FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Swishette Pty Ltd [2018] FCA 55

ORDERS

THE COURT DECLARES THAT:

1.    Each of the first respondent (Swishette) and the second respondent (Letore) was directly or indirectly knowingly concerned in, or party to, the contraventions by Clinica Internationale Pty Ltd (in liquidation) (Clinica) of ss 18, 21, 29(1)(g) and 31 of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth), referred to in paragraphs 1 and 2 of the declarations of the Court dated 23 March 2016 in Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd (in liquidation) & Ors (VID 252 of 2015).

AND THE COURT ORDERS THAT:

2.    Letore pay to clients of Clinica amounts equal to the amounts paid by those clients to Clinica that were paid under, referable to, or otherwise used in relation to the Clinica Program, the Regional Sponsorship Agreements and/or the Cleaning Course (as those terms are defined in the applicant’s amended concise statement dated 19 July 2017), together with interest calculated from the time when the clients made the payments at the rate set out in s 2 of the Penalty Interest Rates Act 1983 (Vic).

3.    A copy of the reasons for judgment, with the seal of the Court thereon, be retained by the Court for the purposes of s 137H of the Competition and Consumer Act.

4.    Within seven days, the parties file and serve written submissions (of no more than three pages) on the proposed ancillary orders and costs.

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

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1    The applicant (the ACCC) claims that the first respondent, Swishette Pty Ltd (Swishette), as trustee of a discretionary trust known as the Second Rodney Laski Family Trust (the Trust), and the second respondent, Letore Pty Ltd (Letore), were persons “involved” in certain contraventions by Clinica Internationale Pty Ltd (in liquidation) (Clinica) of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law). Specifically, it is alleged that Swishette and Letore were directly or indirectly knowingly concerned in, or party to, Clinica’s contraventions.

2    In an earlier proceeding in this Court (the Clinica Proceeding), brought by the ACCC against Clinica and its director, Radovan Laski (Mr Laski), the ACCC claimed that Clinica had, among other things, engaged in misleading or deceptive conduct and unconscionable conduct in contravention of provisions of the Australian Consumer Law, and that Mr Laski was liable as a person “involved” in those contraventions. The alleged contraventions arose from representations made, and conduct engaged in, by Clinica between about August 2012 and about July 2013 (the Relevant Period) in relation to the provision of recruitment consulting services to persons who were in Australia on temporary visas, and who sought to obtain permanent residency. In brief summary, it was alleged that Clinica had induced clients to pay fees in the expectation that they would be recruited for jobs that would lead to permanent residency under a government scheme known as the Regional Sponsored Migration Scheme. However, the relevant jobs – in cleaning – were not available and, in any event, working in such jobs would not have qualified the clients for permanent residency status.

3    Shortly before the trial of the Clinica Proceeding (which took place on 21 and 22 October 2015), Clinica and Mr Laski admitted liability for the contraventions. The hearing proceeded, with the dispute confined to some aspects of the relief sought.

4    On 9 February 2016, the trial judge in the Clinica Proceeding handed down reasons for judgment on the principal issues in the proceeding: Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd (No 2) [2016] FCA 62 (Clinica (No 2)).

5    On 23 March 2016, the Court made declarations and orders in the Clinica Proceeding. These included declarations that Clinica had contravened the Australian Consumer Law and that Mr Laski was a person involved in the contraventions. The Court made a ‘consumer redress’ order, pursuant to s 239 of the Australian Consumer Law, requiring Clinica and Mr Laski to pay refunds to clients of Clinica.

6    Additionally, the Court made an order to the effect that certain funds that were being held in the ACCC’s solicitors’ trust account, pursuant to a ‘freezing order’ made by the Court, be applied to pay the refunds to clients of Clinica. That aspect of the Court’s orders was challenged on appeal and, on 15 March 2017, set aside by the Full Court: Swishette Pty Ltd v Australian Competition and Consumer Commission (2017) 249 FCR 483 (Swishette).

7    On 30 March 2017, the ACCC commenced the present proceeding, alleging that Swishette and Letore were knowingly concerned in, or party to, Clinica’s contraventions of the Australian Consumer Law, being the contraventions that were the subject of the Clinica Proceeding. It is contended, among other things, that Swishette provided security for Clinica’s overdraft and that Letore paid relevant expenses on behalf of Clinica. During the Relevant Period, the sole director of both Swishette and Letore was Mr Laski. The ACCC contends that his knowledge of Clinica’s contraventions is to be attributed to Swishette and Letore.

8    The ACCC seeks ‘consumer redress’ orders against Swishette and Letore, requiring them to pay clients of Clinica amounts equal to the relevant payments made by those clients to Clinica. The funds that were held in the ACCC’s solicitors’ trust account during the Clinica Proceeding have remained in that account pursuant to further freezing orders made in this proceeding. The ACCC seeks orders to the effect that these funds be applied towards the payment of amounts to clients of Clinica.

9    Some further detail needs to be set out regarding the funds in the ACCC’s solicitors’ trust account. For some years before 2015, Swishette, as trustee of the Trust, owned a property situated at 5 Maroona Road, Brighton, Victoria (the Brighton Property). The property was used by Mr Laski as his home. In May 2015, Swishette entered into a contract of sale in relation to the property. In August 2015, before settlement of the sale of the property, the ACCC obtained freezing orders against Clinica, Mr Laski, Swishette and Letore. (Swishette and Letore were not, at least at that time, respondents to the Clinica Proceeding, but they were respondents to the ACCC’s application for freezing orders.) Settlement of the sale of the Brighton Property took place on 8 September 2015. At that time, pursuant to the Court orders, the net proceeds of sale (proceeds of sale) were paid into the ACCC’s solicitors’ trust account. It is now apparent (but was not clear at the time of the trial of the Clinica Proceeding) that, in June 2015, Swishette resolved to distribute the net income of the Trust for the year ended 30 June 2015 to the following beneficiaries in the following proportions: Letore (as to 70%); the third respondent to the present proceeding (Ms Laski) (as to 15%); and the fourth respondent to the present proceeding (Ms Hatch) (as to 15%) (the June 2015 Resolution). (Ms Laski is Mr Laski’s former wife and Ms Hatch is his cousin.) The resolution was not before the Court at the trial of the Clinica Proceeding. It is common ground in this proceeding that the distribution was effective. It is also common ground that the net income of the Trust for the year ended 30 June 2015 included the proceeds of sale of the Brighton Property (on the basis that the contract of sale was entered into during that financial year, even though settlement took place during the following financial year). It follows that, subject to a possible exception and a contention raised in this proceeding, Letore, Ms Laski and Ms Hatch have an interest in the funds in the ACCC’s solicitors’ trust account. The possible exception relates to a claim by a Lauris Fahey in respect of $85,000. The contention raised in this proceeding is a contention of the ACCC that Swishette has a right of indemnity or exoneration from the trust assets or the beneficiaries. The amount in the ACCC’s trust account has been reduced over time by the payment of legal fees and other expenses pursuant to Court orders. At the time of the trial of the present proceeding, the balance was approximately $660,000.

10    The respondents to the present proceeding do not challenge the findings or declarations made in Clinica (No 2). Further, the respondents accept that: the knowledge of Mr Laski in the Relevant Period is to be imputed to Swishette and Letore; and Letore was, by reason of the use of its credit card, a person involved in Clinica’s contraventions of the Australian Consumer Law.

11    However, the respondents contend that the ACCC is precluded from bringing the present claims on the basis of issue estoppel, Anshun estoppel and abuse of process. In summary, the respondents contend that the ACCC is estopped or the proceeding is an abuse of process on the following bases:

(a)    The ACCC admitted, in the Full Court, that Swishette and Letore were not involved in the contraventions and is bound by that admission. Further, the judgment of the Full Court included a statement that Swishette and Letore were not involved in the contraventions.

(b)    It was unreasonable for the ACCC not to have claimed in the Clinica Proceeding that Swishette and Letore were involved in the contraventions.

12    Further or in the alternative, the respondents contend that: Swishette was not “involved” in the contraventions; if the Court finds that Swishette was involved in the contraventions, there is no right of indemnity from the trust assets or the beneficiaries; and if Swishette was involved and there is a right of indemnity, the Court should fashion any relief to ensure that Ms Laski and Ms Hatch, as innocent third parties, are not worse off.

13    In light of the above, the main issues that need to be dealt with may be summarised as follows:

(a)    Is the ACCC precluded from bringing its claims that Swishette and Letore were persons “involved” in Clinica’s contraventions of the Australian Consumer Law on the basis of issue estoppel, Anshun estoppel or abuse of process?

(b)    If the ACCC is not precluded, were Swishette and Letore persons “involved” in Clinica’s contraventions of the Australian Consumer Law? (In respect of this issue, it is conceded that Letore was a person involved.)

(c)    If the issues in (a) and (b) are answered in the ACCC’s favour, should a ‘consumer redress’ order be made under s 239 of the Australian Consumer Law? Further, does Swishette have a right of indemnity or exoneration from the trust assets or the beneficiaries?

14    For the reasons that follow, my conclusions in relation to these issues are, in summary, as follows:

(a)    The ACCC is not precluded from proceeding against Swishette and Letore in this proceeding. Insofar as the respondents rely on the judgment of the Full Court, the appeal did not involve any contested issue as to whether Swishette and Letore were involved in Clinica’s contraventions and the Full Court did not make any determination on the matter. The statements made by the Full Court reflected the position that it had not been alleged that Swishette and Letore were involved in the contraventions. Accordingly, no issue estoppel arises. Insofar as the respondents rely on the Clinica Proceeding at first instance, I deal separately with the position of Letore and Swishette. In relation to Letore, it was not unreasonable for the ACCC not to include in the Clinica Proceeding a claim that Letore was involved in Clinica’s contraventions of the Australian Consumer Law. In particular, at the time of trial, the ACCC did not have a copy of the June 2015 Resolution. Although there were references to loans to beneficiaries in the financial statements of the Trust that were before the Court at the trial of the Clinica Proceeding, it was not clear at the time of the trial that the net income of the Trust for the financial year ended 30 June 2015 (which included the proceeds of sale of the Brighton Property) had been distributed to Letore, Ms Laski and Ms Hatch. In circumstances where it was not clear that Letore had an interest in a portion of the funds held in the ACCC’s solicitors’ trust account, it was not unreasonable not to claim in the Clinica Proceeding that Letore was a person involved in Clinica’s contraventions. In relation to Swishette, I am not satisfied that it was unreasonable for the ACCC not to include in the Clinica Proceeding a claim that that Swishette was involved in the contraventions. Swishette was not a party to the Clinica Proceeding at the time of trial (although it became a party later). While I accept that, by early October 2015, the ACCC had sufficient information to plead a case of involvement against Swishette (and Letore), that is not the same as saying that it was unreasonable of the ACCC not to do so. Accordingly, no Anshun estoppel arises in relation to the claims against Letore and Swishette and the claims are not an abuse of process.

(b)    It is conceded that Letore was, by reason of the use of its credit card, a person involved in Clinica’s contraventions of the Australian Consumer Law. In relation to Swishette, I conclude that it was knowingly concerned in, or party to, Clinica’s contraventions of the Australian Consumer Law. Swishette provided a guarantee and a mortgage to support an overdraft provided to Clinica. These securities continued to be provided throughout the Relevant Period. It may be inferred that the continued provision of the guarantee and the mortgage were required by the bank and that Clinica needed the overdraft in order to carry on its operations, including the contravening conduct. In the circumstances, I consider there to be a sufficient practical connection between Swishette’s conduct and Clinica’s contraventions of the Australian Consumer Law. Swishette accepts that the knowledge of Mr Laski in the Relevant Period is to be imputed to Swishette. Thus it may be accepted that Swishette had knowledge of the essential facts constituting Clinica’s contraventions.

(c)    In relation to whether (as contended by the ACCC) Swishette has a right of indemnity or exoneration from the trust assets or beneficiaries in relation to the liability that would arise if a consumer redress order were made against Swishette, I conclude that Swishette would not have a right of indemnity or exoneration. In particular, Swishette’s conduct in continuing to provide the guarantee and the mortgage to support the overdraft to Clinica in the circumstances constituted a breach of trust. In relation to whether a ‘consumer redress’ order pursuant to s 239 of the Australian Consumer Law should be made, I do not consider it appropriate to make such an order against Swishette, but do consider it appropriate to make such an order against Letore. Swishette has no assets or income and therefore does not have any funds available to make payments to clients of Clinica. In these circumstances, a consumer redress order against it would lack utility. However, these considerations do not apply to Letore, and I consider it appropriate to make a consumer redress order against that company.

Procedural matters

15    As noted above, this proceeding was commenced on 30 March 2017. The ACCC subsequently amended its originating application. As set out in the amended originating application, the ACCC seeks declarations or orders to the following effect:

(a)    An order that, until further order, the proceeds of sale of the Brighton Property continue to be held in the trust account of the ACCC’s solicitors.

(b)    Declarations that each of Swishette and Letore was directly or indirectly knowingly concerned in, or party to, the contraventions by Clinica of ss 18, 21, 29(1)(g) and 31 of the Australian Consumer Law.

(c)    Orders under s 239 of the Australian Consumer Law:

(i)    directing Swishette and Letore, jointly and severally, to pay to clients of Clinica amounts equal to the amounts paid by those clients to Clinica that were paid under, referrable to, or otherwise used in relation to the Clinica Program, the Regional Sponsorship Agreements and/or the Cleaning Course (as those terms are defined in the ACCC’s amended concise statement), together with interest calculated from the time when the clients made the payments at the rate set out in s 2 of the Penalty Interest Rates Act 1983 (Vic);

(ii)    directing that the proceeds of sale of the Brighton Property be applied towards discharging Swishette and Letore’s liability to clients of Clinica; and

(iii)    further orders for the orderly ascertainment of claims of, and distribution of funds among, aggrieved Clinica clients.

(d)    A declaration that in respect of its liability to clients of Clinica under s 239 of the Australian Consumer Law, Swishette has a right of exoneration or indemnity, as trustee of the Trust: out of any part of the trust fund that it retains; and, to the extent that the trust fund has been distributed among the beneficiaries of the Trust, against Letore, Ms Laski and Ms Hatch personally.

(e)    A further order under s 239 of the Australian Consumer Law requiring Swishette to discharge its liability to clients of Clinica out of any entitlement it has to be indemnified (out of the trust fund or by the beneficiaries).

(f)    Alternatively, to the extent that the trust fund of the Trust has been distributed to Letore, a further order under s 239 of the Australian Consumer Law requiring Letore to discharge its liability to clients of Clinica out of the amount so distributed to it.

(g)    An order that a copy of the reasons for judgment, with the seal of the Court thereon, be retained by the Court for the purposes of s 137H of the Competition and Consumer Act.

16    It is convenient, at this point, to set out s 239 of the Australian Consumer Law. It provides as follows:

239    Orders to redress etc. loss or damage suffered by non-party consumers

(1)    If:

(a)    a person:

(i)    engaged in conduct (the contravening conduct) in contravention of a provision of Chapter 2, Part 3-1, Division 2, 3 or 4 of Part 3-2 or Chapter 4; or

(ii)    is a party to a contract who is advantaged by a term (the declared term) of the contract in relation to which a court has made a declaration under section 250; and

(b)    the contravening conduct or declared term caused, or is likely to cause, a class of persons to suffer loss or damage; and

(c)    the class includes persons who are non-party consumers in relation to the contravening conduct or declared term;

a court may, on the application of the regulator, make such order or orders (other than an award of damages) as the court thinks appropriate against a person referred to in subsection (2) of this section.

Note 1:    For applications for an order or orders under this subsection, see section 242.

Note 2:    The orders that the court may make include all or any of the orders set out in section 243.

(2)    An order under subsection (1) may be made against:

(a)    if subsection (1)(a)(i) applies—the person who engaged in the contravening conduct, or a person involved in that conduct; or

(b)    if subsection (1)(a)(ii) applies—a party to the contract who is advantaged by the declared term.

(3)    The order must be an order that the court considers will:

(a)    redress, in whole or in part, the loss or damage suffered by the non-party consumers in relation to the contravening conduct or declared term; or

(b)    prevent or reduce the loss or damage suffered, or likely to be suffered, by the non-party consumers in relation to the contravening conduct or declared term.

(4)    An application under subsection (1) may be made at any time within 6 years after the day on which:

(a)    if subsection (1)(a)(i) applies—the cause of action that relates to the contravening conduct accrued; or

(b)    if subsection (1)(a)(ii) applies—the declaration is made.

17    The ACCC’s contentions are set out in its amended concise statement. Swishette and Letore filed a concise response to the ACCC’s amended concise statement. Ms Laski and Ms Hatch did not file a response to the amended concise statement. However, at the hearing of the proceeding, Ms Laski and Ms Hatch, who represented themselves, essentially adopted the same position as Swishette and Letore. In particular, they adopted the closing submissions of Swishette and Letore. Thus, ultimately, there was no relevant distinction between the position adopted by Swishette and Letore and the positions of Ms Laski and Ms Hatch.

18    Paragraphs [3]-[12] of the ACCC’s amended concise statement, which relate to contraventions by Clinica of ss 18, 21, 29 and 31 of the Australian Consumer Law, are admitted by Swishette and Letore in their concise response. Given that Ms Laski and Ms Hatch adopted the same position, these facts and matters may be accepted. Included in this section of the amended concise statement is a description of a program offered by Clinica to clients (the Clinica Program) that consisted of the following elements:

(a)    Clinica would arrange for clients to complete a cleaning course called the Certificate III Asset Maintenance (Cleaning Operations) course (the Cleaning Course);

(b)    Clinica would find for the client a cleaning job in a regional area of Australia;

(c)    Clinica would instruct and liaise with a registered migration agent in relation to a permanent residence visa application and other immigration advice for the client; and

(d)    completion of the Cleaning Course and working in the cleaning job would qualify the client for permanent residency under the Subclass 187 visa – Regional Sponsored Migration Scheme (the 187 Visa Scheme).

19    It is also contended, in this section of the amended concise statement, that approximately 90 clients signed up to the Clinica Program, and in many cases executed an agreement (a Regional Sponsorship Agreement), and that the clients paid, by instalments, fees to Clinica that were paid under, referable to, or otherwise used in relation to the Clinica Program, the Regional Sponsorship Agreements and/or the Cleaning Course (the Fees).

20    The ACCC contends, in [13] of its amended concise statement, that during the Relevant Period:

(a)    each of Swishette and Letore provided, or continued to provide, a guarantee (and, in the case of Swishette, also a mortgage) to secure a $660,000 business line of credit advanced by the Commonwealth Bank of Australia (the CBA) to Clinica, which funds were used for establishing, promoting and operating the Clinica Program;

(b)    Letore directly funded certain activities undertaken by Clinica in connection with the Clinica Program;

(c)    each of Swishette and Letore benefited from the Fees, as the moneys of Clinica, Swishette and Letore were mixed and used as a pool of funds by Mr Laski;

(d)    each of Swishette and Letore directly or indirectly received some of the Fees; and

(e)    each of Swishette and Letore knew, by virtue of Mr Laski’s common directorship of each of Clinica, Swishette and Letore: the matters referred to in [6]-[8] of the amended concise statement concerning the false and misleading nature of the representations there set out; that there were no reasonable grounds for the representations in respect of future matters as referred to in [11] of the amended concise statement; and the matters in [8]-[10] of the amended concise statement concerning unconscionable conduct.

21    In their concise response, Swishette and Letore refer to the Clinica Proceeding and specifically to the Clinica (No 2) judgment. Swishette and Letore state that they do not challenge the findings or declarations made in Clinica (No 2). Swishette and Letore state that the ACCC did not join Swishette or Letore to the Clinica Proceeding and positively resisted doing so, referring to Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd (In Liquidation) (No 3) [2016] FCA 284 (Clinica (No 3)).

22    At [5]-[14] of the concise response, Swishette and Letore set out contentions in relation to estoppel and abuse of process. As these were developed and refined in the course of opening and closing submissions, I will refer to Swishette and Letore’s contentions later in these reasons.

23    At [15]-[26] of the concise response, Swishette and Letore set out contentions to the effect that Swishette was not directly or indirectly knowingly concerned in, or party to, the contraventions by Clinica. In this section of the concise response, it is accepted that Swishette provided a guarantee and second mortgage in support of liabilities of Clinica. However, it is contended that, as these securities were provided in 2008, well before any of the contravening conduct occurred, they do not support the ACCC’s allegations of liability against Swishette. It is also contended that: there is no allegation that Swishette took “some positive step of some nature” so as to be involved in the contraventions; mere knowledge by a common director (even the only director) does not amount to a positive step of some nature by Swishette; at the highest it can only be said that Swishette was in knowing receipt of some of the Fees; however, knowing receipt is not sufficient to constitute involvement within the meaning of s 2 of the Australian Consumer Law.

24    At [27]-[31] of the concise response, Swishette and Letore contend, in the alternative, that if Swishette was directly or indirectly concerned in, or party to, the contraventions, such conduct was not within Swishette’s power as trustee of the Trust. Accordingly, it is contended, creditors of Swishette in respect of the contraventions (if the consumers are appropriately characterised as such) do not have access to the trust assets. Further, it is contended that the orders sought by the ACCC would almost certainly cause a difficulty with the operation of the winding up provisions in the Corporations Act 2001 (Cth).

25    In a section of the concise response headed “Appropriate relief”, Swishette and Letore make a number of contentions regarding the disposition of the proceeding, including by reference to discretionary considerations.

26    Before the trial of the proceeding, the ACCC served a notice to admit. Swishette and Letore served a notice of dispute in accordance with r 22.02 of the Federal Court Rules 2011, by which they disputed the facts set out in certain paragraphs of the notice to admit. Ms Laski and Ms Hatch did not serve a notice of dispute and thus, by ordinary operation of the Rules, would be taken to have admitted the truth of each of the facts in the notice to admit.

27    At the hearing of the proceeding, Swishette and Letore sought leave to withdraw the admissions that they had effectively made in respect of [29], [50] and [53] of the notice to admit. These paragraphs had not been included in the list of disputed paragraphs set out in the notice of dispute. Leave to withdraw the admissions was opposed. The matter was resolved in the following way. In relation to [29] of the notice to admit, an alternative wording was substituted as follows: “In March 2008, Swishette provided a guarantee to the bank and provided a second mortgage to the bank so Clinica would have money to operate. The guarantee and second mortgage continued until September 2015.” On this basis, Swishette and Letore were content to admit this paragraph. In relation to [50] and [53] of the notice to admit, I gave leave to Swishette and Letore to withdraw their admissions. Also at the hearing, Swishette and Letore indicated that they admitted certain paragraphs of the notice to admit that had previously been disputed. The upshot was that Swishette and Letore ultimately disputed the following paragraphs of the notice to admit: [28], [31], [32], [34], [35], [50], [53], [60]-[64], [66] and [67].

28    In the context of Swishette and Letore’s application for leave to withdraw admissions, I asked Ms Laski and Ms Hatch whether they sought leave to withdraw their admissions in relation to all or any of the facts in the notice to admit. After having some time to consider their positions, Ms Laski and Ms Hatch sought leave to withdraw their admissions in relation to one paragraph, namely [53], of the notice to admit. I gave them leave to do so. Ms Laski and Ms Hatch are taken to have admitted the facts set out in the balance of the notice to admit.

29    In advance of the hearing, the ACCC, Swishette and Letore prepared a statement of agreed and disputed facts. This document was admitted into evidence at the hearing. Ms Laski and Ms Hatch were not parties to this document. However, as indicated above, they essentially adopted the same position as Swishette and Letore. Ms Laski and Ms Hatch did not challenge any of the facts that Swishette and Letore admitted.

The hearing

30    At the trial of the proceeding, the ACCC called the following witnesses:

(a)    Graham Phillips, a partner of Thomson Geer. Thomson Geer were the solicitors acting for the ACCC in the Clinica Proceeding and are the solicitors for the ACCC in this proceeding. Mr Phillips was the supervising partner in relation to the Clinica Proceeding.

(b)    Kimberley Lloyd, a solicitor. Ms Lloyd was a solicitor at Thomson Geer at the time of the Clinica Proceeding. She had the day-to-day conduct of the matter on behalf of the ACCC. At that time, she was a solicitor with 12-15 years’ experience and held the position of “special counsel”.

31    When the trial of the present proceeding commenced, the ACCC had not proposed to call Ms Lloyd as a witness. However, following an indication by counsel for Swishette and Letore during the course of the trial that he may wish to submit in closing submissions that an adverse inference should be drawn from the ACCC’s failure to call Ms Lloyd, the ACCC decided that it would call her to give evidence. No affidavit of Ms Lloyd was prepared for the purposes of this proceeding. However, Ms Lloyd’s affidavit dated 15 October 2015, prepared for the purposes of the Clinica Proceeding, was relied upon by the ACCC and admitted into evidence.

32    As stated in [13] of Mr Phillips’s second affidavit, in the present proceeding, the ACCC waived client legal privilege in respect of “the issue surrounding the joinder of Swishette and Letore to the earlier proceeding [ie, the Clinica Proceeding] prior to the trial of the earlier proceeding”. (The issue might also be expressed as: the issue of whether to join Swishette and Letore to the Clinica Proceeding before the trial of that proceeding.) Mr Phillips gave evidence about this issue in his second affidavit. Both Mr Phillips and Ms Lloyd were cross-examined about the issue.

33    In relation to the evidence of Mr Phillips and Ms Lloyd, I make the following observations. Both gave evidence clearly and honestly and I accept their evidence. Because of the circumstances referred to above, Ms Lloyd did not have as great an opportunity as Mr Phillips to prepare for giving oral evidence. As a result, she was not able to provide as much detail as Mr Phillips in answer to questions. However, I do not consider that this affected the substance of the evidence that she gave.

34    It is convenient to deal at this point with a submission on behalf of Swishette and Letore that an adverse inference should be drawn from the fact that the ACCC did not call a witness from the ACCC (as distinct from its external solicitors). It may be accepted that an officer of the ACCC could have been called in relation to the ACCC’s consideration of whether to join Swishette and Letore to the Clinica Proceeding. However, the ACCC called Mr Phillips and Ms Lloyd, who gave detailed evidence about the matter. It is not necessary to call cumulative evidence. Further, as noted in Heydon JD, Cross on Evidence (11th Aust ed, LexisNexis Butterworths, 2017) at [1215], the rule in Jones v Dunkel (1959) 101 CLR 298 “entitles the trier of fact the more readily to draw any inference fairly to be drawn from the other evidence by reason of the opponent being able to prove the contrary had the party chosen to give or call evidence. But the rule does not permit an inference that the untendered evidence would in fact have been damaging to the party not tendering it. … The rule cannot be employed to fill gaps in the evidence, or to convert conjecture and suspicion into inference” (footnotes omitted). In the present case, I accept that where the evidence establishes that a relevant document was received by the ACCC in the course of its investigation of Clinica and Mr Laski, or in connection with the Clinica Proceeding, it may be inferred that the document was read by the ACCC, and that an inference to this effect may be more readily drawn in circumstances where the ACCC did not call an officer of the ACCC to give evidence. But beyond this situation, I do not consider that the absence of evidence from an ACCC officer affects the findings to be made.

35    Swishette and Letore called two witnesses:

(a)    Andrew Quayle, an accountant. Mr Quayle has been responsible for the preparation of the financial and taxation accounts for the Trust and Letore since 1996.

(b)    Ms Hatch. As noted above, Ms Hatch is Mr Laski’s cousin and a beneficiary of the Trust. In addition, she is currently the sole director of Swishette and Letore.

36    Each of these witnesses was cross-examined. Mr Quayle’s evidence was of a confined nature. I accept his evidence. Ms Hatch at times appeared evasive in answering questions during cross-examination. Despite being the sole director of Swishette and Letore, she displayed a surprising lack of familiarity with the affairs of the companies. I generally do not accept her evidence unless it is corroborated by objective evidence, such as documentary evidence.

37    Ms Laski gave evidence on her own behalf and was cross-examined. Her evidence in chief was of a confined nature. The matters dealt with in cross-examination were of limited relevance to the issues to be determined in this proceeding.

38    Ms Hatch relied in her own case on the evidence she had given as part of the case for Swishette and Letore.

39    After the hearing, the parties each filed (with leave) written reply submissions to the written submissions handed up by the other side during closing submissions. Attached to the ACCC’s written reply submissions were two documents that had been produced by Ms Laski and Ms Hatch following the completion of the trial (in response to a request during the hearing). The documents were: Ms Laski’s draft tax return for the year of income ended 30 June 2015 and Ms Hatch’s tax return for the same year. The ACCC stated that it tendered these documents. No objection has been received from the respondents. In these circumstances, I will treat these documents as forming part of the evidence.

40    I will now consider each of the issues identified earlier in these reasons.

Issue 1: Is the ACCC precluded from bringing its claims that Swishette and Letore were persons “involved” in Clinica’s contraventions?

Factual findings

The Clinica Proceeding at first instance

41    In this section, in addition drawing on the affidavit and oral evidence in this proceeding, I have drawn on the judgments in the Clinica Proceeding in relation to the procedural framework of, and some of the steps taken in, the proceeding. None of the parties to the present proceeding suggested that the judgments in the Clinica Proceeding did not accurately describe such matters, and the hearing proceeded on the basis that the judgments did provide an accurate description of these matters.

42    On 14 May 2015, the ACCC commenced the Clinica Proceeding. The proceeding, brought under the Competition and Consumer Act, concerned the conduct of Clinica (the first respondent to that proceeding) in providing (what were described as) recruitment consulting services to individuals in Australia on temporary visas who were seeking to obtain permanent residency status. The second respondent was Mr Laski. He had been the managing director of Clinica and was alleged to have been involved in the conduct and liable accordingly. The ACCC sought declarations, injunctions, a disqualification order, non-party redress orders and pecuniary penalties.

43    Broadly, the ACCC’s allegations in the Clinica Proceeding related to false or misleading representations and unconscionable conduct in relation to the Clinica Program. By the time of trial, it was not disputed by Clinica or Mr Laski that the Cleaning Course and cleaning work offered by Clinica would never have entitled its clients to apply for a Subclass 187 visa. Moreover, by the time of trial, Clinica and Mr Laski admitted that Clinica did not have any cleaning jobs available for clients with sponsoring employers in regional areas and no clients who completed a Cleaning Course with Clinica were placed in such cleaning jobs.

44    On 23 June 2015, the Clinica Proceeding was set down for trial, on all issues other than relief, with the trial to commence on 21 October 2015, on an estimate of three days.

45    On 4 August 2015, the ACCC applied, on an ex parte basis, for a ‘freezing order’. The freezing order was granted by Middleton J as duty judge and had effect, initially, until 12 August 2015. The respondents to the freezing order application included Swishette and Letore (in addition to Clinica and Mr Laski). Pursuant to the order, each of the four respondents to the freezing order was prohibited from removing from Australia or disposing of, dealing with or diminishing the value of any of its or his assets in Australia or overseas. The orders also dealt with the proceeds of sale of the Brighton Property. At this time, the property was the subject of a contract of sale, but settlement had not yet taken place. The orders provided that the proceeds of sale be paid into a trust account in the name of the ACCC’s solicitors. The orders also provided, as an exception, that Mr Laski was not prohibited from paying up to $2,000 per week on his ordinary living expenses or from paying $20,000 on his reasonable legal expenses.

46    On 12 August 2015, the freezing order application returned to the Court, this time on an inter partes basis. Counsel for Clinica and Mr Laski informed Mortimer J that, by reason of Mr Laski’s illness and recent absence from Australia, they were not in a position to contest the freezing order on or near the scheduled return date. In these circumstances, her Honour extended the freezing order to the first day of the trial, while reserving leave for Clinica and Mr Laski to apply at any time prior to trial to vary or discharge the order if they wished to do so.

47    Subsequently, Clinica and Mr Laski sought variation (but not discharge) of the freezing order. A hearing took place in relation to this application on 9 September 2015. Some of the variations were contested by the ACCC. Mortimer J gave judgment on the requested variations on 10 September 2015: Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd [2015] FCA 1006. A number of variations to the freezing order were made, for example in relation to the payment of legal fees.

48    The Clinica Proceeding was actively defended until 12 October 2015. On that date, the parties filed a statement of agreed facts containing admissions as to liability.

49    On 14 October 2015, a pre-trial conference took place. The parties proposed that the proceeding be listed for hearing on all issues (ie, including relief) on the same trial date as had originally been fixed for the hearing of issues other than relief. This was accepted by the Court.

50    On the same day, the ACCC provided a form of the orders that it would seek at trial, including as to relief. The ACCC’s proposed orders included an order to the effect that Clinica and Mr Laski refund to clients of Clinica any moneys paid by the clients that were paid under, referable to or otherwise used in relation to Regional Sponsorship Agreements, the Clinica Program or the Cleaning Course. Further, the ACCC sought an order to the effect that Mr Laski execute a written direction on behalf of Swishette and Letore that the funds held in the ACCC’s solicitors’ trust account (being the proceeds of sale of the Brighton Property) be applied towards the payment of the refunds. Ancillary orders were also sought by the ACCC to provide a mechanism for the payment of refunds to clients of Clinica. In seeking these orders, the ACCC relied on s 239 of the Australian Consumer Law.

51    On 21 and 22 October 2015, the trial of the Clinica Proceeding took place. Ahead of the hearing, the parties filed a statement of agreed facts pursuant to s 191 of the Evidence Act 1995 (Cth). In addition, there were before the Court a number of affidavits filed by both parties, annexing a range of documents relevant to the proceeding, and various documents tendered by the parties at the hearing. The following witnesses provided affidavits on behalf of the ACCC: Ms Lloyd; Ms Fahey; Lynn McKirdy; Sukhdev Singh Gill; Rajesh Azad; and Sourab Uppal. None of these witnesses was cross-examined. Their evidence is summarised at [23]-[58] of Clinica (No 2).

52    The witnesses for Clinica and Mr Laski at the trial of the Clinica Proceeding were: Mr Laski; Ms Laski; and Prospero Franzese, a solicitor. Their evidence is summarised at [59]-[88] of Clinica (No 2). Mr Laski was extensively cross-examined as to the dealings that Swishette and Letore had with him and with Clinica. Mr Phillips accepted during cross-examination in the present proceeding that the cross-examination of Mr Laski (in the Clinica Proceeding) was directed at him in his capacity as a director of Swishette and Letore.

53    As has been noted, by the time of the trial of the Clinica Proceeding, Clinica and Mr Laski had admitted liability for the alleged contraventions. Mortimer J described the conduct constituting the contraventions at [107]-[128] of Clinica (No 2). Her Honour made findings relating to misleading or deceptive conduct at [129]-[138], findings in relation to unconscionable conduct at [139]-[145], and findings in relation to Mr Laski’s involvement at [146]-[149]. At the conclusion of this section of Clinica (No 2), her Honour said at [150]:

This was a scheme aimed at vulnerable people, desperate to gain secure migration status in Australia. It was a scheme promoted, advertised and conducted on the basis that people would secure a permanent residence visa. That is why large sums of money could be charged, and were paid. That is why people such as Messrs Uppal, Azad and Gill begged and borrowed, and worked long hours, to put together the instalment payments. The prize which they had been led to believe awaited them was an Australian permanent residence visa. Conveying the value of that migration status to those in the Australian community fortunate enough never to have had to be concerned about not being able to stay in Australia is not an easy exercise. It is something most people take for granted. To those who do not have it, it is precious. The way Clinica and Mr Laski preyed on the dreams of people about obtaining secure and long term residency and employment in Australia, is one of the features of this scheme most deserving of the Court’s condemnation.

54    In relation to relief, by the time of the trial of the Clinica Proceeding there was agreement between the parties as to some aspects of the relief sought by the ACCC. The areas of agreement and dispute were, in summary, as follows:

(a)    The parties were agreed as to the form of declaratory relief.

(b)    Clinica and Mr Laski agreed that injunctions under s 232 of the Australian Consumer Law should be made against both of them, but contested the breadth of the conduct to be covered by the injunctions.

(c)    Mr Laski did not contest that he should be disqualified under s 248 of the Australian Consumer Law from managing corporations, but there was a difference between the ACCC and Mr Laski as to the period of disqualification.

(d)    Clinica and Mr Laski did not contest orders: declaring each Regional Sponsorship Agreement between Clinica and its clients void ab initio; requiring Clinica and Mr Laski to refund to clients of Clinica any moneys paid under, referable to or otherwise used in relation to those agreements, the Clinica Program or the Cleaning Course; and requiring Clinica to discontinue all proceedings on foot against clients to recover such moneys.

(e)    Clinica and Mr Laski contested that funds from the sale of the Brighton Property that were the subject of the freezing orders should be withdrawn and paid to effect refunds to Clinica clients who had made payments in respect of Regional Sponsorship Agreements, and as a consequence opposed any orders setting a mechanism by which the ACCC would establish a process for clients to claim refunds out of the Brighton Property settlement funds held in the trust account of the ACCC’s solicitors.

(f)    Clinica and Mr Laski did not contest an order that pecuniary penalties be paid by each of them to the Commonwealth, but in submissions the parties emphasised different factors relevant to the assessment of penalty.

55    Thus, the main areas of dispute at the trial of the Clinica Proceeding were:

(a)    the extent of the penalties that should be imposed on Clinica and Mr Laski;

(b)    the breadth of the injunctions;

(c)    the length of the disqualification period to be imposed on Mr Laski; and

(d)    whether orders should be made that would reach, and preserve access to, the funds from the sale of the Brighton Property, so that they would be available to satisfy other orders made (ie, the non-party redress orders).

56    In relation to (d) above, Clinica and Mr Laski submitted that the Court did not have power under s 239 to order Mr Laski to give a direction as sought by the ACCC.

57    The ACCC did not allege at the trial of the Clinica Proceeding that Swishette and Letore were persons “involved” in Clinica’s contraventions of the Australian Consumer Law, and they were not parties to the proceeding at the time of the trial.

58    On 9 February 2016, Mortimer J handed down reasons for judgment dealing with the principal issues in the proceeding: Clinica (No 2). In relation to the funds held in the ACCC’s solicitors’ trust account, Mortimer J accepted the ACCC’s submission that the Court had power under s 239 of the Australian Consumer Law to order Mr Laski to give a direction as sought by the ACCC. Mortimer J considered that, in exercising a power of the kind conferred by s 239, the Court is able to address “the reality of Mr Laski’s financial circumstances and access to the assets of corporate vehicles he controls” (at [294]). That reality included “the fact that he is in effective control of the proceeds of sale from the Brighton property, through his role as appointor of the Trust and sole director of Swishette” (at [294]). Accordingly, Mortimer J indicated that she would make an order that Mr Laski give a direction regarding the funds in the ACCC’s trust account as sought by the ACCC.

59    At the time that judgment was handed down in Clinica (No 2), Mortimer J provided a form of proposed orders to the parties. The parties were given an opportunity to file short submissions on the form of the orders on or before 23 February 2016. The ACCC filed such submissions in the time frame provided for in the Court order; Clinica and Mr Laski did not file any submissions.

60    On 26 February 2016, Swishette and Letore filed an interlocutory application dated 23 February 2016 by which they applied for a series of orders, both interlocutory and permanent. The application was wholly concerned with the funds held in the ACCC’s solicitors’ trust account pursuant to the freezing orders, representing the proceeds of sale of the Brighton Property. The final orders sought by Swishette and Letore included an order to the effect that the ACCC’s application for an order that Mr Laski give a direction regarding the proceeds of sale of the Brighton Property be refused. This was a matter that had already been dealt with in Clinica (No 2). The interlocutory application filed by Swishette and Letore did not seek an order that they be joined as parties to the proceeding, but such an order was sought orally at the hearing of the application (referred to below).

61    On 11 March 2016, an affidavit of Mr Franzese was filed in support of Swishette and Letore’s interlocutory application. This affidavit annexed a copy of the minutes of a meeting of the directors of Swishette dated 11 June 2015. The meeting was attended by Mr Laski as the sole director. Mr Laski was the chairperson and signed the minutes as such. The minutes record a resolution (referred to in these reasons as the “June 2015 Resolution”) that the net income of the Trust for the year ended 2015 be distributed in the following proportions: (a) 15% of the net income to Ms Laski; (b) 15% of the net income to Ms Hatch; and (c) 70% of the net income to Letore. The resolution had not been in evidence during the trial of the Clinica Proceeding. It is an agreed fact in the present proceeding that this (ie, 11 March 2016) was the first time the ACCC received the resolution (T244-245).

62    On 22 March 2016, a hearing took place in relation to Swishette and Letore’s interlocutory application and an interlocutory application filed by the ACCC in relation to the ‘carve outs’ from the freezing order.

63    On 23 March 2016, Mortimer J handed down judgment in relation to those interlocutory applications: Clinica (No 3). In relation to Swishette and Letore’s interlocutory application, her Honour made an order that Swishette be joined to the proceeding, but otherwise dismissed the application. Among other things, her Honour decided that it would be an abuse of process to allow Swishette and Letore to re-open the trial, adduce further evidence and make new arguments in circumstances where, her Honour considered, their interests had in substance been represented in the Clinica Proceeding all along and the companies had acquiesced in the manner in which the proceeding had been conducted (see [67]).

64    On the same day, Mortimer J made declarations and orders, and provided reasons for judgment explaining the final form of the declarations and orders: Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd (In Liquidation) (No 4) [2016] FCA 286.

65    Paragraph 9 of the orders made on 23 March 2016 was to the effect that Clinica and Mr Laski refund to clients of Clinica any moneys paid by the clients that were paid under, referable to or otherwise used in relation to the Regional Sponsorship Agreements, the Clinica Program or the Cleaning Course, together with interest, calculated from the time when the clients made the payments until the refunds are provided, at the rate set out in s 2 of the Penalty Interest Rates Act.

66    Paragraph 10 of the orders required Mr Laski to execute a written direction, and was in the following terms:

For the purposes of complying with paragraph 9 of these orders, on or before 5:00pm on the day after the making of these Orders, Mr Radovan Montague Laski must execute and submit to the applicant a written direction in the form of Annexure A to these Orders, on behalf of his companies Swishette Pty Ltd ACN 094 286 085 and Letore Pty Ltd ACN 005 733 013.

67    Annexure A to the orders made on 23 March 2016 was as follows:

ANNEXURE A

DIRECTION TO BE GIVEN BY RADOVAN MONTAGUE LASKI IN FEDERAL COURT OF AUSTRALIA PROCEEDING VID 252 OF 2015

I, Radovan Montague Laski, hereby direct on behalf of Swishette Pty Ltd ACN 094 286 085 (Swishette) and Letore Pty Ltd ACN 005 733 013 (Letore), that the whole of the funds held in the applicant’s solicitors’ trust account (being the proceeds of sale of the property of Swishette situated at 5 Maroona Road, Brighton, better described in certificate of title Volume 4249 Folio 755) pursuant to the freezing order made on 4 August 2015 (as extended or varied on 12 August 2015, 10 September 2015, 14 October 2015, 22 October 2015 and as consolidated on 9 March 2016) be:

(a)    maintained in the applicant’s solicitors’ trust account; and

(b)    subject to any further orders of the Court, withdrawn and applied only to effect the refunds referred to in paragraph 9 of the orders of the Court made on 23 March 2016.

68    Paragraphs 11 to 17 of the orders contained ancillary orders that provided a mechanism for the payment of refunds to clients of Clinica from the funds held in the ACCC’s solicitors’ trust account.

69    I note for completeness that a further hearing took place before Mortimer J on 17 May 2016 in relation to whether Ms Laski was secured creditor of Swishette, in respect of loans made by her to Mr Laski in the sum of $215,000 (being an issue reserved for further consideration by paragraph 11 of the 23 March 2016 orders). Her Honour handed down judgment on 15 July 2016: Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd (In Liquidation) (No 5) [2016] FCA 811.

The appeal to the Full Court

70    Swishette appealed, and Letore sought leave to appeal, from some of the orders made on 23 March 2016. In essence, they contended that the Court did not have power under s 239 of the Australian Consumer Law to order Mr Laski to give a direction as sought by the ACCC and ordered by the Court.

71    The premise of Swishette and Letore’s submissions was that Swishette and Letore had not contravened the Australian Consumer Law, nor were they persons “involved” in the contraventions by Clinica of the Australian Consumer Law. For example, in [1] of their appeal submissions, Swishette and Letore submitted that neither Swishette nor Letore “was the subject of allegations by the ACCC, nor was either company involved in the contraventions”. In these circumstances, it was contended, an order could not be made under s 239, in effect, against Swishette and Letore.

72    The ACCC, in its submissions in relation to the appeal, accepted that Swishette and Letore were not persons “involved” in Clinica’s contraventions of the Australian Consumer Law. In particular, at [40] of the ACCC’s appeal submissions, the ACCC stated: “It may be accepted that s 239 does not in terms permit orders directed to third parties not involved in the contravention (as was the position of Swishette or Letore).”

73    On 15 March 2017, the Full Court allowed the appeal. In brief summary, the Full Court accepted Swishette and Letore’s contention that the Court did not have power under s 239 to make paragraph 10 of the 23 March 2016 orders: Swishette at [16]. In the first part of the Full Court’s reasons, describing the decision below, the Full Court said at [7]:

The combined effect of s 239(1) and (2) is that s 239, in unqualified terms, only empowers the Court to make an order against the person who engaged, or was involved, in the contravening conduct. Whilst neither Swishette nor Letore was involved in the contravening conduct of Clinica and Mr Laski, the primary judge held that Order 9 and Order 10 were consistent with this requirement.

(Emphasis added.)

74    The Full Court’s consideration of the issue raised by the appeal is set out at [16]-[28] of the Full Court’s reasons. After noting, at [25], that s 239 is a remedial provision enabling consumers to obtain redress for loss or damage suffered as a result of a person’s contravening conduct without having to take action themselves against the person, and that the Court is given a wide power with respect to the kind of orders that can be made under s 239, subject to the limitation that it be an order “against” the contravener, the Full Court stated at [26]-[28]:

26    Order 10, however, was an order affecting assets in respect of which Mr Laski, as an object of the discretionary trust, has no legal or beneficial interest but only the right to due consideration and due administration of the Trust: Kennon v Spry (2008) 238 CLR 366; Re Gulbenkian’s Settlements Trusts [1970] AC 508; McPhail v Doulton [1971] AC 424. The fact that Mr Laski may control the Trust both as appointor and as director of the trustee company, does not give him an interest in the trust property amounting to ownership: DKLR Holding Company (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1980] 1 NSWLR 510; Gartside v Inland Revenue Commissioners [1968] AC 553 at 617-618. Objects of a discretionary trust have no beneficial interest in the property of the trust and their only interest is characterised as a mere expectancy coupled with a right to due administration of the trust. Whilst the right to due administration includes a right to due consideration in the exercise of the trustee’s discretionary power to distribute capital and income, until the exercise of the trustee’s power in favour of Mr Laski, Mr Laski has no entitlement to such capital or income. Moreover, Swishette as trustee is not free to exercise rights in respect of the trust property for its own benefit as if no trust existed. It has fiduciary and equitable obligations to administer the Trust in accordance with its terms, which the beneficiaries have the right to enforce.

27    The effect of Order 10 was to require Swishette and Letore, neither of which was engaged or involved in the contravening conduct, to apply the proceeds from the sale of the Brighton property to the repayment of client moneys. The proceeds from the sale of the Brighton property are, however, trust funds held by Swishette pursuant to the terms of the deed of the Trust. The primary judge accepted that the Trust was not a sham and that Swishette had owned the Brighton property in its capacity as trustee of that trust and that, following the sale, Swishette holds the sale proceeds as trustee pursuant to the terms of the Trust. In consequence, the sale proceeds were not available to be dealt with as the “property of” Mr Laski for the purposes of an order under s 239 and it was not open to the primary judge to make Order 10, disregarding the existence of the Trust and the obligations on Swishette, as trustee, with respect to the application of trust funds. Section 243 of the Australian Consumer Law does not authorise the making of such an order. Nor does the remedial nature of the power conferred by s 239 compel a different conclusion on the proper construction of the section.

28    We accordingly conclude that Order 10 went beyond the scope of s 239(1) by requiring third parties to apply trust property in which Mr Laski has no legal or beneficial interest to the repayment of client moneys, and the primary judge fell into error in concluding that she had the power to make such an order. Furthermore, we cannot see how an order under s 239 could have been directed at Letore in any event. The fact that Mr Laski may control Letore does not alter the position that Letore’s only interest under the Trust is that of a beneficiary with a right to due administration of the Trust but with no proprietary interest in the trust assets. We would accordingly grant an extension of time to Letore to apply for leave to appeal the making of the order against it, grant leave to appeal and would allow Letore’s appeal.

(Emphasis added.)

75    Accordingly, the Full Court allowed Swishette’s appeal and set aside paragraphs 10-17 of the 23 March 2016 orders. In relation to Letore’s application for leave to appeal, the Full Court granted an extension of time and leave to appeal, and allowed the appeal.

The ACCC’s consideration of whether to join Swishette and Letore

76    I now set out additional facts relating to the ACCC’s consideration of whether to join Swishette and Letore to the Clinica Proceeding. The facts in relation to this matter are based on the affidavit and oral evidence of Mr Phillips, the oral evidence of Ms Lloyd, and the other documents in evidence.

77    Ms Lloyd said during cross-examination, and I accept, that when the ACCC first instructed her (ie, at about the time when the Clinica Proceeding was commenced) one of the things that the ACCC was concerned about was a way of obtaining compensation for non-party consumers.

78    Ms Lloyd also said during cross-examination, and I accept, that her usual practice was to forward documents she received in relation to the case to the ACCC.

79    In about April 2015, the ACCC obtained bank documents relating to companies associated with Mr Laski (including Clinica, Swishette and Letore) pursuant to notices issued under s 155 of the Competition and Consumer Act. The documents included the Letore credit card statements.

80    The ACCC was already aware at this time that Clinica had commenced a proceeding in the Magistrates’ Court of Victoria against a Mr Uppal on a particular date. The Letore credit card statements included a payment by Letore to the Magistrates’ Court on the same day that Clinica had commenced the proceeding against Mr Uppal. While the credit card statements referred to a payment to the Magistrates’ Court on the relevant date, they did not refer to Mr Uppal by name. It was put to Mr Phillips that “it was easy to join the dots”. In other words, it was easy to infer that the payment made by Letore had been for Clinica’s proceeding against Mr Uppal. Mr Phillips did not accept this. I am not satisfied that the ACCC, in or about April 2015, made the connection between the Letore credit card statements and the commencement of the proceeding by Clinica against Mr Uppal. While the ACCC had received the relevant documents by April 2015, the evidence does not establish that it undertook, in or about April 2015, a forensic analysis of the documents to investigate links between Letore and Clinica.

81    I infer that the ACCC was aware that Mr Laski was the sole director of Clinica, Swishette and Letore by April 2015, if not before.

82    As noted above, on 4 August 2015, the ACCC applied for freezing orders. It did so because it was concerned about the recovery of moneys from Clinica and Mr Laski.

83    On 19 August 2015, the historical financial statements of Swishette and Clinica referred to in [56] and [57] of the notice to admit were provided to the ACCC.

84    On 26 August 2015, financing documents relating to an overdraft provided by the CBA to Clinica in March 2008 (the Clinica Overdraft) were received by the ACCC’s solicitors and forwarded to the ACCC. (This is an agreed fact: T106). These documents indicated that the security provided in support of the Clinica Overdraft included a guarantee and second registered mortgage by Swishette as trustee of the Trust. Ms Lloyd said during cross-examination that, in accordance with her usual practice, she would have reviewed the financing documents relating to the Clinica Overdraft. She accepted that, upon reviewing these documents, she would have known that Swishette had provided its assets in support of Clinica. On the basis of this evidence, I find that, from about 26 August 2015, the ACCC was aware that Swishette had provided, in about March 2008, a guarantee and second mortgage in support of the Clinica Overdraft.

85    Mr Phillips accepted during cross-examination that, given that Clinica had a liability of about $600,000 under the Clinica Overdraft, and did not appear to have other assets, it was likely that the ACCC would have to look elsewhere if there was going to be compensation to third parties. Mr Phillips also accepted that it was important to the ACCC to secure an outcome for the consumers of Clinica if this were possible.

86    It is agreed between the parties that: the schedule to the trust deed for the Trust was received by the ACCC’s solicitors and forwarded to the ACCC on 19 August 2015; and the full trust deed was received by the ACCC’s solicitors and provided to the ACCC on 26 August 2015 (T106).

87    On 2 September 2015, the ACCC filed a reply submission in relation to the freezing orders (Ex R2). The ACCC contended in those submissions that the freezing order made by the Court on 4 August 2015 should continue until the hearing and determination of the proceeding or further order. In the submissions, the ACCC submitted that the Brighton Property “is – in an economic sense – Mr Laski’s most valuable asset. Although it is not registered in his name, there is at least a very strong argument that he is entitled to the economic benefit …”. It was submitted that, if Mr Laski were to become bankrupt, “his trustee in bankruptcy is likely to be able to claim successfully that Mr Laski is the true beneficial owner of the Brighton home, and/or the shares in Swishette (which owns the home) and Letore”. The submissions included: “There is also evidence that Mr Laski treats funds of his entities as his own funds and does not distinguish between funds of different entities.”

88    In September and early October 2015, the ACCC carried out an analysis of the financial documents relating to Clinica, Swishette and Letore. This analysis appeared to show numerous instances where funds paid by Clinica clients into the Clinica account were on-paid to Letore and/or Swishette. The analysis was ultimately presented in an Excel spreadsheet that was annexure “KAL-58” to the affidavit of Ms Lloyd dated 15 October 2015 filed in the Clinica Proceeding. (The Excel spreadsheet is also Ex A3 in the present proceeding.)

89    It was put to Ms Lloyd that by the time the freezing order application was heard on 4 August 2015, she and, through her, the ACCC “were well aware that Mr Laski was treating funds of his entities as his own funds”. Ms Lloyd said: “Yes. I think we had some understanding of that at the time of the freezing order, and had looked at some of the receipts and the like, and his bank statements that showed evidence of that. But then a few months later we [did] a ... more thorough exercise of looking closely at that. And at that stage I had … [begun] to understand the way he was treating his assets in more detail.” I take this to refer to the financial analysis carried out in September and early October 2015 that formed the basis of the Excel spreadsheet referred to above. I accept Ms Lloyd’s evidence as set out in this paragraph.

90    Ms Lloyd was taken to an email from Rebecca Heath, a senior investigator at the ACCC, dated 5 October 2015 (10.13 am) (part of Ex A4). Ms Lloyd accepted that the analysis undertaken by Ms Heath showed links between Clinica, Swishette and Letore accounts. The email from Ms Heath included the statement: “Also linking to Clinica clients are numerous Magistrate Court expenses i.e. 5/4/2013 (and 8/8/2013) which is the same day proceedings were instituted for example against Rajesh Azad.”

91    It was put to Ms Lloyd that the documents in the possession of the ACCC as at 5 October 2015 “were enough … to at least make an allegation that Swishette and Letore were involved with Clinica in the contraventions”. Ms Lloyd responded: “Well, at that point in time, I don’t think that I necessarily [had] put the information together in that way that I would consider we had enough information to claim that.” Ms Lloyd also said that, as at early October 2015, “[w]e were still reviewing all of the documents and still forming a view on how it all [fitted] together with all of the other evidence that Mr Laski had provided on all of his other companies”. Ms Lloyd said further that Clinica and Mr Laski had not admitted liability at this stage, “so we were focused on the liability … aspect of the case, and still believing that … there would be a whole second phase that dealt with penalties, and we were focused on showing that Mr Laski and Clinica had breached the ACL”. I accept Ms Lloyd’s evidence as an accurate reflection of her state of mind as at early October 2015 and of the steps that were being taken by the ACCC and its solicitors at that time.

92    On or about 7  October 2015, the ACCC’s solicitors asked counsel to consider whether it was appropriate to join Swishette and Letore and to prepare draft amended court documents for the purposes of discussion. There was also discussion between the ACCC and its solicitors in early October 2015 regarding relying on s 239 of the Australian Consumer Law to obtain a direction from Mr Laski on behalf of Swishette and Letore that the proceeds of sale of the Brighton Property be used to pay third parties.

93    On 7 October 2015 (6.50 pm), the ACCC’s counsel emailed to the solicitors draft court documents, namely:

(a)    an amended fast track application, which sought relief against Swishette and Letore;

(b)    an amended fast track statement, which pleaded allegations against Swishette and Letore; and

(c)    an interlocutory application for the joinder of Swishette and Letore as parties.

94    Copies of the email and draft documents are in evidence. In the covering email, counsel referred to the draft court documents that were attached and commented:

The linchpin is an argument that Swishette and Letore are ‘involved’ within the meaning of the statutory provisions, because they received some of the Clinica funds, while having Mr Laski’s knowledge (as the director of all 3 companies). It would be useful to see if we can find case law specifically on whether the mere receipt is sufficient for involvement under the statute. We might be able to make an analogy with cases on ‘knowing assistance’ in equity, and whether receipt is sufficient to amount to assistance.

95    It is apparent from the draft court documents that the basis upon which it was proposed to be contended that Swishette and Letore were “involved” in Clinica’s contraventions of the Australian Consumer Law was that Swishette and Letore had received some of Clinica’s funds and were to be attributed with Mr Laski’s knowledge of the contraventions.

96    On the same day, at 8.25 pm, Ms Lloyd forwarded the email from counsel and the draft court documents to the ACCC. The email referred to the draft documents and said that the solicitors were working on a draft affidavit in support of the application, with a view to discussing this with the ACCC the following morning. The email asked the following question of the ACCC:

[A]re you happy for us to do some research on whether the mere receipt of funds is sufficient for ‘involvement’ under the statute, as per [counsel’s] email below?

97    The ACCC’s counsel was then instructed to draft a letter to be sent to the solicitors acting for Clinica and Mr Laski in the event that a decision was taken to join Swishette and Letore. Counsel prepared a draft letter (a copy of which is in evidence). The draft letter dealt with a number of matters relating to the trial and then stated:

Swishette and Letore

In the course of preparations for the trial, our client has found a number of instances where funds paid by clients of Clinica were on-paid to Letore and/or Swishette and/or other entities of Mr Laski.

We are in the course of preparing a further affidavit which sets out details of these transactions. We anticipate filing and serving that affidavit on Monday 12 October 2015. Our client intends to rely on that additional evidence in support of the continuation of the freezing orders.

Further, our client is considering the joinder of Swishette and Letore (and other of Mr Laski’s entities) as respondents to the substantive proceeding. Our client proposes to inform the Court about this at the pre-trial conference on 14 October 2015. Given that Clinica and Mr Laski have admitted liability without the need for a contested trial, any trial in relation to the liability of Swishette and Letore (and other entities) and relief against them, could be held at a future time without affecting the scheduled trial on 21, 22 and 23 October 2015.

98    Ms Lloyd said during cross-examination that there were discussions with the ACCC about joining Swishette and Letore around 7 October 2015, when counsel prepared the draft court documents, “but then we fairly quickly decided that the ACCC wanted to go down the section 239 path, instead of joining [Swishette and Letore]”. Ms Lloyd said that the decision was made by the ACCC. She also said: “I don’t actually know what their reasoning was for that. We were just instructed that they had decided to go that way.” I accept Ms Lloyd’s evidence as set out in this paragraph.

99    Accordingly, no application to join Swishette and Letore was made, and the letter drafted by counsel was not sent. Mr Phillips accepted that the ACCC could have gone down the path of joining Swishette and Letore.

100    In her email of 7 October 2015 to the ACCC, Mr Lloyd had asked whether the ACCC was happy for research to be done on whether the mere receipt of funds is sufficient for involvement under the Australian Consumer Law. Initially, the ACCC requested that this research be carried out. However, the research was not carried out as the decision was taken not to seek joinder.

101    On or about 20 October 2015, the ACCC received an affidavit of Mr Laski that stated that Letore’s credit card had been used to pay Magistrates’ Court filing fees on behalf of Clinica. Mr Phillips said during cross-examination that there is a distinction between having a document that gives a suggestion that there is a link between a payment of Magistrates’ Court filing fees and the Letore credit card, and the admission made by Mr Laski in his affidavit filed on 20 October 2015 that the Letore credit card was used for that purpose. Mr Phillips said that “[u]ntil that point … we could surmise what might have happened, but it wasn’t until we had Mr Laski’s admission that we had clarity around that”. Mr Phillips was challenged on this and maintained his position. I accept Mr Phillips’s evidence as summarised in this paragraph.

102    Mr Phillips said during cross-examination (and I accept) that if Swishette and Letore had been joined (in the lead-up to the trial commencing on 21 October 2015), the question of their liability “would have needed to have been deferred to a date beyond the 21 and 22 October hearing”. Mr Phillips accepted that the ACCC could have done what had been proposed in the draft letter prepared by counsel, which was to join Swishette and Letore and ask to have the question of their liability deferred until a later date.

103    Mr Phillips was asked whether the ACCC could have sought to have Swishette and Letore joined at the end of cross-examination during the trial of the Clinica Proceeding. He said “[p]otentially”, but added that it would still have been necessary to deal with the question of their liability.

Applicable principles

104    The respondents rely on the principles of issue estoppel, Anshun estoppel and abuse of process. I will outline the relevant principles in that order.

105    In Kuligowski v Metrobus (2004) 220 CLR 363 (Kuligowski), the High Court of Australia (Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ) quoted at [21] the following passage from Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853 at 935, where Lord Guest indicated that, for the doctrine of issue estoppel to apply in a second set of proceedings, the requirements were:

(1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and, (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.

106    In relation to the first requirement, namely that the same question has been decided, the High Court quoted, at [40], the following passage from the judgment of Barwick CJ in Ramsay v Pigram (1968) 118 CLR 271 at 276:

Long standing authorities, in my opinion, warrant the statement that, as a mechanism in the process of accumulating material for the determination of issues in a proceeding between parties, an estoppel is available to prevent the assertion in those proceedings of a matter of fact or of law in a sense contrary to that in which that precise matter has already been necessarily and directly decided by a competent tribunal in resolving rights or obligations between the same parties in the same respective interests or capacities, or between a privy of each, or between one of them and a privy of the other in each instance in the same interest or capacity. The issue thus determined, as distinct from the cause of action in relation to which it arose, must have been identical in each case.

107    Later in the High Court’s judgment in Kuligowski, the Court discussed the situation where, in an earlier proceeding, the judge did not reach a conclusion either way on a factual allegation, but rather said that the party upon whom the burden of proof lies had failed to discharge the burden. The High Court said, at [60], that there were “many general statements about the operation of issue estoppel, approved in this Court, which require more than non-satisfaction to establish an estoppel in later proceedings”. In this context, the High Court referred to the following statements in earlier cases, which are of assistance in the resolution of the issues in the present proceeding:

61    For example, in Jackson v Goldsmith, Williams J approved a passage from Halsbury’s Laws of England including the following:

“A party is precluded from contending the contrary of any precise point which, having been once distinctly put in issue, has been solemnly found against him.”

Much here turns upon what is involved in the phrase “solemnly found”. The form of the first proceeding, particularly the issues joined or admitted on any pleadings, will be important. In Hoysted v Federal Commissioner of Taxation, Higgins J said:

“A point or an issue may be actually controverted, may be in actual controversy, in actual litigation, although it is not argued, or argued properly. A point may be in controversy although counsel may address no arguments to it, or may overlook certain aspects.”

62    An issue admitted on pleadings or other formal process or otherwise conceded at a hearing may, from the nature of the outcome, necessarily have been decided. But what of other questions arising in the first proceeding? In Blair v Curran, Dixon J observed that a “judicial determination concludes, not merely as to the point actually decided, but as to a matter which it was necessary to decide and which was actually decided as the groundwork of the decision itself, though not then directly the point at issue”. His Honour went on to distinguish findings concerning only “evidentiary facts” not the “ultimate facts” which formed the very title to rights in dispute. This analysis, with the emphasis on decision-making, would require more than non-satisfaction.

(Footnotes omitted.)

108    The doctrine generally referred to in Australia as “Anshun estoppel” takes its name from the decision of the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 (Anshun). In that case, the High Court held that an action (the second action) was properly stayed in circumstances where a matter sought to be raised by the plaintiff in the second action ought to have been raised as a defence in an earlier proceeding. After referring to English cases that had applied Henderson v Henderson (1843) 3 Hare 100; 67 ER 313, and the situation where a plaintiff’s new proceeding is said to be estopped because the plaintiff omitted to plead a defence in an earlier action, Gibbs CJ, Mason and Aickin JJ said in Anshun at 602-603:

In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff’s claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings e.g. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few. See the illustrations given in Cromwell v. County of Sac.

(Footnote omitted.)

109    Their Honours also said (at 603) that it “has generally been accepted that a party will be estopped from bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment”. Further, their Honours indicated (at 603-604) that “[b]y ‘conflicting’ judgments we include judgments which are contradictory, though they may not be pronounced on the same cause of action. It is enough that they appear to declare rights which are inconsistent in respect of the same transaction”.

110    More recently, in Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 (Tomlinson), French CJ, Bell, Gageler and Keane JJ said at [22]:

Three forms of estoppel have now been recognised by the common law of Australia as having the potential to result from the rendering of a final judgment in an adversarial proceeding. The first is sometimes referred to as “cause of action estoppel”. Estoppel in that form operates to preclude assertion in a subsequent proceeding of a claim to a right or obligation which was asserted in the proceeding and which was determined by the judgment. It is largely redundant where the final judgment was rendered in the exercise of judicial power, and where res judicata in the strict sense therefore applies to result in the merger of the right or obligation in the judgment. The second form of estoppel is almost always now referred to as “issue estoppel”. Estoppel in that form operates to preclude the raising in a subsequent proceeding of an ultimate issue of fact or law which was necessarily resolved as a step in reaching the determination made in the judgment. The classic expression of the primary consequence of its operation is that a “judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies”. The third form of estoppel is now most often referred to as “Anshun estoppel”, although it is still sometimes referred to as the “extended principle” in Henderson v Henderson. That third form of estoppel is an extension of the first and of the second. Estoppel in that extended form operates to preclude the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding. The extended form has been treated in Australia as a “true estoppel” and not as a form of res judicata in the strict sense. Considerations similar to those which underpin this form of estoppel may support a preclusive abuse of process argument.

(Footnotes omitted.)

111    In Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 259 CLR 212, French CJ, Kiefel, Keane and Nettle JJ referred, at [27], to the fact that the appellant did not contend that an issue estoppel arose with respect to the claims that the respondents sought to pursue, but rather contended that these claims ought to have been raised and determined in the earlier proceeding. Their Honours continued:

An estoppel of this kind, an “Anshun estoppel”, will preclude the assertion of a claim or of an issue of law or fact if the claim or issue was so connected to the subject matter of the first proceeding as to make it unreasonable, in the context of the first proceeding, for the claim or issue not to have been made or raised in it.

(Footnotes omitted.)

112    At [56], their Honours said:

An Anshun estoppel is not based upon degrees of similarity, which may be a matter of impression. It was made clear in Anshun that there could be no estoppel “unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it”.

(Footnote omitted; emphasis added by the High Court in Timbercorp.)

113    The respondents in the present proceeding rely on the decision of the Court of Appeal of the Supreme Court of Victoria in Solak v Registrar of Titles (2011) 33 VR 40 for the proposition that the principle of Anshun estoppel is capable of application in circumstances where the defendant to the second proceeding was not a party to the earlier proceeding. The ACCC accepts that, as a single judge in the Australian judicial system, albeit in a different court, I would follow the decision of the Court of Appeal. However, the ACCC reserves its position to challenge the correctness of Solak if the matter were to go on appeal. In Solak, Warren CJ (with whom Neave JA agreed) said at [67]-[71]:

67    This case is one of the relatively few cases where the party asserting Anshun estoppel in the second proceeding was not a party to the first proceeding. The High Court is yet to consider the principles applicable in this situation. However, in Redowood Pty Ltd v Link Market Services Pty Ltd Hodgson JA of the NSW Court of Appeal (with whom Mason P and Bryson AJA agreed) suggested that a stricter test should be applied:

In cases where the earlier proceedings and the later proceedings are between the same parties, as in Anshun itself, a finding of unreasonableness in not raising a matter in the earlier proceedings would almost inevitably mean that the later proceedings were oppressive and an abuse of process. Where the parties are different, the test of unreasonableness is still relevant; but in my opinion it must either be considered not conclusive, or else must be understood as involving unreasonableness of such a nature that the later proceedings against different parties are an abuse of process.

68    The court cautioned against applying Anshun estoppel too readily where the party asserting the estoppel was not a party to the first proceeding:

… [W]here a plaintiff may have alternative remedies against different parties, to suggest that a plaintiff should generally sue all of them, barring exceptional circumstances, would be to encourage complex and lengthy litigation, and promote the incurring of costs where there is no certainty that a Bullock or Sanderson order would be obtained. … [P]laintiffs should be permitted reasonable latitude in deciding whether to sue just one defendant, or to join a number of defendants in alternative claims.

69    The English Court of Appeal has expressed a similar sentiment. In Aldi Stores Ltd v WSP Group Plc, Thomas LJ stated:

[T]here is a real public interest in allowing parties a measure of freedom to [choose] whom they sue in a complex commercial matter and not to give encouragement to bringing a single set of proceedings against a wide range of defendants or to complicate proceedings by cross-claims against parties to the proceedings. That freedom can and should be restricted by appropriate case management.

70    All of the Australian cases to which the court was referred where a defendant who was not a party to the first proceeding was able to successfully rely on Anshun estoppel in the second proceeding involved the estopped plaintiff attempting to assert in the second proceeding some proposition inconsistent with the judgment in the first proceeding. Even if such a collateral attack by the plaintiff is not a necessary precondition for Anshun estoppel, its absence is a significant factor militating against a finding that Anshun estoppel has arisen.

71    It is not necessary in this case to decide whether special principles or a different test applies where the person asserting Anshun was not a party to the first proceeding. It is clear that the test is at least as strict as the test applicable in a case where the parties are the same. …

(Footnotes omitted.)

114    See also Ekes v Commonwealth Bank of Australia (2014) 313 ALR 665 at [131]-[133] per Bathurst CJ (with whom Beazley P agreed); cf Tomlinson at [23], [26].

115    In relation to abuse of process, the respondents’ contention is essentially that it is an abuse of process for the ACCC to litigate, in this proceeding, claims that should have been litigated in an earlier proceeding. In Walton v Gardiner (1993) 177 CLR 378, Mason CJ, Deane and Dawson JJ said at 393:

… proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings. The jurisdiction of a superior court in such a case was correctly described by Lord Diplock in Hunter v. Chief Constable of the West Midlands Police as “the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people”.

(Footnotes omitted.)

116    In Tomlinson, French CJ, Bell, Gageler and Keane JJ discussed the relationship between the doctrine of estoppel and the doctrine of abuse of process as it has come to be recognised and applied in Australia. Their Honours said, at [24], that the doctrine of abuse of process is informed in part by similar considerations of finality and fairness, and that “[a]pplied to the assertion of rights or obligations, or to the raising of issues in successive proceedings, it overlaps with the doctrine of estoppel”. Their Honours stated at [25]-[26]:

25    Abuse of process, which may be invoked in areas in which estoppels also apply, is inherently broader and more flexible than estoppel. Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court’s procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. It can for that reason be available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel.

26    Accordingly, it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel. Similarly, it has been recognised that making such a claim or raising such an issue can constitute an abuse of process where the party seeking to make the claim or to raise the issue in the later proceeding was neither a party to that earlier proceeding, nor the privy of a party to that earlier proceeding, and therefore could not be precluded by an estoppel.

(Footnotes omitted.)

Consideration

117    It is convenient to commence with the respondents’ contentions in relation to the appeal to the Full Court. The respondents contend that the Full Court determined the issue of whether Swishette and Letore were involved in Clinica’s contraventions, by making a positive finding of fact that Swishette and Letore were not involved. Accordingly, the respondents submit, an issue estoppel arises. The respondents’ submissions may be summarised as follows:

(a)    The Court must determine whether the same question has been decided. That requires the Court to construe the decision of the Full Court, and the submissions of the ACCC on the appeal. The question before the Full Court was whether s 239 of the Australian Consumer Law, on its proper construction, authorised the making of orders in the form of paragraphs 9 and 10 of the 23 March 2016 orders. In its decision, the Full Court observed that “[t]he combined effect of s 239(1) and (2) is that s 239, in unqualified terms, only empowers the Court to make an order against the person who engaged, or was involved, in the contravening conduct”: at [7]. The Full Court then said at [7]: “Whilst neither Swishette nor Letore was involved in the contravening conduct of Clinica and Mr Laski, the primary judge held that Order 9 and Order 10 were consistent with this requirement.”

(b)    That finding of fact was consistent with an admission made by the ACCC at [40] of its appeal submissions (quoted at [72] above).

(c)    The admission made by the ACCC before the Full Court was consistent with the position advanced by the ACCC at first instance, albeit impliedly. Recovery of compensation for the non-party consumers was a principal motivation for the ACCC. That motivation was central to the ACCC’s investigation, and to its commencement and prosecution of these proceedings. The ACCC knew, from an early time in the proceeding, that the prospects of non-party consumers recovering compensation were tied to the ACCC’s ability to access the proceeds of sale from the Brighton Property. The ACCC knew also that the proceeds of sale from the Brighton Property were in the hands of Swishette and Letore.

(d)    If Swishette or Letore were involved in the contraventions of Clinica within the meaning of s 2 of the Australian Consumer Law, s 239, in terms, operated against Swishette and Letore. In such a case, it was wholly unnecessary for the ACCC to seek to extend the ambit of s 239. The necessity for orders in the form of paragraphs 9 and 10 of the 23 March 2016 orders arose from the decision by the ACCC not to allege that either Swishette or Letore was involved in the contraventions of Clinica.

(e)    The Full Court made a finding of fact based on an unqualified admission by the ACCC. It was open to the ACCC to defend the appeal on a demurrer basis. It did not do so. Instead, it elected to make an admission. Having made that admission, in a proceeding to which both Swishette and Letore were parties, it cannot now resile from it.

(f)    The decision of the Full Court was final. It was not interlocutory.

(g)    The parties to the Full Court proceeding were the same. It is relevant also that Mr Laski was cross-examined during the course of the earlier proceeding as a privy of Swishette and Letore. That is, he was cross-examined in his capacity as director of those two companies, notwithstanding that they were not then parties to the proceeding.

118    The respondents make the following further submissions in relation to [40] of the ACCC’s appeal submissions (quoted at [72] above). The respondents submit that the statement stands as an admission by the ACCC within the meaning of s 87 of the Evidence Act 1995 (Cth) as it was made by a person (the solicitors and counsel acting for the ACCC) with authority to make the statement: Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (2008) 167 FCR 314 at [18]. The respondents submit that Swishette and Letore were parties to the proceeding in which the admission was made and that the ACCC is bound by its admission and this proceeding is not maintainable because of it.

119    In my view, no issue estoppel arises from the judgment of the Full Court in Swishette. In order to determine whether an issue estoppel arises from the judgment of the Full Court it is necessary to consider what was, and was not, in issue before the Full Court. At the trial of the Clinica Proceeding, it had not been alleged that Swishette or Letore were persons “involved” in Clinica’s contraventions of the Australian Consumer Law. Accordingly, there was no finding at first instance in relation to this issue. It necessarily follows that the appeal did not involve any contested issue as to whether Swishette and Letore were involved in Clinica’s contraventions.

120    It is true that the Full Court (at [7] and [27]) stated that Swishette and Letore were not involved in Clinica’s contraventions (see [73] and [74] above). Those statements reflected the position that it had not been alleged that Swishette and Letore were involved in the contraventions. They did not represent the determination of a contested issue.

121    It is necessary to say something more about the context in which the Full Court made these statements. As explained above, the premise of Swishette and Letore’s submissions on the appeal was that Swishette and Letore had not contravened the Australian Consumer Law, nor were they persons “involved” in the contraventions by Clinica of the Australian Consumer Law. In these circumstances, it was contended, an order could not be made under s 239, in effect, against Swishette and Letore. The ACCC, in its appeal submissions, accepted that Swishette and Letore were not persons involved in Clinica’s contraventions of the Australian Consumer Law. The Full Court proceeded to consider the issue of whether paragraph 10 of the 23 March 2016 orders was beyond the scope of s 239 on this basis, concluding that the order was beyond the scope of the provision.

122    Although the Full Court stated that Swishette and Letore were not involved in Clinica’s contraventions, I do not think these statements constituted a necessary or essential part of its decision. The Full Court could equally have said, for example, that there was no allegation at trial, and no finding, that Swishette and Letore were persons involved in the contraventions. This would have provided a sufficient basis upon which to determine the question whether paragraph 10 of the 23 March 2016 orders, which affected Swishette and Letore, went beyond the scope of s 239.

123    For these reasons, I conclude that no issue estoppel arises from the judgment of the Full Court.

124    Further, I do not accept the proposition that [40] of the ACCC’s appeal submissions is an “admission” that binds the ACCC in the present proceeding or has the effect that this proceeding is not maintainable. The ACCC, by this submission, was merely accepting the premise of Swishette and Letore’s contentions on the appeal. For the same reasons, I do not consider it to be an abuse of process for the ACCC now to contend that Swishette and Letore were persons involved in Clinica’s contraventions.

125    I turn then to consider the respondents’ submissions in relation to the Clinica Proceeding at first instance. The respondents contend that it was unreasonable for the ACCC not to have made the claims it now makes against Swishette and Letore in the Clinica Proceeding, and that the ACCC is precluded from doing so now on the basis of Anshun estoppel or abuse of process. The respondents’ submissions can be summarised as follows:

(a)    From the time that the ACCC’s solicitors were instructed in December 2014, a key priority for the ACCC was to obtain relief for the non-party consumers. That question was not incidental or secondary to obtaining findings of liability against Clinica and Mr Laski: it was integral to the ACCC’s purpose.

(b)    From a very early time, and not later than April 2015, the ACCC knew that neither Clinica nor Mr Laski had sufficient assets to meet any non-party redress orders. The ACCC knew that Clinica was heavily indebted through its overdraft facility and had no real property assets. It knew that Mr Laski had no personal assets. Thus, by April 2015, the ACCC knew that, if it was to achieve practical compensation for the non-party consumers, it could do so only by identifying other sources of assets.

(c)    By not later than August 2015, the ACCC knew that there was a sufficient connection between Mr Laski and the Brighton Property to seek a freezing order for the proceeds of sale. Its purpose in seeking that freezing order was to secure the proceeds of sale and to make them available for potential distribution to non-party consumers. In doing so, the ACCC knew that the Brighton Property was owned by Swishette as trustee of the Trust. It knew that the proceeds were not the property of Mr Laski personally. It knew that to gain access to the proceeds, something more than merely freezing the assets was required. But the evidence of Ms Lloyd was that no advice was sought or given on that question until October 2015.

(d)    The freezing order application resulted in the ACCC coming into possession of financial documents of Clinica that identified that: Clinica obtained an overdraft in 2008; there was security given for the overdraft; and the security included a second registered mortgage from Swishette as trustee of the Trust.

(e)    Also by August 2015, the ACCC had the information necessary to link Letore and Clinica through the use of the Letore credit card, by reason of the credit card payments connected to the Magistrates’ Court proceeding. While it is true that the link was inferential, the inference was clear.

(f)    Thus, by not later than August 2015, the ACCC had in its possession sufficient information to have a proper basis to plead that Swishette and Letore were involved in Clinica’s contraventions. That information was crucial to the achievement of one of its key objectives – obtaining relief for the non-party consumers. Despite that, there is no evidence that any steps were taken to address this issue at that time.

(g)    By 2 September 2015, the ACCC had formed the view that Mr Laski treated the funds of his entities (including Swishette) as his own funds and did not distinguish between the funds of different entities.

(h)    It was frankly conceded by Ms Lloyd that, by 2 September 2015, the ACCC’s solicitors knew “a number of facts” that pointed to involvement by Swishette and Letore, and that the solicitors had a significant amount of information that showed that Swishette and Letore were being used by Mr Laski, or were involved in the conduct that Clinica was engaged in. Those facts, and that information, were known equally by the ACCC.

(i)    Despite that, it was not until shortly prior to 1 October 2015 that steps were taken to consider how to obtain access to the proceeds of sale. Those steps commenced with the email from Ms Heath of 29 September 2015.

(j)    That analysis and those discussions led to counsel being briefed to draw draft documents joining Swishette and Letore. Counsel did so, but on the limited basis that involvement was shown by receipt of monies. The draft pleading did not identify the Swishette guarantee, nor the link between Letore and Clinica. No evidence was given as to what documents or instructions counsel was briefed with. Shortly thereafter, the ACCC instructed its solicitors to provide advice on whether “receipt” was sufficient to establish involvement. There was no request about advice on the question of involvement more broadly, nor was such advice offered.

(k)    Ultimately, the advice about involvement constituted by receipt was not prepared. That was because the ACCC decided to proceed with an argument that s 239 was wide enough to fashion appropriate relief. It was frankly conceded by Mr Phillips that joining Swishette and Letore was an option available to the ACCC and an option discussed with the ACCC. Ultimately, the ACCC made a decision not to get advice on involvement and to limit its claim to “expansive orders” under s 239. The ACCC made a deliberate and conscious decision not to pursue a claim that Swishette and Letore were involved in the contraventions. No officer from the ACCC was called to explain that decision. There was no witness who could attest to the ACCC’s state of mind. The witnesses called could attest only to what was said to them. The Court should infer that the evidence that might have been called, such as from Ben Morawetz (an Assistant Director in the Enforcement Division of the ACCC), would not have assisted the ACCC.

(l)    In that context, it is unreasonable for the ACCC to now resile from its position. It elected, in the face of the information available to it, to advance a particular argument. It elected, in the face of documents clearly setting out the practical course to be followed, not to pursue joinder. It did so because it believed that it had a suitable remedy available to it. It would be unreasonable to now allow it to turn back because it made the wrong decision.

(m)    Even if the Court is against the respondents on this point, the ACCC had a second opportunity to seek leave to join Swishette and Letore, namely at the end of cross-examination of Mr Laski, if only on the deferred basis contemplated in the letter drafted by counsel. There is not one fact that the ACCC relies on in this proceeding that it did not have at the end of its cross-examination of Mr Laski.

126    The respondents submit that: the ACCC had available to it (before the trial of the Clinica Proceeding) substantially the whole of the facts now sought to be relied on in this proceeding; and aside from the evidence of Mr Phillips and Ms Lloyd and the emails from the ACCC in early October 2015 reporting on some analysis, there is no evidence as to what the ACCC did with those facts, what research it undertook, or what opinions it formed. The respondents make the following further submissions:

(a)    First, by at least 4 August 2015, being the date that the ACCC sought a freezing order against Swishette and Letore on the basis that each of them was associated with Mr Laski, the ACCC was on notice of the identity of Swishette and Letore and their relationship with Mr Laski.

(b)    Secondly, by the time the matter returned before the trial judge in the Clinica Proceeding on 9 September 2015, the ACCC: had formed the view that Mr Laski treated the funds of his entities (including Swishette) as his own funds and did not distinguish between funds of different entities; and/or knew there were alleged loans totalling $660,000 from Clinica to Swishette and Letore.

(c)    Thirdly, there is no evidence to support the assertion that the ACCC did not have the material for each of the facts upon which it now seeks to rely until shortly before the commencement of the trial of the Clinica Proceeding on 21 October 2015. Indeed, some of the material upon which it seeks to rely was in its possession by at least 18 August 2015. There is no evidence as to when Ms Lloyd commenced, or concluded, her analysis upon which the ACCC now seeks to rely. The facts that the ACCC relies upon to show knowledge, namely knowledge imputed from the common directorship of Mr Laski, was obvious from company searches.

(d)    Fourthly, the ACCC concedes that it had most of the material it now relies on in its possession prior to the commencement of trial. It did not make an application at that time to join Swishette or Letore. If it had, such an application would almost certainly have been granted, for the same reasons advanced by the ACCC in support of its application for what became paragraph 10 of the 23 March 2016 orders, namely that, without Swishette and Letore, any orders for compensation to non-party consumers may well have been ineffective. Any delay would have likely been minimal, and the position of the parties was preserved because of the freezing orders.

(e)    That the ACCC was in possession of the material described above is clear from its cross-examination of Mr Laski (in the Clinica Proceeding), which traversed the relationship between Clinica, Mr Laski and Swishette, and traversed the movement of funds. It was open to the ACCC to seek leave to re-open its case and join Swishette and Letore after it heard Mr Laski’s evidence in cross-examination. It did not do so. Nor did it do so when Swishette sought, and was granted, leave to be joined as a party to the original proceeding on the question of relief.

(f)    What the above makes clear is that, at the time of the Clinica Proceeding, the ACCC: was aware of the difficulties associated with obtaining relief that would attach to the proceeds of sale of the Brighton Property; knew the identity of Swishette and Letore; knew that Swishette and Letore held the bulk of the funds available to pay compensation to non-party consumers; and knew that Swishette and Letore were associated with Mr Laski.

(g)    The issue of access to the sale proceeds was so central to the relief sought by the ACCC that it was unreasonable for it not to have included the present claims in the Clinica Proceeding.

127    In support of the abuse of process contention, the respondents also submit, in summary, as follows:

(a)    The ACCC knew at all times the importance of obtaining non-party redress orders. It knew from an early time that the only prospect of achieving such a result was to obtain access to the Brighton Property sale proceeds. It knew that the Brighton Property was owned by Swishette as trustee of the Trust. Despite having that knowledge, and recognising the need to freeze the proceeds of sale, it took no steps until October 2015 to consider how it might achieve its aim.

(b)    The ACCC had in its possession the information necessary to found a proper basis for a claim of involvement against both Swishette and Letore. It did nothing with that information. It decided against receiving advice from its solicitors on the question. That decision was made without advice from Ms Lloyd. She did not know, but assumed, that it was because the ACCC had decided to pursue the s 239 avenue. Despite the importance of the issue, and its possession of the relevant information, the ACCC took no steps until October 2015, shortly before the trial commenced, to identify how to access the monies held by Swishette and Letore, or to consider whether they were involved in Clinica’s contraventions. No explanation has been provided for that failure.

(c)    Further, the ACCC at all times treated Mr Laski as the privy of Swishette and Letore. It formed the view, by early September 2015, that Mr Laski treated the monies of the various entities as his personal funds and that he directed them for his own use. It cross-examined him at the trial of the Clinica Proceeding in his capacity as director of Swishette and Letore, including as to the financial relationships between those entities. It viewed him as a privy for those companies and it treated him as such. It must have known that any later proceedings against Swishette and Letore would be intimately connected with his conduct as their sole director in the Relevant Period.

(d)    Finally, the evidence is that the ACCC made a conscious decision to not pursue a claim of involvement. It did so after counsel was instructed to, and did, draw pleadings. It declined to receive advice on the question of involvement before making its decision. This is not a case in which the issue was overlooked. It is a case in which the ACCC turned its mind to the issue, decided not to proceed with an application for joinder, and has declined to explain its reasons for doing so.

(e)    It is an abuse for the ACCC to now seek to litigate the issues in this proceeding in circumstances where: the issue was of central importance; the information was available to the ACCC; it appears that no steps were taken to consider the question until shortly before trial; draft pleadings were prepared, but not filed; the ACCC declined to take advice on the question; and the ACCC made a conscious decision not to pursue the claims.

128    I will deal separately with the positions of Letore and Swishette.

129    In relation to Letore, in my view it was not unreasonable for the ACCC not to include in the Clinica Proceeding a claim that Letore was involved in Clinica’s contraventions of the Australian Consumer Law. In particular, at the time of trial, the ACCC did not have a copy of the June 2015 Resolution. As noted above, the resolution was provided as an annexure to Mr Franzese’s affidavit, which was filed on 11 March 2016, that is, after judgment had been handed down in Clinica (No 2). It is an agreed fact in the present proceeding that this was the first time the ACCC received the resolution. Although there were references to loans to beneficiaries in the financial statements of the Trust, it was not clear at the time of the trial that the net income of the Trust for the financial year ended 30 June 2015 (which included the proceeds of sale of the Brighton Property) had been distributed to Letore, Ms Laski and Ms Hatch – see Swishette at [28]; see also Clinica (No 2) at [257], [296]. In circumstances where it was not clear that Letore had an interest in a portion of the funds held in the ACCC’s solicitors’ trust account, it was not unreasonable for the ACCC not to claim in the Clinica Proceeding that Letore was a person involved in Clinica’s contraventions.

130    As emphasised by the respondents in their submissions, one of the ACCC’s main objectives was obtaining redress for consumers. It saw the proceeds of sale of the Brighton Property as potentially providing a source of funds for the payment of refunds to the Clinica clients. Had the ACCC received a copy of the June 2015 Resolution before the trial of the Clinica Proceeding, it may well have taken a different approach and sought to join Letore, as the resolution would have shown a distribution of 70% of the net income of the Trust for the year ended 30 June 2015 (which included the proceeds of sale of the Brighton Property) to Letore. This tends to underline the point that, in circumstances where the ACCC did not have the resolution, it was not unreasonable not to include in the Clinica Proceeding a claim against Letore.

131    For these reasons, no Anshun estoppel arises in relation to the claim against Letore and the claim is not an abuse of process.

132    I consider the position in relation to Swishette to be less clear. On the one hand, Swishette was not a party to the Clinica Proceeding at the time of trial. (It became a party later, on 23 March 2016, but this was after the trial had been completed and the principal judgment had been handed down.) In these circumstances, it is difficult for Swishette to establish that it was unreasonable for the ACCC not to have claimed in the Clinica Proceeding that it was involved in Clinica’s contraventions. On the other hand, a central contested issue at the trial of the Clinica Proceeding concerned whether the funds held in the ACCC’s solicitors trust account (representing the proceeds of sale of the Brighton Property) should be made available for the payment of refunds to consumers. The ACCC is seeking similar relief in the present proceeding, albeit on a different basis.

133    Ultimately, the key to resolution of this issue is to focus on the test. It is necessary for the respondents to establish that it was unreasonable for the ACCC not to have included in the Clinica Proceeding a claim that Swishette was involved in Clinica’s contraventions of the Australian Consumer Law. I am not satisfied that it was unreasonable for the ACCC not to have done so. First, Swishette was not a party to the Clinica Proceeding at the time of trial. Secondly, while I accept that, by early October 2015, the ACCC had sufficient information to plead a case of involvement against Swishette (and Letore), that is not the same as saying that it was unreasonable of the ACCC not to do so. Thirdly, it appears from the draft court documents prepared by the ACCC’s counsel on 7 October 2015, and from the emails from counsel to solicitors and solicitors to the ACCC of the same date, that the basis upon which joinder was being considered was the receipt of funds by Letore and Swishette from Clinica. However, as indicated in those emails, there was uncertainty at that time as to whether this provided a solid basis upon which to claim involvement. Fourthly, I do not consider that a judgment in the ACCC’s favour in the present case would conflict with any judgment in the Clinica Proceeding, at first instance or on appeal. Those judgments did not involve a determination of whether Swishette and Letore were persons involved in Clinica’s contraventions. Fifthly, while the ACCC had available to it, by early October 2015, many of the facts that it now relies upon to support its involvement case, it did not have the additional facts in Mr Laski’s affidavit of 20 October 2015 or the evidence of Mr Laski given during cross-examination. It is true that, by the end of the trial, the ACCC had this additional information, but by that stage the trial had been concluded.

134    For these reasons, no Anshun estoppel arises in relation to the claim against Swishette and the claim is not an abuse of process.

135    The reasons set out at above in relation to Swishette apply also in relation to Letore, and provide additional reasons for my conclusion that it was not unreasonable for the ACCC not to claim in the Clinica Proceeding that Letore was involved in Clinica’s contraventions.

136    For the reasons set out above, the ACCC is not precluded from proceeding against Swishette and Letore in this proceeding.

Issue 2: If the ACCC is not precluded, were Swishette and Letore persons “involved” in Clinica’s contraventions?

Factual findings

137    I first set out factual findings relating to Clinica’s contraventions, and then set out factual findings relating to whether Swishette and Letore were persons “involved” in those contraventions. I have also included certain additional facts that are relevant to other issues in the proceeding.

Clinica’s contraventions

138    Clinica’s contraventions arose from representations made, and conduct engaged in, during the Relevant Period (ie, between about August 2012 and about July 2013) in relation to the provision of recruitment consulting services to persons who were in Australia on temporary visas, and who sought to obtain permanent residence (the clients).

139    Specifically, Clinica offered the Clinica Program, as described in [18] above.

140    Approximately 90 clients signed up to the Clinica Program, and in many cases executed a Regional Sponsorship Agreement. The clients paid the Fees (as defined in [19] above) by instalments.

141    During the Relevant Period, Clinica represented to clients and the public that:

(a)    by engaging Clinica, pursuant to the Clinica Program or otherwise, a person who did not have permanent residency status could obtain a job that would or could qualify them for permanent residency, or qualify them for permanent residency within nine months, under the 187 Visa Scheme;

(b)    by completing a Cleaning Course, a person who did not have permanent residency status could obtain a job that would or could qualify them for permanent residency, under the 187 Visa Scheme;

(c)    by working in a cleaning job pursuant to the Clinica Program, or alternatively by working in a cleaning job, a person who did not have permanent residency status would or could qualify for permanent residency, or qualify for permanent residency within nine months, under the 187 Visa Scheme;

(d)    Clinica had cleaning jobs, with sponsoring employers in regional areas, available for the clients that participated in the Clinica Program; and

(e)    at the conclusion by the clients of the Cleaning Course, Clinica would have cleaning jobs, with sponsoring employers in regional areas, available for the clients that participated in the Clinica Program and Clinica would place them in cleaning jobs,

(the Representations).

142    However, the Cleaning Course and cleaning work offered by Clinica could never have entitled its clients to apply for a Subclass 187 visa. Moreover, Clinica did not have any cleaning jobs available for clients with sponsoring employers in regional areas, and no clients who completed a Cleaning Course with Clinica were placed in cleaning jobs with sponsoring employers in regional areas.

143    Clinica should have known (and for at least part of the Relevant Period did know) that:

(a)    there would be no cleaning jobs, with sponsoring employers in regional areas, available for the clients that participated in the Clinica Program, at the conclusion of the Cleaning Course by the clients; and

(b)    the Clinica Program did not enable a person who did not have permanent residency status to qualify for permanent residency.

144    A substantial number of Clinica’s clients:

(a)    were at all material times foreign nationals;

(b)    were in Australia on a temporary visa;

(c)    needed to obtain permanent residency within a relatively short period of time to stay permanently in Australia, prior to the expiry of their temporary visa;

(d)    had at all material times little, if any, commercial experience and a limited ability to understand legal documents, facts which ought to have been obvious to Clinica;

(e)    as Clinica knew, had not received independent advice in relation to the Regional Sponsorship Agreement; and

(f)    by reason of the matters set out in paragraphs (a)-(e) above, had significantly weaker bargaining power than Clinica and were vulnerable in relation to Clinica.

145    During the Relevant Period, Clinica:

(a)    made the Representations, including by placing advertisements, making oral (and in some cases also written) statements, and entering into the Regional Sponsorship Agreements with the clients;

(b)    presented the Regional Sponsorship Agreements to clients as standard form contracts, without any opportunity for clients to negotiate the standard terms;

(c)    charged clients, received the Fees, and issued receipts;

(d)    imposed a condition on clients that Clinica would not continue to offer its services under the Regional Sponsorship Agreement (and would not provide a refund) if payments were not made when due;

(e)    imposed a condition on clients that, if the client cancelled his or her application, the client would have to pay a $5,000 cancellation fee;

(f)    arranged for clients who participated in the Clinica Program to undertake a Cleaning Course in circumstances where the occupation of cleaner would not and could not fulfil the criteria for the Direct Entry stream for a Subclass 187 visa;

(g)    did not find qualifying employers to sponsor the clients under the 187 Visa Scheme;

(h)    did not have any cleaning jobs, with sponsoring employers in regional areas, available for the clients that participated in the Clinica Program;

(i)    was unlikely to have cleaning jobs, with sponsoring employers in regional areas, available for the clients that participated in the Clinica Program, at the conclusion of the Cleaning Course by the clients;

(j)    provided no cleaning jobs to clients who participated in the Clinica Program;

(k)    where clients defaulted on payment of the Fees, made demands for payment of the Fees in respect of recruitment consultancy services; and

(l)    where clients defaulted on payment of the Fees, commenced, or threatened to commence, enforcement proceedings in the Magistrates’ Court of Victoria.

146    By its conduct, Clinica engaged in unconscionable conduct in contravention of s 21 of the Australian Consumer Law, engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law, engaged in misleading conduct in relation to employment in contravention of s 31 of the Australian Consumer Law, and made false representations in contravention of s 29 of the Australian Consumer Law. Mr Laski was knowingly concerned in Clinica’s contraventions. To the extent that the Representations related to future matters, Clinica did not have reasonable grounds for making the Representations.

Mr Laski, Ms Laski and Ms Hatch

147    Mr Laski:

(a)    was a director of Clinica from 1 December 2005 until 23 March 2016;

(b)    was the sole director of Clinica between 13 March 2013 and 23 March 2016;

(c)    was the sole company secretary of Clinica between 1 December 2005 and 23 March 2016;

(d)    was the sole director of Swishette between 30 January 2006 and 24 March 2016;

(e)    was the sole company secretary of Swishette between 30 January 2006 and 24 March 2016;

(f)    was the sole director of Letore between 4 April 2005 and 15 October 2015, and again from 25 October 2015 until 24 March 2016; and

(g)    was the sole company secretary of Letore between 4 April 2005 and 15 October 2015.

148    Ms Laski is the ex-wife of Mr Laski.

149    Ms Hatch is the cousin of Mr Laski. Since 24 March 2016, she has been the director and company secretary of Swishette.

Swishette, the Trust and the Brighton Property

150    At all times since 21 February 2006:

(a)    Swishette has been the trustee of the Trust; and

(b)    Swishette’s sole function has been to act as trustee of the Trust.

151    Pursuant to the terms of the trust deed of the Trust: Mr Laski and Ms Laski are primary beneficiaries; Letore, Mr Laski and Ms Laski are general beneficiaries; and Ms Hatch is a member of a class of general beneficiaries. The Trust may be described as a standard discretionary trust.

152    The Brighton Property was:

(a)    owned by Swishette, in its capacity as trustee of the Trust, at all times from 21 February 2006 until 8 September 2015; and

(b)    the residential home of Mr Laski at all times from at least 21 February 2006 until 8 September 2015.

153    The Brighton Property was the registered office of Clinica from February 2003 to April 2005, and its principal place of business from August 2002 to March 2005 and again from March 2006 onwards.

154    On 4 May 2015, Swishette entered into a contract of sale under which it agreed to sell the Brighton Property for a price of $1,925,000.

155    On 11 June 2015, Mr Laski as the sole director of Swishette held a meeting of directors of Swishette and made the June 2015 Resolution.

156    At settlement of the contract of sale, on 8 September 2015, the purchaser paid Swishette $1,728,678.04, of which:

(a)    $261,548.54 was paid to the CBA to discharge Swishette’s home loan, the first mortgage on the property;

(b)    $665,051.99 was paid to the CBA to discharge the second mortgage securing the Clinica Overdraft; and

(c)    the balance of $802,077.51 was paid into the ACCC’s solicitors’ trust account, pursuant to freezing orders made by the Court in the Clinica Proceeding.

157    It is an agreed fact (set out in the statement of agreed and disputed facts) that the net proceeds of sale of the Brighton Property were distributed by Swishette as trustee of the Trust as follows:

(a)    70% was distributed to Letore;

(b)    15% was distributed to Ms Laski;

(c)    15% was distributed to Ms Hatch.

158    A statement to the same effect appears in the notice to admit at [65], which paragraph is admitted by the respondents. More precisely, the position is that Swishette distributed the net income of the Trust for the financial year ended 30 June 2015 to Letore, Ms Laski and Ms Hatch in the above proportions, and the net income for that year included the net proceeds of sale of the Brighton Property (on the basis that the contract of sale was entered into during that financial year).

159    While the distributions have been made to Letore, Ms Laski and Ms Hatch, they have not received payment because the funds have been frozen.

160    In his affidavit, Mr Quayle sets out the accounting and taxation consequences of the sale of the Brighton Property. The taxable capital gain as shown in the Swishette accounts was $1,050,843.82.

161    Mr Quayle refers in his affidavit to the June 2015 Resolution. He states that, although the funds distributed have not been paid to the beneficiaries, the resolution remains effective, with “the consequence being that the totality of the Trust’s net taxable income for the year to 30 June 2015 is deemed to have been distributed pursuant to the Resolution and the Trust has no income tax liability for that period. As a result, each of the nominated beneficiaries has a vested and indefeasible interest in the funds and the distribution will be added to their other income for the year ended 30 June 2015.” I accept this evidence as to the tax treatment of the distribution.

162    Mr Quayle states in his affidavit that “[o]ther than the net proceeds from the sale of the [Brighton Property] on 8 September 2015, neither Swishette nor the Trust presently have any asset or income”. I accept this evidence, which was not challenged.

The Clinica Overdraft and securities

163    After Clinica started operating, it required an injection of working capital. Mr Laski approached the CBA to seek finance. As Clinica was a new business, the CBA required that any credit extended to Clinica be supported by security. Clinica did not own any property or have any assets to provide the security required by the CBA. The only available security was through Swishette and Letore.

164    On or about 28 March 2008, Clinica obtained the Clinica Overdraft, being a $660,000 overdraft facility, from the CBA, secured by:

(a)    a guarantee limited to $660,000 on behalf of Mr Laski;

(b)    an unlimited guarantee on behalf of Swishette;

(c)    a guarantee limited to $660,000 on behalf of Letore; and

(d)    a second mortgage by Swishette over the Brighton Property.

165    Mr Laski caused Swishette and Letore to provide the securities for the Clinica Overdraft.

166    With the assistance of Swishette and Letore, Clinica was granted the Clinica Overdraft.

167    The Clinica Overdraft continued to be provided until September 2015, including during the Relevant Period.

168    On 21 April 2008, the agreement for the Clinica Overdraft was varied so as to refer expressly to Swishette’s capacity as trustee of the Trust.

169    The guarantees of Swishette and Letore and the second mortgage by Swishette continued, including during the Relevant Period, until they were discharged upon the settlement of the sale of the Brighton Property on 8 September 2015, when the Clinica Overdraft was repaid in full from the proceeds of the sale.

170    The Clinica Overdraft was the only bank account that Clinica used for the Clinica Program.

171    During the Relevant Period, the funds from the Clinica Overdraft were used to pay Clinica’s operating expenses, and for establishing, promoting and operating the Clinica Program. The expenses included:

(a)    wages and contractor expenses, such as payments to:

(i)    George Stamatakos, who provided business development and marketing assistance to Clinica;

(ii)    Irene Munk, the secretary employed by Clinica; and

(iii)    John Embling, who worked for Clinica for about four months;

(b)    rent for Clinica’s office in Box Hill;

(c)    utilities and phone expenses;

(d)    start-up costs such as the acquisition of computers;

(e)    the purchase of two vehicles for use in the Clinica business; and

(f)    the making of loans to other companies (primarily Letore and Swishette, as well as other companies associated with Mr Laski, being Equitale Pty Ltd and Global Echo Learning Pty Ltd).

172    Clinica needed money to function, so it needed an overdraft. Swishette had an asset with considerable equity. Letore was a company that traded and undertook subdivisions and developments.

Mr Laski’s role and knowledge

173    Mr Laski was at all material times the managing director and controlling mind of Clinica. He ran Clinica for his own purposes and in the way he saw fit. There was no person other than Mr Laski who had any material contribution into the way Clinica operated and the schemes or ventures it undertook. Mr Laski was almost entirely responsible for Clinica’s conduct and he supervised and authorised the conduct of Mr Stamatakos on behalf of Clinica.

174    Mr Laski knew of all the circumstances that gave the conduct of Clinica its misleading and unconscionable characteristics, because it was he who was attempting to see how cleaning jobs might be sourced, and it was he who decided whether or not to secure migration advice.

175    Mr Laski was told in September 2012 that the migration agent he had consulted thought Clinica’s scheme would not work.

Clinica’s income

176    In the financial year ended 30 June 2013, Clinica received $742,818, with a profit of $183,006 (which represents a 25% profit margin). All, or almost all, of Clinica’s income in the 2013 financial year was derived from the Clinica Program.

Payments by and to Letore

177    A credit card held by Letore, issued by the ANZ Bank, was used by Clinica for funding certain activities undertaken by Clinica in connection with the Clinica Program, including: to pay fees on behalf of clients under the Clinica Program for online applications to the Department of Immigration and Citizenship; and to pay Magistrates’ Court filing fees to commence proceedings against clients who had signed up for the Clinica Program but had defaulted on payment of fees in respect of recruitment consultancy services.

178    For example, Letore’s ANZ credit card was used:

(a)    to make payments of $3,105.00 on 28 June 2012 and $1,540.00 on 19 July 2012 on behalf of clients for online applications to the Department of Immigration and Citizenship; and

(b)    to make payments of $875.90 on 13 December 2012, $672.90 on 8 March 2013, $1,067.60 on 5 April 2013, $624.00 on 8 August 2013 and $273.50 on 7 March 2014 in relation to Magistrates’ Court filing fees.

179    A cheque account held by Letore with the CBA received payment of $5,000.00 on 4 July 2012 from Vinay Bendadi, a client of Clinica in the Clinica Program who undertook the Cleaning Course between 22 October 2012 and 19 November 2012.

Pooling of funds and transfers of money

180    In practice, Clinica, Swishette and Letore paid money to each other – characterised in the accounts as loans – due to cash flow situations.

181    Mr Laski directed the transfer of funds between corporate entities controlled by him, including Clinica, Swishette and Letore, and thereby managed his personal financial expenditure and commitments without a bank account in his own name.

182    The financial statements of the Trust for the financial year ended 30 June 2013 showed a loan of $340,792 from Clinica as at 30 June 2013, which had increased from $260,584 as at 30 June 2012.

183    The financial statements of Clinica for the financial year ended 30 June 2013 showed a loan of $317,388 to Letore as at 30 June 2013, which had increased from $219,858 as at 30 June 2012, and a loan of $340,792 to the Trust as at 30 June 2013, which had increased from $260,584 as at 30 June 2012.

184    There were numerous instances where funds paid by Clinica clients into the Clinica bank account were on-paid to Letore and/or Swishette.

185    Mr Laski routinely followed a pattern of payments between accounts, whereby:

(a)    Mr Laski withdrew an amount from the Clinica bank account.

(b)    On the same day or shortly after, Mr Laski deposited the same or a similar amount into the Letore bank account.

(c)    Within the next few days or weeks (and sometimes on the same day), Mr Laski withdrew an amount from the Letore bank account (which may have been smaller than the amount initially deposited) and deposited it into the Swishette cheque account.

(d)    Later that month, Mr Laski withdrew an amount from the Swishette cheque account and deposited it into the Swishette home loan account for payment of the mortgage on the Brighton Property.

Applicable principles

186    The ACCC contends that Swishette and Letore were “involved” in the contraventions by Clinica on the basis that they were directly or indirectly knowingly concerned in, or party to, Clinica’s contraventions (see paragraph (c) of the definition of “involved” in s 2(1) of the Australian Consumer Law).

187    It is established that, for a person to be knowingly concerned in a contravention, the person must have knowledge of the essential facts constituting the contravention: Yorke v Lucas (1985) 158 CLR 661 at 670; Australian Securities and Investments Commission v ActiveSuper Pty Ltd (in liq) (2015) 235 FCR 181 (ActiveSuper) at [398]-[399] per White J.

188    In addition, for a person to be directly or indirectly knowingly concerned in, or party to, a contravention, there needs to be a practical connection between the alleged accessory and the contravention. This point was made in a number of cases cited by White J in ActiveSuper at [407]-[410]:

407    As noted, being knowingly concerned requires that the person participate intentionally in the contravention, with knowledge of the essential elements constituting the contravention. In Trade Practices Commission v Australian Meat Holdings Pty Ltd (1988) 83 ALR 299 Wilcox J at 357 quoted with approval the following passage from the judgment of the Full Court of the Supreme Court of Western Australia in Ashbury v Reid [1961] WAR 49:

The question which a Court should ask itself in determining whether an act or omission on the part of an individual comes within the terms of s 54 is whether on the facts it can reasonably be said that the act or omission shown to have been done or neglected to be done by the defendant does in truth implicate or involve him in the offence, whether it does show a practical connection between him and the offence.

408    This statement in Ashbury v Reid was approved in R v Nifadopoulos (1988) 36 A Crim R 137 at 140 (Kirby ACJ with Maxwell and Carruthers JJ agreeing):

[Ashbury v Reid] correctly establishes the meaning of the expression “knowingly concerned in” and is wholly in accordance with the common law that a person cannot become criminally involved in an act made unlawful by mere knowledge or inaction on his part — some act or conduct on his part is necessary.

409     In R v Tannous (1987) 10 NSWLR 303, a drug importation case, Lee J said (at 308):

The “concern” to which the section speaks is not a concern personal to the appellant in the sense of being in his mind, but it is a concern which can be demonstrated objectively by reference to his association, whatever it may be, with the importation.

410    In Emwest Products Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2002] FCA 61; (2002) 117 FCR 588 at [34], Kenny J spoke of the expression “concerned in” requiring conduct, by act or omission, which implicates or involves the alleged accessory in the offence or shows a practical connection between the alleged accessory and the offence.

189    In Sent v Jet Corporation of Australia Pty Ltd (1984) 2 FCR 201, Smithers J (with whom Sweeney J agreed) referred, at 208, to the decision of the Full Court of the Federal Court in Yorke v Lucas (1983) 49 ALR 672 and said:

As was said in Yorke’s case at 681 adopting the decision of Pennycuick V.-C. in Re Maidstone Buildings Provisions Ltd [1971] 1 W.L.R. 1085 the expression “party to” in s. 332(1) of the Companies Act 1948 (Eng.) “must on its natural meaning indicate no more than ‘participates in’, ‘takes part in’ or ‘concurs in’. And that, it seems to me, involves some positive step of some nature. I do not think it can be said that someone is a party to carrying on a business if he takes no positive steps at all”.

Consideration

190    In the present case, it is conceded that Letore was, by reason of the use of its credit card, a person involved in Clinica’s contraventions of the Australian Consumer Law. That concession is properly made. The facts and circumstances set out above demonstrate that Letore funded activities of Clinica that formed part of the contraventions of the Australian Consumer Law that were the subject of the declarations made on 23 March 2016 in the Clinica Proceeding. In these circumstances, there was a sufficient practical connection between Letore and the contravening conduct. Further, as noted above, Letore accepts that Mr Laski’s knowledge is to be imputed to Letore. It follows that Letore had knowledge of the essential facts constituting the contraventions. For these reasons, I accept that Letore was knowingly concerned in, or party to, Clinica’s contraventions of the Australian Consumer Law.

191    In relation to Swishette, the ACCC contends that there is a practical connection between Swishette and Clinica’s contraventions. In support of this contention, the ACCC relies on the matters identified in [13] of its amended concise statement, the substance of which is set out in [20] above. The second of these matters relates only to Letore and can be put to one side for present purposes. The remaining four matters, insofar as they relate to Swishette, are, in summary, as follows:

(a)    Swishette provided, or continued to provide, a guarantee and a mortgage to secure a $660,000 business line of credit advanced by the CBA to Clinica, which funds were used for establishing, promoting and operating the Clinica Program;

(b)    Swishette benefited from the Fees, as the moneys of Clinica, Swishette and Letore were mixed and used as a pool of funds by Mr Laski;

(c)    Swishette directly or indirectly received some of the Fees; and

(d)    Swishette knew, by virtue of Mr Laski’s common directorship of each of Clinica and Swishette, the essential facts constituting Clinica’s contraventions.

192    The fourth of these matters relates to knowledge rather than practical connection. Swishette accepts that the knowledge of Mr Laski in the Relevant Period is to be imputed to Swishette. Thus it may be accepted that Swishette had knowledge of the essential facts constituting Clinica’s contraventions.

193    In relation to the first matter relied upon by the ACCC, it is established that in March 2008 Swishette provided a guarantee and second mortgage in support of the obligations of Clinica under the Clinica Overdraft. The Clinica Overdraft and these securities remained in place during the Relevant Period.

194    In relation to this matter, Swishette submits as follows:

(a)    At the time Swishette provided the guarantee and second mortgage, it could not have had knowledge of the essential elements constituting the contraventions because the contraventions had not yet occurred; they were still several years in the future. There is no allegation, and no finding, that the common director, Mr Laski, had in 2008 formed an intention to carry out the contravening conduct, nor that, if he had any such intention, the guarantee and mortgage were given to further that intention.

(b)    By reason of the temporal distance between the guarantee and second mortgage and the contravening conduct, it could not be said that what Swishette agreed to do became associated with the conduct constituting the contraventions.

(c)    The part played by Swishette must be played before or during the contraventions: Lam v R (1990) 46 A Crim R 402 at 404. The reference in Lam to “before” must be read to mean “after the contravention is contemplated but before it occurs”.

(d)    Here, at the relevant time (when the mortgage was granted), there was no practical connection because there was no contravening conduct to which the granting of security could attach. At best, it can be said that Swishette stood by while the contravening conduct occurred and that is not to be involved: Lam at 404. Swishette did not “engage in some act or conduct”: see Leighton Contractors Pty Ltd v Construction, Forestry, Mining and Energy Union (2006) 154 IR 228 at [25].

195    In my view, the first matter relied upon by the ACCC does constitute a practical connection between Swishette and the contravening conduct sufficient to support a finding that Swishette was knowingly concerned in, or party to, the contraventions. Although the guarantee and mortgage were provided in March 2008, well before the contravening conduct took place, the securities continued to be provided throughout the Relevant Period. In circumstances where the securities were provided upon the establishment of the Clinica Overdraft, it may be inferred that these were required by the bank as a condition of providing the overdraft. Further, it may be inferred that the continued provision of the guarantee and the mortgage were required by the bank. As set out above, the Clinica Overdraft was the only bank account that Clinica used for the Clinica Program, and the funds from the Clinica Overdraft were used to pay Clinica’s operating expenses and for establishing, promoting and operating the Clinica Program. It may be inferred that Clinica needed the overdraft in order to carry on its operations, including the contravening conduct. In these circumstances, I consider there to be a sufficient practical connection between Swishette’s conduct (ie, continued provision of the guarantee and the mortgage as security for the Clinica Overdraft during the Relevant Period) and Clinica’s contraventions of the Australian Consumer Law.

196    There is some overlap between the second and third matters relied upon by the ACCC, as set out in [191] above. The second matter is that Swishette benefited from the Fees, as the moneys of Clinica, Swishette and Letore were mixed and used as a pool of funds by Mr Laski. The third matter is that Swishette directly or indirectly received some of the Fees. I am not satisfied that either of these matters establishes a sufficient practical connection between Swishette and the contravening conduct. The evidence does not establish, for example, that Swishette’s conduct (in respect of the second and third matters) promoted or facilitated Clinica’s contraventions. The facts relating to the pooling of funds and transfers of money (see [181]-[185] above) do not go so far as to establish that Swishette funded Clinica’s operations: cf R v Tannous (1987) 10 NSWLR 303 at 308.

197    Nevertheless, on the basis of the first matter relied upon by the ACCC, I am satisfied that there was a sufficient practical connection between Swishette and the contravening conduct. Given that knowledge is accepted, I conclude that Swishette was knowingly concerned in, or party to, Clinica’s contraventions of the Australian Consumer Law.

198    It is appropriate for a declaration to be made to the effect that each of Swishette and Letore was knowingly concerned in, or party to, the contraventions by Clinica of ss 18, 21, 29(1)(g) and 31 of the Australian Consumer Law referred to in paragraphs 1 and 2 of the orders of the Court made on 23 March 2016 in the Clinica Proceeding.

Issue 3: If issues 1 and 2 are answered in the ACCC’s favour, should a ‘consumer redress’ order be made under s 239 of the Australian Consumer Law? Further, does Swishette have a right of indemnity or exoneration?

199    The ACCC seeks a ‘consumer redress’ order to the effect that Swishette and Letore, jointly and severally, pay to clients of Clinica amounts equal to the amounts paid by those clients that were paid under, referable to, or otherwise used in relation to the Clinica Program, the Regional Sponsorship Agreements and/or the Cleaning Course (as those terms are defined in the ACCC’s amended concise statement), together with interest calculated from the time when the clients made the payments at the rate set out in s 2 of the Penalty Interest Rates Act. The ACCC also proposes a series of further orders, the effect of which would be to make the funds in the ACCC’s solicitors’ trust account available to fund the payments to the clients of Clinica. The ACCC relies on s 239 of the Australian Consumer Law (set out at [16] above) in seeking these orders.

200    These orders are similar to the consumer redress orders made against Clinica and Mr Laski in the 23 March 2016 orders in the Clinica Proceeding. Paragraph 9 of those orders (which provided for Clinica and Mr Laski to make refunds to clients of Clinica) was not the subject of appeal to the Full Court. Nor was it the subject of contest at the trial of the Clinica Proceeding. I note that, while paragraph 9 of the 23 March 2016 orders required Clinica and Mr Laski to “refund” amounts paid by clients of Clinica, the language of “refund” is inapposite where the payment is to be made by a person other than the initial recipient of the money (Clinica). For this reason, the order now sought by the ACCC would require Swishette and Letore to pay to clients of Clinica “amounts equal to” the relevant amounts paid by those clients.

201    In circumstances where (as I have concluded above) Swishette and Letore were “involved” in Clinica’s contraventions of the Australian Consumer Law, there is power under s 239 of the Australian Consumer Law to make consumer redress orders against them: s 239(2)(a).

202    However, the making of an order under s 239(1) is discretionary (the provision uses the word “may”) and it may not be appropriate to make such an order against a person if it is clear on the evidence that the person has no funds to make the payments. As noted above, other than the net proceeds of sale of the Brighton Property, neither Swishette nor the Trust has any assets or income. And the net proceeds of sale have been distributed to three of the beneficiaries – Letore, Ms Laski and Ms Hatch – as part of the distribution of the net income of the Trust for the year ended 30 June 2015. In these circumstances, subject to any right of indemnity or exoneration against the trust assets or the beneficiaries, Swishette has no funds to make payments to clients of Clinica. As I consider this to be relevant to the question whether to make a consumer redress order against Swishette, I will defer further consideration of whether to make a consumer redress order against Swishette until after considering the right of indemnity or exoneration issue. It is convenient also to defer consideration of whether to make a consumer redress order against Letore.

203    The relevant facts are set out above, in the “factual findings” sections under issues 1 and 2 above.

Applicable principles

204    A trustee has a right to resort to and apply trust funds for the discharge of liabilities incurred in the authorised conduct of the trust: Heydon JD and Leeming MJ, Jacobs’ Law of Trusts in Australia (8th ed, LexisNexis Butterworths, 2016) (Jacobs), [21-04]. However, as explained by the learned authors in that paragraph:

The trustee does not always have a right of indemnity. … [T]he question of authorisation is crucial. If the trustee’s activities were not authorised by the trust instrument, prima facie no right of indemnity can arise; if they were, prima facie a right of indemnity does arise. However, even where the trust instrument does not authorise the activities, the right to indemnity may be exercised against the trust assets if all cestuis que trust, being unanimous, sui juris and together absolutely entitled, in fact authorise the trustee to conduct those activities, and where some only of the cestuis que trust so authorise them the right to an indemnity subsists against the shares of those cestuis que trust.

(Footnotes omitted.)

205    Further, as explained in Jacobs at [21-05], a sole beneficiary who is sui juris is personally bound to indemnify a trustee for liabilities properly incurred; the obligation of the beneficiary rests upon the principle that the cestui que trust who gets all the benefit of the property should bear its burden: Hardoon v Belilios [1901] AC 118. In the same paragraph of Jacobs, the view is expressed that there is no right of personal indemnity from the objects of a standard discretionary trust.

206    The scope of the indemnity, at general law and under statute, is confined to expenses that are properly or reasonably incurred: Jacobs, [21-07]; Ford HAJ and Lee WA (eds), Principles of the Law of Trusts (Thomson Reuters, subscription service), [14.110], [14.3030]. The principles applicable to these requirements were discussed by Brooking J in RWG Management Ltd v Commissioner for Corporate Affairs [1985] VR 385, by the Full Court of this Court in Adsett v Berlouis (1992) 37 FCR 201, and by Ormiston JA (with whom Batt and Vincent JJA agreed) in Nolan v Collie (2003) 7 VR 287. In the latter case, Ormiston JA, at [51], favoured the “simple proposition” of Lindley LJ in In re Beddoe [1893] 1 Ch 547 to the effect that the words “properly incurred” are equivalent to the words “not improperly incurred”, a proposition (in the words of Ormiston JA) “so abundantly obvious that it tends to obscure some of the complications which have been overlooked from time to time”. Ormiston JA continued:

In my opinion the use of the negative is intended to show that what is “proper” and “improper” must be answered by reference to the circumstances and in particular by reference to the duty with which a trustee was obliged to comply or the power which a trustee is intending to exercise. The content of trustees’ duties vary considerably, as do the obligations taken on when a power is exercised. A significant number of trustees’ duties requires strict compliance so that failure to comply with that duty will necessarily lead to the conclusion that a particular cost, expense or liability has not been properly incurred. On the other hand, the more day to day functions of a trustee in the management of a trust require only that the trustee “exercise the same care as an ordinary, prudent person of business would exercise in the conduct of that business were it his or her own”: per Gummow J in Breen v Williams [(1996) 186 CLR 71 at 137].

See also the discussion in Nolan v Collie at [52]-[53].

207    In Australian Securities and Investments Commission v Letten (No 17) (2011) 286 ALR 346, Gordon J discussed the principles concerning a trustee’s right of indemnity or exoneration at [12]-[18]:

12    A trustee must be diligent in discharging its duties and obligations and, in doing so, must give careful consideration to the exercise of discretions under the trust deed and refrain from doing anything beyond the terms of the trust deed and relevant statutory or other legal or equitable obligation: Grossman v E Katz Manufacturing Jewellers (ACT) Pty Ltd (2004) 213 ALR 373; 52 ACSR 198; [2004] NSWSC 1224 at [4] and Bruton Holdings Pty Ltd (in liq) v Federal Commissioner of Taxation (2011) 193 FCR 442; [2011] FCAFC 79 at [21]. As a result, a trustee is personally liable for liabilities incurred in the discharge of the trust but is entitled to be indemnified against those liabilities from trust assets: Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 at 367–8; 27 ALR 129 at 134–5; 4 ACLR 575 at 580–1.

13    As Austin J said in Trim Perfect Australia v Albrook Constructions [2006] NSWSC 153 at [20]:

(1)    A trustee is personally liable for the debts it incurs as trustee, notwithstanding any such provision as cl 16 of the present trust instrument purporting to relieve it of that liability: Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319; [1946] ALR 50; Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 at 367; 27 ALR 129 at 134; 4 ACLR 575 at 580.

(2)    Where a trustee incurs expenses or becomes subject to liability in the course of performing the duties of the trust, it has a right of indemnity out of assets of the trust in respect of those expenses or that liability, the right of indemnity taking the form of a right of recoupment of expenditure made by the trustee and a right of exoneration from the liability to make expenditure which has not yet been expended: Octavo Investments at CLR 367; ALR 134; ACLR 580; Chief Commissioner of Stamp Duties for New South Wales v Buckle (1998) 192 CLR 226; 151 ALR 1; [1998] HCA 4 at [44]–[47].

(3)    The right of indemnity, recoupment and exoneration is supported by security in favour of the trustee over the trust assets in the form of an equitable lien (sometimes referred to as an equitable charge, though it arises as a matter of law rather than by agreement inter parties): Octavo Investments at CLR 367; ALR 134; ACLR 580; Buckle at [44]–[47].

(4)    The trustee’s equitable lien confers on it a proprietary interest in the trust property, which can be asserted in priority to the claims of the cestuis que trust: Octavo Investments at CLR 370; ALR 137; ACLR 582.

(5)    The trustee’s proprietary interest is enforceable by judicial sale or the appointment of a receiver, and ancillary orders such as an order to recover possession of trust property to permit these primary remedies to take effect, but foreclosure is not available: Tennant v Trenchard (1869) LR 4 Eq 537; Seton’s Judgments and Orders, 7th ed, 1912, vol 3 pp 2220 to 2225; see also Ashburner’s Principles of Equity, 2nd ed, 1983, p 248; E L Sykes and S Walker, The Law of Securities, 5th ed, 1993, p 198; Fisher and Lightwood’s Law of Mortgages, Australian ed, 1995 by E L G Tyler, P W Young and C W Croft, p 44; ANZ Banking Group Ltd v Intagro Projects Pty Ltd [2004] NSWSC 1054 at [14].

(6)    The trustee’s proprietary interest may only be enforced by judicial sale or the appointment of a receiver (and ancillary orders) and not merely by sale without curial intervention: The Melbourne Tramways Trust v The Melbourne Tramway and Omnibus Co Ltd (1887) 13 VLR 487 at 490; Re Pumfrey (dec’d); The Worcester City and County Banking Co Ltd v Blick (1883) 22 ChD 255 at 265; Re Stucley; Stucley v Kekewich [1905] 1 ChD 67; Davies v Littlejohn (1923) 34 CLR 174 at 184; Hewett v Court (1983) 149 CLR 639 at 663; 46 ALR 87 at 104.

(7)    The right of indemnity accrues at the time the obligation is incurred, although it may subsequently become either a right of recoupment or a right of exoneration, depending on how the trustee responds: Xebec Pty Ltd (in liq) v Enthe Pty Ltd (1987) 18 ATR 893; Southern Wine Corporation (in liq) v Frankland River Olive Co Ltd [2005] WASCA 236 at [30].

(8)    Loss of office by the trustee (whether by retirement or removal) does not deprive the trustee of an accrued right of indemnity, recoupment or exoneration: Coates v McInerney (1992) 7 WAR 537; 6 ACSR 748; Xebec v Enthe [at 898]; Southern Wines at [30].

See also JA Pty Ltd v Jonco Holdings Pty Ltd (2000) 33 ACSR 691; [2000] NSWSC 147 at [50].

14    The trustee’s right of indemnity against trust assets, however, is qualified. In general terms, it depends on whether the trustee has strictly adhered to the terms of its mandate. So, for example, the indemnity is not available if the activity which generated the liability involved a breach of trust or a breach of a duty by the trustee, was beyond the powers given to the trustee or was criminal or fraudulent in nature: Gatsios Holdings Pty Ltd v Kritharas Holdings Pty Ltd (in liq) (2002) ATPR 41-864; [2002] NSWCA 29 (Gatsios). The indemnity is also not available where the liability is “unreasonable or unnecessary” and therefore is not “properly incurred”: O’Keeffe v Hayes Knight GTO Pty Ltd (2005) 218 ALR 604; [2005] FCA 389 at [14] and Nolan v Collie (2003) 7 VR 287; [2003] VSCA 39 at [51] and [53] (Nolan).

15    Although those principles appear relatively straightforward, the scope and nature of a trustee’s right of indemnity has been the subject of judicial comment and academic debate: see, for example, Nolan v Collie [2004] HCA Trans 22 and Aitken L, “A liability ‘properly incurred’? — The trustee’s right to indemnity, and exemption from liability for breach of trust” (2011) 35 Australian Bar Review 53 at 54. At the core of the debate is identifying when a trustee’s liability has been “properly incurred”. As has been noted on more than one occasion, the word “properly” or “improperly” is less than helpful: see, for example, Gatsios at [8]. The negative test is the relevant test; that is to allow indemnification for what has not been shown to have been improperly incurred: Nolan at [51] and [53] citing Lindley LJ in Re Beddoe [1893] 1 Ch 547.

16    To determine what is “improperly incurred” it is necessary to consider whether the conduct of the trustee was (Nolan at [53]):

(1)    done in bad faith;

(2)    outside the relevant power (that is, outside the terms of the trust deed); and/or

(3)    exercised with an absence of the care and diligence that a person of ordinary prudence should exercise. If it concerns the management of trust property, the equitable standard applies: Speight v Gaunt (1883) 9 App Cas 1; 48 JP 84. If it concerns investment of trust property, the statutory standard applies, namely the duties under the relevant provisions of the Trustee Act of each state and territory.

17    Of course, not all breaches of duty result in a trustee losing the right of indemnity. Duties that require strict adherence, if breached, will result in loss of the right of indemnity: Nolan at [51]. In Nolan, the following examples were given at [52]:

(1)    duty to keep and render accounts;

(2)    the duty not to allow a conflict between duty and interest;

(3)    the duty not to obtain an unauthorised benefit from the trust; and

(4)    the duty to adhere and carry out the terms of the trust deed.

The list is, of course, not exhaustive. On the other hand, duties that concern the day to day management of the trust, if breached, will not result in a loss of the right of indemnity: Nolan at [51].

18    At a practical level, a breach of certain “core” duties will as a matter of course result in a loss of the right of indemnity. For all other breaches, the answer will depend on the terms of the trust deed and whether that breach was in bad faith, outside the relevant power and exercised with an absence of care and diligence that a person [of] ordinary prudence should exercise.

(Emphasis added.)

See also Gatsios Holdings v Kritharas Holdings (in liq) [2002] ATPR 41-864 (Gatsios) at [14]-[16], [19] per Spigelman CJ, [42] per Mason P, [47] per Meagher JA, a case concerning whether a trustee of a trading trust was entitled to be indemnified in respect of an order that it pay damages for a contravention of s 52 of the Trade Practices Act 1974 (Cth).

Consideration

208    The ACCC contends that Swishette has a right of exoneration and/or indemnity, as trustee of the Trust, out of any part of the trust fund that it retains and/or against the three beneficiaries to whom distributions were made. The ACCC’s submissions may be summarised as follows:

(a)    The right of exoneration and/or indemnity extends to any liability incurred by the trustee in the course of administering the Trust. The right is available in equity, under statute (relevantly, s 36(2) of the Trustee Act 1958 (Vic)) and under the trust deed of the Trust.

(b)    The trust deed of the Trust does not exclude or limit the trustee’s right of exoneration and/or indemnity. The trust deed relevantly provides that the trustee shall not be responsible for any loss or damage occasioned by the exercise of any discretion or power conferred on the trustee (clause 17).

(c)    Swishette’s right of exoneration and/or indemnity, whether under statute, equity or the trust deed, which is secured by an equitable lien, takes priority over any distributions to beneficiaries.

(d)    There is authority that a trustee that has contravened the Australian Consumer Law has a right of indemnity in respect of the trustee’s liability under the Australian Consumer Law: Gatsios. In that case, the Court accepted the submission that damages under the consumer protection provisions of the Trade Practices Act should be equated with damages for common law torts, in respect of which a trustee’s right of indemnification extends: see Gatsios at [46] per Meagher JA; Spigelman CJ and Mason P agreeing at [1], [36] respectively. Consumer redress liability under s 239 of the Australian Consumer Law ought be treated in the same way.

(e)    Meagher JA, who wrote the leading judgment in Gatsios, stated in obiter that, if the activity that generated the liability in question were a breach of trust, or fraudulent or criminal in nature, indemnity under the general law would no longer exist: at [47]. None of these applies to the liability of Swishette. It is not alleged that it engaged in fraudulent or criminal conduct. The acts that it carried out (and which found its involvement in Clinica’s contraventions) were not in breach of trust. The trust deed specifically authorised Swishette to carry on business, to grant security, to give guarantees, to make investments, and to make and receive payments: clause 7. Indeed, Swishette’s acts benefited a primary beneficiary, Mr Laski, and a general beneficiary, Letore, because they enabled Clinica to operate, and Mr Laski and Letore benefited from Clinica’s profitable operations.

(f)    Swishette’s right of indemnity would be either against the trust fund (to the extent there has not been a distribution) or against the beneficiaries – Letore, Ms Hatch and Ms Laski – personally, under the principle in Hardoon v Belilios [1901] AC 118 (see also JW Broomhead (Vic) Pty Ltd (in liq) v JW Broomhead Pty Ltd [1985] VR 891) that a trustee’s right of indemnity extends beyond the trust property and is enforceable in equity against a beneficiary who is sui juris.

(g)    Although it is not involved in the trust relationship, the ACCC has standing to seek declaratory relief in relation to Swishette’s right of indemnity, as there is a justiciable controversy, and a matter, in relation to this issue: CGU Insurance Ltd v Blakeley (2016) 259 CLR 339.

(h)    In relation to the submission made by Swishette and Letore that the s 239 orders sought by the ACCC would almost certainly cause a difficulty with the operation of the winding up provisions in the Corporations Act, there is no such difficulty. As the liability of Swishette is covered by the right of indemnity, the Clinica clients (in whose favour the s 239 relief would be directed) would be unsecured creditors that are subrogated to Swishette’s right of indemnity and to Swishette’s first-ranking charge or lien over the trust assets. Any other unsecured creditors who are subrogated to Swishette’s right of indemnity and to Swishette’s first-ranking charge or lien over the trust assets would have a commensurate entitlement, and in a liquidation, if there are insufficient trust assets to satisfy all such trust liabilities, those creditors would share in the trust assets pari passu. If there are any secured creditors, the general rules on priorities will govern their position vis-à-vis the trustee’s charge or lien. Any exposure of the beneficiaries to tax liabilities is irrelevant.

209    The question is whether the right of indemnity or exoneration would be available if the Court were to make a consumer redress order pursuant to s 239. Swishette’s susceptibility to such an order arises because it was knowingly concerned in, or party to, Clinica’s contraventions of ss 18, 21, 29(1)(g) and 31 of the Australian Consumer Law. These provisions concern the making of false or misleading representations and unconscionable conduct (cf Gatsios). Swishette provided a guarantee and a mortgage as security for the Clinica Overdraft and continued to provide these securities throughout the Relevant Period. Swishette is to be imputed with the knowledge of Mr Laski, and therefore had knowledge of the essential facts constituting Clinica’s contraventions.

210    In my view, Swishette’s conduct in continuing to provide the guarantee and the mortgage to support the Clinica Overdraft during the Relevant Period in the circumstances constituted a breach of trust. There is no suggestion that this conduct was for the purposes of the Trust. The conduct did not take place, for example, in the course of the business operations of the Trust. Rather, the conduct appears to be wholly unrelated to the affairs of the Trust. Moreover, the conduct constituted involvement in contraventions of the Australian Consumer Law, including the unconscionable conduct provisions. It is true that during cross-examination, Ms Hatch and Ms Laski gave evidence to the effect that they assumed that Mr Laski could grant security over Swishette’s assets to support his business borrowings. However, this evidence did not go so far as to establish specific authorisation for the continued provision during the Relevant Period of the guarantee and the mortgage to support the Clinica Overdraft. In any event, they were mere objects of a discretionary trust at the relevant time, ie during the Relevant Period. In these circumstances, if a consumer redress order were to be made against Swishette, I consider that the liability that would arise would be outside the scope of the trustee’s right of indemnity or exoneration. The liability would not have been properly incurred, in the sense that it would have been, for the reasons given, improperly incurred.

211    As noted above, other than the net proceeds of sale of the Brighton Property, neither Swishette nor the Trust has any assets or income. And the net proceeds of sale have been distributed to three of the beneficiaries – Letore, Ms Laski and Ms Hatch – as part of the distribution of the net income of the Trust for the year ended 30 June 2015. In circumstances where I have concluded that Swishette would not have a right of indemnity or exoneration against the trust assets or the beneficiaries if a consumer redress order were to be made against it, Swishette has no funds to make payments to clients of Clinica. In these circumstances, as a matter of discretion, I do not consider it appropriate to make a consumer redress order against Swishette. Putting the matter simply, it has no funds to satisfy any such order and therefore the order would lack utility.

212    I turn then to consider whether a consumer redress order should be made against Letore. The difficulty discussed above in relation to Swishette does not apply to Letore. This is because, pursuant to the June 2015 Resolution, it received a distribution of 70% of the net income of the Trust for the year ended 30 June 2015, which included the proceeds of sale of the Brighton Property. In circumstances where, for the reasons outlined above, Letore was involved in Clinica’s contraventions of the Australian Consumer Law, it is appropriate to make a consumer redress order against Letore pursuant to s 239. The requirements for the making of such an order set out in s 239 are satisfied. I note also the matters set out in s 240. Accordingly, I will make an order to the effect that Letore pay to clients of Clinica amounts equal to the amounts paid by those clients to Clinica that were paid under, referable to, or otherwise used in relation to the Clinica Program, the Regional Sponsorship Agreements and/or the Cleaning Course (as those terms are defined in the amended concise statement), together with interest calculated from the time when the clients made the payments at the rate set out in s 2 of the Penalty Interest Rates Act. For completeness, I note that I have considered whether Letore’s liability to make redress to clients of Clinica should be limited in some way, to reflect the level of its involvement in the contraventions. However, I do not consider it appropriate in the circumstances of this case to limit the redress on this basis. The facts and circumstances set out above indicate that Letore’s involvement in the contraventions was not insignificant. For example, one element of the conduct that founded its involvement in Clinica’s contraventions, was paying the filing fees for Magistrates’ Court proceedings against Clinica clients.

213    The next question is whether the ancillary orders sought by the ACCC should also be made. These orders relate to the funds held in the ACCC’s solicitors’ trust account and, broadly speaking, would establish a mechanism by which these funds would be applied towards the making of redress to clients of Clinica. As I have concluded that a consumer redress order should be made against Letore alone, any such ancillary orders would relate only to the portion of the funds in respect of which Letore has an interest. It appears from the orders proposed by the ACCC that a Ms Fahey has a claim in respect of $85,000. The ACCC proposes, and there was no dispute about this, that this amount should be maintained in the trust account pending resolution of Ms Fahey’s claim in the Victorian courts. I therefore propose to make an order to the effect proposed by the ACCC, in effect setting aside for the time being an amount of $85,000 pending resolution of this claim.

214    The case was presented by both sides on the basis that (subject to the claim of Ms Fahey in respect of $85,000 and subject to the ACCC’s contention that Swishette has a right of indemnity or exoneration) the interests of Letore, Ms Laski and Ms Hatch in the funds currently in the ACCC’s solicitors’ trust account are 70%, 15% and 15% respectively. I proceed on this basis.

215    Proceeding on this basis, I consider it appropriate to make ancillary orders in substance as sought by the ACCC, but limited to 70% of the balance of the funds in the ACCC’s solicitors’ trust account (reflecting the conclusion that I have reached that a consumer redress order be made against only Letore). These orders provide a practical means of ascertaining the amounts that were paid by clients of Clinica and making redress to those clients from the available funds. The power to make appropriate orders under s 239 is broad and capable of supporting this mechanism. For completeness, I note that I do not consider that the amount to be applied in this way should be reduced on account of any tax that Letore may be required to pay in respect of the distribution of the net income of the Trust for the year ended 30 June 2015. As discussed above, the form of consumer redress order that I propose to make is not limited to a particular amount. In these circumstances, I consider it appropriate that the ancillary orders relate to the whole of Letore’s 70% of the amount in the ACCC’s solicitors’ trust account.

216    Putting to one side the $85,000 in respect of which Ms Fahey claims an interest, and proceeding on the basis outlined above, it follows that Ms Laski has an interest in 15% of the funds in the ACCC’s solicitors’ trust account and Ms Hatch has an interest in 15% of those funds. I propose to make an order to the effect that these funds be paid to Ms Laski and Ms Hatch. However, given the possibility of an appeal from my orders, I propose to suspend the operation of this order for a period of 28 days. For the same reason, I propose to extend the operation of the current freezing orders for a period of 28 days, or further order.

217    In light of the above, I propose to make ancillary orders to the effect that:

(a)    the funds that are currently held in the ACCC’s solicitors’ trust account pursuant to a freezing order made by the Court on 22 May 2017 (as varied on 19 September 2017) be dealt with as follows:

(i)    In respect of $85,000: the funds be maintained in the trust account for the time being and then dealt with in accordance with paragraph (h) below.

(ii)    In respect of 70% of the amount that is the current balance less $85,000 (the Letore Funds):

(A)    subject to (B)-(D) below, the amount be maintained in the ACCC’s solicitors’ trust account;

(B)    amounts be withdrawn and applied to effect the payments referred to in the consumer redress order against Letore pursuant to the process set out in these orders;

(C)    upon completion of that process, any remaining balance be applied to any outstanding costs that Letore is due to pay the ACCC; and

(D)    if there is any remaining balance, it be paid to Letore.

(iii)    In respect of 15% of the amount that is the current balance less $85,000: the funds be paid to the third respondent.

(iv)    In respect of 15% of the amount that is the current balance less $85,000: the funds be paid to the fourth respondent.

(b)    The operation of paragraphs (a)(iii) and (iv) be suspended for a period of 28 days from the date of these orders.

(c)    The freezing order made by the Court on 22 May 2017 (as varied on 19 September 2017) be extended so that it continues in effect until 4.00 pm on the day that is 28 days after the date of these orders, or further order.

(d)    Within 14 days of the date of these orders, the ACCC send a notice to each of the Clinica clients for which it has a last known address and/or email address, or otherwise use its best endeavours to contact those clients within 45 days of the date of these orders, so as to provide them with a notice, stating:

(i)    the fact that there are funds in the ACCC’s solicitors’ trust account for the purpose of paying to clients of Clinica amounts equal to the amounts paid by those clients to Clinica, plus interest;

(ii)    the fact that it is possible the funds available may not be sufficient to provide a payment of the full amount paid by the client plus interest and, if so, payments will be made as between clients in proportion to the amount of their claims;

(iii)    a person may claim a payment in respect of fees that were paid under, referable to or which were otherwise used in relation to the Regional Sponsorship Agreements, the Clinica Program and/or the Cleaning Course, plus interest, if the person can provide sufficient proof of his or her identity and evidence to satisfy the ACCC’s solicitors that he or she was a Clinica client and is eligible for a refund;

(iv)    each claim for a payment, including interest, must be made within 60 days of the date of these orders;

(v)    the fact that clients are not bound to accept the payment ultimately offered pursuant to these orders and may choose instead to bring a separate action against Letore; and

(vi)    the fact that if the client accepts the payment offered pursuant to these orders, he or she may not be able to bring any separate legal action against Letore.

(e)    The ACCC shall within 135 days of the date of these orders:

(i)    assess each claim for a payment that is made by a person pursuant to paragraph (d) above (and may, if necessary or desirable, seek further supporting evidence from the person);

(ii)    determine whether the person is eligible for a payment, and the quantum of the payment amount plus interest for that person; and

(iii)    if there are insufficient funds to pay the full amount to all eligible clients, determine a payment offer on a proportionate basis;

and the ACCC will document its reasons for decision and write to the person:

(iv)    providing the ACCC’s reasons for decision and offering a payment amount plus interest (either on a full payment basis or if there are insufficient funds on a proportionate basis);

(v)    stating that a person is not bound to accept the payment offered pursuant to these orders and may choose instead to bring a separate action against Letore; and

(vi)    stating that if a person accepts the payment offered pursuant to these orders, he or she may not be able to bring any separate legal action against Letore; and

(vii)    stating that the payment offer must be accepted within 21 days.

(f)    Following the expiry of the 21 days in which eligible persons must accept a payment pursuant to paragraph (e)(vii) above, the applicable payment amount including interest for each person that has accepted a payment must be withdrawn from the Letore Funds and paid to that person.

(g)    If, after the expiry of the 21 days referred to in paragraph (e)(vii) above, it appears to the ACCC that additional funds may be available for payments because not all payment offers have been accepted, the ACCC is authorised to recalculate the payments due to each person who has accepted a payment offer and make any additional payments accordingly.

(h)    The sum of $85,000 be preserved in the ACCC’s solicitors’ trust account pending the final determination by the Victorian courts as to whether Ms Fahey held a caveatable interest in the property formerly held by Swishette at 5 Maroona Road, Brighton, Victoria, which secured a specific sum payable by Swishette to Ms Fahey. If there is a final determination in Ms Fahey’s favour in respect of a specific sum, the ACCC is to pay to Ms Fahey, as soon as reasonably practicable after that final determination, the sum to which she has been found entitled. If there is a final determination wholly or partially against Ms Fahey, the ACCC is to apply the $85,000 (or such part that remains after payment to Ms Fahey) in the same manner as set out in paragraphs (a)(ii), (iii) and (iv) of these orders.

218    Given that circumstances may have changed since the hearing, and given that these proposed orders are not in the same form as discussed at the hearing, I will provide the parties with the opportunity to provide short written submissions on the form of these proposed ancillary orders.

Conclusion

219    My conclusions in relation to the issues that arise in this proceeding have been summarised at [14] above. In light of those conclusions, I propose to make a declaration that Swishette and Letore were knowingly concerned in, or party to, the contraventions by Clinica of the Australian Consumer Law referred to in paragraphs 1 and 2 of the orders of the Court made on 23 March 2016 in the Clinica Proceeding. I propose to make a consumer redress order against Letore pursuant to s 239 of the Australian Consumer Law. I will also make an order that a copy of these reasons for judgment be retained by the Court for the purposes of s 137H of the Competition and Consumer Act.

220    In relation to the proposed ancillary orders set out above, and costs, I will give the parties the opportunity to provide short written submissions.

Associate:

Dated:    9 February 2018

SCHEDULE OF PARTIES