Australian Competition and Consumer Commission v Jetstar Airways Pty Ltd [2019] FCA 797
ORDERS
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant | ||
AND: | JETSTAR AIRWAYS PTY LTD (ACN 069 720 243) Respondent | |
DATE OF ORDER: |
THE COURT DECLARES THAT:
No Refund Representations Contravention
1. Between 10 April 2017 and 13 March 2018, Jetstar contravened ss 18 and 29(1)(m) of the Australian Consumer Law, being Schedule 2 of the Competition and Consumer Act 2010 (Cth) (ACL), by making representations in connection with the supply or possible supply by Jetstar of domestic Australian flight services and international flight services to and from Australia booked through its website at the URL www.jetstar.com/au (being the version of the website accessible to consumers using an Australian IP address) (Flight Services) that:
(a) Jetstar Starter and Plus Fares were not refundable; and
(b) if consumers wished to have any entitlement to a refund, it was necessary for them to purchase a flight bundle at additional costs;
when in fact
(c) the Flight Services are subject to consumer guarantees contained in ss 60 to 62 of the ACL (Consumer Guarantees);
(d) the Consumer Guarantees cannot be excluded, restricted or modified by contract; and
(e) consumers may be entitled to a range of remedies (including, in certain circumstances, refunds and compensation for reasonably foreseeable losses) if there has been a failure to comply with a relevant Consumer Guarantee.
Conditions Representations Contravention
2. Between 10 April 2017 and 13 March 2018, Jetstar contravened ss 18 and 29(1)(m) of the ACL by making representations in connection with the supply or possible supply of Flight Services in its Conditions of Carriage that:
(a) the Flight Services were not subject to any statutory guarantees or warranties, including the Consumer Guarantees; and
(b) to the extent that the Consumer Guarantees applied to the Flight Services, Jetstar’s liability was limited to either supplying the services again or paying the cost of having the services supplied again, at its discretion;
when in fact
(c) the Flight Services are subject to the Consumer Guarantees;
(d) the Consumer Guarantees cannot be excluded, restricted or modified by contract;
(e) consumers may be entitled to a range of remedies (including, in certain circumstances, refunds and compensation for reasonably foreseeable losses) if there has been a failure to comply with a relevant Consumer Guarantee;
(f) where a supplier fails to comply with a relevant Consumer Guarantee, the consumer may choose which of the available remedies under the ACL they wish to pursue; and
(g) pursuant to s 64A of the ACL in respect of services of a kind ordinarily acquired for personal, domestic or household use or consumption, Jetstar is not entitled to limit its liability for a failure to meet the Consumer Guarantees to supplying the services again or paying the cost of having the services supplied again.
THE COURT ORDERS THAT:
3. Jetstar pay to the Commonwealth of Australia a pecuniary penalty in the amount of $1,000,000 in respect of the contraventions referred to in declaration 1 above, within 30 days of the date of these orders.
4. Jetstar pay to the Commonwealth of Australia a pecuniary penalty in the amount of $950,000 in respect of the contraventions referred to in declaration 2 above, within 30 days of the date of these orders.
THE COURT ORDERS, BY CONSENT, THAT:
5. Jetstar make a contribution to the ACCC’s costs in the amount of $50,000, to be paid within 30 days of the date of these orders.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
PERRY J:
1.1 Application for declarations and orders by consent
1 Jetstar Airways Pty Ltd (Jetstar) is the third largest airline in Australia. It is a private company incorporated in Australia and a wholly-owned subsidiary of Qantas Airways Limited (Qantas). It is also part of the Jetstar Group which includes Jetstar Asia, Jetstar Pacific, and Jetstar Japan. The Jetstar Group operates domestic Australian and domestic New Zealand flight services, as well as international flight services including services that depart from or arrive in Australia.
2 The Australian Competition and Consumer Commission (the ACCC) is the statutory authority responsible for enforcing the Competition and Consumer Act 2010 (Cth) (the CCA). By an application filed on 23 January 2019, the ACCC seeks declarations pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) (the FCA Act) that Jetstar contravened ss 18 and 29(1)(m) of the Australian Consumer Law (the ACL), being Schedule 2 to the CCA. The ACCC also seeks orders for pecuniary penalties under s 224 of the ACL and a contribution to the ACCC’s costs pursuant to s 43 of the FCA Act.
3 Jetstar has admitted that, as alleged, between 10 April 2017 and 13 March 2018 (the relevant period) it made various representations in connection with the supply or possible supply by it of domestic Australian flight services and international flight services to and from Australia (the flight services) booked through its website (www.jetstar.com/au) (being the version of the website accessible to consumers using an Australian IP address) (the website) including its published Conditions of Carriage. These representations concerned the application of the consumer guarantees contained in ss 60 to 62 of the ACL (the Consumer Guarantees) and the availability of refunds or other remedies, namely:
(1) that Jetstar ‘Starter’ and ‘Plus’ Fares were not refundable, and that if consumers wished to have any entitlement to a refund, it was necessary for them to purchase a flight bundle at additional cost. In fact, the flight services are subject to the Consumer Guarantees and consumers were entitled to refunds under the ACL in certain circumstances if Jetstar failed to comply with a relevant Consumer Guarantee (the No Refund Representations);
(2) that the flight services were not subject to any statutory guarantees or warranties, including the Consumer Guarantees, when in fact the Consumer Guarantees under the ACL applied to the flight services (the Exclusion of ACL Representations); and
(3) that to the extent that the ACL applied to the flight services, Jetstar’s liability was limited to either supplying the services again or paying the cost of having the services supplied again, at its discretion (the Limitation of Liability Representations). In fact, the ACL provides a range of remedies including, in certain circumstances, refunds, the resupply of services and compensation for reasonably foreseeable loss or damage. Where a supplier fails to comply with a relevant Consumer Guarantee, it is up to the consumer to determine which of the remedies available under the ACL they wish to pursue.
4 The No Refund Representations were made on the webpages that a consumer must navigate to in order to book flight services (the booking flow) and in the “Fare Rules” published by Jetstar on its website. The Exclusion of ACL and Limitation of Liability Representations were made in Jetstar’s Conditions of Carriage which were also available on its website (the conditions) but were not part of the booking flow.
5 Jetstar admits that, by making the representations summarised above, it contravened ss 18 and 29(1)(m) of the ACL. The parties jointly seek the declarations and orders set out in proposed orders signed by the parties on 13 December 2018, including penalties totalling $1.95 million, relying upon the Statement of Agreed Facts and Admissions dated 13 December 2018 (Agreed Facts). They also filed joint submissions explaining why they contend that the proposed relief is appropriate and that the Court ought to make orders in those terms in the exercise of its discretion.
1.2 Principles applying to a determination of whether to give effect to agreed orders in the exercise of the Court’s discretion
6 In Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482 (Director, FWBII), French CJ, Kiefel, Bell, Nettle and Gordon JJ (with whose reasons Keane J agreed at [79]) approved the practice whereby the parties may file agreed penalty submissions, holding that:
46. … there is an important public policy involved in promoting predictability of outcome in civil penalty proceedings and … the practice of receiving and, if appropriate, accepting agreed penalty submissions increases the predictability of outcome for regulators and wrongdoers… such predictability of outcome encourages corporations to acknowledge contraventions, which, in turn, assists in avoiding lengthy and complex litigation and thus tends to free the courts to deal with other matters and free investigating officers to turn to other areas of investigation that await their attention.
7 Their Honours further observed at [57] that in civil, as opposed to criminal, proceedings “there is generally very considerable scope for the parties to agree on the facts and upon consequences. There is also very considerable scope for them to agree upon the appropriate remedy and for the court to be persuaded that it is an appropriate remedy” (emphasis in the original). More specifically, while acknowledging that there may be exceptions to the general rule, their Honours explained that:
58. … There is, however, no reason in principle or practice why civil penalty proceedings should be treated as an exception. Subject to the court being sufficiently persuaded of the accuracy of the parties’ agreement as to facts and consequences, and that the penalty which the parties propose is an appropriate remedy in the circumstances thus revealed, it is consistent with principle and … highly desirable in practice for the court to accept the parties’ proposal and therefore impose the proposed penalty. To do so is no different in principle or practice from approving an infant’s compromise, a custody or property compromise, a group proceeding settlement or a scheme of arrangement.
(emphasis in the original, citations omitted)
8 In this regard, their Honours accepted at [59] the public interest in the imposition of civil penalties but considered that “[o]nce it is understood that civil penalties are not retributive, but like most other civil remedies essentially deterrent or compensatory and therefore protective, there is nothing odd or exceptionable about a court approving an agreed settlement of a civil proceeding which involves the public interest; provided of course that the court is persuaded that the settlement is appropriate.”
9 As the joint submissions explain, these principles are not confined to agreed submissions on pecuniary penalties but apply equally to agreement on other forms of relief, consistently with previous authority with respect to agreement on declaratory, injunctive and other relief in civil regulatory proceedings: see e.g. NW Frozen Foods Pty Ltd v Australian Competition & Consumer Commission (1996) 71 FCR 285 (NW Frozen Foods); Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 (ACCC v Coles [2014]) at [75] (Gordon J).
10 In short, as for example, Gordon J in ACCC v Coles [2014] helpfully explained by way of a summary of the applicable approach:
70 … First, there is a well-recognised public interest in the settlement of cases under the Act: NW Frozen Foods Pty Ltd v Australian Competition & Consumer Commission (1996) 71 FCR 285 at 291. Second, the orders proposed by agreement of the parties must be not contrary to the public interest and at least consistent with it: Australian Competition & Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79 at [18].
71 Third, when deciding whether to make orders that are consented to by the parties, the Court must be satisfied that it has the power to make the orders proposed and that the orders are appropriate: Real Estate Institute at [17] and [20] and Australian Competition & Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 at [1]. Parties cannot by consent confer power to make orders that the Court otherwise lacks the power to make: Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 163.
72 Fourth, once the Court is satisfied that orders are within power and appropriate, it should exercise a degree of restraint when scrutinising the proposed settlement terms, particularly where both parties are legally represented and able to understand and evaluate the desirability of the settlement: Australian Competition & Consumer Commission v Woolworths (South Australia) Pty Ltd (Trading as Mac’s Liquor) [2003] FCA 530 at [21]; Australian Competition & Consumer Commission v Target Australia Pty Ltd [2001] FCA 1326 at [24]; Real Estate Institute at [20]-[21]; Australian Competition & Consumer Commission v Econovite Pty Ltd [2003] FCA 964 at [11] and [22] and Australian Competition & Consumer Commission v The Construction, Forestry, Mining and Energy Union [2007] FCA 1370 at [4].
73 Finally, in deciding whether agreed orders conform with legal principle, the Court is entitled to treat the consent of [the respondent] as an admission of all facts necessary or appropriate to the granting of the relief sought against it: Thomson Australian Holdings at 164.
11 In support of the orders sought, the parties tendered the Agreed Facts to which were attached:
(1) Annexure A comprising details of the specific rules applicable to each category of fare in the form which were accessible on the website during the relevant period (Agreed Facts at [19]); and
(2) Annexure B comprising Jetstar’s conditions that applied to a contract for the booking and acquisition of the flight services during the relevant period (Agreed Facts at [20]).
12 The parties also relied upon the affidavit of Christopher Michael Steger, solicitor, affirmed on 14 December 2018 annexing the proposed consent orders.
13 Finally, at the hearing on 11 April 2019, the parties handed up a copy of the draft undertaking given by Jetstar to the ACCC for the purposes of s 87B of the CCA. As a consequence of certain concerns which arose during the course of the hearing, the parties provided a notice of variation on 16 May 2019 to the s 87B undertaking which had been accepted by the Chair of the ACCC and executed by the parties.
3. THE STATUTORY CAUSES OF ACTION
14 As earlier explained, Jetstar has admitted to contraventions of ss 18 and 29(1)(m). Subsection 18(1) of the ACL provides that:
A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
15 Section 29 of the ACL relevantly provides that:
(1) A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:
…
(m) make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy …
16 The applicable principles are well established and were recently summarised in Australian Competition and Consumer Commission v Oticon Australia Pty Limited [2018] FCA 1826 as follows:
28. First, it was properly not in issue that representations may constitute “conduct” for the purposes of s 18 of the ACL: see e.g. Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 (Global Sportsman) at 87-88 (the Court); and Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2014] FCA 634; (2014) 317 ALR 73 (holding relevantly that s 18 had been breached by false or misleading representations about par-baked bread).
29. Secondly, conduct is “likely” to mislead or deceive for the purposes of (now) s 18 if there is “‘a real or not remote chance or possibility regardless of whether it is less or more than fifty per cent’”: Global Sportsman at 87 (the Court) (citations omitted); see also in relation to s 9 of the Fair Trading Act 1999 (Vic) which is in the same terms as s 18, Noone (Director of Consumer Affairs Victoria) v Operation Smile (Australia) Inc [2012] VSCA 91; (2012) 38 VR 569 at [60] (Nettle JA) (Warren CJ and Cavanough AJA agreeing relevantly at [33]). There is however no requirement to establish that significant members of the public have been misled: .au Domain Administration Ltd v Domain Names Australia Pty Ltd [2004] FCA 424; (2004) 207 ALR 521 (.au Domain) at [25] (Finkelstein J). Furthermore, it is not necessary to show that the consumers may have been misled into actually purchasing the product. It suffices if consumers are “enticed into ‘the marketing web’ by an erroneous belief engendered by an advertiser, even if the consumer may come to appreciate the true position before a transaction is concluded”: Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640 (TPG Internet) at [50] (French CJ, Crennan, Bell and Keane JJ).
30. Thirdly, there is no meaningful difference between the words “misleading or deceptive” and “mislead or deceive” in s 18 of the ACL, “false or misleading” in subs 29(1)(a), and “mislead” in s 33: Australian Competition and Consumer Commission v Birubi Art Pty Ltd [2018] FCA 1595 at [62] (Perry J).
31. Fourthly, the question of whether representations are misleading or deceptive or likely to mislead or deceive is a question of fact: Australian Competition and Consumer Commission v Telstra Corporation Ltd [2004] FCA 987; (2004) 208 ALR 459 at [49] (Gyles J). The question of whether conduct is misleading or deceptive (or likely to be so) is objective and “… is concerned with the effect or likely effect of conduct upon the minds of those by reference to whom the question of whether the conduct is or is likely to be misleading or deceptive falls to be tested”: Global Sportsman at 87 (the Court). Similarly as French CJ explained in Campbell v Backoffıce Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 at [25], and as was subsequently endorsed in TPG Internet at [49], the characterisation of conduct as misleading or deceptive or as likely to mislead or deceive “generally requires consideration of whether the impugned conduct viewed as a whole has a tendency to lead a person into error”.
32. Finally, the question of whether the representation or conduct had a tendency to lead a consumer into error can meaningfully be addressed only once the class of persons likely to be affected and their relevant attributes have been identified. As Gibbs CJ held in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 199:
… consideration must be given to the class of consumers likely to be affected by the conduct. Although it is true, as has often been said, that ordinarily a class of consumers may include the inexperienced as well as the experienced, and the gullible as well as the astute, the section must in my opinion by [sic] regarded as contemplating the effect of the conduct on reasonable members of the class. The heavy burdens which the section creates cannot have been intended to be imposed for the benefit of persons who fail to take reasonable care of their own interests. What is reasonable will [of] course depend on all the circumstances.
See also CPA Australia Ltd v Dunn [2007] FCA 1966 at [27] (Weinberg J); Australian Competition and Consumer Commission v Turi Foods Pty Ltd (No 4) [2013] FCA 665 at [75] (Tracey J); .au Domain at [15] (Finkelstein J); and Campomar Sociedad Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45 at [103] (the Court).
17 The following explanation of the contravening conduct to this application is taken from the Agreed Facts.
4.1 The relevant class of consumers
18 The parties were agreed that the relevant class of consumers for the purpose of assessing the conduct is those members of the public who were interested, from time to time, in purchasing domestic Australian flight services or international flight services to and from Australia operated by a low cost airline. This audience includes a broad mix of consumers, including consumers with varying levels of experience navigating the internet and purchasing services online and varying levels of education and of experience in travel.
4.2 The ACL guarantees, rights and remedies
19 As is apparent, each contravention arises out of false or misleading representations made by Jetstar in relation to the application of the Consumer Guarantees afforded to consumers under subdivision B of Part 3-2 of Chapter 3 of the ACL. These are statutory guarantees that services:
(1) will be rendered to a consumer with due care and skill (s 60, ACL);
(2) will be reasonably fit for any particular purpose made known, expressly or by implication, to a supplier for which the services are being acquired by the consumer (s 61(1), ACL); and
(3) will be supplied within a reasonable time (s 62, ACL).
20 Importantly, by virtue of ss 64 and 64A(2) of the ACL, in the case of services of a kind ordinarily acquired for personal, domestic or household use or consumption, any contractual term purporting to exclude, restrict or modify the Consumer Guarantees, the exercise of a right conferred by them, or liability for a failure to comply with them, is rendered void. It is accepted by the parties that the flight services are services of this kind.
21 Where a Consumer Guarantee is not complied with, a consumer may take action under s 267 of the ACL which creates a range of different remedies. Where the failure is a “major failure” or the failure to comply with the guarantee cannot be remedied, the consumer is entitled under s 267(3) to terminate the contract for the supply of the services or to recover compensation from the supplier for any reduction in the value of the services below the price paid or payable by the consumer. However, where the failure can be remedied and is not a major failure, s 267(2) provides that the consumer may require the supplier to remedy the failure within a reasonable time or, where the supplier refuses or fails to do so, may recover reasonable costs incurred in having the failure remedied or terminate the contract. In addition, under s 267(4) and (5) (and subject to exceptions in s 267(1)(c)), consumers are entitled to recover damages for any reasonably foreseeable loss or damage caused by the non-compliance with a Consumer Guarantee irrespective of whether or not it was a major failure.
4.3 The No Refund Representations
22 Jetstar operates a “low cost carrier” business model, which involves offering a low-priced “basic” fare that includes a seat on the relevant service and the entitlement only to “carry-on” baggage (Starter Fare).
23 On all flight services, consumers have the option of purchasing additional products or features for their flight, described as “extras”, such as checked baggage, seat selection, and food, depending on their specific needs. Flight extras can be purchased individually or as part of a specific package of extras, described as a “bundle” (flight bundle). In addition to flight extras, some flight bundles provide consumers with increased flexibility for consumer-initiated flight changes.
24 During the relevant period, there were different categories of flight bundles offered by Jetstar. For domestic Australian flight services and short haul international flight services departing Australia, the fare categories were “FlexiBiz” (FlexiBiz Fares), “Starter fare with Plus” or “Plus” (Plus Fares) and “Starter fare with Max” or “Max” (Max Fares). For long haul international flight services departing Australia, the fare categories were Business fares (Business Fares) and Business fares with Max Bundle (Business Max Fares) in addition to Starter Fares, FlexiBiz Fares, Plus Fares and Max Fares.
25 Details of the specific rules applying to each category of fare (for example, in relation to flight changes or the availability of refunds) are set out in Jetstar’s fare rules, which are accessible on the website. During the relevant period, the fare rules for each category of fare were substantially in the form provided at Annexure A to the Agreed Facts.
26 The booking flow throughout the relevant period was substantially in the form shown in the video at Exhibit 1 and included the following steps:
(1) a consumer selects a one way or a return flight, the number of passengers, origin, destination, and proposed dates of travel for a flight;
(2) a consumer is then taken to a new webpage to select flight times (flight selection page);
(3) once a specific flight is selected, a consumer is taken to a new webpage and given the option to choose a flight bundle (bundle page);
(4) once a flight bundle is selected (including if a consumer elects not to choose a flight bundle), a consumer is then directed to select baggage, seats and other extras, complete personal details and is then able to finalise the purchase of the flight.
27 Throughout the relevant period:
(1) the flight selection page included the text “[u]nless otherwise stated fares are non-refundable, limited changes are permitted and charges apply” and a hyperlink to the fare rules (see 01:32 of Exhibit 1);
(2) the bundle page contained a table which summarised the features of each fare bundle, including a row which indicated whether the fare was refundable (refundable row), and was substantially in the form of the table shown at 13:57 to 14:24 of Exhibit 1; and
(3) for the Starter Fare and Plus Fares, the refundable row was marked with a grey “x”, indicating that the fare was not refundable. For other bundles, the refundable row was marked with a green tick indicating the fare was refundable.
28 The fare rules were also accessible during the relevant period from the booking flow through a hyperlink on the flight selection page (although a consumer is not required to navigate to the fare rules in order to progress through the booking flow). Throughout the relevant period, the fare rules for each of the Starter Fare and Plus Fares stated in blunt terms that the fare was simply “non-refundable”.
29 The ACCC does not allege that Jetstar deliberately represented to consumers that the Starter Fare and Plus Fares were not refundable in any circumstances. However, the parties agree that as a result of the way in which the No Refund Representations were expressed, some consumers would have understood them as meaning that the Starter Fare and Plus Fares were not refundable, and/or that they were entitled to a refund only if they purchased a flight bundle at additional cost. As such, they were liable to be misled as to their entitlement to a refund if Jetstar failed to comply with a relevant Consumer Guarantee where the failure was either a major failure or was not remedied within a reasonable time.
30 As a consequence, I agree with the parties that, by making the No Refund Representations as explained above, Jetstar made false or misleading representations in relation to the existence and effect of the Consumer Guarantees in contravention of ss 18 and 29(1)(m) of the ACL.
4.4 Representations in the conditions
31 Throughout the Relevant period, the conditions stated at clause 2.7 that:
These Conditions of Carriage do not apply to the extent that they are inconsistent with any laws that apply to your carriage.
In respect of any goods or services we may provide other than carriage, certain statutory guarantees or warranties may apply for the benefit of consumers. For example, for consumers, services may come with a non-excludable guarantee or warranty that they will be provided with due care and skill. The nature and application of these guarantees or warranties will depend on the relevant jurisdiction. Nothing in these Conditions of Carriage is intended to exclude or restrict the application of such consumer laws.
In respect of goods or services acquired for business purposes and not as a consumer:
(a) consumer guarantees and warranties, including under the Competition and Consumer Act 2010 (Cth), a Fair Trading Act or the New Zealand Consumer Guarantees Act 1993 (NZ), will not apply where these Conditions of Carriage apply, provided that the relevant terms may by law be excluded; and
(b) if a statute or other law provides a guarantee or warranty that cannot be excluded, to the extent permitted by law our liability for a breach of the guarantee or warranty will be limited to either supplying the goods or services again or paying the cost of having them supplied again, as determined by us.
32 By publishing clause 2.7 of the conditions, including particularly the words “other than carriage”, the parties agree that Jetstar represented that the flight services were not subject to any statutory guarantees or warranties (including the Consumer Guarantees) (Exclusion of ACL Representations).
33 Throughout the relevant period, the conditions and fare rules were each accessible on the website through a number of hyperlinks, including the “Help” tab and the “Terms and Conditions” hyperlink on the homepage.
34 Jetstar rightly admits that the Exclusion of ACL Representations were false or misleading because the Consumer Guarantees applied to the flight services and that by making the Exclusion of ACL Representations, it contravened ss 18 and 29(1)(m) of the ACL.
35 Throughout the relevant period, cl 15.6 of the conditions stated that:
To the extent permitted by law, we exclude all liability for any costs, expenses, losses or Damages whatsoever that may arise in any way in connection with the carriage. If the Competition and Consumer Act 2010 (Cth) or any similar law implies a condition or warranty that cannot be excluded, our liability for a breach of the condition or warranty will be limited to either supplying the services again or paying the cost of having the services supplied again, as determined by us in our absolute discretion.
36 The parties agree that, by publishing cl 15.6 of the conditions, Jetstar represented that, to the extent that the Consumer Guarantees applied to flight services, Jetstar’s liability was limited to either supplying the services again or paying the cost of having the services supplied again, at its discretion (Limitation of Liability Representations).
37 The Limitation of Liability Representations were false or misleading because:
(1) the remedies available to a consumer for a breach of a relevant Consumer Guarantee were not limited to a resupply of the service or Jetstar paying to have the services supplied again, but included a right to terminate the agreement and recover damages for reasonably foreseeable loss; and
(2) the available remedies in accordance with the ACL were at the election of the consumer, not Jetstar.
38 As such, as the joint submissions submit, by publishing cl 15.6 of the conditions, Jetstar sought to limit its liability for any failure to comply with the Consumer Guarantees in a manner that was unenforceable and presented a more limited impression of the remedies that were available to consumers than was in fact the case.
39 For these reasons, Jetstar also rightly admits that, by making the Limitation of Liability Representations, it contravened ss 18 and 29(1)(m) of the ACL.
5. GRANT OF DECLARATORY RELIEF
40 The Court has a wide discretionary power to make declarations under s 21 of the FCA Act: Forster v Jododex Australia Pty Limited (1972) 127 CLR 421 at 437-438 (Gibbs J) (Forster); Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-582 (Mason CJ, Dawson, Toohey and Gaudron JJ); see also ACCC v Coles [2014] at [74] (Gordon J). Nonetheless, as Gordon J also held in ACCC v Coles [2014] at [75]:
Where a declaration is sought with the consent of the parties, the Court’s discretion is not supplanted, but nor will the Court refuse to give effect to terms of settlement by refusing to make orders where they are within the Court’s jurisdiction and are otherwise unobjectionable: see, for example, [Australian Competition & Consumer Commission v Econovite Pty Ltd [2003] FCA 964] at [11].
41 Thus, before making declarations, the Court should be satisfied that:
(1) the question is real, and not a hypothetical or theoretical question;
(2) the applicant has a real interest in raising it; and
(3) there is a proper contradictor.
(See Forster at 437-438 (Gibbs J))
42 These requirements are met in the present case.
43 First, as the parties submit, there is a direct and important question raised as to whether Jetstar contravened the provisions of the ACL in making each of the alleged representations and the proposed declarations contain a sufficient indication of how and why the relevant conduct is a contravention of the ACL: BMW Australia Ltd v Australian Competition and Consumer Commission [2004] FCAFC 167; (2004) 207 ALR 452 at [35] (the Court); Australian Securities & Investments Commission v Westpac Banking Corporation [2018] FCA 1733 at [29] (Perram J).
44 Secondly, as the statutory regulator, the ACCC has an obvious and genuine interest in seeking the declaratory relief and it is in the public interest both for the ACCC to seek to have the declarations made and for the declarations to be made.
45 Thirdly, Jetstar is a proper contradictor because it has contravened the ACL and is the subject of the proposed declarations. Furthermore, the declarations sought are appropriate because (adopting the words of Gordon J in ACCC v Coles [2014] at [78]) they:
… serve to record the Court’s disapproval of the contravening conduct, vindicate the ACCC’s claim that [the respondent] contravened the ACL, assist the ACCC to carry out the duties conferred upon it by the [CCA] (including the ACL) in relation to other similar conduct, inform the public of the harm arising from [the respondent’s] contravening conduct and deter other corporations from contravening the ACL.
46 Finally, I am satisfied that the facts and admissions in the Agreed Facts and annexures provide a sufficient factual foundation for the making of the declarations: see s 191(2) of the Evidence Act 1995 (Cth); Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (in liq) [2007] FCAFC 146; (2007) 161 FCR 513 at [91]-[92] (the Court); Hadgkiss v Aldin (No 2) [2007] FCA 2069; (2007) 169 IR 76 at [20]-[23] (Gilmour J); ACCC v Coles [2014] at [79] (Gordon J).
6. CONSIDERATION OF THE APPROPRIATE PENALTY
47 In approaching considering the appropriateness of the agreed penalty, I recently explained in Oticon that:
41. ... the judicial restraint in scrutinising proposed settlements of controversies under the [ACL] and its predecessor, the Trade Practices Act 1974 (Cth), means that the Court will not substitute its own view of the orders or undertakings if the agreed orders, including penalties, fall with[in] the range of an appropriate disposition of the case: Australian Competition and Consumer Commission v Real Estate Institute of Western Australia (1999) 161 ALR 79 at [20]-[23] (French J (as his Honour then was)). As Burchett and Kiefel JJ observed in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 (NW Frozen Foods) at 291:
There is an important public policy involved. When corporations acknowledge contraventions, very lengthy and complex litigation is frequently avoided, freeing the courts to deal with other matters, and investigating officers of the Australian Competition and Consumer Commission to turn to other areas of the economy that await their attention. At the same time, a negotiated resolution in the instant case may be expected to include measures designed to promote, for the future, vigorous competition in the particular market concerned. These beneficial consequences would be jeopardised if corporations were to conclude that proper settlements were clouded by unpredictable risks. A proper figure is one within the permissible range in all the circumstances. The court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case.
(emphasis added)
42. Thus the High Court in Director, Fair Work Building Industry Inspectorate at [57] considered that it was open to the Court to receive submissions, including joint submissions, as to an appropriate penalty, and noted there was generally considerable scope given to parties to agree on an appropriate remedy.
48 Under s 224 of the ACL the Court may order a person to pay, relevantly, to the Commonwealth “such pecuniary penalty, in respect of each act or omission by the person to which [s 224] applies, as the court determines to be appropriate”. This provision applies relevantly only to the contraventions of s 29 of the ACL.
49 The primary purpose of civil penalties “is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners”: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; (2018) 262 CLR 157 (ABCC) at [116] (Keane, Nettle and Gordon JJ (with whose reasons Kiefel CJ agreed at [50])) (citations omitted); see also Director, FWBII at [55], [59] (French CJ, Kiefel, Bell, Nettle and Gordon JJ) and [110] (Keane J); and Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640 (TPG Internet) at [65]. Thus, with respect to specific deterrence, Keane, Nettle and Gordon JJ explained in ABCC:
116. … According to orthodox sentencing conceptions as they apply to the imposition of civil pecuniary penalties, specific deterrence inheres in the sting or burden which the penalty imposes on the contravener. Other things being equal, it is assumed that the greater the sting or burden of the penalty, the more likely it will be that the contravener will seek to avoid the risk of subjection to further penalties and thus the more likely it will be that the contravener is deterred from further contraventions; likewise, the more potent will be the example that the penalty sets for other would-be contraveners and therefore the greater the penalty's general deterrent effect. Conversely, the less the sting or burden that a penalty imposes on a contravener, the less likely it will be that the contravener is deterred from further contraventions and the less the general deterrent effect of the penalty. Ultimately, if a penalty is devoid of sting or burden, it may not have much, if any, specific or general deterrent effect, and so it will be unlikely, or at least less likely, to achieve the specific and general deterrent effects that are the raison d'être of its imposition.
(citations omitted)
50 As such, as the parties submit, the various penalty factors are to be considered in setting a penalty of appropriate deterrent value. Consistently with this, the Full Court of the Federal Court has emphasised that “the punishment must be fixed with a view to ensuring that the penalty is not such as to be regarded by that offender or others as an acceptable cost of doing business” (Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 (Singtel Optus (FCAFC) at [62]). Furthermore, as the Full Court has also explained:
All other things being equal, the greater the risk of consumers being misled and the greater the prospect of gain to the contravener, the greater the sanction required, so as to make the risk/benefit equation less palatable to a potential wrongdoer and the deterrence sufficiently effective in achieving voluntary compliance. Tipping the balance of the risk/benefit equation in this way is even more important when the benefit in contemplation is profit or other material gain.
(Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; (2016) 340 ALR 25 (Reckitt) at [151] (the Court))
51 Subsection 224(2) provides that in determining the appropriate pecuniary penalty, the Court must have regard to all relevant matters including:
(1) the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission;
(4) the circumstances in which the act or omission took place; and
(5) whether the person has previously been found by a court in proceedings under Chapter 4 or Part 5-2 of the ACL to have engaged in any similar conduct.
52 Otherwise, potentially relevant factors include (but are not limited to):
(1) the size of the contravening company;
(2) the degree of power of the contravener, as evidenced by its market share and ease of entry into the market;
(3) the deliberateness of the contravention and the period over which it extended;
(4) whether the contravention arose out of the conduct of senior management of the contravener or at some lower level;
(5) whether the contravener has a corporate culture conducive to compliance with the ACL as evidenced, for example, by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention;
(6) whether the contravener has shown a disposition to cooperate with the authorities responsible for the enforcement of the ACL in relation to the contravention;
(7) the financial position of the contravener; and
(8) whether the contravening conduct was systematic, deliberate or covert.
(See Trade Practices Commission v CSR Limited (1991) ATPR ¶41-076 at [52152] (French J (as his Honour then was)); NW Frozen Foods at 292 (Burchett and Kiefel JJ); Australian Competition and Consumer Commission v Singtel Optus Pty Ltd (No 4) [2011] FCA 761; (2011) 282 ALR 246 at [11] (Perram J) (reversed on appeal in Singtel Optus (FCAFC)), but not in a relevant respect))
53 There is, as Allsop CJ pointed out in Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2015] FCA 330; (2015) 327 ALR 540 (ACCC v Coles [2015]) at [9], a degree of overlap between these factors and the statutory mandatory considerations. However, as his Honour further explained: “These factors do not necessarily exhaust potentially relevant considerations; nor do they regiment the discretionary sentencing function” (ibid).
54 In common with criminal sentencing, the process of arriving at the appropriate civil penalty under the ACL (and its predecessor, the Trade Practices Act 1974 (Cth)) involves an intuitive or instinctive synthesis of all of the relevant factors rather than a sequential mathematical process: ACCC v Coles [2015] at [6] (Allsop CJ). This does not of course mean that all of the considerations which are relevant to criminal sentencing are also relevant to assessing an appropriate civil penalty. Rather it is the process itself which is the same. Instinctive synthesis in this sense was helpfully described by McHugh J in Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 as meaning: “the method of sentencing by which the judge identifies all the factors that are relevant to the sentence, discusses their significance and then makes a value judgment as to what is the appropriate sentence given all the factors of the case” (at [51]); see also by analogy Barbaro v The Queen [2014] HCA 2; (2014) 253 CLR 58 (Barbaro) at [34]-[35] (French CJ, Hayne, Kiefel and Bell JJ).
55 As to the role of maximum penalties in determining the appropriate penalty, I explained in Australian Competition and Consumer Commission v Homeopathy Plus! Australia Pty Limited (No 2) [2015] FCA 1090 (Homeopathy Plus!) at [27] that:
… careful attention to maximum penalties will always be required because the legislature has legislated for them, they invite comparison between the case before the court and the worst possible case, and they provide, taken and balanced with all of the other relevant factors, a yardstick: [Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357] at 372 [31] (Gleeson CJ, Gummow, Hayne and Callinan JJ). However, even where the maximum penalty is high and the amount necessary to provide effective deterrence is large, the amount of the penalty cannot be so high as to be oppressive. As Burchett and Kiefel JJ explained in NW Frozen Foods, “[p]lainly, if deterrence is the object, the penalty should not be greater than is necessary to achieve this object; severity beyond that would be oppression” (at 293).
56 The course of conduct principle is also relevant to an assessment of pecuniary penalties. This recognises the commonality of legal and factual matters between two or more contraventions, and that a contravening party should not be punished twice for common contraventions. As Middleton and Gordon JJ explained, for example, in Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; (2010) 269 ALR 1:
39. … The principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality. That requires careful identification of what is “the same criminality” and that is necessarily a factually specific enquiry.
(emphasis in the original)
57 Their Honours then further explained that:
41. … where two offences arise as a result of the same or related conduct that is not a disentitling factor to the application of the single course of conduct principle but a reason why a court may have regard to that principle, as one of the applicable sentencing principles, to guide it in the exercise of the sentencing discretion: Johnson v R (2004) 205 ALR 346; [2004] HCA 15 at [3]-[4] and [34] and Attorney-General v Tichy (1982) 30 SASR 84 at 92-3 ... It is a tool of analysis (Tichy at 93) which a court is not compelled to utilise: Royer v Western Australia [2009] WASCA 139 at [21]-[34] and [153]-[156] (Royer).
(emphasis in the original)
58 The course of conduct principle has frequently been applied in imposing penalties for breaches of the ACL, particularly when the number of legally distinct breaches is large: see e.g. Reckitt at [139]-[145] (the Court); TPG Internet at [60]-[61]; and Singtel Optus (FCAFC) at [51]-[55].
59 Finally, the Court must consider all of the contravening conduct and determine whether the total penalty for each offence aggregated together exceeds that which is proper for the entire contravening conduct involved (the totality principle): Mill v The Queen (1988) 166 CLR 59 (Mill) at 63 (the Court) (by analogy). As such, the totality principle operates as a final check of the penalties to be imposed on the respondent, considered as a whole. As Goldberg J explained in Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 145 ALR 36 (Safeway Stores) at 53:
The totality principle is designed to ensure that overall an appropriate sentence or penalty is [imposed] and that the sum of the penalties imposed for several contraventions does not result in the total of the penalties exceeding what is proper having regard to the totality of the contravening conduct involved.
60 The application of the totality principle will not necessarily result in a reduction in the penalty. Rather, as the parties submit, in cases where the Court considers that the cumulative total of the penalties to be imposed would be too high or too low, it should alter the final penalties to ensure that they are “just and appropriate”: Safeway Stores at 53 (quoting Mill at 63).
6.2 Application of the course of conduct principle
61 Section 29 of the ACL was contravened on each occasion that the representations were communicated to each person who viewed and read the web page or conditions: Reckitt at [139]-[145]; Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd (No 2) [2016] FCA 698 at [12] (Beach J). In this regard, the parties agree that:
(1) the Jetstar website is accessible by consumers across Australia;
(2) a large number of consumers accessed the website and navigated Jetstar’s booking flow during the relevant period; and
(3) during the relevant period, Jetstar received on average 252,000 monthly bookings for flight services via the website (Agreed Facts at [35]).
62 As such, while the parties were unable to identify the number of contraventions, it is not in dispute that the conduct for which penalties are sought gave rise to a substantial number of legally distinct contraventions (joint submissions at [28]). However, as the parties also submit, those contraventions were closely factually interrelated and as such the proper assessment of appropriate penalties requires consideration of a number of issues associated with the treatment of multiple contraventions (ibid).
63 I agree with the parties that it is appropriate to group the numerous individual contraventions into two groups, namely: (1) the No Refund Representations; and (2) the Exclusion of ACL and Limitation of Liability Representations (Conditions Representations). As to the first group, I agree with the parties’ submission that:
32. The No Refund Representations arose out of the booking flow and the Fare Rules (which were accessible through hyperlinks in the booking flow and provided more detailed information on the terms applying to each fare class).
33. While the No Refund Representations were published on different parts of the Website, there was a close interrelationship between them as all of the relevant pages were accessible as part of the booking flow. It was necessary for consumers to navigate, some, but not all of the relevant pages, and each of the pages was capable of conveying the same message (that refunds were not available for Jetstar Starter and Plus Fares).
64 Further, while it would be possible to treat the Conditions Representations as two courses of conduct under the course of conduct principle (given that they involved two representations), I agree with the parties that the preferable course is to treat them as a single course of conduct given that each arose out of the same act by Jetstar, namely, the publication of the conditions on the website.
65 In accepting the appropriateness of this approach, I emphasise that this does not convert the many separate contraventions into two contraventions; nor does it constrain the available maximum penalty. To the contrary, the Full Court recently held in Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73; (2018) 357 ALR 55 at [230] that “to treat a number of contraventions as subject to one maximum penalty … is to treat them, impermissibly, as one contravention”: see e.g. ACCC v Coles [2015] at [20] (Allsop CJ). Thus, as the parties emphasise, “… it remains critical to ensure that the penalties ultimately imposed have appropriate deterrent value having regard to the actual, substantive contraventions”.
66 The statutory maximum penalty for contraventions by a company of a provision in Part 3-1 of the ACL at the time of the contraventions was $1.1 million: see item 2 of s 224(3). As the parties submit, this maximum applies to each of Jetstar’s numerous contraventions notwithstanding that I accept the parties’ submission that the contraventions should be grouped into two groups, and can be used as a “notional maximum” or guide of $2.2m against which to consider the whole of the (overlapping) contravening conduct in that course of conduct: ACCC v Coles [2015] at [103], see also at [82]-[84] (Allsop CJ).
67 Having regard to all of the circumstances of this case, the parties submit that the following penalties will have appropriate deterrent effect in respect of the two courses of conduct:
(1) $1 million for the No Refund Representations; and
(2) $950,000 for the Conditions Representations.
68 For the reasons given below, I consider that these penalties are within the range of appropriate penalties having regard to the following considerations and applying the principles explained above.
6.3 Mandatory factors relevant to penalty (s 224(2), ACL)
6.3.1 Nature, extent and duration of the conduct, and the circumstances in which it took place (s 224(2)(a) and (b))
69 With respect to s 224(2)(a) and (b) of the ACL, I have earlier explained the contravening conduct and the circumstances in which it took place. I regard the conduct in question by Jetstar as serious, but not at the most serious end of the spectrum. In this regard, I have given weight to the fact that it is not alleged that Jetstar deliberately set out to breach the law (Agreed Facts at [49]). Nonetheless, the material published on the website was liable to convey the representations alleged to reasonable members of the public, even though the No Refund Representations were susceptible to multiple interpretations, and those risks were not appropriately identified by Jetstar.
70 Furthermore the parties accepted that the number of customers likely to have been affected by the No Refund Representations “would not be insignificant” (joint submissions at [58]). I agree, particularly given that the contraventions occurred over a period of approximately 11 months during which time they were communicated to a wide audience, bearing in mind that in excess of 2.5 million bookings were made on the website over this period (based upon the average monthly figure quoted earlier). Equally the parties accepted, as can reasonably be inferred, that customers may have been misled by the Conditions Representations (joint submissions at [63]).
71 Moreover, I took into account that the contraventions occurred in circumstances where Jetstar had a “detailed, focussed” compliance program in place which constituted “a serious and generally effective endeavour to ensure that the corporation complies with the law, including the ACL” (Australian Competition and Consumer Commission v Jetstar Airways Pty Limited (No 2) [2017] FCA 205 (Jetstar (2017 penalty)) at [43] (Foster J)). Nonetheless, Jetstar did not independently identify the contravening conduct and changed its behaviour only after the ACCC raised concerns. Given the heightened importance of conveying accurate information about refund policies, this showed that the compliance systems in place needed to be reviewed. I am satisfied that this is in the process of being undertaken as a result of the detailed s 87B undertaking.
6.3.2 Loss and damage (s 224(2)(a))
72 There is no evidence before the Court that the contraventions caused loss or damage to any customers. The absence of such evidence is not, of course, determinative of whether loss or damage was suffered (ACCC v Coles [2015] at [54]-[61] (Allsop CJ)) and the parties agreed that this was a possibility (Agreed Facts at [39]). The parties identified two circumstances where customers may have suffered loss or damage, namely:
(1) if they opted to incur the additional cost of purchasing a higher priced, more flexible, fare or fare bundle as a result of the No Refund Representations (even though only a subset of consumers is likely to have been misled by the representations in the booking flow); or
(2) if they were dissuaded from seeking a remedy from Jetstar in circumstances where they might otherwise have been entitled to do so due to Jetstar’s failure to comply with the Consumer Guarantees (e.g. where there was an unreasonable delay or cancellation to a scheduled service).
(Joint submissions at [75])
73 I accept that it is not possible to quantify the number or proportion of customers who were misled and suffered loss or damage as a result of the contraventions. However, given the significant traffic on the website during the relevant period and the fact that the No Refund Representations arose via the booking flow, the parties submitted that “the number of customers likely to have been affected by the [No Refund Representations] would not be insignificant” (joint submissions at [58]). The number of those who may have been misled and acted to their detriment in the case of the Conditions Representations is equally impossible to quantify but is likely to be smaller as the conditions were not part of the booking flow.
74 The risk that consumers may have suffered loss or damage is addressed in the s 87B undertaking accepted by the ACCC. Specifically, Jetstar has undertaken to appoint a suitably qualified legal practitioner to review complaints made during the relevant period where, following a delay or cancellation to flight services, the complainant was refused a remedy by Jetstar or was dissatisfied with the remedy they received and the complaint was not otherwise resolved in a court or tribunal. That review system also applies to any complaints received after the expiry of the relevant period until 30 June 2019, given that the publicity arising from this proceeding may lead to further complaints of loss or damage allegedly suffered during the relevant period being made.
6.3.3 Prior similar conduct (s 224(2)(c))
75 With respect to s 224(2)(c) of the ACL, Jetstar has previously been held to have contravened ss 18, 29(1)(i) and 29(1)(m) of the ACL as a result of representations made on its website and mobile website in relation to the failure to adequately disclose booking service fees imposed when fares were purchased via those platforms: Australian Competition and Consumer Commission v Jetstar Airways Pty Limited [2015] FCA 1263; [2016] ATPR 42-523 (Jetstar (2015)). Declarations embodying those findings were made on 7 March 2017 in Jetstar (2017 penalty) in the following terms:
1. On 14 May 2013, the respondent (Jetstar) contravened ss 18, 29(1)(i) and 29(1)(m) of the Australian Consumer Law by making representations on its website at the URL: http://www.jetstar.com/au/en (Jetstar website) that the price it would charge for air passenger services on selected dates from Brisbane to Melbourne (Tullamarine Airport) would be from $139 per person and that the price it would charge for air passenger services on selected dates from Melbourne (Tullamarine Airport) to Brisbane would be from $109 without adequately disclosing until the very end of the booking process that:
(a) The said air passenger services were subject to a condition that required the payment of a booking and service fee of $8.50 per passenger per flight for certain Australian domestic air passenger services booked through the Jetstar website, depending upon the payment method chosen by the consumer (Website Booking Condition), in addition to the said sums of $139 and $109 respectively; and
(b) The lowest price (including the booking and service fee) that could be payable by a customer purchasing the air passenger services referred to above through the Jetstar website, in circumstances where the Website Booking Condition became applicable, was $147.50 and $117.50 respectively.
2. On or about 21 March 2014, Jetstar contravened ss 18, 29(1)(i) and 29(1)(m) of the Australian Consumer Law by making representations on its mobile website at https://mobile.jetstar.com/ (Jetstar mobile site) that the price it would charge for air passenger services from Melbourne (Tullamarine Airport) to Sydney on 1 April 2014 would be $85 per person without adequately disclosing until the end of the booking process that:
(a) The said air passenger services were subject to a condition that required the payment of a booking and service fee of $8.50 per passenger per flight for certain Australian domestic air passenger services booked through the Jetstar mobile site, depending upon the payment method chosen by the consumer (Mobile Site Booking Condition), in addition to the sum of $85; and
(b) The lowest price (including the booking and service fee) that could be payable by a customer purchasing the air passenger services referred to above through the Jetstar mobile site, in circumstances where the Mobile Site Booking Condition became applicable, was $93.50 per person.
76 Penalties totalling $545,000 were imposed with respect to those contraventions: Jetstar (2017 penalty). I note that these contraventions were relatively proximate to those in the present case (2013 and 2014 as opposed to the present representations in 2017-2018). I also note that the conduct considered in Jetstar (2015) concerned representations made on Jetstar’s website apparently during the course of the booking flow, albeit that they related to the point at which the total price of an airfare was disclosed during that process. This emphasises the care that is required in settling the terms of representations made in the course of the booking flow, in particular, bearing in mind that this is the process by which contractual relations are entered into between Jetstar and individual customers via the website. These matters in turn reinforce the need for the penalty to be appropriate in order to promote specific and general deterrence.
6.4.1 Relevant circumstances including deliberateness and the role of senior management
77 The manner in which the representations came to be made and the level of managerial involvement are explained as follows in the Agreed Facts:
45. The Website and Conditions each contain content that is updated or amended periodically. The form and content of the Website including the booking flow, Fare Rules and Conditions is amended and developed, from time [to] time, by the following business teams within Jetstar in an incremental, ongoing and collaborative way:
45.1 Digital is responsible for the management and development of Jetstar’s digital sales and service channels;
45.2 Marketing is responsible for Jetstar’s brand, advertising and campaign management;
45.3 Customer Care is primarily responsible for customer service through digital and telecommunications contact channels; and
45.4 Ancillary is responsible for ‘ancillary revenue’ which includes revenue generated from baggage, seat selection, food and entertainment and booking and service fees.
46. From time to time the in-house legal team also provides input into the the [sic] content of the Website.
47. Similarly, the Conditions are amended and developed from time to time in consultation between members of the relevant business units and the in-house legal team.
48. The publication and any amendments of the booking flow, Fare Rules and Conditions were acts of Jetstar employees in the above business areas, acting within their actual authority. They did not arise by mistake or accident. There was however no single team or individual that was responsible for the development or approval of the form and content of the Website including the booking flow, Fare Rules and Conditions. Senior management was not involved in developing or approving the form and content of the Website including the booking flow, Fare Rules and Conditions.
78 As such, as I have earlier stated, it is not suggested that there was any intention to mislead the public.
79 Concerns raised at the hearing about ensuring the involvement of legal practitioners in reviewing and settling the conditions of carriage were satisfactorily addressed in my view by the variation to the s 87B undertaking pursuant to which Jetstar included a commitment (in line with its apparent intention in any event) to ensure that this occurred in the future.
6.4.2 Size of contravener and financial position
80 As earlier mentioned, Jetstar is the third largest airline in Australia in terms of market share. It operates up to 1806 domestic flight services a week within Australia and up to 328 international flight services (Agreed Facts at [36]). These figures, together with the number of online bookings made each week, reinforce the importance of ensuring that accurate information about consumer guarantees and refunds is published. For many passengers it can be inferred that the amounts spent on purchasing flight services will be regarded by them as substantial, particularly for longer haul and international flights, notwithstanding the fact that Jetstar is a low cost carrier.
81 As to the revenue and earnings of the Jetstar Group and the Qantas Group (Agreed Facts at [37]-[38]), the parties agreed that:
(1) in the financial years ending June 2017 and June 2018, the Jetstar Group (including Jetstar (Domestic AU and International AU) and Jetstar Asia revenue) reported revenue of $3.6 billion and $3.77 billion respectively, and underlying earnings before interest and tax of $417 million and $461 million respectively; and
(2) in the financial years ending June 2017 and June 2018, the Qantas Group, that is Qantas and Qantas’ wholly-owned subsidiaries including Jetstar, reported total revenue of $16 billion and $17 billion respectively, and underlying earnings before interest and tax of $1.59 billion and $1.79 billion respectively.
82 As the principles earlier outlined suggest, it is necessary to have regard to the financial resources of Jetstar in ensuring that the penalty is imposed at a level with the necessary “sting” to act as an effective deterrent.
6.4.3 Whether Jetstar has a corporate culture conducive to compliance with the CCA
83 As I earlier held, Jetstar has had a detailed, focussed and generally effective competition law and ACL compliance program in place since at least 2007 (the compliance program). That program includes the following elements as summarised in the agreed facts:
44.1 a Compliance Roadmap which conforms with Australian Standard AS3806-2006 and describes the structure of the Compliance Program, the roles and responsibilities of people managing it, how compliance obligations are embedded in operational policies and procedures, a process of identifying, reporting and responding to compliance failures and how Jetstar’s parent company, Qantas, will monitor and measure delivery on the Compliance Program;
44.2 a Code of Conduct and Ethics, which incorporates a general requirement for all employees to comply with competition laws and the ACL and specifies consequences for employees who are in breach of such laws, including disciplinary action and personal responsibility for payment of associated costs and fines;
44.3 a Compliance Policy, which sets out requirements for employees to, among other things, comply with the Code of Ethics, undertake mandatory training and report suspected non-compliance to the legal team who have expertise in competition law and the ACL;
44.4 mandatory training, which consists of face to face training sessions and an online course. This training must be completed at least once every two years by relevant staff;
44.5 a Quick Guide on Advertising which includes guidance on advertising material, online content and warnings about disclaimers and fine print;
44.6 a Compliance Guide for Managers which, among other things, requires managers to certify that they and their business segments have complied with the Compliance Policy and Compliance Roadmap as well as with competition laws and the ACL;
44.7 methods for reporting suspected, attempted or actual breaches including through a whistle-blower policy; and
44.8 a Competition Law and ACL compliance intranet site, which hosts various resources and Quick Guides on competition law and the ACL including for internal conduct and legal sign off procedures.
6.4.4 Whether the contravener has shown a disposition to cooperate with the authorities responsible for the enforcement of the ACL in relation to the contravention
84 Importantly, Jetstar has provided a high level of cooperation with the ACCC from the outset. Since the ACCC notified Jetstar on 19 February 2018 that it had received complaints about Jetstar including regarding statements on the website concerning the availability of refunds and the application of Consumer Guarantees with respect to flight services, Jetstar has taken the following steps:
(1) amended the website, adding a page titled “Compensation and Refunds” which provides information about assistance, which may include a refund and other compensation, that Jetstar will provide to consumers in the event of a delay, cancellation or commercial overbooking in respect of flight services;
(2) amended the website, adding a page titled “Australian Consumer Law” which provides information in relation to the rights of consumers under the ACL;
(3) voluntarily responded to, and cooperated with, the ACCC’s inquiries and requests for information;
(4) provided the ACCC with a s 87B undertaking and a variation thereto addressing concerns raised at the hearing, in accordance with which it will take a number of actions to address the admitted contraventions including:
(a) reviewing its policies, procedures and ACL compliance program and notifying relevant staff of the ACL compliance program and any amendments;
(b) reviewing its existing ACL training material, and delivering updated training to relevant staff;
(c) reviewing complaints made during the relevant period and until 30 June 2019 regarding a delay or cancellation to a flight service during the relevant period; and
(d) undertaking ongoing reviews of ACL compliance and risks.
(Agreed Facts at [51]; s 87B undertaking accepted by the ACCC on 14 December 2018 and the variation thereto executed on 15 May 2019)
85 Furthermore, as earlier explained, Jetstar has admitted the contraventions of s 18 and subs 29(1)(m) of the ACL (Agreed Facts at [4]).
86 I agree with the joint submission that the cooperative attitude of Jetstar has saved the ACCC from incurring substantial costs in connection with the proceeding and conserved valuable court resources. I also agree that Jetstar is entitled to a significant discount in penalty for this degree of cooperation and that this is appropriately reflected in the agreed penalty amount. This is particularly so where Jetstar has undertaken:
(1) to audit complaints in relation to the relevant period in order to reimburse customers who suffered loss; and
(2) to abide by a detailed programme to better ensure future compliance with the ACL, including to promote an understanding of the ACL and relevant obligations imposed upon Jetstar.
Further, the ACCC has accepted the appropriateness of that undertaking: NW Frozen Foods at 293-294 (Burchett and Kiefel JJ).
87 In addition, as I explain below, Jetstar has agreed to make a contribution of $50,000 towards the ACCC’s costs of this proceeding.
88 While caution must be exercised in referring to penalties in other cases, some assistance may be gleaned from penalties imposed in other cases. In the present case, suffice it to say that the authorities referred to in the parties’ joint submissions at [84]-[85] indicate that the proposed penalty is within an appropriate range.
6.5 The appropriateness of the agreed penalties
89 Having regard to the matters set out above, I consider that the proposed penalty is appropriate for the following reasons.
90 First, it is important to impose a penalty that is likely to send a strong message of deterrence to Jetstar and other potential wrongdoers from engaging in similar conduct. I have given particular weight to the importance of deterring Jetstar and other companies from providing false or misleading information about the availability and effect of the Consumer Guarantees being legislative protections for the benefit of consumers. I also accept that the proposed penalties will serve to remind other companies of the need to carefully review their websites, including online booking and sales flows and standard terms of trade, in order to ensure that they do not convey a misleading or deceptive impression about these consumer protections. In this regard, the fact that the statements giving rise to the No Refund Representations might have been reasonably open to an alternative construction which was not misleading is not an answer to the fact that they were also liable to be read by an ordinary reasonable member of the public in a misleading way. As Allsop CJ held in Coles [2015]:
95. … the fact that a debate that the phrases were misleading was objectively open indicate that the impugned phrases should never have been deployed in the way that Coles chose to deploy them. Corporations that market goods and services to consumers have an obligation to ensure that they do not mislead or deceive the public about the goods and services they are marketing. The existence of alternative constructions of the phrases they use is a matter they must take into account in their decision-making processes. The fact that some people may not be misled is not the point. It is important that sellers in the market recognise that consumers are entitled to reliable, truthful and accurate information. Confidence in such is a matter of importance for the Australian community and economy. It is an important factor in market efficiency. General and specific deterrence are important in order to encourage the maintenance of a fair, reliable and efficient market. Consumers play a vital part in that market. They buy the goods and services that commercial entities proffer.
91 Secondly, the representations appeared on the website in the booking flow and conditions over a lengthy period (11 months) during which a very substantial number of bookings were made on the website. Thus, while there is no evidence of direct consumer harm, there is a reasonable possibility that some consumers may have suffered loss or damage. This danger has been addressed to some extent by the fact that effective mechanisms have been put in place in the s 87B undertaking (as amended) to audit previous complaints and to deal with new complaints as I have earlier mentioned. I have also taken into account that there was no intention to mislead.
92 Thirdly, I consider that the proposed penalty is serious taking into account the size and position in the market of Jetstar.
93 Fourthly, I give significant weight to the high degree of cooperation demonstrated by Jetstar from the outset with the ACCC investigation and in seeking to resolve these proceedings by agreement as soon as they were advised of the ACCC’s intention to commence proceedings. As the parties submitted, this has avoided the need for a contested proceeding resulting in cost and resource savings for a publicly funded regulator, and savings in terms of court time and resources (see also Australian Competition and Consumer Commission v Apple Pty Ltd (No 4) [2018] FCA 953 at [6] (Lee J)). It has also enabled the matter to be resolved within a short timeframe so as to facilitate the timely implementation of measures directed to compensating members of the public for any loss or damage suffered and of the compliance regimes so as to guard against similar risks being unidentified, and to bring to the attention of other providers the importance of ensuring accuracy in the making of representations concerning consumers’ rights under the ACL and equivalent State and Territory laws.
94 On the balance therefore I consider that the penalty proposed by the parties falls within the range of an appropriate penalty.
95 Finally I note that Jetstar has agreed to contribute $50,000 towards the ACCC’s costs of the proceeding and to pay the costs contribution within 30 days of the Court’s orders (joint submissions at [86]-[87]).
96 For the reasons set out above, I consider that it is appropriate to make final orders in the terms agreed by the parties.
I certify that the preceding ninety-six (96) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perry. |
Associate:
