in any particular amount; or

(ii)    where Foster is involved in the set up, promotion or marketing of the business and that involvement is not disclosed; or

(iii)    where a clinical trial or scientific report is used as a basis for statements as to the efficacy of the good or service; or

(iv)    where the goods or services concerned are weight loss products or like products.

5.    In the alternative to order 4, pursuant to section 232 of the ACL, Foster be restrained indefinitely, from the date of the court’s order, whether by himself, his agents, servants or howsoever otherwise, in trade or commerce, whether in Australia or between Australia and places outside Australia from being involved, either directly or indirectly, in the supply of goods or services from not disclosing the involvement of Foster in the set up, promotion or marketing of the business, if he is so involved.

6.    Pursuant to section 232 of the ACL, Foster be restrained indefinitely from the date of the court’s order from in any manner being knowingly concerned in any business in trade or commerce, making or permitting to be made, any representation as to the nature, quality, fitness for any purpose, testing, history, composition, standard, approval by any person, performance characteristics, uses or benefits of any good or service unless, prior to making the representation:

(i)    he believes the representation to be true and accurate;

(ii)    the business informs the representee in writing of all information of which he is aware that refutes, qualifies or contradicts any part of the representation; and

(iii)    the business provides the representee with a copy of these orders or informs the representee of the existence of these orders and gives the representee the address of the Federal Court website, namely www.fedcourt.gov.au, from which a copy of these orders can be obtained.

The applicant’s submissions

165    The applicant does not advance any submissions in addition to those which I have summarised at [88]-[97] above.

Consideration and conclusion

166    Generally speaking, I do not think that these injunctions are appropriate. For some of them, there are difficulties in language and form. For some others, there are problems of scope. I do not propose to detail these difficulties. It is sufficient for me to simply note that, in light of his conduct, I am satisfied that it is appropriate that Mr Foster be restrained from being directly or indirectly knowingly concerned in or party to any conduct in trade or commerce by a corporation that involves the promotion or supply, by any means, of goods or services represented as having weight loss or related health benefits. It is also appropriate that he be restrained from being directly or indirectly knowingly concerned in or party to the conduct by a corporation of a business system in which the corporation as franchisor grants a franchise to a franchisee and in respect of which system an industry code for the purposes of Pt IVB of the CCA applies, in circumstances where the second respondent’s identity and nature of involvement in the business system have not been disclosed in writing by the corporation to each person who is a prospective franchisee.

Mr O’Brien

167    The applicant seeks the following injunctions in respect of Mr O’Brien:

9.    Pursuant to section 232 of the ACL, O’Brien be restrained for a period of 10 years from the date of the court’s order, whether by himself, his agents, servants or howsoever otherwise, in trade or commerce, from being involved, either directly or indirectly, in the supply of goods or services:

(i)    where Foster is involved in the set up, promotion or marketing of the business and that involvement is not disclosed; or

(ii)    where the goods or services concerned are weight loss products or like products.

10.    In the alternative to order 9, pursuant to section 232 of the ACL, O’Brien be restrained for a period of 10 years, from the date of the court’s order, whether by himself, his agents, servants or howsoever otherwise, in trade or commerce, whether in Australia or between Australia and places outside Australia from being involved, either directly or indirectly, in the supply of goods or services from not disclosing the involvement of Foster in the set up, promotion or marketing of the business, if he is so involved.

11.    Pursuant to section 232 of the ACL, O’Brien be restrained for a period of 10 years from the date of the court’s order from in any manner being knowingly concerned in any business in trade or commerce, making or permitting to be made, any representation as the nature, quality, fitness for any purpose, testing, history, composition, standard, approval by any person, performance characteristics, uses or benefits of any good or service unless, prior to making the representation:

(i)    he believes the representation to be true and accurate;

(ii)    the business informs the representee in writing of all information of which he is aware that refutes, qualifies or contradicts any part of the representation; and

(iii)    the business provides the representee with a copy of these orders or informs the representee of the existence of these orders and gives the representee the address of the Federal Court website, namely www.fedcourt.gov.au, from which a copy of these orders can be obtained.

The applicant’s submissions

168    The applicant does not advance any submissions in addition to those which I have summarised at [106]-[110] above.

Consideration and conclusion

169    I do not think that these injunctions are appropriate. Apart from certain difficulties of language, form and scope, which it is not necessary for me to detail, the conduct with which Mr O’Brien was involved, and for which he has been found liable, concerns his misconduct as a director—in particular the misrepresentation of his role in SensaSlim. The disqualification order I propose to make will be sufficient to protect the public interest in that regard and, in addition, to mark the Court’s disapproval of his conduct: see, in that connection, my observations at [55] above.

Mr Boyle

170    The applicant seeks the following injunctions in respect of Mr Boyle:

Pursuant to section 232 of the ACL, Boyle be restrained for a period of 5 years from the date of the court’s order, whether by himself, his agents, servants or howsoever otherwise, in trade or commerce, from making or permitting to be made any representation that he controls or directs a business or is actively involved in a business when in fact he does not control or direct the business or is not actively involved in the business.

The applicant’s submissions

171    The applicant does not advance any submissions in addition to those which I have summarised at [125]-[133] above.

Mr Boyle’s submissions

172    Mr Boyle refers to a number of authorities, in the area of consumer protection law, that emphasise the threat of repeated or continuing conduct as an important discretionary consideration in deciding whether an injunction should be granted: ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248; [1992] FCA 707 at 256-257; Pye Industries Sales Pty Ltd v Trade Practices Commission [1979] ATPR 40-124 at 18,327; Shoshana Pty Ltd v 10th Cantanae Pty Ltd (1987) 18 FCR 285 at 294; Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2001] ATPR 41-802; [2000] FCA 1893 at 42,638; Trade Practices Commission v Tubemakers of Australia Ltd [1983] ATPR 40-390; [1983] FCA 209 at 44,579 and Australian Competition and Consumer Commission v Health Partners Incorporated [1998] ATPR 41-604; [1997] FCA 1469 at 40,572. He says that there is no threat or likelihood of continuing conduct on his part in breach of the TPA or ACL. Mr Boyle asks rhetorically, what purpose would be served by an injunction being made against him? He says that the applicant merely points to the power to grant an injunction and asserts, without further explanation, that making an injunction against Mr Boyle would be “appropriate”.

Consideration and conclusion

173    In light of my finding that it is unlikely that Mr Boyle will engage in the same or similar conduct in the future, I do not think that the injunction sought by the applicant, or any other injunction, is appropriate. Moreover, the observations I have made at [169] with respect to Mr O’Brien apply equally to Mr Boyle’s case.

Totality

174    The orders I propose to make will:

    disqualify Mr Foster, permanently, from managing corporations and impose pecuniary penalties on him in the total amount of $660,000. Injunctions will also be granted;

    disqualify Mr O’Brien from managing corporations for a period of 10 years and impose a pecuniary penalty on him of $55,000; and

    disqualify Mr Boyle from managing corporations for a period of 3 years and impose a pecuniary penalty on him of $75,000.

175    In each case, I have considered the combined effect of the relief. In each case, I am satisfied that the relief is just and appropriate for that respondent’s involvement in the contravening conduct I have found.

176    I have already expressed my satisfaction that the total penalty to be imposed on SensaSlim is just and appropriate for its conduct: see [87] above.

Disposition

177    Orders will be made accordingly.

178    The applicant seeks an order that Mr Foster, Mr O’Brien and Mr Boyle pay its costs of and incidental to the proceeding. I can see no reason why, Mr Foster, Mr O’Brien and Mr Boyle should not pay the applicant’s costs in respect of the case brought against them. At the penalty hearing, Mr Boyle sought to be heard in relation to costs after these orders were made and reasons given. If that remains the case, I will allow Mr Boyle time to file written submissions. I will allow time for the applicant to respond. In each case, the submissions are not to exceed three pages. I will then determine that question on the papers and make an order for costs of the proceeding in respect of the applicant’s case against Mr Boyle. With respect to Mr Foster and Mr O’Brien, Mr Foster is to pay the applicant’s costs of the case brought against him and, similarly, Mr O’Brien is to pay the applicant’s costs of the case brought against him.

Associate:

Dated:    11 May 2016

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