Federal Court of Australia

Director, Consumer Affairs Victoria v Vic Solar Pty Ltd (No 2) [2021] FCA 26

File number(s):

VID 111 of 2019

Judgment of:

O'BRYAN J

Date of judgment:

29 January 2021

Catchwords:

CONSUMER LAWdoor to door marketing and sale of residential solar photovoltaic panels and inverters – alleged misleading representations in contravention of ss 18, 29 and 33 of the Australian Consumer Law – whether the respondent entered into unsolicited consumer agreements and contravened ss 73, 74, 76, 78, 79, 84 and 86 of the Australian Consumer Law – whether the respondent’s marketing and sales methods were unconscionable in contravention of s 21 of the Australian Consumer Law – whether allegations invoked Federal jurisdiction

Legislation:

Competition and Consumer Act 2010 (Cth) ss 131, 139B(2)

Competition and Consumer Act 2010 (Cth) Schedule 2 (Australian Consumer Law) ss 18, 21, 29, 33, 69, 70, 72, 73, 74, 76, 78, 79, 84, 86, 224, 232, 237, 248

Australian Consumer Law and Fair Trading Act 2012 (Vic) ss 8, 10, 107, 109(g), 110, 126, 196(2)

Federal Court Rules 2011 (Cth) rr 4.04(3), 4.05(1)(b)

Competition and Consumer Regulations 2010 (Cth) regulations 83, 84, 85

Cases cited:

Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90; ATPR 42-447

Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2020] FCAFC 130; (2020) 381 ALR 507

Bowler v Hilda Pty Ltd [2000] FCA 899

Director of Consumer Affairs Victoria v Daiso Industries (Australia) Pty Ltd [2017] FCA 683

Director of Consumer Affairs Victoria v Dimmeys Stores Pty Ltd (2013) 213 FCR 559

Director of Consumer Affairs Victoria v Gibson [2017] FCA 240

Director, Consumer Affairs Victoria v Vic Solar Pty Ltd [2020] FCA 910

Jones v Dunkel (1959) 101 CLR 298

Lloyd v Belconnen Lakeview Pty Ltd [2019] FCA 2177; 377 ALR 234

Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53

Trade Practices Commission v J & R Enterprises Pty Ltd (1991) 99 ALR 325

Wade v J Daniels and Associates Pty Ltd [2020] FCA 1708

Walker v Sell (2016) 245 FCR 308

Westpac Banking Corporation v Northern Metals Pty Ltd (1989) 14 IPR 499

Yorke v Lucas (1985) 158 CLR 661

Division:

General Division

Registry:

Victoria

National Practice Area:

Commercial and Corporations

Sub-area:

Regulator and Consumer Protection

Number of paragraphs:

189

Date of hearing:

13, 14 July 2020, 14 August 2020

Counsel for the Applicant:

Ms G Costello SC with Mr M Kenneally

Solicitor for the Applicant:

Consumer Affairs Victoria

Counsel for the Respondents:

The respondents did not appear

ORDERS

VID 111 of 2019

BETWEEN:

DIRECTOR OF CONSUMER AFFAIRS VICTORIA

Applicant

AND:

VIC SOLAR TECHNOLOGIES PTY LTD (ACN 160 835 941)

First Respondent

SUNNY SRINIVASAN

Second Respondent

order made by:

O'BRYAN J

DATE OF ORDER:

29 January 2021

THE COURT ORDERS THAT:

1.    The parties file, within 28 days, draft short minutes containing an agreed form of declarations reflecting the reasons for decision of the Court and orders proposed by the parties for timetabling a hearing as to pecuniary penalties and other relief or, in the absence of agreement, the plaintiff and respondents file competing draft short minutes containing the declarations and timetabling orders proposed by each party and accompanying submissions in support of no more than 3 pages in length.

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

REASONS FOR JUDGMENT

O’BRYAN J:

Introduction

1    The applicant holds the position of Director of Consumer Affairs, established by s 107 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) (ACLFTA).

2    Section 8 of the ACLFTA applies the Australian Consumer Law (which is set out in Schedule 2 to the Competition and Consumer Act 2010 (Cth) (CCA)) as a law of the State of Victoria. Where it is necessary to distinguish the Australian Consumer Law applying as a law of Victoria from the Australian Consumer Law enacted by s 131 of the CCA (which is a law of the Commonwealth), I will refer to the former as the Australian Consumer Law (Vic) and the latter as the Australian Consumer Law (Cth).

3    Pursuant to ss 10, 109(g) and 110 of the ACLFTA, the Director is empowered to bring proceedings to enforce the Australian Consumer Law (Vic) both in the capacity as “regulator” (as referred to in the Australian Consumer Law (Vic)) and generally. Section 109(g) has also been construed as empowering the Director to bring proceedings under the Australian Consumer Law (Cth), although not in the capacity as “regulator” under the Commonwealth law: Director of Consumer Affairs Victoria v Dimmeys Stores Pty Ltd (2013) 213 FCR 559 (Dimmeys) at [5] (Marshall J) (followed in Director of Consumer Affairs Victoria v Gibson [2017] FCA 240 (Gibson) at [1] (Mortimer J) and Director of Consumer Affairs Victoria v Daiso Industries (Australia) Pty Ltd [2017] FCA 683 (Daiso Industries) at [5] (Moshinsky J).

4    From February 2013 to January 2019 (inclusive), the first respondent (Vic Solar) conducted a business of marketing, selling and installing residential solar photovoltaic (PV) panels and inverters (solar PV systems) in Victoria. The second respondent, Mr Srinivasan, was the director of, and a shareholder in, Vic Solar from October 2012 until it went into administration in November 2019.

5    The applicant alleges that, in the course of its business activities, Vic Solar (directly or through its agents) has engaged in the following conduct which contravened the Australian Consumer Law:

(a)    through its advertising and sales system, and marketing companies appointed to represent Vic Solar (referred to as lead generators), Vic Solar made false, misleading or deceptive representations about the solar PV systems being offered for sale in contravention of ss 18, 29 and 33 of the Australian Consumer Law;

(b)    in negotiating and entering into unsolicited consumer agreements for the sale of solar PV systems, Vic Solar, itself or by its lead generator as agent, engaged in contraventions of ss 73, 74, 76, 78, 79, 84 and 86 of the Australian Consumer Law; and

(c)    by reason of the above conduct and other circumstances referred to below, Vic Solar’s business system for the supply and installation of solar PV systems was unconscionable in contravention of s 21 of the Australian Consumer Law.

6    The applicant also alleges that Vic Solar contravened the Australian Consumer Law in its individual dealings with the seven consumer witnesses in this case.

7    The applicant seeks the following remedies against Vic Solar:

(a)    declaratory relief under s 21 of the Federal Court Act 1976 (Cth) (FCA Act);

(b)    injunctive relief under s 232 of the Australian Consumer Law;

(c)    pecuniary penalties under s 224 of the Australian Consumer Law;

(d)    orders that Vic Solar publicly disclose its contraventions pursuant to ss 246 or 247 of the Australian Consumer Law; and

(e)    orders that Vic Solar compensates the consumer witnesses referred to above pursuant to s 237 of the Australian Consumer Law.

8    The applicant seeks similar relief against Mr Srinivasan on the basis that he was knowingly concerned in each of Vic Solar’s contraventions of ss 18, 21, 29, 33, 74, 76 and 79 of the Australian Consumer Law, as well as an order disqualifying Mr Srinivasan from managing corporations for a period of five years pursuant to s 248 of the Australian Consumer Law.

9    The proceeding was heard on 13 and 14 July 2020 via Microsoft Teams, consistently with the Federal Court’s Special Measures Information Note (SMIN-1). The hearing was limited to the issue of liability and declaratory relief. At the hearing, there was no appearance by the respondents. As discussed below, I am satisfied that the respondents were aware of the hearing and elected not to appear.

10    At the hearing on 13 July 2020, I gave leave to the applicant to file an amended statement of claim, which was provided on 14 July 2020 before the hearing. At the hearing on 14 July 2020, I also gave leave for the applicant to file an amended originating application. The amendments made by those documents were minor and technical and I was satisfied that allowing the amendments in the absence of the respondents was not procedurally unfair to the respondents in circumstances where the respondents had elected not to appear.

11    Shortly after the completion of the hearing, the Court raised a concern with the applicant that the proceeding (on the face of the originating application) appeared to have been brought solely under the Australian Consumer Law (Vic), and not under the Australian Consumer Law (Cth), with the result that the Federal Court did not have jurisdiction over the proceeding. In response, and with the leave of the Court, on 29 July 2020 the applicant filed an application to amend to clarify that the applicant sought injunctive relief in respect of alleged contraventions of the Australian Consumer Law (Cth). That application was heard on 14 August 2020, at which time I made orders granting leave to amend the originating application and statement of claim. The proceeding is therefore based on an amended originating application dated 29 July 2020 and a further amended statement of claim dated 28 July 2020. The necessity for that application and its disposition is discussed further below.

12    For the reasons set out below, I am satisfied that Vic Solar has contravened ss 18, 21, 29, 73, 74, 76, 78, 79, 84 and 86 of the Australian Consumer Law. I am also satisfied that Mr Srinivasan was knowingly concerned in certain of the contraventions of ss 18(1), 29, 76 and 79 of the Australian Consumer Law.

13    It is necessary to note that, in a number of respects the applicant’s written and oral submissions to the Court alleged contraventions of the law by the respondents that were framed differently and more broadly than the pleaded and particularised allegations in the further amended statement of claim. I have determined the proceeding on the basis of the pleaded and particularised allegations in the further amended statement of claim and disregarded the applicant’s submissions in so far as they purport to widen the ambit of the allegations.

No appearance by the respondents

14    After this proceeding was commenced on 14 February 2019, the respondents retained and were represented by Corrs Chambers Westgarth. On 17 February 2020, Corrs Chambers Westgarth filed a notice of ceasing to act under rr 4.04(3) or 4.05(1)(b) of the Federal Court Rules 2011 (Cth) (Rules). In the period that the respondents were represented by Corrs Chambers Westgarth, the respondents filed a request for further and better particulars of the statement of claim on 25 March 2019 and a defence on 21 May 2019. The defence admits a number of alleged facts, but also denies the principal allegations of contravention. The respondents have not filed any material with the Court since the defence.

15    After Corrs Chambers Westgarth filed a notice of ceasing to act, the respondents were required by rr 4.04(2) or 4.05(2) of the Rules to file a notice of address for service with the Court, which they failed to do. Between February and June 2020, the applicant made a number of attempts to serve evidence on the respondents in accordance with the timetabling orders of 15 November 2019, but were unable to effect service. On 25 June 2020, I heard an application by the applicant for orders for substituted service of documents on the respondents under r 10.24. At that hearing, I made the orders sought by the applicant: see Director, Consumer Affairs Victoria v Vic Solar Pty Ltd [2020] FCA 910. I am satisfied that service of documents by the means stipulated in those orders has been effective to bring knowledge of the hearing to the respondents.

16    I am therefore satisfied that the respondents were aware of the hearing conducted in July 2020 but elected not to appear. Nevertheless, the respondents have filed a defence and the applicant has been put to proof on many issues, albeit in the absence of any contest. Therefore, I will draw all inferences on the evidence that are open to be drawn in accordance with the rule in Jones v Dunkel (1959) 101 CLR 298.

Jurisdiction

17    As noted above, the originating application originally filed by the applicant referred only to the Australian Consumer Law as enacted by the ACLFTA. In those circumstances, the proceeding did not engage Federal jurisdiction: see Walker v Sell (2016) 245 FCR 308 at [83]-[85] (Bromwich J).

18    Following a communication from the Court, on 29 July 2020 the applicant filed an interlocutory application to amend its originating application filed on 15 February 2019 and its amended statement of claim filed on 14 July 2020, supported by an affidavit of Andrew Nicholas Bray dated 29 July 2020, which affidavit contained those amended documents. The interlocutory application was served on the respondents in accordance with the orders for substituted service made on 25 June 2020. Again, the respondents did not appear at the hearing of the application on 14 August 2020.

19    At the hearing of the application, the applicant advanced the arguments that:

(a)    the originating application as originally filed should be read as comprehending a claim for relief under s 232 of the Australian Consumer Law (Cth), and no amendment was necessary;

(b)    alternatively, the applicant ought to be granted leave to amend the originating application to clarify that relief is sought under s 232 of the Australian Consumer Law (Cth).

20    At the hearing on 14 August 2020, I made orders granting the leave to amend sought by the applicant. These are my reasons for doing so.

21    First, I do not accept that the originating application as originally filed could be read as comprehending a claim for relief under s 232 of the Australian Consumer Law (Cth). It did not state so expressly and, in my view, such a claim should not be implied. I accept, though, that the drafting of the originating application in that manner involved a slip or oversight and it was the intention of the applicant to make such a claim.

22    Second, it was open to the applicant to seek injunctive relief under s 232(1) of the Australian Consumer Law (Cth) as an “other person” as referred to in s 232(2): Dimmeys at [5] (Marshall J). Such an application would invoke Federal jurisdiction. By s 138 of the CCA, that application could be brought in the Federal Court and accrued jurisdiction would then extend to the relief sought by the applicant as regulator under the Australian Consumer Law (Vic) in respect of the same substratum of facts: Walker at [83] (Bromwich J), Gibson at [1] (Mortimer J) and Daiso Industries at [5] (Moshinsky J).

23    Third, r 8.21(1) provides that an amendment to an originating application can be made:

(a) to correct a defect or error that would otherwise prevent the Court from determining the real questions raised by the proceeding; or

(g) to add or substitute a new claim for relief, or a new foundation in law for a claim for relief, that arises:

(i) out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the applicant;

24    I accept that the amendment corrects a defect that would otherwise prevent the Court from determining the real questions raised by the proceeding and merely adds a new foundation for a claim for relief (being the Australian Consumer Law (Cth)) that arises out of the same facts.

25    Fourth, in my view the amendment would occasion no prejudice to the respondents. The respondents never raised a jurisdictional complaint about the proceeding (including during the period that the respondents were legally represented). The amendment has no effect on the respondents’ defence to the factual allegations made by the applicant. The respondents were duly served with the application to amend and elected not to appear (as was the case with the primary hearing).

26    In all the circumstances, I concluded that the grant of leave would promote the overarching purpose of the civil procedure rules by facilitating the just resolution of disputes as quickly, inexpensively and efficiently as possible: FCA Act, s 37M.

Overview of Admissions and Evidence

27    In their defence, the respondents admit a number of factual allegations made by the applicant which I have generally accepted. In a few instances, dates referred to in the defence are contradicted by other documentary evidence in circumstances which suggest that the date in the defence is a typographical error. In those instances, I have relied on the documentary evidence.

28    The applicant adduced the following evidence concerning the marketing and sales process undertaken by or on behalf of Vic Solar:

(a)    admissions made by Mr Srinivasan in a compulsory examination conducted on 8 November 2018 under s 126(1)(c) of the ACLFTA;

(b)    business records of Vic Solar and the “lead generators” (referred to below) produced by those companies in response to notices issued by the applicant under s 126 of the ACLFTA comprising contracts, marketing scripts, brochures and correspondence; and

(c)    affidavits from seven consumer witnesses who entered into agreements with Vic Solar for the purchase of solar PV systems being (in chronological order) Jennifer Hizon, Marisa Capodicasa, Davide Altobelli, Susan Wright, Rodney Davis, Mark Boast and Maxwell Johansen.

29    The applicant also sought to tender written responses made by the “lead generators” in response to notices issued by the applicant under s 126 of the ACLFTA. Such responses are hearsay and I placed no reliance upon them in the proceeding.

30    The applicant also read an affidavit of Ms Anna Sexton, a representative of the Clean Energy Council, which is the peak body representing the solar energy industry.

31    The applicant adduced expert evidence from Mr Warwick Johnston who prepared two reports dated 19 June 2020 and 10 July 2020. Mr Johnston gave brief oral testimony in which he affirmed the contents of his reports which concerned the pricing of solar PV systems and the capacity of solar PV systems to reduce electricity bills. Mr Johnston was a director of the Clean Energy Council, and held a range of other positions of leadership in the Australian and Victorian solar PV industries. He has significant experience in the financial evaluation of solar PV system costs and benefits and, since founding the company SunWiz in 2009 in order to provide services to the Australian solar industry, of which he is still Managing Director, has collated substantial sets of data regarding the pricing of solar PV systems.

Findings of fact

32    From 1 February 2013 to January 2019, Vic Solar conducted a business of marketing, selling and installing solar PV systems in Victoria. Mr Srinivasan was the director of, and a shareholder in, Vic Solar from October 2012 until it went into administration on 21 November 2019. On 3 February 2020, the period of administration ended due to the execution of a deed of company arrangement. Mr Osman Sagizli was briefly co-director from October 2012 until March 2013. Mr Sagizli was Operations Manager for Vic Solar until June 2018.

33    The solar panels and inverters that were sold and installed by Vic Solar were supplied under the brand One Solar which was a brand owned by One Solar International Pty Ltd (One Solar International). Mr Srinivasan was also a member and director of One Solar International.

34    Initially, Vic Solar generated customer sales through digital aggregators, which are companies that provide online quotes in response to internet searches. From mid-2014, Vic Solar engaged marketing companies (which Vic Solar described as lead generators) to undertake marketing for Vic Solar, involving door-knocking to procure, from the home-owner, an invitation for a Vic Solar sales representative to visit. The lead generators were, in chronological order:

(a)    Aussie Excel Pty Ltd (Aussie Excel) from 10 June 2014 to October 2017;

(b)    KVP Sales and Marketing Pty Ltd (KVP) from 23 June 2014 to September 2015;

(c)    Prism Group Pty Ltd (Prism) from 3 November 2016 to 18 November 2016; and

(d)    Blue Rhino Marketing Group Pty Ltd (Blue Rhino) from 1 August 2017 to December 2018.

35    Mr Srinivasan had a 25 per cent shareholding in Blue Rhino. The sole director of Blue Rhino, Mr Vijaya Govindsamy, was previously an employee of Vic Solar. When employed at Vic Solar, Mr Govindsamy was responsible for managing the relationship between Vic Solar and Aussie Excel.

36    From mid-2014, the marketing and selling business model deployed by Vic Solar involved a three step process:

(a)    A representative of the lead generator knocked on a household door with a prepared script, and asked the householder whether they would like a Vic Solar sales representative to visit to discuss the installation of solar panels. If the householder expressed interest in purchasing a solar PV system, the door-knocker took their phone number.

(b)    A representative of the lead generator subsequently called to confirm an appointment for a representative of Vic Solar to attend the householder’s home to offer a solar PV system to the householder.

(c)    A representative of Vic Solar attended the householder’s home to negotiate and finalise the sale of the solar PV system.

37    Vic Solar entered into around 4,300 contracts for the supply of solar PV systems through this system of door-to-door lead generation.

38    Vic Solar promoted Certegy Ezy-Pay Ltd (Certegy), a “buy now, pay later” financing company, to consumers as a finance facility to purchase solar PV systems on a payment plan.

Vic Solar’s contract with Aussie Excel

39    The contract between Vic Solar and Aussie Excel was dated 10 June 2014. The principal obligations undertaken by Aussie Excel were expressed as follows:

GENERAL/

By signing this agreement, AUSSIE EXCEL undertakes:

All duties that pertain to gathering expressions of interest, promoting brand awareness, qualifying lead criteria

Adhering to the transcripts as set out in Appendix I & II.

SCOPE OF SERVICES /

Provide expressions of interest (EOI)

Adhere to general lead criteria (GLC)

Present the community bulk buy promotion (CBB - Promo)

Promote brand awareness

Adhere to appendix I and II:

{Attach "Vic Solar & AUSSIE EXCEL Process"}

APPENDIX /

Appendix I

{Attach CBB - Promo Script}

Appendix II

{Attach Verification Script}

40    The “community bulk buy promotion (CBB – Promo)” was defined in the contract as follows:

Community Bulk Buy Promotion, [CBB - Promo] / an EOI that meets all the GLC should be presented with the CBB - Promo. They must be directed to calling Vic Solar at a suitable time for further qualification, and to arrange an appointment

41    A “VICSOLAR Verification Script” to be used by Aussie Excel representatives on the Vic Solar contract included the following statements:

Excellent, so your request for an appointment is verified and successful. What time would suit you and your partner for a meeting?

(Sample consumer response) - We will be available on "Date and time"

Great, I can secure that time for you. Confirm Date and Time of appointment.

Just to confirm, our specialist will:

Conduct an in-depth home energy assessment

Demonstrate how solar power works

Assess your roof space

Show you how to redeem Community Bulk Buy promotion

And, if you are happy with the terms of the promotion complete an agreement for a solar power solution at your property.

At this point do you have any questions regarding your appointment? if No-

Just confirming your appointment time will be "Time" on "Date".

Please make sure you have a recent electricity bill available along with your Community Bulk Buy promotion card at the time of the appointment.

Vic Solar’s contract with KVP

42    In the contract between Vic Solar and KVP, the principal obligations undertaken by KVP were expressed as follows (errors in original):

KVP will identify and meet with people who may be interested in becoming a customer of Vic Solar. It will then set up an appointment for Vic Solar to meet with the person to endeavor to achieve a sale …

and

KVP will follow any reasonable and agreed directives and/or manuals set out by Vic Solar governing the way that KVP represents Vic Solar's product to potential customers.

43    The training manuals used by KVP on the Vic Solar contract included the following statements:

Let's look at your job as a lead generator of VIC SOLAR:

1. …

2. Create excitement in saving up to 70% off their power bills

6. Create excitement about the bulk buy program

44    A script to be used by KVP representatives on the Vic Solar contract when “door knocking” included the following statements (errors in original):

I've been sent down by Vic Solar to speak to all the homeowners today, you can ask me to leave whenever you'd like, what is your name?

I'm sure you've noticed a lot of your neighbors are getting solar panels at the moment! What's happening today, is we are organizing a community bulk buy. Which means the more people that get involved the cheaper the price will be!

Have you every thought about solar before?

Yes!

Have you ever had a quote?

Yes: what stopped you from going ahead?

No: so you obviously no solar can save you money yeah?

No!

No worries some of your neighbors haven't either ... did you know with the right sized system solar can cut your bills by up to 70%?

Look I'm not even here to sell it. I'm just here to let you know about our promotion. At the appointment the consultant will explain how solar works, what size system you need and the discount you can get with all your neighbors in this group!

45    A script to be used by KVP representatives on the Vic Solar contract when confirming or verifying an appointment from the call centre included the following statements:

You do qualify for the community bulk buy today, so we're going to get a consultant to come to your house and have a chat to you about solar. They'll assess your roof and your switchboard and take you through the energy saving projections for your property, as well as explain the community bulk buy discount in depth.

Congratulations!!🙂 YOU ARE NOW PART OF THE COMMUNITY BULK BUY IN (SUBURB)!

46    An appointment reminder card used by KVP representatives on the Vic Solar contract, headed “VICSOLAR” included the following statements:

Your Solar Specialist Will ...

Show you how to save up to 80% off your bills

Vic Solar’s contract with Prism

47    The contract between Vic Solar and Prism was undated and, as noted above, Prism provided services to Vic Solar for a very short period (3 to 18 November 2016). Nevertheless, the arrangements between Vic Solar and Prism in that short period were consistent with the arrangements between Vic Solar and the other lead generators. The principal obligations undertaken by Prism under the contract were expressed as follows:

By signing this agreement, Prism Group undertakes:

All duties that pertain to generating Leads, qualifying and scheduling Appointments. Adhering to the transcripts as set out in Appendix I & II.

APPENDIX/

Appendix I

{Attach Door to Door Script (D2D Pitch)}

Appendix II

{Attach Vero Script}

48    The “Door to Door Script” for use by Prism representatives contained the following statements:

I have been sent down here from community bulk buy, I must advise you that you can ask me to leave at any time, but don't worry I'm not here to sell you anything today. (have a bit of a laugh)

I am just here getting interest off people in the area, regarding booking a solar appointment for the area as part of our community partnership program.

Basically, what is happening is we have solar experts that are in the area showing home owners how they can get a solar system that can reduce their electricity bills by up to 80%. (use body language)

What the experts will also show you is how you can put a system on your roof at little to no extra cost to what you are currently paying on your electricity bill.

49    A script to be used by Prism representatives on the Vic Solar contract when confirming or verifying an appointment from the call centre included the following statements:

As you would have discussed with [NAME OF REP], the most popular solution for your area is a solar solution which can reduce your electricity bill by up to 80%.

Please ensure you log on to the CBB website and enter your unique code to generate your saving allocation.

50    An appointment reminder text message included the following statements:

Hello, This is your reminder for your Appointment_time appointment that you booked with one of our door staff. Your appointment has been allocated to Consultant. Please ensure you log on to our website www.communitybulkbuy.com.au to generate you (sic) unique discount code. Please have your community bulk buy voucher & a recent bill ready also, make sure all home owners are available.

51    The training manuals used by Prism on the Vic Solar contract included the following statements:

THINGS TO TALK ABOUT

• Save up to 80% off electricity bill

• System at little to no extra cost to what they are paying on their electricity bill

• Only in the area for the next 4-5 days

52    Prism was provided with a brochure titled “Community Bulk Buy” that purported to explain the cost savings for a consumer participating in the Community Bulk Buy program. As discussed below, Mr Srinivasan admitted that the Community Bulk Buy program was merely a marketing concept and, in reality, there was no “bulk” buying aspect to Vic Solar’s business. The brochure contained representations to the effect that:

(a)    together, many households have “collective purchasing power”; and

(b)    bulk-buy costs produced lower prices in comparison to traditional costs, enabling premium products to be supplied at competitive prices thanks to economies of scale.

53    Prism was also provided with a flyer titled “Community Bulk Buy” which contained representations to the following effect:

WHO - Community Bulk Buy is a social enterprise – for the people, by the people. We are energy experts and provide independent advisory services and programs to help households, community groups and businesses to save energy and money

WHAT – The Community Bulk Buy is the smartest and most cost effective way to get solar for your home

YOUR SOLAR SPECIALIST WILL…

Show you how to save up to 80% off your bills

54    The flyer also purported to contain testimonials from the “community” as follows:

Fantastic money saver system

‘Good job, we asked to move the panels on the roof, it was done with minimum fuss, and quick turn over.’

[Four stars]

Great, thanks for killing my cooling costs

‘Can use the clothes dryer now (during the day) without it increasing my power bill. I can run my electric cooling system and it doesn’t cost me a cent.’

[Four stars]

Great Service & Quality Product

‘Very happy with the pre and post sales service plus it’s a quality system with excellent warranty terms. Would definitely recommend them.’

[Five stars]

Excellent Product and Service

‘We were happy with entire process, from sales to installation. Great customer service from everyone involved. We will gladly recommend them to anyone wanting solar panels.’

[Five stars]

55    Prism was also provided with brochures relating to the “One Solar” branded solar panels. The brochures contained the following representations (errors in original):

There's no time like the present to experience OneSolar International

OneSolar International is a leading global manufacturer of Solar Panel solutions for the residential and commercial market. We are proud to be the worlds first fully integrated 'one-stop-shop' solar company that controls the whole process of manufacturing, installation and servicing of entire solar system applications. At OneSolar, you can feel confident that all your solar panel needs will be looked after from start to finish.

International Quality Standards

Utilising German and US engineering, all our premium quality solar panels reflect reliability, durability and strong energy efficiency.

56    The brochures depicted the Australian, United States and German flags.

Vic Solar’s contract with Blue Rhino

57    The contract between Vic Solar and Blue Rhino was dated 1 August 2017. The principal obligations undertaken by Aussie Excel were expressed as follows:

GENERAL

By signing this agreement, BLUE RHINO undertakes:

All duties that pertain to gathering expressions of interest, promoting brand awareness, qualifying lead criteria

Adhering to the transcripts as set out in Appendix I & II.

SCOPE OF SERVICES /

Provide expressions of interest (EOI)

Adhere to general lead criteria (GLC)

Present the community bulk buy promotion (CBB - Promo)

Promote brand awareness

Adhere to appendix I and II:

{Attach "Vic Solar & BLUE RHINO Process"}

APPENDIX /

Appendix I

{Attach CBB - Promo Script}

Appendix II

{Attach Verification Script}

58    The script used by Blue Rhino representatives in confirming and verifying a sales appointment contained the following statements:

Your solar specialist will ...

• Will conduct an in-depth home energy assessment.

• Demonstrate how solar power works.

• Assess your roof space.

• Calculate a Community Bulk Buy promotional offer, and show you how to redeem this offer.

• If the terms of the promotional offer are acceptable to you, finalise an agreement with you for the supply and installation of a solar power system at your property.

59    A sample voucher titled “VicSolar Community Bulk Buy Savings Voucher” purported to provide savings of $2,260 and contained terms and conditions that stated:

By making an appointment, you will invite a VicSolar consultant to attend your property for the predominant purpose of entering into negotiations regarding the possible supply and installation of a solar power system, At this appointment, a VicSolar consultant will calculate a promotional offer and, if you agree with the terms of the offer, enter into an agreement with you for the supply and installation of a solar power system. *'The appointment is considered an invitation for the sole purpose of negotiations regarding the supply and installation of solar power. The voucher can only be used on a one call basis, and cannot be used in conjunction with any other offer. The voucher will expire after the date and time stated on the voucher. Voucher savings are off the RRP of the system.

Approval of the marketing materials by Vic Solar (through Mr Srinivasan)

60    Although the documentary evidence in respect of each lead generator was somewhat piecemeal, Mr Srinivasan admitted in his examination that each of the lead generators used marketing scripts and brochures on behalf of Vic Solar that were in a similar form to those that were in evidence, as set out above. Mr Srinivasan also admitted that he reviewed and approved the marketing scripts used by the lead generators in the course of their marketing activities on behalf of Vic Solar.

61    On the basis of Mr Srinivasan’s admissions, and in the absence of contrary evidence, I find that Vic Solar, directly or through its appointed lead generators, used the marketing scripts and brochures referred to above in offering its solar PV systems for sale during the period in which the lead generators were engaged, being June 2014 until December 2018.

Community Bulk Buy

62    Community Bulk Buy was a marketing campaign engaged in by each of the lead generators in order to attract customers to Vic Solar. As set out above, it was referred to in the contracts between Vic Solar and each of the lead generators, as well as the door knocking and telephone verification scripts. In his compulsory examination, Mr Srinivasan stated that the Community Bulk Buy concept was Vic Solar’s preferred customer generation strategy.

63    The Community Bulk Buy campaign was a marketing strategy which conveyed to potential customers that a “community bulk buy” for solar PV systems was being organised in their neighbourhood. The represented benefit of the “community bulk buy” was that the cost to each customer of a solar PV system would be reduced by reason of a bulk-buying discount. The Community Bulk Buy marketing campaign was pursued through the door knocker, subsequent verification phone call and, finally, the attendance of a Vic Solar representative at a consumer’s house, as well as written material provided to the consumers including a voucher and a brochure.

64    The representations conveyed to potential customers through the use of the scripts and brochures were that:

(a)    the marketing or sales person was representing an organisation called Community Bulk Buy;

(b)    the potential customer could participate in the bulk buy program and thereby benefit from a cost saving;

(c)    the more households that participated in the bulk buy program, the greater the cost savings to each household; and

(d)    the program was only available for a short period of time.

65    I am satisfied on the evidence that each of those representations was false. The “Community Bulk Buy” program was a marketing fiction. There was no organisation (whether corporate or otherwise) which constituted Community Bulk Buy, and consumers’ purchases of solar PV systems from Vic Solar were not aggregated in any way that generated cost savings for them.

The One Solar brochures

66    As set out above, the brochures relating to the “One Solar” branded solar panels supplied by Vic Solar contained the following representations relating to One Solar International and the One Solar branded solar panels:

(a)    One Solar International is a leading global manufacturer of Solar PV system solutions for the residential and commercial market;

(b)    One Solar International is the world’s first fully integrated “one-stop shop” solar company that controls the whole process of manufacturing, installation and servicing of entire solar PV system applications; and

(c)    One Solar International’s solar panels utilise German and US engineering.

67    I am satisfied on the evidence that each of those representations was false. In his examination, Mr Srinivasan admitted that One Solar International did not manufacture solar panels, but merely owned the brand name “One Solar”, and that the solar panels and inverters supplied by Vic Solar under the One Solar brand were manufactured in China.

Evidence of the Clean Energy Council

68    The applicant read an affidavit of Anna Sexton. Ms Sexton has been employed by the Clean Energy Council since June 2014. Since October 2019, Ms Sexton’s position has been GRC and Legal Manager. Ms Sexton was not cross-examined and I accept her evidence which was as follows.

69    The Clean Energy Council is an incorporated not-for-profit organisation based in Melbourne and operates nationally. It is funded principally by membership fees. The Clean Energy Council maintains a membership of companies operating in the renewable energy industry that pay an annual membership fee for various membership benefits and support the Council’s policy and advocacy work in the renewable energy sector. Among those member companies, the Council accredits certain qualified individuals, including some installers and designers of solar PV systems. Accreditation by the Clean Energy Council for designers and retailers of solar PV systems requires completion of the necessary solar-specific training courses and for the accredited person to be bound by the Clean Energy Council Accreditation Code of Conduct and Design and Install Guidelines and Australian Standards. Additionally, companies who sell solar PV systems to individual and business consumers and who are approved by the Council to sign the Solar Retailer Code of Conduct are classed as Approved Solar Retailers. In order to become a signatory to the Solar Retailer Code of Conduct, the company must undertake a rigorous assessment process, which, according to Ms Sexton’s evidence, could take up to eight weeks, and requires the applicant to meet best practice standards in pre-sales advertising and sales tactics among other things.

70    On about September 2016, the Clean Energy Council began receiving enquiries from consumers about whether One Solar was associated with the Clean Energy Council, because its printed brochures displayed Clean Energy Council logos. Clean Energy Council records show that these enquiries increased in January 2017 and continued through 2017. Ms Sexton’s evidence was that One Solar was neither a paid member of the Clean Energy Council nor an Approved Solar Retailer. In January 2017, the Clean Energy Council wrote to One Solar requesting that it cease using the Clean Energy Council’s intellectual property and cease representing that it was associated with the Clean Energy Council.

71    Around February 2017, the Clean Energy Council received an enquiry from a consumer whether Vic Solar was associated with the Clean Energy Council, because of brochures distributed by Vic Solar displaying the Clean Energy Council logo alongside or near One Solar products. Ms Sexton’s evidence was that, while Vic Solar was a paid member of the Clean Energy Council, it was not an Approved Solar Retailer. On or about February 2017, Clean Energy Council’s solicitors wrote to One Solar and Vic Solar seeking undertakings that those companies cease distributing or displaying material containing the Clean Energy Council’s logos and cease representing any association with the Clean Energy Council.

72    Ms Sexton’s affidavit exhibited copies of brochures for One Solar products. The brochures bore the Clean Energy Council logo. The use of the logo conveys a representation that the One Solar products have an affiliation with the Clean Energy Council. On the basis of Ms Sexton’s evidence, that representation was false.

Consumer witnesses

73    The applicant read affidavits from seven consumer witnesses who entered into agreements with Vic Solar for the purchase of solar PV systems. The witnesses were not cross-examined and I accept their evidence. The salient aspects of their evidence was as follows.

74    Ms Jennifer Hizon lives in Thomastown, Victoria. She is employed and lives with her mother. On 22 April 2015, Ms Hizon was at home when there was a knock on the door from a man who introduced himself as Tony. They spoke inside and Tony asked whether Ms Hizon was interested in solar. Ms Hizon said she was interested but would need to check whether the body corporate would allow her to install solar panels. Tony said that they were going door-to-door running a promotion and that they could offer Ms Hizon a good price if she made a deposit that day. Ms Hizon thought the price quoted was good compared to the price a friend had paid for solar. Ms Hizon signed a Vic Solar sales order form for a cash price of $4,400 with a deposit of $400, with installation to occur in July 2015. Ms Hizon asked Tony whether her deposit would be returned if the body corporate did not allow her to install solar. Tony said that the deposit would be refunded if the installation did not go ahead. Ms Hizon paid the deposit of $400. Subsequently, Ms Hizon learned that body corporate approval would require all unit holders to approve and she chose not to proceed with the purchase. Despite multiple attempts by Ms Hizon to obtain a refund of her deposit, Vic Solar did not refund the deposit.

75    Ms Marisa Capodicasa lives in Epping, Victoria. She works part-time and cares for her mother. Around mid-September 2015, she was contacted by someone regarding solar panels (Ms Capodicasa did not recall whether the contact was by phone or in person). The person arranged an appointment for someone to come to Ms Capodicasa’s house to talk about solar panels. On 23 September 2015, in the afternoon, a man named Gurjeet came to her house to talk to her about installing solar panels on her home. Gurjeet said that if Ms Capodicasa installed a 5kW solar PV system it would be enough to cover her energy consumption and that she would not receive another energy bill. During the visit, Gurjeet did not tell Ms Capodicasa that he was obliged to leave her home immediately on request and did not tell Ms Capodicasa that she had a ten-day cooling off period. A copy of Vic Solar’s contract with Ms Capodicasa was exhibited to her affidavit. It did not contain any statement concerning the termination rights under the Australian Consumer Law. Documents exhibited to Ms Capodicasa’s affidavit show that the solar PV system was installed and connected to the power network on 29 September 2015. Contrary to the statements made by Gurjeet, Ms Capodicasa continued to receive electricity bills after the solar panels were installed.

76    Mr Davide Altobelli lives in Mill Park, Victoria. He is retired and receives an aged pension. In September 2015, Mr Altobelli answered a knock at the door from a young woman who said that she represented a solar company. She stated that her company was "cheap" and that it would only cost Mr Altobelli "a few hundred dollars" to install a solar system at his home. About a week after that visit Mr Altobelli received a telephone call from Vic Solar to arrange an appointment. On 30 September 2015, a man called Luke Harbinson came to Mr Altobelli’s home and introduced himself as being from Vic Solar. Mr Altobelli told Luke that he wanted 16 panels on his roof like his neighbours. Luke said that Mr Altobelli would get better discounts on his electricity bills than his neighbour at “number 16 because Vic Solar's solar panels were German, and number 16's panels were Chinese. Luke said that the panels at number 16 did not have as much power as Vic Solar's product. Luke also said that once Mr Altobelli had installed the solar panels, he would never get an electricity bill again. Mr Altobelli signed a contract with Vic Solar that day. He understood that he would be receiving 16 solar panels, although the contract stated 8 panels. Before Luke left the house, he said that Mr Altobelli had a three-day cooling off period if he changed his mind about the contract. However, Luke did not tell Mr Altobelli how to cancel the contract. Nor did Luke leave a copy of the contract with Mr Altobelli. On the evening of 30 September 2015, Mr Altobelli rang Luke to get a copy of the contract and talk to him about cancelling the contract. Mr Altobelli was worried about making the repayments. Luke did not answer the phone and Mr Altobelli left messages every day for three days. A few days later, Mr Altobelli called the main office of Vic Solar and spoke to a female who said that Luke did not work for Vic Solar anymore. She said that Mr Altobelli could not cancel the contract because the three-day cooling off period had expired. After the solar panels were installed, Mr Altobelli received his first electricity bill. The bill was not reduced by as much as he had expected. A copy of Vic Solar’s contract with Mr Altobelli was exhibited to his affidavit. It did not contain any statement concerning the termination rights under the Australian Consumer Law.

77    Ms Susan Wright lives in Swan Hill, Victoria. She is retired and lives with her daughter and adult grandson. About two days before 18 November 2016, Ms Wright arrived home and a representative from Vic Solar was waiting for her. They discussed solar panels. The representative claimed that if Ms Wright purchased solar panels, she would "never have an electricity bill in summer" and may have a "slight" bill in winter. This statement convinced her to get the solar panels. The representative did not talk about cooling-off periods or the fact that Ms Wright could ask him to leave at any time. Ms Wright gave her details to the representative and he said someone from the sales team would come out to go through the sale. On 18 November 2016, another man came to Ms Wright’s house. Ms Wright agreed to purchase a 3kW solar PV system with a 5kW inverter from Vic Solar and signed a contract for the sale on the day. A copy of Vic Solar’s contract with Ms Wright was exhibited to her affidavit. It did not contain any statement concerning the termination rights under the Australian Consumer Law. Subsequently, Ms Wright experienced difficulties in arranging finance for the solar panels and incurred power bills higher than she had been led to believe that she would receive.

78    Mr Rodney Davis lives in Ararat, Victoria. He is retired and lives with his wife. Mr Davis deposed that, on or about 24 April 2019 at around 4pm, he saw a man putting a leaflet in his letterbox. I infer that the reference to 2019 is a typographical error and should be a reference to 2017, being the date shown on the Vic Solar contract with Mr Davis. He approached the man who said that he was from Vic Solar. The man asked whether Mr Davis was interested in putting solar panels on his house, and Mr Davis told him that he was interested. The man then called another person and organised a meeting at Mr Davis’ property for 7pm that night. At around 7pm that night, a sales representative from Vic Solar attended Mr Davis’ property and came inside. Mr Davis had a conversation about the possibility of purchasing solar panels. The sales representative said that Mr Davis needed a 2.6 minimum kW system with a 3kW inverter and that this system would provide all the power Mr Davis needed. The sales representative said that the payments to Vic Solar would take the place of Mr Davis’ power bills. The sales representative said that Vic Solar had a deal going, but that it was only available on the night and would not be available later on. The sales representative gave a quote of $13,305, but said that if Mr Davis signed up with him that day, it would be reduced to $9,206.40. The sales representative did not advise Mr Davis of any right to cancel the contract, or that the sales representative had to leave Mr Davis’ home if asked. Mr Davis agreed to acquire the system that evening. A copy of Vic Solar’s contract with Mr Davis was exhibited to his affidavit. It did not contain any statement concerning the termination rights under the Australian Consumer Law. The solar panel system was installed in early May 2017. Mr Davis currently receives solar power credits, but they are less than half of the electricity bill.

79    Mr Mark Boast lives in Monbulk, Victoria. He is employed and lives with his wife and daughter. On or around 23 May 2017 at about 6pm (shortly before his daughter’s bed time), Mr Boast received a knock on the door from a man named Srikanth who claimed to be from Vic Solar. Srikanth came inside and had a conversation with Mr Boast. Srikanth said that he was in the area selling solar systems and said words to the effect of: "we're in the area doing bulk installations". Srikanth said that by signing up a lot of people in the local area they could provide cheaper prices for the solar system and installation costs. Mr Boast could not remember the exact words, but he believes that Srikanth said they had a "community service grant" or they were doing a "community service campaign" for the area. Srikanth said that once the solar system was installed, it would heavily reduce Mr Boast’s electricity bill. Srikanth gave Mr Boast a One Solar brochure in the form described above, which also had the Clean Energy Council logo on it. Srikanth offered a 3kW system with a 5kW inverter for $10,795, but said that if Mr Boast signed up for the system immediately, he would only pay $6,680. Srikanth said that the deal was only available on the day. The meeting lasted about 1 ½ hours and Mr Boast signed a Vic Solar contract for the discounted amount that day. A copy of Vic Solar’s contract with Mr Boast was exhibited to his affidavit. It did not contain any statement concerning the termination rights under the Australian Consumer Law. The solar panels were subsequently installed, but they were not connected to the power network. Mr Boast deposed that, following the installation of the solar panels, his power bills were reduced slightly but not substantially.

80    Mr Maxwell Johansen lives in Moe, Victoria. He is a pensioner. In early December 2018, he received a knock on the door from a woman in the mid-afternoon who said she was from Vic Solar. The woman asked Mr Johansen if he was interested in getting solar panels and Mr Johansen said that he was. While the woman was at the door, she made an appointment for someone from Vic Solar to come out to see Mr Johansen. She also presented Mr Johansen with a Vic Solar Community Bulk Buy Savings Voucher and said that someone from Vic Solar would explain the voucher to Mr Johansen when they came. On 5 December 2018, a man named Gurjeet, representing Vic Solar, attended Mr Johansen’s home. Gurjeet examined Mr Johansen’s power bills and performed some calculations before offering a 3kW system of 10 solar panels. Gurjeet claimed that the cost for the panels would only cost Mr Johansen $14 more than his then current power bill, so that he would only be paying $78 a fortnight, and that Mr Johansen might receive a small electricity bill of about $10. Gurjeet stated that the panels "were all German". Mr Johansen signed a contract for the panels with a contract price of $10,000. A copy of Vic Solar’s contract with Mr Johansen was exhibited to his affidavit. It did not contain any statement concerning the termination rights under the Australian Consumer Law. The solar panels were subsequently installed, but they were not connected to the power network. Mr Johansen deposed that, when he received his first bill, he realised that he was not getting any benefit from the solar panels. Mr Johansen deposed that, over the course of the first 12 months, he estimated that he had saved about $64 in total. At a later date, Mr Johansen noticed that the inverter had “Made in China” stickers on it.

Expert evidence

81    Expert evidence was given by Warwick Johnston who holds a Masters Degree in Science (Renewable Energy) and a Bachelor Degree in Engineering with Honours. Mr Johnston was not cross-examined. I find that Mr Johnston had relevant expertise to express the opinions in his reports that were read into evidence.

82    Mr Johnston has worked in the Australian solar industry since 2005. He holds or has held the following positions:

(a)    an elected director of the board of the Clean Energy Council;

(b)    appointed to the Victorian Government’s Solar Victoria Industry and Consumer Reference Group;

(c)    appointed as the Australian representative to the International Energy Agency’s Photovoltaic Power Systems Program;

(d)    elected chair of the Solar Energy Industries Association; and

(e)    elected chair of the Clean Energy Councils’ PV Directorate.

83    Mr Johnston founded SunWiz in 2009 to provide services to the businesses that comprise the Australian Solar industry. He has been performing financial evaluations of solar power systems since 2005 for government, businesses and households. He developed financial evaluation software, PVsell, that has been used by over 1000 solar businesses since 2011. His software calculates the financial savings resulting from installation of a solar system, accounting for the end-customers’ specific consumption pattern, electricity tariff and solar production level for every hour of the year. Since 2009, SunWiz has been tracking the total capacity of every solar power system installed in Australia. Each month since 1 August 2012 SunWiz, has obtained system pricing data from online solar lead provider SolarChoice. This provides a representative dataset of system prices.

84    Mr Johnston was asked to address the following questions:

(a)    How did the price consumer witnesses paid compare to the market price at the time of purchase?

(b)    Whether Vic Solar's prices were "generally competitive".

(c)    Could a consumer save 70 - 80 per cent off household electricity bills by installing a residential solar system?

(d)    What specifications would the system need to meet to deliver those savings?

(e)    Could a consumer reduce their electricity bills by 100 per cent by installing a residential solar system?

(f)    What specifications would the system need to meet to deliver those savings?

85    In his first report dated 19 June 2020, Mr Johnston expressed the following opinions in respect of the consumer witnesses who gave evidence other than Ms Susan Wright:

(a)    The prices paid by the consumer witnesses in this proceeding for the solar PV systems were at or above the top end of market prices at the time of purchase. The equipment purchased by the consumer witnesses was not premium-quality equipment that might have justified such high prices. Being a white-label product, it was reasonably regarded as inferior in quality to the equipment included in the lower end of market prices, which were 60% lower than the price paid by the consumer witnesses. The prices charged by VicSolar were therefore not generally competitive.

(b)    Mr Johnston calculated that the most the consumer witnesses could have expected to save from their power bill was 42%. For some of the consumer witnesses, the power bill saving was half that amount, as low as 19%.

(c)    Most of the consumer witnesses’ systems would not generate enough energy to eliminate consumption from the grid, meaning a zero-dollar power bill would be physically impossible.

(d)    For consumer witnesses that bought prior to 2018-19 when electricity prices surged, it would not have been possible to reduce electricity bills by 70% or more. That is because a 10kW system was required for bill savings of 70%, but the electricity network operator limits the solar power system to 6.6kW for the single-phase grid connection that is predominant for homes. Even then, a 70% reduction only happens for homes with very low daily consumption. Mr Maxwell Johansen bought when the electricity prices were much higher. He could theoretically have reduced his bill by 70% with a 5kW solar power system, yet he was sold a 3kW system. Reducing his bill by 100% would have required an 8.8kW system, which was more than the electricity network operator would have allowed for a single-phase connection.

86    In his second report dated 10 July 2020, Mr Johnston expressed the following opinions concerning Ms Susan Wright’s dealings with Vic Solar:

(a)    The price paid by Ms Wright was above the top end of market prices for equivalently-sized systems at the time of their purchase.

(b)    Ms Wright could expect to save 39% off her power bill.

(c)    Ms Wright’s solar PV system would not generate enough energy to eliminate consumption from the grid, meaning a zero-dollar bill would be impossible.

(d)    Ms Wright’s system produced only half of her home’s total energy consumption.

(e)    Ms Wright could only have achieved a 70% reduction in her power bill if her household consumed very low amounts of energy and installed a 10kW PV system.

Misleading and deceptive conduct

Overview

87    The applicant alleges that Vic Solar, itself or by its lead generators as agents, made the following categories of representations to consumers in breach of one or more of ss 18(1), 29(1)(a), (e), (f), (g), (h), (i) and (k) and 33 of the Australian Consumer Law:

(a)    Community Bulk Buy representations;

(b)    country of origin representations;

(c)    One Solar representations;

(d)    bill saving representations; and

(e)    Clean Energy Council representations.

88    Section 18 of the Australian Consumer Law prohibits a person from, in trade or commerce, engaging in conduct that is misleading or deceptive or is likely to mislead or deceive. The applicable principles concerning this statutory prohibition (and closely related prohibitions) are well known. These principles have recently been summarised by the Full Court in Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2020] FCAFC 130; (2020) 381 ALR 507 (ACCC v TPG) at [22]:

The central question is whether the impugned conduct, viewed as a whole, has a sufficient tendency to lead a person exposed to the conduct into error (that is, to form an erroneous assumption or conclusion about some fact or matter): Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 (Taco Bell) at 200 per Deane and Fitzgerald JJ; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 (Puxu) at 198 per Gibbs CJ; Campomar Sociedad, Limitada v Nike International Limited (2000) 202 CLR 45 (Campomar) at [98]; Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 (TPG Internet) at [39] per French CJ, Crennan, Bell and Keane JJ; Campbell at [25] per French CJ. A number of subsidiary principles, directed to the central question, have been developed:

(a) First, conduct is likely to mislead or deceive if there is a real or not remote chance or possibility of it doing so: see Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 (Global Sportsman) at 87, referred to with apparent approval in Butcher at [112] by Gleeson CJ, Hayne and Heydon JJ; Noone (Director of Consumer Affairs Victoria) v Operation Smile (Australia) Inc (2012) 38 VR 569 at [60] per Nettle JA (Warren CJ and Cavanough AJA agreeing at [33]).

(b) Second, it is not necessary to prove an intention to mislead or deceive: Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228 per Stephen J (with whom Barwick CJ and Jacobs J agreed) and at 234 per Murphy J; Puxu at 197 per Gibbs CJ; Google Inc v ACCC (2013) 249 CLR 435 (Google) at [6] per French CJ and Crennan and Kiefel JJ.

(c) Third, it is unnecessary to prove that the conduct in question actually deceived or misled anyone: Taco Bell at 202 per Deane and Fitzgerald JJ; Puxu at 198 per Gibbs CJ; Google at [6] per French CJ and Crennan and Kiefel JJ. Evidence that a person has in fact formed an erroneous conclusion is admissible and may be persuasive but is not essential. Such evidence does not itself establish that conduct is misleading or deceptive within the meaning of the statute. The question whether conduct is misleading or deceptive is objective and the Court must determine the question for itself: see Taco Bell at 202 per Deane and Fitzgerald JJ; Puxu at 198 per Gibbs CJ.

(d) Fourth, it is not sufficient if the conduct merely causes confusion: Taco Bell at 202 per Deane and Fitzgerald JJ; Puxu at 198 per Gibbs CJ and 209-210 per Mason J; Campomar at [106]; Google at [8] per French CJ and Crennan and Kiefel JJ.

(e) Fifth, where the impugned conduct is directed to the public generally or a section of the public, the question whether the conduct is likely to mislead or deceive has to be approached at a level of abstraction where the Court must consider the likely characteristics of the persons who comprise the relevant class to whom the conduct is directed and consider the likely effect of the conduct on ordinary or reasonable members of the class, disregarding reactions that might be regarded as extreme or fanciful: Campomar at [101]-[105]; Google at [7] per French CJ and Crennan and Kiefel JJ.

89    Paragraphs 29(1)(a), (e), (f), (g), (h), (i) and (k) of the Australian Consumer Law relevantly provide that 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:

(a)    make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use;

(e)    make a false or misleading representation that purports to be a testimonial by any person relating to goods or services

(f)    make a false or misleading representation concerning:

(i)    a testimonial by any person; or

(ii)    a representation that purports to be such a testimonial,

relating to goods or services;

(g)    make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits;

(h)    make a false or misleading representation that the person making the representation has a sponsorship, approval or affiliation;

(i)    make a false or misleading representation with respect to the price of goods or services;

(k)    make a false or misleading representation concerning the place of origin of goods.

90    Though ss 18 and 29 take a different form, the prohibitions are similar in nature. Whilst s 29 uses the phrase “false or misleading” rather than “misleading or deceptive", there is no material difference in the two expressions: ACCC v TPG at [21].

91    Section 33 of the Australian Consumer Law provides that a person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods. The test in s 33 differs from the test in s 18. Section 18 refers to conduct that is likely to mislead or deceive. Section 33 refers to conduct that is “liable” to mislead the public, which has been interpreted as requiring proof of a probability of the public being misled (Trade Practices Commission v J & R Enterprises Pty Ltd (1991) 99 ALR 325 at 339 per O’Loughlin J) and the representation must be to the public and not merely an individual customer (Westpac Banking Corporation v Northern Metals Pty Ltd (1989) 14 IPR 499 at 508-509 per Davies and Spender JJ).

Conduct of the lead generators

92    The applicant alleges that the conduct of the lead generators engaged by Vic Solar is to be attributed to Vic Solar.

93    Section 196(2) of the ACLFTA (which is applicable to the Australian Consumer Law (Vic)) and s 139B(2) of the CCA (which is applicable to the Australian Consumer Law (Cth)) are in materially the same terms and provide that the following conduct engaged in on behalf of a body corporate is also taken, for the purposes of the Australian Consumer Law, to have been engaged in by the body corporate:

(a)    conduct by an officer, employee or agent of the body corporate within the scope of the actual or apparent authority of the officer, employee or agent; or

(b)    conduct by any other person:

(i)    at the direction of a officer, employee or agent of the body corporate; or

(ii)    with the consent or agreement (whether express or implied) of such an officer, employee or agent;

if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the officer, employee or agent.

94    The evidence shows that the lead generators were contractually engaged by Vic Solar to door knock and telephone homes to arrange appointments on behalf of Vic Solar. In doing so, the lead generators used scripts and marketing materials that were approved by Vic Solar. In my view, that conduct of the lead generators is conduct undertaken as an agent of Vic Solar within the scope of the authority given to them, or is conduct undertaken at the direction of and with the consent of Vic Solar. Accordingly, the conduct of the lead generators is taken to be the conduct of Vic Solar for the purposes of the Australian Consumer Law. The evidence shows that the lead generators were engaged in the period from June 2014 to December 2018.

Community Bulk Buy representations

95    The applicant alleges that, between 1 February 2013 and 31 January 2019, Vic Solar, itself or by its lead generators as agents, made the following representations (Community Bulk Buy representations) to consumers or potential consumers in breach of ss 18 and 29(1)(a), (e), (f), (g), (h) and (i) of the Australian Consumer Law:

(a)    the Community Bulk Buy opportunity to acquire and have installed solar panels and inverters was organised by an independent organisation (in breach of ss 29(1)(g) and/or (h));

(b)    Community Bulk Buy was a social enterprise for the purpose of helping people save energy and money (in breach of ss 29(1)(g) and/or (h));

(c)    the person who knocked on a door to promote Community Bulk Buy represented an independent community organisation promoting an opportunity to buy solar PV systems at low prices, rather than a business selling solar power systems (in breach of ss 29(1)(g) and/or (h));

(d)    if the consumer acquired solar panels and inverters supplied and installed as part of the Community Bulk Buy promotion, the consumer would save money because the solar PV system was available for a low price compared to market rates (in breach of s 29(1)(i));

(e)    the Community Bulk Buy promotion offered greatly reduced prices (in breach of s 29(1)(i));

(f)    the Community Bulk Buy promotion offered a lower price because marketing costs and profit margins were removed from the cost of buying the product (in breach of s 29(1)(i));

(g)    the Community Bulk Buy promotion offered premium products at competitive prices due to group buying in the consumer’s neighbourhood (in breach of s 29(1)(i));

(h)    the opportunity to acquire the solar power system promoted as part of the Community Bulk Buy offer was only available for up to a few days (in breach of s 29(1)(i));

(i)    the Community Bulk Buy promotion offered an opportunity to drastically reduce or completely eliminate household power bills (ss 29(1)(a) and/or (g));

(j)    the reductions in a household’s power bills from the solar PV system installed as part of the community buy back promotion would offset all, or most, of the cost of the consumer’s repayments for the solar power system (in breach of ss 29(1)(a), (g) and/or (i)); and

(k)    other customers who had purchased solar PV systems as part of the Community Bulk Buy promotion had purportedly given testimonials (in breach of ss 29(1)(e) and/or (f)).

96    Many of the above allegations are repetitive of other allegations and simply re-phrase the representations. Nevertheless, the evidence adduced in the proceeding satisfies me that Vic Solar’s marketing campaign involved making representations to the effect of the Community Bulk Buy representations in the period June 2014 to December 2018 (being the period in which the lead generators were engaged by Vic Solar). It is apparent from the scripts used by the lead generators, and the available brochures and voucher, that the Community Bulk Buy concept was at the heart of Vic Solar’s marketing efforts. The primary representations conveyed to consumers by the use of such materials were that:

(a)    Community Bulk Buy was an independent social enterprise for the purpose of reducing the price of residential solar PV systems (through bulk buying cost savings);

(b)    the more people who signed up to the Community Bulk Buy program, the greater the cost saving; and

(c)    the opportunity to acquire a solar PV system promoted as part of the Community Bulk Buy offer was only available for up to a few days;

97    As I have found above, those representations were false. The Community Bulk Buy program was a marketing fiction. There was no organisation (whether corporate or otherwise) which constituted Community Bulk Buy, and consumers’ purchases of solar PV systems were not aggregated in any way that generated cost savings for them. As the whole campaign involved a fiction, the representation that it was only available for a few days was also a fiction. The false representations contravened s 18. I also find that the false representations contravened s 29(1)(h) in that there was a false representation of affiliation with a Community Bulk Buy organisation, and contravened s 29(1)(i) in that there was a false representation with respect to the price of the solar PV systems.

98    I do not accept the applicant’s allegation that Vic Solar represented that the Community Bulk Buy promotion offered an opportunity to drastically reduce or completely eliminate household power bills. The evidence shows that the representations relating to power bill savings were not directly connected to the Community Bulk Buy marketing campaign. The power bill savings representations are addressed below.

99    I accept the applicant’s allegation that the testimonials contained in the Community Bulk Buy brochure, set out above, were false and/or misleading. Section 29(2) of the Australian Consumer Law provides that a representation that purports to be or concerns a testimonial (as referred to in ss 29(1)(e) and (f)) is taken to be misleading unless evidence is adduced to the contrary. No evidence has been adduced by the respondents in relation to the testimonials contained in the Community Bulk Buy brochure set out above. Accordingly, the testimonials are taken to be misleading and a breach of ss 18 and 29(1)(e). Again, on the evidence, the contraventions occurred in the period June 2014 to December 2018.

The country of origin representations

100    The applicant alleges that, between 1 February 2013 and 31 January 2019, Vic Solar, itself or by its lead generators on its behalf or as agents, made false or misleading representations in breach of ss 18, 29(1)(k) and/or 33 of the Australian Consumer Law to consumers and prospective consumers that the solar panels and/or inverters supplied by Vic Solar were made in Germany, the Netherlands, Japan and the USA, when they were not made in any of those countries (the country of origin representations).

101    I accept that allegation in part. As set out above, the evidence shows that the brochures relating to the “One Solar” branded solar panels supplied by Vic Solar contained a representation that One Solar International’s solar panels utilised German and US engineering. That representation was false. Mr Srinivasan admitted in his examination that the solar panels and inverters supplied by Vic Solar under the One Solar brand were manufactured in China. The representation was therefore a breach of ss 18 and 29(1)(k). The period of contravention was from June 2014 to December 2018 (being the period in which the lead generators were engaged by Vic Solar).

102    I am not satisfied that the representation, as alleged by the applicant, was also a breach of s 33. The applicant did not allege that Vic Solar made a representation as to the nature, the manufacturing process, the characteristics or the suitability for purpose of the solar PV systems sold by it. The applicant’s allegation was confined to the country of origin of the solar PV systems. The pleaded allegation does not support a finding under s 33.

103    In relation to the alleged representation relating to the Netherlands and Japan, the applicant relied on a diagram in the One Solar brochure which showed that certain components of the solar PV system were manufactured in the Netherlands and Japan. No evidence was adduced as to the place of manufacture of those components. Accordingly, I cannot be satisfied that the representation was false.

104    I also find that VicSolar made misleading country of origin representations to the following consumer witnesses:

(a)    Mr Altobelli and Mr Johansen were told by a Vic Solar sales representative that the solar panels supplied by Vic Solar were German made, which was false;

(b)    Mr Boast was given a One Solar brochure which indicated that the inverters were manufactured in Germany or the USA, which was false.

105    Those misleading representations were a breach of ss 18 and 29(1)(k).

The One Solar representations

106    The applicant alleges that, between 1 February 2013 and 31 January 2019, Vic Solar by itself or by its lead generators on its behalf or as agents, made false or misleading representations in breach of ss 18, 29(1)(a), 29(1)(k) and/or 33 of the Australian Consumer Law that the solar panels and/or inverters were manufactured by a company called One Solar, which was a leading global manufacturer of solar panels (the One Solar representations).

107    I accept that allegation in part. As set out above, the evidence shows that the brochures relating to the “One Solar” branded solar panels supplied by Vic Solar contained a representation that One Solar International is a leading global manufacturer of Solar PV system solutions for the residential and commercial market and that One Solar International is the world’s first fully integrated “one-stop-shop” solar company that controls the whole process of manufacturing, installation and servicing of entire solar PV system applications. Those representations were false. Mr Srinivasan admitted in his examination that One Solar International does not manufacture solar panels, but merely owns the brand name “One Solar”. The representation was a breach of s 18 and also a breach of s 29(1)(a) as it is a representation that the goods are of a particular standard, quality or grade (that One Solar is a leading global manufacturer). The period of contravention was from June 2014 to December 2018 (being the period in which the lead generators were engaged by Vic Solar).

108    I am not satisfied that the representation, as alleged by the applicant, was also a breach of ss 29(1)(k) or 33. The representation that One Solar is a “leading global manufacturer” does not pertain to the place of origin of the solar PV systems supplied by Vic Solar within s 29(1)(k). Nor does the representation pertain to the nature, the manufacturing process, the characteristics or the suitability for their purpose of the solar PV systems supplied by Vic Solar.

Bill saving representations

109    The applicant alleged that, between 1 February 2013 and 31 January 2019, Vic Solar itself, or by its lead generators on its behalf or as agents, made false or misleading representations to customers and potential customers, in breach of s 18 and/or s 29(1)(g) of the Australian Consumer Law, that the solar panels and/or inverters supplied by Vic Solar would drastically reduce or eliminate the consumer’s power bills (the bill saving representations). The particulars to the allegation were confined to the dealings with five of the consumer witnesses: Ms Capodicasa, Mr Altobelli, Mr Davis, Mr Boast and Mr Johansen. The particulars did not extend to Vic Solar’s marketing and sales material more generally, even though the marketing and sales material contained statements to the effect that Vic Solar’s sales panels would generate electricity bill savings of 70% or 80%. The applicant is to be held to its particulars and therefore I make no findings beyond the particularised case.

110    In support of its allegation, the applicant relied on s 4 of the Australian Consumer Law which provides that, if a person makes a representation with respect to any future matter and does not have reasonable grounds for making the representation, the representation is taken, for the purposes of the Australian Consumer Law, to be misleading.

111    The evidence of each of Ms Capodicasa, Mr Altobelli, Mr Davis, Mr Boast and Mr Johansen summarised above shows that the bill saving representation was made to each of them and that the representations were false:

(a)    Ms Capodicasa was told on 23 September 2015 that, after installing the solar PV system she would not receive another energy bill, but she continued to receive electricity bills after the solar panels were installed;

(b)    Mr Altobelli was told on 30 September 2015 that, once he had installed the solar panels, he would never get an electricity bill again but he continued to receive bills;

(c)    Mr Davis was told on 24 April 2017 that the payments to Vic Solar (for the solar panels) would take the place of his power bills, but the solar power credits received by Mr Davis do not cover even half of his power bill;

(d)    Mr Boast was told on 23 May 2017 that, once the solar system was installed, it would heavily reduce his electricity bill, but his power bills were only reduced slightly; and

(e)    Mr Johansen was told on 5 December 2018 that the cost for the solar panels would only be $14 more than his then current power bill, so that he would only be paying $78 a fortnight, and that he might receive a small electricity bill of about $10, but Mr Johansen did not receive any material (cost saving) benefit from the solar panels.

112    On the basis of the expert evidence given by Mr Warwick Johnston, I also find that Vic Solar did not have a reasonable basis for making the bill saving representations to the consumer witnesses. Mr Johnston calculated that the most the consumer witnesses could have expected to save from their power bill was 42%, and for some of the consumer witnesses, the power bill saving was half that amount, as low as 19%, and that the consumer witnesses’ systems would not generate enough energy to eliminate consumption from the grid with the result that a zero-dollar power bill was physically impossible.

113    Accordingly, I find that the bill saving representations made to each of Ms Capodicasa, Mr Altobelli, Mr Davis, Mr Boast and Mr Johansen contravened s 18 and also contravened s 29(1)(g) as the bill saving representations contained false representations that the solar PV systems had particular benefits.

The Clean Energy Council representations

114    The applicant alleged that, a number of times between 1 February 2013 and 31 January 2019, by distributing brochures to customers or potential customers which contained Clean Energy Council’s corporate logo (the Clean Energy Council representation), Vic Solar breached ss 18 and 29(1)(g) of the Australian Consumer Law by making false or misleading representations that Vic Solar or One Solar had a sponsorship, approval or affiliation with the Clean Energy Council. The reference to s 29(1)(g) appears to be an unintended error and is intended to be a reference to s 29(1)(h). The applicant alleged that the Clean Energy Council representation was false or misleading in that neither Vic Solar nor One Solar:

(a)    were permitted to use the Clean Energy Council’s corporate logo for any purpose;

(b)    were signatories to the Solar Retailer Code of Conduct; or

(c)    were Clean Energy Council Approved Solar Retailers.

115    I accept that allegation in the following respects. The One Solar brochures exhibited to the affidavits of Mr Boast and Ms Sexton both depict the Clean Energy Council logo in multiple locations – most notably, prominently on the front page of the brochure. The use of that logo carries a representation that One Solar International is affiliated with, or approved by, the Clean Energy Council. The evidence of Ms Sexton establishes that the representation was false. Vic Solar (which issued the One Solar brochures) was not authorised to use the Clean Energy Council logo. Accordingly, the issue of the brochure to consumers was a breach of ss 18 and 29(1)(h) of the Australian Consumer Law.

116    The evidence does not establish the extent of the contraventions, beyond the affidavits of Mr Boast and Ms Sexton. Ms Sexton’s evidence establishes that One Solar brochures displaying the Clean Energy Council logo were being distributed in the period from September 2016 until at least February 2017. Mr Boast received the One Solar brochure on 23 May 2017. I note that the One Solar brochure produced by the lead generator Prism did not contain the Clean Energy Council brochure, which indicates that different versions of the brochure were being used by Vic Solar in that period. Accordingly, I find that on an indeterminate number of occasions in the period from September 2016 to May 2017, Vic Solar made the Clean Energy Council representations in breach of ss 18 and 29(1)(h).

Unsolicited Consumer Agreements

Overview

117    Division 2 of Part 3-2 of the Australian Consumer Law regulates the formation and content of “unsolicited consumer agreements”, which are defined by s 69 (within that Division).

118    The applicant alleges that the agreements entered into by Vic Solar for the supply and installation of solar PV systems were unsolicited consumer agreements and that Vic Solar, itself or by its lead generators (as dealers or agents of Vic Solar), contravened the following provisions relating to unsolicited consumer agreements:

(a)    s 73(1)(c), which provides that a dealer must not call on a person for the purpose of negotiating an unsolicited consumer agreement, or for an incidental or related purpose, before 9 am or after 6 pm (or after 5 pm on a Saturday);

(b)    s 74(a), which requires that a dealer who calls on a person for the purpose of negotiating an unsolicited consumer agreement, or for an incidental or related purpose, must, as soon as practicable and in any event before starting to negotiate, clearly advise the person that the dealer’s purpose is to seek the person’s agreement to a supply of the goods or services concerned;

(c)    s 76(a), which provides that a dealer must not make an unsolicited consumer agreement with a person unless, before the agreement is made, the person is given information as to their right to terminate the agreement during the termination period and the way in which the person may exercise that right;

(d)    s 78(1), which provides that, if an unsolicited consumer agreement was not negotiated by telephone, the dealer who negotiated the agreement must give a copy of the agreement to the consumer under the agreement immediately after the consumer signs the agreement;

(e)    ss 79(b)(i) and (c)(i), which provide that the supplier under an unsolicited consumer agreement must ensure that the agreement complies with the following requirements:

(iii)    (paragraph (b)(i)) its front page must include a notice that conspicuously and prominently informs the consumer of the consumer’s right to terminate the agreement; and

(iv)    (paragraph (c)(i)) it must be accompanied by a notice that may be used by the consumer to terminate the agreement;

(f)    s 84, which provides that, if an unsolicited consumer agreement is terminated in accordance with s 82, the supplier under the agreement must, immediately upon being notified of the termination, return or refund to the consumer under the agreement any consideration (or the value of any consideration) that the consumer gave under the agreement or a related contract or instrument; and

(g)    ss 86(b) and (c), which provide that the supplier under an unsolicited consumer agreement must not accept or require any payment, or any other consideration, in connection with the goods or services to be supplied under the agreement during the period starting on the day on which the agreement was made and ending at the end of the tenth business day after the day on which the agreement was made.

119    The first question to be determined is whether the agreements entered into by Vic Solar for the supply and installation of solar PV systems were unsolicited consumer agreements within the meaning of s 69 of the Australian Consumer Law.

Did Vic Solar enter into unsolicited consumer agreements?

120    Section 69 of the Australian Consumer Law relevantly provides as follows:

69 Meaning of unsolicited consumer agreement

(1)     An agreement is an unsolicited consumer agreement if:

(a)     it is for the supply, in trade or commerce, of goods or services to a consumer; and

(b)     it is made as a result of negotiations between a dealer and the consumer:

(i)     in each other’s presence at a place other than the business or trade premises of the supplier of goods or services; or

    (ii)     by telephone;

whether or not they are the only negotiations that precede the making of the agreement; and

(c)     the consumer did not invite the dealer to come to that place, or to make a telephone call, for the purposes of entering into negotiations relating to the supply of those goods or services (whether or not the consumer made such an invitation in relation to a different supply); and

(d)     the total price paid or payable by the consumer under the agreementis more than $100].

121    The word “dealer” is defined by s 71 as follows:

A dealer is a person who, in trade or commerce:

(a)     enters into negotiations with a consumer with a view to making an agreement for the supply of goods or services to the consumer; or

(b)     calls on, or telephones, a consumer for the purpose of entering into such negotiations;

whether or not that person is, or is to be, the supplier of the goods or services.

122    The word “negotiation” is defined by s 72 as follows:

A negotiation, in relation to an agreement or a proposed agreement, includes any discussion or dealing directed towards the making of the agreement or proposed agreement (whether or not the terms of the agreement or proposed agreement are open to any discussion or dealing).

123    In the present case, the agreements entered into by Vic Solar for the supply of solar PV systems satisfied the requirements in ss 69(1)(a) and (d). The question is whether they satisfied the requirements in ss 69(1)(b) and (c).

124    The evidence shows that Vic Solar’s business model involved the appointment of the lead generators to knock on the doors of home-owners, enter into a discussion about the supply of solar PV systems (under the false marketing concept of a Community Bulk Buy) and ask the home-owner whether they wished to have a Vic Solar representative visit their house to discuss an agreement for the supply of a solar PV system. If the home-owner answered affirmatively, a Vic Solar representative would then attend the house for that purpose.

125    The applicant submitted that the lead generators engaged by Vic Solar were “dealers” within the meaning of s 71 because their initial discussions with the home-owner were “negotiations within the meaning of s 72. The applicant argued that any agreement for the supply of the solar PV system that ensued was made as a result of the initial discussions between the lead generators and the home-owner, and it followed that the requirements of ss 69(1)(b) and (c) were satisfied.

126    By paragraph 32 of its defence, Vic Solar denied that the agreements entered into by Vic Solar for the supply and installation of solar PV systems were unsolicited consumer agreements within the meaning of s 69 of the Australian Consumer Law and pleaded that:

(a)    the lead generators were engaged to determine whether prospective customers had an interest in installing a solar PV system and, if so, making an appointment with a sales consultant from Vic Solar;

(b)    the lead generators were not authorised to enter into an agreement for the sale of a solar PV system on behalf of Vic Solar; and

(c)    by the time a customer made an appointment inviting a sales consultant to visit their home they had been fully informed that the predominant purpose of the visit was to negotiate an agreement for the supply of a solar energy system.

127    I accept the applicant’s submission and find that the agreements entered into by Vic Solar for the supply and installation of solar PV systems, following the discussions with home-owners undertaken by lead generators, were unsolicited consumer agreements.

128    In my view, the lead generators are dealers within the meaning of s 71. Their activities are in trade or commerce and involve entering into negotiations with consumers with a view to making an agreement for the supply of a solar PV system to the consumer. It is not a requirement of s 71 that the dealer enter into the supply agreement. That is made plain by the express proviso in the section that a person may be a dealer even though the person is not the supplier of the relevant goods or services the subject of the agreement. What the section requires is that the dealer enter into negotiations with a view to making an agreement. The words “with a view” convey the purpose or object of the negotiations, being the making of an agreement for the supply of goods or services to the consumer. The word “negotiation” is defined broadly in s 72 to include any discussion or dealing directed toward the making of an agreement. It is not a requirement of s 72 that the discussion relate to the price or other terms or conditions of the supply agreement. The section merely requires that the discussion be directed toward the making of an agreement. Again, the words “directed toward” conveys the purpose or object of the discussion. The evidence shows that sole purpose of the lead generators in knocking on home-owners doors was to enter into discussions with the object of generating the home-owner’s interest in purchasing a solar PV system and seeking a further appointment to discuss the purchase of such a system.

129    It follows from the above that the agreements entered into by Vic Solar as a result of the “leads” generated by the lead generators satisfy paragraphs (b) and (c) of s 69(1). In relation to paragraph (c), the evidence shows that the relevant consumers did not invite the lead generators to come to their homes. The lead generators engaged in “door-knocking” activity. In relation to paragraph (b), I am satisfied that the Vic Solar agreements were made “as a result of” negotiations between the lead generators and the consumers in each other’s presence at a place other than the business or trade premises of Vic Solar. The phrase “as a result of” conveys a notion of causation – the agreement must be an outcome of the negotiation. However, it is not necessary for the negotiations to be the sole “cause” of the resulting agreement. Paragraph (b) makes clear that the negotiations that are the subject of the paragraph need not be the only negotiations that precede the making of the agreement. It is sufficient that they are a cause of the agreement. The Court merely needs to be satisfied that the agreement results from the negotiations, even if additional negotiations are necessary before the agreement is made. In the present case, I am satisfied that the Vic Solar supply agreements resulted from the discussions between the lead generators and home-owners, because those discussions led directly to the further negotiations between Vic Solar and the home-owner that resulted in the agreement.

130    In my view, the foregoing conclusions are consistent with the apparent purpose of the provisions of Division 2 of Part 3-2 of the Australian Consumer Law, which is to define unsolicited consumer agreements in such a way that the provisions cannot be avoided by trading stratagems. In that respect, the Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010 (which introduced the current provisions of Division 2 of Part 3-2) stated in respect of s 69(1)(b) (at [8.11]):

The second element of the test requires the agreement to have resulted from negotiations between a dealer and the consumer either in person (at a place other than the business or trade premises of the supplier) or by telephone, regardless of whether other negotiations preceded the making of the agreement. This provision is designed to prevent dealers from avoiding the unsolicited selling provisions by, for example, making an uninvited telephone call and persuading the consumer to make an appointment to carry out the negotiations at home.

131    The second sentence of that paragraph confirms the construction of s 69(1) that I have found, that it is sufficient that the agreement results from an initial uninvited door knock or telephone call at which the consumer is persuaded to make an appointment for further negotiations at their home.

132    Further and in any event, s 70 of the Australian Consumer Law provides as follows:

70 Presumption that agreements are unsolicited consumer agreements

(1)    In a proceeding relating to a contravention or possible contravention of this Division (other than a criminal proceeding), an agreement is presumed to be an unsolicited consumer agreement if:

(a)    a party to the proceeding alleges that the agreement is an unsolicited consumer agreement; and

(b)     no other party to the proceeding proves that the agreement is not an unsolicited consumer agreement.

(2)    In a proceeding relating to a contravention or possible contravention of this Division (other than a criminal proceeding), it is presumed that a proposed agreement would be an unsolicited consumer agreement if it were made if:

(a)      a party to the proceeding alleges that the proposed agreement would be an unsolicited consumer agreement if it were made; and

(b)      no other party to the proceeding proves that the proposed agreement would not be an unsolicited consumer agreement if it were made.

133    In the present case, the applicant alleged that all of the agreements entered into by Vic Solar were unsolicited consumer agreements, and the respondents adduced no evidence to the contrary. In the circumstances, I also rely on the statutory presumption that the agreements were unsolicited consumer agreements.

Contraventions of section 73(1)(c) – permitted hours for calling

134    Section 73 of the Australian Consumer Law provides as follows:

73 Permitted hours for negotiating an unsolicited consumer agreement

(1)     A dealer must not call on a person for the purpose of negotiating an unsolicited consumer agreement, or for an incidental or related purpose:

   (a)     at any time on a Sunday or a public holiday; or

   (b)     before 9 am on any other day; or

(c)     after 6 pm on any other day (or after 5 pm if the other day is a Saturday).

(2)     Subsection (1) does not apply if the dealer calls on the person in accordance with consent that:

(a)     was given by the person to the dealer or a person acting on the dealer’s behalf; and

(b)    was not given in the presence of the dealer or a person acting on the dealer’s behalf.

135    The applicant alleged that Vic Solar contravened s 73(c) by its lead generator or a Vic Solar representative attending at the homes of Mr Davis on 24 April 2017 and Mr Boast on 23 May 2017 after 6pm for the purposes of negotiating an unsolicited consumer agreement.

136    Mr Davis gave evidence that a Vic Solar representative called on him at his home after 7pm. His evidence regarding the origin of that interaction is as follows:

On or about 24 April 2019 at around 4pm, I was leaving my driveway when I saw a man putting a leaflet in my letterbox. I approached the man who advised that he was from Vic Solar. He was not wearing a uniform but was wearing business clothes. I did not find out his name. He asked me whether I was interested in putting solar panels on my house, I told him that I was interested. He then called another person in front of me and organised a meeting at our property for 7pm that night. He said that this meeting would provide us with an opportunity to ask for more information about the packages on offer.

At around 7pm that night, a sales representative from Vic Solar attended our property and came inside…

137    On the basis of that evidence, I am satisfied that the initial contact between the person dropping leaflets and Mr Davis satisfied the requirements of s 69(1), such that the resulting agreement with Mr Davis was an unsolicited consumer agreement. I am also satisfied that the Vic Solar representative who called on Mr Davis after 6pm was a dealer within the meaning of s 71, and he called on Mr Davis for the purpose of negotiating an unsolicited consumer agreement. Thus, the elements of s 73(1) are made out. I am further satisfied that s 73(2) does not apply because, while Mr Davis gave consent for the Vic Solar representative to call on him at 7pm that night, that consent was given in the presence of the person dropping the leaflets, who was acting on behalf of Vic Solar.

138    Mr Boast gave evidence that on or around 23 May 2017 at about 6pm, he received a knock on the door from a man named Srikanth from Vic Solar. The evidence shows that the purpose of calling on Mr Boast was to negotiate an unsolicited consumer agreement, and Mr Boast ultimately entered into an agreement with Vic Solar that evening. That conduct was in breach of s 73.

139    I therefore accept the applicant’s allegation in respect of the conduct of Vic Solar’s sales representatives who called on Mr Davis and Mr Boast (who are dealers within the meaning of s 71). While the prohibition in s 73 is directed to the dealer who makes the visit out of hours, s 77 provides that the supplier is taken to have also contravened the provision (being a provision of Subdivision B of Division 2). Accordingly, I find that Vic Solar is also taken to have contravened s 73.

Contraventions of section 74(a) – notification of purpose of visit

140    Section 74 of the Australian Consumer Law provides as follows:

74 Disclosing purpose and identity

A dealer who calls on a person for the purpose of negotiating an unsolicited consumer agreement, or for an incidental or related purpose, must, as soon as practicable and in any event before starting to negotiate:

(a)     clearly advise the person that the dealer’s purpose is to seek the person’s agreement to a supply of the goods or services concerned; and

(b)     clearly advise the person that the dealer is obliged to leave the premises immediately on request; and

(c)     provide to the person such information relating to the dealer’s identity as is prescribed by the regulations.

141    The applicant alleges that, between 1 February 2013 and 31 January 2019, Vic Solar, itself or by its lead generator as agent, called upon persons for the purpose of negotiating an unsolicited consumer agreement, or for an incidental or related purpose, and did not before starting to negotiate clearly advise the person that the dealer’s purpose was to seek the person’s agreement to a supply of the goods or services by Vic Solar in breach of s 74(a).

142    For the reasons given earlier, the lead generators acting on behalf of Vic Solar were dealers within the meaning of s 71 and, when knocking on home-owners doors to solicit “leads” for the sale of solar PV systems, were engaged in negotiations within the meaning of s 72. I am also satisfied on the evidence that the lead generators failed to clearly advise the home-owners that the dealer’s purpose was to seek agreement to a supply of a Vic Solar PV system before beginning to negotiate. The scripts used by the lead generators show that the lead generators told home-owners that:

(a)    the lead generator was not seeking to sell anything;

(b)    the lead generator was a representative of a Community Bulk Buy organisation; and

(c)    the lead generator would set up an appointment so that the home-owner’s needs and suitability for a solar PV system could be assessed.

143    As found above, those statements were misleading in that the Community Bulk Buy was a fiction. The effect of the statements was that the lead generators failed to advise clearly that the true purpose of the visit was to seek the home-owner’s agreement to a supply of a solar PV system by Vic Solar. Therefore, the lead generators contravened s 74(a). I find that the contraventions occurred during the period of appointment of the lead generators, between June 2014 and December 2018. While the prohibition in s 74 is directed to the dealer who makes the visit, s 77 provides that the supplier is taken to have also contravened the provision (being a provision of Subdivision B of Division 2). Accordingly, I find that Vic Solar is also taken to have contravened s 74(a).

Contravention of ss 76(a) and 79 – notification of termination rights

144    Section 76 of the Australian Consumer Law provides as follows:

76 Informing person of termination period etc.

A dealer must not make an unsolicited consumer agreement with a person unless:

(a)     before the agreement is made, the person is given information as to the following:

(i)     the person’s right to terminate the agreement during the termination period;

(ii)     the way in which the person may exercise that right;

(iii)      such other matters as are prescribed by the regulations; and

(b)    if the agreement is made in the presence of both the dealer and the person—the person is given the information in writing; and

(c)    if the agreement is made by telephone—the person is given the information by telephone, and is subsequently given the information in writing; and

(d)    the form in which, and the way in which, the person is given the information complies with any other requirements prescribed by the regulations.

145    The termination period for an unsolicited consumer agreement is defined by s 82. As Vic Solar’s agreement were negotiated in person and not by telephone, the termination period would ordinarily be 10 business days from the day the agreement was made (see s 82(3)(a)). In circumstances where Vic Solar contravenes s 76, the termination period is extended to 6 months (see s 82(3)(d)).

146    Regulation 83 of the Competition and Consumer Regulations 2010 (Cth) prescribes, for the purposes of s 76(a)(iii), information about the prohibition in s 86 of the Australian Consumer Law. Section 86 prohibits a supplier under an unsolicited consumer agreement from supplying goods or services or accepting or requiring any payment within the period of 10 business days after the agreement was made.

147    Regulation 84 of the Competition and Consumer Regulations 2010 (Cth) prescribes, for the purposes of s 76(d), that the information given in writing must be:

(a)    attached to the unsolicited consumer agreement;

(b)    transparent; and

(c)    in text that is the most prominent text in the document, other than the text setting out the dealer’s or supplier’s name or logo.

148    Additionally, s 79 of the Australian Consumer Law relevantly provides as follows:

79 Requirements for all unsolicited consumer agreements etc.

The supplier under an unsolicited consumer agreement must ensure that the agreement, or (if the agreement was negotiated by telephone) the agreement document, complies with the following requirements:

(a)     ;

(b)    its front page must include a notice that:

(i)     conspicuously and prominently informs the consumer of the consumer’s right to terminate the agreement; and

(ii)     conspicuously and prominently sets out any other information prescribed by the regulations; and

(iii)     complies with any other requirements prescribed by the regulations;

(c)     it must be accompanied by a notice that:

(i)     may be used by the consumer to terminate the agreement; and

(ii)     complies with any requirements prescribed by the regulations;

149    Regulation 85 of the Competition and Consumer Regulations 2010 (Cth) prescribes, for the purposes of s 79(b)(ii), that the following information must be set out on the front page of an unsolicited consumer agreement:

(a)    the text ‘Important Notice to the Consumer’;

(b)    the text ‘You have a right to cancel this agreement within 10 business days from and including the day after you signed or received this agreement; and

(c)    the text ‘Details about your additional rights to cancel this agreement are set out in the information attached to this agreement’.

150    Regulation 86 of the Competition and Consumer Regulations 2010 (Cth) prescribes, for the purposes of s 79(b)(iii), the following requirements:

(a)    the front page of the agreement must be signed by the consumer; and

(b)    the front page of the agreement must include the day on which the consumer signed the document.

151    The applicant alleges that, between 1 February 2013 and 31 January 2019, Vic Solar, itself or by its lead generator, made unsolicited consumer agreements with consumers in breach of s 76(a) in that, before the agreements were made, the consumer was not given information in writing as to:

(a)    the consumer’s right to terminate the agreement during the termination period; or

(b)    the way in which the consumer may exercise that right.

152    The applicant further alleges that, between 1 February 2013 and 31 January 2019, Vic Solar, itself or by its lead generator, breached s 79 in that Vic Solar entered into unsolicited consumer agreements for the supply of its goods and services to consumers that:

(a)    did not contain on the front page a notice that conspicuously and prominently informed the consumer of the consumer’s right to terminate the agreement in accordance with s 79(a)(b)(i);

(b)    were not accompanied by a notice that could be used by the consumer to terminate the agreement in accordance with s 79(c)(i); and

(c)    purported to impose a $500 cancellation fee upon termination, which was not in accordance with a consumer’s termination rights under s 84.

153    The allegation concerning the cancellation fee was not the subject of evidence or submissions and I treat it as having been withdrawn.

154    In evidence were two versions of the Vic Solar supply agreement. The first version was a pro forma document produced by Vic Solar to the applicant on 15 August 2016, in response to a request that was first made by the applicant. The pro forma version contained, on the front page, in prominent text, the following statement:

THIS AGREEMENT IS SUBJECT TO A 10 BUSINESS DAY COOLING OFF PERIOD

155    I consider that the statement, if it appeared in contracts signed by Vic Solar with consumers, would have complied with s 76(a)(i). However, even if the pro forma contract had been used by Vic Solar, the contract would not have satisfied the requirements of s 76(a)(ii) by not explaining how a person can terminate the agreement. Nor would the contract have satisfied the requirements of s 76(a)(iii) which requires the inclusion of information about the prohibition in s 86 of the Australian Consumer Law (which prohibits a supplier under an unsolicited consumer agreement from supplying goods or services or accepting or requiring any payment within the period of 10 business days after the agreement was made). Nor would the contract have satisfied the detailed requirements of s 79, including by failing to include the information prescribed for the purposes of s 79(b)(ii) and not attaching a notice about cancellation as required by s 79(c).

156    The second version of the Vic Solar supply agreement in evidence were the contracts signed by six of the consumer witnesses: Ms Capodicasa on 23 September 2015; Mr Altobelli on 30 September 2015; Ms Wright on 18 November 2016; Mr Davis on 24 April 2017; Mr Boast on 23 May 2017; and Mr Johansen on 5 December 2018. Each of those contracts were in the same form. None of those contracts contained information regarding the termination period. Each of them failed to comply with the requirements of ss 76 and 79 set out above.

157    Having regard to the evidence of the consumer witnesses, I infer that the form of agreements used by Vic Solar in its day-to-day business were the forms signed by the consumer witnesses. That inference is supported by the fact that the same form of agreement was used by Vic Solar over a lengthy period of time, from September 2015 to December 2018. I place no weight on the pro forma agreement produced by Vic Solar to the applicant in August 2016 in circumstances where the evidence shows that Vic Solar signed contracts in a different form after that date (Ms Wright, Mr Davis, Mr Boast and Mr Johansen all entered into agreements with Vic Solar after 15 August 2016). I consider that it is appropriate to draw that inference in circumstances where the respondent elected not to appear and adduce evidence to the contrary at the trial.

158    Accordingly, I find that on each occasion that Vic Solar entered into agreements in the course of its business operations in the period June 2014 to December 2018, there was a contravention of ss 76 and 79 of the Australian Consumer Law. While the prohibition in s 76 is directed to the dealer who makes the unsolicited consumer agreement (which will ordinarily be a sales representative of the supplier), s 77 provides that the supplier is taken to have also contravened the provision (being a provision of Subdivision B of Division 2). The prohibition in s 79 is directed to the supplier under the unsolicited consumer agreement and stipulates that the supplier must ensure that the agreement is compliant. The statutory language is strict and Vic Solar failed to fulfil the statutory obligation. Accordingly, Vic Solar contravened both s 76 and s 79 in respect of the agreements entered into in the period June 2014 to December 2018.

Contravention of s 78(1) – provide a copy of the agreement

159    Section 78 of the Australian Consumer Law provides as follows:

78 Requirement to give document to the consumer

(1)     If an unsolicited consumer agreement was not negotiated by telephone, the dealer who negotiated the agreement must give a copy of the agreement to the consumer under the agreement immediately after the consumer signs the agreement.

160    The applicant alleges that, on 30 September 2015, Vic Solar, itself or by its lead generator, contravened s 78 by making an unsolicited consumer agreement with Mr Altobelli in his home and not providing a copy of the agreement after Mr Altobelli had signed the agreement.

161    I accept that allegation. Mr Altobelli’s evidence was that Vic Solar’s sales representative, Luke Harbinson, did not leave a copy of the signed contract with Mr Altobelli on 30 September 2015 and later that evening Mr Altobelli rang Mr Harbinson seeking a copy of the contract.

162    The prohibition in s 78 is directed to the dealer who negotiates the unsolicited consumer agreement, in this case Mr Harbinson. Although the applicant sought to rely on s 77 to extend liability to Vic Solar as the supplier under the agreement, s 77 does not apply to the provisions of Subdivision C of Division 2 of Part 3-2. On its terms, it only applies to the provisions of Subdivision B. Nevertheless, by virtue of s 196(2) of the ACLFTA (which is applicable to the Australian Consumer Law (Vic)) and s 139B(2) of the CCA (which is applicable to the Australian Consumer Law (Cth)), the conduct of Vic Solar’s sales representatives (whether they are employees or agents) is taken to have been engaged in also by Vic Solar. I am satisfied on the evidence that Mr Harbinson was an employee or agent of Vic Solar because he had ostensible authority to enter into a supply agreement in the name of and on behalf of Vic Solar. It follows that Mr Harbinson’s conduct is taken to have been engaged in also by Vic Solar. In engaging in that conduct (negotiating the agreement with Mr Altobelli), Vic Solar was a dealer within the meaning of s 71 and therefore also contravened s 78.

Contravention of s 84 – refund upon termination

163    Section 84 of the Australian Consumer Law provides as follows:

84 Obligations of suppliers on termination

If an unsolicited consumer agreement is terminated in accordance with section 82, the supplier under the agreement must, immediately upon being notified of the termination, return or refund to the consumer under the agreement any consideration (or the value of any consideration) that the consumer gave under the agreement or a related contract or instrument.

164    The applicant alleged that, on or about 27 April 2015, Vic Solar contravened s 84 by not returning or refunding Ms Hizon’s deposit after she terminated the unsolicited consumer agreement entered into by her.

165    I accept that allegation. Ms Hizon’s evidence was that she entered into an agreement with Vic Solar on 22 April 2015 and paid a $400 deposit to Vic Solar’s sales representative that day. On 27 April 2015, Ms Hizon sent an email to Vic Solar cancelling the agreement. By email on 30 April 2015, a representative of Vic Solar acknowledged receipt of Ms Hizon’s email. Despite Ms Hizon attempting to contact Vic Solar by email and by phone, no-one from Vic Solar responded and Ms Hizon’s deposit was not returned. Accordingly, I find that Vic Solar contravened s 84.

Contraventions of s 86(b) and (c)

166    Section 86 of the Australian Consumer Law provides as follows:

86 Prohibition on supplies etc.

(1)     The supplier under an unsolicited consumer agreement must not:

(a)     supply to the consumer under the agreement the goods or services to be supplied under the agreement; or

(b)     accept any payment, or any other consideration, in connection with those goods or services; or

(c)     require any payment, or any other consideration, in connection with those goods or services;

during:

(d)     if the agreement was not negotiated by telephone—the period starting on the day on which the agreement was made and ending at the end of the tenth business day after the day on which the agreement was made; or

(e)     if the agreement was negotiated by telephone—the period starting on the day on which the agreement was made and ending at the end of the tenth business day after the day on which the consumer was given the agreement document relating to the agreement.

167    The applicant alleges that, on 22 April 2015 and 23 September 2015, Vic Solar, itself or by its lead generator, breached s 86 by:

(a)    accepting deposits from consumers within the restricted period stated in s 86; and/or

(b)    supplying and installing solar systems within the restricted period stated in s 86.

168    By way of particulars, the applicant referred to the following conduct:

(a)    on 22 April 2015, Vic Solar through its sales representative accepted a deposit of $400 from Ms Hizon at the time of signing an unsolicited consumer agreement;

(b)    on 23 September 2015, Vic Solar through its sales representative accepted a deposit of $1,000 from Ms Capodicasa at the time of signing an unsolicited consumer agreement; and

(c)    on 29 September 2015, Vic Solar commenced installation of a solar system at Ms Capodicasa’s premises within 10 days of her signing the UCA on 23 September 2015.

169    I accept those allegations as particularised. The evidence of Ms Hizon and Ms Capodicasa is to the effect alleged. It follows that Vic Solar contravened s 86 in the manner alleged.

Unconscionable conduct

170    The applicant alleges that, during the period 1 February 2013 to 31 January 2019, Vic Solar, in trade or commerce, engaged in conduct in connection with the supply or possible supply of solar PV systems that was unconscionable in breach of s 21 of the Australian Consumer Law.

171    In support of that allegation, the applicant relies principally on the following four alleged matters:

(a)    the misleading conduct referred to earlier;

(b)    the unsolicited sales method including particularly the conduct that contravened the unsolicited consumer agreement provisions of the Australian Consumer Law referred to earlier;

(c)    the prices paid by consumers for Vic Solar’s solar PV systems which are alleged to have been above average market prices; and

(d)    Vic Solar made significant profits at the expense of consumers.

172    The allegation in paragraph (d) was not the subject of evidence or submissions and I take it to have been abandoned.

173    I have recently considered and summarised the relevant principles concerning s 21 of the Australian Consumer Law in Wade v J Daniels and Associates Pty Ltd [2020] FCA 1708 at [390]-[391]. It is unnecessary to reproduce that summary and I apply the principles there set out. In particular, I have taken into all of the factors referred to in s 22 of the Australian Consumer Law that are relevant.

174    I consider that Vic Solar’s business model, based on using the lead generators to knock on home-owners’ doors to generate invitations, a false “Community Bulk Buy” marketing concept amongst other false and misleading marketing statements and failing to comply with central elements of the unsolicited consumer agreement provisions of the Australian Consumer Law, constituted unconscionable conduct in contravention of s 21. The evidence supports the following conclusions:

(a)    Vic Solar’s business model was an intentional system of trading to call on consumers at their homes using the “lead generators”. Parliament has recognised that consumers are more vulnerable to predatory and unfair sales tactics when sales representatives visit them at their homes. This is because consumers may not have given any consideration to the product being offered and may not have undertaken any investigation of available market prices or alternative products. Some consumers may also experience heightened sales pressure when a sales representative visits their home. In recognition of those risks, Parliament has enacted Division 2 of Part 3-2 of the Australian Consumer Law to protect consumers in those circumstances.

(b)    An important element of Vic Solar’s business model was the false “Community Bulk Buy” marketing concept. The effect (and, I infer, intended effect) of that marketing concept was to create a false impression in the minds of home-owners that they had an opportunity to participate in a “community” or “social” enterprise that would generate costs savings for them. At its heart, the business model was dishonest and exacerbated the problems associated with unsolicited sales referred to in the preceding paragraph.

(c)    As set out earlier, many other aspects of Vic Solar’s marketing were false or misleading, including particularly that Vic Solar was offering a “leading brand” of solar PV systems manufactured in Germany and the US.

(d)    Vic Solar failed to comply with some of the most important requirements of Division 2 of Part 3-2 of the Australian Consumer Law. I have found that Vic Solar systemically failed to comply with the requirement of s 74(a) to disclose clearly the purpose of the visit (to sell solar PV systems supplied by Vic Solar) and the requirements of ss 76 and 79 to provide clear and prominent notification of termination rights and the means by which those rights could be exercised.

175    I also accept the expert evidence of Mr Johnston that the prices charged by Vic Solar for its solar PV systems were above average market prices for systems of similar quality. In my view, the evidence supports the conclusion that Vic Solar’s business model, summarised above, to some extent insulated Vic Solar from market pressures, thereby enhancing its ability to charge above market prices.

176    In my view, Vic Solar’s conduct of its business model objectively answers the description of being against conscience. It involved trickery and sharp practice, illegality and taking advantage of consumers in their homes when they are more vulnerable to such practices.

177    I accept the applicant’s submission that an analogy can be drawn with the facts in Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90; ATPR 42-447 in that Vic Solar’s business model, incorporating the Community Bulk Buy marketing concept, used a “deceptive ruse” to gain entry into the consumer’s home and encourage the sale. This conduct was done in bad faith and sought to exercise undue influence on the consumer by misrepresenting the nature of the company and the value of the product on offer.

178    Having regard to those matters, I find that Vic Solar engaged in unconscionable conduct in contravention of s 21 of the Australian Consumer Law in respect of each of its sales of solar PV systems between June 2014 and December 2018 (being the period in which it engaged lead generators to market its products).

179    I also accept that the sale of solar PV systems to each of the consumer witnesses was unconscionable contrary to s 21 of the Australian Consumer Law. Although the consumer witnesses do not refer to the Community Bulk Buy representation, as found earlier the transactions involved misleading conduct and breaches of Division 2 of Part 3-2 of the Australian Consumer Law. Further, Mr Johnston’s report shows that each of the consumer witnesses purchased solar PV systems for prices that were more expensive than the average prices on the market for similar products. I find that these transactions were specific instances of the overall unconscionable trading conduct of Vic Solar.

Mr Srinivasan’s accessorial liability

180    The applicant alleges that Mr Srinivasan was knowingly concerned in each of the contraventions of law alleged against Vic Solar, apart from the contraventions of ss 73, 78, 84 and 86 of the Australian Consumer Law.

181    It is well established that a person is knowingly concerned in a contravention of the Australian Consumer Law only if the person has intentionally participated in the contravention. The requisite intent is formed by knowledge of the essential matters which constitute the contravening conduct, whether or not the person knows that those matters are a contravention of the law: Yorke v Lucas (1985) 158 CLR 661 at 667 and 670 (Mason ACJ, Wilson, Deane and Dawson JJ); Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [48] (Gummow, Hayne and Heydon JJ).

182    In the present case, the applicant faced the evidentiary difficulty that Mr Srinivasan did not appear at the trial and, it follows, did not give evidence. As a result, the applicant must rely on such admissions as are made in Mr Srinivasan’s defence and statements made in his compulsory examination, as well as inferences that are available from the totality of the evidence. Applying the principles stated in Jones v Dunkel (1959) 101 CLR 298, knowledge will be more readily inferred where a respondent whose state of knowledge is in issue fails to give evidence, provided the evidence otherwise supports such an inference: see for example Bowler v Hilda Pty Ltd [2000] FCA 899 at [79] (Finn J); Lloyd v Belconnen Lakeview Pty Ltd [2019] FCA 2177; 377 ALR 234 at [323] (Lee J).

183    The evidence set out earlier supports the following findings in respect of Mr Srinivasan:

(a)    Mr Srinivasan was the director of, and a shareholder in, Vic Solar from October 2012 until it went into administration in November 2019. Mr Srinivasan was also a member and director of One Solar International. Mr Srinivasan admitted in his examination that he oversaw the direction of the Vic Solar business and worked within the business on a day-to-day basis.

(b)    Mr Srinivasan personally signed the agreement between Vic Solar and each of Aussie Excel and KVP. In his compulsory examination, Mr Srinivasan also admits that he negotiated the contract with Blue Rhino.

(c)    Mr Srinivasan understood and was responsible for Vic Solar’s marketing and sales system involving the lead generators knocking on household doors to seek an invitation for a Vic Solar sales representative to visit to discuss the sale of a solar PV system.

(d)    Mr Srinivasan admitted in his examination that each of the lead generators used marketing scripts and brochures on behalf of Vic Solar that were in similar form to those that are in evidence (as set out above) and that he reviewed and approved the marketing scripts used by the lead generators in the course of their marketing activities on behalf of Vic Solar.

(e)    Mr Srinivasan admitted in his examination that the Community Bulk Buy program was merely a marketing concept and, in reality, there was no “bulk” buying aspect to Vic Solar’s business.

(f)    Mr Srinivasan admitted in his examination that One Solar International does not manufacture solar panels, but merely owns the brand name “One Solar”, and that the solar panels and inverters supplied by Vic Solar under the One Solar brand were manufactured in China.

184    On the basis of those findings, I infer the following:

(a)    Mr Srinivasan knew that the Community Bulk Buy representations were false;

(b)    Mr Srinivasan knew that the country of origin representations were false;

(c)    Mr Srinivasan knew that the One Solar representations were false;

(d)    Mr Srinivasan knew that the form of agreements used by Vic Solar did not contain a notification of the consumer’s termination rights.

185    On the basis of the foregoing, and having regard to Mr Srinivasan’s role as director of Vic Solar and work on a day-to-day basis in Vic Solar, I find that Mr Srinivasan was knowingly concerned in the following contraventions of the Australian Consumer Law by Vic Solar:

(a)    the contraventions of ss 18 and 29 in respect of the making of the Community Bulk Buy representations, the country of origin representations and the One Solar representations; and

(b)    the contraventions of ss 76 and 79 in respect of Vic Solar’s consumer agreements.

186    I am satisfied that Mr Srinivasan had responsibility within Vic Solar for the business model, marketing documents and agreements which gave rise to those contraventions of the Australian Consumer Law by Vic Solar, and had personal knowledge of all of the facts and circumstances which gave rise to the contravention. It is unnecessary to find that Mr Srinivasan knew that Vic Solar’s trading conduct constituted a contravention of the law.

187    Otherwise, I am not satisfied on the evidence that Mr Srinivasan was knowingly concerned in the other contraventions of the Australian Consumer Law by Vic Solar. In relation to the Clean Energy Council representations, Mr Srinivasan’s compulsory examination does not establish that he knew that Vic Solar and One Solar International were not permitted to use the Clean Energy Council logo, or that representing that Vic Solar and One Solar International were affiliated with the Clean Energy Council was false. In relation to the contravention of s 21, I have found that Mr Srinivasan was knowingly concerned in conduct that forms the backbone of the unconscionable conduct engaged in by Vic Solar. However, the evidence does not enable me to draw inferences with sufficient confidence concerning Mr Srinivasan’s knowledge of other matters relevant to the finding of unconscionability, such as the failure of lead generators to state clearly the purpose of the visit to consumer’s homes and the relatively high prices charged to Vic Solar’s customers.

Conclusion

188    In conclusion, I have found that Vic Solar has contravened ss 18, 21, 29, 73, 74, 76, 78, 79, 84 and 86 of the Australian Consumer Law, and that Mr Srinivasan was knowingly concerned in Vic Solar’s contraventions of ss 18, 29, 76 and 79 of the Australian Consumer Law.

189    The applicant seeks declarations of contravention, which I am prepared to make, and also seeks other relief which will be the subject of a further hearing. Accordingly, the orders I will make are that the parties file draft short minutes containing an agreed form of declarations reflecting these reasons for decision and proposed orders for timetabling a hearing as to pecuniary penalties and other relief or, in the absence of agreement, the plaintiff and respondents file competing draft short minutes containing the declarations and timetabling orders proposed by each party and accompanying submissions in support of no more than 3 pages in length.

I certify that the preceding one hundred and eighty-nine (189) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Bryan.

Associate:

Dated:    29 January 2021