Federal Court of Australia

Australian Communications and Media Authority v Jones (No 4) [2023] FCA 834

ORDERS

THE COURT ORDERS THAT:

1.    The second respondent, Diverse Link Pty Ltd ACN 641 292 088, pay to the Commonwealth a penalty for the contraventions of s 15(2A) of the Interactive Gambling Act 2001 (Cth) in the sum of $5,000,000.00.

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

REASONS FOR JUDGMENT

THOMAS J:

BACKGROUND

1    In the default judgment decision in this matter, Australian Communications and Media Authority v Jones (No 3) [2023] FCA 511, the Court declared that, between 15 March 2021 and 13 April 2022, the second respondent, Diverse Link Pty Ltd, provided a prohibited interactive gambling service through https://redrawpoker.com/ and the Redraw Poker clubs on the PPPoker App with club identification numbers 3000693, 3000694 and 3000695 that had an Australian-customer link and by doing so contravened s 15(2A) of the Interactive Gambling Act 2001 (Cth) (IGA).

2    The applicant, Australian Communications and Media Authority (ACMA), has submitted that the Court should order Diverse Link to pay a penalty for the contraventions of s 15(2A) of the IGA in the sum of $5,000,000.

CIVIL PENALTY

3    A civil penalty provision under the IGA is enforceable under Part 4 of the Regulatory Powers (Standard Provisions) Act 2014 (Cth) (RPA) (s 64B(1) of the IGA). For the purposes of Part 4 of the RPA, the ACMA is an authorised applicant in relation to the civil penalty provisions (s 64B(2) of the IGA) and the Federal Court has jurisdiction in relation to the civil penalty provisions (s 64B(3) of the IGA).

RELEVANT PRINCIPLES IN RELATION TO PENALTY

4    If the Court is satisfied that there has been a contravention of the civil penalty provision, the Court may order the person to pay such penalty as the Court determines to be appropriate (s 82(3) of the RPA).

5    In the High Court decision in Australian Building and Construction Commissioner v Pattinson (2022) 399 ALR 599; [2022] HCA 13 (Pattinson), the principles guiding the imposition of civil penalties were fully discussed.

6    As was said in Pattinson (Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ at [40]), “discretionary power conferred by statute on a court, [is] to be exercised judicially, that is, fairly and reasonably having regard to the subject matter, scope and purpose of the legislation”. The Court continued (at [41]) that the Court was required “to ensure that the penalty it imposes is ‘proportionate’, where that term is understood to refer to a penalty that strikes a reasonable balance between deterrence and oppressive severity”.

7    In Pattinson, the High Court (Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ at [15]) concluded that “civil penalties are imposed primarily, if not solely, for the purpose of deterrence”. There are two aspects of deterrence, namely specific deterrence of the person who contravenes the penalty provisions and general deterrence of others who might contravene in the future.

8    In Trade Practices Commission v CSR Ltd (1991) ATPR ¶41-076 (CSR Ltd), French J (as he then was) said (at [40]):

The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the [TPA].

9    The Full Court of the Federal Court in Singtel Optus Pty Ltd (ACN 052 833 208) v Australian Competition and Consumer Commission (2012) 287 ALR 249; [2012] FCAFC 20 (Singtel Optus) at [62] (per Keane CJ, Finn and Gilmour JJ) said that a civil penalty “must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business”.

10    In that same context, Burchett and Kiefel (as her Honour then was) JJ in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 293 said:

[I]nsistence upon the deterrent quality of a penalty should be balanced by insistence that it “not be so high as to be oppressive”. Plainly, if deterrence is the object, the penalty should not be greater than is necessary to achieve this object; severity beyond that would be oppression.

11    So, in summary, the power conferred on the Court to impose a penalty must be exercised judicially and is imposed primarily for the purpose of deterrence – both specific deterrence of the person who contravenes the penalty provisions and general deterrence of others who might contravene in the future. The assessment of the penalty must have regard to the subject matter, scope and purpose of the legislation and must be proportionate in that it strikes a reasonable balance between deterrence and oppressive severity. The penalty should not be greater than is necessary to achieve the object of deterrence and severity beyond that level would be oppression. In that respect, the penalty must be fixed with a view to ensuring that it is not such as might be regarded by the offender, or others, as an acceptable cost of doing business. The penalty should put a price on contravention that is sufficiently high to deter repetition by the contravenor and others who might be tempted to contravene.

12    Section 82(6) of the RPA sets out four matters which the Court must take into account. It provides:

In determining the pecuniary penalty, the court must take into account all relevant matters, including:

(a)    the nature and extent of the contravention; and

(b)    the nature and extent of any loss or damage suffered because of the contravention; and

(c)    the circumstances in which the contravention took place; and

(d)    whether the person has previously been found by a court (including a court in a foreign country) to have engaged in any similar conduct.

13    When considering penalties under the Trade Practices Act 1974 (Cth) (TPA), French J in CSR Ltd pointed to several factors which informed the setting of an appropriate level of penalty (in that case, under the TPA, but the principles have been applied to other regulatory regimes in more recent times).

14    Those factors were as follows:

1.    The nature and extent of the contravening conduct.

2.    The amount of loss or damage caused.

3.    The circumstances in which the conduct took place.

4.    The size of the contravening company.

5.    The degree of power it has, as evidenced by its market share and ease of entry into the market.

6.    The deliberateness of the contravention and the period over which it extended.

7.    Whether the contravention arose out of the conduct of senior management or at a lower level.

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

9.    Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the [TPA] in relation to the contravention.

15    As will be obvious, these factors will be more relevant to some breaches than others.

RELEVANT MATTERS FROM THE EXPLANATORY MEMORANDUM

16    The purpose of the amendments, which incorporated the revised penalty regime of the IGA, was explained in the Explanatory Memorandum to the Interactive Gambling Amendment Bill 2016 (Cth). Amongst other things, the Bill was said to include new provisions prohibiting a person providing regulated interactive gambling services to Australians unless the person held a licence under the law of an Australian State or Territory and also to introduce a civil penalty regime to be enforced by the ACMA.

17    The civil penalty regime was included to enable the ACMA to apply a graduated range of enforcement tools to encourage and support improved compliance with the IGA.

18    The Explanatory Memorandum identified the problem (and damage to the Australian community) as being:

Australians are among the biggest gamblers in the world, spending $1,245 per capita in 2014. Online gambling, in particular online wagering (betting on racing and sporting events), is growing in Australia due to the ubiquity of mobile devices and changes in consumer behaviour. Consequently, offshore gambling operators target Australians which leads to negative social and economic effects on industry, racing and sporting associations, problem and at-risk gamblers, consumers and government. The key legislation – the IGA – which was enacted in 2001, has been ineffective in stopping offshore operators from providing interactive gambling services to Australians.

…

Many of the risk factors for problem gambling associated with online gambling may be heightened for gamblers who use mobile and supplementary devices. These include the convenience and easy accessibility and availability of gambling, enhanced privacy, perceived anonymity, and the reduced salience of electronic funds …

(footnote omitted)

19    In relation to the penalty regime, the Explanatory Memorandum said:

To reduce the adverse effects, the penalty amounts for contraventions of the IGA need to be high, in particular for major offences including the provision of prohibited interactive gambling services and unlicensed regulated interactive gambling services, to deter offshore global entities from providing services to the Australian market.

20    The Explanatory Memorandum referred to the increase of penalty units and the introduction of civil penalties at a higher rate compared with criminal penalties. When referring to the new subsections (15(2A) and 15(2B)), the Explanatory Memorandum indicated the intention was to introduce a parallel civil penalty provision at a higher level compared with the pecuniary penalty for contravention of s 15(1) in acknowledgement of the effect or stigma of the criminal conviction that would arise if the person were found guilty of breaching s 15(1).

21    The Explanatory Memorandum noted that the “increased penalty will ensure that the offence provides a sufficient deterrent”, recognising the costs to the community of the harm caused by the prohibited services.

22    The Explanatory Memorandum also noted that there would be a separate contravention in respect of each day during which the contravention occurs.

23    The fact that these measures were deliberately included as measures to ensure that the offence provides a sufficient deterrent underlies the importance of the measures.

THE FACTORS

24    As was pointed out in Pattinson (at [46]), the appropriate penalty will be one that strikes a reasonable balance between oppressive severity and the need for deterrence. The Court continued (at [47]) that the penalty which is appropriate to protect the public interest by deterring future contraventions may be moderated by taking into account the factors identified by French J (in CSR Ltd).

25    As was described by Rares, Stewart and Abraham JJ in Australian Competition and Consumer Commission v Employsure Pty Ltd (ACN 145 676 026) (2023) 407 ALR 302; [2023] FCAFC 5, the determination of a civil penalty involves a process of “instinctive synthesis” of the relevant factors.

26    As I have said, in Pattinson, the High Court concluded that the issue of punishment is not relevant in relation to the setting of penalty for contraventions such as the current contravention. The High Court concluded that deterrence (both specific and general) is relevant to the setting of penalty.

27    In this case, steps had been taken to deregister Diverse Link, with that process having been halted by application of the ACMA for the purpose of these proceedings. Without intervention from the ACMA, Diverse Link would be deregistered, therefore, no element of a specific deterrence is relevant to the assessment of penalty in this case.

28    However, the principle of general deterrence remains relevant.

29    The High Court in Pattinson recognised that “some concepts from criminal sentencing may usefully be deployed in the enforcement of a civil penalty regime. In this regard, concepts such as totality, parity and course of conduct may assist in the assessment of what may be considered reasonably necessary to deter further contraventions” (at [45]).

Totality principle

30    The totality principle (which requires that the total penalty should not exceed what is appropriate for the entire contravening conduct) does have relevance in these circumstances. This principle would, for example, suggest that, having regard to all of the circumstances, the entire contravening conduct would not warrant the imposition of a penalty at the level of the maximum penalty – a figure in excess of $3 billion.

Parity

31    As to parity, given that this is the first case involving the imposition of civil penalties for contraventions of the provision in question, there are no other cases which could be considered in ensuring parity between similar offences.

Course of conduct

32    In criminal matters, the course of conduct allows the Court to consider the grouping of like offences for contraventions in order to avoid double punishment for the same act or omission (Pattinson at [96]). Of course, the purpose of the penalty regime is not punishment, but deterrence. The course of conduct principle would contemplate the grouping of linked offences in order to avoid double counting for the same act or omission. The course of conduct may suggest treating the actions of Diverse Link over a number of days as just one contravention, given that the conduct was identical. Of course, in this case, the Parliament has deliberately, and expressly, provided that there will be a separate contravention on each day that the service is provided. It would be at odds with the legislative intent to assess the penalty on the basis that this is just one course of conduct which took place over a prolonged period. In my view, the course of conduct principle does not, therefore, have application. In this case, I believe that the totality principle will operate to take this factor into account.

The maximum penalty

33    The maximum penalty is an indication of the Legislature’s approach concerning the seriousness of the relevant conduct. This is a consideration which must be taken into account.

34    Diverse Link has been found to have contravened s 15(2A), which provides that a person must not provide an Australian based prohibitive interactive gambling service that has a designated country-customer link. The penalty for breach of s 15(2A) is 7,500 penalty units for each contravention.

35    Pursuant to s 15(2B), a person who contravenes s 15(2A) commits a separate contravention of that provision in respect of each day during which the contravention occurs (including the day the relevant civil penalty order is made or any later day).

36    Section 82(5) of the RPA provides that the pecuniary penalty must not be more than, if the person is a body corporate, 5 times the pecuniary penalty specified for the civil penalty provision (s 82(5)(a)).

37    On 14 May 2020, the then Attorney-General fixed the value of a penalty unit at $222.

38    The maximum penalty for each contravention is calculated taking into account the number of penalty units (7,500), the value of each penalty unit ($222) and the five times multiplier in the case of a body corporate (s 82(5) of the IGA). That figure is $8,325,000.

39    It is then necessary to apply the requirements of s 15(2B) – that the person contravening s 15(2A) commits a separate contravention in respect of each day during which the contravention occurs. The alleged contraventions occurred over 395 days (from 15 March 2021 to 13 April 2022 inclusive).

40    The calculation for the maximum penalty is 7,500 penalty units × $222 (the value for a penalty unit) × 5 (applicable for a body corporate) × 395 (for each separate contravention). The maximum penalty is therefore $3,288,375,000.

41    Taking into account the totality principle, the maximum penalty is, as described by Jagot, Yates and Bromwich JJ in Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (ACN 003 274 655) (2016) 340 ALR 25; [2016] FCAFC 181, “but one yardstick that ordinarily must be applied” (at [155]) and cannot be “applied mechanically” at [156].

42     As set out in the Explanatory Memorandum, the Legislature took the deliberate step of increasing the maximum penalty for the contravention and, moreover, providing that a separate contravention would occur on each day. This was to ensure that the increased penalty imposed sufficient deterrence.

Was the conduct serious?

43    The Legislature clearly regarded the conduct as serious as is reflected in the scheme (outlined earlier in these reasons) with respect to the assessment of penalty and fixing the maximum penalty which might be imposed.

44    The expert studies upon which the amendments were based also regarded the issue of online unregulated gambling as serious.

45    I conclude that the conduct was serious.

Nature and extent of the contravening conduct and the circumstances in which the conduct took place

46    In terms of the nature and extent of the contravening conduct, the service operated for an extended period of time. It was sophisticated and broad in its possible impact in that it offered the ability to play poker online for money from computers, phones and other devices. The process involved registration and purchase and redeeming of chips used in playing poker in the Redraw Poker clubs. Each chip was worth $1 and they were acquired through either bank transfers or bitcoin payments. Moneys were transferred to one of two Diverse Link bank accounts and the process was completely unregulated. Players were provided with a unique reference number to enable these transactions to take place.

47    From the evidence, it is clear that the system was well organised and was such that it was easy for players to join and play. In terms of the risk factors identified in the Explanatory Memorandum, the contravening conduct allowed access through mobile and supplementary devices, was easily accessible and likely will have been perceived as providing enhanced privacy and anonymity.

48    The process was unregulated and there were no controls and no way in which problem compulsive gamblers were assisted.

49    The ACMA obtained records from the Australian and New Zealand Banking Group (ANZ) and the Commonwealth Bank of Australia (CBA).

50    An independent expert reviewed the records between 11 March 2021 and 8 October 2021 (just over half of the contravention period) and identified:

(a)    a total of 27,773 deposits were made into the ANZ and CBA accounts from 714 individuals for the total value of $2,752,169.25. As to those deposits:

(i)    a total of 19,923 deposits from 585 individuals, with a value of $1,768,881.29, with a transaction description containing a seven-digit reference number (that was provided by the Redraw Poker website);

(ii)    a total of 661 deposits, from 33 individuals, with a value of $83,142.74, with a transaction description containing the following words or phrases “Redraw Poker, “redraw”, “DL”, “Diverse Link”, “diverse”, “ppp”, “pppoker”, “poker”, “chip” or other variations thereof;

(iii)    a total of six deposits, from four individuals, with a value of $161.00, which contained both the seven-digit reference number and the relevant words or phrases.

(b)    94 payments out of Diverse Link with a value of $179,456.23 to the provider of the PPPoker App. Diverse Link used the ANZ and CBA accounts to make purchases from the operator of the PPPoker App for the purpose of the operation of the Redraw Poker clubs on the PPPoker App.

51    Moreover, the solicitors for the ACMA undertook an analysis of the remaining transactions during the contravening period, which revealed that between 9 October 2021 and 13 April 2022 there were a total of 14,556 deposits into the account, with a value of $1,496,339.13. Of those deposits, 10,727 deposits, with a value of $998,323.41, contained a transaction description with a seven-digit number, and 230 further deposits, with a value of $20,655.00, had a transaction description linking the deposit to the contravening conduct.

52    The ACMA was unable to obtain any information regarding chip purchases using bitcoin. The reasonable inference to be drawn is that the figures derived by the independent expert and the solicitors for the ACMA will be less than the actual amount of money received by Diverse Link and will fall short of the true extent of Diverse Link’s contraventions.

53    There was no evidence available as to the profit made by Diverse Link as a result of the contraventions. This is because Diverse Link did not respond to the proceedings which have been brought.

54    The evidence from the independent expert and the analysis by the solicitors for the ACMA revealed that, during the contravening period, Diverse Link received approximately $4,200,000 in total deposits. Of that figure, approximately $2,860,000 related to records which contained a reference to the unique reference number or presence of relevant words and phrases which would indicate its link to the contraventions.

55    There is no evidence that Diverse Link undertook any activity other than the contravening conduct. As indicated earlier, Diverse Link was in the process of deregistration. I conclude that the deposits of approximately $4,200,000 were linked to the contravening conduct. I note that the figure of approximately $4,200,000 does not take into account transactions undertaken by bitcoin and I conclude that the actual figure involved was in excess of $4,200,000.

Nature and extent of any loss or damage suffered because of the contravention

56    Relevant to the nature and extent of any loss or damage suffered because of the contravention is the general detriment and damage suffered by the community due to the general impact of exposing Australians to unregulated and illegal interactive gambling. The Explanatory Memorandum emphasised this point, when highlighting the need for a more effective regulatory regime to be put in place and the imposition of penalties at a level which is an effective deterrent.

57    The Explanatory Memorandum noted (at p 19) that “the rate of problem gambling is higher amongst interactive gamblers compared to gamblers more generally”.

58    The Memorandum continued: “Many of the risk factors for problem gambling associated with online gambling may be heightened for gamblers who use mobile and supplementary devices. These include the convenience and easy accessibility and availability of gambling, enhanced privacy, perceived anonymity, and the reduced salience of electronic funds”.

59    These factors were identified in a Review which was commissioned by the Government preceding the amendment to the legislation.

60    Other evidence provided as to this factor was reflected in the two complaints which were made to the ACMA about Redraw Poker. Each of the complainants referred to losing thousands of dollars with one complainant explaining the reason for complaint as follows:

Redraw Poker act as unregulated agents taking money and exchanging them for chips on phone app pppoker. There is no responsible gambling feature, allowing people to make multiple accounts under fake identities … I have lost thousands at this site and asked to be banned multiple times but they can’t honour requests or just don’t have the care or capacity.

61    The loss or damage included financial loss from players playing poker in the Redraw Poker clubs. Whilst it is not possible to be specific, given the value of the deposits into the ANZ and CBA accounts and the fact that further transactions would have taken place by use of bitcoin, I conclude that the actual financial loss was significant.

62    The money that has been gambled, and lost, by Australians in circumstances where they should not have had access to the unregulated service is a broad measure of the risk and loss to the Australian community.

The size of the contravening company

63    Diverse Link was a small company, having a sole director and member. Searches undertaken by the ACMA have not identified any assets belonging to Diverse Link. The size of the contravening company is more relevant to specific deterrence and does not materially impact the question of general deterrence. Moreover, though the company was small, the funds received were at a high level. The level of deposits or turnover (which is reflective of the size of the business) is a factor which should be taken into account.

Whether the person has previously been found by a court (including a court in a foreign country) to have engaged in any similar conduct

64    Diverse Link was not previously been found by a court to have engaged in any similar conduct. This is not significant as it seems to have been a company incorporated for the purpose of the Redraw Poker clubs.

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

65    There is no evidence as to this issue. As mentioned, Diverse Link was a small company with just one member and a sole director. There is no evidence that Diverse Link had any management structure. This factor is not relevant to the current circumstances.

The degree of power it has, as evidenced by its market share ease of entry into the market

66    This factor is not relevant to the current contravention.

The deliberateness of the contravention and the period over which it extended

67    This particular contravention extended over a 12 month period. The contravention was clearly deliberate. Diverse Link has not co-operated with the ACMA or demonstrated any remorse for its conduct. After the proceedings were commenced against Diverse Link, steps were taken to deregister Diverse Link. Default judgment was ultimately entered by this Court due to various defaults of Diverse Link in these proceedings.

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

68    There is no evidence which would enable the Court to make a finding as to the corporate culture and there is no evidence as to any educational programs in place. This factor is not relevant to the current contraventions.

Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the IGA in relation to the contravention

69    As mentioned above, when the proceedings were instituted, steps were taken to deregister Diverse Link. Moreover, Diverse Link did not co-operate in relation to the proceedings and ultimately default judgment was entered as a result of default by Diverse Link. Diverse Link has shown no disposition to co-operate with the ACMA.

Recovery

70    It is accepted that there is virtually no likelihood of recovery. This flows from the fact that the company was to be deregistered with that position being halted by the ACMA for the purpose of these proceedings.

71    The limited likelihood of recovery of the penalty is a matter of no relevance.

72    This arises because of the fact that the financial circumstances of the contravenor, or the impact upon the contravenor, will be a factor of little weight against the compelling need for general deterrence.

ASSESSMENT OF THE PENALTY

73    Civil penalties are imposed primarily, if not solely, for the purpose of deterrence (Pattinson at [15]). Deterrence has two aspects, namely specific deterrence of the contravenor and, by example, general deterrence of other would-be contravenors (Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157; [2018] HCA 3 at [116] (per Keane, Nettle and Gordon JJ)).

74    The object of the imposition of civil penalties is to attempt to put a price on a contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the provision (CSR Ltd at 52,152).

75    Importantly, a civil penalty must be fixed with a view to ensuring that the penalty is not such as to be regarded by the offender or others as an acceptable cost of doing business (Singtel Optus at [62] – quoted with approval in Pattinson at [17]). The penalty must strike a reasonable balance between deterrence and oppressive severity (Pattinson at [41], [46]).

76    The maximum penalty which might be imposed by the Court is $3,288,375,000. I have concluded that, during the contravening period, Diverse Link received approximately $4,200,000 in deposits into bank accounts held with the ANZ and CBA and there were payments out of $179,456.23. There is no evidence before the Court as to the level of bitcoin deposits received and so such deposits are not included in that figure of $4,200,000.

77    There is no evidence of profit – this was largely due to the fact that Diverse Link did not co-operate in relation to the proceedings. The principle which is relevant to the significance of the profit figure was outlined in viagogo AG v Australian Competition and Consumer Commission [2022] FCAFC 87 at [162] (per Yates, Abraham and Cheeseman JJ), where their Honours observed:

[W]e accept … that it is a distraction to observe that the authorities often express the cost of doing business principle by reference to “profit”. The word “profit” is not used in the authorities in a limited or technical way to describe the profits reported by the contravenor. Rather, profit describes the wide array of benefits flowing to the contravenor which will inform the risk/benefit calculus undertaken by the contravenor; were it otherwise, the principle would be denuded of effect except in cases where the benefits accruing to the contravenor were limited solely to the profits reported on the contravenor’s balance sheet. That is why the principle is often expressed by reference to “putting a price on contraventions”, or to “benefit”, “gain” or “revenue”.

(citations omitted)

78    As to the factors, in summary, I have relevantly concluded that the conduct was serious and was so viewed by the Legislature which enacted legislation with increased penalties and included a provision that each day constituted an additional contravention so as to enable the imposition of penalties which would be of sufficient deterrence. I have also had regard to the maximum penalty, over $3 billion, but have taken into account that this is but one yardstick that must be applied and should not be applied mechanically. As to the nature and extent of any loss suffered, I have taken into account the likelihood of actual loss being suffered as a result of gambling losses, as reflected in the complaints which were received with respect to Redraw Poker clubs, but also the loss and damage suffered because of the contravention in the form of general detriment and damage suffered by the community due to the impact of exposing Australians to unregulated and illegal interactive gambling activities which can lead to consequences associated with problem gambling. I note that the particular contravention was clearly deliberate and that Diverse Link has not co-operated with the ACMA either during the investigation or in the context of the Court proceedings. It is irrelevant that there is limited likelihood of recovery against Diverse Link as this is a factor of little weight against the compelling need for general deterrence.

79    The penalty will not be effective as a general deterrent if it is at a level which could be funded as a cost of doing business. So, if the level of the penalty were fixed at a figure less than the amount received by the contravenor, the object of general deterrence would not be achieved because it could be funded by the money taken by the contravenor as part of the contravention. A penalty at a lesser level would, in effect, mean that the contravenor might take the risk of detection on the basis that, if detected, the penalty could be covered from gross receipts of the contravention. That clearly does not achieve the outcome of general deterrence.

80    I have accepted that the moneys paid into the two bank accounts, approximately $4,200,000, are referrable to the contravention. It is also the case that payments by bitcoin were an alternative method of payment and there is no evidence (due to the non-co-operation of Diverse Link) as to the amount of money paid in that way.

81    A penalty less than the amount received (a minimum of $4,200,000) does not, in my opinion, achieve the important objective of general deterrence.

82    The ACMA submitted that a penalty of $5,000,000 is appropriate in the current circumstances. I conclude that a penalty of $5,000,000 is appropriate in the current case. A penalty at that level is, on the evidence before me, more than merely the cost of doing business and will give effect to the purpose of general deterrence. The figure is at a level which is greater than the funds received as a result of the contraventions. The level is, in my view, sufficiently high to deter others who might be tempted to contravene, but is not at a level that could, in my view, be described as oppressive. The figure is not greater than necessary to achieve the object of general deterrence.

83    I have taken note of the fact that the importance of general deterrence in this case is underscored by the fact that these are the first civil penalty proceedings in respect of s 15(2A) of the IGA.

84    As was said in Australian Competition and Consumer Commission v High Adventure Pty Ltd (2006) ATPR ¶42-091; [2005] FCAFC 247 at [11] (per Heerey, Finkelstein and Allsop JJ (as he then was)):

[A]s deterrence (especially general deterrence) is the primary purpose lying behind the penalty regime, there inevitably will be cases where the penalty that must be imposed will be higher, perhaps even considerably higher, than the penalty that would otherwise be imposed on a particular offender if one were to have regard only to the circumstances of that offender. In some cases the penalty may be so high that the offender will become insolvent. That possibility must not prevent the Court from doing its duty for otherwise the important object of general deterrence will be undermined.

85    I will therefore order that Diverse Link pay to the Commonwealth a penalty for the contraventions of s 15(2A) of the Interactive Gambling Act 2001 (Cth) in the sum of $5,000,000.00.

Associate:    

Dated:    24 July 2023

SCHEDULE OF PARTIES