FEDERAL COURT OF AUSTRALIA

Clean Energy Regulator v E Connect Solar & Electrical Pty Ltd [2023] FCA 1082

ORDERS

THE COURT ORDERS THAT:

1.    The applicant has leave pursuant to s 471B of the Corporations Act 2001 (Cth) to continue these proceedings against the first respondent, subject to the undertaking in Annexure A.

THE COURT DECLARES THAT:

2.    Between 9 January 2019 and 10 December 2019, the first respondent contravened s 24B(1) of the Renewable Energy (Electricity) Act 2000 (Cth) (REE Act) on 38 occasions in that:

(a)    through its agents, it provided small-scale technology certificate (STC) assignment documents and other information to either One Stop Warehouse Pty Ltd ABN 46 161 849 323 (One Stop) or Formbay Trading Pty Ltd ACN 146 464 995 (Formbay) in relation to the installation of each of the solar power generation systems specified in rows 1 to 38 of the table at Annexure B (the installations);

(b)    the assignment documents and other information falsely claimed that each of the systems had been installed by a person who:

(i)    was accredited to perform those installations under the Clean Energy Council (CEC) accreditation scheme; and

(ii)    complied with the CEC’s Code of Conduct and the Installation Guidelines Version 12 or 13;

(c)    One Stop and Formbay relied upon that information to create STCs in relation to the installations that they were not entitled to create; and

(d)    it could reasonably have been expected that One Stop and Formbay would rely upon the false and misleading information in that way.

3.    Between 29 August 2019 and 10 December 2019, the second respondent contravened s 24B(1) of the REE Act on 17 occasions in that:

(a)    he provided STC assignment documents and other information to either One Stop or Formbay in relation to 17 of the installations;

(b)    the assignment documents and other information falsely claimed that each of the systems had been installed by a person who:

(i)    was accredited to perform those installations under the CEC accreditation scheme; and

(ii)    complied with the CEC’s Code of Conduct and the Installation Guidelines Version 12 or 13;

(c)    One Stop and Formbay relied upon that information to create STCs in relation to the 17 installations that they were not entitled to create; and

(d)    it could reasonably have been expected that One Stop and Formbay would rely upon the false and misleading information in that way.

4.    Between 9 January 2019 and 10 December 2019, the third respondent contravened s 24B(1) of the REE Act on 21 occasions in that:

(a)    he provided STC assignment documents and other information to either One Stop or Formbay in relation to 21 of the installations;

(b)    the assignment documents and other information falsely claimed that each of the systems had been installed by a person who:

(i)    was accredited to perform those installations under the CEC accreditation scheme; and

(ii)    complied with the CEC’s Code of Conduct and the Installation Guidelines Version 12 or 13;

(c)    One Stop and Formbay relied upon that information to create STCs in relation to 21 of the installations that they were not entitled to create; and

(d)    it could reasonably have been expected that One Stop and Formbay would rely upon the false and misleading information in that way.

AND THE COURT ORDERS THAT:

Pecuniary penalty

5.    The first respondent pay to the Commonwealth of Australia a pecuniary penalty in the sum of $200,000.

6.    The second respondent pay to the Commonwealth of Australia a pecuniary penalty in the sum of $20,000.

7.    The third respondent pay to the Commonwealth of Australia a pecuniary penalty in the sum of $20,000.

Injunctive relief

8.    Pursuant to s 154S(2) of the REE Act:

(a)    the second and third respondents shall take all reasonable steps to obtain the consent of the owners of the systems the subject of the installations for the purposes of having a CEC-accredited person inspect the installations and carry out testing and commissioning tests in accordance with section 11 of the Installation Guidelines Version 13 dated 2 November 2019 (the inspections);

(b)    if any of the inspections identifies any defects with an installation, the second and third respondents shall take all reasonable steps to arrange for the installation of a new system or to remedy any identified defect;

(c)    the second respondent must take reasonable steps to ensure that any company in respect of which he is an executive officer, or the conduct of which he is in a position to influence, does not provide false or misleading information to any person in relation to the creation of renewable energy certificates associated with the installation of any solar power generation system by that company; and

(d)    the third respondent must take reasonable steps to ensure that any company in respect of which he is an executive officer, or the conduct of which he is in a position to influence, does not provide false or misleading information to any person in relation to the creation of renewable energy certificates associated with the installation of any solar power generation system by that company.

Other orders

9.    The second and third respondents pay the applicant’s costs of the proceedings, fixed in the sum of $30,000, with the second respondent liable for the applicant’s costs in the sum of $15,000 and the third respondent liable for the applicant’s costs in the sum of $15,000.

10.    The amount of $35,000 ordered against the second respondent by Orders 6 and 9 above be paid by way of instalments as follows:

(a)    $17,500 within three months of the date of these orders; and

(b)    $17,500 within six months of the date of these orders.

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

Annexure A

UNDERTAKING BY THE APPLICANT

In accordance with Order 1 of the Orders of the Hon. Justice Derrington dated 23 March 2023 and made in Federal Court of Australia proceeding No. QUD 468 of 2022, the Applicant, the Clean Energy Regulator, undertakes to the Court that it will not enforce any monetary relief against the First Respondent, E Connect Solar & Electrical Pty Ltd (in liquidation) ACN 625 797 337 while in liquidation, without the leave of the Court.

Annexure B

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1    By an Originating Application filed on 15 December 2022, the Clean Energy Regulator (the CER) applied for orders, including the imposition of pecuniary penalties, against E Connect Solar & Electrical Pty Ltd (E Connect) and its directors at the material times, Mr Benjamin Airey and Mr Quinton Doody, in relation to certain contraventions of the Renewable Energy (Electricity) Act 2000 (Cth) (REE Act). The alleged contraventions related to the signing of certain written statements by Mr Airey and Mr Doody, on behalf of E Connect, which were used to assign rights to create “small-scale technology certificates” (STCs) to two companies, One Stop Warehouse Pty Ltd (One Stop) and Formbay Trading Pty Ltd (Formbay). After One Stop and Formbay had purported to exercise those rights, it was revealed that information in the written statements was false or misleading, such that the companies had not in fact been assigned any valid entitlements to create STCs.

2    The parties, with the exception of E Connect (which is now in liquidation), are agreed as to the factual circumstances in which the alleged contraventions occurred, the principles that the Court should apply in imposing pecuniary penalties in such circumstances and, subject to the Court’s discretion, the quantum of the penalties and the other orders to be made. Although the Court must exercise its discretion in relation to the appropriate penalties and other orders independently of the parties, it is appropriate to accord a degree of weight to the position taken by the CER in respect of those matters. It can be expected that, in circumstances where a civil penalty is proposed by consent, the regulator will provide to the Court thoughtful and careful submissions that draw upon and reflect its unique understanding of, and expertise in, the area of business activity that it is responsible for monitoring. In the present case, where it is apparent that some diligence has been brought to the task of proposing to the Court agreed penalties for the relevant contraventions, a measure of deference can properly be accorded to the CER’s opinion.

The facts

3    The facts on which the Court is to make its determination are set out in the Statement of Agreed Facts and Admissions filed by the parties (other than E Connect) on 21 March 2023. The relevant parts of that document are extracted below, with some alterations to its formatting and minor corrections to its content:

11    At all material times to this proceeding the CER:

(a)    is, and was, the Clean Energy Regulator established by s 11 of the Clean Energy Regulator Act 2011 (Cth) (CER Act); and

(b)    is, and was, capable of commencing civil penalty order proceedings under the REE Act because:

(i)    the REE Act is [a] climate change law pursuant to s 4 of the CER Act;

(ii)    the CER has such functions as [are] conferred on it by [a] climate change law pursuant to s 12 of the CER Act;

(iii)    the REE Act defines “Regulator” as “the Clean Energy Regulator” pursuant to s 5; and

(iv)     s 154C(1) of the REE Act expressly provides that only the Regulator, being the CER, may apply for a civil penalty order.

12    At all material times to this proceeding E Connect:

(a)    is, and was, a company duly incorporated according to the laws of Australia;

(b)    is, and was, capable of suing and being sued in its own name;

(c)     had, and has, as its director Mr Airey from 26 April 2018;

(d)     had as its director Mr Doody for the period of 26 April 2018 through to 14 February 2022;

(e)     employed persons, including Mr Airey and Mr Doody, or contracted persons, to carry out solar panel system installations;

(f)     is, and was, liable for the acts and omissions of Mr Airey and Mr Doody because Mr Airey and Mr Doody had the actual or apparent authority of E Connect;

(g)     was placed under external administration on 8 February 2023; and

(h)     was placed into liquidation on 10 March 2023.

13    At all material times to this proceeding Mr Airey:

(a)    is, and was, a natural person, capable of suing and being sued in his own name;

(b)     is, and was, [a] director of E Connect;

(c)     had, and has, the actual or apparent authority of E Connect;

(d)     is, and was, the holder of an electrical mechanic and fitter class licence with licence number 127140; and

(e)     is, and was, the holder of the following accreditation from [the] Clean Energy Council (CEC):

(i)    Grid-connect Install only of photovoltaic power systems;

(ii)    Accreditation A6053971; and

(iii)    Period of accreditation of 8 October 2018 to 15 May 2021.

14    At all material times to this proceeding Mr Doody:

(a)    is, and was, a natural person, capable of suing and being sued in his own name.

(b)     was [a] director of E Connect [for the period of] 26 April 2018 through to 14 February 2022;

(c)     had, during his period [as] director, the actual or apparent authority of E Connect;

(d)     is, and was, the holder of an electrical mechanic and fitter class licence with licence number 126847; and

(e)     is and was the holder of the following accreditation from CEC:

(i)    Grid-connect Design & Install of photovoltaic power systems;

(ii)     Accreditation A9183829; and

(iii)     Period of accreditation of 15 September 2016 to 26 May 2021.

C.     THE USE OF SMALL-SCALE TECHNOLOGY CERTIFICATES

15    When a CEC-accredited holder accredits an installation, the owner of the installed device, here small-generation units (SGUs), is entitled to create a REC [renewable energy certificate] with the CER.

16     RECs created for SGUs are defined as “small-scale technology certificates” (STCs). The REE Act regulates how many STCs might be created per installation, as well as allowing for the assignment of STCs from homeowners to companies or other persons.

17     The CER is responsible for managing and regulating the creation, trading, and selling of STCs after installation of SGUs.

18     The holders of STCs, being SGU owners themselves or those assigned their rights, can trade or sell them within the Clearing House established by the CER or on the private market. The current Clearing House price is $40.00. There is, therefore, an economic incentive to create STCs, commercialise and profiteer from their trade.

19     The assignment of the right to create STCs from the homeowner to another company often occurs in consideration for the reduction of installation costs and associated fees. Sometimes, a third party, often the actual installer, acts as an intermediary between the SGU owner and the entity to whom the STC rights are being assigned. As discussed from paragraph 24, that happened in this matter. The intermediary is paid to act for facilitating the assignment of STC rights.

D.     BACKGROUND TO THE CONTRAVENTIONS

Installation of 38 Solar Panel Systems

20     Between 9 January 2019 and 10 December 2019 E Connect, Mr Airey and Mr Doody caused thirty-eight (38) solar panel systems to be installed at properties throughout north-east New South Wales and south-east Queensland (collectively, the installations). [The dates and locations of each of the installations are described in the table at Annexure B to the orders accompanying these reasons.]

21     Each of the solar panel systems installed was a SGU because they were devices that generated electricity whose source of energy:

(a)    had a kW rating of no more than 100 kW; and

(b)     had a capacity to generate no more than 250 MWh of electricity each year.

22     Because each of the installations [was] installed after 1 April 2001, [an] STC [could] be created after the [SGU was] installed.

23     The owners of the installed SGUs had a right, arising on the installation date:

(a)    to create STCs arising from the installations; and/or

(b)    [to] assign their right … to create STCs to a third party.

Assignment of Right to Create [STCs]

24     For the installations, each of the SGU owners assigned their right to create STCs to either:

(a)    One Stop Warehouse Pty Ltd ABN 46 161 849 323; or

(b)    Formbay Trading Pty Ltd ACN 146 464 995.

25    Each of the assignments occurred by the SGU owners signing an assignment document assigning their right to create an STC to One Stop or Formbay. Pursuant to the assignment documents, Formbay and One Stop were assigned [rights] to create STCs.

26     E Connect was paid by Formbay and One Stop to facilitate the assignment of the SGU owners’ right[s] to create STCs to Formbay and One Stop.

27     Between 22 August 2019 and 30 January 2020 Formbay and One Stop paid E Connect the sum of $173,118.40.

Accreditations of Installations

28    Pursuant to s 20AC(5) of the Renewable Energy (Electricity) Regulations 2001 (Cth), in the version of the Regulations that was in effect from period 13 March 2019 through to 10 March 2020, before Formbay or One Stop could register the information in the assignment documents for the purposes of creating the STCs, they were each respectively required to obtain a written statement from the installer of the SGUs at each of the installations stating:

(a)    the name of the designer and of the installer of the SGU;

(b)     the CEC’s accreditation scheme classification and accreditation number of the installer and designer of the SGU;

(c)     that the installer has public liability insurance of at least $5 million; and

(d)     that the installer:

(i)    is bound by the CEC’s Code of Conduct; and

(ii)    has complied with that Code of Conduct for the installation of the [SGU].

CEC Code of Conduct and Installation Guidelines

29    There were two versions of the CEC’s Code of Conduct that covered the period of the installations between 9 January 2019 and 10 December 2019.

30     For the period of 29 February 2012 through to 1 November 2019, the CEC Code of Conduct Version 1 applied.

31     From 2 November 2019 to date, the CEC Code of Conduct Version 2 applied.

32     Both the Code of Conduct Version 1 and the Code of Conduct Version 2 provided that:

All Clean Energy Council-accredited installers are bound by our code of conduct

33    Both the Code of Conduct Version 1 and the Code of Conduct Version 2 also provided that:

All persons holding any form of Clean Energy Council accreditation shall observe and conform to all relevant Australian Standards and all relevant Clean Energy Council Accreditation guidelines, and all applicable laws, ordinances, regulations and codes of practice.

34    Installers installing SGUs between the period of 9 January 2019 and 10 December 2019 were required to comply with the following CEC Guidelines:

(a)    For the period from 1 January 2019 to 30 June 2019, Version 12 of the “Clean Energy Council Install and Supervise Guidelines for Accredited Installers” (Installation Guidelines Version 12) applied.

(b)     For the period from 1 July 2019 to date, Version 13 of the “Clean Energy Council Install and Supervise Guidelines for Accredited Installers” (Installation Guidelines Version 13) applied.

35     Section 6 of the Installation Guidelines Version 12 provided:

6 RESPONSIBILITIES OF ACCREDITED PERSON

6.1 An accredited person shall sign-off on systems where they have:

6.1.1 Undertaken the installation; or

6.1.2 Supervised the installation by others

6.1.3 Supervision includes visiting the site at:

Job set up

Mid-installation check-up

Testing and commissioning

6.1.4 Sign-off is defined as the installer or supervisor performing the testing and commissioning requirements stated in section 11.

6.1.5 The date of sign-off is the day that the installer or supervisor performs the testing and commissioning requirements.

36    Section 11.1.1 of the Installation Guidelines Version 12 provided that:

The commissioning sheets provided with these guidelines (or similar document) shall be completed by the accredited installer or the accredited supervisor (with suitably licensed person).

37    Section 6 of the Installation Guidelines Version 13 provided:

6 RESPONSIBILITIES OF ACCREDITED PERSON

6.1 Signing Off as an Accredited Person

6.1.1 An Accredited Person shall only sign off on systems where they have:

•    Undertaken the installation; or

•    Supervised the installation by others

Supervision includes attending the site during:

•    job set up;

•    mid-installation check-up; and

•    testing and commissioning

6.1.2 Sign off is defined as the installer or supervisor performing the testing and commissioning requirements stated in Section 14.

6.1.3 The date of sign off is the day that the installer or supervisor performs the testing and commissioning requirements.

Accreditation by Mr Airey and Mr Doody

38    For seventeen (17) of the installations, Mr Airey signed written statements, which formed part of the assignment documents for the installations, accrediting those installations.

39     Mr Airey represented in his written statements that:

(a)    he was the accredited CEC installer that completed the SGU installation at the address; and

(b)     he installed the system at the address; and

(c)     the system complied with CEC accreditation guidelines.

40     For twenty-one (21) of the installations, Mr Doody signed written statements, which formed part of the assignment documents for the installations, accrediting those installations.

41     Mr Doody represented in his written statements that:

(a)    he was the accredited CEC installer that completed the SGU installation at the address; and

(b)     he installed the system at the address; and

(c)     the system complied with CEC accreditation guidelines.

Creation of [STCs]

42    Formbay and One Stop relied on the information contained within the written statements signed by Mr Airey and Mr Doody to exercise their entitlement to create STCs.

43    To create STCs, representatives from One Stop and Formbay were required to register the information contained within the assignment documents, which included the written statements signed by Mr Airey and Mr Doody, to the Renewable Energy Certificate Registry.

44    Between 14 January 2019 and 31 December 2019, a representative or representatives from One Stop and Formbay registered the information contained within the assignment documents in the Renewable Energy Certificate Registry.

45    Between 14 January 2019 and 31 December 2019, 4487 STCs were passed by the CER based on the information registered from One Stop from the assignment documents.

Respondents Overseas

46    At the times at which the thirty-eight (38) installations as described in [the table at Annexure B to the orders accompanying these reasons] were purportedly carried out, Mr Airey and Mr Doody were either overseas, or in transit overseas.

47    Relevantly, Mr Airey and Mr Doody were overseas, or in transit overseas:

(a)    between 23 December 2018 and 13 January 2019;

(b)     between 22 August 2019 and 26 August 2019; and

(c)     between 28 November 2019 and 10 December 2019.

False or Misleading Accreditations

48    By reason of the matters set out in this Statement at paragraphs 28 to 37 (inclusive), 39, 46 and 47, the written statements signed by Mr Airey were false or misleading in a material particular because Mr Airey did not comply with the Code of Conduct Version 2 and Version 3 in that he did not “conform [to]” all [relevant] Clean Energy Council Accreditation guidelines because he did not comply with the Installation Guidelines [Version] 12 and [Version] 13 because:

(a)    he signed off on installations he did not complete, install or supervise, within the meaning of Installation Guidelines [Version] 12 and [Version] 13; and

(b)    he did not sign off the installation[s] by performing the testing and commission requirements.

49    By reason of the matters set out in this Statement at paragraphs 28 to 37 (inclusive), 40, 46 and 47, the written statements signed by Mr Doody were false or misleading in a material particular because Mr Doody did not comply with the Code of Conduct Version 2 and Version 3 in that he did not “conform [to]” all [relevant] Clean Energy Council Accreditation guidelines because he did not comply with the Installation Guidelines [Version] 12 and [Version] 13 because:

(a)    he signed off on installations he did not complete, install or supervise, within the meaning of Installation Guidelines [Version] 12 and [Version] 13; and

(b)    he did not sign off the installation[s] by performing the testing and commission requirements.

No Valid Entitlement to Create Certificates

50    By reason of the matters set out in this Statement from paragraphs 28 to … 49 (inclusive), neither Formbay nor One Stop held an entitlement to create STCs because the written statements obtained from Mr Airey and Mr Doody were false or misleading.

E.     GROUNDS OF RELIEF

51     By reason of the matters set out in this Statement at paragraphs 28 to 50 (inclusive), E Connect, Mr Airey and Mr Doody contravened s 24B(1) [of] the REE Act because:

(a)    Mr Airey and Mr Doody were representatives of E Connect and had the actual or apparent authority of E Connect;

(b)     the information in the written statements signed by Mr Airey and Mr Doody was provided to One Stop or Formbay;

(c)     the information in the written statements signed by Mr Airey and Mr Doody was in relation to [SGUs];

(d)     by reason of the matters set out in this Statement at paragraphs 28 to 41 (inclusive) [and] 46 to 49 (inclusive) the information contained in the written statements signed by Mr Airey and Mr Doody [was] false and misleading;

(e)     by reason of the matters set out in this Statement at paragraphs 42 to 45 (inclusive):

(i)    agents of One Stop and Formbay relied on the information contained in the written statements signed by Mr Airey and Mr Doody; and

(ii)    it could have been expected the agents of One Stop and Formbay would rely on the information contained in the written statements signed by Mr Airey and Mr Doody; and

(f)    neither One Stop nor Formbay [was] entitled to create the certificates they did because the written statements obtained from Mr Airey and Mr Doody were false or misleading.

F.     THE ALLEGED HARM SUFFERED BY THE CER

52     Invalidly created STCs impacts on the efficacy of the Renewable Energy Target scheme administered by the CER. This impact comes in the form of a distortion of the number of STCs within the market. That distortion results in the number of STCs eligible for purchase by a liable entity in a quarter and on an annual basis … being incorrect or inflated.

53     A liable entity may, for a given period, have a renewable energy shortfall which is an obligation imposed on them that must be discharged. There are two types of renewable energy shortfall, a large-scale generation shortfall, or a small-scale technology shortfall:

(a)    [if] a liable entity has a large-scale generation shortfall for a year, large-scale generation shortfall charge is payable in respect of the shortfall; [and]

(b)    [if] a liable entity has a small-scale technology shortfall for a year, small-scale technology shortfall charge is payable in respect of the shortfall.

54     RECs, which include STCs and large-scale generation certificates, are used to avoid or reduce the amount of renewable energy shortfall charge that liable entities who acquire electricity must pay. The liable entities will generally acquire the [RECs] by purchasing them.

55     A liable entity may discharge a renewable energy shortfall obligation through the surrender of STCs (or other RECs); if they do not have enough certificates, the liable entity must pay a renewable energy charge.

56     The REC scheme is directed toward:

(a)    encouraging the additional generation of electricity from renewable sources;

(b)     reducing emissions of greenhouse gases in the electricity sector; and

(c)     ensuring that renewable energy sources are ecologically sustainable.

57     As s 3 of the REE Act explains, these objectives are achieved:

… through the issuing of certificates for the generation of electricity using eligible renewable energy sources and requiring certain purchasers (called liable entities) to surrender a specified number of certificates for the electricity that they acquire during a year.

58     The REC scheme assists in achieving the Renewable Energy Target.

59     The Renewable Energy Target is an Australian Government scheme designed to reduce emissions of greenhouse gases in the electricity sector and encourage the additional generation of electricity from sustainable and renewable sources.

60     A liable entity’s obligations under the REE Act are determined by calculating the amount of relevant electricity acquired by the entity during the year. [Section 35] of the REE Act provides [that] “a person who, during a year, makes a relevant acquisition of electricity is called a liable entity.” [Section 31] of the REE Act sets out what is a relevant acquisition.

61     The relevant acquisition of electricity is critical to determining a renewable energy shortfall. For present purposes, Part 4, Division 1, Subdivision C of the REE Act sets out how a small-scale technology shortfall is calculated.

62     A liable entity’s annual small-scale technology shortfall is calculated by adding together the quarterly shortfalls. Each quarterly [shortfall is calculated in accordance with the steps set out in s 38AE of the REE Act]. For example, the first quarter is calculated by:

(a)    Firstly, working out 35% of the previous year’s reduced acquisitions, [multiplying] this by the small-scale technology percentage for the assessment year and [rounding] the result to the nearest MWh (rounding 0.5 upwards). The result is the required surrender amount.

(b)     Secondly, adding together:

(i)     the total value, in MWh, of [STCs] surrendered, under Subdivision A of Division 1 of Part 5, by the liable entity during the surrender period for the first quarter; and

(ii)     the amount of any quarterly surplus that the liable entity has for the fourth quarter of the previous year.

    The result is the surrendered amount.

(c)     Thirdly, subtracting the surrendered amount from the required surrender amount.

(d)     [Finally]:

(i)    if the result is greater than zero, the liable entity has a quarterly shortfall for the first quarter of the assessment year equal to the result; or

(ii)    if the result is zero, the liable entity does not have a quarterly shortfall for the first quarter of the assessment year.

(iii)    If the result is less than zero, the liable entity has a quarterly surplus for the first quarter of the assessment year equal to the result (expressed as a positive).

63     Part 4, Division 1, Subdivision C of the REE Act sets out the methodology for subsequent quarters.

64     As above, the calculated renewable energy shortfall is an obligation the REE Act imposes on liable entities to discharge. Its discharge is fulfilled through the surrender of RECs, or payment of a charge. The RECs that a liable entity surrenders can, and invariably [do], include RECs it has purchased on the REC market. The costs of these purchases are passed on by liable entities to retail and domestic consumers within the market.

65     All of the STCs created by One Stop and Formbay have been surrendered by liable entities to the CER.

G.     ANY OTHER RELEVANT MATTERS

Co-operation with the CER’s investigation

66     E Connect, Mr Airey and Mr Doody have been co-operative in the investigations of the contraventions against the REE Act. This co-operation has included:

(a)     voluntarily providing documents at the request of CER investigators;

(b)     offering to provide the CER with enforceable undertakings;

(c)     offering to provide an audit to be taken by Mr Airey and Mr Doody to identify further sites (if any) where either Mr Doody or Mr Airey may have signed off on the installation of SGUs installed by installers who are not CEC-accredited; and

(d)     [joining] with the CER in presenting evidence by way of agreed facts.

No previous similar conduct

67     E Connect, Mr Airey [and] Mr Doody have not previously been found by a court to have contravened the REE Act.

4    Where appropriate, the defined terms used in the above passage have been adopted in these reasons.

The continuation of proceedings against E Connect

5    As E Connect was placed into liquidation on 10 March 2023, it was necessary to consider at the hearing of this matter whether the CER should be granted leave pursuant to s 471B of the Corporations Act 2001 (Cth) (Corporations Act) to continue the proceedings against it. It was relevant to the determination of that issue that the CER had offered an undertaking to the Court not to enforce any penalty imposed on E Connect without leave.

6    On the basis of that undertaking, leave to proceed was granted. The following paragraphs set out the reasons for that grant of leave.

7    The CER has alleged that E Connect contravened s 24B(1) of the REE Act by the conduct of its directors and agents, Mr Airey and Mr Doody. Those persons have admitted that their conduct, in providing certain information in relation to the installation of SGUs that was false or misleading, contravened the REE Act. There is no doubt as to E Connect’s liability for the actions that they took in the course of carrying out their roles as directors and agents. That liability is established on the facts as they have been agreed and presented to this Court.

8    Section 471B of the Corporations Act provides as follows:

471B     Stay of proceedings and suspension of enforcement process

While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with:

(a)     a proceeding in a court against the company or in relation to property of the company; or

(b)     enforcement process in relation to such property;

except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.

9    The section is analogous to ss 444E(3) and 500(2) of the Corporations Act, and the case law makes apparent that essentially the same principles apply to all three provisions. Given the frequency with which these “leave to proceed” provisions come before the courts, it is no surprise that the relevant principles have been substantially synthesised and summarised on numerous occasions.

10    The purpose of such provisions was explained some time ago by McPherson J (with whom Campbell CJ and Sheahan J agreed) in the oft-cited case of Re Gordon Grant & Grant Pty Ltd [1983] 2 Qd R 314 (Re Gordon Grant & Grant), where his Honour identified at 316 that “without the relevant restriction, a company in liquidation would be subjected to a multiplicity of actions which would be both expensive and time-consuming, as well in some cases as unnecessary”. Similar observations were made much earlier in relation to the cognate section of the Companies Act 1862, 25 & 26 Vict, c 89 by James LJ in Re David Lloyd & Co (1877) 6 Ch D 339 at 344, which continue to be cited both in England and in Australia: see, eg, Re Atlantic Computer Systems Plc [1992] Ch 505, 520 – 521; JJ Leonard Properties Pty Ltd v Leonard (WA) Pty Ltd (in liq) (1986) 11 ACLR 224, 226; Australian Competition and Consumer Commission v Phoenix Institute of Australia Pty Ltd (subject to deed of company arrangement) (2016) 116 ACSR 353, 377 [87] (ACCC v Phoenix Institute) (this aspect of the judgment not being challenged on appeal: Phoenix Institute of Australia Pty Ltd v Australian Competition and Consumer Commission [2017] FCAFC 155 [15] (Phoenix Institute v ACCC)).

11    The leave to proceed requirement has elsewhere been explained as serving “to ensure that the assets of a company being wound up are administered in accordance with the relevant statutory provisions and no person obtains an advantage to which he or she is not properly entitled under those provisions”, and “to enable the court to supervise claims brought against the company being wound up”: Zempilas v JN Taylor Holdings Limited (in prov liq) (No 3) (1991) 55 SASR 108, 109 – 110; Altinova Nominees Pty Ltd v Leveraged Capital Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2) [2009] FCA 42 [18]; Australian Competition and Consumer Commission v Campbell (No 2) [2019] FCA 1487 [6] (ACCC v Campbell (No 2)). However, it has been doubted whether the former of those characterisations can properly be said to express a “major” or “principal” purpose of the requirement, since neither the commencement of proceedings nor the entry of judgment will normally confer an advantage on a creditor, and the prohibition imposed by the relevant provisions is not directed only at proceedings by creditors but includes proceedings by shareholders and others: Commonwealth of Australia v Davis Samuel Pty Ltd (No 5) (2008) 164 ACTR 1, 4 – 5 [13] – [14] (Commonwealth v Davis Samuel (No 5)).

12    In Re Gordon Grant & Grant, McPherson J explained the practical effect and usual function of leave to proceed provisions at 317, as follows:

What is substituted for litigation in the ordinary form is a procedure by which a claimant lodges a verified proof of debt with the liquidator, who admits or rejects it wholly or in part, and from whom an appeal lies to a judge, who determines that appeal de novo primarily on affidavit material … There can be no doubt that ordinarily such a procedure is, and is designed to be, much more expeditious and less expensive than ordinary proceedings by way of action. …

The question whether a claimant should be permitted to proceed by action, or should be required to submit his proof of debt and, if dissatisfied, appeal to a judge, is therefore reduced largely to one of choosing between alternative forms of procedure. … It, of course, follows that it is quite impossible to state in an exhaustive manner all the circumstances in which leave to proceed may be appropriate, but in the past they have been said to include factors such as the amount and seriousness of the claim, the degree of complexity of the legal and factual issues involved, and the stage to which the proceedings, if already commenced, may have progressed.

13    This passage was quoted with apparent approval by the Full Court of this Court, comprising Wilcox, Burchett and Beazley JJ, in Vagrand Pty Ltd (in liq) v Fielding (1993) 41 FCR 550 (Vagrand) at 555 – 556. It suggests that the starting point when considering an application for leave under s 471B will be that the applicant must lodge a proof of debt unless it can demonstrate that there is good reason to depart from that procedure: Swaby v Lift Capital Partners Pty Ltd (in liq) (2009) 72 ACSR 627, 631 [26] (Swaby). See also OD Transport (Australia) Pty Ltd (in liq) v OD Transport Pty Ltd (1997) 80 FCR 290, 294; Eopply New Energy Technology Co Ltd v EP Solar Pty Ltd [2013] FCA 356 [22]. The applicant, in this sense, bears the onus of establishing a case for leave to be granted.

14    It was recognised by the Full Court in Vagrand, at 553, that the question of leave under provisions like s 471B “is always a matter of discretion”. However, as the terms of the provision indicate, the legislation is silent as to the principles to be applied in determining an application for leave: Rushleigh Services Pty Ltd v Forge Group Ltd (In Liq) (Receivers and Managers Appointed); In the Matter of Forge Group Ltd (In Liq) (Receivers and Managers Appointed) [2016] FCA 1471 [14]. The discretion is accordingly unconfined: Secretary, Department of Health and Ageing v Prime Nature Prize Pty Ltd (in liquidation) [2010] FCA 597 [15] (Secretary v Prime Nature Prize). Indeed, some have gone so far as to describe it as “absolute”, albeit that it must be exercised fairly and judicially: see King v Yurisich (2006) 59 ACSR 598, 600 [13]; Commonwealth v Davis Samuel (No 5) at 6 [19]; Australian Securities and Investments Commission v Axis International Pty Ltd (No 7) [2011] FCA 812 [8]; QNI Resources Pty Ltd v Park (2016) 116 ACSR 321, 331 [46]. In other cases, however, it has been described in apparently conflicting terms as “broad but not absolute”: see Swaby at 631 [23]; Hu v PS Securities Pty Ltd as trustee of the Joseph Family Trust [2011] NSWSC 303 [20]; Australian Pipe & Tube Pty Ltd v QBE Insurance (Australia) Limited [2015] FCA 1135 [8].

15    Notwithstanding the breadth of the discretion, it is possible to identify certain factors that might generally inform its exercise — as is apparent, for instance, from the final sentence of the passage from the judgment of McPherson J in Re Gordon Grant & Grant extracted above. Although lists of such factors have at this point been compiled, quoted and reformulated in a significant number of cases, it must always be borne in mind that each application is ultimately to turn upon its own facts and the question of leave cannot be approached by treating the factors as comprising as “shopping list” to be worked through routinely by litigants: Australian Competition and Consumer Commission v Advanced Medical Institute Pty Limited (Administrator Appointed) (No 3) [2011] FCA 348 [5] (ACCC v Advanced Medical Institute (No 3)), referred to in Murphy v Astute Projects Pty Ltd [2018] FCA 2118 [5] – [7]; Hastie Group Ltd (in liq) v Multiplex Constructions Pty Ltd (Formerly Brookfield Multiplex Constructions Pty Ltd) (No 2) (2021) 155 ACSR 217, 220 [8]. That having been said, the Court may be guided by previous decisions when identifying the factors that are to be considered in the case before it, having regard, also, to the underlying purpose served by the leave to proceed requirement, as explained above: Secretary v Prime Nature Prize [15]; ACCC v Phoenix Institute at 377 [87].

16    In the present case, several relevant factors were identified in the CER’s submissions in support of its application for leave. Given the fact-specific nature of the inquiry, and prior judicial warnings against approaching the principles concerning leave to proceed too prescriptively, it was appropriate for such an attempt to be made to define the matters most pertinent to the exercise of discretion in this case. There can be little utility, by contrast, in an applicant distilling from the vast library of authorities concerning s 471B and its analogues, and presenting to the Court, a lengthy consolidated list of all matters that might historically have had some bearing on the question of leave in other cases, each of which it then endeavours to address. A degree of judgment must be brought to the task of deciding what ought and ought not to be considered.

17    It is apparent from the CER’s submissions on this point, and no doubt correct as a matter of principle, that the question of leave in this case is affected to a substantial extent by the fact that these proceedings involve the pursuit of pecuniary penalties, declarations and injunctions by a regulator. This gives rise to a relatively distinctive list of matters of foremost relevance to the exercise of the discretion under s 471B, between which there is some degree of overlap. Those matters can be set out as follows:

(a)    Whether the applicant has established that there is a serious question to be tried: Vagrand at 556; Executive Director of the Department of Conservation and Land Management v Ringfab Environmental Structures Pty Ltd [1997] FCA 1484. An applicant must generally establish that it has a good claim with a solid foundation, but it is perhaps unnecessary to establish a prima facie case: J & J Richards Super Pty Ltd ATF the J & J Richards Superannuation Fund v Linchpin Capital Group Ltd (in liq) [2020] FCA 1772 [8]; Buckingham v Pan Laboratories (Australia) Pty Ltd (in liq) (2004) 136 FCR 102, 109 [68]. It follows that the applicant need not prove every element of the claim that it wishes to make out, though mere assertion will not suffice: Commonwealth v Davis Samuel (No 5) at 7 [29], citing Tolhurst Druce & Emmerson v Maryvell Investments Pty Ltd [2007] VSC 271 [157] – [164].

(b)    Whether the relief sought is not otherwise available in the liquidation process, particularly by the lodging of a proof of debt: Australian Competition and Consumer Commission v Link Solutions Pty Ltd (2008) 68 ACSR 561, 565 [11] (ACCC v Link Solutions); Australian Competition and Consumer Commission v Australian Institute of Professional Education Pty Ltd (in liq) [2017] FCA 521 [21], [23] – [24] (ACCC v AIPE); Australian Competition and Consumer Commission v Birubi Art Pty Ltd (No 2) [2018] FCA 1785 [15] (ACCC v Birubi (No 2)). The inability to obtain relief by that process, including the imposition of pecuniary penalties and the grant of declarations and injunctions, is a significant factor favouring the grant of leave to proceed.

(c)    Whether there is a public interest in enforcing compliance with, and preventing conduct that is in contravention of, a statutory scheme: ACCC v Phoenix Institute at 377 – 378 [89]; ACCC v Birubi (No 2) [9]. See also ACCC v Advanced Medical Institute (No 3) [5] – [6], [20]; Australian Competition and Consumer Commission v ACN 135 183 372 (Administrators Appointed) (formerly known as Energy Watch Pty Ltd) [2012] FCA 586 [6]. If there is, this may favour the grant of leave to proceed, though the weight to be afforded to this factor will turn upon a consideration of all of the circumstances of the particular case: see, eg, ACCC v Link Solutions at 566 [16] – [17].

(d)    Whether there is a public interest in allowing the applicant to fulfil a statutory duty, particularly for the purpose of obtaining orders that give effect to the objective of general deterrence: Australian Competition and Consumer Commission v Artorios Ink Co Pty Ltd [2013] FCA 753 [10] – [11] (ACCC v Artorios Ink); ACCC v Campbell (No 2) [13]; Fair Work Ombudsman v Foot & Thai Massage Pty Ltd (in liquidation) [2019] FCA 1601 [15]; Fair Work Ombudsman v Blue Sky Kids Land Pty Ltd (in liquidation) [2020] FCA 718 [11].

(e)    The stage to which the proceedings have progressed, and the extent to which the applicant has expended time, effort and money in prosecuting its claim: Re Gordon Grant & Grant at 317; Meehan v Stockmans Australian Cafe (Holdings) Pty Ltd (1996) 22 ACSR 123, 127; Speiser v Locums Financial Management Pty Ltd (1996) 22 ACSR 478, 482 – 483; ACCC v Artorios Ink [12]. The nearer the proceedings are to completion, and the greater the expenditure on them, the more appropriate the grant of leave to proceed may be on the balance of convenience.

(f)    Whether the claims in the proceedings raise complex questions of fact that are more appropriate for determination by the Court rather than under a proof of debt procedure: Phoenix Institute v ACCC [154]. It must be borne in mind, however, that requiring a liquidator to engage in complex litigation has the potential to distract inappropriately from the liquidation process and reduce the funds available to meet the claims of creditors. This outcome would seem to run contrary to the purpose intended to be served by the requirement of leave to proceed, as explained in Re Gordon Grant & Grant and other cases.

(g)    The potential for creditors of the company to suffer prejudice: Re AJ Benjamin Ltd (in liq) (1969) 90 WN (Pt 1) (NSW) 107, 110; Swaby at 631 – 632 [29]; ZOLL Medical Australia, in the matter of Cardiac Defibrillators Australia Pty Ltd (in liq) v Cardiac Defibrillators Australia Pty Ltd (in liq) [2022] FCA 167 [25]. This prejudice can be alleviated by an undertaking not to enforce any relief without the Court’s leave: ACCC v Phoenix Institute at 386 [127]; Commissioner of Taxation v International Indigenous Football Foundation Australia Pty Ltd (in liq) [2017] FCA 538 [15]; Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2020] FCA 474 [9]; Australian Securities and Investments Commission v ACBF Funeral Plans Pty Ltd [2022] FCA 871 [14]. However, it should not be thought that the giving of such an undertaking materially advances the case for leave to proceed; it is typical for courts to condition the grant of leave by imposing on the applicant a requirement that such an undertaking be provided: Water Efficiency Labelling and Standards Regulator v Renaissance Traditional Bathrooms Pty Ltd [2020] FCA 1757 [47].

(h)    Finally, the fact that the company has no ability to pay a penalty sought in the proceedings does not weigh against the grant of leave: ACCC v AIPE [26]; ACCC v Birubi (No 2) [10], [14]. As explained below, there may still be utility in a regulator progressing claims for pecuniary penalties and other relief against a company in liquidation where to do so would advance the objective of general deterrence.

18    There is no need to consider and address in any great detail the extent to which the above principles apply in the present case. Their application, on the agreed facts as they stand, leads inexorably to the conclusion that leave should be granted. First, the CER has established a clear case that E Connect has contravened the REE Act. The directors of the company have admitted the facts necessary to support the regulator’s allegations. Secondly, the relief sought against E Connect is not recoverable by way of a proof of debt, as it requires the Court to determine whether or not to impose the relevant pecuniary penalties and to make orders in relation to the declarations and injunctions sought by the CER. Thirdly, there is clearly a strong public interest in the enforcement of the REE Act against contravenors, including E Connect, so as to further the policy objectives advanced by the legislation and to deter others from contemplating non-compliance with its provisions. Finally, there will be no prejudice to the creditors of E Connect, as the CER has undertaken not to enforce any monetary relief against E Connect while it remains in liquidation without the Court’s leave. It is also relevant to note that the liquidator does not oppose the making of the orders sought by the CER.

19    For these reasons, it was concluded at the hearing of this matter that it was appropriate to make an order, pursuant to s 471B of the Corporations Act, that the CER have leave to continue the present proceedings against E Connect.

The statutory context in which the contraventions occurred

20    Despite having been in operation for some time, the REE Act has been the subject of relatively limited judicial consideration. A helpful summary of the legislative scheme was provided by Foster J in Hundy (Liquidator); In the Matter of Enviro Friendly Products Pty Ltd (In Liq) [2013] FCA 852 [14] – [24], which was drawn upon more recently by Griffiths J in Re Renewable Energy Traders Pty Ltd (in liq) (2019) 140 ACSR 466, 468 – 469 [4] – [15]. Justice Foster provided a somewhat similar summary in Clean Energy Regulator v MT Solar Pty Ltd [2013] FCA 205 [18] – [39] (MT Solar), where his Honour also specifically addressed the consequences that followed from contraventions of the civil penalty provisions in s 24B.

21    MT Solar appears to be the only other occasion on which the CER has brought proceedings seeking the imposition of pecuniary penalties for contraventions of the REE Act. However, although that case also concerned s 24B(1), the contraventions in question there did not arise in quite the same way as the contraventions at present. There is accordingly some utility in considering the specific statutory context within which the contravening conduct occurred in this case. Whilst that context has been explained in part in the Statement of Agreed Facts and Admissions, it is useful to explore in more detail the precise obligations that the respondents are agreed to have breached.

22    The starting point is pt 2, div 4 of the REE Act, which is entitled “Creation of renewable energy certificates”. Section 17B explains, at the outset of that division, that there are two types of RECs with which the division deals: large-scale generation certificates and STCs. STCs for SGUs are addressed more specifically in sub-div BA. Within that subdivision, s 23A(1A) has at all relevant times provided as follows:

23A     When a certificate may be created

…

(1A)     The regulations:

(a)     may provide that certificates cannot be created in relation to a small generation unit unless particular conditions are satisfied in relation to the small generation unit or its installation; and

(b)     without limiting paragraph (a), may:

(i)     require information or documents to be given to the Regulator in relation to a small generation unit or its installation; and

(ii)     provide that information or documents required to be given to the Regulator must be verified by statutory declaration.

23    As contemplated by this provision, numerous requirements have been set out in the Regulations in relation to the creation of STCs for SGUs. Most notably, throughout the period during which the contravening conduct in this case took place, reg 20AC(1) and (5)(a) provided as follows:

20AC     Requirements for creation of certificates

(1)     For subregulation 20(1), this regulation sets out the circumstances in which certificates may be created for a small generation unit.

…

(5)     Before any certificates are created for the unit, the person who is entitled to create the certificates for the unit obtains:

(a)     a written statement by the installer of the unit stating:

(i)     the name of the designer and of the installer of the unit; and

(ii)     the ABCSE accreditation scheme or CEC accreditation scheme classification and accreditation number of the installer and designer of the unit; and

(iii)     that the installer has public liability insurance of at least $5 million; and

(iv)     that the installer:

(A)     is bound by the Clean Energy Council’s Code of Conduct; and

(B)     has complied with that code of conduct for the installation of the unit;

24    In relation to the last of these requirements, it is relevant to note that there were two versions of the CEC’s Code of Conduct in operation at different times across the period from 9 January 2019 to 10 December 2019, during which time the 38 offending installations in this case took place. Between 29 February 2012 and 1 November 2019, the Code of Conduct Version 1 applied. Thereafter, from 2 November 2019 to 10 December 2019, the Code of Conduct Version 2 applied. Both provided that all persons holding any form of CEC accreditation:

… shall observe and conform to all relevant Australian Standards and all relevant Clean Energy Council Accreditation guidelines, and all applicable laws, ordinances, regulations and codes of practice.

25    Two versions of the relevant “Clean Energy Council Accreditation guidelines” were in force at different times during the period from 9 January 2019 to 10 December 2019. Specifically:

(a)    for the period from 9 January 2019 to 30 June 2019, Version 12 of the “Clean Energy Council Install and Supervise Guidelines for Accredited Installers” (Installation Guidelines Version 12); and

(b)    for the period from 1 July 2019 to 10 December 2019, Version 13 of the “Clean Energy Council Install and Supervise Guidelines for Accredited Installers” (Installation Guidelines Version 13).

26    Section 6 of the of the Installation Guidelines Version 12 provided:

6     RESPONSIBILITIES OF ACCREDITED PERSON

6.1     An accredited person shall sign-off on systems where they have:

6.1.1     Undertaken the installation; or

6.1.2     Supervised the installation by others.

6.1.3     Supervision includes visiting the site at:

6.1.3.1    Job set up

6.1.3.2    Mid-installation check-up

6.1.3.3    Testing and commissioning

6.1.4     Sign-off is defined as the installer or supervisor performing the testing and commissioning requirements stated in section 11.

6.1.5     The date of sign-off is the day that the installer or supervisor performs the testing and commissioning requirements.

27    Section 11.1.1 of the Installation Guidelines Version 12 provided that:

The commissioning sheets provided with these guidelines (or similar document) shall be completed by the accredited installer or the accredited supervisor (with suitably licensed person).

28    Section 6 of the Installation Guidelines Version 13 provided:

6     RESPONSIBILITIES OF ACCREDITED PERSON

6.1     Signing Off as an Accredited Person

6.1.1     An Accredited Person shall only sign off on systems where they have:

•    Undertaken the installation; or

•    Supervised the installation by others

Supervision includes attending the site during:

•    job set up;

•    mid-installation check-up; and

•    testing and commissioning

6.1.2     Sign off is defined as the installer or supervisor performing the testing and commissioning requirements stated in Section 14.

6.1.3     The date of sign off is the day that the installer or supervisor performs the testing and commissioning requirements.

29    Accordingly, in summary:

(a)    s 23A of the REE Act provided that an STC for an SGU may be created in the circumstances prescribed in the Regulations;

(b)    the Regulations, as contemplated, prescribed certain requirements in relation to the creation of STCs, some of which directed attention to the CEC’s Code of Conduct;

(c)    that Code of Conduct, in turn, referred to obligations set out in the guidelines published by the CEC for accredited installers; and

(d)    the guidelines made clear that the accreditation of installers, or supervisors of installers, was a critical aspect of the installation of SGUs.

30    It is relevant to note that, within this chain of instruments and provisions, the overarching requirement most relevant to the present case was that set out in reg 20AC(5)(a): that is, for the person who was entitled to create the STCs for each SGU to obtain a written statement by the installer of the SGU containing certain information. It is in connection with this specific obligation that it becomes necessary to consider s 24B(1) and (3) of the REE Act:

24B     False etc. information resulting in improper creation of certificates under Subdivision B or BA—civil penalty

(1)     A person (the first person) contravenes this subsection if:

(a)     the person provides information to another person (the second person) in relation to, or in relation to the installation of, a solar water heater or a small generation unit; and

(b)     the information:

(i)     is false or misleading in a material particular; or

(ii)     omits a matter or thing without which the information is misleading in a material particular; and

(c)     the second person relies on the information to create certificates under Subdivision B or BA in relation to the solar water heater or small generation unit; and

(d)     it could reasonably be expected that the second person would so rely on the information; and

(e)     the second person’s reliance on the information results in the second person creating certificates under that Subdivision, in relation to the solar water heater or small generation unit, that the second person is not entitled to create.

…

Civil penalty provisions

(3) Subsections (1) and (2) are civil penalty provisions.

Note:     Division 1 of Part 15A provides for pecuniary penalties for breaches of civil penalty provisions.

31    It follows that the civil penalties in this case are not, strictly speaking, to be imposed for the contravenors’ non-compliance with the specific obligations imposed by the Installations Guidelines Version 12 and Version 13, but instead for their provision of written statements that contained false or misleading information in relation to the installers’ compliance with the CEC’s Code of Conduct, which in turn required compliance with those guidelines.

32    The possible consequences in the present circumstances for the contraventions of s 24B(1) as a civil penalty provision are set out in ss 154B and 154S of the REE Act, which are addressed in more detail later in these reasons.

Consent orders in relation to relief including penalties

33    The parties before the Court, save for E Connect, have jointly sought certain pecuniary penalties, declarations, injunctions and other orders. They rely upon the Statement of Agreed Facts and Admissions as evidence in support of that relief, pursuant to s 191 of the Evidence Act 1995 (Cth). In the alternative, they submit that the Court should make the orders that they propose by consent on the basis of agreed facts: see, generally, Australian Competition and Consumer Commission v Australian Medical Association Western Australian Branch (2001) 114 FCR 91, 99 [34] – [35]. The Court may treat the consent of the respondents as an admission of all facts necessary or appropriate to the granting of the relief sought against them: Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150, 164.

34    There is no need to set out, in this case, the general principles relating to the imposition of civil penalties. I addressed them recently in Australian Competition and Consumer Commission v Lactalis Australia Pty Ltd (No 2) [2023] FCA 839 (ACCC v Lactalis (No 2)) at paragraphs [5] – [25], and their repetition is unnecessary. However, that discussion did not specifically consider the circumstance in which a regulator and contravenor proffer to the Court joint submissions that include a proposed penalty to which they have agreed. It is therefore appropriate to mention, briefly, the principles applicable to that situation.

35    In Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 (Fair Work), the High Court reaffirmed the practice of courts acting upon submissions as to an agreed penalty, as had been explained previously in Trade Practices Commission v Allied Mills Industries Pty Ltd (No 5) (1981) 60 FLR 38, NW Frozen Foods Pty Ltd v Australian Consumer and Competition Commission (1996) 71 FCR 285 (NW Frozen Foods) and Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR ¶41-993 (Mobil Oil). In the joint judgment of French CJ, Kiefel, Bell, Nettle and Gordon JJ, it was emphasised at 503 – 504 [46] that there is:

… an important public policy involved in promoting predictability of outcome in civil penalty proceedings and that the practice of receiving and, if appropriate, accepting agreed penalty submissions increases the predictability of outcome for regulators and wrongdoers. As was recognised in Allied Mills and authoritatively determined in NW Frozen Foods, such predictability of outcome encourages corporations to acknowledge contraventions, which, in turn, assists in avoiding lengthy and complex litigation and thus tends to free the courts to deal with other matters and to free investigating officers to turn to other areas of investigation that await their attention.

36    Their Honours went on to say at 507 [58]:

Subject to the court being sufficiently persuaded of the accuracy of the parties’ agreement as to facts and consequences, and that the penalty which the parties propose is an appropriate remedy in the circumstances thus revealed, it is consistent with principle and, for the reasons identified in Allied Mills, highly desirable in practice for the court to accept the parties’ proposal and therefore impose the proposed penalty. To do so is no different in principle or practice from approving an infant’s compromise, a custody or property compromise, a group proceeding settlement or a scheme of arrangement.

37    Later, their Honours considered the value of the imprimatur of a specialist regulator when the parties before the Court submit an agreed penalty to be imposed. At 508 [60], they observed:

As was emphasised in NW Frozen Foods, it is the function of the relevant regulator to regulate the industry in order to achieve compliance and, accordingly, it is to be expected that the regulator will be in a position to offer informed submissions as to the effects of contravention on the industry and the level of penalty necessary to achieve compliance.

38    These reasons do not contradict the fundamental proposition that it is the Court that ultimately bears responsibility for the imposition of civil penalties. It must accordingly satisfy itself that, as a matter of law, its power to impose such penalties has been enlivened: that is, that a relevant contravention has occurred. It must also satisfy itself that the circumstances do properly warrant the imposition of the agreed penalty. The parties’ submissions as to the appropriateness of that agreed penalty will necessarily be scrutinised in the usual manner.

39    The above principles were recently summarised and restated by the Full Court, comprising Wigney, Beach and O’Bryan JJ, in Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission (2021) 284 FCR 24 (Volkswagen v ACCC). In that case, the ACCC and Volkswagen jointly submitted that a penalty of $75,000,000 should be imposed for the latter’s admitted contraventions of s 29(1)(a) of the Australian Consumer Law (being Sch 2 to the Competition and Consumer Act 2010 (Cth)). The primary judge held that the proposed penalty was manifestly inadequate and increased the penalty to $125,000,000. On appeal, the Full Court considered whether it had been appropriate for the primary judge to reject the agreed penalty. In a unanimous joint judgment, their Honours identified (at 44 [123]) that the starting point must always be the relevant legislation pursuant to which the civil penalty is to be imposed. Accordingly, taking up the language of s 224 of the Australian Consumer Law, they stated that, even where an agreed or jointly proposed penalty had been put to the Court as part of a settlement, “it is always a matter for the Court to determine the appropriate penalty having regard to all relevant matters”. The Full Court went on (at 44 – 45 [125] – [129]) to identify the necessary process that should be followed in that circumstance, and it is useful to set out those observations in full:

[125]     First, the Court must be persuaded that the penalty proposed by the parties is appropriate: Fair Work at [57]. The agreement of the parties cannot bind the Court in any circumstances to impose a penalty which it does not consider to be appropriate.

[126]     Second, if the Court is persuaded of the accuracy of the parties’ agreement as to facts and consequences, and that the agreed penalty jointly proposed is an appropriate remedy in all the circumstances, it would be highly desirable in practice for the Court to accept the parties’ proposal and therefore impose the proposed penalty: Fair Work at [58]. The desirability of the Court accepting a proposed agreed penalty which it is persuaded is an appropriate penalty derives primarily from a public policy consideration; the promotion of predictability of outcome in civil penalty proceedings: Fair Work at [46]. Predictability of outcome encourages corporations to acknowledge contraventions, which, in turn, assists in avoiding lengthy and complex litigation. It should be emphasised, however, that this public policy consideration is but one of the relevant considerations to which the Court must have regard and, more significantly, it cannot override the statutory directive for the Court to impose a penalty that is determined to be appropriate.

[127]     Third, in considering whether the agreed and jointly proposed penalty is an appropriate penalty, it is necessary to bear in mind that there is no single appropriate penalty. Rather, there is a permissible range of penalties within which no particular figure can necessarily be said to be more appropriate than another. The permissible range is determined by all the relevant facts and consequences of the contravention and the contravener’s circumstances. An agreed and jointly proposed penalty may be considered to be “an” appropriate penalty if it falls within that permissible range: NW Frozen Foods at 290-291; Mobil Oil at 48,625-48,626; [47], [51]. It is unlikely to be considered an appropriate penalty if it falls outside that range.

[128]     It should be emphasised in this context, however, that even though the process in determining whether an agreed and jointly proposed penalty is an appropriate penalty involves or includes determining whether that penalty falls within the permissible range of penalties, having regard to all the relevant facts and circumstances, it does not follow that the Court’s task can be said to amount to no more than determining whether the proposed penalty falls within the permissible range, as the Commission’s submission tended to suggest. Nor can it be said that the Court is bound to start with the proposed penalty and to then limit itself to considering whether that penalty is within the permissible range: Mobil Oil at 48,627; [54].

[129]     Fourth, in considering whether the proposed agreed penalty is an appropriate penalty, the Court should generally recognise that the agreed penalty is most likely the result of compromise and pragmatism on the part of the regulator, and to reflect, amongst other things, the regulator’s considered estimation of the penalty necessary to achieve deterrence and the risks and expense of the litigation had it not been settled: Fair Work at [109]. The fact that the agreed penalty is likely to be the product of compromise and pragmatism also informs the Court’s task when faced with a proposed agreed penalty. The regulator’s submissions, or joint submissions, must be assessed on their merits, and the Court must be wary of the possibility that the agreed penalty may be the product of the regulator having been too pragmatic in reaching the settlement: Fair Work at [110].

40    The application of these principles is now well entrenched in this Court: see, eg, Australian Securities and Investments Commission v Colonial First State Investments Limited [2021] FCA 1268 [73]; Australian Securities and Investments Commission v General Commercial Group Pty Ltd [2023] FCA 24 [77].

The centrality of the role of deterrence in the imposition of civil penalties

41    In ACCC v Lactalis (No 2), consideration was given to the centrality of the role that deterrence plays in a Court’s determination of an appropriate penalty. Reference was also made to the several factors that, generally, are relevant to the quantum of the penalty imposed. There is no need to repeat that summary of the applicable principles here, though it is noted that the parties’ joint submissions in this case reflected the thrust of what was said in that decision. It is therefore appropriate to proceed upon the basis of those principles.

Other factors

42    Like many other pieces of legislation, the REE Act identifies a number of specific factors that may be taken into account in the imposition of a civil penalty. More specifically, s 154B(1) grants a power to impose a civil penalty against a person who has contravened a civil penalty provision, and s 154B(7) then identifies an inclusive list of factors that the Court may take into account in determining the amount of that penalty. The latter subsection provides:

Matters to be taken into account by Court in determining amount of penalty

(7)    In determining the pecuniary penalty, in accordance with this section, for a contravention by a person of a civil penalty provision, the Court may have regard to all relevant matters, including:

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

(b)     the nature and extent of any loss or damage suffered as a result 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 in proceedings under this Act to have engaged in any similar conduct; and

(e)     the extent to which the person has cooperated with the authorities; and

(f)     if the person is a body corporate:

(i)     the level of the employees, officers or agents of the body corporate involved in the contravention; and

(ii)     whether the body corporate exercised due diligence to avoid the contravention; and

(iii)     whether the body corporate had a corporate culture conducive to compliance; and

(g)     if the contravention is of subsection 24A(1) whether the person has surrendered any renewable energy certificates under section 28A to compensate for the contravention.

43    It is apparent from a brief perusal of these factors that there is likely to be some overlap in their application to any particular case.

Contraventions

44    The parties’ joint submissions asserted, effectively, that the respondents had contravened the REE Act as a consequence of Mr Airey and Mr Doody having signed written statements that contained information that was false or misleading. The statements were false or misleading in a material particular because they represented that Mr Airey and Mr Doody had completed or supervised certain installations, that they had performed the testing and commissioning required as part of those installations, and that the systems that were installed complied with CEC accreditation guidelines and the applicable Code of Conduct. In fact, at the time that each of the installations was carried out, Mr Airey and Mr Doody were either overseas or in transit overseas. They had accordingly not complied with the requirements in section 6 of the Installation Guidelines Version 12 and Version 13, and, in turn, failed to comply with the Code of Conduct Version 1 and Version 2.

The appropriate penalties

The penalties suggested by the parties

45    The parties submitted that the appropriate penalties to be imposed in the circumstances of this case are $200,000 against E Connect, and $20,000 against each of Mr Airey and Mr Doody.

Specific deterrence considerations

46    A civil penalty must effect both specific and general deterrence so as to discourage the contravenors and others in their position from engaging in similar contravening conduct in the future: Australian Securities and Investments Commission v Dixon Advisory & Superannuation Services Ltd [2022] FCA 1105 [31] – [32]. It must be sufficiently high as to avoid being seen as a mere “cost of doing business”. However, the penalty should not be so severe as to be oppressive.

47    Here, the respondents obtained a financial benefit from signing the written statements that contained false or misleading information. Between 22 August 2019 and 30 January 2020, Formbay and One Stop paid E Connect the sum of $173,118.40 for the purported assignments of the entitlements to create STCs in relation to the 38 relevant installations. That is an important factor to take into account when ensuring that any penalty imposed will not be regarded as a mere cost of doing business.

48    It is also important to note that, since the contravening conduct took place, Mr Doody has ceased to be a director of E Connect. The company has been placed into liquidation and is no longer trading. It is also an agreed fact that there has been no further contravention of the REE Act by any of the respondents since the contraventions of which the CER complains in this case. Additionally, the remorse of Mr Airey and Mr Doody is evident in their cooperation with the CER, and in their admitting the contraventions (which amounts, effectively, to an admission of contraventions by E Connect). That cooperation includes their consent to the Statement of Agreed Facts and Admissions, and the joint submissions that were provided to this Court.

49    These matters, whilst significant, do not entirely negate the need for the penalty to deter the contravenors specifically from engaging in any future contravening conduct: see Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd (2015) 327 ALR 540, 558 [79]. Nevertheless, they do suggest that the CER’s actions have already had a tangible impact on each of the respondents, which will go some ways to deterring future contraventions by them.

General deterrence considerations

50    Although Mr Airey and Mr Doody have appropriately acknowledged their wrongdoing, there are several reasons in this case to ensure that any penalty imposed will act as a general deterrent to those who would potentially breach the REE Act in a similar manner.

51    First, as the parties submitted, any penalty imposed should produce a strong deterrent effect so as to ensure the efficacy of the broader Renewable Energy Target scheme, which is designed to reduce emissions of greenhouse gases in the electricity sector and to encourage the additional generation of electricity from sustainable and renewable sources. It was said that this objective is facilitated by the statutory REC scheme, but will be affected adversely if that scheme is misused to create invalid STCs. That will artificially inflate the number of STCs available in the market for purchase by a liable entity in a quarter, or on an annual basis, and may in turn cause the renewable energy charge that the liable entity is obliged to pay to be reduced in a manner contrary to the scheme’s intended operation.

52    It may be that, if the SGUs the subject of the false or misleading statements in this case were correctly installed, there will be no actual damage in relation to the level of renewable energy that becomes available. However, if false or misleading statements went insufficiently punished, it would be more likely that other such statements would be made in relation to more important matters. The CER would also be required to expend time, effort and money in identifying STCs that were invalidly created on the basis of false or misleading information, and in ensuring the rectification of the corresponding SGUs. Moreover, the existence of invalid STCs in the market is apt to undermine the veracity of the statutory REC scheme, the integrity of which is intended to be maintained by the imposition of strict requirements.

53    It follows that those industry participants who are subject to the REE Act should not be left in any doubt as to the cost of their non-compliance with its requirements. The appropriate penalty must send a strong message to other businesses that do not comply with the legislation, to the effect that they cannot obtain a competitive advantage over those that do: Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25, 62 [149] – [152].

The maximum available penalties

54    It is clear, as a matter of principle, that consideration should be given to the maximum penalties that might be applied to the contraventions in question in a particular case. In ACCC v Lactalis (No 2), at paragraph [8], I observed as follows in relation to this issue:

Relevant to the assessment of an appropriate penalty, calculated to deter any future breach, is the maximum penalty prescribed by the legislature for a contravention of the statutory provision in question. On this issue, the parties to the present case made particular reference to the decision of the Full Court in Australian Competition and Consumer Commission v Employsure Pty Ltd (2023) 407 ALR 302, 312 – 314 [42] – [53] (ACCC v Employsure), which concerned the alleged inadequacy of a pecuniary penalty imposed at first instance. The Court observed at 312 [44], by reference to the judgment of the plurality in Markarian v The Queen (2005) 228 CLR 357, 372 [31], that a primary consideration in determining an appropriate penalty is the maximum that the legislature has indicated might be applied to the relevant contravention. That is because the maximum is an indicator of the legislature’s perception of the seriousness of the worst form of contravention of a provision, and it invites a comparison between the worst possible case and the case before the Court. In addition, it provides an important yardstick, or factor, to be taken and balanced with all of the other relevant factors in the assessment process, such that there must usually be some “reasonable relationship between the theoretical maximum and the final penalty imposed”: Pattinson at 603 [10], 614 [53], [55], quoting Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25, 63 [156] per Jagot, Yates and Bromwich JJ (ACCC v Reckitt Benckiser).

55    It must not be forgotten that, even though the penalty imposed must usually bear some reasonable relationship to the theoretical maximum penalty, the maximum penalty is not reserved for only the most serious contraventions: Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450, 471 [49] – [51] (Pattinson).

56    Here, the maximum pecuniary penalty available for a contravention of s 24B(1) of the REE Act is 500 penalty units if the contravenor is a body corporate and 100 penalty units for an individual: REE Act s 154B(6). At the time of the contraventions, the value of one penalty unit was $210.

57    It follows that the maximum penalties that are available on the basis of the agreed facts are:

(a)    for E Connect, $210 x 500 x 38 = $3,990,000;

(b)    for Mr Airey, $210 x 100 x 17 = $357,000; and

(c)    for Mr Doody, $210 x 100 x 21 = $441,000.

58    Quite clearly, these penalties would be out of all proportion to the overall wrongfulness of the contravenors’ conduct, given the nature of the offences and the circumstances in which they occurred.

The nature and extent of the contraventions (s 154B(7)(a) of the REE Act)

59    As was submitted on behalf of the CER, the contraventions in this matter were “serious” or “very serious”. They involved the deliberate making of false or misleading statements, which were repeated over the period of about one year. It is not irrelevant to note that it must have been plain to Mr Airey and Mr Doody when they were signing the statements whilst overseas that they were not in a position to have installed or supervised the installation of the SGUs in question, or carried out the necessary testing and commissioning, such that there was obvious non-compliance with the guidelines and the Code of Conduct.

60    The extent of the contravening conduct was relatively significant. Statements containing false or misleading information were signed on 38 different occasions, leading to the improper creation of 4,487 STCs. E Connect received the sum of $173,118.40 as a result of this conduct.

61    Such circumstances would tend to suggest that it is appropriate to impose on the contravenors penalties that are at the higher end of the permissible range.

The nature and extent of any loss or damage suffered as a result of the contraventions (s 154B(7)(b) of the REE Act)

62    However, a mitigating factor is that no consumer suffered any known loss or damage as a consequence of the contraventions. That is an important feature of this case, and the position with respect to penalties would surely be different if any such damage had occurred, or if consumers had been put at risk as a result of the contraventions.

63    Nevertheless, the contraventions distorted the market for RECs by improperly inflating the number of STCs within it. This has harmed the ability of the CER to administer the REC scheme, which is directed to a broader community interest. Although the harm is difficult to quantify, it is not merely theoretical, as the scheme is necessarily disrupted by the entry into circulation of invalid STCs that have been produced through non-compliance with applicable legislative and other requirements. That non-compliance can have further consequential effects, in that the STCs that have entered into the market may not have the efficacy that they ought to: it cannot be said with certainty that they reflect the production of particular amounts of clean energy from renewable sources.

64    Overall, though, this element is not one that, in the present circumstances, should substantially increase the amount of the penalties.

The circumstances in which the contraventions took place (s 154B(7)(c) of the REE Act) and whether the wrongdoing was deliberate

65    The contravening conduct in this case was deliberate. Mr Airey and Mr Doody intentionally affixed their signatures to forms that attested and declared that they had carried out or supervised installations, and conducted certain testing and commissioning work, when they simply had not done so. Indeed, it is apparent that they were travelling overseas at the relevant times, such that the false or misleading nature of the information must have been abundantly clear to them. In the parties’ joint written submissions, it was stated that the CER took the deliberate nature of the conduct to be “particularly egregious”.

66    However, in the joint submissions, it was also asserted by Mr Airey and Mr Doody that they had not fully appreciated the requirements of the legislation until engaging with the CER as part of the investigation process that led to these proceedings. Specifically, it was contended that they had not understood that it was a requirement that they personally complete the installation, or supervise the installation, of the SGUs. It appears that the CER accepted that they in fact believed that, by “signing off” on the installation of the SGUs, they were “simply certifying that based on the material provided to them by the installers employed by E Connect to undertake the installation work, the installation had been carried out in accordance with the relevant requirements”.

67    The difficulty with this submission is that there is no evidence either way as to whether the infringing conduct was undertaken on this basis. There are no agreed facts in relation to this issue. This leaves the Court in a particularly difficult position, as there is very little material from which any inferences can be drawn. However, the Court was taken to examples of the relevant forms within which the false or misleading information appears. When those forms are considered, it becomes apparent that only a person who was reckless or wilfully blind would sign them without knowing that the relevant entries and certifications were false.

68    In any event, the CER submitted that, even if Mr Airey and Mr Doody did not understand the requirements of the REE Act, such a misapprehension does not afford them any reasonable excuse for their non-compliance. Moreover, it was said that this misapprehension does not alter the deliberate nature of their conduct. As the submission went, the holder of a CEC accreditation is in an especially privileged position, since that accreditation permits them to certify an installation that in turn enables the creation of STCs. Accredited specialists have a corresponding obligation to understand the framework within which they operate, given the financial incentives associated with the accreditation.

69    The CER’s submission in this respect should be accepted. Were it necessary to decide the point, the available evidence indicates that the contraventions were deliberate in every manner. For the present purposes, it can and should be accepted that the conduct of the respondents was, as the CER submitted, “particularly egregious”.

Whether the contraveners have engaged in similar conduct in the past (s 154B(7)(d) of the REE Act)

70    It was an accepted fact that the respondents have not previously been found by a Court to have contravened the REE Act. However, attention was drawn in the parties’ joint submissions to the statement of the Full Court in Volkswagen v ACCC at 47 – 48 [142] – [143] to the effect that prior good character is not generally given significant weight where, as here, general deterrence is an important consideration. The applicability of that observation to the present case can be accepted without reservation.

The extent to which the contraveners have cooperated with the authorities responsible for the enforcement of the REE Act (s 154B(7)(e) of the REE Act)

71    The CER accepted that, from about 9 March 2021, the respondents attempted to engage and cooperate with it in relation to the investigation and rectification of the contraventions. This included the volunteering of documents at the request of the CER’s investigators, offering to give the CER enforceable undertakings, and offering to undertake an audit to identify any further sites in respect of which either Mr Airey or Mr Doody may have signed off on the installation of SGUs that were in fact installed by persons who were not CEC-accredited. The respondents have also made appropriate admissions and have cooperated with the CER to prepare the Statement of Agreed Facts and Admissions, as well as agreeing to the making of joint submissions.

72    The CER has accepted that this cooperation should be reflected in a significant discount to the penalty that might otherwise have been sought.

73    It is fair to observe, generally, that the making of timely admissions by contravenors confers a substantial benefit on regulators, who are then spared the time, effort and money that would otherwise be spent in undertaking further investigations and gathering admissible evidence in relation to the alleged breaches. That not only saves the regulator’s resources, but also enables its investigators and administrators to pursue other contraventions. It is therefore appropriate, in the present case, to take into account the substantial impact on the quantum of the pecuniary penalties that ought usually to follow from a timely admission of wrongdoing.

Course of conduct principle

74    Whilst some aspects of the respondents’ conduct might suggest that each of the contraventions was intrinsically connected to the others, the parties submitted that those contraventions should not be seen as constituting a single course of conduct on the part of each respondent. They claimed that the following considerations militated against the adoption of such an approach:

(a)    each contravention arose from a separate, unrelated contract with a different homeowner, such that the bundling of contraventions into a single course of conduct would not reflect the reality of the situation;

(b)    the work performed under each contract, in respect of which the STCs were wrongly created, was different, in that it was performed at different locations and times, for different values, and resulted in different entitlements to create certain numbers of STCs;

(c)    new documents containing the false or misleading information were created and provided to One Stop or Formbay each time an installation was performed, such that the creation and provision of the documents represented a distinct act of wrongdoing on each occasion;

(d)    different numbers of RECs were created in respect of each installation, according to the specific solar power generation system that was installed;

(e)    E Connect received remuneration from One Stop and Formbay on an installation-by-installation basis in differing amounts, depending upon the number of RECs that were created in each case; and

(f)    the Originating Application and Concise Statement in this matter identified which of the second and third respondents was alleged to have contravened the REE Act with respect to the various separate installations.

75    The present circumstances sit close to the borderline between those cases in which the various contraventions can be seen to be part of a broader course of conduct and those in which the contraventions are properly to be considered separate and distinct. Despite each instance of contravening conduct being generally the same, there was no intrinsic relationship between one instance and any other. There was, at least, a temporal and locational difference in the underlying factual circumstances of each offence, which might well be sufficient to exclude the application of the course of conduct principle.

76    Albeit with some degree of hesitation, the parties’ joint submissions that the contraventions did not constitute a single course of conduct should be accepted.

Totality principle

77    In all cases involving multiple contraventions, it is necessary to keep steadily in mind the operation of the totality principle. It, too, was referred to in ACCC v Lactalis (No 2), where it was observed at paragraph [17] that:

The “totality” principle is not concerned with avoiding double punishment; it “requires the Court to make a ‘final check’ of the penalties to be imposed on a wrongdoer, considered as a whole, to ensure that the total penalty does not exceed what is proper for the entire contravening conduct”: ACCC v Employsure at 314 [52]. See also Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383, 397 [42] – [43] per Stone and Buchanan JJ; ASIC v Westpac [269] – [272]. The purpose of this exercise is to ensure that the penalty is “just and appropriate” for the whole of the contravening conduct: Australian Competition and Consumer Commission v Telstra Corporation Ltd (2010) 188 FCR 238, 277 [229] – [230] per Middleton J. See also Australian Competition and Consumer Commission v EnergyAustralia Pty Ltd (2014) 234 FCR 343, 358 [102] per Middleton J (ACCC v EnergyAustralia).

The synthesising process

78    The circumstances of the present matter present some difficulty. On one hand, the contraventions are said by the CER to be “very serious”, in that they were clearly deliberate and tended to undermine the statutory scheme established by the REE Act for the creation of and trading in RECs. Yet, on the other hand, the penalties sought against Mr Airey and Mr Doody appear to be somewhat lenient. This is particularly so when it is considered that a penalty of $20,000 is sought against each individual in circumstances where the maximum penalty available is $357,000 in the case of Mr Airey and $441,000 in the case of Mr Doody.

79    In resolving this apparent difficulty, it is important to recall the relatively limited role that the “seriousness” of the contraventions, taken in isolation, plays in the determination of the appropriate penalty. In Australian Securities and Investments Commission v Australian Mines Limited [2023] FCA 9, after considering the approach to be adopted in assessing the quantum of a pecuniary penalty following the decision in Pattinson, Colvin J stated at paragraph [33] that:

… it is not appropriate to approach the task of assessing penalty on the basis of the application of a yardstick of seriousness concerning the conduct. The seriousness of the conduct has only indirect significance in the sense that conduct that is less serious may be conduct that may be deterred by a lesser penalty than more serious conduct. However, a persistent and wilful contravenor may require a high penalty to deter future contraventions even if the conduct itself is not assessed as being at the highest level of seriousness. Therefore, I do not accept those submissions which directed attention in an unqualified way to where the conduct may be thought to lay on a spectrum of possible seriousness of the contravening conduct.

80    His Honour also observed in the preceding paragraph [32], citing Pattinson at [10], [49], [51], that “there is no place for the notion that the penalty must be proportionate to the seriousness of the conduct that constituted the contraventions”.

81    It would accordingly be contrary to principle to treat the fact that the contravening conduct has been characterised as “very serious” as excluding the possibility that penalties of $20,000 against each of the individual contravenors might be appropriate. The focus of the analysis must remain squarely on the objective of deterrence. The fact that the individual contravenors have freely cooperated with the CER, have made timely admissions in relation to their conduct, and have assisted in progressing the matter efficiently through this Court does suggest a substantially lessened need for specific deterrence, and must therefore go some ways to diminishing the quantum of the penalties to be imposed. Indeed, the joint submissions make clear that the proposed penalties reflect a “significant discount” for this cooperation.

82    The contraventions committed by the respondents had the very real potential to damage the efficacy of the Renewable Energy Target scheme, and might have imperilled the veracity of the STC market in such a way as to create needless difficulties for the CER. However, it has not been shown on the evidence that the invalid STCs created as a result of the false or misleading statements did not accurately reflect the productive capacity or functionality of the SGUs in question. It may well be that they were all properly installed, and ultimately operated as they should. There is simply no evidence that the STCs attributable to the SGUs the subject of this case do not accurately reflect the amount of clean energy that is actually produced.

83    Although the respondents claim that the contraventions were unintentional, it is doubtful whether that conclusion can genuinely be countenanced, given the circumstances identified above. Nevertheless, it can be accepted that, intentional or not, the contravening conduct was not as sinister as it might conceivably have been, and was relatively narrowly confined to a specific period of time.

84    The penalty of $200,000 that the CER submitted should be imposed upon E Connect may seem relatively severe at first blush, but that is ameliorated by the CER’s undertaking not to enforce it without leave of the Court. It also takes into account the fact that E Connect received payment of $173,118.40 as a result of the contraventions. Whilst there is no role to be played by notions of specific deterrence in the case of E Connect, given that it is now in liquidation, considerations of general deterrence continue to apply. As the Full Court observed in Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (in liq) (2007) 161 FCR 513 at 519 [20]:

… a court may impose a penalty on a company in liquidation if, to do so, would clearly and unambiguously signify to, for example, companies or traders in a discrete industry that a penalty of a particular magnitude was appropriate (and was of a magnitude which might be imposed in the future) if others in the industry sector engaged in the same or similar conduct.

85    It is now well established that this Court may impose a civil penalty against a company, notwithstanding the fact that it is in liquidation, where the penalty is justified by the public interest in identifying the condemnable nature of the contravening conduct, in measuring the Court’s disapproval of the contraventions established, and in alerting other industry participants to the magnitude of the penalty that stands to be imposed for such wrongdoing: see, generally, Australian Competition and Consumer Commission v The Vales Wine Company Pty Ltd (1996) ATPR ¶41-528, 42,776; Australian Competition and Consumer Commission v SIP Australia Pty Ltd (2003) ATPR ¶41-937, 47,077 – 47,078 [59]; Australian Competition and Consumer Commission v ACN 135 183 372 (in liquidation) (formerly known as Energy Watch Pty Ltd) [2012] FCA 749 [19] – [20]; Milardovic v Vemco Services Pty Ltd (No 2) (2016) 242 FCR 492, 495 – 497 [13] – [19]; Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 7) [2016] FCA 484 [20] – [28]; Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liq) (No 3) [2017] FCA 1018 [78] – [80]; Australian Competition and Consumer Commission v Cornerstone Investment Aust Pty Ltd (in liq) (No 5) [2019] FCA 1544 [31] – [36]. The fact that the company may be unable to pay the penalty is no reason for the Court to refrain from imposing it.

86    In the present case, the proposed penalty of $200,000 against E Connect should be understood by others in the industry as reflecting the seriousness with which the Court regards the 38 contraventions attributable to the company, and as indicating the consequences that they might expect to face for similar contraventions of the REE Act.

87    The penalties of $20,000 for each of Mr Airey and Mr Doody are comparatively light, though they are individuals who made full and timely admissions of their respective contraventions. Moreover, they have agreed to rectify any defective installations and to carry out an audit of installations in order to detect any further instances in which false or misleading paperwork might have been provided. It can be accepted that, along with the other costs that they will bear in relation to these proceedings, the penalties will be a substantial impost on them.

88    It is worth noting, at this juncture, that little to no evidence was adduced by the parties in relation to the financial circumstances of either Mr Airey or Mr Doody. It might be inferred from the proposed orders, which provide for Mr Airey to pay the $20,000 penalty along with a fixed amount of costs in two instalments, that he may not have access to substantial funds or other assets. If that is in fact the case, the proposed penalty of $20,000 would very likely meet the objective of specific deterrence. Indeed, even in the case of an individual not faced with financial difficulties of any kind, a penalty in the amount of $20,000 would be likely to have a relatively significant impact.

89    However, the fact that the Court is left to draw such an inexact inference, or otherwise to make generalised observations as to the effect that the proposed penalty might have on an ordinary contravenor, is rather unsatisfactory. Although there is no “checklist” of the matters to be considered in determining an appropriate penalty, the Court will ordinarily expect to see at least some evidence of an individual contravenor’s financial capacity, such that it is able to assess the specific deterrent effect, or the “sting”, that the penalty is likely to have: see, generally, Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157, 195 – 196 [116]. See, eg, Tax Practitioners Board v Caolboy [2020] FCA 1559 [51], [70]; Australian Competition and Consumer Commission v We Buy Houses Pty Ltd (No 2) [2018] FCA 1748 [124] – [126]. Particularly where, as here, the regulator has dealt with cooperative contravenors and, presumably, had at least some regard to the means available to them to meet the proposed penalties, it would not seem to be too onerous a task for the parties to furnish the Court with material going to this point. At the very least, the regulator could provide the Court with an informed or researched opinion in relation to these matters, such that the Court is not left to act upon inferences.

90    The absence of evidence on this point was, regrettably, not an isolated problem in the present case. It would not be unfair to say that the Statement of Agreed Facts and Admissions was less than comprehensive, and the evidence adduced by the parties therefore seemed, at times, to be at some risk of falling short of what was required for the Court to make a determination as to the appropriate penalties to be imposed against the respondents. Although it can be accepted that the evidentiary material will ordinarily be less voluminous in cases where pecuniary penalties are proposed to the Court by consent, as compared to cases proceeding on a contested basis, the fact that there is agreement between the parties affords no excuse for any abdication of responsibility on the part of the regulator. It is trite to observe that the Court is not bound by the figure suggested by the parties, and must satisfy itself that the submitted penalty is appropriate: Fair Work at 504 [48]. It necessarily follows that the regulator must ensure that sufficient evidence is before the Court to enable a finding that the proposed penalty, which enjoys its imprimatur, is indeed appropriate. So much is consistent with the observation of the Full Court in Mobil Oil at 48,630 [70] that:

The Court must form its own view about the appropriate range of penalties, on the basis of the agreed facts or evidence. If the Court considers that the information supplied by the parties is inadequate, or requires elaboration or verification, it is free to request more detailed information or to ask that the information, or any aspect of it, be verified on oath or affirmation. In the unlikely event of the parties being unwilling to respond to the Court’s request, the Court might well take the view that it is not prepared to act on the agreed material in the manner sought by the parties.

91    The circumstances in which such a request must be made will no doubt be quite unfortunate, as the need for the parties to put on more material in response to the request will immediately begin to undermine the predictability of outcome and the efficiency that would otherwise be gained from the making of agreed penalty submissions. However, the alternative (assuming that the Court continues to act) is intolerable: the Court would effectively be channelled towards a particular conclusion by an inability to conduct any meaningful analysis and evaluation of its own on the limited material made available to it.

92    At certain points in the present proceedings, it was difficult to resist forming the impression that this is what was taking place, though the parties did not seem to have intended any such result. Ultimately, however, the evidence proved sufficient to permit an adequate evaluation of the various factors relevant to the determination of appropriate penalties, as set out earlier in these reasons. This is not a case where the Court has been asked, effectively, to act only as a “rubber stamp”: cf Australian Securities and Investments Commission v Westpac Banking Corporation (2018) 132 ACSR 230, 237 [31] – [33].

93    It remains only to address, on a final basis, the appropriateness of the agreed penalties.

Are the agreed penalties appropriate?

94    As explained earlier in these reasons, the Court’s task when faced with agreed penalties submitted by the parties is to assess whether each of those penalties is an appropriate penalty: Fair Work at 507 [58]. The Court may be satisfied that the agreed penalties are appropriate in this respect if they fall within a range of permissible penalties, within which no particular figure can necessarily be said to be more appropriate than another: NW Frozen Foods at 290 – 291. The Court will not depart from a submitted figure falling within this range “merely because it might otherwise have been disposed to select some other figure”: Fair Work at 504 [47], quoting NW Frozen Foods at 291. On the contrary, in such circumstances, it will be “highly desirable” in practice for the Court to accept the parties’ proposal and impose the agreed penalties: Fair Work at 507 [58].

95    The fact that the agreed penalties are likely to be the product of compromise and pragmatism on the part of the regulator also informs the Court’s task: Volkswagen v ACCC at 45 [129]. However, considerations of pragmatism and compromise on the part of the regulator “do not absolve the Court from forming its own opinion that the proposed penalty is, on the evidence, within an appropriate range and proportionate to the conduct constituting the contraventions”: Australian Competition and Consumer Commission v Medibank Private Ltd (2020) 146 ACSR 181, 195 [59], quoting Australian Competition and Consumer Commission v Bupa Aged Care Australia Pty Ltd [2020] FCA 602 [19]. Nevertheless, it is not uncommon for some significance to be attributed to the fact that a specialist regulator, in particular, has agreed to submit a specific penalty to the Court: see, eg, Minister for Environment v Northern Seafoods Pty Ltd [2022] FCA 656 [84]; Australian Competition and Consumer Commission v Samsung Electronics Australia Pty Ltd [2022] FCA 875 [74].

96    I am satisfied in this case that the penalty of $200,000 for E Connect is appropriate. For the reasons set out above, that penalty is capable of achieving the objective of general deterrence. It sufficiently reflects the extent of the Court’s disapproval of the contravening conduct.

97    There is some prima facie reason to question whether penalties of $20,000 for each of Mr Airey and Mr Doody fall within an appropriate range. However, taking into account the fact that the CER, which no doubt has extensive knowledge of the industry and considerable experience in dealing with contraventions of the REE Act, regards those penalties as apt to fulfil the purposes of specific and general deterrence in this case, I am satisfied that the penalties are appropriate. They properly reflect the cooperation offered by Mr Airey and Mr Doody, both in the course of the CER’s investigations and in these proceedings. In accordance with authority, it is highly desirable to accept the proposed penalties in order to promote the predictability of outcome that such cooperation tends to achieve.

98    In these circumstances, and applying the principles stated above in respect of the Court’s approach to agreed penalties, I am satisfied that the pecuniary penalties that have been proposed jointly by the CER, Mr Airey and Mr Doody in this case are appropriate.

Other relief

Declarations

99    The CER sought additional orders in relation to the contraventions, including, in particular, declaratory relief pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth). The parties’ joint submission that the prerequisites for the making of declarations have been met in the present case should be accepted. Those prerequisites were explained in Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421, 437 – 438 and in Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, 581 – 582. Their application in this case can be summarised as follows:

(a)    There is before the Court a real and not hypothetical question in relation to the contraventions of the REE Act. The foregoing reasons show that there exists a direct and important question as to whether the respondents contravened s 24B(1) of the REE Act as a result of Mr Airey and Mr Doody having signed statements containing false or misleading information.

(b)    The CER has a real interest in raising the question in issue. As the regulator, it has an obvious interest in bringing these proceedings in the discharge of its statutory functions for the purpose of advancing the public interest. Indeed, it is the only entity that can seek the relief in question: s 154C(1) of the REE Act.

(c)    There is a proper contradictor to respond to the CER’s allegations, and real consequences follow from the Court’s conclusions. The respondents, being the entity and the individuals alleged to have contravened the REE Act, have an interest in opposing the relief and this remains so notwithstanding their admissions and agreement: see Australian Competition and Consumer Commissioner v MSY Technology Pty Ltd (2012) FCR 378, 387 [30] – [33].

100    As to the utility of declarations in circumstances such as the present, in Australian Securities and Investments Commission v Axis International Management Pty Ltd (2009) 178 FCR 485, Gilmour J stated relevantly as follows at 495 – 496 [42] – [43]:

… The plaintiff, as the public regulatory agency charged with enforcing the Act, has a real interest in raising the questions to be litigated in the current proceedings. It is not a hypothetical case but involves real questions of fact and law between the corporate regulator and Owston as the appropriate contradictor. The courts have for a considerable period consistently concluded that it is appropriate for ASIC to take civil proceedings for declaratory relief in respect of past events, even if there is no risk of repetition, where the outcome may establish that the conduct complained of was wrongful and thereby mark the Court’s and the community’s disapproval of it and may deter other wrongdoers. … This is so, on the authorities, whether or not there is a cause of action against the defendant, and whether or not other relief is sought. Further, s 21 of the Federal Court Act provides, as I observed earlier, that a “suit is not open to objection on the ground that a declaratory order only is sought”.

It also informs those affected, for example investors, as to what occurred as a matter of law: ASIC v HLP Financial Planning. Were it necessary, and in my opinion it is not, any possible doubt over the Court’s jurisdiction is removed by the obvious relation between the declarations that the plaintiff seeks and the injunctive relief sought under s 1324B.

101    To similar effect are the remarks of Gordon J in Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 at paragraph [78]:

It is in the public interest for the ACCC to seek to have the declarations made and for the declarations to be made (see the factors outlined in ACCC v CFMEU at [6]). There is a significant legal controversy in this case which is being resolved. The ACCC, as a public regulator under the ACL, has a genuine interest in seeking the declaratory relief and Coles is a proper contradictor because it has contravened the ACL and is the subject of the declarations. Coles has an interest in opposing the making of them: MSY Technology at [30]. No less importantly, the declarations sought are appropriate because they serve to record the Court’s disapproval of the contravening conduct, vindicate the ACCC’s claim that Coles contravened the ACL, assist the ACCC to carry out the duties conferred upon it by the Act (including the ACL) in relation to other similar conduct, inform the public of the harm arising from Coles’ contravening conduct and deter other corporations from contravening the ACL.

102    Those observations are relevant to the present proceedings. There is genuine importance in the Court’s public admonishment of the respondents’ conduct. In the performance of its statutory duties, the CER is correct to seek to have the occurrence of the contraventions and the imposition of pecuniary penalties accorded significant publicity. The declarations assist in making others in the industry aware of their obligations and may well attract the attention of consumers, who might then better appreciate the obligations of installers of SGUs.

103    It follows that the CER has established an entitlement to the declaratory relief that it sought in relation to the contraventions by the respondents, as set out in the orders proposed to the Court.

Injunctive relief pursuant to s 154S(2) of the REE Act

104    The CER also sought injunctive relief pursuant to s 154S(2) and (3) of the REE Act. Those provisions relevantly provide:

154S    Injunctions

…

(2)     If:

(a)     a person has refused or failed, is refusing or failing, or is about to refuse or fail, to do a thing; and

(b)     the refusal or failure is, or would be:

(i)     an offence against this Act or the regulations; or

(ii)     a contravention of a civil penalty provision;

the Federal Court may, on the application of the Regulator or any other aggrieved person, grant an injunction requiring the person to do the thing.

(3)     The power of the Federal Court to grant an injunction may be exercised:

(a)     whether or not it appears to the Court that the person intends to engage, or to continue to engage, in conduct of that kind; and

(b)    whether or not the person has previously engaged in conduct of that kind.

105    The first injunction sought by the CER, and with which the respondents agree, requires Mr Airey and Mr Doody to take steps to obtain the consent of the owners of the systems the subject of the installations in respect of which the contraventions occurred for the purposes of having a CEC-accredited person inspect the installations and carry out testing and commissioning in accordance with the requirements of the relevant guidelines. In effect, the injunction will require steps to be taken to remediate any potential harm to homeowners flowing from the contraventions committed by the respondents. It is appropriate to grant that relief.

106    The second injunction follows from the first. It requires remedial action to be taken in respect of any defects identified in the installations that were certified improperly by Mr Airey and Mr Doody, following the inspections mandated by the first injunction. Again, that relief is appropriate, given that it is directed to the rectification of any damage that the contraventions may have caused.

107    The remaining two injunctions impose upon Mr Airey and Mr Doody the obligation to take reasonable steps to ensure that any company in respect of which they are executive officers, or the conduct of which they are in a position to influence, does not engage in the conduct that has been found to have contravened the REE Act in these proceedings. That is, they are required to take reasonable steps to prevent any such company from providing false or misleading information to any person in relation to the creation of renewable energy certificates associated with the installation of any solar power generation system by that company. Similar injunctions were granted in MT Solar.

108    In the present circumstances, such injunctions are appropriate to prevent any repetition of the offending conduct by other companies over which Mr Airey and Mr Doody might come to exert control or influence. Whilst, at first glance, the injunctions might seem to do no more than require Mr Airey and Mr Doody to obey the law, the value of the relief may lie in the fact that, if Mr Airey and Mr Doody do happen to engage again in the same contravening conduct, they will then be in breach of both the REE Act and the orders of this Court, such that they may face more serious repercussions.

Costs

109    The parties agreed upon the orders to be made in relation to costs. Those orders require that Mr Airey and Mr Doody together pay the CER’s costs of these proceedings, fixed in the sum of $30,000. They are each individually liable for those costs in the sum of $15,000.

110    It is apparent that Mr Airey has reached an agreement with the CER as to the manner in which he will pay the $35,000 total amount (comprising the $20,000 penalty and $15,000 in costs) that he has been ordered to pay in accordance with these reasons. A further order should be made to recognise that agreement.

Associate:

Dated:    13 September 2023